Introduction

It is commonly accepted that well-functioning capital markets are a key to economic development and growth, yet our knowledge of capital markets in historical times is very limited. Recent research has begun to characterize the nature and evolution of stock markets in England, France, and the United States and, to a lesser extent, the markets and institutions that had a direct impact on large numbers of people such as credit cooperatives and mortgage markets. This chapter contributes to the latter literature by examining the mortgage market in the Niagara District of Upper Canada (now Ontario) in the first half of the nineteenth century.

Through this period banks were the only financial intermediaries, and their lending was restricted to “real bills,” and their clientele therefore limited to the commercial sector. In the large agricultural and smaller industrial sectors, credit was limited to direct transactions between borrowers and lenders, and the resulting decentralization has made it difficult to collect data to determine the nature and extent of the credit market. However, Upper Canada had a land registration system that required registration of mortgages, providing a rich source of information on one piece of the credit market. This chapter summarizes the evidence on three aspects of the mortgage market: the extent of mortgage indebtedness; the characteristics of the market – who lent how much to whom and, in particular, the extent to which borrowing was internal (lenders came from the Niagara District) or external (lenders came from elsewhere in Upper Canada, Lower Canada, the United States, or the United Kingdom); and the rationale for mortgage borrowing.