Confederation and the National Policy

Conventionally, the national policy has been represented as comprising four main elements. One was Confederation itself, the constitutional arrangements which created a central government and an economic union strong enough to pursue a course of economic development independent of the United States. Secondly, there was the building of the Canadian Pacific Railway, a huge project designed to make a transcontinental political and economic entity feasible by bridging the great barrier of the Canadian Shield and establishing a direct all-Canadian transportation system from the Atlantic to the Pacific. Third was the acquisition and settling of the prairie lands to establish in western Canada a new frontier of agricultural settlement to complement and support the industry of central Canada. And finally, there was the policy of protecting domestic manufacturing through a tariff on imported manufactured goods. (This protective tariff was referred to at the time as the "National Policy", and it has become the practice to capitalize the term when it is used in this narrow sense to distinguish it from the more general strategy of nation-building, the "national policy", of which it was a part.)
 

The British North America Act

In the new province of Canada, however, the government found itself paralyzed by legislative discord between members from Canada East and Canada West, each of which had equal representation in the house. The conflict was particularly acute with respect to passing measures, often very expensive ones, to effect the transportation improvements desired by the people of Canada West. This was particularly frustrating because of the way population growth in Canada West had outstripped that of Canada East. The rallying cry of the Canada West faction was "Representation by Population". In Canada East this raised the old concerns of the Roman Catholic French over becoming submerged in a society dominated by English-speaking Protestants. It was not until 1864, when the leader of the Conservative Party in Quebec, Jean Etienne Cartier, became persuaded that the best course to resolve the deadlock was to form a coalition government with the reformers of Canada West that the way was cleared for further progress. 

In the Maritimes, changes were also underway by mid-century which were conducive to making new political arrangements acceptable. The idea of forming a union of the Maritime colonies had often been aired, but in 1864 it began to be actively promoted by Nova Scotia and New Brunswick which expressed interest in the possibility of forming a union with Prince Edward Island. A conference was called to discuss the possibilities at Charlottetown, Prince Edward Island, on September 1, 1864. When representatives from the Province of Canada turned up with a proposal for a larger union of all British North America the Maritime scheme was dropped and plans made for a conference to be held in Quebec City in October 1864 to discuss what was coming to be called "confederation". These developments were warmly endorsed by the British government, which was becoming very uneasy about its relations with the US. Acceptance was less certain in some of the British North American colonies, however. The plan had to be ratified by the legislatures of each of them. Approval was gained in the Province of Canada, after lengthy debate, in March 1865. In New Brunswick, however, the pro-Confederation party lost an election and the proposal was defeated. The legislatures of Prince Edward Island and Newfoundland also rejected the scheme. 

It was not until 1866 that the uncertainties created by the outbreak of civil war in the US combined with mounting pressure from the British government to generate enough support to pass the proposal in New Brunswick. Nova Scotia promptly ratified it as well. Prince Edward Island voted to remain outside. The British North America Act, uniting the provinces of Canada, New Brunswick, and Nova Scotia, was whisked through the British Parliament early in 1867. The Dominion of Canada came into existence on July 1, 1867.

The original provinces were subsequently joined by Manitoba and the Northwest Territories in 1870, British Columbia in 1871, and Prince Edward Island in 1873. The new prairie provinces of Saskatchewan and Alberta were carved out of the Northwest Territories in 1905 

The most significant provisions of the British North America Act affecting the economic development of the new nation were those which attempted to define the respective functions of the federal and the provincial legislatures. With the disaster of the US Civil War in the news of the day, it is not surprising that the framers of the Canadian constitution were at pains to make clear that the main responsibility for guiding the country would lie with the federal authority. The provinces were apparently assigned matters of local and particular interest, many of which had proved to be divisive in pre-Confederation political processes because they involved cultural issues, especially those of importance to the French-Canadian population. Thus, in the Act, the federal powers are defined in very broad terms, as summed up in the charge to provide "peace, order and good government". The federal taxing authority was correspondingly defined very broadly to include all types of taxation, both direct and indirect. The provincial powers were set out mainly in terms of specific functions such as education, municipal government and licensing saloons and taverns, responsibilities which were relatively minor functions of government in 1867. Since these were not expected to be particularly expensive to perform, the provincial taxing authority was limited to direct taxes, such as sales taxes and license fees. But the drafters of the Act then embellished their work and, in so doing, set the stage for the bizarre subsequent history of Canadian federal-provincial relations which has dominated Canadian public debate to the present day. Instead of leaving the federal powers stated in general terms, they inserted a list of specific powers to illustrate the kinds of things they intended the federal government to do, for example, national defence, trade and commerce, foreign affairs, money and banking, the effect of which was to imply certain limits to federal powers. And instead of leaving the provincial responsibilities as a list of specific functions, they added what turned out to be a difficult to define, and potentially very broad responsibility, the protection of "property and civil rights".

