I have a new working paper which is part of a series of six papers I want to publish to close the conversation on the topic of Quebec’s agricultural crisis/economic growth in the 19th century. The agricultural crisis hinges on the claim that there was a rapid decline of wheat which had been a major export staple. I, alongside Alicia Morgan Plemmons and Andrew Thomas, argue that there was indeed a decline of wheat output and exports. However, we argue that this was welfare-enhancing because of the way it happened. A surprising trade shock in the form of unexpected and unilateral trade liberalization led to the decline of wheat output in Quebec in the 1830s and 1840s. Combined with transportation innovations in waterways, areas that were exposed to the trade shock (as proxied by the level of road networks in a district) shifted out of wheat and into other productions that increased per capita income. The paper is here on SSRN and the abstract is below:
In the first half of the nineteenth century, the wheat oriented agrarian economy of Lower Canada (the French-speaking modern-day province of Quebec) saw a rapid collapse in wheat production dubbed the “wheat crisis.” In a single decade, Quebec went from being an exporter of wheat to an importer. Given that Quebec was an agrarian economy, this collapse of wheat exports has been used to infer falling living standards in the colony during the period. These developments have been blamed on many factors ranging from soil exhaustion to cultural conservatism among French-Canadian farmers. In this paper, we provide evidence suggesting this rapid collapse was largely the result of adjustment to the trade shock that followed the Colonial Trade Act of 1831 (a unilateral liberalization of the entry of agricultural goods from the United States) and a rapid reduction in freight costs between the Canadian colonies. We find that areas that were more exposed to external markets—as proxied by road access—shifted away from wheat production. We provide supportive evidence that this was welfare-enhancing.