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Sir John A MacDonald
The National Policy, 1873 to 1878


THE early sessions of the first Liberal administration of the Dominion were not marked by any factious opposition on the part of Macdonald. Many useful measures were brought forward by the government in the wisdom of which he fully concurred, while to others he proposed amendments increasing their value but not destroying their principle. Never had his vigour of intellect and splendid buoyancy of spirit shown to greater advantage than when leading an almost forlorn parliamentary hope. He had offered, when defeated, to resign the leadership of his party, but his followers with absolute unanimity had refused even to think of serving under any one else. Consummate tactician that he was, he abstained from exposing the weakness of his party-following in the House by frequent divisions, and devoted himself to careful legislative criticism, to study of the electorate, and to patient waiting for that revulsion of popular feeling in his favour which he was confident would come.

Raillery, rather than the more violent methods urged by some of his friends, marked his attacks on the government. "Give the Grits rope enough," was his reply to such suggestions, II and they will hang themselves." To say that the event justified his predictions might perhaps not be altogether fair to his Liberal opponents, against whom circumstances worked which had no connection with any defects of policy or errors of judgment on their part. Still, in the light of events, Macdonald appeared to his friends to have spoken in the spirit of prophecy; and there is little doubt that his dictum was founded on a certain insight into the characteristics of the Liberal party of his day as well as a profound understanding of the temper of the Canadian people. A great general's success often depends as much upon his power of anticipating the errors of adversaries as upon any combination of his own. So it was in the battlefield of politics with Macdonald.

The leading members of the Liberal party of that day, it is generally admitted, had high ideals of political purity and honesty in administration, though the rank and file were probably as ready as any other to win elections by such means as came to their hands. Macdonald himself would perhaps have agreed that Alexander Mackenzie and Edward Blake had standards of political morality stricter in some particulars than his own. At any rate they claimed them, and on that claim had come into power. But they were cautious even to timidity. No temper could be less fitted to win popularity and secure power in the young and ambitious Dominion during the early years of Confederation. Macdonald clearly foresaw that their attitude on more than one great public question foredoomed them to failure in 'the task of satisfying popular desires.

The refusal to carry out the terms of the agreement to build within ten years a transcontinental railway, alienated the West and drove British Columbia to the verge of secession. Mackenzie himself, than whom no more high-minded and indefatigable man ever served a British colony, lacked Sir John's skill in cabinet making and in the arts by which a political majority is held together. Nor did he ever secure in an equal degree the loyalty of colleagues. Discontent became rife among his followers ; dissensions became frequent in the cabinet and were more than once fought out on the floor of the House. Meanwhile Macdonald was not relying alone upon the mistakes of his opponents. He was steadily shaping a large constructive policy and skilfully appealing to the electorate on lines adapted to stir popular enthusiasm. To the development of the North-West and the fulfilment of the bargain with British Columbia, he stood pledged. To these planks of his platform he was soon to add another of even more vital consequence, and greater attractiveness. In this he was singularly favoured by the circumstances of the time. Though the reciprocity treaty negotiated by Lord Elgin in1854 had come to an end in 1866 owing to its denunciation by the government of the United States, the early years of the new Dominion were years of prosperity. The farmers gathered in excellent crops; the European markets were favourable; and the perfect freedom of trade between the provinces which came with Confederation greatly enlarged the field for the nascent manufacturing industries of the towns. But about 1873 a tide of economic depression swept over the whole North American continent. In great measure it was one of those commercial crises which can neither be foreseen nor prevented. It did not originate in Canada, and was not confined to her borders. But the undeveloped and struggling colony was far less fitted to bear the industrial strain than her powerful neighbour, and the conditions of the crisis in the United States greatly increased her distress. The protective policy of that country gave no hope to the Canadian manufacturer, and was beginning to cripple also the lumbermen and the farmers. In the opinion of many, perhaps of most, Canadians that policy was, in part at least, intended to drive Canada into union on such terms as Washington might impose. On the other hand, manufacturers of the United States, whom a protective policy had stimulated to over-production, finding in the prevailing depression large surplus stocks on their hands, threw them upon Canada as a slaughter market, or in the language of a later day, as a dumping ground. The Canadian manufacturer was thus ground between the upper and nether millstones of an unfair competition, while the farmer found his home market contracted and his foreign market rendered precarious and uncertain.

