Econ 321 Final Exam Brandon McManus V00873065 Dr. Scoones I certify that this work was done independently without the assistance of any other person for the duration of the exam. Brandon McManus Part A: 1. True. The goal of mercantilism was to have a trade surplus and there in have less dependency on the imperial government. Monopolies were common which was why the Hudson’s Bay Company was so successful as well as the imperial nature of the economy lead to discovery of land to the west. This attracted settlers and was a driving force for future independence. 4. True. The popularity of British Columbia lead Great Britain to settle the land aggressively to maintain power of the land. Mining licenses were issued and the costs of mining rose making it difficult for many unsuccessful miners to maintain a living wage. 5. False. Paper money was introduced in the 17th century due to a shortage of coins. This was due to war time and a lack of tax revenues leaving new France with limited supply of money for circulation. 7. True. Investment opportunities in Great Britain were sparse making British investors look for foreign projects to invest in. Railway projects were easy to market, even with uncertain long- term economic risk factors, investors were still eager to invest. 8. True. The use of forage crops and fall ploughing became more common and improved the quality of the farm land. Threshing grain or stacking it become common practice in order to prevent the grains from freezing in the winter. Increases in technology lead to increases in production efficiency of farmers and wheat prices rose over the period. 9. True. The provincial and municipal governments were unable to provide support to their citizens due to the lack of support from the federal government. The federal government was in charge of exports and imports and decided to enact a retaliation tariff to the United States Smoot- Hawley tariff. 10. True. The booming economy of the 1920’s was led to an over-aggressive approach to agriculture. The great depression hit and then later a drought in the prairies causing a “dust bowl” effect and a large fall in wheat prices contributed greatly to the suffering of Canadians. Part B: 1. Prior to European colonization the indigenous communities had their own economy which has some role in the shaping of the modern Canadian economy. As European colonists arrived to Canada they had in mind a land that was free and open to be claimed as private property. The idea of private ownership was difficult for indigenous communities to grasp as they shared the land equally which was far different than the European colonists idea of private property. It was ultimately decided that treaties were necessary if the two communities were to co-exist with one another. At first these treaties were enacted to show a sign of respect and cooperation but as settlement grew the role of private property became a more problematic issue. As the ownership of land expanded to the west, the trade between the indigenous communities and the British increased, particularly in the fur trade. The indigenous technology of canoes, toboggans and snowshoes were vital to the success of the fur trade. The growth of this staple industry would provide great economic growth for the early Canadian economy and contribute to its confederation in the mid-19th century. Soon after, is when Canada changed its role with the indigenous community and took an imperial approach to land ownership. The decision to build the CPR would become problematic for the previous agreed upon land contracts and so many treaties were made out west. These treaties were made in an effort to assimilate the indigenous communities by means of civilizing them. Through these efforts, Canada’s plan was to hold resources for settlers and were promised land if they would settle out west. It was from here on that the indigenous communities no longer were an essential part of the Canadian economy and colonization would be ever-growing from then on. 2. The Staples approach argued that the economy relied heavily on exporting only a handful of commodities such as fish, timber, wheat and fur. This economic approach can yield problems for the economy if the commodities fail to produce to their desired capacity or become very scarce. This approach is ideal for a developing economy where they can maintain economic growth and increase their manufacturing and industrial services to create a more diversified economy. In Canada during the 19th and 20th century, wheat and cod fish were two of the main staples Canada relied on. Western Canada was a primary producer of wheat and used it to drive their economy forward. Wheat was an ideal product to grow due to the large amounts of flat prairie land in the region. The building of the Canadian Pacific Railway created easier distribution of wheat products from the west to the east. However, The dependence of wheat contributed to the financial difficulties of the prairie provinces during the late 1920’s and early 1930’s where there was many crop failures. It was evident that the over-reliance of the commodity would result in too much economic volatility and a more diversified economy would be necessary for sustainable economic growth. In Atlantic Canada, Triangular trade between brought some prosperity for the region but was had difficulties with economic stability. The reliance on cod fishing in the region left fisherman with worries of either a shortage of catch or too much catch which would drive prices down. Trade brought many foreign materials that otherwise would have been unattainable without the specialization of the cod fishing industry in the Atlantic. 3. The Hudson’s Bay Company set up forts and factories where indigenous tribes could come and trade their furs with the company while the North West Company would go to the villages of the Indigenous peoples and trade with them. This hurt the HBC as the aboriginal tribes would no longer need to travel to trade their furs. While the HBC technically had a monopoly for the fur trade, it was clear that enforcing it would not be possible. It was also to the NWC advantage that they were open to negotiations with fur and good prices which was an attractive quality for many of the indigenous tribes. Interracial marriages were also encouraged by Indian communities to create long-term relationships between fur traders and the NWC which the HBC was not willing to do. It was clear that the HBC would have to adjust in order to maintain its market share. They decided to raise the prices they paid to aboriginal fur traders to incentivize increased harvest amounts. The profits of the NWC were also shared among fur traders which the HBC could not compete with and therefore realized a merger would be their best strategy. Further regulation by the British government was enacted to prevent the NWC from trading and then In 1821 the two companies merged. The charter of the HBC monopoly did play a factor in the merger as it was clear the NWC could not sustain its profits under heavy regulation and thus the merger was necessary. 5. In branch banking, banks have a hierarchical system where larger institutions control the smaller banks which spreads the risk and resources across a variety of banks making it more resilient to market shocks. In unit banking, a single small bank provides the services and rarely has other branches which makes it more susceptible to market price shocks. One key characteristic between the two types of banking structures is the ability for government intervention. In the United States, the regulation of chartered banks was done by states instead of the federal government. This allows for an overall weak structure of banking that is subject to greater amounts of volatility. In contrast, the Canadian banking structure is much more stable and can be adjusted based on federal requirements. The ability to adjust interest rates and the money supply on a national level is a great advantage the Canadian banking system has over the American banking system. Furthermore, the differences in regulation can also be attributed to the incentives each banking structure creates. The US banking system is very much a for-profit system that is less interested in sustainable practice and more interested in maximizing wealth creation. Due to theses incentives, banks are more likely to take on risky loans, use more aggressive interest rates and reserve ratios. These leaves the banking system more susceptible to fraudulent activity due to the desire for profit and difficult nature of regulation and supervision. In contrast, the Canadian banking structure is a function to assist the growth of the economy rather than being a business concerned with making profits for shareholders. These enables more conservative interest rates and reserve ratios as well as a better distribution of power and capital within the industry.