While the intent of the framers of the BNA Act would seem to be clear from the above with respect to where the weight of legislative authority would be in Canada, supporters of provincial interests, especially, but not exclusively within Quebec, subsequently succeeded in subverting the evident intention of making the federal authority strong relative to that of the provinces. Judicial interpretation, beginning with the Local Prohibition case heard by the Judicial Committee of the Privy Council in London in 1896, initiated a trend to place more emphasis on the "property and civil rights" clause and less on the "peace, order and good government clause". The effect was of great consequence for the conduct of economic policy, the effectiveness of which seemed to rest on the existence of a strong central authority capable of acting in the national rather than sectional interest. 
 

The Western Lands

A large part of the territory north of the border in what is now southwestern Saskatchewan and southern Alberta was found to be arid ("Palliser's Triangle"), but surrounding this forbidding area was what appeared to be a fertile belt in which soils and rainfall would make agricultural settlement feasible. The expedition also explored the passes of the southern Rockies, identifying possible routes for a railway through the mountains to the Pacific coast, but noting the extreme difficulty of penetrating the mountains further west , Palliser reported that if the international boundary was set along the 49th parallel, it would likely be impossible to build a railway to the west coast through only British territory. Rather similar findings were supplied by H.Y. Hind (Professor of Chemistry at Trinity College in Toronto), one of the scientific advisers with Palliser's 1857 expedition, who returned to explore the valleys of the Assiniboine and Saskatchewan Rivers in 1858 although, in his view, the chief obstacles to settlement would be lack of markets, rather than geographical considerations.

In Britain and central Canada interest in the possibility of developing a western frontier arose from a variety of motives: there was concern that the Americans would occupy the region; there appeared to be an opportunity to validate the already heavy investments that had been made in transportation (such as the Grand Trunk project); and there was the possibility that the new railway technology might make it feasible to establish the long dreamed of "Northwest Passage" -a direct route between Britain and the Far East. (Neither the Suez nor the Panama Canals had yet been built.)

How significant was the prospect of western settlement in promoting Confederation in 1867? The Confederation Debates indicate that some of the proponents of a federal union of the British North American colonies were mainly concerned with the Maritimes and central Canada per se. Others, however, used arguments which seem to imply that they saw Confederation as a necessary step toward establishing a political and economic power strong enough to undertake the development of the west. In the event, however, the policy of the Canadian government with respect to the western lands was clear: they would be used to attract settlers and to help finance the construction of railways. But before the land could be utilized for such purposes the prairies had to be surveyed.

The survey of the western interior was a large and technically complex undertaking. It was also the source of the new nation's first serious conflict with a dissident minority, the Métis residents of the Red River region. The survey appeared to take little account of the established claims of local residents and was interpreted by many of the Métis as a direct challenge to their long-established position in the area. The result was the Red River Rebellion of 1869-70 and formation of a provisional government under the leadership of Louis Riel. Although the Manitoba Act, which created a small new province in the southeast corner of present-day Manitoba, contained a provision that land would be reserved for the Métis and their children, this did not happen. Although some land in Manitoba was made available to Métis, most of it was in the form of transferable certificates (paper scrip) which many recipients sold cheaply to speculators who offered cash on the spot. The influx of new settlers and subsequent amendments to the legislation had the effect of driving most of the 10,000 or so half-breeds out of the area. Some relocated in the United States, many others moved further west into what was still the largely unorganized Northwest Territories. 

In the 1880's, as the railways and settlement pushed further westward, the Métis again found themselves in the way of agricultural expansion and their situation once more led them into armed rebellion. Despite some initial success, the Métis were decisively defeated by Canadian troops at the battle of Batoche in Saskatchewan. Their leader, Louis Riel, and eight Indians who had supported him were hanged, an act which created bitterness and resentment in Quebec. Large numbers of Riel's supporters fled again, some to the United States, but most of them to northern Alberta and the Mackenzie country in the far northwest. The federal government, strongly supported by Ontario, had made it clear that nothing would stand in the way of settling the west to realize "the purposes of the Dominion".

With the suppression of the Métis, the Canadian government was able to proceed with its disposition of the western lands. The survey carried out in western Canada divided the agricultural lands there into one-square-mile townships subdivided into 36 sections of 640 acres each. Two sections in each township were reserved for the purpose of supporting education; one or two were made available to the Hudson's Bay Company as compensation for relinquishing title to Rupert's Land; and most of the odd-numbered sections were set aside for selection by railway companies receiving land grants. The remaining sections were disposed of in two ways. The federal government sold some of the land to colonization companies on the understanding that they would resell it to settlers within a period of five years. This program was not very successful, as many of the companies failed when western land prices fell sharply in 1883. The rest was disposed of through direct grants from the government to settlers. Following American precedent, the Dominion Lands Act of 1872 made it possible for settlers to obtain a quarter section "homestead" upon paying a fee ($10.00) and giving a commitment to build a house and to bring a specified amount of acreage under cultivation within three years.

