The following is a re-print of a past column by former Advertiser columnist Stephen Thorning, who passed away on Feb. 23, 2015.
Some text has been updated to reflect changes since the original publication and any images used may not be the same as those that accompanied the original publication.
Trade issues with the United States have occupied Canadian governments for nearly two centuries – long before NAFTA came into force in 1988.
The Province of Canada experimented with free trade in the 1850s, but the American government of the time refused to renew it. Sir John A. Macdonald embraced a high-tariff protectionist policy in 1878, with results that are still debated by historians.
A little more than a century ago, in 1896, Wilfrid Laurier’s Liberal Party gained power on a promise of more open trade policies with the U.S. In 1890, most Liberals had advocated wide-open free trade. Party leaders modified that position during the early 1890s. After the 1896 election, Laurier’s cabinet could reach no consensus on the trade issue. It did what every government does in such a situation: appoint a commission to study the matter.
W.S. Fielding, the minister of finance, headed the four-man panel. A former premier of Nova Scotia, he had begun as a free trader, and gradually had turned protectionist. William Paterson, the minister of customs and a protectionist, filled one of the other chairs. Agriculture minister Sydney Fisher, and free trader Sir Richard Cartwright, the old Liberal warhorse and minister of trade and commerce, rounded out the commission.
This high-powered panel spent several weeks touring the country to hear the opinions of manufacturers, merchants, farmers and others with an interest in the trade issue.
On Jan. 12, 1897, it reached Guelph. Mayor Hewer met the commission at the Grand Trunk station in the morning, and escorted them to the council chamber at City Hall, where proceedings began at once.
First to offer his opinion on trade and tariff matters was R.L. Torrance, manager of the J.B. Armstrong carriage factory in Guelph. He preferred that the existing tariff on American carriages, in the range of 25% to 35%, remain. He stated that a few years earlier he might have supported a lowering of the duty on components, but all parts his firm required could now be procured in Canada. The sheer size of American firms could easily overwhelm the Canadian carriage industry, he claimed. At least one U.S. firm could supply the entire Canadian market.
A.B. Jardine, of the Diamond Tool Works in Hespeler, stated that American competition was most keen in the cheaper lines. He estimated that larger American firms could manufacture goods at 25% less than his firm due to their economies of scale and the large home market they supplied.
John I. Hobson, who farmed 300 acres at Mosborough in Guelph Township, was the first to speak from the viewpoint of the farmer. As might be expected, Hobson advocated that duties be abolished on those items used by farmers, and retained on the products they sold on the Canadian market. He did make some exceptions.
Hobson believed that the duty on farm implements could be lowered because Canadian firms were doing well, producing good quality implements. He feared that abolition of duties would result in the market being flooded with cheap, inferior implements. On the other hand, Hobson viewed the duty on coal oil as a protection for inferior brands of Canadian coal oil.
The question of duties on livestock produced a lengthy exchange between Hobson and W.S. Fielding. Hobson was uncertain of the implications of tinkering with existing import duties. He did fear that large American firms might dump excess and inferior product in Canada, which could find its way into the Dominion’s export market, and ruin the fine reputation, particularly in England, for Canadian ham and bacon.
Several other farmers followed, and most endorsed the views of John Hobson. William Rae, who farmed near Arkell, believed that American corn should be allowed into Canada in return for Canadian barley into the U.S. He took a more critical view of Canadian manufacturers than Hobson, and believed that Canadian farmers should be able to buy freely from British manufacturers because so much Canadian agricultural produce went to England. His view was that farmers’ incomes were based largely on the commodity prices set on the British market, and there was little that governments could do to protect them.
James Duncan of the West Wellington Farmers’ Institute, echoed previous speakers when he said that farmers must sell in a free trade market, and buy in a protected one. He favoured reciprocity in tariff reductions, rather than arbitrary rate changes.
A. Hillyer, representing the East Wellington Farmers’ Institute, said farmers should have all their raw materials free of duty, and this included farm implements. He told the commissioners that Canadian implement makers had no difficulty selling in foreign markets, but they demanded protection at home, exacting higher prices from Canadian farmers than was necessary. In particular, he wanted duties removed completely from salt and coal oil.
Several fruit growers from Niagara followed Hillyer, and they argued against any reduction in the tariff on American fruit, which, they admitted, was earlier and better looking than their own. They especially feared the loss of the Maritime market to Ontario growers. In answer to W.S. Fielding’s statement that Maritimers might not like paying an extra 100% or 200% for fresh fruit, one of the Niagara representatives declared that “fruit was not a necessity.” The Niagara men also feared the intrusion of inferior U.S. nursery stock into Canada.
