11 November 2005
The Great Trans-Canada Panama Canal
It was 120 years ago: 7 Nov 1885. Scottish financier Donald Smith hammered the
"last spike" into a stretch of hinterland track in British Columbia's Eagle Pass, completing the CPR and forging a nation. A
heroic achievement, preserved in precise detail in the CPR's iconic photograph, indelibly imprinted on Canada's collective memory. The
railway moved the country westward with astonishing speed. In the decade that followed the CPR's arrival in Calgary, the town grew
tenfold. British Columbia, though, remained where it started - at the end of the line. For British Columbia, the last spike wasn't the
final iron nail holding down 3,200 kilometres of railway track. It was the robber baron freight rates that the CPR levied on eastbound
cargo. British Columbia would wait another 35 years for a practical coast-to-coast connection with the rest of Canada. It
wasn't the CPR that finally provided it. It was the Panama Canal.
For this achievement, as heroic as the CPR, Canadians must thank former U.S. president Teddy Roosevelt, the leader who did for Canada's
Pacific Coast what Sir John A. Macdonald had done for the Prairies. Consider him an honorary Father of Confederation. The Panama Canal
opened in 1914, 12 years after Mr. Roosevelt took over the construction job. By 1920, British Columbians were shipping sawn lumber
through the canal for east coast destinations in Canada and the United States, forging their own destiny independently of the CPR.
Writing in 1939, at the end of the Depression years, Queen's University economist W.A. Mackintosh described British Columbia's stunning
change in fortunes when West Coast lumber arrived, duty-free, in Halifax and New York.
"The opening of the Panama Canal subjected eastern lumber producers to new and severe competition from British Columbia's
products," he said. "It was not until the opening of the Panama Canal that British Columbia experienced the rapid development
which comes from access to world markets."
Mr. Mackintosh described the province's increased production in lumber and in mining as "phenomenal." It was the Roaring
Twenties. In the White House, Silent Cal Coolidge kept taxes low. The American economy boomed - and the wood that built the boom came
from British Columbia. In turn, British Columbia's export-driven prosperity lured people westward, enriched them and
transformed Vancouver from a rude West Coast outpost to a metropolitan centre with trade routes that led to Europe, Asia, and South
America.
Before the canal, the railways had commanded exorbitant freight rates - whether the railway was the CPR or, south of the border, the
Northern Pacific Railroad.
Mr. Mackintosh records the precise rates. In 1920, it cost $27.30 to move 1,000 board feet of Douglas fir from Vancouver to New York
City - almost as much as the value of the wood. It cost only $14.04 to move 1,000 board feet of southern pine from Georgia to New York
City. (Southern pine has always been the primary competitor to B.C.'s spruce, pine and fir. It still is.) By 1929, it cost only $10.11
to ship the same B.C. lumber through the Panama Canal. British Columbians discovered that they could sell 1,000 board feet of lumber,
delivered to New York City, for $32.61 - a price that gave them immense profit. With a break-even price of $39.69, the
southern states found themselves shut out of the biggest single market for lumber in the world.
Before the First World War, British Columbia had depended on Prairie markets to buy 70 percent of its production. By 1928, production
had soared and the Prairies took only 30 percent of it. In the prosperity that followed, B.C. incomes soared. By 1925, British
Columbians were the best-paid people in the country, earning $550 for each person (compared with $500 in Ontario and $350
in Quebec).
Although hit in the thirties, West Coast incomes remained higher than Ontario incomes throughout the Depression. In his analysis, Mr.
Mackintosh concluded that, with the Depression, Canada's own tariffs held back British Columbia's further expansion.
Although we had nothing to do with it, the Panama Canal remains an essential piece of Canadian infrastructure. It will assume greater
importance as time passes - as North America and South America move, however awkwardly, toward a hemisphere-wide
free-trade agreement, as Panama prepares to build a "third lane" canal for mega-ships that will
measure about 400 metres in length. (The canal set a cargo record last year, clearing one million tons of goods in a single day.)
Should these 34 democracies ever succeed in establishing a free and open marketplace, binding 850 million people together in a
$18-trillion economy, the Panama Canal will be a central hub, a commercial Avenue of the Americas.
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