unattainable in the face of the powerful manufacturing interests that had grown up behind the tariff curtain of Sir John A. Macdonald’s National Policy.47 In 1911, Laurier stoutly defended in the House of Commons his government’s commitment to finding new markets for the country’s burgeoning production: “Our policy has been, is and will be . . . to seek markets wherever markets are to be found.”48
However much his eyes may have been fixed on markets wherever they were to be found, those same eyes could see clearly that the market that really mattered for the future was the United States. So the next major step in freeing Canadians’ access to foreign markets was securing more favourable terms for the entry of Canadian products into the US market. That effort was crowned with success in 1911 when, after protracted negotiations, his finance minister, Fielding, returned triumphantly from Washington with a new reciprocity agreement with the Americans, one that seemed to set extremely favourable terms for Canada. The Liberals were ecstatic and the Tories despondent, convinced that the old fox Laurier, with his “sunny ways,” had dished them yet again.49
To the surprise of almost everyone at the time, the outcome of the 1911 election was the rejection of reciprocity by the voters, for a complex tangle of reasons that need not detain us too long. In English Canada, an aggressive British imperialist movement called for the Empire to be made a kind of free trade zone complete with tariffs to keep out goods from elsewhere, including the US. In French Canada, by contrast, Henri Bourassa, and the nationalist movement into which he had breathed such life, abandoned the Liberals for being insufficiently ardent defenders of an independent Canadian policy in the face of growing imperialist sentiment. Even though the reciprocity agreement with the US continued protection for Canadian manufacturers, Central Canadian industry feared the thin edge of a tariff-busting wedge.50 And of course the Americans, with the tin ear so typical of their sensitivity to Canadian concerns, gave Laurier’s opponents lots of ammunition. Champ Clark, the speaker-designate of the House of Representatives, announced in Congress that “‘I hope to see the day when the American flag will float over every square foot of the British North American possessions clear to the North Pole.’”51 Reciprocity went down to defeat.
In our time, the anti-American protectionist crowd has so come to dominate the discussion of Canada–US relations in many universities and much of the media that many Canadians seem somehow to feel that Laurier’s abortive attempt to establish free—or at least freer—trade with the US was an aberration in our history, one happily seen off by a vigilant Canadian electorate when given the chance in the federal election of 1911.52
One searches in vain for any justification for this view in the historical record.53 Instead, it was the rejection of improved trade relations with the US that was the anomaly.
In fact, it would not be too much to say that Canada’s development, indeed its very existence as a nation, owes a very great deal to the evolution of trade relations with both Britain and the United States, as well as the associated development of the tariff. Laurier knew this all too well, having lived through the difficulties created for the Dominion and its predecessors by the machinations of its two chief trading partners.
Britain had not always been a free-trading nation. When the Corn Laws were abrogated in 1846, and Britain put protectionism behind it, the consequences for the United Province of Canada (the union of Upper and Lower Canada created in 1841) were severe. It was Canadian grain, among others, that had sheltered behind the preferential tariff of the mother country. When the Corn Laws went, so too did protected access to our most important market. By the following year, the situation was dire in Canada and the decision was made, with imperial blessing, to seek reciprocity with the US as an alternative to the lost markets of Britain.54
While Canada was an ardent suitor, the Americans were a very discouraging object of our affections. They saw little benefit for themselves in such an arrangement, and Northern industrial interests were particularly leery. Moreover, the slave states, in this politically charged run-up to the Civil War, feared that reciprocity might lead to annexation and the reinforcement of anti-slavery forces in the Union. After all, slavery had been abolished peacefully by judicial fiat in Great Britain in 1772, and then throughout the Empire by simple act of Parliament in 1807, but America continued with what Southerners euphemistically called the “peculiar institution” until the issue was settled at the cost of many thousands of lives almost sixty years later.55 The promise of access to Canadian waters for politically powerful New England fishing interests, however, ultimately tipped the balance within Congress, and a reciprocity agreement was signed in 1854. America, always the reluctant partner, gave in to protectionist pressures a mere twelve years later, abrogating the hapless and unloved agreement in 1866. Faced with no privileged access to either US or British markets, the third option for British North America was Confederation. Impelled chiefly by this economic logic, the federal union of three British colonies occurred the following year.56
The expanded markets made possible by Confederation, however, remained small beer in global terms. Reciprocity with our southern neighbour remained the holy grail of Canadian politics; Sir John A. Macdonald pursued it energetically in the face of massive American indifference, until even Old Tomorrow had to resign himself to the evidence. To fill the vacuum, he came up with the National Policy, which even he regarded as a poor second best. The National Policy—high tariffs to protect domestic producers against American competition, plus the completion of transcontinental ties, and especially the railway—became his signature policy in 1878. But in an early precursor of R.B. Bennett’s boast that he would use high tariffs to “blast our way into the markets of the world or perish in the attempt,”57 Macdonald was clear that his policy ought not to be taken as an alternative to reciprocity with the US, but rather as a strategy for obtaining it:
The welfare of Canada requires the adoption of a National Policy, which, by a judicious readjustment of the tariff, will benefit and foster the agricultural, the mining, the manufacturing and other interests of the Dominion; that such a policy . . . will prevent Canada from being made a sacrifice market . . . and moving (as it ought to do) in the direction of reciprocity of tariffs with our neighbours, so far as the varied interests of Canada may demand, will greatly tend to procure for this country, eventually a reciprocity of trade . . . It is only by closing our doors, and by cutting them out of our market, that they will open theirs to us . . . it is only by closing the door that we can get anything.58
It was this policy that Laurier and his government inherited in 1896, that he moderated through tariff reform in the early days, and that he sought to subsume under a new reciprocity pact at the end of his reign. Surprisingly, the agreement Laurier negotiated would have left much of the protective tariff for Canadian manufactures in place but would have given free access for Canadian resources to US markets. A striking amount of the old National Policy would have remained intact. But the moment was not right. Laurier’s political skills were not equal to the task after the wear and tear of fifteen years in power, and this key part of Laurier’s vision became encrusted with a mythology of divisiveness and defeatism that would only be shaken off by slow degrees over the following century.
chapter two
A COUNTRY AND A CENTURY DERAILED
What happened? How was such a promising start to what was to be Canada’s century steered so quickly into the ditch?
In fact, the prosperity largely continued under Laurier’s successor, Prime Minister Sir Robert Borden,1 who, with the exception of reciprocity with the Americans, largely pursued Laurier’s economic policies. The rapid growth in population, for example, continued right up until 1921, at which time 8.8 million people lived
