Our Healthiest Industry?

“Smuggling on the Canadian border.”
“Counterfeiting gang caught.”
“No escape from bloody mafia.”
“Big drug seizure.”
“Police hold six men for questioning in gang slaying.”
“Canada in the bookies’ web.”

We have become more than accustomed to the urgent and incessant headlines about organized crime. In the last year, for instance, we have learned that Afghanistan is the world’s largest producer of opium, hundreds of Mexicans are murdered every month as a result of the cannibalistic drug trade, millions of dollars of impeccable counterfeit goods produced in Asia are sold worldwide, thousands of women are lured into the sex trade by eastern European mobsters, identity theft is the fastest emerging organized crime in the United States, internet hacking is eclipsing armed robberies as the modus operandi for criminal bank robbers and the Neapolitan Camorra has become a greater threat to Italy than the Sicilian Mafia. Moreover, we have learned recently that Canada is a consumer, producer and international conduit of illegal drugs, a branch plant for some of the largest criminal groups in the world, a washing machine for dirty money, a destination and transit point for human cargo being smuggled into North America, an eminent source of counterfeit currency, credit cards and consumer goods, and the headquarters of numerous telemarketing fraudsters who prey on innocent victims.

But what if I told you that the headlines reproduced above were actually gleaned from Canadian newspapers published in 1865, 1900, 1905, 1920, 1934 and 1938, respectively?

On the surface, those headlines seem to belie one of the most enduring and endearing of all Canadian myths: that the historical development of this country was relatively free of crime and lawlessness, especially when compared to our American cousins.

A closer look at the history of Canada reveals something startling different: more than 400 years of organized crime, beginning with pirates who plundered ships and towns off Newfoundland’s coast in the 17th and 18th centuries, and smugglers, bank robbers and horse thieves in the Canadian west in the 19th century, opium traffickers, Black Hand extortionists and “white slave” traders during the early 20th century. It covers Canadian bootleggers who provided more than half of the illegal booze consumed by a dry America during Prohibition, Quebec- and Ontario-based bookmakers who laid off bets as part of continent-wide bookmaking operations beginning in the 1930s, right up to the Italian mafia, outlaw motorcycle gangs, Chinese triads, Russian mafia and Colombian cocaine “cowboys” of the last 50 years.

It was once famously said that societies get the crime they deserve. If that is the case, what does Canada’s rich historical tapestry of organized crime say about the country and its people? What are the factors that have given rise to this bountiful cornucopia of criminal groups? And how does Canada combat a problem that has become increasingly widespread, sophisticated and culturally ingrained?

A bit of history first.

It can be said that the first criminal organizations in what is now Canada were pirates who operated off the Atlantic coast, using Newfoundland as a base during the 17th and 18th centuries. Pirates first targeted fishing vessels operating off the Grand Banks and in subsequent years sailed to the British colony to repair, pick up supplies and conscript seamen. Soon Newfoundland’s main draw for pirates was as a staging area for excursions into the more profitable waters of the Caribbean and South America. During the late 18th and early 19th centuries, Nova Scotia produced some of the most successful war-time privateers in the world. Privateers were essentially pirates who were issued licences by the government of their country to rob merchant ships from enemy countries in times of conflict. During the War of 1812, it was the privateers who were the principal line of defence that prevented the Maritimes from becoming the property of America.

By the mid 19th century, the frontier outlaw carried on the organized criminal tradition of the sea pirate. In Canada, the most fabled desperado groups were the Markham Gang, the Campbell brothers, the Big Muddy Mob and the McLean brothers. Like pirates, these bands of highwaymen were predatory in nature, robbing trains, stagecoaches, banks, hotels and cattle ranches. Theft, assault and murder were not uncommon occurrences in the settling of Canada and at various times, whole towns and regions lived in fear of violent gangs. The “spread of crime in the rural districts of this province is daily more alarming,” warned a February 6, 1846 article in the Toronto edition of the usually staid British Colonist. “We hear of gangs of horse thieves, and of burglars of every description, prowling about the country in organized gangs, and the peaceable inhabitants have to guard themselves and their properties against the nocturnal depredations of these bandits.”

