Selective Cuttings

Canadian forest sector history (Article 3): The great transformation (1891–1929)—Capitalization of the forest industry and sawmilling evolution

February 21, 2014

This article is the third in a series of five which delve into the history of the forest sector in Canada from the 17th century until the 20th century (see also 1, 2, 4 and 5).

Between 1891–1929, the output of the Canadian economy grew dramatically, the population doubled, and there was a great increase in the capital stock of the country. While the regions became more closely integrated through investments in transportation and innovations in communication (railway link to Manitoba completed in 1882), the economy was still centered in and controlled through the main cities.

During this period, the per capita gross national product (GNP) rose by 177%. Only Sweden and the US had greater growth rates. As the population grew and income increased, consumer demand for a variety of goods and services enlarged and diversified the activity in trade and services. Major new export staples, such as pulp and paper and industrial minerals were developed. In the 20th century, as pulp and paper production grew, capital requirements increased further. Many firms amalgamated, and joint-stock financing began to shape the patterns of corporate dominance that mark the forest industry today. The early diffuse and informal trade gave way to an industry dominated by relatively few well-capitalized family firms and partnerships. This trend helped smooth some of the chronic instability of early trade, but as shown in the lumber prices below, booms and busts have remained a constant feature of the industry even up to today.

Lumber prices between 1891 and 2013, in 2012 dollars.

 This line graph depicts the price of lumber between 1891 and 2013 in 2012 US dollars and highlights the historical volatility of lumber prices.

Source: 1891–2008: Global Financial data (source is Chicago Mercantile Exchange which used a price lumber index as provided in annual issues of Moody’s Industrial Manual between 1891 and 1935; data are for white fir 2x4 from 1959 to 1970; data are for spruce-hemlock-fir 2x4 from January 1972 to March 1980; data are for western spruce-pine-fir from April 1980 on)
2008-2013: Kiln-dried western spruce-pine-fir #2 and better 2x4

Sawmilling was a leading manufacturing industry during most of the 19th century. But by 1926, a drastic production shift was occurring: whereas much of the production had been in Central Canada, western Canadian mills were now producing a far greater share of outputs. The utilization of the forests in Ontario and Quebec had been largely redirected to the pulp and paper industries. Accordingly, sawmilling was starting to take a back seat to pulp and paper segment in terms of industry leadership (see figure below).

Production and exports of the lumber and pulp industries in 1891 and 1926

This bar chart shows how in only 35 years (1891-1926), the forest sector moved from being lumber dominated to being pulp and paper dominated and how production of lumber and pulp and paper became distinctly regionalized.

The rapid development of sawmills and wood-working plants in Central Canada had been spurred by an embargo on export of logs cut on Crown lands in Ontario (1898) and Québec. With no such log export bans in place in the west, the solid wood processing industry developed much slower. However, with the completion of the CPR in the 1880’s and the opening of the Panama Canal in 1914, the western industry eventually overtook the scale of activity in eastern Canada. Initially, BC exported lumber mainly to Australia, Hawaii, Chile, and China. As CPR construction continued into the 1880s, the domestic demand for timber increased, leading to an expansion of the scope of the forest industry into the southern interior of the province. However, once railway construction was finished, forestry slowed considerably until the 1890s. In 1910 BC production surpassed Quebec’s, and by the late 1920s BC was producing half of Canada’s annual cut of timber.