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Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent dtre fiimis A des taux de reduction diffArents. Lorsque le document est trop grand pour dtre reproduit en un seul cliche, il est fllmd A partir de I'angle supArieur gauche, de gauche it droite, et de haut en bas, en prenant le nombre d'images n6cessaire. Les diagrammes suivants illustrent la mithode. 1 2 3 1 2 3 4 5 6 T r m I \r COMMERCE BETWEEN THE United States & Canada OBSERVATIONS ON Reciprocity and the McKinley Tariff ADDRESSED TO D. M. IRWIN, ESQ., PRESIDENT OF THE BOARD OF TRADE, OSWEGO, N.Y. >:\ BY ROBERT H. LAWDER TORONTO, ONT. U m'. n( -M I ilUNJiUk IP "«* «^' . 1^. ■■ ...a •■ I Printed bv The Monetary Times Printing Company. Ltd., Cor. Church & Court Sis., Toronto, Ont. 1592 l! ^•■M Toronto, Ontario, April 30th, 1892. Dear Sir,- In pursuance of our correspondence on the subject, I have much pleasure in submitting the following memoranda and tables relating to the commerce between the United States and Canada, together with such observations on Reciprocity and the McKinley Tariff as are suggested by the consideration of the statistics contained in the official returns published by the Governments of both countries. It is to be sincerely hoped that a thorough and impartial investigation of the relative position of this commerce, and a due regard to its future expansion, will enable the two Governments to agree upon some joint policy, or upon such ad- justment of their respective policies, on a liberal and equitable basis, as will con- duce to mutual prosperity, and to 4he maintenance of those amicable business relations which ought to exist between the two countries. D. M. Irwin, Esq., President Board of Trade, Oswego, N. Y. Yours truly, ROBERT H. LAWDER. tfi Commerce Between the United States and Canada. i IN investigating the subject of the commerce between the United States and Canada, and in compiling tables illustrating the relative extent and character of this trade, it is absolutely necessary to examine and utilize the official government statistics of both countries, because of the defective character of the export returns in both cases. Even in Canada, where, under its customs regu- lations, exporters of merchandise are required to report at nearest c;istom house all their exports, whether by land or water carriage, this duty is so often evaded that the Mmister of Customs finds it necessary, in making up his abstract of ex- ports from the Dominion to the United States, as published in the Trade and Navigation Returns, to make a small allowance for short returns at inland ports (The amount so allowed for year ending June 30th, 1891, was $2,913,994). It has been found that the allowances thus made, when added to the actual entries at custom houses, form totals for each year corresponding very closely with the totals shown for same years in the statements of imports from Canada published by the Bureau of Statistics at Washington. As no attempt is made to distribute this allowance among the different classes of merchandise exported, this makes it all the more necessary to employ the United States Statements of Imports from Canada, in order to obtain a correct return and classification of the exports from Canada to that country. In the United States, under the customs regulations in force there, exporters are only required to report at custom houses such merchan- dise as is exported by water ; and as a very large proportion of the exports to Canada is shipped by rail, the result is that the United States reports of exports to Canada are of little or no statistical value whatever. On this point, Mr. S. G. Brock, chief of the Bureau of Statistics at Washington, writes as follows : (see Eage 262 in quarterly report No. i, 1891-92, for the three months ending Septem- er 30th, 1891) : — "Our statistics of the exports to Canada, as in case of Mexico (see remarks on page iii), are very defective, owing to the absence of law pro- viding for the collection of statistics of exports by railways. We are therefore obliged, for the period since railway communication was established between this country and Canada, to make use of the official Canadian Statistics of Imports from the United States, in order to approximately show the true condition 01 our export trade to that country.' In preparing the following memoranda and accompanying tables on the com- merce for the two fiscal years ending June 30th, 1890 and 1891, the exports of each of the countries are based upon the Government import tables of the other country. There can be no doubt but that the defectiveness of the United States system of collecting returns of exports has led to much misapprehension with respect to the extent and value of its commerce with Canada. In the Annual Reports and Statistical Abstracts published by the Bureau of Statistics at Wash- ington, the statements and comparisons are based on the defective system. The corrected returns, such as those alluded to by Mr. Brock, are only to be found in some of the appendices to Quarterly Reports. In almost every instance, poli- ticians, or writers for the press, looking for statistics, will rely entirely upon the Annual Reports or Statistical Abstracts for their information ; very few will ever know or hear of the corrections found in these appendices. In evidence of the very m'c!«iading tendency or character of the returns based on the defective system alluded to, the following figures are presented : — In the Statistical Abstract for 1891, prepared by the Bureau of Statistics at Washington (see page 77), the value of tne merchandise exported from the United States to the Dominion of Canada and other British North American possessions (this includes Newfoundland) is stated : For the year ending June 30, 1890 $41,503,812 1891 39.843.755 For the two years $81,347,367 It is only fair to state that the following foot note to the table is appended : " In the absence of law providing for the collection of statistics of exports to adjacent foreign territories over railways, the data of exports here given are very incomplete and largely understated." This is very well so far, but no indication is given of the extent of the defi- ciency, or as to where the corrected report is to be found. In the Quarterly Report of same Bureau, already alluded to (No. i, 1891-92), page 299, the total value of the imports of merchandise into Canada alone from the United States, as exhibited by the Canadian Trade and Navigation Returns, is shown to have been : For the year ending June 30, 1890 $60,449,366 •• " 1891 58,044,081 For two years $1 18,493,447 As compared with U. S. returns of exports to all B.N. A 81,347,567 Showing deficiency under U. S. defective system... 