Canada - Why Reciprocity Was Rejected
( Originally Published 1915 )
IF American capital and American enterprise dominate Canadian mines, Canadian timber interests, Canadian fisheries ; if American elevators are strung across the grain provinces and American flour mills have branches established from Winnipeg to Calgary; if American implement companies and packing interests now universally control subsidiaries in Canada why was reciprocity rejected? If it is good for Canada that American capital establish big paper mills in Quebec, why is it not good for Canada to have free ingress for her paper-mill products to American markets? The same of the British Columbia shingle industry, of copper ores, of wheat and flour products? If it is good for the Canadian producer to buy in the cheapest market and to sell in the highest, why was reciprocity rejected? Implements for the farm south of the border are twenty-five per cent. cheaper than in the Canadian Northwest. Canadian wheat milled in Minneapolis enjoys a lower freight rate and consequently a higher market than Canadian wheat milled in Europe, as sixteen and twenty two are to forty and fifty cents the former being the freight cost to a Minneapolis mill; the latter, the freight cost to a European mill. Why, then, was reciprocity rejeeted?
From 1867, Canada had been intermittently seeking reciprocity with the United States. Now, at last, the offer of it came to her unsolicited. Why did she reject it by a vote that would have been unanimous but for the prairie provinces? Though the desire for reciprocity with the United states was exploited politically more by the Liberals or low tariff party than by the Conservatives the high tariff party both had repeatedly sent official and unofficial emissaries to Washington seeking tariff concessions. Tariff concessions were a plank in the Liberal platform from the days of Alexander MacKenzie. They were not a plank in the platform of the Conservative party for the sole reason that the high tariff on the American side forced a high tariff in self defense on the Canadian side. Close readers of Sir John Macdonald's life must have been amazed to learn that one of his very first visits to Washington contemporaneous with the Civil War period, when the United States were just launching out on a high tariff policy was for the purpose of seeking tariff favors for Canada. Failing to obtain even a favorable hearing, he observed the high-tariff trend at Washington, took a leaf out of his rival's book and returned to Canada to launch the high-tariff policy that dominated the Dominion for thirty years. Alexander MacKenzie, Blake, Mowat, George Brown, Laurier, Cartwright, Fielding all the dyed-in-the-wool ultra Whigs of the Liberal party practically held their party together for the thirty lean years out of office by promises and repeated promises of reciprocity with the United States the instant they came into office. They never seemed to doubt that the instant they did come into office and proffered reciprocity to the United States the offer would be accepted and reciprocated. It may be explained that all these old-line Liberals from MacKenzie to Laurier were free-traders of the Cobden-Bright school. They believed in free trade not only as an economic policy but as a religion to prevent the plundering of the poor by the rich, of the many by the few. One has only to turn to the back files of the Montreal Witness and Toronto Globe from 1871 to 1895 the two Liberal organs that voiced the extreme free trade propaganda to find this political note emphasized almost as a fanatical religion. The high tariff party were not only morally wrong; they were predestinedly damned. I remember that in my own home both organs were revered next to the Bible, and this free-trade doctrine was accepted as unquestionably as the Shorter Catechism.
Well Laurier came to power; and he gathered into his Cabinet all the grand old guard free traders still alive. As soon as the Manitoba School Question was settled Laurier put his Manchester school of politics into active practice by granting tariff concessions on British imports. The act was hailed by free-trade England' as a tribute of statesmanship. Laurier and Fielding were recognized as men of the hour. The next step was to carry out the promises of reciprocity with the United States. One can imagine Sir John Macdonald, the old chieftain of the high-tariff Conservatives, turning over in his grave with a sardonic grin "Not so fast, my Little Sirs!" When twitted on the floor of the House over a high tariff oppressing farmers and favoring factories, Sir John had always disclaimed being a high-tariff man. He would have a low tariff for the United States, if the United States would grant Canada a low tariff he had answered; but the United States would not grant Canada any tariff concessions. And the grand old guard of Whigs had jeered back that he was "a compromiser" and "a trimmer," who tacked to every breeze and never met an issue squarely in his life.
