No Wheat Crisis: Agricultural Trade Liberalization in Quebec during the 1830s and 1840s

Abstract

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.

Keywords: Trade shock, economic history; Canada; Quebec; wheat

JEL Classification: Q17, N51, N71