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CIHM/ICMH
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1
The Writer of this Letter is
THE HON. SIR RICHARD CARTWRIGHT,
A Member of the Dominion Parliament of Canada; and who was Minister of Finance-,
in the Mackenzie Administration from 1S7J to i<V7<S'.
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THE ECONOMIC CONDITION OF CANADA AND HER TRADE POLICY.
TO THE EDITOR OF THE ECONOMIST.
Sib,
I have observed that there has beeh a steady attempt for some coiisidenilile length of time, in
the coinmunicationa published in the English press as coming from Canada, lo misri'])resuiit the actual
economic condition of that country and also the objects of the Liberal party in Canada in pressing for free
trade with the United States. y ( ■■''''7 ^^^^
As regards the first point, it is well l^nown to you and to your reaciei-s that Canada has been engaged
for the last thirteen years in the operation of trying to increase the collective wealth of tiie country by
doubling or trebling its taxation.
But it is not quite equally well known on your side of the Atlantic that it has become painiully
apparant for some time back, to everyone who has been at the jiains to examine the evidence which has
accumulated on the subject, that, even in that c(>m])aiatively short space of time, this most ill-advised
policy has resulted in a tremendous exodus of tlie very ciioicest portion of tlie |)opu)alion of Canada, and
in a very grave depreciation in tbe selling values of farm lands and of town anil village property tlirough-
out all the older sections of the Dominion, including Quebec, Ontario, Nova Scotia, New Brunswick, and
Prince Edward.
This has been accompanied, as is usual in such cases, by an inimense increase in the aggregate
indebtedness of the Dominion in the shape of large additions to its federal, provincial, and municipal
debts, and also to the mortgage debts incurred by private individuals and liabilities incurred for the
construction of railroads — by far the greater part of all which obligations are held abroad.
Briefly, in these thirteen years there has been a great displacement of wealth, caused mainly by
artificial legislation, but (as regards the older provinces) absolutely no increase at all of the collective
wealth of the community. Two or three cities, and perhaps a score of towns, have increased considerably,
and a few hundred individuals (who have been privileged to tax their fellows for their private advantage)
have grown rich by this system of legalised robbery; but the great mass of the population, and notably
the agricultural class, are distinctly poorer and less prosperous then they were twelve years ago.
Take the returns of the recent census. New Brunswick with a area of 30,0(X) square miles,
inhabited by about GO, 000 families, has added just sixty-one souls to her population from 1881 to 1891,
Nova Scotia, with a population of 440,000 souls in 1881, has done a little better, having gained
some 9,1)00 people in ten years — or rather less than one year's natural increase.
Ontario and Quebec, with unlimited quantities of unoccupied land, >liow an increase of perhaps
1 per cent, per annum, being rather less than that of England, and that in despite of an alleged immigra-
tion of nearly 900,000 people.
In one word, if the assertions and official statements of the present Government are to be relied on,
and these 900,000 immigrants did really come to Canada, as they assert, what between innuigrants who
came to Canada and who have quitted it, chiefly for the United States, and the loss of its own natural
increase which has disappeared in the same direction, the Dominion has lost not less than one million and
a- half of people in the last ten years.
As to the amouut of taxation, the agricultural class has been simply bled white. ' > > -
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Over and above the taxes actually jmid into the Dominion Treasury to bp expended f.ir so-called
Federal purposes, Ibey have been mulcted during all tlicse years under the jirotective system of at least an
equal amount, which is either totally wasted or goes into the pockets of a very small number of protected
manufacturers.
The exact amount levied, or, to speak more accurately, pillaged, in this way can hardly be estimated ;
but it is known not to be less than a sum fuUy equal to tlie entire amount credited to the Treasury, and
probably ranch exceeds it, ]n fact, the Canadian tariff (which has been, in the most literal manner,
dictated by the protected manufacturers) is so constructed that there are innumerable cases in which
for each single dollar paid into the Treasury, three, four, five and even ten dollars are taken out of
the pocket of the consumer; nay, in many instances the tax is made absolutely prohibitive, so that tlie
public are heavily taxed witi.'>ut any benefit to the revenue ; <?.'/., the duty on sugar is now so arranged (for
the advantage oF lialf-a-dozeu sugar refiners), that the Canadian consumer is obliged to pay a tax of nearly
two millions a year, of which only the most insignificant fraction finds its way into the public Treasury.
