The Isolation of Canada

NEGOTIATIONS between Canada and the United States looking toward more harmonious relations are now at a standstill, although the High Joint Commission created to formulate a treaty is still in existence. Matters of grave concern to both countries have not yet been disposed of, and are left in such status as to threaten prolonged controversy and dangerous friction, involving the amicable relations of England, as well as Canada, with the United States. The Canadian members of the High Joint Commission have returned to their own country, feeling hurt and slightly revengeful; so much so, in fact, that north and south of the boundary it is freely predicted and generally believed that no further meetings of the Commission as now constituted will be held.

Several causes are responsible for this discouraging state of affairs. The Canadians assert that their advances were received with indifference, and that their Commissioners were not accorded the consideration warranted by their position and the importance of their mission. In view of the fact that fourteen treaties of trade and friendship, the entire number submitted, were smothered in the United States during the last session of Congress, they feel no hope that a convention with Canada would meet a different fate. In brief, the Canadians accept the commercial challenge issued to the world by the United States through the refusal of the legislative branch of the government to sustain the efforts of the executive to bring about trade extension by treaties of mutual concession.

The present tariff law of the United States provides specifically for reciprocity. President McKinley, through the State Department, has spared no endeavoi’, from the first day of his administration to the present time, to extend the operations of this provision. The Senate, as the ratifying power, has, on the other hand, persistently blocked all effort in this direction, until a time has been reached when there is some question as to whether the reciprocity act has not expired by limitation. This obstruction has not arisen, as a rule, from any opposition to the principle involved, but from a consideration of local interests represented by individual Senators who, under the exereise of “senatorial courtesy,” are able to control legislation. This is the general situation in regard to reciprocity in foreign trade, and there is no immediate prospect of relief.

In the case of Canada another element, which is a well-defined congressional influence, comes into play. Friendliness toward England or England’s colonies on the part of the administration is still looked upon by ambitious politicians as an opportunity for making political capital for themselves. The anti - British vote still has its terrors for prospective candidates for the presidency, and, with half a dozen Senators playing their cards with this great prize in view, Canada is looked upon as an effigy of the British bugaboo, to be maltreated for the edification of the anti-British American voter. Under existing conditions this seems hardly credible, but the treaty-making power of the United States has been brought to a sharp realization of the force of this influence within a year past. A full understanding of the motives actuating a majority of those who oppose closer relations with Canada by treaty has led to the belief, on the part of many American officials, that Canada has some reason for irritation at the lack of results following her strenuous efforts to enter into closer union with the United States.

Naturally, a severe reaction has followed the rebuff. The Liberal party of Canada has been the party in favor of close community of interests with the United States. It appealed to broadminded Canadians of all political creeds, and especially did it please the large French Canadian element. To meet with absolute failure in carrying out this idea was not pleasant, nor was it politically profitable. The Liberal party was placed in an uncomfortable position, to which the Opposition promptly and persistently called public attention. It became necessary for the Liberals to provide a counter irritant, which was quickly done. The indifference of the United States to the advantages of closer commercial relations with Canada has given rise in the latter country to a new policy, which promises in time to arouse the people of the United States to a radical change frem their present attitude toward Canadian affairs.

The keynote of tills new policy which has been adopted for Canada by the Liberal party now in power is to maintain, so far as the United States is concerned, the present isolation of Canada, and to cultivate closer relations with England and her colonies, and such other countries as may show considerate interest in the products of Canadian industry. The domestic phase of this new policy is to be the active development of all-Canadian transportation routes; the encouragement of immigration, especially from the United States; and the development by subsidies of all industries, particularly those which can use Canadian raw material now sent to the United States for treatment.

The results to come from the carrying out of this policy are eloquently and enthusiastically set forth by Canada’s able premier, Sir Wilfrid Laurier. Scarce concealing his chagrin at the failure to bring about a convention with the United States, and smarting under the sarcasm of the Opposition, he finds relief and consolation in a brilliant prophecy of Canada’s future greatness as a powerful, selfsufficient, and commercially independent nation, wooed by all the countries of the earth, including the United States, for a share of her vast volume of foreign trade. In view of the present importance of Canada’s trade to the commercial interests of the United States, an importance not at all generally appreciated by the people of the latter country, and in view of the tremendous possibilities of growth in Canada’s population and wealth in the immediate future, it certainly is incumbent upon all concerned to consider well what may be termed, without exaggeration, a grave and remarkable situation.