37,145,880 Allowing for exports to Newfoundland included in Statistical Abstract report, the United States returns of exports for these two years were short about $40,000,000. The Balance of Trade. One of the most important points to determine, in discussing the commerce between the two countries, is as to which of them is the larger purchaser of merchandise from the other. On referring to the Quarterly Report of the Bureau of Statistics at Washington, already alluded to, being No. i, 1891-92 (see page 299), the value of the merchan- dise imported from the United States into the Dominion of Canada, during the two years 1889-90 and 1890-91, was : As given above $118,493,447 The value of the merchandise imported into the United States from the Dominion of Canada (see page 271 of same Report), was. For the year ending June 30, 1890. . . .$39,042,977 •' " " " " 1891.... 39,087,782 78.130,759 Balance of trade in favor of the United States for these two years $40,362,688 Reference has been made above to the misleading character of United States Annual Reports, as to the extent of the commerce with Canada. Table " A," % appended hereto, clearly shows that these reports are equally misleading on the question of the balance of trade. The Annual Reports and Statistical Abstracts of the Bureau at Washington show that during the last ten years the net balance of trade was in favor of Canada to the amount of $9,900,123. The later Quar- terly Return of the same Bureau, No. i, 1891-92, which furnishes the corrected return of United States exports for these ten years, as exhibited by the Canadian returns of imports, shows that the balance of trade for these years was really $78,514,521 in favor of the United States ; thus establishing a deficiency in United States returns of exports, $88,414,644. Nor is this all; the imports into the United States as given in this Quarterly Report include all impmrts, whether entered for consumption or not ; whereas the imports into Canada only include merchandise actually entered for consumption. By referring to table "A," it will be seen that the Washington Bureau, in its Quarterly Report No. i, 1891-92, makes the excess of imports into Canada from the United States over its exports to the United States, for the two years ending June 30, 1890 and 1891, $27,846,871 (seepage 263). In the same Quarterly Report, Statement No. 69 gives the total imports into Canada from the United States, whether taken /or consumption or not ; and the immediately preceding Statement No 68 shows the total imports into the United States, uhether taken for consumption or not. These two statements show that the correct balance of trade for these two yeas was, as already shown, $40,- 362,688 in favor of the United States, instead of $27,846,871, as appears on page 263 of the Quarterly Report referred to. By making reasonable allowance for the imports into Canada not included with those entered for consumption, during the other eight years embraced in table "A," it may be fairly assumed that the bal- ance of trade in favor of the United States, for the ten years 1881-82 to 1890-91 in- clusive, was somewhat over $125,000,000. The imports and exports in table " A," taken from the Statistical Abstract, include Newfoundland and Labrador. These do not materially affect the question of balance of trade. The Quarterly Report No. i, 1891-92, above referred to, see pages 238, 239, shows that the totail exports to these points from the United States, during the year ending June 30th, 1890, were $1,221,704, and the imports into the United States were $354,003.) Character op the Commerce. The value of the export trade from either country to the other is not detc/- mined by extent alone, but is largely affected by the considerations as to whether these exports can be marketed in the importing country to better advantage or at better prices than in any other foreign market, and whether the demand from the importmg country really adds to the production and gives additional employment to the capital and labor of the exporting country. The additional sale to Canada of a few million dollars worth of cotton, tobacco, Indian corn and like products, would be of very little advantage to the United States, because such sales would not be of sufficient volume to improve prices, and these commodities could be sold elsewhere on as favorable terms On the other hand, additional sales of coal, fruit, manufactures, etc , would be of direct advantage, because they give rise to increased production in these articles, which increcise would not have occurred except through the demand in Canada. The commerce between the United States and Canada may be classified as follows : 1. Produce of the field, the forest, the mines and the fisheries ; or raw pro- ducts generally. 2. Manufactured goods. 3. Foreign merchandise, for which either country is the carrier or distributor for the other. 4. Articles not strictly merchandise ; settlers' effects, coin and bullion, articles returned. The tables B, C, D and E, hereto appended, are Abstracts of the Imports and Exports into and from each country to the other, during the two years ending June 30, 1890 and 1801 ; showing the values of each class of merchandise^ and the proportions thereof imported into either country, free of duty, or subject to duty. Tne classification of imports is made from detailed statements of every import which appears in the returns of the Uureau of Statistics at Washington and the Trade and Navigation Returns for the Dominion of Canada. The export returns of both Governments are discarded : the official returns of imports into the one country correctly exhibiting the exports from the other. The official classification of^the merchandise has also been discarded ; every article has been entered under the heading to which it appears to properly belong. There may be a few trifling errors in discriminating between foreign and domestic mer- chandise imported, but these are very insignificant. In the following comparison, foreign merchandise, settlers' effects, coin and bullion, and articles returned, are left out of consideration, the object being to ascertain how much of the native productions and manufactures of either country is purchased by the other, and what proportion is in raw products or in manufactured goods. Raw Products. Tables 13 and C show that the value of the products of the farm and field, the forest, the mines nnd the fisheries, imported into the United States from Canada during the two hscal years 1889-90 and 1890-91, was ^07, 039, 165 The same tables show that of these imports, the value of $10,. 