If the Liberals had not been absolutely sincere men, they would not have ridden to such a hard and unexpected fall. They would, like Sir John, have trimmed to the wind; but they believed in free trade as they believed in righteousness ; and they furthermore believed all they had to do was to ask for it to get it. Blake had retired from Canadian politics. George Brown of the Globe was dead; Alexander MacKenzie had long since passed away ; but the old guard rallied to the reciprocity cry. International negotiations opened at Quebec. They were not a failure. They were worse than a failure. They were a joke. High tariff was at its zenith in the United States. Every one of the American commissioners was a dyed-in-the-wool high-tariff man. It would be an even wager that not one man among them had ever heard of the Cobden-Bright Manchester School of Free Trade, by which the Laurier government swore as by an unerring Gospel. They had heard of McKinley and of Mark Hanna, but who and what were Cobden and Bright? What, relation were Cobden and Bright to the G. O. P.? The negotiations were a joke to the United States and a humiliation to Canada. They were adjourned from Quebec to Washington; and from Washington, Fielding and Cartwright re-turned puzzled and sick at heart. They could obtain not one single solitary tariff concession. They found it was not a case of theoretical politics. It was a ease of quid pro quo for a trade. What had Canada to offer from 1893 to 1900 that the United States had not within her own borders? Canada wanted to. buy cheaper boots and cheaper implements and cheaper factory products generally. She wanted a higher market for her wheat and her meat and her fish and her crude metals and her lumber. She would knock off her tariff on American factory products, if the United States would knock off her tariff against Canadian farm products. One can scarcely imagine Republican politicians going to American farmers for votes on that platform. What had Canada to offer? She had meat and wheat and fish and timber and crude metals. Yes ; but from 1893 to 1900 Uncle Sam had more meat and wheat and fish and timber and crude metals than he could digest industrially himself. Look at the exact figures of the case ! You could buy pulp timber lands in the Adirondacks at from fifty cents to four dollars an acre. You could buy timber limits that were almost limitless in the northwestern states for a homesteader's relinquishment fee. Kansas farmers fed their wheat to hogs because it did not pay to ship it. Texas steers sold low as five dollars on the hoof. Crude metals were such a drug on the market that the coinage of free silver was suggested as a panacea. Canada hadn't anything that the United States wanted badly enough for any quid pro quo in tariff concessions.
This was the time that Uncle Sam rejected reciprocity.
Fielding, Laurier and Cartwright came home profoundly disappointed men; and as stated before old Sir John may have turned over in his grave with a sardonic grin.
When Sir John had launched the Canadian Pacific Railroad to link Nova Scotia with British Columbia, when his government to huge land grants had added cash loans, when he had offered bonuses for factories and subsidies for steamships no one had sent home such bitter shafts of criticism as these old guard Liberals hungry for office. Why give away public lands? Why push railroads in advance of settlement? Why build railroads when there were no terminals, and terminals when there were no steamships? Why subsidize steamships, when there were no markets? Was it not more natural to trade with neighbors a hand-shake across the way than with strange nations across the ocean? I have heard these barbed interrogations launched by Liberals at Conservatives with such bitterness that the wives of Conservative members would not bow to the wives of Liberal members met in the corridors of Parliament.