Another form of piracy began to embed itself in Canada in the mid 19th century: counterfeiting. Based on police and media reports, currency counterfeiting in this country appears to have begun in earnest in the 1850s and, for many years following, Canada would be a significant source of U.S. counterfeit cash or “green goods.” When counterfeiters were arrested in Sherbrooke, Quebec, on August 1, 1854, government authorities found a printing press, 26 platters for paper money, a 365-kilogram machine for stamping gold and silver coins, various engravers’ tools, 24 moulds for running hard-money dies and thousands of dollars in fake cash. Following the arrests, the New York Times trumpeted, “this is probably the most important arrest of the kind ever made on this continent.”

Canadian counterfeiters did not restrict their fraudulent infringements to currency. In the late 1890s, members of the American Music Publishers’ Association blamed “Canadian pirates” for producing “spurious editions of the latest copyrighted popular songs.” Literary giants of this era were also victimized by Canadian publishing pirates: Mark Twain was forced to file a civil suit in Canada after it was discovered that cheap, unauthorized editions of his books were being published and sold in this country.

Thieving from the tenderloin citizen was a mainstay of organized criminals, but they quickly learned that more money could be made by providing goods and services to the public that were in high demand but were prohibited or excessively taxed by the government. In Canada, the main device for this was smuggling. And perhaps no other country has as many conditions in place that are conducive to a vibrant smuggling trade as Canada: this nation has thousands of kilometres of poorly enforced coastline—not to mention thousands of kilometres of unguarded border with the United States of America, the largest supplier and consumer of drugs and contraband in the world. Uniquely, Canada has a large concentration of its population living within a short distance of that border, thereby providing a convenient marketplace as well as a sympathetic and skilled labour pool from which to draw smugglers and black marketeers.

Illegal imports into Britain’s North American colonies soared throughout the 1700s to around 1815 due to the precipitous increase in duties that Great Britain continuously imposed on goods imported into the colonies. The stifling tax impositions would become an economic noose around commerce in the British protectorates and, as a result, according to criminologist William Chambliss, “smuggling activities promoted an institutionalization of crime in the colonies in order to ensure their commercial survival.” While the American colonies ultimately responded to Britain’s heavy-handed mercantilist policies by dumping cases of British tea into Boston Harbor and then rebelling against the unjustness of taxation without representation, the expression of defiance by the mother country’s subjects north of the 49th parallel was more subdued—they simply evaded the taxes by bringing in shiploads of contraband. Customs historian Dave McIntosh goes so far as to say, “the only reason Canada and the Maritime colonies did not join the revolution was that they were expert smugglers and consequently were not as enraged by customs duties as were the Americans.”

By the end of the 18th century, the contraband market in the Maritimes was so large that illegal imports now surpassed legal landings. In their 1908 book The King’s Customs, Henry Atton and Henry Hurst Holland estimated that contraband consumed in the Maritimes during this time made up “nearly all the tea; three-quarters of the wine; nine-tenths of the spirits; seven-eighths of the soap and candles; most of the indigo, starch, mustard, tobacco and cottons; and all the nankeens, sailcloth, cordage and anchors.” In the 19th century, tobacco products became the most popular contraband in Canada, due to the imposition of an import duty to protect Canadian cigarette manufacturers. In February 1865, a 50 percent tariff on opium imported into the colony of British Columbia was imposed, far exceeding the usual 12.5 percent applied to most other imports. The substantial tariff prompted the widespread smuggling of opium into Canada, helping the legal substance take its first baby steps into the nether region of the criminal underworld. Less than a few months after the tariffs were imposed, colonial customs officials in British Columbia began making seizures of contraband opium, most of which was being smuggled aboard steamer ships from Hong Kong or San Francisco.

Indeed, even today’s scourge of human smuggling has its precedent in Canadian history as thousands of illegal Chinese were surreptitiously brought into Canada en route to the U.S. in the latter years of the 19th century. In 1884, law enforcement authorities in B.C. captured 14 fishing ships engaged in human smuggling, each one realizing “handsome profits for their owners,” as the New York Times put it. “As high as $80 per head for women and $80 for Chinese men are now paid to Captains of boats for running them across the boundary line.”