635,201 was not entered for consumption. It may be assumed that this sum covers the value of imports from Canada which were exported from the United States to foreign countries. Nearly all of these exports consisted of grain and other agricul- tural products, lumber, fish, etc. The value of these exports may be fairly estimated, as fully 9,000,000 Making the value of Canadian raw products imported for actual consumption $58,039, 165 Tables D and E show that the value of the like raw products of United States production imported into Canada during these two years, all of which was entered for consumption, was 52,296,824 Balance of trade in favor of Canada in raw products $5,742,341 Manufacturbd Goods. Tables B and C show that the value of manufactured goods im- ported into the United States from Canada, during these two years, was i 343.3^* Tables D and E show that the value of manufactured goods im- ported into Canada from the United States during these two years, was 43.438,217 Balance of trade in favor of United States, in manufactured goods $42,094,906 The above figures show that in the exchange of merchandise of native production or manufacture, the balance of trade for these two years was in favor of the United States $36.35^.565 There is a wide misapprehension as to the value of Canadian agricultural products which are taken lor consumption in the United States. The following figures are taken from the Quarterly Report of the Bureau of Statistics at Wash- ington (No. I, 1891-92): Total imports into the United States from the Dominion of Canada during the year ending June 30, 1891 $39,088,390 Deduct proportion of above not entered for consumption $4,008,380 Imported through exterior pxirts without appraisement . . 449.5o<> Articles, the Krowth, produce and manufacture of the U. S returned ^33.455 Household and personal effects of settlers and of IJ. S citizens dying abroad 1,936,881 7.047,225 Total merchandise entered for consumption $32,041,174 Description of Mbrchanpisb Foreign merchandise about $ 1,200 000 Timber and lumber and other woods " 13,400,000 Fish, oil, etc •* 3,000,000 Coal, ores, etc " 3,000.000 Manufactured ^oods " 1,000.000 Merchandise other than agricultural products. . . " 21.600,000 Of which, entered for consumption " 19,600,000 Leaving for agricultural products taken for consumption $12,441,174 The principal articles were: Horses about $i,6oo,ooo(of which over $500 000 was for the improvement of stock); sheep and lambs, about $1,100,000; eggs, about $1,200,000; hides and skins, including fur skins, about $900,000; barley. 9bout $3,200,000; hay, about $450,000; beans and peas, about $900,000 ; pota- toes, about $1,750,000. Per contra, the agricultural products imported into Canada from the United States, all of which were entered tor consumption, amounted to$i5,426,273. The principal articles were, hides, skins and wool, about $2,400,000 ; hors4js, cattle, sheep, hogs and animal products, about $2,700,000 ; Indian corn and meal, wheat and flour, about $2,200,000; tobacco, about $1,500,000; raw cotton, about $3,500,000; hemp, fruit, field and garden seeds, nursery stock, broom com, vegetaisles, etc., about $3,000,000. During this year, the agricultural imports from Canada into the United States, especially in barley and eggs, were much under the average, owing to the McKinley tariff, which was in operation during most of the year. On the other hand, the imports of animal products into Canada were much smaller than formerly, owing to increase in the Canadian tariff on cattle and hog products. In produce of the forest, the balance of trade is largely in favor of Canada ; the imports into the United States of logs, lumber, timlser, shingles, wood pulp, hemlock bark, etc., being about $13,300,000, as compared with exports to Canada of about $1,300,000. As the United States exports to foreign countries a larger value of lumber, etc., than it imports from Canada, and as it imports from Canada nearly $2,500,000 in logs and unmanufactured wood, it is a matter of Interest to the UcUed States to impose a low duty on sawed lumber, in order to secure the suspension of a Canadian export duty on logs. In products of the fisheries, the balance of trade is also largely in favor of Canada, the imports into the United States for 1890-91 being about $3,200,000, while its exports only amount to about $500,000. The fishermen of the Maritime Provinces on the Atlantic appear to consider the exclusive right to the in-shore fisheries as of greater value than free entry of their fish into American markets. In products of the mines, the balance of trade is largely in favor of the United States, their exports to Canada (chiefly of coal) in 1890-91 amounting to about $8,400,000, as compared with about $3,200,000 imports from Cdbada. 10 Manufactured Goods. It is in this class of goods that the United States obtains great advantage from its commerce with Canada, its exports to that country for the two years under consideration being about $42,000,000 in excess of its imports of similar goods from Canada. The exports of manufactured merchandise to Canada form about one-seventh part of the entire exports of this class of goods from the United States to all foreign countries. Table F shows the classification of the different kinds of manufactured goods, and the proportion admitted into Canada, free of duty or dutiable. It will be noted that they are nearly all of a highly finished character. Of the following classes of manufactured goods, Canada purchases from the United States a larger value than it does from Great Britain: Metal manufactures and hardware generally ; leather, gutta percha and india rubber goods; books and stationery and wall paper; drugs, dyes and chemicals; glassware ; miscellaneous and fancy wares other than dry goods. It may also be observed that by far the largest proportion of these manufactured goods consists of articles which are highly, many of them very highly, protected by heavy customs duties in the United States. It is not the mtention here to enter upon an argument for or against protection, but this fact deserves attention from those who hold the theory that protection adds to the cost to the consumer the amount of the duty levied on imports. As opposed to this theory, there is the unquestionable fact that Canadians find several articles, which are pro- tected in the United States by duties from even 45 per cent, and upwards, selling in the American market as cheaply as in free trade England. Relative Liberality of the Two Customs Tariffs in the United States and Canada. The Quarterly Report No. i, 1891-92, of the Bureau of Statistics at Wash- ington, see page 263, shows the proportions of the imports into the United States from Canada, which were admitted free of duty. For the last five years they were : in 1887, 31.31 per cent.; in 1888, 30.01 ; in 1889, 31.48 ; in 1890, 30.79 ; in 1891, 29.73. Average for five years per cent., 30.66 The proportions for theimports into Canada from the United States were : in 1887,31.75 per cent.; in 1888,41.65; in 1889, 42.07; in 1890, 41.53; in 1891, 44.51. Average for five years per cent., 40.30 In this respect again, Canada suffers by the method in which the comparison is made ; in its case the percentage is calculated on the amount entered for con- sumption ; in the case of the United States on its gross imports. The total imports into Canada from the United States, in the last two of these years, were $105,977,630 Of which there was admitted free of duty. 43,611, 831 *• " " percentage of free goods 4300 As compared with percentage in United States for same years .... 