A Concise History of Business in Canada
Through A Concise History of Business in Canada, Peter Baskerville and Graham Taylor successfully highlight three dimensions of Canadian business evolution in a clear and effective manner. By outlining transformations in social, political and business structures, the changing patterns of business organization in Canada are thoroughly analyzed. The particular character of Canadian business arrangements is also revealed through a description of the constraints imposed on private enterprises, as well as the attempt to maintain “national” interests against economic pressures.
Finally, the international setting of Canadian business is explored through an analysis of Canada’s place and role in the global business environment. The above three dimensions combine together to provide a comprehensive description of the nature of Canadian business. In order to trace the changing patterns of business organization within Canada, the authors explored the influence of significant structural changes in European commercial activities.
Chapter two outlines the very early stages of European expansion, providing an in- depth look into forms of business organization that evolved in a halting state of transition from pre-modern to modern capitalist behaviour. In 17th century Europe, the notion of a joint-stock, incorporated company was widely received. This form of enterprise had great capital raising potential based on the purchasing of shares. The corporate business structure was believed to be best suited to the demands of a long-distance colonial-commercial enterprise.
In order to facilitate this expansion, many European nations began using chartered companies in which the state played an active financial and managerial role. The nature of these chartered companies were dominated by pre-modern business and cultural traditions. For example, the French fur trade in North America began with the state granting two chartered companies ten-year monopolies of the fur trade, provided that they would engage in commercial activities and colonize. Both failed miserably as only private invitations to participate in the ventures were extended to a select group. Additionally, many individuals were engaging in private trade for personal profits, creating a competitive atmosphere.
Therefore, the French-chartered companies did spark commercial exchange, however, they did so in ways unintended by their initial promoters. By raising capital and absorbing losses, many short-term competing enterprises evolved to form the dominant business organization of this period. Baskerville and Taylor further illustrate the changing pattern of Canadian business organization in chapter three by describing the colony of New France. This chapter builds on the strategy and tools employed by France to obtain control and develop an effective structure for managing affairs between 1663-1763.
In 1663, New France was declared a part of France’s governing structure. Its primary role lay in supplying raw materials to the Mother Country in exchange for manufactured goods. Although this system implied the development of an economically active and central state, reality proved otherwise. The head of that state owed power to a combination of provincial class and familial groupings. Therefore, the primary way to acquire the support of the nobility was through the sale of chief financial and judicial offices.
As financial and tax collection offices continued to be sold to private hands, the managing and spending of state funds became further decentralized. Louis XIV contributed to this problem by choosing advisors from the non-noble rank in an attempt to rule without a first minister. However, these individuals built up their own support base by employing the rentier and patriarchic tactics at their command for personal gain. Therefore, the inability to distinguish between state and personal ends, and the primacy of noble life in France characterized the organization of business activity in Canada during this period and curtailed economic diversification.
In chapter seven, the bitter corporate rivalries between the Hudson Bay Company and the North West Company that occurred in the fur trade era may also reveal the changing patterns of business organization. This chapter investigates the new forms of strategy and structure that emerged from 1763-1871, a period of major transition in capitalist business activity. The NWC was divided into regional departments, each one managed by a partner who overlooked its operations. Every year, these men would meet together and exchange information. Costs would be cut, specific furs targeted, and posts shifted quickly and efficiently.
In contrast, HBC’s managerial structure was less flexible and responsive to changes. Significant decisions were made in London by the advisory committee and the governor of HBC. Another major problem with HBC revolved around the distribution of incentive money to managers based on the value of their yearly fur shipments, resulting in destructive competition between store clerks. In this challenging environment, the HBC undertook a major change in structural organization.
A profit sharing incentive system similar to the NWC was introduced to decrease the rivalries among post managers. The transmission of fur trade news to London was streamlined and standardized so decisions could be made quickly. Post activity also became more and more routine and directed from the centre. Individual posts began to carry out specialized functions – some gathered fur, while others acted as shipment points. Labour relations changed dramatically as well. Company policy made it a point to have an equal proportion of mixed-blood, Irish and Scottish workers to weaken the possibility of collective resistance and increase the ease of managerial control.
HBC also made use of new technology in the form of steamboats providing the speed and efficiency required to remain in a competitively commercial environment. The HBC’s operational strategies were shared by many other smaller enterprises during this time, representing another major change in the pattern of business organization. Companies had now begun to centralize managerial control, divide workers along ethnic lines, and experiment with new transportation technologies in order to increase the effectiveness of business operations.
This trend was a dramatic development from the early periods of French chartered companies and represented a significant improvement in the structure and strategies of enterprises in Canada. The second dimension outlined by Baskerville and Taylor builds from the first. The authors admit that many other parts of the capitalist world experienced similar patterns of change and stability in business organization.
However, they also go on to describe some of the distinctive features of Canada which have produced a unique configuration of business arrangements. One of these attributes includes a government that has placed constraints on the operations of private enterprises. In chapter thirteen, this may be seen during the emergence of electrical utilities. Electrical utilities meant improved urban transportation and diversified industrial development. However, the initial costs of installing such systems were high. Therefore, distribution companies attempted to lure in investors by issuing stock at below-par value, exploiting the sense of public excitement for quick profits. Over time, large scale enterprises developed and were able to expand and penetrate regional markets.
During this period, utility promoters attempted to exploit the Canadian federal system to obtain charters which would enable them to gain exclusive rights to provide services in municipalities. Although municipalities could prove troublesome over time, they were subject to provincial laws. Similarly, the federal government had chartering authority, and promoters began selecting the jurisdiction most likely to back their actions. Opposition began to surface in many areas of Canada, fearing that such businesses would establish monopolies, thereby, preventing future growth of the industry.
Consequently, a movement for public power of utilities gained great strength. In the prairies, government ownership appeared first at the municipal level. In 1905, Winnipeg established a public hydro-electric system. Alberta and Saskatchewan also “nationalized” their telephone systems. Overall, private utilities were among the first industries to become targets of government intervention in the form of regulation. The notion of public ownership began to emerge early in the twentieth century, laying the foundation for a distinctive feature of Canadian business arrangements.