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The Act of Union gave the French and English sides of Canada equal power. Both sides had opposite interests, so their votes would cancel out, and no bills could get passed. Representation by population could change this, but it would create tension between the French and English sides, as the English side had more people. The French side voted against this. This lead to confederation because uniting the colonies would end the deadlock, and give the English power over the French.
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The Corn Laws allowed grain from the colonies to enter Britain tax-free, so Canada had a guaranteed market for grain, and an advantage over other countries because they could easily trade with Britain. When these laws were repealed, Canada lost its advantage, and had to compete with the lower grain prices of other countries. This led to confederation because it made Canada more independent, loosened Britain's control over Canada, and it forced Canada to look for other trading partners.
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Railways became very popular in the mid 1800's. Before railways were built in Canada, travel, and trade between the colonies was difficult. Trade between the colonies could help increase their economic power after their trade laws between Britain and the U.S. were repealed. This lead to confederation because if the colonies united, they'd be able to build a railway, which would improve their economy. They would also be able to move military equipment, which would help them prevent an invasion.
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Starting in the 1860's, Britain started to loosen its control over British North America. Britain's other colonies were more beneficial to them, and Canada was becoming a burden. Canada was also affecting Britain's relationship with the United States because of the tension between them during the Civil War. This lead to confederacy because Britain encouraged Canadian confederation, and the loosened control made Canada more independent from Britain.
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During the American Civil War, Canada and the United States both wanted to expand west. Canada wanted to expand to prevent the U.S. from expanding. If the United States expanded west, it would be easier for them to invade Canada, which they had threatened to do. This event led to confederation because the united colonies would have more power to prevent an American invasion and American expansion, so they would have a better chance of guarding all of the land from America.
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Many Americans believed that it was God's will to expand its borders. Canada's worry about this increased during the Civil War, when tension between Canada and the U.S. was high. This lead to confederation because Canada didn't want to be a part of the United States, and they wanted protection from an American invasion. The colonies by themselves had little protection from an invasion, but a confederacy would be able to form a stronger defense.
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Britain continued to trade with the south for cotton during the American Civil War, which the United States saw as support for the south. This created tension between the United States and Britain, and therefore, Canada as well. U.S. newspapers threatened Canada with invasion. This led to confederation because it increased tension between Canada and the U.S., and people realised that Canada was poorly prepared for an attack or invasion, and the colonies could defend Canada better if they united.
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A warship stopped a British ship and arrested two American confederate delegates. Because of this, Britain sent soldiers to Canada, and the United States almost attacked Canada. This led to confederation because the colonies realized they were not prepared for an American attack, and it increased the fear that the United States would try to invade Canada.
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Britain allowed a confederate warship to be built in Britain, despite their neutrality in the Civil War. The warship did a lot of damage in the United States, and they demanded compensation from Britain. The U.S. told Britain that they could either pay $4 billion or give them Canada. This led to confederation because it added to the increasing tension between Britain (and Canada) and the U.S., and it showed that the U.S. really wanted to expand into Canada.
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A group of confederates robbed some banks at St. Alban's, Vermont, and escaped into Canada. They were arrested in Canada, but they were released. This caused Canada to be threatened with invasion again, and caused the Reciprocity Treaty to be ended. This lead to confederation because Canada had to become more independent, and it really increased the fear of an American invasion. A confederation would help prevent an invasion, and it would increase economic power.
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The Reciprocity Treaty between Canada and the U.S. eliminated tariffs on trade, which increased trade between the U.S. and Canada. However, the treaty was not renewed because of the tension during the Civil War. This meant that Canada lost it's trading advantages with the U.S. This lead to confederacy because it increased anti-Americanism and independence. It also drew the colonies closer, and increased support for confederation because it would help increase the economic power of the colonies.
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A group of Irish people living in the United States formed a militia called the Fenian Brotherhood. Their goal was to make the British government to give up their claim to Ireland by attacking British North America, because they were unable to directly attack Britain. This event led to confederation because it made the people in Canada realize that they needed a common defense, which would be possible if the colonies united. This dramatically increased the support for confederation.
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Nova Scotia, New Brunswick, and the province of Canada joined to form the dominion of Canada.