30.26 From which it is seen .that the proportion of imports admitted into Canada, free of duty, is 4c per cent, larger than the proportion admitted into the United . States on same terms. Owing to the different classification or nomenclature of many articles under the two tariffs, and the imposition of specific in place of ad valorem duties in several instances, it is difficult even approximately to arrive at a just comparison. It can be clearly shown, however, from official authority, that even prior to the McKinley tari^ the customs duties in the United States were much higher than in Canada. In a report published by Mr. Wm. F. Switzer, then Chief of the Bureau of Statistics at Wa^ington, dated May 31SM 1888, table No. 29 therein gives a detailed statement of the merchandise imported into Canada from the United States, during the year 1886-87, showing the quantities and values, and the rates and amounts of duty levied under the Canadian tariff; also, the rates and amounts of 4uty which would have been levied on like merchandise under the United States tariff, if imported from Canada. He shows : II Total value of the imports into Canada, and entered for consumption $44,802,733 Of which there was admitted, free of duty 14,224,400 " " subject to duty 30.578,332 The total amount of duty levied in Canada 7>265,i36 The amount of duty which would have been levied on same goods in United States 9,025,911 The average rate of duty on all imports from the United States, per cent 16.22 The average rate of duty on same imports into the United States would have been, per cent 20.15 Excessive as the United States tariff rates of duty were in comparison with those in Canada previous to the McKinley Bill, a present comparison would prove in6nitely greater lUiberality towards Canadian commerce. In-transit Trade. In addition to the commerce referred to in preceding observations and in- cluded in the annexed tables, there is a very extensive transportation trade in the products and merchandise of both countries, and of foreign countries, not included in the Import and Export Returns of either country. The Quarterly Report, No. i, 1891-92, of the Bureau of Statistics at Wash- ington, furnishes the following statement (see page 300) : No. 70. Statement showing the values of foreign merchandise brought into the United States from the Dominion of Canada for immediate transit or trans- shipment to other foreign countries, and of merchandise brought into the United States from all foreign countries for like shipment to the Dominion of Canada, together with the routes by which such merchandise was shipped, during the year ending June 30th, 1891. It makes the total value of merchandise so received from Canada $19,592,830 ' It makes the total value of merchandise shipped to Canada 27,848,750 ' Inland Transportation. Canada has incurred an enormous debt under the large Government expend- iture on its canals and railway system. No doubt this debt was incurred primarily and perhaps exclusively with the design of promoting its own prosperity. Yet there can be no doubt that these public works have indirectly benented the Western States to a greater extent than they have benefited Canada. No one can dispute the fact that the operation of these important transportation routes has greatly aided in the reduction of the cost of transportation to and from the West and the seaboard. Every cent of reduction so created has just added so much to the value of all the produce of the West, and consequently to the value of every acre under cultivation. It is not only true that a much larger quantity and value of Western States produce have been transported over Dominion canals and rail- ways than there have been of Canadian produce ; but as the aggregate produc- tion and acreage in the former largely exceed those of the latter, it must be equally true that, in like proportion, the excess of advantage derived from the re- duction in cost of transportation has been in favor of the former. The American farmers and produce dealers have had the use of these canals and railways on equal terms with the Canadian farmer and dealer, without having to contribute one dollar towards the cost of their construction or the interest upon the amount expended. In fact, it is a cause of frequent complaint throughout Canada, that the Government-aided railways are almost always exacting higher rates for trans- portation of Canadian produce than they obtain from American producers and shippers for similar service. Considering the real position of Canadian railways and canals in respect of the in-transit trade and inland transportation service, tne attitude of many of the politicians and of a large portion of the United States press is unaccountable.. From a business point of view, the large Dominion Gov- «rQineat expenditures on these works, which have proved of so much advantage to the Western States, might be expected to have produced a spirit of hberality in the commercial policy of the American Government and Congress towards Can- ada; but, on the contrary, they are generally treated as a cause of offence. United States politicians appear to be more solicitous about the interests of the few big American railway and transportation companies than they are about the interests of the millions of producers and consumers who are b«iefited by com- petition in freights. Proportion which the Commerce of Canada with thb United States bears to the whole foreign commerce of canada. Table G, hereto annexed, shows the value of the merchandise imported mto and exported from the Dominion of Canada for ten years, fropi and into Crnat Britain, th^ United States and all countries. The imports taken for consump- tion from the United States form 45 per cent, of the whole import*: , the exports to the United States form 43^ per cent, of the whole imports. The average rate of duty levied on imports from the United States was 15 gnr cent., as compared with 30.25 per cent, average rate on imports from Great ritain, and 20.08 per cent, on all imports. It is not to be inferred from this that under the Canadian tariff any discrimination was intended or really exists in favor of the United States. The same apparent discrimination