The growth and development of trades and manufacturing in St. John's, 1870-1914

Joy, John Lawrence (1977) The growth and development of trades and manufacturing in St. John's, 1870-1914. Masters thesis, Memorial University of Newfoundland.

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Abstract

The growth of industrial production is a major hallmark in the development of most economies and the chief source of this growth is import substitution. While practically all income in Newfoundland was derived from the primary sector prior to 1870, the country made considerable efforts between 1870 and 1914 to stimulate an industrial transformation. By 1914, however, the higher production, employment and income levels enjoyed in other countries with vibrant manufacturing sectors had not been achieved. While trades and manufacturing industries experienced some growth during this period, the rate of expansion was slow. In 1870 small shops produced all of the locally-made goods, but by 1914 a small number of larger mechanized factories dominated the market, and most of the small businesses either disappeared or retailed and repaired imported or local factory-made products. The capital for the larger St. John's factories came chiefly from the retained earnings of the fish merchants. The major city merchants invested moderate sums in a number of incorporated companies protecting their export-import business through limited liability and spreading the risk over a number of different enterprises. Inter-industry linkages within the trades and manufacturing sector and between it and other parts of the Newfoundland economy were rare and most machines and raw materials were imported. While the number of employees grew over the period, unemployment, poor wages and working conditions were common. The trades and manufacturing industries usually produced common and widely used products leaving specialized items to foreign suppliers. The St, John's trades and manufacturing industries were import substitution factories designed to serve the national market. While many of these firms succeeded in capturing the Newfoundland market with the help of the tariff, locational advantages and the nature of some of the products, the market was not large enough to support continued growth. The import substitution model was not suitable for Newfoundland because of the size of the domestic market, the unbalanced availability of resources and raw materials and the inability of the country to prosper as a closed economy. The factories needed large and growing markets for single items in order to reach profitable economies of scale, while consumers demanded a wide variety of products and styles. Practically all inputs used by St. John's trades and manufacturing industries were imported because they were simply not available in Newfoundland. Finally, the country's reliance on the export of fishery and other primary products and its dependence on imported raw materials and finished products established that Newfoundland was not, and was not likely to become, a closed economy capable of generating most of its natural resource and capital requirements, and capable of producing most of its intermediate, capital and consumer goods at a rate comparable to other Western market economies. Import substitution, therefore, was not an appropriate strategy for Newfoundland. The trades and manufacturing sector needed export markets in order to contribute significantly to the transformation of the economy and to achieve the higher levels of production, employment and income characteristic of countries with dynamic secondary manufacturing. Newfoundland should have concentrated on a manufacturing field where her resource and locational advantages were greatest and where her skills and entrepreneurship were keenest. The vast bulk of Newfoundland's capital, expertise, entrepreneurial potential and locational advantages were centered in the fishing industry. The logical place to attempt to break into international markets was in the maritime trades and manufacturing industries. -- In conclusion, the potential for development of secondary manufacturing in Newfoundland was at best marginal given the small size of the domestic market, the dearth of managerial and labour skills in this field, the limited investment resources, the unbalanced availability of resources and raw materials, locational disadvantages, transportation costs and the need to develop foreign markets for manufacturing.

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