Confederation enabled the creation of a changed investment environment. Like all such environments, it had more to do with subjective confidence than with any objective reality. Nevertheless, the years after 1867 were marked by heavy investment in railroads, the growth and maturation of the banking system, and the rise of an urban-industrial Canada that was only hinted at in mid-century, although the dye had certainly been cast.
The dramatic political/constitutional changes of the 1860s were nothing compared to some of the economic transformations underway. The value of production in agricultural implements — one sector of industrial manufacturing that would be central to the Canadian industrial revolution — exploded in the 1860s from $413,000 in output in 1861 to $2,685,000 in 1871, according to the Canadian census.
In some regions, industrialization overwhelmed old practices and old economic orders. On the face of it, that’s what happened in Atlantic Canada when the age of wind, wood, and water came up against a new generation of larger and steam-powered iron- and steel-hulled ships in the last quarter of the century. It was not the case, however, that shipowners in the region stood still. They adjusted for changes in the economy and changes in demand for their ships by making them more efficient. Innovative adaptations took place right at the moment when capital investment in new modes of production might have been more appropriate. But this was not foolishness on the part of Atlantic Canada’s shipping magnates. One study of the industry puts it this way: