The 1814 Treaty of Ghent, which ended the war between Britain and the United States, created the conditions for one of history’s great natural economic experiments.

On the west side of the Niagara River, colonial survivors of the War of 1812 got on with their lives in service of King George III. On the east side of the river, Americans returned to the dream of building a great republic. 

Nightmares of killing, pillaging and razing haunted everyone along the river equally, as the Niagara Region was the location for much of the fighting. Indigenous communities lived with an additional burden—dread, as British negotiators had done little to protect their First Nations allies from American expansionism and white supremacy. 

A few years into the peace, it was clear which economic system was going to dominate. John Howison, a Scottish writer and surgeon, traveled through Upper and Lower Canada between 1818 and 1820. He settled for a time in St. Catharines, Ont., a perch that allowed him to see what was happening over the border in New York. “There, bustle, improvement, and animation fill every street; here dulness [sic], decay, and apathy discourage enterprise and repress exertion,” Howison wrote in Sketches of Upper Canada, a travelogue published in Edinburgh in 1821. 

I considered leading this column with Howison’s observations of the glories of life in New York, while obscuring the source. Pretty sure I could have tricked at least a few of you into thinking it was an outtake from Shopify president Harley Finkelstein’s appearance at the Elevate conference in Toronto, where he discussed the state of Canada’s technology scene, calling a lack of ambition the “600-pound beaver in the room.”

Finkelstein obviously isn’t the first to make such an observation. 

William Cornelius Van Horne, the American railroader who was recruited to build the Canadian Pacific Railway, grumbled about Quebec farmers shipping hay to the U.S. rather than seeking to generate more value out of their land. “Exporting hay is a good deal like living off one’s own blood,” Van Horne told Prime Minister Wilfrid Laurier in a letter quoted by Valerie Knowles in From Telegrapher to Titan: The Life of William C. Van Horne.  

Van Horne’s sentiment is shared by another transplant to Canada who has become one of the country’s most important business leaders—Finkelstein’s boss, German-born Tobi Lütke, who said last month on economist Tyler Cowen’s podcast that Canada has a “go-for-bronze mentality, which apparently is not uncomment for smaller countries attached to significantly more cultural or just bigger countries.” 

Yet as my colleague Catherine McIntyre reported, Finkelstein’s comments caused a stir. Industry Minister François-Philippe Champagne, who worked in Europe as a corporate lawyer before returning home to pursue public service, endorsed the call for greater ambition. Others were annoyed. Uvaro CEO Joseph Fung called the suggestion “lazy and hackneyed.”  

It’s not hackneyed when it’s history. After the American Revolution, Britain lured loyalists north with promises of free land and low taxes. The catch was that the Crown discouraged land speculation, which, according to historian Alan Stanley, made it difficult for the most ambitious entrepreneurs to accumulate wealth. 

High labour costs were another barrier, as enterprising landowners had to offer wages that were more attractive than obtaining a patch of ground from the Crown. Therefore the most productive farmers and merchants tended to opt for the newly formed republic. “Upper Canada offered cheap land and paltry taxes, but the settler had to accept a lower standard of living than in the United States,” Taylor writes in The Civil War of 1812. “That prospect screened out ambitious men.”   

Peace between Britain and the U.S. hardened the border, setting the Americans on a path to continental—and ultimately global—supremacy. Meanwhile, the Empire effectively cut loose the First Nations that had helped it fight the U.S. to a draw, while its North American colonies became sources of raw materials for the Industrial Revolution. 

All of this matters. Business thinkers from Adam Smith in the 1750s to Andrew McAffee today have written about how we’re shaped by our built-in need to get along with others. We aren’t born ready to thrive. We learn from others as we go, inheriting their knowledge, norms and habits of mind. 

This socialization is reinforced by institutions. The relative lack of ambition that Van Horne observed in his time was influenced by Quebec’s history as an outpost in two successive empires. British overseers actively discouraged the risk-takers from settling in Upper Canada because they preferred docile farmers who had little interest in challenging the order of things. 

Over time, a penchant for docility within an economic structure built to supply Britain with raw materials compounded to create what the University of Waterloo’s Horatio Morgan calls “business leader myopia,” an unconscious tendency to emphasize safety in the short term over risky longer-term bets. 

Most Canadian executives have been conditioned by history to curb their ambition. Policies are created to reinforce those tendencies. Morgan argues that Britain’s harsh treatment of bankruptcy dulled the impulse to take financial risk in Canada, while American entrepreneurs could risk financial ruin without fear of ending up in jail. While Canada no longer runs debtor prisons, our bankruptcy laws tend to be more severe than those in the U.S. 

Finkelstein and Lütke are right about Canada’s general lack of ambition. Shopify’s success is an exception that proves the rule. Talking about it will help, but the answer probably rests with policy—ambitious leaders who are bold enough to break the wheel. 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.