Alcoholic capitalism: How rum fuelled Canada’s early economy

With health-conscious young people drinking less than ever before, it’s interesting to look back to an earlier century when Canadians consumed more liquor — a lot more, in fact.
According to my estimates, the average consumption of spirits in the 1700s was about 15 times higher than today’s figures. Between the 1720s and the 1830s, the colonies that would later become Canada were awash in rum. As I explain in my recent book, Canada in the Age of Rum, the spirit became deeply embedded in the economic life of early Canada. Cheap rum came pouring in from New England and the Caribbean, supplemented with local production from distilleries in Halifax, Québec City and Montréal. It mostly fed the hard-drinking workforces of industries like fish, fur and timber. Rum, labour and survival in the fisheries

In the 18th century, alcohol was considered good for the health and warming to the body: just the thing for people working outdoors in a cold climate. But that’s not the main reason that rum flowed into Canada in such prodigious quantities.
More importantly, it provided a solution to export industries’ chronic labour problem. Every spring, Newfoundland fishing skippers had to hire four or five men to catch, clean and salt-dry cod for shipment abroad. Since the pool of qualified fishing hands was small and competition for their services stiff, generous salaries were offered. The catch was that payment was deferred until the end of the season.
In the meantime, the boat master would supply the men with free room and board, plus as much rum as they desired. The latter was charged against their salary at four to four times the retail price.
Consequently, when it came time to settle accounts in the fall, many fishermen found they had drunk away their wages. Some had even racked up a negative balance and had to sign on for the next season to work off their debts.
Under-capitalized and indebted to their merchant-suppliers, fishing entrepreneurs would have gone under if they paid their crews in full, but alcohol conferred the magical ability to claw back wages and hold on to workers for the future. Drinking on the job Far from prohibiting drinking on the job, employers actively encouraged it, since the more the men drank, the less they had to be paid. A similar logic prevailed in the fur trade. The North West Company shipped hundreds of thousands of litres of rum every year from Montréal to destinations as far away as the Mackenzie River and the Pacific coast.
Some of this liquor was for Indigenous customers, but much was destined to slake the thirst of the French Canadian voyageurs who paddled the company’s canoes and manned its trading posts. In this industry, too, skilled labour was scarce and nominal salaries high, more in aggregate than the company could afford to pay.
Traders like Sir Alexander Mackenzie developed a policy of plying their crews with liquor during downtimes to cut costs and retain workers. This strategy was very effective. An 1805 ledger shows that 83 per cent of northern voyageurs were in debt to the company and that many signed on for another three years to pay for the overpriced rum they had already consumed. Alcohol and the fur trade Traders also found rum indispensable in their dealings with the Indigenous people who supplied them with furs. The fur trade was rarely a matter of direct barter. From the trader’s point of view, it was more a matter of exchange mediated by credit. Each fall, traders gave hunters the supplies they needed for the winter hunt, such as blankets, ammunition and pots. They kept a record of the debts incurred and expected the hunters to return with pelts of a corresponding value the following spring. It made perfect sense from a capitalist perspective: value for value according to an implied contract. Indigenous people saw things differently, however. For them, the exchange of goods always took place as part of a relationship of mutual support: gifts were a device to turn strangers into friends, as were hospitality, advice, protection and participation in ceremonies. If circumstances prevented a hunter from delivering as many pelts as expected, that was a violation of contract for the trader, but not for the Indigenous person. One does what one can in a spirit of alliance, without numerical calculations or rigid deadlines. Alcohol proved useful in bridging the gap between these divergent economic universes. After cultivating a taste for liquor in preliminary contacts, traders would present a keg of watered-down rum when hunters accepted goods “on credit.” Another keg would be gifted when they returned to pay their “debts.” In between, a trader might distribute drinks as an incentive to be more productive. Rarely was alcohol treated as merchandise for sale. And despite enduring racist stereotypes, Indigenous people drank less liquor than the non-Indigenous. The hidden cost of a rum-soaked economy Alcohol played a vital role in making capitalism work in 18th-century Canada. It was used in an effort to make Indigenous people conform to the ways of the global market and to ensure a supply of cheap labour at a time when workers were scarce. Huge quantities of low-cost rum made all this possible, though it did exact a social cost in widespread drunkenness, lethal accidents, violence and spousal abuse. Today’s capitalism thrives on other addictions, especially consumerism fuelled by digital media, while alcohol’s empire seems to be declining.

Allan Greer does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.