was found in the operation of the United States tariff towards Canada. On this point, Mr. Wm. F. Switzler, at that time Chief of the Bureau of Statistics at Washington, in a report dated May 31, 1.888, wrote: — "The average ad valorem rate of duty collected in the United States on dutiable merchandise imported /rom a// couii- 4rwj was 47-11 per cent.; on imports /rom the Dominion on/y, 21.00 per cent. This difference is found in the following classes of merchandise constituting the bulk of the dutiable imports from Canada" (animals, barley, coal, fish, provi- sions, lumber, etc.). Mr. Switzler evidently reported in thi^ way in order to remove any wrong impression which other foreign countries might entertain con- cerning the apparent low average rate of duties on Canadian imports. The same explanation will serve as to apparently low average rate of duties in Canada on imports from the United States. The McKinlev Tariff. The official reports of the United States Government up to the time of the passage of this bill established the following facts : That the commerce between the United States and Canada was very import- ant in its extent ; had been increasing neatly every year ; and was capable of being rapidly and largely increased under a liberal and equitable policy ; That the balance of trade during the ten immediately preceding years had been immensely in favor of the United States ; That the interchange of raw products was slightly in favor of Canada ; but this small balance of advantage was covered four or five times over by the large purchases by Canada of United States manufactures ; That the proportion of the imports admitted into Canada, free of duty, was much larger than the proportion admitted into the United States from Canada, on same terms; That the average rate of duties levied in Canada on imports from the United States was much lower than the average rate levied in the United States on imports firom Canada. In every respect, Canada had adopted towards the United States as liberal ^ commercial policy as its financial and political position would admit of. Fre- quent attempts have been made by its Government to come to some under- standing with the Administration at Washington, whereby the commerce between the two countries could be establi^ed on a liberal basis of a permanent character. In view of all the above considerations, Canada had every reason to expect that under any general re-adjustment of the United States tariff, the average rates on M Canadian products would be reduced at any rate to the level of the average rates in Canada on United States products. The reverse policy was adopted under the McKinley tariff. Excessive, and in many cases, prohibitory, duties were imposed on all the products for which Canada at that time found its best market in the United States, viz., horses, barley, eggs, beans, hay, potatoes, etc. The relative position of the inter-commerce and sound business principles all pointed to a liberal policy ; why, then, was the opposite course taken ? The onl^ explanation which the writer could obtain from numerous enquiries among prominent business and newspaper men in New York, was: That the real position of the trade between the two countries was not fully submitted to or discussed in Congress ; that the clauses of the Bill affecting agricultural and other products were not specially directed against Canada, but were in accordance with the general principle that heavy protective duties should be levied upon all articles of produce or manufacture which could possibly be produced in the United States ; that no danger of reti^liation was to be apprehended from Canada, because, according to the representations of the Toronto Globe and Mail and other news- papers, and of many prominent politicians in the Dominion, the prosperity of Canada was so entirely dependent upon the United States market, that Canadians were utterly unable to retaliate or to resent %ay action which Congress might take. Mr. Erastus Wiman of New York was reoorted as the only prominent character who stronglv remonstrated against and opposed the policy pursued towards Canada, which he considered equally unwise and impolitic. Admitting that ultra-protection was the basis of the McKinley tariff, the object being to extend the held for labor in the United States, how is this object to be accomplished by shutting out part of the forty millions of merchandise imported from Canada, if Canada, adopting the same principle of action, should take similar steps for shutting out a like proportion of the sixty millions of mer- chandise imported from the United States ? If the object was to exclude Canadian barley, it has succeeded ; but at sorrowful expense to eastern maltsters and brewers, whose property has been terribly depreciated in value. In shutting out Canadian barley it was hoped that the production in New York State would be stimulated, and that prices would be improved, but on the contrary there has been decreased production and lower prices. If the object was to shut out Canadian horses, it has partially succeeded, but it has not added one dollar to the value of American horses, the general run of which are now being imported into the Canadian Northwest at lower prices than they can be procur«l from the Province of Ontario. What greater absurdity could be advanced than the pre- tension that the exclusion of a few thousand Canadian horses could add to the value of over fourteen million horses reported as owned in the United States in 1890 ? If the object was to exclude Canadian hay, this, too, has been accom- plished ; but how conld this affect the value of the crop of the United States, amounting to over $400,000,000 ? If the object was to shut out Canadian potatoes, it has succeeded, but how can it be shown that this course could improve the value of the 200 million bushel crop of the United States ? The same question may be asked as to the exclusion of Canadian cattle, sheep, eggs, etc. The McKinley tariff imposes heavy taxes upon Canadian products, but is a delusion in its pretence to afford protection or increase the value of United States produce. ' -'■ Reciprocity. . - In connection with the McKinley Bill, resolutions were adopted by Congress authorizing the President to enter into treaties of reciprocity uith American countries south of the United States, and with other countries, establishing the system of mutually preferential duties. The avowed objects sought to be accom- plished by these treaties, especially with the countries south of the United States, were : To reduce the large balances of trade now existing against the United States, To increase the demand for agricultural and other products. X4 To enlarge existing and to create new markets, by means of preferential duties, for the manufactures