Following its enactment of national prohibition laws in 1920, the United States would be supplied with illegal booze from a diverse number of countries. Canada was by far the greatest source, outstripping all other countries combined. Estimates of Canada’s share of the U.S. contraband liquor market ranged from 60 percent to 90 percent. Bootlegging became a country-wide industry in Canada, employing tens of thousands of people. Canadian distilleries and breweries regularly dealt with some of the most infamous gangsters in the U.S. and were behind the largest smuggling operations ever carried out across the border. It was not just the liquor producers, smugglers and American gangsters who got rich off Prohibition, however; the Canadian government’s annual liquor-related revenue increased from $8.5 million in 1919 to $49.8 million in 1928. By the fiscal year ending March 31, 1928, approximately one eighth of all federal revenue was derived from the trade in alcoholic beverages. (Unsurprisingly, Ottawa stubbornly refused to seriously combat the smuggling problem, despite the constant entreaties from Washington.)

During the 1950s and ’60s, Canada became a major conduit for heroin smuggling from Europe to North America. Quebec’s cultural, commercial and linguistic ties to France (the world’s biggest producer of heroin at the time), the subservience of the Mafia in the province to the American Cosa Nostra, as well as Montreal’s inviting seaports and close proximity to New York, made the city a major entry point for heroin being shipped into North America. Fuelled in part by the rise of drug-friendly counter-cultures such as the beatniks and the hippies, marijuana, hashish and cocaine were also regularly illegally imported into Canada. This country’s role as a conducive intermediary in the international drug trade has only intensified in the new millennium. According to the U.S. State Department’s 2002 International Narcotics Control Strategy Report, “heroin, cocaine, and MDMA (ecstasy) are trafficked through Canada, as international drug traffickers take advantage of Canada’s proximity to the United States, less stringent criminal penalties as compared to the U.S., and the constant flow of goods across the U.S.-Canada border.”

Canada also has an established history as a drug-producing country, starting in the late 1800s when British Columbia emerged as a domestic and international source of recreational opium. Between 1870 and 1908, Chinese merchants opened a number of factories in Victoria and B.C.’s Lower Mainland to convert raw gum opium into the smokeable form. By the 1880s, British Columbia was the main North American importer, producer and exporter of opium. Beginning in the 1970s, outlaw biker gangs, such as Satan’s Choice, the Outlaws and Hell’s Angels, became famous for producing “Canadian Blue,” considered the best downer available on the black market. By the 1990s, there were thousands of marijuana “grow-ops” in the country, a phenomenon that began in B.C. but quickly spread across the country. In recent years, Canada has not only become self-sufficient in cannabis; it has become an exporter to the United States. Today, marijuana production has become what the RCMP calls “a staple for all crime groups” in Canada. Synthetic drug production was reborn in the late 1990s as police began discovering clandestine laboratories producing ecstasy and crystal meth.

During the post-war years, Canada stepped up its role as a conduit for undocumented immigrants, primarily from Asia, who were illegally entering the United States. It has also become an international centre for telemarketing fraud and the counterfeiting of currency, bank cards and digital entertainment products.

In addition, there is evidence that Canada has become a centre of operations for some transnational crime groups. Since the return of Hong Kong to China in 1997, Chinese crime groups have shifted resources, people and certain criminal activities to Toronto and Vancouver. Canada also has the highest concentration of Hell’s Angels chapters in the world. Hell’s Angels are unprecedented in the annals of Canadian organized crime in that they are the first truly national criminal organization, with cells or associates in every province and territory. Outlaw biker gangs also join an elite group of criminal fraternities—including Chinese triads, South American drug cartels and eastern European crime groups, to name just a few—that have become international in scope.

The proliferation of criminal groups in Canada really began in the early 1970s and gathered speed in subsequent decades. In its 2007 annual report, Criminal Intelligence Service Canada estimated there were 950 known organized crime groups in the country, an increase of nearly 20 percent over the previous year. The vast majority of these groups (80 percent, according to the CISC) are involved in the illegal drug trade. In British Columbia alone, the estimated number of organized crime gangs has more than doubled in recent years—from 52 in 2003 to 108 in 2005. In a public speech, the assistant commissioner of the RCMP in that province said that limited law enforcement resources mean that “only 30 percent of known organized crime groups can be targeted every year.”

