In response to the economic challenges of the 1890s, the United States enacted the Dingley Tariff Act in 1897, significantly increasing duties on imports, including those from Canada. This move triggered a sharp policy shift in Canada, strengthening its economic ties with Britain and fostering anti-American sentiment in trade policy and helped to silence the calls for a Canadian-American union.
Dingley Tariffs
In a special session of Congress in July 1897, US President McKinley pushed the Dingley tariff legislation through the House in a near record time of three weeks. With the support of the House Speaker, Thomas Reed and the Ways and Means committee, McKinley’s Dingley Tariff Act sought to increase duties on everyday commodities such as sugar, salt, tin cans, glassware, matches, whisky, leather goods and tobacco, as well as on more industrial imports like iron and steel, petroleum, lead, copper, and locomotives. When the bill reached the Senate, the originally modest tariffs were raised further, resulting in an average increase of over 50%, to protect US industry from foreign imports.
That the bill was quickly passed, despite the Senate being split almost equally between parties, was accomplished because the vote did not strictly follow party lines. After the major economic downturn brought on by the Panic of 1893, it seemed the United States was highly in favour of protectionism and that all had abandoned the idea of Free Trade.
Garret Hobart, Vice President and President of the Senate, Mr. Reed, Speaker of the House and finally by President McKinley signed the bill and it became law.
Meanwhile in Canada
Leading up to 1897, when the Dingley tariffs were put in place, the political landscape in Canada was in turmoil, setting the stage for change. The party who had ruled the country for almost two decades was facing an erosion of confidence in their ability to lead the country.
In December 1894, when Prime Minister John Thompson died suddenly of a heart attack while in office, Mackenzie Bowell, the most senior member of the Conservative Government, was chosen to run the government. By 1896, however, Bowell was getting mounting criticism over what was known as the Manitoba Schools Question, not only from the Liberals but from within the Conservative Party. Although the Manitoba Act of 1870 allowed for Catholic schools, the Manitoba government had stopped funding these in 1890, and this led to a public debate over the issue with the Canadian population being split across language, religious, and political lines. Although Bowell supported proposed legislation to restore funding for the Catholic schools in Manitoba, it failed to pass because of dissent over the matter within the party.
In January 1896, seven cabinet members resigned, putting Bowell’s leadership in question. After a period of deliberation, Bowell agreed to resign and eventually stepped down on 27 April 1896. He was replaced by Sir Charles Tupper on May 1, 1896, after which six of the seven cabinet members returned to the Cabinet. His control of the Prime Minister’s office was to be short-lived. When an election was called in June 1896, both Tupper and the Conservatives and Tupper suffered a resounding defeat, ending 18 years of Conservative rule.
Sir Wilfrid Laurier, head of the Liberal party, won the majority and formed the new government on 23 June 1896.
Result of the popular vote in the 1896 Canadian federal election. Attribution https://commons.wikimedia.org/wiki/User:Lokal_Profil
Custom Duties, Excise Taxes and Duties
In a time before sales tax or income tax, the Federal government’s primary source of revenue in 1897 was custom duties, duties paid on goods leaving or coming into the country. This was followed by excise taxes and duties which were charged on domestic manufactured goods such as tobacco and alcohol.
Although Sir Wilfrid Laurier had been supportive of the idea of free trade with the United States while Leader of the Opposition, as the Prime Minister faced with the Dingley Tariffs of 1897, he enacted his own tariffs for Canada that were themselves mildly protective, but which introduced maximum and minimum rates with his first budget. For countries such as the United Kingdom that imported Canadian goods with no duties or at a minimum rate, tariffs were lowered to a preferential 12.5 per cent, however the higher rates remained in effect for the United States, who was now charging prohibitively high tariffs on Canadian imports.
Dingley threatened Canada and this is Canada’s reply. ~The Pall Mall Gazette
As well as the United Kingdom, Canada’s new preferential tariff applied to her colonies, including Bermuda, the British West Indies, British Guiana, British India, Cylon, New South Wales and the Straits Settlements.
The most important feature in the new tariff is the double schedule. This new departure from any policy before adopted by Canada will probably seriously affect the United States. ~The San Francisco call, April 25, 1897.
A Canadian minister told an American journalist:
I don’t care a blank for the United States. I don’t want to spread news concerning Canada in the United States. The two countries should have less to do with each other than ever since the passage of the tariff act. We are going to discriminate in favour of Great Britain, and we will make a market for their for our products instead of sending them to you.
Annexation of Canada
The introduction of the Dingley tariffs in the United States and Canada’s retaliatory double-schedule tariffs most likely played a significant role in diminishing support for Canadian-American annexation. Rather than drawing the two nations closer, these policies highlighted their economic differences and had the effect of Canada strengthening her ties to the British Empire.
Since 1775, the idea of a Canadian-American union was a topic of discussion, but opinions for and against it varied greatly among both populations. In the latter part of the 1880s, those Canadians in favour of the scheme made some headway in discussions with the Liberal party. When the Toronto Globe wrote on Annexation in October 1888, requesting opinions on the matter, 25 of the 75 respondents supported joining the United States. Most cited economic advantage as their motive.
In the western part of Canada, there was considerable support for the movement towards annexation. Quebec, too, had its share of supporters. The English in Montreal, Quebec and the Eastern Townships thought that the American government would put an end to the privileges of the Roman Catholics and the French and that the move would also benefit Quebec economically. The French in Quebec thought their religion and language would be safer in what they perceived to be a more tolerant United States. In 1892, a poll taken in Montreal on the matter found that of the 3000 who responded, 364 preferred to remain under the United Kingdom, over 1600 wanted independence and almost a 1000 hoped for annexation by the United States.
If those who periodically sound a note for the annexation of Canada will tell in what particular the United States will be benefitted by such a measure, they will fill a long felt want. Canada is the producer of raw material, grumblers and dependants. Uncle Sam grows all the raw material now that he can profitably work up and does not hanker after becoming the exporter of such commodities. As for the grumbers and dependants he has them to spare. ~San Antonio daily light, June 7, 1899.
The Americans, except for those in the border states of Main and Vermont, were less interested in the annexation of Canada. Legislators never read the occasional bill promoting amalgamation, nor did they bring it to a vote. Conversely, proponents on both sides of the border advocated for trade reciprocity campaigns. Although the United Kingdom remained Canada’s largest trading partner, trade between Canada and the United States grew over time, with the United States importing mostly raw materials from Canada and Canada importing mostly manufactured goods. The Liberal party campaigned in 1896 on their plan to seek a reciprocity treaty with the United States, winning the popular vote; however, little progress was made in lowering tariffs on either side. At the turn of the century, the United Kingdom was responsible for 85 per cent of foreign investment in Canada with the United States accounting for only 14 per cent.
As Canada became more industrialized, and with the adoption of preferred tariffs in 1897, it was recognized that Canada, rather than being driven towards annexation, was actually becoming a rival of the United States in the supply of goods to British markets.
During the seven years’ existence of the league [The National Continental Union League], it does not appear to have accomplished much…there are few Canadians who favour annexation to the United States…In the United States, also there was no well-defined sentiment in favour of the annexation of our northern neighbour. ~Marietta daily leader, June 26, 1900
Summary
The Dingley Tariff Act was a turning point in Canada-U.S. economic relations, reinforcing Canadian nationalism and strengthening her trade ties with Britain. Though the tariffs remained until 1913, Canada did not lower duties on U.S. imports until 1935, highlighting the long-term impact of protectionist policies on North American trade.