The response to the homestead program was initially disappointing. Settlement was very slow from the 1870's until near the turn of the century. Despite the homestead policy, the building of the railways, and heavy advertising of western Canadian farming opportunities throughout Europe, there was no rush of settlers into western Canada, although they continued to pour into the American west. Whether this was due to differences of land quality, climate, technique, grain markets, transportation costs or government land policies has been much discussed in the literature. No consensus has yet emerged.

It was not until the late 1890's that the hoped-for large-scale influx of settlers to the Canadian prairies began. Homestead entries increased sharply in 1898 and peaked around 1910. Activity slowed during the years of World War I, but following the war there was renewed interest in settling the remaining western lands, particularly those in the Peace River country of northern Alberta.
 
 

The Transcontinental Railways

The CPR was completed in 1885 and by 1900 a large number of branch-line railways had been built or were under construction throughout western Canada. Such was the enthusiasm of entrepreneurs and investors for railways at the time that three additional transcontinental trunk line projects were soon undertaken -- the Canadian Northern , the Grand Trunk Pacific, and the National Transcontinental. None of the new lines were commercially successful, whether because they were ill-conceived or hobbled by government restrictions on their operations (there are conflicting views on the matter). In any event they were all eventually brought under public ownership and in became incorporated into the publicly-owned Canadian National Railways organization. Subsequent railway construction in Canada was largely a matter of revising and upgrading existing routes and building a number of special purpose railways, most of which were related to resource development in northern Canada.  
 

Immigration and Prairie Settlement

The slow growth of the western population in the thirty years or more following Confederation necessitated some modification of these criteria. Clifford Sifton, the minister of the interior in Laurier's Liberal government elected in 1896, is remembered today, especially in western Canada, for his vigorous campaign to bring in settlers from central Europe (and his frequently quoted observation that, "A stalwart peasant in a sheepskin coat, born on the soil, whose forefathers have been farmers for ten generations, and a stout wife and a half-dozen children is good quality."

Canadian immigration policy under Sifton became more open, but it remained restrictive and still reflected strong ethnic and "racial" biases. This was particularly evident in the treatment of Chinese immigrants. Large numbers of Chinese workers had been recruited during the 1880's to provide labor needed for construction of the CPR, but subsequently the Canadian government imposed severe restrictions on Chinese immigration, including a "head tax" of from 50 to 500 dollars per person. Federal legislation (the Chinese Immigration Exclusion Act) in effect prohibited Chinese immigration between 1923 and 1947. 

Emigration from Canada exceeded immigration in the decades of the 1860's, 1870's, 1880's and 1890's. Large numbers of people left the Maritimes and Quebec in search of opportunities in the US. In the 1890's, with the closing of the agricultural frontier in Ontario, it too lost substantial numbers, although some of these were moving not out of the country, but into western Canada. It was not until the heavy influx of population associated with the settling of the prairies that immigration became an important cause of population growth in the new nation of Canada. During the height of the settlement process, in the decade 1901-11, net migration slightly exceeded natural increase as the main cause of population growth. Although immigration subsequently declined and emigration increased, the net effect of migration remained positive until the Depression of the 1930's.
 
 

The National Policy Tariff

In the years immediately following Confederation the main thrust of Canadian trade policy was to try to restore special trading relations with the US. When Canadian overtures to Washington were rebuffed, and with the onset of the severe recession of the early 1870s, protectionist sentiment grew in Canada and the federal election of 1874 was contested largely around this issue. The free trade interests were championed by the Liberal party and the protectionists by the Conservatives. By then, most Canadian farm groups had come to oppose protection on the reasonable grounds that their interests lay more in free trade which they hoped would enable them to enjoy access to foreign markets without fear of protectionist reprisals while at the same time keeping the prices of the manufactured goods they themselves had need of lower. Manufacturers in central Canada, on the other hand, were becoming disillusioned with efforts to restore Reciprocity with the US and were in the process of forming the Canadian Manufacturers Association, a major purpose of which was to lobby for higher tariffs. With the settlement of the prairie west the issues which pitted farmer against business person in central Canada took on a new dimension. Prairie farmers saw the protective tariff as a device by which they would be denied access to cheaper imported machinery, equipment and other manufactured goods which they would be forced to buy from central Canadian suppliers. The latter held the view that if there were no protective tariff to preserve the prairie market, the benefits of opening the west would flow to American and other foreign producers.

The victory of the Conservatives in 1874 was a win for the manufacturing interests of central Canada and a loss for the agricultural interests. The Conservatives soon introduced legislation to raise tariffs and coined a convenient euphemism for their new policy. Instead of referring to their protective tariff, they called it the "National Policy Tariff" when it was introduced in 1879. The free trade factions in Canada continued to oppose such measures. The tariff was again a major issue in the election of 1896. Laurier, the Liberal leader, delivered splendid speeches denouncing the evils of protection, which he likened to a system which put Canadians into bondage. However, when they won the election, the Liberals made only minor modifications in the tariff.