Fielding interjected, “Well, now we see that the American rogue is worse than the Canadian rogue and his goods inferior. Was that not sufficient protection? Didn’t that show that the Canadian farmer would prefer to deal with the Canadian man?”
The Niagara men believed that naive purchasers would fall prey to American goods and high-pressure salesmen.
At this point in the proceedings, Fielding noted time was advancing and that they wished to hear from some manufacturers. Sydney Fisher, the agriculture minister, agreed to stay in Guelph an extra day to hear from poultry farmers and others with views on agricultural aspects of the tariff issue.
Charles Pettiford, foreman of the Raymond Sewing Machine Co., stated that the tariff had protected his firm, but even so, it had lost money for the previous three years. He stated that the market for sewing machines had peaked in the 1880s, was now only about 30% of what it had been at the peak.
He noted that a reduction in the tariff three years earlier had allowed American machines to capture about a quarter of the Canadian market. Part of the problem, Pettiford told the commission, was the duty on components and parts that Raymond needed to import from the United States. These amounted to more than $1 per machine, which wholesaled at $22, and protected no one, because these were components not made in Canada.
Pettiford also accused American sewing machine makers of dumping – unloading surplus inventory in Canada for less than the American price.
Several other small manufacturers repeated Pettiford’s plea for lowered tariffs on raw materials and components. W.S. Paterson, of the Guelph Norway Iron and Steel Co., wanted a reduction on the tariffs for iron billets and coal. He complained that Canadian supplies came from Nova Scotia, and that the freight on them to Guelph was prohibitive.
This comment riled W.S. Fielding. “Is not Nova Scotia part of the Dominion?” he asked. “We go to Nova Scotia next week … if their duty is to be lowered, what am I to say to them?”
Paterson replied that the Nova Scotia iron and coal industry could find markets in the eastern United States.
Paterson then changed the subject slightly, stating that short distance freight rates were too high compared to those over long distances, and this worked to the detriment of Canadian industries.
Robert Douglas, of the Wroxeter area, came in with a prepared address. He not only wanted free trade in all products, but a free market in money. He complained that debt was the real enemy of farmers, and that most found it impossible to pay off their mortgages and loans under existing economic conditions.
John Oliver of the McDougall Pump Co. in Galt, wished the duty of 30% on pumps to remain, and he was content to pay the existing duties on raw materials in return.
A couple of textile manufacturers spoke. None wanted to see any reduction in the duties on textiles. They claimed the existing levies protected them and their workers from the lower wage levels of England and Germany.
Robert Dodds, of the Guelph Carpet Co., was more selective in his preferences. He wanted duties lowered on raw materials where there was no Canadian supplier, or where one monopolized the market.
G.B. Ryan of Guelph was the only retailer to speak. His view was that a protective tariff was desirable to allow Canadian manufacturers to get a start, but that tariff levels should be reduced gradually over time. He noted, though, that as Canadian manufacturers became stronger, they managed to exert sufficient political clout to have the rates raised. As an example, he cited a rate of 60% on imported gloves, despite a thriving and competitive Canadian industry.
Ryan said that most people did not realize how much of their money went to taxes and duties. “If the government would put a customs house officer in my store, instructed to stand at the door and collect from my customers … the portion coming to the government, there would be a rebellion in six months.”
Ryan’s testimony concluded the Guelph session, ending a few minutes after 6pm.
The commissioners gathered up their papers and headed to the Grand Trunk station. Fielding and Cartwright took the train to Toronto, to catch an overnight train to Ottawa. Paterson caught a later train to his home in Brantford. Fisher stayed an extra day to hear the comments of the poultry men.
On Jan. 13, the Guelph Mercury noted that “some people have the idea that the Tariff Commissioners are only making things more difficult for themselves by securing such a mass of bewildering and contradictory evidence.” In the end, Fielding did refer to the evidence as he planned the 1897 federal budget.
As for major policy changes resulting from the Tariff Commission, there were none. The die, in fact, had been cast about the same time Laurier struck the commission. American voters had elected William McKinley, the protectionist Republican, as president in November 1896. He and his party had no intention of doing anything with tariffs except perhaps raise them. There would be no deal with Canada during his administration.
Later in the year, the Canadian government did sign a tariff reduction agreement with Great Britain. For the more trading relationship with the United States, it would be the status quo.
What is most interesting about the testimony given in Guelph 106 years ago is that the arguments seem so familiar and current.
Hardly a point was raised then that is not still part of the debate on our trading relationships with the republic to the south.
*This column was originally published in the Wellington Advertiser on Feb. 28, 2003.
