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  • Retreat from Protectionism: R. B. Bennett and the Movement to Freer Trade in Canada, 1930–1935
  • Anthony Patrick O’Brien (bio) and Judith A. McDonald (bio)

Both the United States and Canada enacted sharp increases in tariffs in 1930 as the Great Depression was beginning. The failure of high tariffs to lead to economic recovery in the following years helped to undermine political support for protectionism. Although the conversion to free trade in the United States during the 1930s has been studied, the similar movement in Canada has been relatively neglected.1 McDonald et al. find that R. B. Bennett’s surprising victory in 1930 was due to Canadian voters’ resentment over the Smoot-Hawley Tariff.2 As promised during his campaign, Bennett quickly enacted tariff increases on U.S. goods and took steps to make Canada independent of the United States and to strengthen its ties to the United Kingdom. Beginning with Bennett’s election, we chronicle his deliberations during the period 1930–35 as he reformulated his views about the appropriate role of the tariff as a policy tool. We find that Bennett’s dramatic about-face on trade policy was largely driven by forces beyond his control: the establishment of a “new order,” brought about by changes in the trade policies of Canada’s two major trading partners, the United States and Britain, very much restricted Bennett’s policy choices. [End Page 331]

This period warrants careful examination for three reasons. First, for Bennett personally, not being able to follow through on his campaign pledges on trade policy helped to seal his fate with the electorate. Of course, he also had the misfortune of serving as prime minister during Canada’s most severe economic downturn. Bennett’s focus on expanding trade with the United Kingdom (and the other Dominions) rather than the United States was entirely consistent with his U.K.-centric approach, despite being both infeasible and undesirable from an economic-policy perspective. Thus, his personal failure can be seen as a success for the Canadian economy as the U.S. market dominated Canadian export demand to such an extent that U.K. demand could not possibly have compensated for lost access to the U.S. market.

Second, this period marked a watershed moment for Canada-U.S. trade relations, as Canada’s Empire ties started to fray. These years mark the beginning of the slow but steady progress toward trade-policy realignment for Canada—away from Britain and toward the United States; thus, unraveling the myriad reasons for this realignment is important for a full understanding of why Canada would see its future as tied to the U.S. market. This episode also solidified Canadian-U.S. economic interdependence because all Canadian Prime Ministers since Bennett ultimately had to accept (some more resignedly than others) the inevitability of U.S.-Canada trade ties. As Hart says about John Diefenbaker’s rather bumbling attempts to redirect trade away from the United States in 1957, “It is only with the benefit of hindsight that we can appreciate the extent to which commercial ties with U.K. customers and suppliers had been severed and new ones with the United States put in place.”3

Finally, although, unfortunately, many countries are even now attracted by the appeal of protectionist policies during tough times, Smoot-Hawley–induced tariff increases are still brought forth as important examples of the “folly of protectionism.” Thus, it can be argued that this episode did indeed help to alter policymakers’ attitudes toward protectionism generally. Although “punitive” tariffs and other restrictive trade measures are still used today as blunt instruments of foreign policy, most policymakers now recognize the economic benefits of freer trade.4 However, it was during the 1920s and 1930s that the costs and benefits of protection were not just debated but also experienced first-hand in many countries, including the United States, Britain, and Canada. As Hart puts it, it was “the misery of a full-scale global depression [that] finally turn[ed] the tide” against protectionism.5 If one wants to understand how freer trade came to be largely accepted as good economic policy, a careful examination of the circumstances leading to...

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