Copyright
Edward Porritt.

Evolution of the Dominion of Canada; its government and its politics online

. (page 28 of 34)
Online LibraryEdward PorrittEvolution of the Dominion of Canada; its government and its politics → online text (page 28 of 34)
Font size
QR-code for this ebook


the government at Ottawa to restrict trade of
the United States with Canada.

The tariff of 1870 produced no results at Wash-
ington. There were no overtures from the govern-
ment of the United States for a renewal of the
trade relations of 1854-1866. The duty of fifty
cents a ton on anthracite and bituminous coal,

[432]



THE NATIONAL POLICY

imposed in the interest of the bituminous coal
mines of Nova Scotia, worked, moreover, great
hardship on the people of Montreal and of the
province of Ontario.

Ontario in 1870 was the only wheat-growing Aim of
province, and the only province in which com- ^f 87Q
mercial milling was established. It had long
been exporting wheat and flour to the United
Kingdom, and also to Newfoundland. The new
duties were intended to encourage grain growing
and milling, by compelling the Maritime Provinces
to draw their supplies from Ontario. Ontario
was to be forced to use the coal of a province
that was over a thousand miles from its western
border; and in return for the favors to the coal
owners at Sydney, Island of Cape Breton, the
people of Nova Scotia and New Brunswick, were
to be forced to buy their wheat and flour from
Ontario.

Both in Ontario and in the Maritime Provinces Popular
the new duties provoked much popular dis- ^j^JJ 7
satisfaction, especially in the Maritime Provinces, tariff
where a protectionist tariff was regarded as a
breach of the compact at Confederation. At
this time Ontario was the only province, east of
the Rocky Mountains, in which the protectionist
movement, begun in 1857-1858, had made any
appreciable headway. Even in Ontario it was
a movement that in 1870-1871 had secured sup-
port only in a few manufacturing centers.

There was so much agitation in Ontario against

[433]



EVOLUTION OF THE DOMINION OF CANADA

Abandon- the coal duty, and so much agitation in Nova
ent Scotia and New Brunswick against the duties
National on wheat and flour, that in 1871 Macdonald was
ofi870 f rce d to abandon the National Policy of 1870;
and it was 1879 before the Dominion was com-
mitted to a high protectionist tariff; and 1883
before a bounty system for the encouragement
of the iron and steel industry was adopted.
Re- A Conservative government was responsible

m^t U8h " * r t ^ ie unsuccessful attempt of 1870-1871 to
of establish the National Policy. The Conservatives

Poiic 0nal were a ^ so responsible for the system finally
in 1879 established in 1879. From 1878 to 1896 the
Liberals were in opposition at Ottawa. During
these eighteen years they continuously denounced
the tariff policy of the Conservatives, and from
1883 to 1896 they were equally vigorous and
persistent in their denunciation of the payment of
bounties for the encouragement of the iron and
steel industries. 1

Liberals In 1897 the Liberals, who were in power at
Nat^La O ttawa from 1896 to 1911, adopted both the
Policy tariff and bounty policies of the Conservatives.
^ d They greatly extended the bounty system,

a They increased many of the protective duties;

B rtiK anc * * n tar "iff policy tne Y made one innovation
entiai of far-reaching political importance. They estab-
tariff lished a preferential tariff for imports from the
United Kingdom; forged another link of empire;

1 Cf. Edward Porritt, "Iron and Steel Bounties in Canada,"
Political Science Quarterly, Vol. xxii, No. 2 (1907), 194-195.

[434]



THE NATIONAL POLICY

impelled Great Britain in 1897 to change a long-
existing policy in regard to commercial treaties;
and incidentally provoked a tariff war between
the Dominion and the German Empire that lasted
from 1903 to 1910.

II. The British Preferential Tariffs of 1897
and 1907

The reductions in the tariff in favor of imports Reduc-
from the United Kingdom were made gradually
in the three years from 1897 to 1900. The original on
plan was that from July, 1900, these imports
should be chargeable only with two-thirds of the United
duties imposed on imports from the United States
and other non-British countries.

From July, 190x3, to June, 1904, all imports Hostility
from the United Kingdom were admitted on these Canadian
favorable terms. But Canadian manufacturers, manu-
through their national association, loudly pro- fl^*
tested against this new competition from British erence
manufacturers; and in 1904 and 1907 particu- (
larly in 1907, when there was a general revision
of the tariff, and many increases in duties the
preference was curtailed, and the tariff made
more protective against British imports.

