In 1878, John A. Macdonald introduced his National Policy in the House of Commons, a landmark event that would shape Canadian economic and political history for decades. Macdonald’s National Policy was a comprehensive plan aimed at fostering domestic economic growth and strengthening Canada’s sovereignty. It called for the introduction of protective tariffs to shield Canadian manufacturers from foreign, particularly American, competition, the development of infrastructure such as the Canadian Pacific Railway, and the settlement and development of Western Canada.
The immediate context for the National Policy was Canada’s economic challenges in the 1870s. The nation was in the midst of a severe depression, marked by high unemployment, sluggish growth, and declining trade. Additionally, Canada faced competition from the United States, which had introduced protectionist measures of its own under the Republican Party. For Macdonald, the National Policy represented a strategic response to these pressures, seeking to build an independent economic foundation for Canada and diminish its reliance on American trade.
One of the central components of Macdonald’s plan was the imposition of tariffs on imported goods, particularly manufactured goods. The goal was to encourage the growth of Canadian industries by making imported products more expensive, thus fostering a domestic market where Canadian manufacturers could thrive. This was a dramatic departure from earlier policies that emphasized free trade. Macdonald's vision was not simply economic—it was political. He saw the development of Canadian industry as essential to the nation’s future stability, believing that a robust industrial base would strengthen national unity by tying the provinces more closely together through mutual economic interests.
The National Policy also emphasized the importance of infrastructure, especially the construction of the Canadian Pacific Railway. The railway was vital not just for economic reasons—opening up markets and allowing for the transport of goods—but also for political and strategic ones. Macdonald understood that the railway was key to unifying the scattered provinces, particularly in the West, where fears of American expansion were real and present. The railway would physically link the provinces together, fostering both economic integration and national unity. Moreover, it would enable the settlement of the Prairies, a region rich in resources but sparsely populated, further contributing to Canada’s economic strength and territorial sovereignty.
Macdonald’s National Policy also had a vision for Western expansion. The encouragement of immigration, particularly to the West, was essential to the development of agriculture and the settlement of territories that could otherwise be vulnerable to American annexation. By populating the West with settlers, Macdonald sought to secure Canada’s claim to its vast territories and ensure their economic integration with the rest of the country.
The political implications of the National Policy were significant. It helped Macdonald’s Conservative Party regain power in 1878 after a period in opposition. The policy’s appeal lay in its promise of economic revitalization, protection from foreign competition, and a strong, united Canada. It resonated with Canadian voters, particularly in Ontario and Quebec, where the manufacturing sectors stood to benefit from protectionist tariffs.
However, the National Policy was not without controversy. The tariffs, while beneficial to manufacturers in central Canada, were less popular in the Maritime provinces and Western Canada, where agricultural and resource-based economies depended on imported goods and markets for their products. The policy’s emphasis on protecting domestic industry increased the cost of imported goods for consumers, especially farmers, and created regional disparities that would persist throughout Canadian history.
The long-term influence of the National Policy on Canadian history cannot be overstated. It helped lay the foundation for Canada’s industrial economy, fostering the growth of manufacturing sectors in Ontario and Quebec. The construction of the Canadian Pacific Railway, a cornerstone of the policy, became a symbol of Canadian unity and ambition, allowing for the economic development of the West and securing Canadian sovereignty over its vast territories. The settlement of the Prairies helped transform Canada into a continental nation, while the tariff system created the framework for the country’s economic independence from the United States.
In sum, John A. Macdonald’s National Policy was a defining moment in Canadian history. It represented a bold and strategic vision for Canada’s economic development, territorial expansion, and political unity. Its effects would shape the country’s economic policies, regional dynamics, and national identity for generations to come. Despite its controversies, the policy stands as a testament to Macdonald’s determination to build a strong, independent Canada capable of standing on its own in a rapidly industrializing world.
I move: That... this House is of the opinion that the welfare of Canada requires the adoption of a National Policy, which, by a judicious readjustment of the Tariff, will benefit and foster the agricultural, the mining, the manufacturing and other interests of the Dominion; that such a policy will retain in Canada thousands of our fellow countrymen now obliged to expatriate themselves in search of the employment denied them at home, will restore prosperity to our struggling industries, now so sadly depressed, will prevent Canada from being made a sacrifice market, will encourage and develop an active interprovincial trade, and moving (as it ought to do) in the direction of a reciprocity of tariffs with our neighbors, so far as the varied interests of Canada may demand, will greatly tend to procure for this country, eventually, a reciprocity of trade....
I say then that, if our manufacturers had a reasonable protection, if they had a hold upon our four millions of people in the same way as the manufacturers in the United States, then there would be a basis whereby they might be enabled to go in by degrees and develop their resources like those of the United States, who, as I have pointed out, can compete with and undersell England in every part of the world. The consequence of carrying out the principle of Free-trade to its utmost extent will prevent capital from being generated to any appreciable degree. As John Stuart Mill said in the celebrated passage so often quoted: the very fact that a nation commenced a particular industry first gives them a control over that industry. By getting the start in this way, capital is generated and a system of manufacture is formed which will prevent any rivals from successfully competing with them. So long as we have a Free-trade system, we can only have substantially one description of industry, and that is - agriculture...
But no nation has arisen which had only agriculture as its industry. There must be a mixture of industries to bring out the national mind and the national strength and to form a national character...
We must, by every reasonable means, employ our people, not in one branch of industry, not merely as farmers, as tillers of the soil, but we must bring out every kind of industry, we must develop the minds of the people and their energies. Every man is not fitted to be a farmer, to till the soil; one man has a constructive genius, another is an artist, another has an aptitude for trade, another is a skillful mechanic - all these men are to be found in a nation, and, if these men cannot find an opportunity in their own country to develop the skill and genius with which God has gifted them, they will go to a country where their abilities can be employed, as they have gone from Canada to the United States.
Having said so much about a National Policy, I will call the attention of the House to what that policy is. It should consist of a judicious readjustment of the tariff which would benefit and foster the agricultural, the mining, the manufacturing, and other interests of the Dominion; a judicious readjustment of the tariff will mean, to a certain extent, an increased duty upon certain articles; upon those articles which we can produce ourselves, which this country is fit to produce, which our climet can produce, which our people are able to manufacture...
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Source: Canada, Parliament, House of Commons, Debates , 1878