The last third of the nineteenth century, covering the years from Confederation until the beginning of the era of rapid expansion on the Western prairies, was a formative period for Canada. It is surprising that this period has as yet received little attention from economic historians, for analyses of demographic and economic changes during these years may yield high returns in the form of a more sophisticated interpretation of Canadian development.

One of a number of important yet neglected aspects of these years in Canada is the business cycle, and the purpose of this paper is to report some new research in this area. A study of business cycles, as opposed to “panics,” implies the existence of a clearly defined cyclical sequence that becomes apparent once an economy has reached a certain state of commercialization. While the process of commercialization in Canada generally lagged behind that in the United States it is clear that even before Confederation a viable market economy had been created in the united province of Ontario and Quebec. There is good reason to believe that by the time of Confederation factor and product markets were functioning quite smoothly and that the price system was playing a prominent role in allocating resources.

The two most authoritative, though far from definitive, accounts of cycles and growth in the late nineteenth century are contained in the works of Breckenridge and Skelton. Other students of Canadian economic history have relied heavily upon Skelton's findings about the pace and nature of activity in the post-Confederation years. Skelton concludes that the short period from 1869 to 1873 was a prosperous one, despite the abrogation of reciprocity with the United States, because (1) exports to the latter were well maintained, (2) Canadian producers were successful in finding new domestic markets, and (3) there were expanding sales to the United Kingdom. In contrast the period from the mid-seventies through the mid-nineties he considered to be “Days of Trial” during which Canada waited grimly for a favorable turn in its economic fortunes. In the late nineties Canada's “hour had struck” with emerging opportunities for agricultural expansion in the prairie west.

Over 250,000 native-born Canadians moved west to the Canadian prairies and the American frontier during the last three decades of the nineteenth century. Of this total, almost half settled on the American side of the border. This paper relates the geographical structure of this migration to economic opportunity, and focuses on the importance of economic factors in leading so many Canadian settlers to locate in North Dakota rather than in Manitoba.

Given the Ricardian assumption that factors of production, though completely mobile nationally, are completely immobile internationally, trade theory proves that real income per capita in a country with an effective protective tariff will be lower than it would be in a free trade situation. Does the proposition hold if we assume international mobility of the factors of production? Our first inclination is to say that it does, because (a) the excess costs above world costs of producing protected commodities must be paid for by the consumers of the commodities, and (b) the consumers must be the domestic population, since commodities produced at costs above world costs cannot be sold to foreign consumers. On the other hand, it seems paradoxical to talk of imposing costs on people who are internationally mobile, and who can therefore avoid the burden of a protective tariff in whole or in part by emigration to a country where the burden is either non-existent or lighter. If there is protected production there must be a burden; but since the costs of protection can be avoided by emigration there can be no burden. The apparent contradiction could, of course, be avoided by taking the position that it is impossible to create, or expand, protected industry by means of a tariff in a country whose population is not imprisoned within its own borders by the Ricardian assumption. The contention of this paper, however, is that a country can establish protected industry—manufacturing, let us say—within its borders even when its population is free to emigrate. Our problem is to show how this outcome is possible.

The problem may be rephrased by noting the converse of the proposition stated in our introductory sentence, namely, that a tariff must effect a reduction in real income per capita in a country in order to be effective, i.e., to lead to the development of protected production. Accordingly, if we can describe a mechanism by which a protective tariff results in a reduction of real income per capita in a country whose population is free to emigrate, we will have shown the tariff to be effective.

These notes explore and categorize most cases of monopolistic price discrimination. A majority of these instances, when involving a homogeneous product, fall into that broad and somewhat miscellaneous class that Pigou termed second-degree discrimination. Whenever evident, profit-maximizing rules of approximations are given, the contributions of von Stackelberg (second-degree discrimination) and of Mrs. Robinson (third-degree discrimination) being later shown to be special cases of a more general analytic solution. Less authoritarian forms of discrimination arising from brand differentiation, first considered by Bailey and others, are placed in a larger context. A final section graphically distinguishes between optimal financial outcomes (for the seller) and optimal resource allocations (for the economy) under monopolistic price discrimination.

Post-war balance of payments problems are partly the results of policy applications of the “modern view” of the balancing mechanism of international trade theory. Derived from the Keynesian income-expenditure theory of income determination, the “modern view” relegates the role of the stock of money to a secondary place in determining national income. It asserts that control of the stock of money through monetary policy is incapable of significantly, or dependably, influencing the circular flow of income and thereby the balance of payments. One reason for this view is the conviction that monetary velocity behaves in an erratic and unpredictable manner. In contrast, pre-Keynesian theory attributed a central role to the stock of money, and so to monetary policy, in the balancing mechanism of international trade. It contained an explicit acceptance of the quantity theory of money which argues, among other things, that monetary velocity does behave in a predictable manner.

The usefulness of the modern view of the balancing mechanism of international trade turns partly on the relative stability and behaviour of monetary velocity on the one hand and of the Keynesian investment multiplier on the other. In all countries, but particularly in those that are sensitive to external disturbances, the balancing mechanism of international trade is an issue of vital concern for public policy. The purpose of this paper is to examine the relative stability and behaviour of monetary velocity and of the investment multiplier in an open economy that is subject to external disturbances and in which international trade plays a relatively important role in aggregate output and income. The article deals with the Canadian economy during the period 1926–58.