From 1816 to the Present
The fishery remained the mainstay of the St. Pierre and Miquelon economy during the 19th century. Each summer the population would swell with the arrival of metropolitan Frenchmen fishermen. By mid-century, a fleet of two hundred schooners brought 4,000 French fishermen to the islands every year. Many were young men, graviers, who worked during the season at curing the catch on the "graves" or pebble beaches. The fish they produced was saltfish, destined for markets in the Caribbean and Europe. French bankers also made fish for domestic markets in France, where the "wet" cure was preferred.
This fishing industry developed a heavy dependence on Newfoundland for bait (herring, capelin and squid), which was bought in large quantities. In this way, the close links between the French islands and the nearby settlements on the Burin Peninsula and the south coast persisted. It was, however, an unpredictable industry. Production of salt cod peaked in 1886, only to slide into a decline which reached its low point early in the 20th century. In addition to fluctuations in production, the fishery at St. Pierre and Miquelon faced several other challenges after 1850. The Newfoundland Bait Act of 1887 seriously curtailed the bait trade.
The introduction of large steam trawlers made it possible for vessels to go directly to the Banks from France without having to stop at St. Pierre. But World War I disrupted these supplies, and a number of the businesses which serviced the fishery failed under these conditions. A major business merger saw three companies join forces in a firm called La Morue Française which would dominate the fishing industry until the Second World War. The construction of a large fish processing plant signalled the conversion from sun- and air-dried saltfish to artificial dryers. Nevertheless, as early as 1914, the islands had lost two-thirds of their trade and over one-third of their people, as residents drifted away to North America or Europe in search of work and economic stability.
After the war, the island economy benefited from government spending on harbour improvements and financial subsidies. A period of good fishing began in 1915 and persisted into the 1920s. Then, for a few years, came the unexpected windfall of the Temps de la Fraude. The year 1920 marked the beginning of the United States' experiment with Prohibition, during which the manufacture, sale or transportation of liquor was illegal. In Canada, individual provinces experimented with prohibition as well, but manufacturers were still allowed to distil liquor for export. In this situation, the French islands were conveniently located for receiving liquor from Canada and trans-shipping it to the United States. When a French law banning the import of liquor from foreign sources was repealed in 1922, the flow of booze through St. Pierre turned into a flood. Huge quantities of Canadian whisky, as well as Caribbean rum and French wines and spirits were delivered to specially-built warehouses in St. Pierre. American racketeers like Al Capone were regular visitors to the French islands.
The Temps de la Fraude brought an artificial prosperity to the islands. Fishermen abandoned their uncertain livelihoods and took up lucrative jobs unloading liquor from ships arriving from Canada, Bermuda or Europe and moving the cargoes to warehouses. Even the modern new fish processing plant was converted into a warehouse. Like every boom, this one ended as quickly as it began. In 1933 Prohibition in the United States ended. The distilleries pulled their capital out of St. Pierre, leaving only empty, deserted warehouses. The islands were thrown from prosperity to depression. When the Second World War broke out in 1939, over half the population was on relief.
War and Crisis
With war came a different kind of crisis. In 1940, German armies quickly defeated France and occupied the northern part of the country. A new French government was formed in the south — the so–called Vichy government — which was nominally neutral but in fact was subordinate to Germany. In St. Pierre, Governor Gilbert de Bournat remained loyal to the Vichy government, but the people faced a difficult dilemma. They needed the financial subsidies France provided in order to keep the islands' economy alive – it is estimated that France spent 40 million francs on the islands during the first half of the 20th century. On the other hand, General Charles de Gaulle had issued a call from London, England, to rally support for his "Free French" movement. Adding to the tension was the presence of the French fishing fleet, which had sought shelter in St. Pierre harbour rather than return to German-occupied France.
Moreover, Britain, the United States, Canada and Newfoundland were nervous about the dangers posed to North Atlantic security by St. Pierre and Miquelon so long as the islands were in the control of Vichy France. For instance, the St. Pierre radio transmitter was suspected of passing information about Allied shipping to German submarines. Fearing that the Americans or Canadians might act against St. Pierre, General de Gaulle secretly ordered Free French naval forces to occupy the islands late in 1941. This they did, to the chagrin of the US government, and there they remained until the war's end.
The End of the War: Returning to Tradition
When the war ended in 1945, the islands returned to their traditional way of life, based on the fishery. The French fishing fleet resumed its activities, and beginning in the early 1950s, they were joined by a growing number of other European fishing vessels drawn by the rich cod and herring stocks in the adjacent waters, and by the ability of St. Pierre to provide services such as repair, refitting and supply. Yet the inhabitant fishery remained handicapped by weak productivity associated with dated fishing technology and methods, aging processing facilities and, increasingly, declining stocks. The low per capita income meant that French government spending in local improvements, unemployment payments and other subsidies became ever more important to the economic well-being of the islands. In the mid-1960s the French subvention to the islands covered half the budget, and contributed to the reputation of the citizen of the islands as the world's "most expensive Frenchman".
Such bonds rule out any thought of joining Canada or the United States. When President De Gaulle offered French colonies everywhere complete political – and financial – independence, voters in St. Pierre and Miquelon chose overwhelmingly in favour of remaining a possession of France. Nevertheless, and despite this rejection of independence, the people have always exercised a sturdy independence of spirit, reacting sharply, even violently, when they believed their way of life was threatened by the decisions of the mother country. When a crisis over the political leadership of the colony erupted in 1965, causing France to rush in an armed force of gardes mobiles, the people protested with a three-day general strike at this interference in local affairs.
One advantage of maintaining ties with France is that St. Pierre and Miquelon have been able to capitalize on being the only "fragment of France in North America" by establishing a vigorous tourist industry. Visitors are drawn by the opportunity to experience all the elements typical of French culture: the language, the customs, and the cuisine. Some visitors arrive by air, but many take the short sea passage from Fortune, Newfoundland. In this way, the commercial and social connections which have existed between the French islands and the communities of the Burin Peninsula since the 17th century remain strong to this day. Another long-standing tradition which keeps those connections strong is the illicit traffic in liquor and tobacco from the French islands to Newfoundland.