The history of Canadian whisky is closely tied with that of prohibition in the United States. When the 18th amendment to the American constitution was ratified, making the sale, production, transport, consumption, etc. of alcohol illegal in 1919, there was a sudden increase in demand for booze from Canada that could be imported (smuggled) across the border.
Before prohibition, there was not a great deal of hard liquor being distilled in Canada, and most of what was being made was rum. However, since whiskey, paticularly rye whiskey, was popular in the United States, a number of enterprising Canadians started making a lot more whisky than had been made in Canada before.
Before I go on, I'll address the naming issue. The Irish taught the Scottish to make whiskey. The Irish called it whiskey. The Scottish changed the name to whisky. We don't know why. Americans originally made whiskey closer to the way that the Irish made it. They call it whiskey. Canadians made it more like Scotch whisky was made. Every major brand calls it Canadian whisky, not Canadian whiskey.
At the time, rye whiskey was the most popular type of whiskey drank in the United States, so most Canadians who started distilling it used mostly rye for the mash. However, instead of making straight rye whiskey, they blended their whisky. This had two side effects. The whisky blended with neutral spirits was cheaper and easier to manufacture, and it was also a great deal smoother than it otherwise would be.
A generation of Americans grew up drinking Canadian whisky smuggled across the border, and assosiated the lighter smoother whisky with rye whiskey. Americans weren't the only ones who were drinking it as well, not all of it made it across the border. Canadians started drinking a lot more of it as well, and they found they really liked it. Now a days, Canadian whisky, or rye as it is usually refered to as, is still the most popular spirit in Canada.
After prohibition was repealed, imported Canadian whisky was still quite popular. People had grown used to the smoother taste, and there were few people who started to manufacture straight rye whiskey. Most people who had a taste for the harsher stuff moved on to Bourbon. It is fairly hard to find any actual straight rye whiskey now. There are only a few distillers who make it.
Many of the companies who had sprung up to deal in smuggled alcohol, turned legitimate, including Seagrams, who make two of the most popular brands today.
Canadian whisky is usually made with a blend of corn and rye. It is aged at least 3 years in the barrel, although most of what you find on the shelves has been aged for more than 6 years. It is then blended for a smoother taste. The blender often uses whisky of different ages to make the blend more consistant, although the youngest whisky used is the age that has to be put on the label.
In 1999, Canadian whisky exports totalled over $621 million, most of that going to the United States.
Some of the more popular
brands of Canadian whisky are:
Sources:
www.allaboutbooze.com
www.internetwines.com/spirits-canadian.html