Now mark what happened when the free trade Liberals found they could obtain no tariff concessions from the United States ! They had gibed Sir John for committing the country to one transcontinental railroad. They now launched two more transcontinental railroads east and west, not north and south. Subsidies were poured into the lap of steamship companies to attract them to Canadian ports ; and thirty-eight millions in all were spent improving navigation in the St. Lawrence. Wherever Clifford Sifton sent agents to drum up settlers trade agents were sent to drum up markets. Then as Sir Richard Cartwright acknowledged the Liberals were traveling in the most tremendous luck. An era of almost opulent prosperity seemed to come over the whole world. Gold was discovered in Klondike. Germany opened unexpected markets for copper ores. Number One Hard Wheat became famous in Europe. Canadian apples, Canadian butter, Canadian meats began to gather a fame of their own. Canada was no longer dependent on American markets. There was more demand for Canadian products in European markets than could be filled. Then came the tidal wave of colonists. This created an exhaustless market for farm produce within Canada's borders, and within three years in spite of the tariff imports of manufacturers from the United States doubled. American factories and flour mills and lumber mills sprang up on the Canadian side by magic. In this era Canada was actually importing ten million dollars' worth of food a year for one western province, and the cost of living in ten years increased fifty-one per cent.
Came a turn in the wheel ! The wheel has a tricky way of turning up the unexpected between nations. A new era had come to the United States. Kansas was no longer feeding wheat to hogs. In fact, the decrease in wheat exports had become so alarming that men like Hill of Great Northern fame and James Wilson, Secretary of Agriculture, actually predicted that there would come a day of bread famine in the United States. The population of the United States had grown faster than the country's production of food. There was an appalling decrease of meat animals. American packers were establishing branch houses all through Canada. As for metals, with the superabundance of gold from Yukon and Nevada, there did not seem any limit to the world's power to absorb what was produced. The almost limitless timber lands of the northwestern states passed into the hands of the great trusts. Buyers of print paper in the United States became alarmed at the impending shortage of wood pulp.
It was not unnatural that the same thought came to many minds in the United States at once. "If we had free trade, we could bring Canada's raw products in and build up our factories here instead of in Canada," was the gist of the manufacturer's argument. "If we had free trade, it would reduce the cost of living," was the gist of the city consumer's argument. Canadian lumber, Canadian meat, Canadian wheat could be brought across and manufactured on the American side. For the first time the American manufacturer became a free trader. Practically there was only one section in the United States opposed to reciprocity with Canada ; that was the American farmer, and his opposition was more negative than positive.
It is hard to say who voiced the desire for reciprocity first. Possibly the buyers of print paper. At all events, there was at Ottawa a Governor-General of the Manchester School of Free Trade. There was editing the Toronto Globe the main Liberal organ a worthy successor of George Brown as an exponent of the Manchester School of Free Trade. Shortly after this editor a man of brilliant forceful character had met President Taft and Joe Cannon in Washington, the Governor General of Canada was the guest of Governor Hughes at Albany and there met President Taft. Of the old guard of free traders, there were still a few in Laurier's Cabinet, and Laurier himself was as profoundly and sincerely a free trader in power as he had been out of office. Enemies aver that the Laurier government now launched reciprocity to divert public attention from criticism of the railroad policy, in which there had undoubtedly been great incompetency and gross extravagance an extravagance more of a recklessly prosperous era than of dishonesty but this motive can hardly be accepted. If Laurier had launched reciprocity as a political dodge, he would have sounded public opinion and learned that it was no longer with him on tariff concessions ; but because he was absolutely sincere in his belief in the Cobden-Bright Gospel of Free Trade, he rode for a second time to a humiliating fall. A trimmer would have sounded public opinion and pretended to lead it while really following. Laurier believed he was right and launched out on that belief.
There was probably never at any time a more conspicuous example of politicians mistaking a rear lantern for a headlight. I had come East from a six months' tour of the northwestern states and northwestern Canada. I chanced to meet a magazine editor who for twenty years had been the closest exponent of Republican politics in New York. The Canadian elections were to be held that very day. In Canada a party does not launch a new policy like reciprocity without going to the country for the electorate's approval or condemnation. The editor asked me if I would mind reading over a ten-page advance editorial congratulating both countries on the endorsation of reciprocity. I was paralyzed. I was a free trader and had been trained to love and revere Laurier from childhood; but I knew from cursory observation in the West that there was not a chance, nor the shadow of a chance, for reciprocity to be endorsed by the Canadian people. The editor would not believe me. He was in close touch with Taft. He sat up over-night to get returns from Canada, and the next night I left for Ottawa to get the views of Robert Borden, Canada's new Conservative Premier, as to why it had happened.