At the revision in 1907 the principle of a uniform Tariff
reduction of one third in favor of British imports ^ v ^ ree
was abandoned. The government then adopted sions
the plan of a tariff in three divisions a plan
that will be easily understood from the accom-

[435]



EVOLUTION OF THE DOMINION OF CANADA

SCHEDULE A



British Inter-

Tariff Preferential mediate General

Items. Tariff, Tariff. Tariff.

403 Wire, crucible cast steel, valued at not less

than six cents per pound Free. 5 pxj. 5 p.c.

403o Steel wire valued at not less than two and
three-quarter cents per pound when
imported by manufacturers of rope for
use exclusively in the manufacture of
rope; and also wire rope for use exclu-
sively for rigging of ships and vessels
under regulations by the Minister of
Customs Free. Free. Free r

404 See Tariff Amendment, June 12, 1914.

405 Buckthorn strip fencing, woven wire fenc-

ing, and wire fencing of iron or steel,
n.o.p., not to include woven wire or
netting made from wire smaller than
number fourteen gauge nor to include
fencing of wire larger than number nine
gauge 10 p.c. 12$ p.c. 15 p.c.

406 Wire of all metals and kinds, n.o.p 15 p.c. 17$ p.c. 20 p.c.

407 Wire, single or several, covered with-

cotton, linen, silk, rubber or other

material, including cable so covered 20 p.c. 27$ p.c. 30 p.c.

408 Wire rope, stranded or twisted wire,

clothes lines, picture and other twisted

wire and wire cable, n.o.p 17$ p.c. 22$ p.c 25 p.c.

409 Wire cloth or woven wire, and wire netting,

of iron or steel 20 p.c. 27$ p.c. 30 p.c.

410 See Tariff Amendment, June 12, 1914.

411 See Tariff Amendment, June 12, 1914.

412 Iron or steel nuts, washers, rivets, and

bolts, with or without threads; nut, bolt
and hinge blanks; and T and strap hinges

of all kinds, n.o.p per

one hundred pounds 75 cents. 75 cents. 75 cents,
and 10 p.c. 20 p.c. 25 p.c.

413 Screws, commonly called "wood screws,"

of iron or steel, brass or other metal,
including lag or coach screws, plated or
not, and machine or other screws, n.o.p. 22$ p.c. 30 p.c. 35' p.c.

414 Iron or steel cut nails and spikes (ordinary

builders') ; and railroad spikes per

one hundred pounds. 30 cents. 45 cents. 50 cents.

415 Composition nails and spikes and sheathing

nails 10 p.c. 12$ p.c. 15 p.c.

416 Wire nails of all kinds, n.o.p per

one hundred pounds . 40 cents. 55 cents. 60 cents.

417 Nails, brads, spikes and tacks of all kinds,

n.o.p 20 p.c. 30 p.c. 35 p.c.

418 Wire cloth, or woven wire of brass or

copper .-'; ...... 17$ p.c. 22$ p.c. 25 p.c.



[436]



THE NATIONAL POLICY

panying facsimile of a page from the Dominion
tariff as it stood before the war. 1

Under the tariff as enacted in 1907 there are Protec-
(i) the British preferential tariff; (2) an inter- J^
mediate tariff* for countries that make concessions three
in their tariffs for imports from the Dominion; and ^ Ss
(3) a general tariff, applicable to all countries that Canadian
in their tariffs make no concessions to Canada.

No general principle was followed in 1907 in
determining rates in the British preferential
tariff. Consideration was given to the opposi-
tion of Canadian manufacturers of competing
goods, who demanded adequate protection against
all comers, British or non-British. While the
tariff on British imports was usually fixed at
rates below the rates in the intermediate tariff,
much care was exercised to make it certain that
in the British preferential tariff there should be
adequate protection for all Canadian manufac-
turing interests a procedure that necessitated
many curtailments of the preference of 1897-1907.

From 1897 to 1907 the preferential tariff stimu-
stimulated trade between the United Kingdom ^ tt n f

BriuSu

and Canada. Particularly was this the case as trade
regards woolens and other textiles, some products

1 The tariff act of 1915 added seven and a half per cent to
the duties of the intermediate and general tariffs; five per cent
to the duties of the preference division; and imposed a duty
of seven and a half per cent on many imports, mostly raw
materials or partly finished materials, that were formerly
on the free list.

[437]



EVOLUTION OF THE DOMINION OF CANADA

of the secondary stages of the iron and steel and
metal industries, and glass, earthenware, and
furniture.

propa- It was this increase in trade between the

against United Kingdom and Canada, and the efforts of
con- manufacturers in England and Scotland to avail
cessions themselves of the lower duties, that impelled
British Canadian manufacturers to protest. They waged
imports a continuous propaganda against the British
preference at the meetings of their association
and in their newspaper organs. They protested
to parliament in 1904 and 1905; and in the
winter of 1905-1906 scores of individual manu-
facturers appeared before the tariff commission
to demand more protection against competition
from Great Britain than was afforded under the
tariff of 1897.