The trade with Great Britain in perishable agricultural products which has since become so important, was not then possible, since the cold storage system on which it depends had not been developed. Every interest, indeed, was depressed. The result was speedily apparent in the falling revenue of the country. The Liberals, whose watchward was economy and whose goal was free trade, were compelled by sheer necessity to raise the tariff. Even so there was a yearly deficit, which in 1876-7 amounted to nearly two million dollars. In the same year the customs dues from which one half the revenue was derived fell from $15,351,000 to $12,546,000. In the words of the finance minister, Mr. (afterwards Sir Richard) Cartwright, "a commercial crisis, great and almost unparalleled in severity "reigned throughout the country. It was under such circumstances that on March 10th, 1876, Sir John Macdonald brought forward in the House a resolution in favour of a "National Policy" of increased protection to mining, manufacturing and agricultural interests, and in doing this he received the united support of the Conservative opposition. He had struck the true note of Canadian feeling. After thirty years experience in carrying out the system then proposed, his countrymen are practically unanimous in thinking that he had also found the true line of Canadian interest.

The previous tariff history of Canada presents few features of interest. Nova Scotia and New Brunswick before Federation had a low tariff for revenue purposes, with an extensive free list. Canada in 1859, under the guidance of Mr. (afterwards Sir A. T.) Galt, introduced a rather high tariff, with a distinct leaning to protection. The Duke of Newcastle, the colonial secretary, under pressure from manufacturing constituencies in Great Britain, protested and threatened disallowance, but Galt stood firm. In 1866, on the eve of Federation, this tariff had been lowered in order to render possible a compromise with the Maritime Provinces, and in 1867 the Dominion tariff had been fixed at a rate which roughly amounted to fifteen per cent. ad valorem, with a free list of moderate extent. From that date the desire for a distinctly protective policy had been steadily growing, and since 1870 petitions in its favour had been coming in, frequently coupled with the idea of retaliation on the United States.

The very name, "National Policy," had been used as early as 1871 by Sir Francis Hincks, and is usually supposed to have been adapted and applied to the policy of protection by Sir Charles Tupper.

Macdonald did not now place himself at the head of the movement without careful study of the Canadian situation, nor until he was convinced that the time was ripe for change. Some of his supporters were impatient with his deliberation. "Sir John was timid unto death of protection, had to be bullied into it, led into it, committed to it by others. But when he thought it grown, he used it as a bridge to reach the power he liked to wield," wrote in after years one of his parliamentary followers. A view such as this scarcely does justice to Macdonald's record on the question. He had argued for incidental protection in 1846; had associated himself in 1850 with the British American League, which aimed at framing a commercial national policy ; had supported Galt, when, as finance minister in 1858, he had announced protection to native industries as the policy of the government ; and had advocated readjustment of the tariff to favour home manufactures in the general elections of 1861 and 1872.

The caution which now marked his course when the rising aspirations and settled judgment of the country had to be translated into practical legislation, was an essential element in his statesmanship. As in the case of Federation he did not catch with facile enthusiasm at the idea floating in the popular mind, nor hastily grasp it as a party weapon. But once adopted, he urged it with a power, a versatility, and a tact which makes him in a very real sense the father of the National Policy. He was splendidly helped by his lieutenants, especially by Sir Charles Tupper and Sir Leonard Tilley. The Nova Scotian leader fought with the almost reckless valour which had marked his struggle for free schools in 1863 and for federation in 1865. But for his unflinching hopefulness it is doubtful whether Sir John would have come triumphantly through the dark days of 1874 and 1875. Sir Leonard Tilley's rare power of financial exposition and commanding weight of personal character were of almost equal service.

No time was lost in putting the new policy before the country, and an original device was hit upon for doing this. During the summer of 1876 a series of political picnics was held throughout the Dominion, more especially in Ontario, under the auspices of the local Conservative associations, and were addressed by Macdonald, Tupper, Tilley, Thomas White and other prominent members of the Opposition. The success of this new experiment in political agitation led to its repetition in 1877, and won the tribute of imitation from the Liberals. Many factories were closed or were but in partial operation at this time, owing to the industrial depression, and so the hands were free to be present at the Conservative picnics, and to hear of the tall chimneys which, as by a wave of the enchanter's wand, were to rise in every province from Halifax to Vancouver. The sympathetic owners of factories still in operation closed their establishments for the day, and encouraged their men to attend. Special rates were given by the railways, and excursion trains were run from all the neighbouring towns, so that immense crowds were drawn together for discussion. At the gathering in London in June, 1877, it was estimated that twenty thousand were present. On such occasions Macdonald's winning personality, his natural sociability, his ready wit, his marvellous power of remembering faces, were far more valuable assets than his speeches, which, read in cold blood, hardly match his reputation, being largely devoted to attacks, sometimes humorous, sometimes keenly satiric, often abusive, on his political opponents, poor stuff enough when divorced from the jaunty toss of the head, the glancing smile, the shrewd and meaning twinkle which once carried them off. Indeed throughout his career, save on great occasions, he seems to have taken pleasure in leaving to trusted lieutenants the weightier arguments of his case, reserving for himself the lighter parts in the political play. Yet he seldom failed to put before his country audiences, in simple language and without the flowers of eloquence, the pith of the question with which he had to deal. A few passages from his speech at the Norfolk picnic illustrate the simplicity of his style and argument.

