National Policy

National Policy, tariff protection for Canadian manufacturers, was the rallying cry of Sir John A. MACDONALD's Liberal-Conservative Party in its successful 1878 general election campaign. Alexander MACKENZIE's Liberal Party, in office 1873-78, adhered to a policy of tariffs for revenue purposes - around 20% CUSTOMS duties on manufactured goods - despite the depression of the 1870s and the failure of the government's 1874-75 attempt to negotiate a RECIPROCITY agreement with the US. Macdonald's National Policy became a public issue after the Liberal government failed to raise the tariff in the 1876 budget. It was set in motion in the budget of 14 March 1879 after consultation with business interests.

It was intended to be a nationalistic policy which would broaden the base of the Canadian economy and restore the confidence of Canadians in the development of their country. That the National Policy would also assist in the development of a group of wealthy businessmen who could be counted on to contribute generously to the Conservative Party was another factor that Macdonald acknowledged. The tariff on most foreign manufactured goods was increased, affording substantial protection to Canadian manufacturers. Equally important to the manufacturers were the reduced customs duties on the necessary raw materials and semi-processed products, which lowered their costs of production.

Over time the National Policy took on a broader meaning in Conservative Party rhetoric, which tended to equate the National Policy with its larger development policies: the CANADIAN PACIFIC RAILWAY (1880s); western settlement (the DOMINION LANDS Act of 1872 and immigration policy); harbour development; and the subsidization of fast steamship service to Europe and Asia to facilitate the export of Canadian products. It became the centrepiece of Conservative Party policy for decades, being espoused by R.B. BENNETT in the 1930s as fervently as it was by Macdonald in the 1880s. Macdonald's last election, in 1891, was fought in defence of his National Policy. Sir Wilfrid LAURIER's Liberal government, 1896-1911, adopted the protectionist principles if not the rhetoric of the National Policy tariff and kept its general tariff at similarly protectionist rates.

Even the Laurier government's famous reciprocity agreement with the US in 1911 made only a few concessions on import duties on manufactured goods; the bulk of the agreement abolished duties on natural products, and customs duties were lowered on a restricted list of manufactured goods. But this alarmed manufacturers enough to swing their support back to the Conservatives in the 1911 general election. Campaigning on the argument that a mature economy had developed under the National Policy, that reciprocity threatened the Canadian economy, and that the choice before the electors was "whether the spirit of Canadianism or of Continentalism shall prevail on the northern half of this continent," Robert BORDEN's Conservatives swept to victory, bringing a continuance of the National Policy.

See also CONTINENTALISM; NATIONALISM; ECONOMIC NATIONALISM.

Author ROBERT CRAIG BROWN

Suggested Reading
Robert Craig Brown, Canada's National Policy, 1883-1900 (1964); V.C. Fowke, The National Policy and the Wheat Economy (1957); P. Russell, "The National Policy, 1879-1979," Journal of Canadian Studies 14 (1979).

Links to Other Sites
Sir John A. Macdonald
A biography of Sir John A. Macdonald, Canada's first prime minister and one of the Fathers of Confederation. Includes photographs and other archival resources. Part of the “Canadian Confederation” website from Library and Archives Canada.