of the United States. For some unaccountable, or at any rate unintelligible reason, the Dominion of Canada was excluded from the operation of this reciprocity policy ; although, as can be clearly shown, a reciprocity treaty with Canada would certainly accom- plish the above objects more fully than any treaty which could be made with any other country. First, as to bialance of trade ; as has been already shown, this now is and for years has been largely in favor of the United States. A fair analy. sis of the commerce and its character must lead to the conclusion that its exten> sion would increase the balance. Compare this condition with that found in the trade returns for the countries south. On this point, Mr. Brock, Chief of the Bureau of Statistics at Washington, in his Quarterly Report, No. i, 1891-92 (see page ro8), writes, concerning year ending June 30, 1891 : — " Our total trade exports and imports, with all the American countries south of the United States, amounted to $332,926,093 ; of which the imports were $242,512,577, and the ex- ports were $90,413,516. The imports represent 72.84 per cent., and the exports 27.16 per cent, of the total trade. In other words, the United States buys $2,66 worth of merchandise from those countries to every dollar of merchandise sold to them by the United States." Next, as to increased demand for agricultural products, this object is equally attainable in the case of Canada as in these countries, probably more so, because the United States exports to Canada con- sist in part of such products as fruits, garden and field seeds, nursery and orchard stock, coal, etc., for which the Dominion is the best and in some cases the only foreign customer. The large proportion of articles of domestic production which the United States can expect to furnish to these southern countries consists of flour and meal, provisions, fish, some kinds of lumber, shingles, etc. The total quantities of these products exported will always be too small to increase prices realized by producers. Some increase of trade will result, and the world's con- sumption may be slightly increased through the reduction of prices arising from the lower duties in these countries ; and to this extent some beneht may accrue to the United States. But, even if by means of preferential duties, the United States should secure the whole import trade of these countries, this could not in- crease prices, because it is inconceivable that, under any circumstances, all these countries would ever absorb the entire supply of the United States, and the prices of the whole will be determined by the value of the remainder left. How much would it profit the United States to increase its exports of flour and provisions to the West Indies, if it thereby curtails its exports to other foreign countries ? Next, as to creating new and enlarging existing markets for manufactures wherein do these southern countries promise better resiilts than could be achieved in Canada under the same policy ? The Quarterly Report of the Bureau of Statistics at Washington, No. i, 1891-92, gives the following comparisons : Value of merchandise imported into the United States ■ ■ ' from all American countries south thereof, during , ' the year ending June 30, 1891 '. $242,512,577 Value of merchandise, manufactured, exported to above : . /•;" Agricultural implements $ 752, r85 ''. > Cotton manufactures 4,686,013 Iron and steel and manufactures of 14,003,762 Refined mineral oils 3,422,840 F""sehold furniture 1,075,300 manufactures of wood 752.732 24,692,832 The exports of manufactured goods to these countries being in the proportion of 10 per cent to the merchandise imported from them ; whereas, in the case of »5 Carada, the exports of manufactured goods to Canada during the same year were equal to 56 per cent, of the whole of the imports into the United States from the Dominion. All these facts and comparisons are taken from the official returns of their own Bureau, and it may be assumed that they were duly considered and discussed, when Canada was expressly excluded from the operations of the reciprocity resolutions. It may also be assumed that Congress believes in the correctness of the principle that the preservation and extension pro tanto of an existing commerce are quite as valuable and deserving of consiaeration as the probable creation of a new Commerce of like extent. Why, then, was Canada exempted from the general policy ? The action of Congress and the later action of the United States Administration in rejecting the overtures for reciprocity submitted by the Canadian Government, cannot be accounted for on the flimsy but plausible pretext or argument that the policy proposed by the latter was a jug-handled, one-sided policy, unfair to the United States, because there was a market there of over 60 million people, while in Canada there is only about five millions of population. What has population to do with the question ? The real question js which of the two countries is possessed of the greater quantity and value of articles which the other country requires. The character of the commerce for the last 10 years decides this question beyond the reach of argument. Nor is it conceivable that even with free trade in raw products the imports from Canada would be at all likely to increase to an extent sufficient to cover the large balance in favorof the United States, in manufactured goods. It must have been observed how carefully the politicians in Congress and the members of the Administration at Washington have refrained from furnishing any figures in support of the pretension of the one-sif'' i character of reciprocity with Canada. Why should they ? They can quotr* jsands of anti-Canadian, unpatriotic statements and admissions from th ..dian press and politicians as justifying them in their pretensions. In Canaua the question of reciprocity is considered one of^ the most, if not the most, important public questions of^ the day. In the United States very little interest is felt on the subject, and very few have given much attention or study to the merits of the question. Nearly all the information they have gained is from extracts from Canadian newspapers and speeches of Canadian politicians. What has been done in Canada to remove the indifference, and, in some cases, the hostility manifested in the United States on this question ? The Americans complain of the general lack of sincerity evinced by Canadian politicians and the press on this subject. They have found both parties trading upon the honest desire of the people for reciprocity. One party, with no worthier object than to render a fair reciprocity treaty incapable of accomplishment by its opponents, studiously refrained from all mention of the advantages which would result to the United States from