Geographically, socially, and commercially, Canada is but an extension of the United States. Politically, a deep gulf separates the two countries, across which international intercourse finds its way only by the bridge of necessity. Regardless of ai’tificial restrictions, the people of Canada find in the United States the best place in which to buy and sell, and the people of the United States find in Canada the third largest market in all the world for the products of American labor. The dividing line between the two countries is imaginary. On land, there is no break at the boundary in the rails of the north and south roads. Where water intervenes, intercourse is even facilitated thereby.

There is no marked change of climate in going from one country to the other. The language, customs, and habits of the two peoples are generally the same. One million Canadian-born have left their native country to add to the population and energy of the United States. Thousands of people have gone from the United States to Canada, especially in recent years, moved by circumstance or to take advantage of peculiar opportunities. As a nation the people of the United States are composite to a greater degree than are those of Canada, though the latter are sufficiently so to induce the American habit of broad cosmopolitan thought. Canadians are of much closer kin to the people of the United States than are those of any other country. If there is any possible application of the principle of community of interests to two peoples, it should be found in this case.

That this community of interests does exist is discovered in the annual exchange between the two countries of nearly $200,000,000 in trade, and a constant and extensive mingling of the people north and south of the dividing line. All this takes place despite the high tariff wall erected by each country against the other; in spite of the absence of mutual agreements of trade and friendship, the conflicting interests of the two countries in certain directions, remarkable trade concessions granted by Canada to commercial rivals of the United States ; and, it may be added, in spite of the successful efforts of politicians in both countries to make political capital for themselves by widening the international breach.

The largest exchange of trade between the United States and any other country is with the United Kingdom, and amounts to about $760,000,000 each year. The next largest is with Germany, and amounts to about $290,000,000. The third largest is with Canada, and, as stated, amounts to nearly $200,000,000. The fourth largest is with France, and amounts to about $172,000,000. The exchanges of trade between the United States and countries other than these four are so much less in volume that the United Kingdom, Germany, Canada, and France must be considered in a class by themselves, as being by far our most important customers, and also our most valuable bases of supply. This fact alone is sufficient to demonstrate the importance to the people of the United States of any movement calculated to affect existing trade relations between this country and Canada. It also brings with it a keener realization of the remarkable and almost inexplicable indifference and lack of interest at present shown by the people of the United States toward Canadian affairs.

A like indifference is not manifested by the people of Canada toward the affairs of the United States. The smaller country is continually reminded of its dependence upon the greater. Political effort to the contrary notwithstanding, Canadian trade with the United States continues to grow at a greater ratio than with any other country. Canadian producers are becoming more and more dependent upon United States carriers, and a large proportion of the Canadian people continue to demand of the party in power that trade and travel between the two countries shall be less restricted. In the Congress of the United States, it is an exceptional day when mention is made of Canada. In the Canadian Parliament, scarcely a debate is precipitated in which the United States is not an important factor. Treatment of Canadian affairs, other than brief mention of current news topics, is the exception in the press of the United States. In Canada, scarcely an edition goes to print without extended mention of the United States from some point of view. It is the enforced recognition of this inevitable dependence which hurts, for it exposes the fatal defect in the present political programme for splendid isolation.

In 1897 Sir Wilfrid Laurier was able to carry into effect the Liberal plan for special trade concessions to England. They had long been discussed, and notable results were expected. Imports from England were granted a one-third reduction in duty. The trade situation following this move has emphasized rather than weakened the command of the Canadian markets by the United States, although the latter country has undoubtedly lost a considerable proportion of such gain as England has made.

Twenty-five years ago Canada was selling $40,000,000 worth of produce to England annually, and making purchases from that country amounting to $60,000,000. At the same time the Canadian sales to the United States were $30,000,000, and the purchases from that country were $51,000,000. Twenty years later, and just before England was granting preferential duties, Canada’s exports to England had increased to $62,000,000, and the imports decreased to $31,000,000. In that same year, 1895, Canada’s sales to the United States increased to $41,000,000, and her purchases to $55,000,000, — an increase of $15,000,000 in the total exchanges between the United States and Canada, as compared with a loss of $7,000,000 in the trade between England and Canada.