"We are in favour of a tariff that will incidentally give protection to our manufacturers; that will develop our manufacturing industries. We believe that that can be done, and if done it will give a home market to our farmers. The farmers will be satisfied when they know that large bodies of operatives are working in the mills and manufactories in every village and town in the country. They know that every man of them is a consumer, and that he must have pork and flour, beef and all that the farmers raise, and they know that instead of being obliged to send their grain to a foreign and uncertain market they will have a market at their own door. And the careful housewife, every farmer's wife, will know that everything that is produced under her care—the poultry, the eggs, the butter and the garden stuff—will find a ready and profitable market in the neighbouring town and village.

"No country is great with only one industry. Agriculture is our most important, but it cannot be our only staple. All men are not fit to be farmers; there are men with mechanical and manufacturing genius who desire to become operatives or manufacturers of some kind, and we must have means to employ them, and when there is a large body of successful and prosperous manufacturers, the farmer will have a home market for his produce, and the manufacturer a home market for his goods, and we shall have nothing to fear. And therefore. I have been urging upon my friends that we must lay aside all old party quarrels about old party doings. Those old matters are matters before the flood, which have gone by and are settled forever, many of them settled by governments of which I was a member. Why should parties divide on these old quarrels? Let us divide on questions affecting the present and future interests of the country.

"The question of the day is that of the protection of our farmers from the unfair competition of foreign produce, and the protection of our manufacturers. I am in favour of reciprocal free trade if it can be obtained, but so long as the policy of the United States closes the markets to our products we should have a policy of our own as well, and consult only our own interests. That subject wisely and vigorously dealt with, you will see confidence restored, the present depression dispelled, and the country prosperous and contented."

While Macdonald and his followers were advocating what was at least a specious remedy for the industrial depression, the Liberals had no alternative to offer save the recommendation to the electorate to practice thrift and to wait for the swing of the economic pendulum. The finance minister carried his trust in the laws of political economy so far as to say that it was as vain for governments or legislators to claim credit for the commercial and industrial prosperity of a country as it would be for a fly on a moving wheel to consider itself the author of the motion—an unfortunate simile, as it won for his party the nickname of "Flies-on-the-wheel," which was used to good effect during the picnic campaigns. Besides this, protestations of devotion to free trade sounded hollow coming from a government which had been compelled to dissemble its love for the principle to the extent of raising the tariff. Free trade has before now proved a stimulating and successful party cry, but it was found difficult to arouse any wide-spread enthusiasm for the inherent sanctity of a tariff of seventeen and a half per cent. ad valorem. Nor were the members of the government at one on the matter. Of the Liberal leaders, Edward Blake was almost openly in favour of the National Policy. On the other hand David Mills assured the London Chamber of Commerce "that of all systems of taxation there is none more objectionable than incidental protection." Mackenzie and Cartwright both seemed for a time open to conviction. At the bye-election in Montreal in 1876, resulting in the return of Mr. Workman, a strong Liberal but a stronger protectionist, Mackenzie seemed almost persuaded, and Cartwright's replies to a series of delegations in the same year induced a general belief throughout the country that the tariff would be raised to at least twenty per cent. Finally, however, "in deference to their formula" as they were told by Goldwin Smith, "they chose to be stiff-necked, and kicked complaining industry into the camp of their opponents."

"In this country" said Macdonald in 1876, "we are not called upon to break our heads upon theories." The Liberal doctrinaires thought otherwise, and succeeded in dominating their party, to their own overthrow, in the election of 1878. It took eighteen years of opposition to repair the fortunes shattered by this mistake, and when the Liberals again came into power it was to exhibit themselves as practical converts to the policy which Macdonald had established.

Turning again to Macdonald, it should be noted that to the extreme protectionists of his party, he steadily refused to commit himself. In June, 1878, he endeavoured to assuage the anxiety of the Maritime Provinces by a telegram stating that he had "never proposed an increase, but a readjustment of the tariff," and his motion in the House of Commons earlier in the same year was drawn with characteristic skill.

