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Chapter 12

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Political Science
POLI 243
Mark Brawley

Poli 243: Chapter 12: Sir John A. Macdonald and the Introduction of Canada’s National Policy - In the election of 1878, the Tories won on a platform featuring protectionism, as their leader, Sir John A. Macdonald pronounced to an audience of businessmen in Ontario during the campaign “Tell us how much protection you want, gentleman, and we’ll give you what you need” - U.S. interest in trade liberalization had declined with sever economic downturn of the 1870’s and Canada’s industrial sectors wanted protection from foreign competition, and protectionism appealed strongly to both labor and capital in heavy industry - The three elements of the National Policy: tariffs, railroad construction, and immigration and settlement would work best in conjunction with each other- politically, it was also important for the Tories to package these policies together, though the Tariffs enacted included raising rates on goods whose producers hadn’t asked for protection The System Level: What choices did Canada have? - In the wake of the Cobden- Chevalier Treaty, free trade had spread via clauses in bilateral trade agreements - The Free Trade Regime rose in ad hoc fashion and deteriorated in the same way - As one country defected on the liberal norms, so did others, states could act as they chose - With no prior historical experience to fall back on, states believed that they could defect first, reaping the benefits of having their markets protected from foreign competition while still holding access to foreign markets - The systematic environment may have provided some sense of why the National policy included domestic Policies o The logic if developing a transnational railroad was clearly linked to economic independence from the U.S. lacking a high speed transcontinental link- the western provinces could only trade with the east via U.S. railroads or overland along long, winding roads- the railroad was therefore vital for successfully standing back from the economic ties with the neighbor to the south o The idea of increasing settlement in the west was also critical for the National Policy’s success o Adopting protectionist tariffs was a common response to the economic downturn to the era, because markets were shrinking- producers wanted to maintain their volume of business by eliminating competition o However, when other states retaliate, export markets are lost, the home market must then grow, and to continue economic growth, the country must have balanced resources  In Canada’s case, industrial producers were losing the U.S. Market, the domestic market needed to grow and that was immigrant policy was so important o Combined with the railroad link, the new settlers would be suppliers of agricultural products to urban areas, and a market for industrial goods Domestic Policies: Cleavages on Trades th - In the late 19 Century, Canada was relatively well endowed with one major factor compared to other countries: Land - However, capital was relatively scarce, as was labor o Using the Stolpher Samuelson theorem, we would expect landowners (farmers) to prefer free trade, while industrial interests wanted protection - Construction of the transcontinental line of the CPR took longer than expected and cost more than planned o As a result, the CPR was allowed to charge high rates for transporting goods alone it s main line, which caused resentment among the farmers and shopkeepers in the west who had little choice but to use it o The Liberals charged that what the country needed was greater competition in transportation and supported the construction of a rival rail line across the country - The immigration policy also did not work as planned- although the Tories argued that the domestic economy would be increased by settling more people in the West
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