Several of them characterized British competi-
tion as foreign competition, and they all declared
that protection against British manufacturers
was as essential to the success and prosperity of
Canadian industries as protection against the
manufacturers of the United States.
Curtaiie The effect of the revised and much curtailed
preferential tariff in encouraging exports to
tariff in Canada from the United Kingdom in the years
from 1907 to 1914 was less obvious than the
effect of the tariff of 1897. There was some
increase in the seven years before the war. But
it was an increase which, when measured in
customs-house valuations, afforded little ground

[438]



THE NATIONAL POLICY

for jubilation in manufacturing communities in
the United Kingdom, especially in view of the
widespread enthusiasm with which the original
preferential tariff was received in Great Britain, 1
the enormous increase in emigration from Great
Britain to Canada in the twelve years that
preceded the war, the widespread prosperity in
the Dominion from 1904 to 1912, and the great
increase in the price of manufactured goods in
the period from 1900 to 1914.

III. The Political Effect in Canada of the
Preferential Tariff

In the seventeen years from 1897 to the be- Attitude
ginning of the war, the political effect of the onser-
preferential tariff, as framed in 1897, and revised vative
in 1907, was much more important than the {^ rds
economic effect. In Canada two political de- prefer-
velopments followed the enactment of the *
preference.

From 1897 to 1911 the preference was de-
nounced by the Conservatives, who in these
years were in opposition at Ottawa. The objec-
tions of the Conservatives were (i) that Canadian
manufacturers must have protection against all
comers; and (2) that Great Britain had given
Canada no tariff concessions in return for the
concessions in the Dominion tariff.

1 Cf. Deckles Willson, "Life of Lord Strathcona and Mount
Royal," II, 336.

[439]



EVOLUTION OF THE DOMINION OF CANADA

Demand As the United Kingdom was on a free-trade
f ^ d basis from 1846 to the beginning of the war, it
pro quo was not possible for any government at Whitehall
to offer Canada an equivalent for the preference,
without effecting a revolution in the British
fiscal system. Many increases in the tariff were
made at Ottawa after the Conservatives were
returned to power at the general election in 1911.
These increases, made in the years from 1912 to
1914, were intended to afford more protection to
Canadian manufacturers, or to add to the pro-
tection of fruit growers in British Columbia,
against competition from the United States.
Conserv- As soon as the Conservatives were in office, how-
ever, they ceased to condemn the British prefer-
ment ence; and from 1911 to the outbreak of the war
accepts they mac [ e no effort to secure from the govern-
prefer- ment at Whitehall any quid pro quo for the
ence lower duties first established for imports from
the United Kingdom by the preferential tariff of
1897. They accepted the policy of the Liberals
as regards the preference, just as the Liberals in
1897 had accepted the National Policy of the
Conservatives of the preceding eight years.
Attitude Advocates of free trade in Canada welcomed
of the preferential tariff of 1897, and protested

agrarian . r .... ,

interests against the curtailments made in it in 1904 and

towards 1907. The only consumers in Canada who are

entiaT organized and articulate as such are the grain

tariff growers of Manitoba, Saskatchewan, and Alberta

and the farmers of Ontario. From 1905 onwards

[440]



THE NATIONAL POLICY



these organizations continuously agitated for
lower duties in the British preferential tariff.
As the leaders of both the Liberal and Conserva-
tive parties at Ottawa as continuously ignored
the agitation, the grain growers and farmers in
the winter of 1915-1916 launched an independent
movement in Dominion politics.

The purpose of the movement the most
considerable of all attempts in Canada from 1867
to 1918 to create a party independent of the
Conservative and Liberal parties was to secure
direct representation of grain growers and farmers
in the house of commons. In the national
political platform adopted by the grain growers'
associations, at their provincial conventions in
the winter of 1916-1917, there was a demand for
an extension of the British preference as a means
of strengthening the bonds between Canada and
Great Britain, and also of bringing about a
reduction in the cost of living in Canada. 1

The innovation in tariff legislation at Ottawa
in 1897 an innovation in which Canada once
more led the oversea dominions thus resulted
in raising a new issue in Dominion politics; and
the persistence with which the grain growers
agitated for an extension of the preferential
tariff widened the political gulf between the
manufacturing interests of Ontario, Quebec,
Nova Scotia, and New Brunswick, and the

1 Cf. "A National Political Platform," Grain Growers'
Guidt, December 13, 1916.



Grain

growers
organize
inde-
pendent
move-
ment
in

Dominion
politics



Division
between
agrarian
and

nicinu-

factoring

interests



EVOLUTION OF THE DOMINION OF CANADA

agrarian interests of Ontario, and of the thousand-
mile stretch of country that lies between the
Lake of the Woods and the Rocky Mountains.