There is no one reason accounting for the rise in organized criminal groups in this country. Some argue that Canada’s relatively lax criminal laws are to blame, although this line of reasoning is undermined by a similar proliferation in other countries with much more punitive criminal justice systems, such as Russia, the United States or China. Globalization has certainly increased opportunities for criminal groups in Canada, which now export much of their drugs and other contraband to the United States. Emerging technologies, such as the fax machine, email and the internet, have ­broadened the international reach of Canadian telemarketing fraudsters, who often prey on American seniors. No doubt the large-scale demand for premium Canadian illicit products, such as the highly coveted “B.C. Bud” marijuana, has played a strong role. And the influx of highly sophisticated and international criminal groups into Canada has also increased this country’s position as a global epicentre of illegal drug production, currency and credit card counterfeiting, product piracy and telemarketing fraud.

Government policies have also historically been a catalyst for the creation and persistence of illegal drug and contraband markets, whether they have been the prohibitive taxes imposed by the British government on tea and other necessities of colonial life starting in the 18th century, the outlawing of gambling in the 19th century, the criminalization of drugs beginning in the early part of the 20th century, the failure of Prohibition in the 1920s, hikes in cigarette taxes during the 1990s or the outlawing of the “world’s oldest profession,” which predates Confederation by centuries. Prohibitionist policies help create underground markets, and, regardless of the commodity, there is a common pattern in the criminal organization of these illicit industries. The earliest stages are characterized by pure competition, with a large number of individuals and small groups operating relatively autonomously. Eventually, oligopolies are formed as small operations consolidate under more successful criminal entrepreneurs or well-established criminal groups, which capitalize on their existing capacities, networks and economies of scale while driving out smaller groups through intimidation and violence.

The smuggling trade also accentuates the realization that organized crime is a reflection of the broader economic, political and social forces of Canada. Underground markets embody the principles of the free market system and, in fact, are a capitalist’s dream: an unfettered market with no government regulation. The massive crossborder traffic in both legal and illegal commodities simply reflects (and takes advantage of) the massive trading relationship between Canada and the United States.

Similarly, the multi-ethnic character of organized crime is a reflection of the multicultural nature of Canadian society. This is aggravated by historically rooted institutionalized racism in Canada (and the United States) whereby certain racial or “ethnic” groups—the Irish, Jews, Chinese, Italians, Hispanics, Jamaicans, aboriginals—have been serially shut out of legitimate economic opportunities en masse and therefore have turned to the underground economy to eke out a living. In the mid to late 19th century, Irish immigrants were the first to form street gangs in the United States. In Canada, the notorious “Shiners,” a group largely made up of Irish labourers who were relegated to second-class status as the English and Scots assumed most positions of power, terrorized eastern Ontario in the 1830s under the corrupt leadership of timber baron Peter Aylen. By the early 20th century, the Irish gangs were eclipsed by more sophisticated Jewish criminals who dominated such organized rackets as gambling and drug trafficking, particularly in Montreal where anti-Semitism was rife. Around the same time, Chinese merchants in British Columbia were the leading purveyors of opium, gambling and prostitutes. Their clientele were the plebeian Chinese immigrant labourers, who found refuge in such vices in the face of constant racial hatred, ethnicity-based herding, violence and legislative disenfranchisement by the white population. The era of Prohibition and the post-war years witnessed the rise of the Italian mafiosi, many of whom emerged from the poverty-stricken Italian slums of such cities as New Orleans, New York, Toronto and Montreal. By the 1970s, Italian-American crime groups were in decline, with the resulting void being filled by other more recent arrivals, including Hispanics, Vietnamese and Russians.

Social critics in both Canada and the United States increasingly view organized crime as a product, not of immigration per se or other international influences, but of social, political and economic cleavages within North American society itself. The post-war political economy has helped forge the structural preconditions for spatial concentrations of crime and the root causes of criminality in most larger cities by fuelling socioeconomic disparities and the concentration of poverty and other social problems within certain neighbourhoods or groups.