In 1900, three years after the preferential tariff of one third in favor of England went into effect, the importations of English goods into Canada increased to $45,000,000, a gain of fifty per cent. The Canadian exports to England rose, during the same period, to $108,000,000, a gain of about sixty per cent. During this period of prosperity for Anglo - Canadian trade induced by a preferential tariff, the United States, without encouragement, not only continued to do business with Canada, but increased her lead over England in that fieldIn 1895 the United States bought $41,000,000 worth of goods from Canada, and $69,000,000 worth in 1900, a gain of over forty per cent. In 1895 the United States sold $55,000,000 worth of goods to Canada, and $110,000,000 worth in 1900, a gain of one hundred per cent, as compared with England’s gain of only fifty per cent under much more favorable conditions. These figures are purposely given in round numbers, to avoid confusion, but are approximately correct.

To illustrate the control of the Canadian market by the United States, despite considerable effort made to check its growing influence, it is only necessary to deal with the matter of percentages as shown in Canada’s total foreign trade. In 1875 fifty per cent of Canada’s purchases were made in England, and fortytwo per cent in the United States. In 1897, just before she received her advantage in the tariff, England furnished twenty-six per cent and the United States fifty-five per cent of Canada’s imports.

In 1900, notwithstanding the fact that England had been favored with a onethird reduction in the duties for three years, her share of the Canadian import trade had dropped to twenty-five per cent, and that of the United States had risen to over sixty per cent. Apologists of the preferential duty granted to England, Sir Wilfrid among them, now admit the impotence of legislation to destroy the trade of the United States in Canada, or even materially to check it. They point, however, to the fifty per cent gain made by English trade in Canada from 1897 to 1900 as one of the effects of the special favors granted that country, and profess to believe that, by discriminating in its favor, they have saved the English trade from almost total extinction and the absorption of the business by the United States.

This is probably true, though Canada has gained little thereby, except a possibly increased consumption of her products by England, due to an increasing volume of trade in the other direction. England has never done anything to encourage Canada in return for these commercial favors. In consideration of tariff concessions for her own manufacturers, she has bought more Canadian produce, but still at competitive prices. She has sold more goods under protection from competition, but she gives no advantage in her own market, in return, to the goods of her friendly colony. This is now fully understood by Canadians. They have asked the British government to extend some recognition to colonial products, even though it be no more than a five per cent discrimination in their favor. No British statesman has yet taken this request seriously, and it is doubtful whether it will ever be so regarded, unless the English people partially abandon their present system of free trade, and become alarmed at the need of stronger ties between the mother country and the lustier colonies, which are now clamoring for less political control of their affairs from Downing Street.

There was another motive than mere friendliness toward England in the discrimination in favor of her trade, however. It was the purpose in this, as it will be in all other moves of like nature made in the future, to arouse the United States, if possible, to the desirability of closer relations with Canada, to kinder consideration of her trade advances. To induce the United States to sue for favors is the dream of every Canadian statesman of the party in power ; for it is the United States that Canada really desires to be friendly with, in a commercial way, and not England. As matters stand to-day, the man who could secure credit for bringing this about might rest assured of a place in Canadian political history along with Sir John Macdonald, long since canonized.

It is interesting to note that Canada was the first country with which the United States made a reciprocal commercial treaty. This was in 1854. By the terms of that treaty the fisheries controversy was temporarily quieted, to the profit of both parties, and a free exchange of raw material was assured. This latter concession was especially valuable to the United States during the Civil War, in the securing of supplies for the Union army. It was largely because of disputes arising out of this war, however, that the United States abrogated the treaty with Canada in 1865, the abrogation going into effect in 1866. Both economic and political reasons were assigned for this action. Canada had increased the import duties to a burdensome extent upon manufactured goods from the United States, thus causing considerable irritation. The friendly attitude of England toward the Confederate government, and the outfitting in Canada of expeditions against the Northern government, aroused greatfeeling against Canada in the Northern states. The abrogation of the treaty of 1854 was therefore really due more to political excitement than the economic reasons assigned as a matter of expediency.