It had happened because it could not have happened otherwise, though neither President Taft nor Premier Laurier, neither the editor of the Globe nor the free trade Governor General seemed to have the faintest idea what was happening. Canada rejected reciprocity now for precisely the same reason that Uncle Sam had rejected reciprocity ten years before because Uncle Sam had no quid pro quo, no equivalent in values to offer, which Canada wanted badly enough to make trade concessions. Said Canada : you have exhausted your own lumber; you want our lumber; pay for it. You want it so badly that you will ultimately put lumber on the free list without any concession from us. Meanwhile, for us to remove the tariff would simply lead to our lumber going across the line to be manufactured. It would build up your mills instead of ours. The higher you keep the tariff against our lumber the better pleased we'll be; for you will have to build more and more mills on our side of the line. We are even prepared to put an export duty on logs to compel you to keep on building mills on our side of the line. This was the argument that swayed and won the vote in British Columbia and Quebec. A similar argument as to wheat and meat swayed the prairie provinces and Ontario.
From Montreal to Vancouver there is hardly a ham-let that has not some American industry, packing house, lumber mill, flour mill, elevator, machine shop, motor factory, which operates on the Canadian side of the border because the tariff wall compels it to do so. These industries have doubled and trebled the populations of cities like Montreal, Hamilton, Winnipeg, Vancouver, Calgary, Moose Jaw. Would removal of the tariff bring more industries to these cities or move them south of the border? The cities voted almost to a man against reciprocity.
Allied with the cities were the great transportation systems running east and west. Reciprocity to divert traffic north and south seemed a menace to their receipts. To a man these systems were ,against reciprocity.
You have forced us to work out our own Destiny, said Canada. Very well now that we are at the winning post, don't divert us from the goal! We love you as neighbors ; we welcome you as settlers ; we embrace you as investors ; but when we came to you, you rejected us. Now you must come to us!
Deep beneath all the jingoism these were the economic factors that rejected reciprocity. It is all a curious illustration of the difference between practical and theoretical politics. Theoretically both parties have been free traders in Canada. Practically free trade had thrown them both down. Theoretically Canada rejects reciprocity. Practically trade across the boundary has increased one hundred per cent. since she rejected reciprocity. Theoretically Canada was protecting her three transcontinental systems when she rejected reciprocity. Practically the growth of lines with running rights across the boundary has increased from sixteen to sixty-four in ten years.
When American industries have become rooted in Canadian soil beyond possibility of transplanting, no doubt the fear will be removed; and at the present rate of the increase of trade between the two countries the tariff wall must become an anachronism, if it be not worn down by sheer force of trade attrition.
Comical incidents are related of the Canadian fear in individual cases. There was a Scotch school trustee in Calgary. He had voted Whig Liberal dyed in the wool free trade for forty years from the traditions of reciprocity under Alexander MacKenzie. A Canadian flag was flying above the fine new Calgary school. The Scotchman was going to the polls by streetcar. An excursion of American home seekers had just come in and one of the variety to essay placing an American flag on the pyramids had taken a glass too much. He began haranguing the street-car. "So that's the old Can-a-day flag," said he. "You jus' wait till tomorrow and, boys, you'll see another flag above that thar school 'ouse !"
Now a Scotchman is vera serious. The Scotch trustee gave one glowering look at that drunken prophet ; and he rang the street-car bell ; and he went at the patter of a dead run to the polling place ; and for the first time in his life he voted, not Whig, not free trade, not reciprocity and Laurier, but Tory and high tariff.
It should be added here that the tariff reductions on food under President Wilson have justified Canada's rejection of reciprocity. Canadian farm products have gained freer access to the American market with-out a quid pro quo.