CANADIAN COMMERCE AND BRITISH POLITICS.
AT a time when the Unionist Party is embarrassed with a good many difficulties we are very reluctant to indulge in any unnecessary criticism of the party or of its leaders. Nevertheless we must express our deep regret that Mr. Balfour should have permitted himself to use the language which he did in speaking, on Monday last, of the proposed Reciprocity Agreement between Canada and the United States. He described that agreement as an Imperial disaster." He was, of course, careful to say that his criticisms were directed not against Canadian Ministers but against those Ministers whom he saw sitting opposite to him. But it is impossible to dissociate his criticisms from the persons who are primarily responsible for the measure which he denounced in such sweeping language. The joint authors of the proposed Reciprocity Agreement are the responsible Governments of Canada and the United States. The British Ministry at West- minster can only be blamed, even from the Tariff Reform point of view, on the ground that it did not offer to Canada something better than the Americans were able to offer. But that is not a complaint to be made against the present Ministry only. The idea of reciprocity with the United States is not, as Mr. Balfour appears to imagine, a new thing suddenly born in the minds of Canadian Ministers, after waiting in despair for more favourable terms from Great Britain. The idea of reciprocity has been present in the minds of all Canadians for at least half a century, and the thing itself actually existed for a considerable period. As a matter of fact, Sir Wilfrid Laurier's adop- tion of the policy of Imperial preference in 1897 was solely due to the fact that he found it impossible to obtain from the United States that reciprocity which he was then demanding. There is no reason to believe that he or other Canadian Ministers ever abandoned the position that they were willing to make a bargain with the Americans whenever the Americans were prepared for a fair deal.
The Americans are now prepared to go not only as far as they were asked to go in 1897 but very much farther. They have discovered two facts: first, that the general policy of Protection as embodied in high tariffs has become ex- tremely unpopular with the mass of the American people; and, secondly, that there is a specific demand by large commer- cial interests in the United States for many Canadian pro- ducts which are now excluded by a high tariff. In particu- lar there is a demand for Canadian wheat, partly because it has special qualities which few American wheats possess, and also because a large number of American farmers are abandoning wheat growing in favour of mixed and dairy farm- ing. These forces have produced in the minds of American politicians an attitude favourable to a commercial treaty with Canada. The Canadians, having always been ready to make a reciprocal arrangement with the United States, naturally seized this opportunity. They are at once de- nounced by the Leader of the Opposition in the British House of Commons for attempting to bring about a great "Imperial disaster." Let us imagine an analogous inci- dent occurring in Europe. Germany is, next to India, the best customer the United Kingdom possesses. She pur- chased last year British goods to the value of £37,000,000, compared with £19,000,000 sold to Canada. Suppose that the present constrained feeling between England and Germany were to disappear, and that as a result the Germans were to propose greatly to lower their tariff on British goods in return for some political concession, such as the abolition of the Sugar Duty, which to some extent affects an important German industry. The result would doubtless be an increase in the already enormous trade between England and Germany. Would there not be a universal ex- pression of indignation in the English press if the negotiation of such an agreement were denounced by a prominent Canadian statesman as a great Imperial disaster ? The truth appears to be that Mr. Balfour has momentarily put himself into the frame of mind of those perfervid patriots who are unable to see that the prosperity of their own country is not injured by the prosperity of others, and who consequently are never happy unless other countries are depressed. Neither our political nor our commercial interests are necessarily damaged by the increasing prosperity of Canada and the United States. To suggest that because the Canadians do a large trade with their Southern neighbours they must necessarily be disloyal to the Empire is a wanton insult, and it is an insult based upon ignorance; for, as a matter of fact, Canada has persistently maintained for many years past a larger trade with the United States than with the United Kingdom. Nor has the establishment of a, preferential tariff in 1897 altered this fact or appreciably affected the general tendencies of Canadian trade. On the contrary, the percentage of American imports into Canada has actually grown since the preferential tariff was established, and the percentage of British imports has declined. In the five years before 1897 thirty-two per cent. of Canadian imports came from Great Britain : the proportion now is only twenty-five per cent.
What too many Tariff Reformers fail to under- stand is the fact that in determining trade routes geography is more potent than politics. The frontier between Canada and the United States is an imaginary line three thousand miles long. People are crossing that line every day at hundreds of points, and it is inevitable that the volume of trade passing across it from north to south and south to north must continue to grow as the waste lands upon either side of the frontier are peopled with active human beings. To imagine that we can prevent this tendency by giving Canada a trivial preference upon her wheat exports is equivalent to trying to empty the Thames with a teacup. We cannot resist the temptation of further pointing out how completely Tariff Reformers have changed the character of their arguments. In the early days of Mr. Chamberlain's campaign the appeal was made to the spirit of Imperial patriotism, and English people were urged to face a small sacrifice for the great gam of Imperial unity. It was a fine appeal with which many men sympathised who could not accept the inverted pyramid of fallacies based upon this single point of Imperial sentiment. But that appeal was quickly dropped, and replaced by the argument that, if a preference were given to Canadian wheat, Canada would increase her preference to British goods, and that an enormous expan- sion in British manufacturing industry would follow. Simultaneously it was argued that the increased demand for Canadian wheat would stimulate an increased supply, and that the English consumer would ultima'Ay have the advantage of cheaper wheat in addition to the expansion of his manufacturing trade. Thus, in the second edition of the Tariff Reform argu- ment, the sacrifice was to be shifted from the British consumer to the Canadian producer. This aspect of Imperial Preference is now even more emphasized by the Tariff Reformers, for they now tell us that they object to the Canadian Reciprocity Treaty with the United States because it will have the effect of making a new market for Canadian wheat, and thus enable the Canadian farmer to obtain a better price than he does at present. In other words, Imperial Preference as now expounded is a proposal to prevent Canadian farmers obtaining the best price for their main product. The use of such an argument by English party politicians confirms the wisdom of those who, from the first, denounced the whole scheme of Imperial Preference as a device for turning the Empire into a tied house. For suppose that Mr. Chamberlain had been successful in 1903, and had secured a binding reciprocal arrangement between Great Britain and Canada. That would not have prevented the growth in the United States of the demand for Canadian wheat, nor would it have prevented the Canadians discovering that by satisfying this demand they r.ould get a bigger price than they could obtain in London. The result would have been that throughout the west of Canada there would have gone up a demand to get rid. of the Imperial connection which was depriving Canadian farmers of the opportunity of a more profitable trade. At preEent, thanks to the sound common-sense of the majority of the English people, that danger does not arise. The Canadian farmer is now able to look at the commercial question entirely apart from any political consideration. No responsible English Government has yet asked him to sacrifice his profit for the sake of the Imperial connection. The authorised policy of this country still remains based. upon the principle laid down by those early Free Traders who were better Imperialists than they themselves knew— namely, the principle that freedom is even greater than Free Trade.
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