In 1879, John A. Macdonald introduced the National Policy, a transformative economic program aimed at fostering Canada's growth by protecting domestic industries. Central to the policy was a system of high tariffs on imported goods, particularly from the United States, which encouraged Canadian manufacturing and economic self-sufficiency. This shift in economic strategy was designed to shield Canadian industries from foreign competition and create a more robust internal market.
At its core, the National Policy was driven by three main pillars: protective tariffs, the completion of the Canadian Pacific Railway, and the settlement of the western territories. Together, these measures aimed to unify the country economically and geographically while fostering national independence. For Macdonald, the policy was more than just an economic tool; it was a political vision that sought to safeguard Canada’s future in the face of American economic dominance.
The protective tariffs were essential in helping fledgling Canadian industries grow by shielding them from cheaper, foreign-made goods. Canadian manufacturers, particularly in Ontario and Quebec, benefited from this economic protection, allowing them to build a stronger industrial base. Macdonald believed that a strong manufacturing sector would reduce Canada’s dependency on British or American imports and foster domestic employment, creating a cycle of internal growth that could fuel national prosperity.
However, the National Policy had broad implications beyond mere economic protectionism. It was intricately tied to the settlement of the West and the expansion of Canada’s railway system, especially the completion of the Canadian Pacific Railway. Macdonald saw the railway as a vital artery for unifying the newly expanded nation, ensuring that goods, people, and capital could flow freely across vast distances, from the Atlantic to the Pacific. It was also crucial in securing British Columbia’s commitment to Confederation, as the construction of the railway was part of the agreement that brought the province into the union.
The National Policy, while successful in stimulating certain sectors of the economy, was not without controversy. It exacerbated regional disparities within Canada, benefiting industrial central Canada at the expense of the agrarian West. Western farmers, particularly in Manitoba, resented the high tariffs because they increased the cost of manufactured goods while reducing the markets available for their agricultural products. Western Canada, with its economy based on agriculture, struggled under the high costs of necessary goods imported from the East. Over time, this contributed to growing discontent in the western provinces and set the stage for future regional tensions in Canadian politics.
Another significant consequence of the National Policy was its impact on Canada-U.S. relations. By instituting high tariffs on American goods, Macdonald’s government created a barrier between the two economies at a time when many in the United States advocated for closer economic ties. This economic divide between the two countries contributed to a growing sense of Canadian identity that was distinct from its southern neighbor, helping to solidify Canada’s place as a self-sufficient nation.
The National Policy, despite its flaws, played a crucial role in shaping the trajectory of Canada’s economic and political development. It helped cement Macdonald’s legacy as a nation-builder and visionary leader, but it also highlighted the complexities of governing a vast and diverse country. His policy established the framework for Canada’s industrial growth, laid the groundwork for the settlement of the West, and furthered the development of a distinct national identity, separate from both the United States and Britain.
In the years following its implementation, the National Policy continued to be a focal point of Canadian politics, both for its successes and its limitations. While it contributed to the rise of a more industrialized Canada, it also sowed the seeds of regional discontent, which would later influence political debates over federalism, regional equality, and economic policy. Ultimately, Macdonald’s introduction of the National Policy stands as one of the defining moments of his career and a pivotal chapter in the story of Canadian nationhood.
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 climate can produce, which our people are able to manufacture....
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