"This Remarkable Growth": Investment in Canadian Great Lakes Shipping, 1900-19591 M. Stephen Salmon L'essor de l'industrie canadienne du transport des Grands Lacs va de pair avec la croissance de l'ensemble de l'économie canadienne au cours des six premières décennies du vingtième siècle. Cet article présente comme analyse préliminaire de cette industrie, de brèves études de cas sur trois compagnies de transport dont la Canada Steamship Lines, la Paterson Steamships Limited et la compagnie de transport du Québec et de l'Ontario. Ces compagnies furent chargées d'un pourcentage important des cargaisons de l'époque. Elles représentent également les liens qu 'avaient les propriétaires canadiens des compagnies de transport des Grands Lacs avec l'économie Nord-Américaine. Tel que le démontre leur histoire collective, la fortune de ces trois propriétaires de navires est le reflet de la performance de l'économie canadienne entre 1900 et 1959. This remarkable growth did not come about steadily but occurred during periods of expansion in the Canadian economy.2 The Canadian Great Lakes shipping industry began the twentieth century as a peripheral sector in the national economy. Its survival depended on shipowners being able to earn a profit on the margins of the American export grain trade. Western Canadian grain shipments through the twin ports of Fort William, Ontario and Port Arthur, Ontario, (collectively know as the Lakehead), were only starting to displace Chicago as the major source for cargoes. The development of the industry, from 1900 to the opening of the St Lawrence Seaway in 1959, went through three periods of sustained growth that were interrupted by two world 1 This a revised version of a paper presented to the 4th International Congress of Maritime History, Corfu, Greece in June 2004. The author would like to thank Robin Craig and John Armstrong for their comments. The author is also indebted to Donald C. Paterson for permission to use the unsorted Paterson Business and Family Archives (PA) deposited with the Library and Archives Canada (LAC) and to Thierry Brossard for allowing access to the Quebec and Ontario Paper Company records deposited with LAC. 2 Canada, Report of The Royal Commission on Coasting Trade (Ottawa, 1958), 61. The Northern Mariner/Le marin du nord, XV No. 3, (July 2005), 1 - 37. 2 The Northern Mariner/Le marin du nord wars and the Great Depression. This expansion parallelled the growth of the entire Canadian economy during the first six decades of the twentieth century. A preliminary analysis of the industry and "This Remarkable Growth," is provided here through brief case studies of three Great Lakes shipping firms.3 The firms under scrutiny represent a partial cross-section of "Canadian" shipowners operating on the Great Lakes.4 The shipowners are: Canada Steamship Lines (CSL), a fully integrated shipping provider that ran bulk freight, package freight and passenger services, Paterson Steamships Limited, (later the steamship division of N. M. Paterson and Sons Limited), which was initially a bulk carrier specializing in the grain trade, and the Quebec and Ontario Transportation Company (Q. & O.), a subsidiary of the Tribune Company, (publisher of the Chicago Tribune). The Q. & O.'s primary purpose was to carry pulpwood and newsprint. Taken together these three firms moved a significant percentage of the system's typical cargoes. They also represent the ties that Canadian Great Lakes shipowners had to the larger North American economy from the Canadian export grain trade to the American newspaper industry. As their collective history demonstrates these three shipowners' fortunes corresponded to the performance of the entire Canadian economy from 1900 to 1959. Investment in Canadian Great Lakes shipping was shaped by the infrastructure of canals and the depth of connecting channels in the system. Steaming west from Montreal, vessels first avoided the Lachine Rapids and the other rapids on the St Lawrence River by using the canal system that reached from Montreal to just below the town of Prescott, Ontario one hundred and twenty miles up river. By 1903 all of these locks on the canals could accommodate ships 250 feet long with a beam of by 43 feet, drawing 14 feet of water; for bulk carriers this was roughly a 2,000 gross ton vessel. The next obstacle, Niagara Falls, was overcome by the Third Welland Canal linking Lake Ontario with Lake Erie. The Canal had been opened to the same size as the St Lawrence canals in 1887. In 1932 the new Welland Ship Canal was completed allowing ships as long as 735 feet by 75 feet to navigate as far east as Prescott. The next impediment was on the St. Mary's River linking Lake Huron with Lake Superior. Both the American and Canadian governments had built locks to overcome the St. Mary's Falls. At least one of these flights of locks was always able to accommodate the largest ships sailing the Great Lakes. By the time our vessel from Montreal reached the Lakehead, it would have travelled twelve hundred miles. 