Date of this Version
Great Plains Quarterly Vol. 18, No. 3, Summer 1998, pp. 257-68.
A decade ago, David C. Jones compellingly described the immense ecological and human tragedy that occurred in the southern, semiarid districts of Alberta and Saskatchewan in the late 1910s and early 1920s.1 Prior to World War I settlers poured into these provinces buoyed by dreams of a better life, but in the decade or so following 1915 many who had taken homesteads in the so-called Palliser Triangle saw their hopes shattered by successive years of drought and crop failure. One of the crucial vehicles in this tragedy was the financial institution. Between 1908 and 1913 investment firms made available huge sums of capital mainly from Britain to enable farmers to commence and expand their operations. As such they helped on the frontier to facilitate the ensuing disaster.2 The purpose of this paper is to develop that thesis. It is not, however, to point the finger of blame. The money managers were subject to some of the same influences that nourished an overestimation of the western frontier by the Canadian government, the Canadian Pacific Railway, and indeed, the farmers themselves who clamored for loans.3 What follows is simply an attempt to shed new light on this major historical event by viewing it through the eyes of those who helped finance it.
Investment in the Canadian west must be seen as a reflection of the fact that in the course of the nineteenth century the United Kingdom, and in particular the city of London, had become the greatest ever international market for the export of capital. In "real" pounds of 1913, total flows to the rest of the world grew from an average of 40 million pounds per year between 1865 and 1874 to 173 million pounds over the decade preceding World War 1.4 The outward movement of capital from Britain greatly exceeded that from any other country and seems to have accounted for between 40 and 75 percent of the total from Europe as a whole.5 Historians have told us about the importance of the philosophy of British economic imperialism in channeling investment to the more independent states of the empire. That theory was based on the belief that the empire was "no longer held together by diplomatic bonds but by the financial commitments made by many influential British investors."6 Successive governments in England had made, and had encouraged the private sector to make, investments in the more independent dominions such as Canada, Australia, and New Zealand in part because it was felt that economic ties would bolster the mother country's influence where it was being eroded in the strictly political sense. In the case of Canada, Britain's perceived need to compete with a growing American presence seems to have been crucial. "From the British angle, a politically independent, but economically dependent, Canada was an excellent offset to the rising power of the United States on the American continent, and brought both political and material gains."7
Thus by the time the prairie wheat lands were being settled and expanded after the turn of the twentieth century there was already in place an ideology, a tradition, and an infrastructure for the exportation of British capital. However, in the period from 1908 to 1913, the flow of capital from the mother country to the prairie wheat farmers also involved a number of both "push" and "pull" forces that had at least as much to do with immediate economic circumstances on both sides of the Atlantic as with long-standing theories of empire. To British money managers, these forces strengthened the appeal of investment abroad in general while making the western wheat frontier seem more inviting than perhaps it was.8