3. Profitability

The period between 1849 and 1856 was one of increasing prosperity for the St. Lawrence region as a whole, a growth in which the passenger trade shared. With price competition on the north shore of Lake Ontario and the upper St. Lawrence virtually eliminated, the number of vessels operating in the trade became the more important variable. This swelled from nine to twelve between 1850 and 1852 but had been reduced to seven by the end of the period. The declining number of steamboats involved in the trade enabled the returns per vessel to increase even more dramatically.

This phenomenon was more evident in the mail than the troop contract. Between 1847 and 1853 the value of the mail contract had only risen marginally. However, the 1852 season had seen the £6807 split eleven ways for a return per vessel of about £620.(47) The following season the same sum was divided into only eight shares, while the year after that a 30% larger contract was worth almost £1000 per participating vessel.(48) These sums were independent of the smaller amounts earned by individual vessels able to operate for a few days prior and subsequent to the period of the official contract. Although the value of the mail contract grew, that of the troop contract would have remained fairly constant as only for the routine rotation of the British garrisons in Upper Canada was it invoked. Nevertheless care was still taken that no proprietor should derive special advantage from this source.(49)

Although the Lake Ontario line of freight steamers operated by Hooker and Holton and their successors must have reduced the amount of packaged freight the Royal Mail-Through Line group carried, the passenger trades held up well. Immigration in particular, maintained relatively high levels. While the average number of immigrants per year between the 1841-49 and 1850-55 periods increased slightly, the former average had been distorted by the anomalous season of famine migration. The 1850s witnessed a stronger , steadier flow. Reports of those scouting for the Grand Trunk in 1853-54 indicated a steady movement of about 200 passengers a day.(50) Indeed, at the peak of the 1854 season complaints were heard that insufficient steam vessels were being made available to move the human mass.(51) Such declarations tend to attract opposition; indeed they were intended to do so. It is a measure of the strength of the cartel that it survived and that it kept the competition at bay in the short run. The general volume of business and tourist traffic appears to have increased during these years although the amount of Canadian tourist traffic remained relatively low.(52)

With regard to prices the actions of the cartel were strictly defensive. Nevertheless, passenger rates were stabilized at lower levels than had prevailed in the 1840s, thanks in part to the elimination of transhipment points on the river. Whereas in 1845 a through cabin fare from Montreal to Toronto would have cost $13 and to Hamilton yet another dollar, by 1849 the regular through rate to the further port was only $10.(53) Six years later this rate still held.(54) Perhaps as well as any other series of figures the drop in the regular passenger fares demonstrated the savings to the consumer from the improvements in the St. Lawrence canals.

Although the exodus of both the forwarding partnerships and Bethune's firm might appear to contradict this portrait of rising prosperity, this is not necessarily so. It is generally argued that the forwarders, D.L. Macpherson and Luther Holton in particular, were reacting, not to short term conditions, but to the long run prospects of competing with the Grand Trunk for the region's freight trade.(55) While this appears to reinforce the notion of short run prosperity in the steamboat trades, the fate of D. Bethune & Co. is less positive. When its affairs were wound up in 1855, liabilities were discovered to exceed assets by upwards of £7000. But, had Bethune neither absconded with £4000 nor defaulted on his capital payments it was thought the firm would have been solvent.(56) Moreover, unconfirmed reports cast aspersions on the honesty of Bethune's chief lieutenant, George B. Holland, who had taken over the management of the company. Consequently, one is inclined to suspect management ethics rather than a hostile business environment led to the demise of this "unfortunate enterprise".(57)

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Chapter 5 appeared in FreshWater.