IV. The Tariff War of 1903-1910 with
Germany

Ger- For the Empire at large the preferential tariff

data to ^ l8 9? kad quite far-reaching consequences,
1897 some of which developed out of the aggressive
attitude of Germany towards the new trade
relations of Canada with Great Britain. Ger-
many claimed that as an empire with a treaty of
commerce with Great Britain, according it favored-
nation treatment, it was entitled to send its
exports to Canada on the same terms as were
conceded under the preferential tariff to imports
from Great Britain.

Great In order to leave Canada, and other oversea

Britain possessions with responsible government, free to
nounces make their own commercial arrangements with
|" one another, and with non-British countries,
treaties Great Britain in July, 1897, only three months
after the new tariff had been enacted at Ottawa
denounced her commercial treaties with Ger-
many, Belgium, Italy, and nearly a dozen other
powers in Europe, Asia, and South America.
Rounding The action of Great Britain in regard to these
com- treaties, all of them, like that with Germany, of
merciai long standing, and of much value to manufacturers
O r f ee<3 and exporters in the United Kingdom, completed
dominions the fiscal and commercial freedom of Canada.
[442]



THE NATIONAL POLICY

It also completed the fiscal and commercial
freedom of the Commonwealth of Australia, the
Dominion of New Zealand, the Union of South
Africa, and the Dominion of Newfoundland; for
heretofore, while these oversea dominions had no
part in the negotiation of commercial treaties
made by Great Britain, they had all, like Canada,
been bound by British commercial treaties made
before 1872. This was the year when Great
Britain conceded to the colonies with responsible
government the option of inclusion in new treaties.

Until July, 1898, imports from Germany into imports
Canada were admitted under the preferential Q^^
tariff. Thereafter imports from Germany paid pay
the duties imposed by the general tariff of 1897 %**
the same duties as were paid on imports tariff
from the United States. Germany resented this
treatment.

Belgium agreed to a new treaty which left Germany
Canada and the other dominions freedom of * ttem P ts

to

action. Germany flatly refused a new treaty domineer
with Great Britain to replace the treaty of 1865-
1898. Her position was that what the oversea
dominions conceded to Great Britain must also
be conceded to the German Empire.

What Lansdowne, who was secretary for Reprisals
foreign affairs in the Salisbury and Balfour ^d*by
governments of 1895-1906, described as a serious Germany
position, developed out of Germany's opposition
to the new commercial relations between Great
Britain and the dominions.

[443]



EVOLUTION OF THE DOMINION OF CANADA

Lans- "It is not merely that we find Canada liable

stated S to b e ma de to suffer in consequence of the differen-
ment tial treatment which the Canadian government
house of ^ad afforded to us," Lansdowne told the house
lords of lords, on June 29, 1903, "but it was actually
adumbrated in an official document, that, if
other colonies acted in the same manner as Can-
ada, the result might be that we, the mother
country, would find ourselves deprived of most-
favored-nation treatment."

Germany "Thus," wrote English commentators on the
Great action of Germany, after the government at
Britain's Whitehall, at the instance of Canada, had ended
little^* 7 the British-German treaty of commerce of 1865,
colonies" "Germany first demanded to share in the Ca-
nadian preference. And when that attempted
intrusion into the domestic life of the British
Empire was forbidden, we had the threat that
England would be punished in her trade with
Germany, if she did not put these naughty little
colonies in their place." x

Tariff The upshot of Germany's procedure was that

1903-* f r t ^ ie ^ rst t ^ me smce Great Britain had adopted
1910 free trade in 1846, one dominion of the British
Empire was engaged from 1903 to 1910 in a
tariff war. Germany was the aggressor. Until
July, 1898, Canadian exports to Germany were
admitted under the German minimum tariff. As
soon as the treaty of 1865 had expired, and ex-
ports from Germany to Canada were consequently
1 P. and A. Kurd, "The New Empire Partnership," 228.
[444]



THE NATIONAL POLICY

no longer admitted on the same favorable terms as
exports from the United Kingdom, Germany put
her maximum tariff into force against Canada.

"We did not," said Fielding, minister of Canada's
finance at Ottawa, "deny to Germany favored- ^many
nation treatment. We were willing to give her
every consideration that we gave to any foreign
government. But she took offense because we
would not treat her as we did the United
Kingdom." !