such a policy, and constantly persisted in attempts to p«rsuade the Canadian people that the advantages in their favor were so one- sided and important, and so absolutely necessary to relieve the Dominion from the great agricultural and commercial depression which they alleged to be every- where prevailing, that Canada should cheerfully assent to any terms or condi- tions which the United States might demand. They wilfully misled the American press and people, as they knew well from the representations and remonstrances of many of their own supporters that they would never consent to the terms and conditions proposed. What would be thought of any business firm or corpora- tion, which, being desirous of effecting an important agreement, should inform the other party that the arrangement contemplated was of such vital necessity to the proposer that he was willing to accede to any price or terms demanded ? The other or the Government party, not to be outdone in profession of zeal in favor of the popular desire for reciprocity, appealed to the electorate on this very profession. Fortunately for them, but unfortunately for the cause of reciprocity, the position of their opponents was so untenable, that all that was necessary for them to do was to expose the impracticable and impolitic character of their opponents' policy, and in very vague and general terms pledge themselves to i6 •wniest «fforts to effect a fair and advantageous treaty of reciprocity. It might have been expected that the conduct of the discussion by the Government party would be such as should commend itself to the intelligence of the electors by a carefully prepared statement of such facts connected with the commerce between the two countries as would justify the expectation that the propositions which they were about to make to the United States Government would be accepted. Little of this kind of argument was employed, but too much of sill^ dissertations on loyalty and untimely criticism of American institutions ; by which means, the support and co-operation of many Americans, who fully appreciate the value of the Canadian trade, were alienated, &nd the existing hostility in many quarters was aggravated. It was certainly unwise, as it was unnecessary, to introduce such irrelevant matter into the discussion of a purely commercial question. The result of the general election and of the subsequent by-elections in Canada must have convinced the politicians of the United States that the people of the Dominion will have nothing to do with Commercial Union or Unrestricted Reciprocity. Their financial position will not admit of any serious reduction of their customs revenue. The late abolition of duties upon refining sugars effected a large reduction. The further reduction which would result from a reciprocity treaty with the United States in raw products alone, would tax the skill of the I'inance Minister to meet. Any treaty which would involve Canada in a policy of discrimination against Great Britam or any foreign country which admits Canadian products on favorable terms, cannot be entertained, Any arrangement between Canada and the United States must have some permanency about it, in order to prove of much advantage to either. If it is to be in the shape of a treaty, it must be on the lines of the old treaty, with such modifications as the changed conditions render necessary. No specific statement of the propositions submitted by the Canadian Gov- ernment to the Administration at Washington has been submitted to Parliament or to the press, nor have any of the documents containing the grounds on which these propositions have been urged, been published. The general impression is that the propositions cover : — Free trade between the two countries in the raw products of the farm, the forest, the mines, and the fisheries, together with such specified manufactures as may be agreed upon ; free access to and enjoyment of the fisheries by the subjects of both countries on equal terms ; all the inland rivers, lakes ancf canals to be open to the trade of both countries, on conditions Qommon to both ; the coasting and wrecking trade to be also open to both coun- tries on equal terms ; and all merchandise, the produce and manufacture of either country, not included under the free trade articles of the treaty, to be ad- mitted into the other country on as favorable terms a&the like goods are admitted from any other foreign country. It may be asked why Canada is so generally in favor of a reciprocity treaty which it bielieves will be of as much or greater advantage to the United States than to itself. The reasons are many, both commercial and political. Owing to differences in soil and climate, there are many kinds of produce which can be raised to greater advantage in the one country than in the other, and under free trade some changes in the productions might be profitably made in several sec- tions in both countries ; owmg also to the comparatively earlier or later seasons in the two countries, many articles common to both countries could be advan- tageously interchanged in the respective seasons, such as calves, lambs, fruits, vegetables, etc.; owing further to the fact that several sections in either country, which produce a surplus of certain products, are in close proximity to and have quick and cheap connection with sections of the other country which have a deficient supply of these products, it is evident that a free interchange must prove to mutual advantage. Another commercial argument in favor of free trade be- tween the two countries is found in the experieqe of exportersof produce, who often find it advisable and cheaper to have their grain, provisions, etc , trans- ported to the seaboard through the other country. They would then be relieved from the vexatious trouble and frequent delays incident to the present bonding t1 system, both at frontier and seaboard potts. The political advantages whieU would result from proposed treaty are, the removal during the term of the treaty of all the petty but irritating disputes which are so frequently cropping up with respect to the fisheries, canals, transportation and in-transit trade questions. Canadians believe that, aside from the valuable privileges as to fisheries and canals which they offer to convey, the advantages of a reciprocity treaty to the United States are fully equal if not superior to those which Canada would derive ; and that in the matter of fisheries and canals, the United States has no such equivalent to offer. It may have been that the propositions submitted by the Canadian Government to the Administration at Washington were subject to some reservations which were considered unacceptable ; or they ma^ have been sub- mitted in such a manner as to convey an impression of such indifference as to