The National Policy Revisited

The National Policy Revisited PAUL PHILLIPS Introduction It is perhaps a sad irony that in 1979, the centenary of the introduction of the National Policy Tariffs, designed ostensibly to create a united national transcontinental economy, the federal election resulted in a dramatic regional polarization amid a general climate of declining national unity. On the other hand, the two events are not unrelated. The structure of the Canadian economy fostered by the national policy (of which the tariffs were but one integral part) have created lasting regional tensions. The questions that are raised by any retrospective on the National Policy Tariffs are their effectiveness in achieving the goals for which they were intended, and their impact on the structure and performance of the Canadian economy over the century. The basic argument of this paper is that the tariffs and the complementary development policies which evolved during the mid-1800s achieved the immediate goal of their authors, the creation of a national economy based on the west as an internal colony tributary to the commercial, financial and industrial empire of the St. Lawrence. While the immediate goal was achieved, however, the longer term effects, particularly on the regional and industrial structure of the Canadian economy, have, in the absence of any national development strategy since 1930, resulted in a disintegration of the Canadian economy. Nevertheless the National Policy Tariffs were not an isolated legislative innovation, independent of the range of other developmental policies pursued by central Canada after Britain's denial of colonial responsibility in the 1840s. They were merely one element of an evolving pattern · of complementary policies that were to have a fundamental effect on the political economy of the northern half of North America, a political Journal ofCanadian Studies Vol. 14. No. 3(Automne1979 Fall) economy that was an alternative to both the British and American imperial systems. In much of the recent literature critical of the national policy, evaluation of its impact is primarily measured by the effects of the individual policies on the date and rate of agricultural settlement or on the global efficiency of the settlement process.I Thus, with the benefit of hindsight , economists are attempting to evaluate the effectiveness of a group of policies, using criteria which were not, by and large, the criteria which motivated the policy makers of the day. Retrospective analysis aimed at evaluating the impact of policy should at least begin with an appreciation of the goals of the policy makers. In the case of the national policy and its constituent parts, therefore, one must begin with the entire transition from colonial status to nationhood. The Roots of the National Policy Strategy The roots of the national policy lie in the abandonment by Britain of its imperial system and its adoption of free trade after the 1840s. (Timber preferences began to decline in 1842, the Corn Laws were repealed in 1846, and the Navigation Acts in 1851). The mercantile oligarchy of Canada, Creighton's commercial empire of the St. Lawrence, were devastated because they had tied their fortunes to the protected market of Britain for the staples of the western frontier, American and Canadian.2 The Canadian commercial and transportation system could not compete with the cheaper American route without protection, despite the large investments in transportation infrastructure in the form of the canal system, finished just in time to be abandoned by Britain. Even before the canals were completed, the search for a competitive all season export route brought forth the railway promoters from among the commercial and financial elite and they pushed for further public support for the railways, despite the already large public debt contracted for the canal system. The end of British protective imperialism undermined the existing rationale of the commercial empire of the St. Lawrence but after a brief and somewhat hysterical flirtation with annexation to the United States, the elite began pro3 posing colonial union as an alternative, a proposal heard with increasing frequency during the 1850s.3 The economic structure of the national policy is clearly evident in the rationale of the proponents of a confederation, perhaps best exemplified by Galt and George Brown. To them it was a question of confederation or...