The Dominion was slow to retaliate. The Efforts
government at Ottawa conceived that there was ottawa
some misunderstanding on the part of Germany, to avoid
By diplomatic correspondence, and also through war
the German consulate at Montreal, efforts were
made to assure Berlin that Canada was giving to
Germany everything that it gave to any foreign
country; that it was conceding to Germany what
it conceded to France, although France, with
which Canada had a treaty of commerce since
1893, gave valuable concessions in return, and
Germany conceded nothing.

All that Canada asked was that her exports to Surtax
Germany should again come under the minimum erman
tariff. This Germany refused. Her maximum imports
tariff was put into force against Canada in the
autumn of 1898; but it was October, 1903, before
Canada retaliated. Then, by act of parliament,
a surtax of one third of the duties of the general
tariff was imposed on imports from Germany.
1 H. C. Debates, December 14, 1907.

[445]



EVOLUTION OF THE DOMINION OF CANADA

The result of the surtax was that on many of
the imports from Germany duties in the years
from 1903 to 1910 ranged as high as forty per
cent, the highest tariff duties ever in force in
Canada, until the war tariff of 1915 was enacted.
There was at once a great reduction in Germany's
export trade to Canada.

Peace Germany slowly realized that only loss of

victory* trac ^ e was resulting from persistence in the tariff

for war; and in February, 1910, on overtures from

Berlin, the tariff war was ended in a peace without

victory for Germany. 1

V. The United States and the British

Preferential Tariffs

Germany Notwithstanding the treaty of commerce be-
tariff tween Great Britain and Germany of 1865-1898
advan- a treaty in which there was a clause 2 which
provided that goods exported from Germany



over



United to Canada should not be chargeable with higher
duties than were imposed on goods exported
from the United Kingdom to Canada only
from April, 1897, to July, 1898, in the thirty-
three years from 1865 to 1897 had Germany any
advantage over the United States in the export
trade to Canada.

1 Cf. Fielding's Speech, "House of Commons Debates,"
February 16, 1910.

2 "A clause very obnoxious to the people, not only of
Canada, but of the colonies generally." Fielding, H. C.
Debates, April 16, 1903.

[ 44 6]



THE NATIONAL POLICY



The United States enjoyed special advantages
from 1854 to 1866, the years of the Elgin-Marcy
treaty; and since 1883 France has continuously en-
joyed a measure of special treatment in Canadian
tariffs, owing to the existence of commercial treaties
between the Dominion and the French Republic.

With these exceptions, until 1897 all countries,
British and non-British, exported goods to
Canada on the same terms. There were no
tariff concessions in Canada to countries with
favored-nation treaties with Great Britain, be-
cause it was not until tariffs for the protection of
Canadian industries had been in operation in the
United Provinces from 1858 to 1867, and in the
Dominion from 1867 to 1897, that any concession
was made in Canadian tariffs to imports from the
United Kingdom. 1

No concession was asked by Canada from the
United Kingdom when the original preferential
tariff was framed. "England," said Fielding,
when he announced the innovation of 1897 to
the house of commons, "has dealt generously
with us in the past. She has given us liberty to
tax her wares, even when she admits ours free;
and we have taxed them to an enormous degree." 2

Canada also asked nothing in return for the
preference for British crown colonies in which
there were tariffs for revenue only; and by 1913

1 Salt imported from the United Kingdom for the sea
fisheries of Canada has always been on the free list.

2 H. C. Debates, April 22, 1897.

[447]



Countries
that had

advan-
tages



Other-
wise all
countries
on same
footing

I



No

conces-
sion
In

return
for

British
prefer-
ence



Canada
and
crown
colonies



EVOLUTION OF THE DOMINION OF CANADA

twenty-five crown colonies were participating
in the concessions of the British preference of
I9O7. 1 The dominions with protective tariffs
had to make reciprocal concessions before they
could share in the preferential rates conceded to
the United Kingdom. New Zealand, Australia,
and the Union of South Africa, all made terms
with Canada.

Recipro- With the nine West Indian colonies 2 Canada,

^ de in 1913, entered into an elaborate and liberal

with agreement for reciprocal trade. The result of

Indies a ^ tnese various arrangements was that in the

year preceding the war, the United Kingdom,

four dominions, and thirty-four crown colonies

were all linked together by the far-reaching

innovation in tariff making at Ottawa in 1897,

which originated with the Liberal government of



Online LibraryEdward PorrittEvolution of the Dominion of Canada; its government and its politics → online text (page 28 of 34)