their acceptance that the Administration at Washington may have felt justified in believing that further negotiations would not lead to any satisfactory result. If it should appear that the failure of these negotiations has been owing to any unwarranted limitations or reservations on the part of the Canadian representa- tives, or to any lack of care and ability in preparing the case upon which their propositions for reciprocity were founded, great dissatisfaction in Canada will result. The public sentiment was very correctly expressed by Principal Grant, of Kingston, in a recent address to the New England Chautauqua Society in the following language : — " No political party could exist for a day in Canada that was opposed to the extension of trade relations with the United States, as far as they can be extended without our coming under obligations that would endanger our fiscal independence or political life " The reply of the Administration in Washington to the proposition of the Canadian Government, was, as reported by the Canadian press, to this effect : — That a reciprocity treaty confined to raw products would not be considered at all, because it -would be a one-sided arrangement in favor of Canada ; and that any reciprocity treaty which might be favorably considered by the people of the United States must include manufactured goods, and a joint dis- criminating tariff as against Great Britain and other foreign countries. The contention as to the one-sided character of a reciprocity treaty in raw product.«^ has been fully discussed and exposed ; the adoption of free trade in manufactured goods has been shown to be impracticable in the tinancial position of Canada. Discrimination against Great Britain is impossible under the present colonial connection, besides being utterly repugnant to the sentiment of the people ; neither could such discrimination be justly adopted against any other foreign country which admits Canadian products on favorable terms. Apart altogether from the political aspect of the question, the discrimination called for is so manifestly unfair and unjust, that such a demand would never have suggested itself to the United States Government except throu(;h the ridiculous propositions of Canadian newspapers and politicians. The official statistics of their own Bureau at Washington show that, leaving out lumber, fish, coal, and such articles as the United States must procure from Canada, their other imports only amount to about $io,o'io,ooo to $12,000,000 In order to obtain free trade in articles of this value, Canada is asked to discriminate against Great Britain and foreign countries from which it now imports (see Tablu G) merchandise of a value exceeding $60,000,000, all of which it is now importing on better terms than the same can now be procured for in the United States. Canada is asked not only to surrender a very large proportion of the customs revenue now derived from these imports, but to place itself in a position to be compelled to purchase from the Unitod States the goods proposed to be excluded, at such prices as American manufac- turers may choose to ask. Surely no such ridiculous proposition has ever been subitted by the Government of any other country to another Government. If not Reciprocity, What Then ? Canada cannot consent to remain much longer under the one-sided tarifi policy now existing ; receiving on her part the produce and merchandise of the Ml , i i8 United States on liberal and favorable terms, while practically excluded from the American markets in the only articles which might be advantageously sold there. Unless the excessive duties imposed by the McKinley tariff on Canadian horses, cattle, sheep, barley, beans and peas, eggs, hay, potatoes, etc., are repealed, or reduced to fair and reasonable rates, Canada will be compelled, in vindication of its independent position and in its own general interests, to impose correspond- ingly high duties upon United States manufactures, etc ; such duties as will attract to Canada more American capital and mechanics than the United States can make employment for by excluding a few million dollars worth of Canadian raw !>roducts. t^Ar too much importance has been attached to the value of what is oolishly termed the "natural" market of sixty-five million people. Too little consideration has been given to the fact that the five million people of Canada are and have been buying much more extensively from the sixty-five millions than they have been selling t(> them. Steam and electricity have annihilated distance in commercial transactions. It is not the near-by or populous market, but the needy market which an exporting country requires. Canada would infinitely prefer that its commercial relations with the United States should be established on the most liberal basis possible ; but if the United States persists in rejecting all reasonable propositions for reciprocity in trade, what can it expect other than a reciprocity in tariff ? 'I ! >0 APPENDIX. t* TABLE showing the balance of trade in favor of or against the United State!, in its commerce with the Dominion of Canada, and other British North American possessions, in each of the fiscal years ending June 30th, 1882 to 1891, inclusive, as exhibited in the returns of the Bureau of Statistics at Washington in the Statistical Abstract for 1891 (see page 77), based upon United States Customs' Returns of Imports and Exports ; compared with returns of the same Department in its Quarterly Report No. i, 1891-92 (see page 263), on the com- merce with the Dominion of Canada alone, the exports to Canada being based upon the Dominion Trade and Navigation Returns of Imports from the United States ; these imports consisting exclusively of merchandise taken for immediate consumption in Canada. Year Ending June 30U1. Per Statistical Abstract for 1891. Per Quarterly Report No. 1, 1891-1892. Excess ot Imports into Unifd States. Exports fromUnit'd States. Excess of Imports. Excess of Exports. Imports into Unifd States. Imports into Canada. Excess of Imports into U.S. Imports into Canada. 1882... 8 5i.i'3,475 44,740,876 39,015,840 36,960,541 37,496,338 38,015,584 43,084,123 43,009,473 39,396.980 40,434.535 8 38,569,822 46,580,253 46411,450 40.124,907 34.785,021 8 12,543.653 8 8 50,775.^81 44,394,158 38,399.835 36,695,485 37,304.036 37,847,277 43,934,554 42,738,074 39.043,97/ 39,087,782 • 47.052,935 55.147.343 49,785,888 45,576,«io 43,818,651 44.795.908 46,440,296 50,029419 53.391.973 53.485457 8 3,723,646 8 1883 .. 1884... 1885... 1886... 1.839.377 7,395.610 3.164.366 10,833,085 11,386,053 8,880,825 5.5»4.6i5 6,948,631 3.515.743 7.391.345 13,248,996 14.597.875 a.tit.111 1887... 1888... 36,162,347 1.853,237 37,245,119 5.839.004 42,141,136 868.417 1889... 1890... 1891... 41,503,812 40,84^,7^5 2,106,832