Abstract

"When Wall Street met Water Street: Political Economy, The Newfoundland Railway Company, and Newfoundland’s dance with United States Capital in the late-Nineteenth Century"

Scott Eaton, Queen's University (Kingston) (scott.eaton@queensu.ca)

In 1881, Newfoundland’s colonial government committed to modernizing its infrastructure, contracting an American syndicate, the Newfoundland Railway Company (NRC), to build a trans-insular railway. Part of the logic informing the contract was a mounting pressure from the island’s residents demanding that the local legislature diversify the local economy; indeed, the railway was envisioned as a modernizing tool through which Newfoundland would overcome its reliance on the extraction of cod, moving towards mining, forestry, and agriculture. However, the realities of Newfoundland’s nineteenth-century political economy constrained how the legislature could proceed with railway construction, as the island conscripted minimal revenue from its customs taxes, London refused to guarantee any loans for railway purposes, and direct taxes had been exceptionally unpopular amongst fishers. Without adequate revenue or imperial backing, Newfoundlanders soon became aware of the realities of American business and financial markets. The NRC and its property quickly became party to myriad litigations (from the Court of Chancery in New Jersey, to the JCPC in London), and by 1884 the NRC was bankrupt. This history requires a nuanced appraisal: what about the partnership between the Newfoundland government and the NRC led to such an abysmal failure? Recently, Richard White has argued that for many railway corporations emerging in Gilded Age United States, “profit came less from selling goods and services than from financial maneuvering involving the securities of the firms.” This paper draws on White’s framework, applying it to a settler colony that has remained outside of the purview of most historians. Drawing on business contracts and legal documents, it argues that Newfoundland's economic realities shaped a contract with the NRC that permitted a potential source of tax revenue to abscond to the USA, and for the type of financial maneuvering identified by White to happen beyond the purview of Newfoundland's residents.