Winnipeg Free Press - PRINT EDITION

The Panama Canal and the decline of Winnipeg

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A century ago this month, the opening of the Panama Canal was hailed not only as an "unprecedented feat of engineering," but also as "a profoundly historic human event and a sweeping human drama," in the words of American historian David McCullough, who chronicled the remarkable building of the canal in his 1977 book, The Path Between the Seas. Apart from wars, he added, the canal "represented the largest, most costly single effort ever before mounted anywhere on Earth."

As with many key events in history, there are winners and losers. And while the canal was a boon for western ports like Vancouver, it had a much different effect on Winnipeg, contributing to the city's economic decline as Canada's railway, grain trade and wholesale centre.

In a frequently quoted dispatch, William E. Curtis, a correspondent for the Chicago Record-Herald who visited Winnipeg in September 1911, summed up the city's status and potential like this: "All roads lead to Winnipeg. It is the focal point of the three transcontinental railway lines of Canada, and nobody, neither manufacturer, capitalist, fanner, mechanic, lawyer, doctor, merchant, priest, nor labourer, can pass from one part of Canada to another without going through Winnipeg. It is a gateway through which all the commerce of the East and the West, and the North and the South must flow. No city, in America at least, has such absolute and complete command over the wholesale trade of so vast an area. It is destined to become one of the greatest distributing commercial centers of the continent as well as a manufacturing community of great importance."

In 1911, Winnipeg, with a population of 136,035, was the third largest city in the country behind Montreal and Toronto, while Vancouver was fourth, with a population of 120,847. By the 1931 census, however, Vancouver's population had more than doubled to 246,597, and though Winnipeg's had also expanded to 218,785, it had dropped in rank beneath Vancouver. Thereafter, Vancouver and its census metropolitan area (CMA) continued to expand at a much faster rate than Winnipeg's -- so much so that as of a 2011 CMA ranking, the greater Vancouver area remains in third spot with Winnipeg in eighth.

It was no coincidence that this demographic shift began with the opening of the Panama Canal.

A French company first attempted to build a canal through the Panamanian Isthmus in the 1880s. Yet after nearly a decade of financial and engineering problems and the death of hundreds of labourers from malaria and yellow fever, this initial effort failed.

A second and successful attempt was launched once Theodore Roosevelt became the president of the United States in 1901 (following the assassination of President William McKinley) "T.R.," as he was called, was a passionate, ingenious and charismatic leader who believed in America's Manifest Destiny. His celebrated foreign policy motto was "speak softly, and carry a big stick"-- which is how the U.S. came to control the canal.

At the turn of the 20th century, Panama was under Columbia's jurisdiction. In 1903, Roosevelt supported the independence of Panama with naval assistance and then secured U.S. rights in a treaty to the zone around the proposed canal -- a treaty that lasted until 1999, when Panama took charge of the waterway. Roosevelt also championed medical research that targeted mosquitoes spreading disease so labourers could stay healthy enough to build the canal. It took 10 years, but the canal at a cost of $352 million was completed by August 1914.

Because the canal was opened just as the First World War began, its real impact for the transportation of goods between North America and Europe was not fully realized until about 1920. Thanks to the miracle of the canal, for example, Vancouver and other Pacific ports were now more than 8,000 kilometres closer to European ports than they had been.

The combination of the canal and lower freight rates had a major economic impact on Vancouver's growth, but the opposite effect on Winnipeg. As the late University of Manitoba economist Ruben Bellan explained in his 1978 economic history of the city, "a 'watershed' emerged in western Saskatchewan, which marked off the area that could most economically ship its grain to Europe via Winnipeg and the Great Lakes, from the area to the west, which could most economically ship its grain to Europe via Vancouver and the Panama Canal." Within about a decade, this transportation had led to the growth of wholesalers in Saskatchewan, Alberta and B.C. that competed with Winnipeg's dominance in that business (though some were branches of Winnipeg companies). Even manufacturers in Eastern and Atlantic Canada made use of the canal for shipments to Vancouver and then east to Alberta and Saskatchewan, bypassing Winnipeg.

More critically, there was a direct link between the canal and the expansion of Vancouver's port facilities, which in turn had an attendant positive impact on the city's growth. Soon, grain, lumber and B.C. fruit were being shipped to Europe in large quantities. In 1920, as B.C. historian Jean Barman notes, approximately 30 ships per month were using Vancouver's port facilities; by 1929 that number exceeded 100.

Even more telling for Winnipeg's status as a grain shipment centre was that in 1921 about one million bushels of prairie grain was shipped via Vancouver; in 1928, an excellent year for the crop, the shipment was nearly 100 million bushels. "By the end of the decade," says Barman, "fully 40 per cent of Canada's grain exports were going through British Columbia, almost all of it via Vancouver."

The opening of the Panama Canal was not wholly responsible for Winnipeg's gradual or stagnant economic growth during the 20th century; among other factors, the federal government takeover of much of the grain industry after 1943, labour problems, as well as our winter weather also played their part. But in this case, the canal, a wonder of inventiveness and determination, did curtail the city's supremacy over the multimillion-dollar western Canadian grain economy and had significant consequences on Winnipeg's long term development -- and not in an especially good way.


Now & Then is a column in which historian Allan Levine puts the events of today in a historical context. His next books to be published in September are, Toronto: Biography of a City, and Miracle at the Forks: The Museum That Dares Make A Difference (co-authored with Peter C. Newman).

Republished from the Winnipeg Free Press print edition August 22, 2014 A13

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