The National Policy and Uncle Sam’s Chagrin

Movie clip on the National Policy established by John A. Macdonald’s Conservative government in 1879. The purpose of the policy was to provide support for emerging Canadian industry and promote development of the domestic market by imposing protectionist tariffs. The tariffs put U.S. products at a disadvantage in relation to Canadian products. (Time: 3 min 22 s)

McCord Museum
c. 1879
© 2007, McCord Museum of Canadian History. All Rights Reserved.


Transcript

At the end of the 1870s, more than 10 years after Confederation (1867), the Canadian economy was stagnant. Political scandal, economic recession – numerous problems plagued the new country. There was no shortage of natural resources, only the means to exploit and thus profit from them. Prime Minister John A. Macdonald (1815-1891) had a three-fold vision of what needed to be done: support the establishment of Canadian industries, help create a national market by linking Canada from sea to sea, and start exploiting the immense western territories. Known as the National Policy, it provided a framework for Canadian development over several decades. It also proved a favourite topic of political cartoonists, who depicted the policy as a white elephant, while representing the United States, a major player, as Uncle Sam, draped in the American flag.

At the heart of the National Policy was a series of protectionist measures by which the government raised tariffs for products imported from the U.S. Since Canadian businesses were younger and didn’t have as large a consumer base as their American competitors, they produced less and consequently sold their goods at higher prices than those charged by the Americans. This made Canadians reluctant to “buy Canadian.” But in 1879 the tariffs on American products were raised, making them more expensive than their Canadian counterparts.

By supporting the growth of Canadian businesses, the National Policy promoted job creation. In addition, the increase in tariffs – 75 percent of revenues came from this one source – fattened the federal treasury and helped finance the building of the transcontinental railway. With the railway in place, the country could start bolstering national unity.

The railway also represented a means to open up the West to settlement. Western colonization was the third element that in ensuring the viability of the CPR guaranteed the development of Canadian trade along an east-west axis. For without a means to attract them, most immigrants preferred to settle in the American West, a fact that threatened the development of Western Canada. Nonetheless, Canadians would have to wait until the end of the 19th century and the subsequent economic boom for the National Policy to truly bear fruit.


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