Since the treaty of 1854 there have been two notable efforts made to secure another convention. One was in 1874, and came to naught. The other was the appointment of a High Joint Commission, which is still in existence, but from which little is now apparently expected. Two meetings of the Commission have been held, — one in Quebec and one in Washington. From the latter meeting the Canadian members returned to their homes with no hope of a final agreement, and the United States Commissioners saw them depart with a certain feeling of relief, as it was felt by them that the difficulties lay not so much in formulating an agreement between the countries as in securing a ratification of that agreement by the Senate of the United States.

It may be said, however, that, of the thirteen questions under the advisement of the High Joint Commission, the only one over which there was wide difference of opinion was in regard to the use of the Lynn Canal in Alaska. The State Department of the United States expresses the conviction that it is perfectly feasible for the United States and Canada to reach an understanding advantageous to both parties, except possibly in the domain of transportation, in which there is the keenest inter-national rivalry for the carrying trade of the Northwest. Even on this point, however, the State Department is confident some solution might be reached in time, by the exercise of mutual forbearance. The recent violent attacks upon Secretary Hay for his alleged liberal concessions to Canada are placed in a curious light, in view of the bitter complaints publicly uttered by Canadians, to the effect that Canada’s advances were received with selfish indifference, and that the United States was willing to take, but refused to give.

The failure of the High Joint Commissioners to accomplish the results desired, although it has attracted little attention in the United States, has been a leading topic of discussion in Canada for a year past. In justice to these gentlemen, it must be explained that they have fully realized the delicacy of their position, and, in view of the fact that the Commission is still in force, have consistently refused to express themselves as to the situation. Such reticence has not been necessary on the part of others, however; and as Sir Wilfrid Laurier holds the Liberal party well in hand, the comments of other leaders and the development of a new Canadian national policy of indifference to the United States may well be assumed to indicate official opinion.

The proposed isolation of Canada is to be achieved, theoretically at least, first by the development of an all-Canadian transportation route from the Northwest to tide water. At present, the carriers of the United States have practically a monopoly of the transportation of Canadian staples. The produce of the Northwest finds its outlet to the sea via Buffalo, for the reason that navigation on the Great Lakes is possible long after canals and rivers are closed. The American carriers have also distanced their Canadian competitors in the conveniences offered the producers of the latter country in the matter of insurance against market fluctuations. Freight rates have been reduced year by year, until they have apparently reached the lowest point possible; and yet the railroad men of New York testify to the effect that, if it becomes necessary, they can so improve facilities as to make it possible to haul Canadian grain from Buffalo to New York for one half the present charge.

During the recent session of the Dominion Parliament, this all - important matter of transportation occupied a greater part of the time. Effort was concentrated upon the improvement of the channel between Quebec and Montreal. An optimistic spirit prevailed, among those bearing the responsibilities of government, as to the possibilities of the future, when the Canadian water ways should have been so improved as to meet the demands of an all-Canadian route. Against such a consummation, however, a long, severe winter imposes a ban, a necessarily restricted budget sets its limitations, and American carriers are watchful, aggressive, and resourceful.

The recent census of Canada will show a population of about 6,000,000, or a gain of at least twenty per cent in a decade. In the encouragement of immigration Canada is now remarkably successful. About 50,000 home-seekers enter the country annually from abroad. Fully seventy-five per cent of these seek the unlimited free lands of the Northwest, and are of a desirable type of agriculturists. An interesting feature of this movement is the fact that the United States is furnishing a larger number of these immigrants than any other country. Over 12,000 American citizens crossed the line to the north last year, and adopted Canada as their home. It is estimated that at least 20,000 will do the same this year.

The Canadian government is spending about $250,000 a year in the encouragement of immigration. The results of the educational work done in the United States have been so satisfactory that increased effort is now being made in that direction. Canadian agents travel and advertise in every state, and last year twenty-nine of the American commonwealths contributed to Canada’s increase of population. The largest number are secured in Dakota, Nebraska, Michigan, and other northerly farming states. Sir Wilfrid expresses the belief that Canada, being the only country in the temperate zone now offering free land to homeseekers, has fallen heir to the great tide of agricultural immigration which once flowed into the United States. He predicts an enormous increase in the volume of this movement in the immediate future, — such an increase as will give Canada a population of at least 15,000,000 in the next Canadian census year, 1911, and 25,000,000 by 1921.

