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Staying Alive
A Short History of Guelph-Wellington Business, Part 2

by Ken Montague

(published in the Wellington Business Digest, Vol. 1, Issue 5, April 1985)

The Guelph area has always had to contend with the older, larger, and wealthier centres which surround it.  When the neighbours spent serious money in support of their business activity, Guelph had to respond with its limited resources or else accept decline.  It has usually managed to scramble well enough to keep up.  However, for Guelph to prosper, rather than just survive, it needed some advantage which the neighbours couldn't bypass or get for themselves.  Despite some admirable attempts to gain such advantages, Guelph has not been able to hold on to many for very long.  Opportunities have often been exploited and then lost or counteracted, leaving an increased population which was just a little too large to be supported by the remaining business activity.

In 1840, Guelph secured a big advantage for itself by becoming the administrative centre for a new District of Wellington, which extended all the way to Georgian Bay and Lake Huron.  Formerly, everything had been done from Hamilton, but now Guelph would gain the administrators' salaries and the trade brought by those forced to come on official business.   A professional community would grow to service those same visitors.  The outrage of our western neighbours was apparently very satisfying.

Unfortunately, and typically, such gains for Guelph were soon partly counteracted by continuing efforts to dismantle the huge District.   Owen Sound quite sensibly thought that it should handle the far north.  The town of Galt, then our chief rival, thought that it should have its own district running within three miles of Guelph itself.  Galt didn't get its way, but the district was indeed broken up.  In 1852, Waterloo County was hived off with Berlin (Kitchener) as the county seat, and Owen Sound took over Grey (with Bruce) County in 1853.  The oddly shaped remainder was pretty much our present Wellington County.  Wellington's unwieldy form has meant that a place like Clifford, in the northwest corner, is closer to six other county seats than it is to Guelph.

The trade from the outlying townships was lost to the new administrative centres, and some of Guelph's professional people had to go with it.  If this seems a small matter, one must remember that Guelph had fewer than 3,000 people until the 1850's.  Small matters mattered indeed.

The little band of Guelphites faced a larger problem, however, when the town of Galt began to raise money for a branch of the Great Western Railway from Hamilton.  Guelph would lose much of its commercial function if it didn't get a line of its own.  Trading on the Toronto-Hamilton rivalry, Guelph leaders promoted a branch of the Grand Trunk Railway from Toronto to Guelph.  Initial investment was raised mainly through the selling of debentures by Toronto, Guelph, and municipalities in between.  To gain an 'edge', it was also planned to run a line to Galt, so that Guelph could benefit from being in two railway systems and from price competition between them.

Once it was clear that the lines were coming, Guelph boomed.  Land worth 300 in 1851 sold for 1,800 to 2,700 in 1855.  Speculators in the know bought and subdivided land around the proposed station sites.  New factories and quarries were opened.  Guelph would profit from being the most northerly railway town in western Ontario.  It seemed too good to be true and, unfortunately, it was.

The Grand Trunk arrived in 1856 and the initial boom promptly collapsed, taking with it those new firms which were undercapitalized.  It also became clear that a line brought in at one end of town could be carried out the other, making Guelph a place on the way to some place else.  Still worse, the railway systems decided not to compete and indulged in a little price fixing, finally amalgamating altogether in 1882.  Guelph was faced with a monopoly's pricing and escape was impossible until the late 1880s, when Guelph, by itself, built a line to the newer C.P.R. at Campbellville.  Worst of all, a line which would become part of the C.P.R. was built from Toronto to Elora and Owen Sound in the '80s, and another branch went through Galt to St. Thomas, draining the south.  Guelph's commercial importance was over, but it would at least survive.

Guelph turned to industry for its salvation. Early industries were small firms which supplied area farms and handled their produce.  After the railway boom, larger and more mechanized factories came to perform the same functions, but real change started with firms which did not so much serve the area as sustain it by selling to national and international markets.  Among the better known of these:  the James Goldie Co. Ltd. (milling, etc.); the Raymond Sewing Machine Co.; McRae & Co. (textiles); and the Bell Organ Co.  These firms came in the 1860s and brought capital and skilled workers with them.

The Board of Trade, also founded in the 1860s, actively sought industries to come to Guelph.  They themselves promoted and sold stock in an agricultural implement factory.  They urged civic improvements to bring custom and subsidies to bring manufacturing.  Guelph was determined to share in the industrialization which grew behind tariff walls erected in 1859 and raised in 1878.

These efforts increased after the turn of the century.  There were higher bonuses for new manufacturers, large scale direct subsidization, and enormous involvement in municipal ownership and investment.  Cheap hydro-electric power was brought in; water, sewage, gas, and other services became city-owned; the street railway was taken over and expanded.  One can see that industry was picking up the economic slack by the fact that between 1881 and 1911, a period when the population grew by only 2,300, there were 1,331 new industrial workers.  Guelph was envied and carefully studied by other cities.

However, trouble had to come and it did.  For example, an Industrial Dept., set up in 1910, had brought in 16 new industries by 1914, but by 1919, 10 of the 16 were either out of business or gone elsewhere.  In the Guelph Historical Society's History of Guelph 1827-1927, author Leo Johnson lists four causes for the difficulties.  Most obviously, the costs of acquiring and running city services was ruinous. To add to the burden, large companies in trouble had to be propped up by direct subsidy.  More familiar is the fact that the wealthy neighbours could woo away those firms who had come only because of the bonuses, tax rebates, and artificially low-cost utilities.  More generally, small centres were also losing firms to the dramatic amalgamations which began around 1908.  Guelph markets could be served more cheaply from giant factories in Toronto, so why keep a small facility here?  The trouble with railway lines is that the trains can run both ways.

Guelph lost some of its largest manufacturers to consolidation.  The Raymond Sewing Machine Co. was sold to a U.S. firm and by 1922 only a distribution network remained.  The Bell Organ Co. disappeared in the 1930s, absorbed into what had been its British branch.

To top things off, somebody decided to hold the Great Depression.  When it was over, Guelph was very aware that it had survived on small, locally owned industry, the salaries of government administrators and employees of such institutions as the Reformatory and the agricultural and veterinary colleges.  As a result, Guelph became mistrustful of large firms and developed an almost religious fervour for diversification.  It would never again become dependent on large concerns or even on any one segment of the economy.  Attempts at really large-scale expansion were abandoned.

Guelph drifted into making a virtue of seeming necessity and lauded the stability of a slow, careful growth.  It became insular and given to strange illusions about how well it was doing.  Next time, we'll look at the slow climb back to the edge of considerable business opportunity.


Part 1 Thin Air and Lots of Money
Part 3 The Price of Independence


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