Ontario's Niagara Falls, 1887-1929: Reversing the Privatization of Hydro

Article excerpt

From 1887 to 1929, the binational Niagara Falls supported tourism and power generation in Ontario. Something went wrong with the private hydro development on the Canadian side of the falls, however. This article shows that when private hydro utilities (who had been allocated public water rights to the falls) created conditions of regional industrial backwardness in Ontario because they found exports to US industry more profitable, the state, pressured by municipal movements, intervened to reverse privatization of hydroelectric development and to strengthen export regulation. This archival study demonstrates that asymmetrical political and trade relations between Canada and the US can be overcome.

De 1887 à 1929, les chutes Niagara binationales ont desservi l'industrie touristique et produit de l'énergie. Mais des problèmes surviennent avec l'aménagement hydroélectrique privé sur le côté canadien des chutes. Le présent article montre que lorsque les services hydroélectriques privés (qui avaient obtenu les droits d'eau publics des chutes) créent des conditions régionales de retard industriel en Ontario parce qu'ils trouvent que les exportations vers les États-Unis sont plus payantes, l'État-à la suite de pressions faites par les mouvements municipaux-intervient pour rescinder la privatisation du développement hydroélectrique et pour renforcer les règlements sur l'exportation. Cette étude archivistique démontre que les rapports politiques et commerciaux asymétriques entre le Canada et les États-Unis peuvent être compensés.

What went wrong with private hydro development at Niagara Falls from 1887 to 1929? At Niagara Falls, developers of a transnational hydroelectric infrastructure stifled industrial growth in Ontario and, instead, strengthened it in New York State. The industrial growth that did occur in Ontario was not of the type and quality anticipated by theorists, engineers, utility executives, and politicians. Ontario's dependence on technology transfers, importation of entrepreneurs, and reliance on US capital showed less industrial autonomy than had been assumed (Keefer 1899; Dales 1957).

The early Niagara experience casts doubt on another assumption currently strong among Canadians and their provincial governments: that water-power rights and electricity generation should be left to the private sector. In 1899, in order to start repatriating and later nationalizing the Niagara power necessary for the progress of Ontario manufacturers, local governments at Niagara were soon forced to reverse their 1887 allocation of water power from the falls to private, US-owned, profit-seeking utilities. The Niagara case constitutes the first major reappropriation of formerly privatized water powers, for in the 1960s British Columbia, Newfoundland, Quebec, and Manitoba followed Ontario by nationalizing their hydro utilities.

Part of the reason of this shift from private to public power was the private power companies' failure to transmit power to the small manufacturers in southwestern Ontario towns. The formation of the publicly owned Ontario Power Commission (Ontario Hydro), allowed small manufacturers to convert their factories from American-coal-fuelled steam engines to industrial electric motors. By 1910, the provincial government belatedly began bridging the transmission gap. The federal government, which controls export policy, reversed its original view that power could be treated as other exports and began to advocate that electricity exports be stopped. The threat of having Ontario water power absorbed by US industry resulted in the 1907 Exportation Act. However, the act was insufficient to repatriate power needed for Canadian war industries between 1917 and 1918. As a result of the repatriation crisis, a temporary consensus developed in power policy: electricity, Mackenzie King emphasized in 1929, "shall be utilized within the Dominion to stimulate Canadian industry and develop natural resources" (Grauer 1961, 261-62). …