Tak Ml altogetlier, it is well within the mark to say that while the present nominal amount of
the taxation of the Dominion is about thirty-one millions of dollars, the genuine actual taxation, i.e., the
sum taken out of tlie pockets of the people for the benefit of tho protected manufacturers, in addition to
that paid into the Treasury is certainly not less, and is probably a good deal more than sixty millions
(^60,000,000).
As a very considerable section of the population of Canada — to wit, the French hahitans of Quebec
— consume a very small quantity of dutiable goods, this virtually means a taxation of £12,000,000 or
£13,000,000 levied from an effective tax-paying population of less than four millions, many of whom
are burthened with a very considerable direct taxation for municipal purposes besides.
Such an amount of taxation levied for thirteen years is a very formidable burthen for a country like
Canada to liear, and is undoubtedly one prime cause of the great loss of population, and of the immense
depreciation in Die values of town and farm property (a few special localities excepted), which has been
such a marked feature in tho economic condition of Canada during the last ten years.
It would be well if this were all, but unfortunately, the economic results of the protective system
adopted by Canada in 1879, grievous as they are, fade almost into insignificance compared with the
moral and political pollution it has brought in its train.
In this, as in many other cases, the indirect or secondary consequences of the fiscal system
misnamed protection are even more pernicious than its direct ones.
In the first place, by deluding the people into the idea that they can enrich themselves by increasing
their taxation, the old, wholesome, natural repugnances to increased taxation and expenditure is entirely
done away with, and the Government are encouraged to enter on a career of extravagant expenditure
which invariably involves per se, a great amount of corruption in one form or other — as has been very
notably the case in Canada.
In the second place, by making it the direct personal interest of a considerable number of active
business men, many of whom are wealthy, and all of wljom have the control of large sums of money, to
support a fiovernment, which gives them a free hand to tax the rest of tho community for their special
benefit, you lay broad and deep the foundations of a colossal system of organised corruption, in tho face of
which honest government becomes an impossibility.
lu such a ease, bribery becomes a pure matter of business routine.
The Government gives the protected manufacturers the po\\er to tax the people for their own
purposes, and the protected manufacturers in turn, whenever called upon, assess themselves in whatever
amounts the Government require in order to enable it to carry the elections.
The thing is done openly and shamelessly by both parties to the transaction. Prior to the general
elections of 1882, of 1887 and of 1891, Sir John Macdonald and his colleagues deliberately called the
protected manufacturers together, and demanded and obtained from them such sums as they deemed
necessary for the purpose of debauching the electorate, pledging themselves in return, not to alter the tariff
to the detriment of the said contributors, which compact was faithfully carried out and impudently avowed.
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The facts are far too notorious to be denied ;
the Government of Canada with the intertited
disgraces Canadian public life is mainly due.
and it is to this deliberate conspiracy on the part of
manufacturers that the intokrablo corruption which
When the Government of any country deliberately abdicates its highest functions in favour of a
few selfish rings, and permits its Minister of Pinanco to become, in the most literal sense, the mere
mouthpiece of the manufacturers' association, in returnfor the right to toll the proceeds of the robbery
for political pui-poses, it is idle to expect anything from a Government or a Legislature elected by such
means and under such auspices, except precisely the results with which every newspaper in England and
the United Stales wore ringing during a great part of the past year.
It is not merely the policy, but the fixed determination of the Liberal party in the Dominion of
Canada to over ihcw this system at all hazards ; and, after very full deliberation, (hoy have come to the
conclusion that Mie best and probably the only really available method which presents itself for tliat
purpose, lies in i'ltroducing a system of perfect continental free trade, or unrestricted reciprocity, with the
United States.
Theoretically, no doubt, free trade with all nations would bo preferable ; but practically, and as a
matter of fact, free trade with the United States is vastly more valuable to Canada than free trade with all
the rest of the world would be with the L^'nited States left out. Moreover, there is a fair prospect ot
obtaining the one, and none at all, humanly speaking, of obtaining the other — at least, within any
reasonable space of time.
Canaila, no doubt, had very great opportunities in the past, which Criiada very foolishly threw
away, of securing for lierself a fiscal system very nearly as purely free trade as that of Great Britain, and
also a very low rate of taxation ; but those have passed and cannot now be recovered.