In the stimulus recently given to the policy of encouragement for home industry, Canada is carrying the subsidy idea to an extreme. Millions in land and money are given to railroads, and manufacturers are encouraged to ask largess from the Dominion taxpayers. All that is necessary to secure consideration for such a demand is a plea that competition in the United States is retarding Canadian development. Some of these requests for subsidies are merely schemes to loot the national treasury. Others are honest endeavors to meet powerful competition.

One phase of the situation which irritates those advocating a policy of Canada for the Canadians is the promptness with which enterprising capital from the United States enters into such advantages as are devised for Canadian benefit. Citizens of the United States have bought the best mines, developed the wood-pulp and iron industry, secured canal, elevator, and harbor privileges, absorbed some of the most profitable foreign trade, reorganized Canadian railroads, designed Canada’s finest modern buildings, and stand ready to appropriate and take advantage of the greatest opportunities before the Canadians apparently are awake to the existence of the same.

Irritation at the United States for indifference to Canada’s requests for reciprocal trade relations has naturally led to some discussion in the latter country of retaliatory tariff legislation. Nothing was done in this direction at the recent session of Parliament, but it was freely suggested, and may take more tangible shape another year. Some years ago, in response to the demands of the farmers of the Northwest territories, the Canadian import duty of thirty-five per cent on American agricultural machinery was reduced to twenty per cent by the Conservative party then in power, and lumber was placed on the free list. Should the proposed discrimination against American products actually go into effect, the first move would be to restore this duty on agricultural implements to the original figure, and to place an import duty of two dollars per thousand feet on lumber. The Canadian imports of American agricultural implements under a twenty per cent duty were valued last year at about $2,000,000, and the importations of lumber duty free were valued at about $3,500,000. Such retaliation could only be effected at the expense of the Canadians of the Northwest, and there would be considerable protest against it. The members of Parliament from that section stated recently, however, that they believed their constituents would agree to such legislation, in the hope it might lead in time to a better realization by the United States of the advisability of freer exchange of goods along all lines of international trade.

The French element in eastern Canada is also keenly desirous of anything which would make traffic easier between Canada and the United States. It is estimated that there are about 1,500,000 French Canadians in Canada, and nearly 500,000 more in the United States. These people really recognize no boundary line. They look upon custom restrictions as an interference. Many of them go to the United States to earn money to send back to their homes. It is stated by the Postmaster General of Canada that of every ten letters received in a French Canadian village, nine of the number are likely to be from the United States. The Postmaster General of the latter country, in his annual report, notes that over $2,000,000 was sent to Canada last year in postal orders. The larger part of this goes to French Canadians, and is sent by friends or relatives in the United States. The tie between the two countries is so close in respect to this race that Canadians naturalized in the United States have been known to return to their old homes during political campaigns, and even to take the stump for their favorite candidates in the Canadian elections. Under these circumstances, it is not remarkable that the Liberal party, placed in power largely by French Canadian votes, should feel keenly the failure to come to a better understanding with the United States.

Hampered by a country of enormous area, sparse population, and severe climate ; limited in national endeavor by necessarily small revenues; forced to an expedient policy of protection and subsidy in direct conflict with established principles of unrestricted competition, the Liberal leaders are yet bravely optimistic in their struggle for national commercial independence. They will fall short of realizing their political dreams, but the Canadian people, under the present or other leadership, will in time accomplish another of those modern miracles, the creation of a great nation.

There is no reason why Canada should not have 25,000,000 population within the span of the present generation. Her wealth is increasing at fourfold ratio. Her tremendous natural resources are only just beginning to be understood, and there is no apparent limit to their ultimate development.

Conscious of her value to her great neighbor, fully appreciating the necessity of the good will of that neighbor to her own prosperity, she is chagrined at the rebuff she believes she has met. With anxious interest she is now watching the war of Europe against the commerce of the United States, not in the hope that Europe will win, but in the expectation that all parties thereto will in time reach the conclusion that commercial war is a useless expenditure of valuable forces, which should rather be utilized in the making of conventions to enable the trade of one country to fit advantageously into that of anotherCanadian statesmen look with confidence to the future to bring about some such result, and anticipate with equal optimism an early awakening of the United States to the fair promise of her northern neighbor to become the first instead of the third greatest customer for the products of American labor.

J. D. Whelpley.