3 The paper can only be an introduction to post-1945 Canadian Great Lakes shipping because the majority of the files created by the Canadian government's transportation agencies, including the Department of Transport and the Canadian Maritime Commission have yet to be released by LAC. These records, particularly those relating to the Canadian Vessel Construction Act and the Park Steamship replacement plan are central to the study of investment in Canadian Great Lakes shipping from 1945 to 1959, see Canada, Report of The Royal Commission on Coasting Trade, 55-56, and 150-151. 4 One shipowner, the Algoma Central Railway, whose surviving records are sufficient to allow a study of its performance has not been analyzed. The Algoma Central fonds is held by the Sault Ste. Marie, Ontario, Public Library. For a commissioned corporate history see, Roderick K. Cunningham, Algoma Central Corporation: The Centennial Anniversary History, 1899-1999 (Sault Ste. Marie, ON, 1999). "ThisRemarkable Growth" 3 4 The Northern Mariner/Le marin du nord Shipowners purchased two sizes of assets. Smaller vessels, known as canallers, were built for service through the St Lawrence canals and the Third Welland Canal. For the Great Lakes themselves (except Lake Ontario before 1932) the larger lakers were acquired. With the opening of the St Lawrence Seaway in 1959 the largest lake vessels could travel the entire distance of the system from Lake Superior to Montreal. Before the First World War canallers grain capacity at canal draft was 70,000 bushels of wheat while newer lakers could carry 400,000 bushels. By the late 1950s lakers carrying 800,000 bushels were being built while modern canallers could carry more than 110,000 bushels through the old canals.5 Canadian Great Lakes shipping grew from twenty-seven vessels of 31,000 tons in 1899 to more than two hundred and sixty ships of more than 870,000 tons in 1959, (figure l).6 This expansion mirrored the economic development of Canada. The industry's development was not gradual but rather occurred in three spurts. The first period from 1900 to 1914 parallelled the opening of the Canadian west and the economic boom know to historians as the "Laurier Boom." During this fifteen year period shipments of grain from the Lakehead increased by a factor of almost nine. Cargoes of coal and other commodities kept pace. Tonnage to handle these products grew at an even faster rate. While the First World War was profitable for Canadian Great Lakes shipowners, it was not a period of rapid expansion with shipyards on both sides of the Atlantic tied up with war orders. Increased earnings came from higher freight rates and continued market growth. Many steel hulled canallers served in the North Atlantic trades and while they made windfall profits a large number of vessels were lost to enemy action or were sold overseas. Unlike global shipping markets, the Great Lakes experienced a boom during the 1920s. From 1920 to 1929 more than 200 vessels of 475,000 tons was added to Canadian owners books. Many of the new canallers were replacements for those lost in the war but by the latter half of the decade they were purchased in hopes of continued growth. The majority of the expansion in laker tonnage during the 1920s can be explained by the rivalries among competing networks of shipowners and grain dealers. Here the relationships between Canada Steamship Lines (CSL), James Playfair, and Norman Paterson played the pivotal roll. The Great Depression was an unmitigated disaster for most Canadian Great Lakes shipowners. Freight tonnage dropped to early First World War levels and freight rates reached record lows. There was too much tonnage chasing too few cargoes and balance sheets suffered. After the catastrophic bankruptcy of the Mathews Steamship Company in early 1931 British shipbuilders, Canadian banks, and bondholders realized that the only chance they had of ever recouping their 5 James Gilmore, "The St Lawrence River Canals Vessel," Transactions of the Society of Naval Architects and Marine Engineers, (TSNAME), LXVI (1956), 111-161; William Bennett, "Great Lakes Bulk Freighters," TSNAME, XXXVII (1929), 21-43; and Brian S. Osborne and Donald Swainson, The Sault Marie Canal: A Chapter in the History of Great Lakes Transportation (Ottawa, 1986), 98-101. 6 M. Stephen Salmon, "'A Prosperous Season': Investment in Canadian Great Lakes Shipping, 1900-1914," in Victoria Brehm, (ed.), "A Fully Accredited Ocean": Essays on the Great Lakes (Ann Arbor, 1998), 107-154. Only vessels capable of carrying first class cargoes such as grain are included. Fully dedicated passenger ships and excursion vessels are excluded. "This Remarkable Growth" 5 Canadian Great Lakes Shipping Figure 1, from Salmon, "A Prosperous Season", and Lake Carriers' Association, Annual Reports investments was to nurse the shipowners through the hard times.7 The turning point for the industry came with the outbreak of the Second World War in September 1939.