Art. 8.-BRITISH PREFERENCE IN CANADA.

1. House of Commons Debates [Canada], 1897-1911. Ottawa: Government Printing Bureau.

2. Industrial Canada, 1901-1911. Published by the Canadian Manufacturers' Association, Toronto.

3. Canadian Manufacturers' Association: Reports of the Standing Committees, as submitted for consideration at the annual meetings, 1906–1911. Toronto.

WHAT may be regarded as the first chapter in the history of the British preference in Canadian tariffs came to an end in October 1911, when, after the election fought on the issue of reciprocity with the United States, the Laurier Government was defeated, and the Conservatives, who had been in opposition since 1896, came into power. From the time when the preferential clause was first made part of a Tariff Act in 1897, the policy embodied in this clause was continuously opposed by the Conservatives as an inroad on the national policy to which a Conservative Government committed the Dominion in 1879; and a second chapter in the history of the preference will open with the first revision of the tariff by the Borden Government. When this revision would be made, was, in the early weeks of the 1912-13 session of the Dominion Parliament, somewhat uncertain. In the session of 1911-12, the Borden Government carried through the House of Commons a Bill for the appointment of a permanent Tariff Commission-a Commission that was to make detailed and exhaustive enquiries before changes were made in the tariff. But owing to amendments made to it in the Senate, where the Liberals are in a majority, the Bill was abandoned. There was no intimation at the opening of Parliament in November last that the Tariff Commission Bill was to be re-introducted in the session of 1912-13. It is possible that the Government may make changes in the tariff without the aid of the proposed Commission; but, until the Minister of Finance announces these changes when the Budget is submitted to the House of Commons, it is unlikely that there will be any authoritative statement of its policy in regard to this much-debated question.

Surprise at this new departure in tariff policy was a s

general in Canada as it was in England. Great changes in the tariff were expected when the Tupper Government went out of office and Parliament met for the session of 1897. Lower duties in all the schedules were then generally looked for except among a few representative manufacturers of Ontario and Quebec, who, since the general election in the preceding year, had been, to some extent, in the confidence of the new Government. Changes in the popular interest were confidently expected, because since 1879 the Liberals in opposition had continuously attacked the national policy, and had repeatedly pledged themselves in Parliament, on the platform, and in national convention, to a tariff from which all vestiges of protection should be eliminated. But when, in April 1897, Mr W. S. Fielding, Minister of Finance, introduced the new Tariff Bill in the House of Commons, it was found to differ from those enacted by the Conservatives only in the preference for imports from Great Britain. Apart from the preference, the tariff of 1897 was in principle and detail as much a protective tariff as any for which Sir John A. Macdonald and the Conservatives had been responsible.

'There is to-day in this Parliament, as between the two sides' (said Mr. Foster, who followed Mr Fielding in the debate on the new Liberal tariff), 'no difference upon the expediency of the principle of protection as the guiding principle of our fiscal system. . . . The very purpose, for which a protective policy was adopted by the Liberal-Conservative party and maintained by it for eighteen years, is to-day, in its entirety, swallowed whole by the Liberals. They embalm it upon the statute books of this country as their own.' (H. of C. Debates, April 23, 1897.)

No member of the Liberal Government could deny Mr Foster's assertion in 1897. Still less in 1911, when the Liberal Government was defeated, could a similar assertion be denied, because between 1904 and the last revision of the tariff in the session of 1906-7 the Liberal Government had become increasingly protective in its tariff policy. It increased some duties in 1904; it increased many more at the revision of 1906-increases which involved much curtailment of the British preference; and, while it was in power, it bestowed over $17,000,000 as bounties on the iron and steel industry of Nova Scotia

and Ontario. As a matter of fact, the Liberal Government had not only adopted the national policy of the Conservatives, but had greatly extended it; and, except for the comparatively small inroad on the national policy tariff due to the British preference, when bounties, free-list privileges, anti-dumping duties and made-in-Canada' enactments, as well as import duties, are taken into account, there was scarcely a manufacturer in the Dominion who was not more generously protected by the Liberal tariff of 1907 than he had been by the tariff on the Statute Book when the Conservative Government was defeated in 1896.

