John A. Macdonald: Maker of a second-class nation

The second volume of Richard J. Gwynn’s biography of Sir John A. Macdonald — Nation Maker — dealing with the epochal final years of Canada’s first Prime Minister will be one of the most discussed of Canadian non-fiction books of 2011. In Kingston, where Macdonald lived most of his life and  where I’ve lived for the past year, Macdonald is a revered figure and much effort is being put into preparing for the bicentenary of his birth in 2015.

Richard Gwynn spoke of his subject at the Kingston Writers’ Festival last weekend and the line-up to buy his book and have him sign copies was satisfying long. During an appearance with two other authors of books on Scottish-Canadians, Ken McGoogan  (“How the Scots Invented Canada”) and Vincent Lam (“Tommy Douglas”) he spoke knowingly of Macdonald’s undisputed impact on Canada. In his book, Gwynn concludes that “Had there been no Macdonald, there almost certainly would be today no Canada.”

It is not always easy to challenge the shibboleths of Canadian history, but after reading this latest of Richard Gwynn’s meticulously researched and finely crafted Macdonald biographies, I feel compelled to do so.

Macdonald’s achievements were indeed historic. His crafting of the scheme to confederate the British colonies of North America in 1867 and his purposeful resolve to build a transnational railway that would provide the spine to keep the country together (completed in 1885) are not to be disputed.

Macdonald is also remembered for a third reason. Little more than a decade after Confederation, he addressed himself to the great economic issue of the times: protectionism vs. free trade. He came down on the side of protectionism, which he saw as a way of building up manufacturing and reducing the appeal of the United States. As Gwynn points out, Macdonald worried that “our work-people have gone off to the United States … adding to the strength, to the power, and to the wealth of a foreign country instead of adding to ours.”

Macdonald was right that there was a great Canadian migration to the United States in the 19th century. Population levels stagnated as the movement to the United States offset, and in some years exceeded, immigration from Europe. Job creation was lagging at a time when the younger sons of farmers, knowing they would never inherit the homestead, headed to the cities in search of jobs.

Macdonald’s solution was his National Policy, a system of tariffs high enough to protect existing Canadian manufactures and to encourage the establishment of new ones. The new tariffs that came into effect after Macdonald’s relection in 1878 ran as high as 34 per cent on finished goods. In a short time, Canadian farmers were paying 25 cents a gallon for inferior coal oil, compared to eight cents a gallon for high-quality oil in the U.S. The duty on iron was 80 per cent, vastly increasing the cost of an American harvester and ensuring a comfortable home market, with high prices, for such companies as Massey-Harris. To make Canadian manufacturers even more comfortable, a healthy portion of the tariff was passed to them rather than the Canadian treasury.

The upshot of Macdonald’s National Policy was to deepen and extend the “Long Depression ” that ran through the 1870s and 1880s. Limiting Canadian farmers to a small home market of just a few million consumers, while they had to pay exorbitant prices for farm equipment,  condemned thousands in the countryside to impoverishment. The new jobs in industry created by protectionism were far fewer than if Canadian companies had had to go after the sixty million eager consumers making up the American market. Richard Gwynn observes astutely that in the years immediately before Confederation, the Reciprocity Treaty then in effect with the United States “had been a boom period for Canadians.”

Macdonald’s National Policy had a second and even more damaging consequence for Canada. It made the country an economic vassal of the United States when, in order to get around the tariffs, American companies began to establish branch plants here. They were, of course,  pleased to charge the higher prices allowed by the Canadian marketplace, a circumstance that continues to this day.

The Liberal-Conservative party of Sir John A. Macdonald continued as the champion of high tariffs and protectionism. The Opposition Liberals under Wilfrid Laurier, campaigned unsuccessfully for “unrestricted reciprocity” in 1891 but finally won election, after the Old Chieftain’s death, in 1896. The Liberals lost power in 1911 over their attempt to bring in a free trade agreement with the United States. It was left, ironically, to Brian Mulroney’s Progressive Conservatives to drink from the holy grail of Canadian politics with their free trade victory in 1988, leading to the North American Free Trade Alliance (NAFTA).

Richard Gwynn’s latest book represents an important addition to the literature of Canadian politics and history. It fails, however, to recognize the disastrous consequences of Macdonald’s National Policy and the fact that for a century it relegated Canada to economic and industrial second-class status.