Alexander Galt, the 1859 Tariff, and Canadian Economic Nationalism

A.A. DEN OTTER Alexander Galt,the Tariff, and Canadian Economic Nationalism I• MARC• •859 Alexander Gait, Canada'sministerof finance,announceda seriesof tariff increases, which appearedto singleout manufactured products for special attention. Despite theemphasis on processed goods, Gaitexplained thatthetariffwasrevised primarily'to obtainsufficient revenue forpublic wants' andmightonly'incidentally benefitandencourage theproduction ...ofmanyofthose articles' then beingimportedintoCanada. • Contemporary critics dismissed Galt's rationalefor thetariff; theycriticized itsimpliedprotection to manufacturersand especially denouncedits statedintentionto createa nationaleconomy by divertingCanadiantrade from New York to Montreal? Modern commentators have shifted the debate to academic grounds byquestioning theactual purpose of thetariff.Presently the rangeof opinionincludes notonlythose whoseethetariff asbeing solely for revenue butalsothose whoviewit asbeingunambiguously for protection? To complicate mattersfurther,somescholars praise the•859 tariffasanimportantsteptowards Canadian fiscal indepenThe authorisindebtedtoseveral colleagues for invaluable advice in thepreparation ofthispaper, especially GregKealey, Hoh-Cheung Mui,andHughTuck. A.T. Gait,Canada: 1849to1859(Quebec•86o), 33-4 Canada,Legislative Assembly, Debates, x4,x5,and•6 March•859.Whilethepoliticians emphasized government spending, newspapermen tackled theissue of protectionism . See,forexample, HamiltonSpectator, 3øJuly•858,asagoodintroduction to thecontemporary debate.SeealsoA. Merchant,TheEffects ofthe NewTariffonUpper Canadian Trade (Toronto•859). The most extreme'revenue' position istakenbyTomNaylor,The History ofCanadian Business 1867-1914, I: TheBanks andFinance Capital (Toronto•975), •8. He goes evenso far astoarguethatGalt's useoftheterm'incidental protection merelyobscures the tariff'sclearrevenue objectives,' aconclusion requiring theliberaluseofellipses. Amongthenotable works devoted toeconomic history ingeneral andcommercial policies Canadian Historical Review, I•xx•, •, •98• ooo8-3755/8•/o6oo-o•5• $o•.•5/0 ¸ University ofToronto Press 152 THE CANADIAN HISTORICAL REVIEW dence, whilestillothersdenythiswithequalvigour. * Onlyaclose look atGalt's defenceof thetariff andthetechniques heusedin itsrevisions will helpclearawaysomeof theconfusion. It willshowthatGaltwasa pragmatic businessman, sensitive tochangingeconomic realities,willingtoadoptandtoimplementnewideas .Indeed,are-examination of theevents surrounding thetariffwillrevealthatitwasthefirststepina fullyintegrated nationalistic policytodevelop theCanadian economy. The x859tariffwasin factanembryoNationalPolicy. AlexanderGalt,whobeganhispolitical careerasa freetraderbut wrotethe protectionist tariff of a859,hasneverhada reputationfor consistency eitherineconomic thoughtor political loyalty. SirJohnA. Macdonald, himselfsomewhat flexiblein thisregard,oncenotedin exasperation thatGaltwas'as unstable aswater, andnoonecandepend uponcontinuous exertionin onedirectionwithhim for 48 hours?A surveyof Galt'scareerclearlyproveshisshiftingpoliticalaffiliations andchangeable economic ideas. Yet,Galtwasnotcapricious. He wasan astute,pragmaticbusinessman whosedriving ambitionraised him policies inparticular whichinterpretGaitliterallyareGordonBlake,CustomsAdministration inCanada: anEssay inTariff Technology (Toronto•957);W.T.Easterbrook and HughG.J.Aitken,Canadian Economic History (Toronto•956);andWilliamL.Marr and DonaldG. Paterson, Canada: anEconomic History (Toronto•98o).Galt's biographer, OscarDouglas Skelton,The LifeandTimes ofSirAlexander Tilloch Galt,CarletonLibrary no•6, editedandintroduced byGuyMacLean(Toronto•966),alsoaccepts Galt's statement at facevalue.The onlyscholarly studyof thetariff whichconcludes it was intentionallyprotective isD.E Barnett,'The GaitTariff: Incidentalor EffectiveProtection ?' Canadian Journal ofEconomics [cjE],•x,Aug.•976,389-4o7 . EdwardPorrttt, Sixty Years ofProtection inCanada, 1846-1907: Where Industry Leans onthe Politician (London •9o8),isauseful tractforferreting outprotectionists. Orville JohnMcDiarmid, CommercialPolicy inthe Canadian Economy (Cambridge, Mass. •946),contradicts himself inhisinterpretation of thetariff.Compare, forexample, hiscomments onpages 74 and79.Crauford D.W.Goodwin, Canadian Economic Thought: the Political Economy ofa Developing Nation 1814-1914 (Durham•96•), isdifficulttoplace because herefersto Galt's incidental protection argument, yetplaces himinadiscussion onrisingprotectionistfeelings in BritishNorthAmerica;hesimply does notmakeadefinitive statement . Unfortunately, theemphasis onthelack orpresence ofadeliberate protectionist e•ement inthetariffobscures itsmorecomprehensive character. Gregory S. Kealey, Toronto Workers Respond toIndustrial Capitalism 1867-1892 (Toronto•98o),by concentrating ontherising industrial consciousness inCanada, corrects this problem. He tooconcludes the•859 tariff wasprotectionist, 4 WhileMcDiarmid,Commercial Policy, 83,calls Galt's tai'iffa'bloodless revolution; DavidM.L. Farr,TheColonial Office andCanada, 1867-1887 (Toronto•955),D.C. Masters ,'Reciprocity andtheGenesis of aCanadianCommercial Policy; Canadian HistoricalReview [c•R], xI!!, Dec.•93•, 4•8-• 8,and'A.T.GaitandCanadian Fiscal Autonomy ,' c•R, x•v,Sept.!934,• 76-8•, denythetariff signified anyrealchange in imperial relations. 5 Macdonald toBrydges, •8 Jan.•87o,citedbyJoseph Pope, ed.,Correspondence ofSir JohnMacdonald (Toronto•9• •), •• 5 GALT AND THE 1859 TARIFF 153 frommodest beginnings toprominence andwealth. Hecouldnothave accomplished thiswithoutbeingcompletely in tunewiththespiritof histimes.Gait,in fact,fullybelieved in theabilityof newtechniques, particularly inmanagement andcommunication, tosolve theproblems ofanincreasingly complex world.Throughouthisfluctuating loyalties runsthe singlethemeof doingthingsasefficientlyand profitablyas possible. When theonetimefree traderproduceda protective tariff, theunderlyingperspective hadhardlychanged. The business careerof AlexanderGait illustrateshisdriving ambitionandexpansionist ideas?He cametoCanadain 1835attheageof eighteenasajunior clerk with the BritishAmericanCompanyand withinnineyearswasitschiefexecutive officer.He usedhisinfluential position for a highlysuccessful stintin thefastest-growing industryof thetime- railways. Besides thequestfor personal profits,thewelfare of the Montreal-Sherbrooke axis loomed large in his ambition. Whetheraspresident oftheStLawrence andAtlantic orasadirector of the Grand Trunk, Gait alwayssoughtto extend the commercial influenceof thisregionto its utmostlimit...