WHY RECIPROCITY WAS REJECTED
I
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 rejected?
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.
II
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 returned 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 case 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 handshake 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.
III
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.
IV
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 overnight
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 hamlet 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 street-car. 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-dáy flag," said he. "You jus'
wait till to-morrow 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. [1]
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
without a quid pro quo.
[1] Opponents of reciprocity in the United States made skilful use of
Canadian touchiness on such matters, and not all such expressions as
that quoted above were spontaneous.--THE EDITOR.