In these circumstances the twofold problem which to-day confronts Canadian statesmen ^^■orthy of
the name, is how to restore a fair measure of material prospeiity to the great mass of their cou!itrynien,
and check the tremendous exodus now going on of the very choicest part of their people to the United
States ; and, what is even more urgent, how to put a stop to the colossal system of organised corruption
which is milking Canada a veritable byeword among English-speaking nations for venality and mal-
administration.
Free trade or absolute reciprocity with the United States, will undoubtedly do more than anything
else which can be devised (with any prospect of success) to restore material jjrosperity, and to enable us
to keep our own people in our own country — in fact, as I have said above, in our present condition it is
the one piacticable measure which will do so; while as to the second object, it is equally plain, that
absolute freedom of interchange with the United States, means a death-blow to every corrupt ring in
Canada; and at the same time, by reason of the fact that, \\ bile it will immensely increase the general
wealth of the people, it will, temporarily at any rate, diminish the revenue collected under the present
system, it will enforce an amount of economy on tlie Administration, which will compel them to be honest,
even if not so inclined, and will make it out of the question to comply with the outrageous demands for
fresh bribes in the shape of unprofitable and utterly uncalled for public works and additional provincial
subsidies, which are of continual recurrence as matters now stand.
One thing, I think ought to be clear to all intelligent Englishmen, and that is, that it is utterly
impossible that Canada can prosper under her present conditions — isolated, and in danger of being still
more completely isolated, from trade and commerce with the entire continent to which she belongs
geographically, losing her population at the rate of one million and a half in ten years (if the official
statements of the present (Government are to bo relied on), and subject at the same time, to a sjstem of
taxation and of organised political corruption such as you have happily been strangers to since tiie days of
Walpole or Charles II.
The Liberal party of Canada, and indeed, the great bulk of the people of the Dominion, wish well
to the mother country, and it is very far from their desire to do anything which in the long run can injure
her interests ; but their duty in the premises is plain.
As Canadians, they must consult the advantage of Canada first, and if it be — as it appears to them
it is, beyond all possible controversy — for the best moral and material interests of Canada, to form a
commercial treaty, which will ensure perfect free trade with the United States, you on your side must bo
content to allow thorn to try tlio fxporinient. It is, and always has been, my own very stronj^ desire that
this measure should be so conduetea. that it luipht ultimately result in removinc all possible causea of
conflict between the two great division of the Ikitish ract-, and end in bringing tliem together in a firm
and durable alliance: and (given only a very modei'atn amount of prudent statomanshij) on the part of the
English (loverninent) I see every reason to hope tiiat that end may be accomplished ; but whetlier or no, I see
still more clearly that some very radical ehang'j in the position of affairs in Canada must ha brought about,
and that very speedily, or else that the Canailian Confederation must perish, rotten before it has iiad time
to become even half r'ne, as the result of the vice and folly with which its affairs have been administered.
I have not deemed it worth my while to dwell at length on the dishonest and dishonourable
pretence advanced by tlie late Sir John A. Macdonald and his fellows, to the effect that their policy
of corruption and oxtortion was prompted by their fervent desire to preserve the connection between
Canada and the mother country.
In Canada such allegations arc treated with the contempt they merit ; and in England the fact
that those who make them are the identical persons who in 1870 deliberately turned their backs upon
the fiscal system of Great Britain, and deliberately adopted the system in vogue in the United States —
with full knowledge of the results which would inevitably follow — ought to be answer enough to anyone
who pri'teiuls to believe that loyalty to England is at the bottom of a systim of protection in Canada
or elsewhere,
But in truth the ijueslion btH«een the two Canadian parties is in reality an economi., one, and
in the long run resolves itself into this — shall Canada be governed for the benefit of tlie i)('oi)le of Canada,
or for the profit of a few hundred protected manufacturers, backed by a subsidised press and a purchased
majority in the Legislature ? ,
To talk of loyalty in such a connection is little short of political blasphemy, and I can only express
my surprise that such a shallow subterfuge should have obtained e/en a momentary credence in the mind
of any Englishman of even average intelligence.
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I have the honour to remain,
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Your obedient servant,
EICHAED J. CAIiTWRIGHT.
Kingston, January, 25ih 1892.
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