This spatial concentration of poverty has important repercussions for the factors that give rise to criminal and violent behaviour. In their 2004 study for Statistics Canada, entitled Neighbourhood Characteristics and the Distribution of Crime in Winnipeg, Robin Fitzgerald, Michael Wisener and Josée Savoie examined crime data at a neighbourhood level in this prairie city. Their findings indicate “that crime was not randomly distributed across cities,” but rather “concentrated in the city centre and highly correlated to the distribution of socio-economic and land-use characteristics.” Approximately 30 percent of reported property crime occurred in 7 percent of neighbourhoods, while 30 percent of reported violent crime incidents occurred in 3 percent of Winnipeg’s neighbourhoods.

The recent rise in gang-related crime, fuelled by a growing underclass of disenfranchised young men of colour from impoverished inner cities and Native communities, refutes another of our self-aggrandizing Canadian parables: that we take care of those who are the most vulnerable and least powerful in society, including children and youth who are highly susceptible to those social factors that can propel them onto an unrelenting criminal trajectory.

In attempting to stem the growth of organized crime in this country, governments can no longer slavishly pursue failed policies, such as the war on drugs, while ignoring viable and proven alternatives. There is no scientific basis to the ­prohibition/enforcement model that currently dominates. Given the billions of dollars spent on the criminal justice system every year, governments should discern, through rigorous scientific methods, which approach delivers the greatest net benefit to society (or at the very least results in the smallest net cost to society). This means comprehensively calculating and comparing the costs and benefits of prohibition and enforcement against alternative models, including legalization and regulation.

Primary use of the criminal justice system loses in any such calculation, first because it is almost entirely reactive, and second because it only addresses the symptoms of much deeper social problems. In other words, the one institution that Canada places at the forefront to combat crime is incapable of preventing, in a proactive manner, the causes of the problem that is the focus of its attention.

Legalizing illegal drugs is another oft-cited approach, but one would be naive to think that this policy would entirely eliminate this market. As they did with liquor, cigarettes and gambling, resilient and innovative professional criminals would surely find a way to maintain market share by working around the inherent limitations of such government policies. Legal drugs would inevitably be accompanied by a government tax, to help feed the state’s voracious appetite for revenue, which would sustain a lower-priced underground market. (A pattern has already been set in the area of medicinal marijuana. While Ottawa pays its licenced suppliers $328.75 per kilogram, those with prescriptions to purchase small amounts from the government end up paying the equivalent of $5,000 per kilogram—a 1,500 percent premium. Thus, those with medicinal marijuana prescriptions often turn to the underground market for cheaper and higher quality pot.)

With that said, policy makers must give at least some consideration to the legalization of certain consensually traded products and services that are in great demand, but are prohibited by the state. It is increasingly difficult for governments to justify allocating vast resources to chasing after pot dealers or bookies, while white collar fraudsters who wipe out the life savings of innocent retirees receive only a modicum of attention from the criminal justice apparatus.

What is required most essentially is a policy that strengthens those institutions that can truly have a deep-seated impact on the root causes of the problem. These institutions include the family, the community, schools, the labour market, the non-profit sector, the healthcare system, faith-based groups, and cultural and recreational organizations. Moreover, support of these institutions must be complemented by a focused approach that targets high-risk communities, families and individuals and is concerned with preventing criminal predispositions from developing in the first place. Research shows that many chronic criminals come from some type of disadvantaged childhood. A social problem-solving approach to criminality relies on targeted strategies that attempt to reduce, eliminate or offset a child’s deleterious social environment (e.g., by promoting more positive and effective parenting) and the child’s personal risk factors (e.g., through remedial education, social competency training, therapy and mentoring).

Let’s be clear: we will not be eradicating organized crime any time soon. Where society can help most is in drying up the recruiting pool. Social developmental approaches to crime and criminality hold out the promise that the factors that lead to an individual’s involvement in organized criminality and the abuse of illegal drugs are both addressed. A just and equitable society that places a premium on helping those who are most in need is the greatest defence we can muster in the fight against the social ill of crime.

[Correction: The original article erroneously referred to “the Nepalese Camorra.”]