Mr Fielding was Minister of Finance during the whole of the Laurier régime. He was responsible for the framing of all the Tariff Acts and all the bounty legislation passed by the Liberal Government between 1896 and 1911; and, as Minister of Finance, he made many more valuable concessions to the manufacturing interests than were made by the Ministers of Finance, who, after the national policy had been embodied in the historic Tariff Act of 1879, were responsible for the tariff and bounty legislation of the Conservative Governments. When the Liberals went out of office in 1912, the Dominion tariff was nearer to the high tariffs of the United States than it was when they came into power in 1896. The only innovation- the only variation from the national policy tariffs of the Conservatives adverse to the manufacturing interests of the Dominion-was the preference for imports from Great Britain. Even this preference was not so valuable to British exporters and to Canadian consumers from 1904 to 1911 as it had been from 1900 to 1904, during which period there was a uniform reduction of one-third in the duties on all British imports except wines, spirits and tobacco.

At the Colonial Conference in 1902, the Canadian representatives served notice on the Imperial Government that the Dominion had gone as far as it intended in making reductions in the tariff in favour of British manufacturers.

'As between the British manufacturer and the Canadian manufacturer' (said Mr Fielding, in explaining to the House of Commons at Ottawa, in April 1903, the attitude of Canada on this question) ' we thought we had gone as far in the way

of reduction of duties as we could. But we pointed out that Canada consumed a large quantity of goods imported from foreign countries; and, in return for the preference which we sought for Canada,* we were prepared so to rearrange our tariff as to give Great Britain a further preference, not over the Canadian manufacturer, but over the foreign competitor.' † This statement by Mr Fielding indicates the extent to which the Laurier Government had committed itself to the national policy of the Conservatives between 1896 and the Colonial Conference of 1902. It is an indication also of the fact that in 1903 the Liberal Government no longer feared a revolt among its followers in the House of Commons as it did in 1897, when it was impelled to introduce the preference into the tariff partly for the relief of Canadian consumers, and partly to mask the fact that, by its tariff and bounty legislation of that year, it was adopting and extending a fiscal policy which the Liberals had denounced ever since 1878.

The Liberal Government carried its party through the crisis in 1897 by shock tactics. No party caucus preceded the adoption of the policy of the British preference. No hint of this policy had been given by any of the leaders of the Liberals at the general election in 1896. Not a whisper of any such plan was let fall by the members of the Laurier Cabinet who formed the Tariff Commission of 1896-7, and who as such held public sessions in many of the large cities of the Dominion. There was not a hint of a British preference in the speech from the throne. As Mr Sydney Fisher, who was Minister of Agriculture in the Laurier Government, said in a debate on the Reciprocity Bill in 1911, the British preference, when it was announced by Mr Fielding,

was like a thunder-clap to the House and to the people. Nobody expected it; nobody dreamed of it. The secret was well kept; so that, with the exception of the men who sat at the council board of that day, there was not a single individual in Canada who knew that we were going to bring down a proposal for a British preference on the lines that were announced.' (H. of C. Debates, Feb. 28, 1911.)

Many factors need to be kept in mind by critics of the

* Exemption from the duty of a shilling a quarter on grain imposed as a war tax from 1902 to 1905. † H. of C. Debates, April 16, 1903.

preference and its working, especially by those who have long complained that British manufacturers have failed to take full advantage of it. Several of these factors will be noted later, particularly the curtailments that have been made in the preference since 1904, and the obstacles put in the way of a larger import of British manufactures into the Dominion by the Canadian Manufacturers' Association. At this point, in recalling the circumstances in which the Liberal Government committed itself to the policy of preference, it is only necessary to note that it was not exclusively the purpose of the Government to reduce duties for Canadian consumers-to widen the market for British manufacturers or to forge a new link of empire-that impelled it to adopt the preference. With the exception of the late Mr J. I. Tarte, every member of the Liberal Cabinet of that day had for many years before 1896 continuously denounced the protective policy of the Conservatives. But between July 1896 and April 1897 a notable change had come over all the members of the Laurier Cabinet. All had been converted; and there were no resignations when the Government committed itself to national principles, and decided that the fiscal policy of the Conservatives should be endorsed, continued and extended by the legislation of 1897.

The rank and file of the Government's supporters in the House of Commons, as Mr Fisher's statement now makes clear, were not in the secrets of the Government when the new tariff was being framed. Many of them who had gone into the election on the Ottawa programme of 1893, which denounced protection as 'radically unsound and unjust to the masses of the people,' expected that in the first session of the new Parliament the old national policy tariff would be revised in accordance with the declarations of that programme and the speeches of the Liberal leaders from 1879 to 1896. This was also the expectation of the electors who had voted for Liberal candidates; and it was because the Government did not dare to disappoint all these popular expectations that the scheme of a preference for British imports was embodied in the Tariff Act of 1897.

British preference has produced good results. Consumers in Canada have profited from it as well as British