Unlike that of 1876 it does not mention protection, but states "that this House is of opinion that 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; . . . and moving (as it ought to do) in the direction of reciprocity of tariff with our neighbours, as far as the varied interests of Canada may demand, will greatly tend to procure for this country, eventually, a reciprocity of trade."

More than one breeze of popular opinion was caught by this resolution. It appealed at once to the deep-seated Canadian suspicion of the United States, and to the strong desire of the farmers for the American market. It was, in fact, a blow at the enemy with the ostensible object of forcing him into a more friendly attitude. Equally important was its appeal to the rising national sentiment of the Dominion, of which the National Policy was the crystallization.

In 1870 an association of able and ambitious young men, known as the "Canada First" party, had been formed in Toronto. Their actual proposals were of less importance than the stimulus which they gave to the national aspirations: their call to Canada to depend not on British or American patronage in commerce or politics, but on herself. Canadian individuality, vigorously worked out on lines not inconsistent with close imperial connection, was the key-note of the party's policy. Around this ideal gathered a number of clever and independent thinkers. For a time they were supported by the distinguished name and skilful pen of Goldwin Smith. They exerted a powerful influence over the course of events at the time of the first North-West rebellion. In the 1878 campaign they were nearly all on the side of Macdonald.

To another argument not brought into his motion, but presented in his speech, Macdonald probably attached greater importance than to the hope of bringing the United States to its knees. This was the possibility of obtaining a trade preference from Great Britain. After giving a sketch of her unique commercial position at the close of the Napoleonic wars in 1815, and of the subsequent gradual growth of trade rivals and also of hostile tariffs, he said :-

"I am an old man, but I think I may live to see the time when that cry may be successful in England; the time when, if reciprocity in trade and equitable commercial treaties cannot be obtained, the people of England will say, 'we will not allow our industries and our accumulated capital of so many years to be swept away by nations who do not give us a chance of competing in their markets, and who, by their legislation, specially exclude England.' "

On his return to power Macdonald took steps to press his views upon the home government. The appointment of his old finance minister, Sir A. T. Galt, as high commissioner in London, had apparently a close connection with this object, and there is reason to think, from a debate on the subject in the Canadian House in 1880 that, had Lord Beaconsfield's government been sustained, important developments might have taken place. In 1891 Macdonald again urged upon the mother country the policy of preferential treatment, and received encouraging letters from the Hon. W. H. Smith, then leader of the British House of Commons. But the feeling in favour of preferential trade was not yet strong enough in the motherland to justify responsible statesmen in making it a political issue. We need only note here the foresight which anticipated the movement of late years.

The general election came on in September, 1878. The government had been warned by the loss of a series of bye-elections—a most significant circumstance in a country where the allotment of public works is openly made the reward of support to the party in power. But the Mackenzie administration was curiously confident in the strength of its position, and so the triumph of Macdonald and the Conservative party came as a great surprise. The Opposition swept every province except New Brunswick, carrying in Ontario sixty-three seats out of eighty-eight, and in the whole Dominion one hundred and forty-six out of two hundred and six. Macdonald was himself defeated in his old constituency of Kingston, but was elected in two western divisions, and decided to sit for Victoria, British Columbia.

Early in the next year Sir Leonard Tilley, as finance minister, introduced a bill to give effect to the National Policy, which was frankly based upon the theory of a qualified protection, its principle being "to select for a higher rate of duty those articles which are manufactured or can be manufactured in the country, and to leave those that are neither made nor are likely to be made in the country at a lower rate." This has ever since been the trade policy of the Conservative party of Canada. As has been mentioned before, the Liberal party was practically compelled to adopt it on coming into power in 1896.
From1874 to 1878 the rate charged on dutiable goods had been about twenty per cent. The National Policy, usually spoken of as the N.P., raised it to about twenty-five per cent., while in many cases substituting specific or compound duties for ad valorem. During the following years a good many changes were made, some really useful—others which seemed mere tinkering to meet special demands. In 1887 important reforms were introduced, the average rate on dutiable goods rising to nearly thirty per cent., and iron being now for the first time specially protected, in order to still the discontent of Nova Scotia, which indulged hopes of becoming in the industrial system of Canada what Pennsylvania is in that of the United States. From 1890 onwards until the Liberals came into office in 1896 a slight tendency to reduction of duties may be traced, but few changes of importance were made.

The advantage of the system thus inaugurated is now scarcely a subject of discussion in Canada. Under its stimulating influence business improved and the revenue promptly expanded to such a degree that the government was able to show a considerable surplus. A marked increase in prosperity followed, even if it were not wholly created by, the new system. Every department of national life revived, and it may now be safely affirmed that the adoption of the National Policy went far to create in Canada a higher and more confident national spirit.


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