LAURIER’S VISION FOR PROSPERITY
Former PM saw lean government as Canada’s secret weapon in competitive struggle with U.S.
This year, Canadians celebrate the 175th birthday of one of our greatest prime ministers, Sir Wilfrid Laurier. In an excerpt from the Macdonald-Laurier Institute book, The Canadian Century: Moving Out of America’s Shadow (Key Porter Books), Brian Lee Crowley and coauthors Niels Veldhuis and Jason Clemens write that Laurier’s vision for a strong and prosperous Canada should still be our guide in the 21st century. When in 1904 Sir Wilfrid Laurier proclaimed that “the 20th century would be filled by Canada,” this was no mere boastfulness. We were one of the richest countries in the world, we enjoyed boundless natural resources, an energetic population, a privileged place in the great commercial empire established and defended by the colonial metropolis, Britain, and reasonable access to American markets.
We had built a national railway across the vastness of the west, and immigrants were arriving on our shores in larger numbers (relative to our population) than anywhere else in the world. In the first 20 years of the 20th century, our population grew by an unprecedented two-thirds. Canada was a magnet to the world. Our future seemed assured.
Laurier had a plan to make sure that this unprecedented flowering would be no seasonal bloom, briefly drawing every passerby’s glance before withering away. He was putting in place a plan to fill, not a decade or two, but a full century with Canada’s rise to prominent adulthood on the world stage. It was a plan that found its roots deep in Canada’s origins, in the ideas of its founders and in the hard work and dogged determination of those who had already been building the country since the founding of the first colonies.
A MAN, A PLAN, A PEOPLE — CANADA!
What was Laurier’s plan, his vision for a Canada that would be the best the New World had to offer the Old, a plan that had already unleashed the greatest growth in our level of prosperity ever seen, and he expected would fuel our development for decades to come? That policy had four distinct elements.
PROSPERITY GROWS FROM LIBERTY’S SOIL
First, he thought it vital to preserve and protect the institutions brought to Canada by our forebears, the “British liberty” composed of the rule of law, free speech, freedom of conscience and religion, respect of minority rights, habeas corpus, parliamentary self-government, minimal state interference, low taxes, respect of property and of contract. That liberty and those institutions were, Laurier believed, the catalyst that released the energy and dynamism of those who lived under them, whatever their ethnic origin or religious convictions. When people were free to follow their own star, to determine what was important to them, to build their own relationships with family, friends and colleagues, they built well and energetically — they had confidence in the future, they took risks and reaped the reward.
Laurier was convinced that the best people in the world would jostle one another at Canada’s door, not just because they would enjoy a higher standard of living, but much more importantly, because in Canada they would be free: “I think we can claim that it is Canada that shall fill the 20th century ... For the next 75 years, nay the next 100 years, Canada shall be the star towards which all men who love progress and freedom shall come.”
A society like this, where people were responsible for themselves, made their own plans, and accepted that their fate was in their own hands, was one that could be open to immigrants on a vast scale. Newcomers could not be a burden to the government or the population, because if they succeeded, they became net contributors, and if they failed, they were no affair of the state.
LIMITED GOVERNMENT, LIGHT TAXES AND FISCAL DISCIPLINE
The second element of Laurier’s plan was the view that, once freedom, the rule of law and key infrastructure had been created, the best thing that government could do was to then get out of the way, to keep taxes and rules to a minimum. Indeed Laurier believed that the burden of government needed always to be kept below the level in the United States, so as to create a powerful competitive advantage for Canada. Small but efficient government, not big government, were to Laurier’s way of thinking Canada’s secret weapon in the competitive struggle with America.
Even beyond the absence of the welfare state, it may surprise many Canadians today the extent to which this belief in lean minimalist government in economic terms was also an article of faith for most of the first century of the Dominion’s existence. Indeed, David Perry of the non-partisan Canadian Tax Foundation, one of our leading historians of Canadian tax policy, points out that this consensus was assumed by its drafters to be part and parcel of the plan that inspired the British North America Act (later re-baptized the Constitution Act, 1867). In that document’s scheme, both the major responsibilities and the major sources of income were granted to the central government in Ottawa, but the plan was not to create an expansive and activist government. Rather it was to ensure that no government got too big for its britches by keeping them all, federal and provincial, on a meagre fiscal diet.
Canada’s former prime minister was excoriated in the press for suggesting that there are no good taxes; the country’s founders saw this view as unexceptionable. Sir Richard Cartwright, finance minister of the young Dominion in 1878, thundered during his budget speech to Parliament that “all taxation ... is a loss per se ... it is the sacred duty of the government to take only from the people what is necessary to the proper discharge of the public service; and that taxation in any other mode, is simply in one shape or another, legalized robbery.”
Politicians stayed as far as they could from the direct provision of services or competing with private enterprise. They did not think it their job to provide what businessmen with proper incentives could do more cheaply and efficiently, while the voters wanted no truck nor trade with government masquerading as business, or even any expansion of the role already played by the state. As one set of historians of the time wrote, the public, “regarded ‘national services’ like the Public Works Department, Post Office, and Intercolonial Railway, all of them believed to be sinkholes of patronage, as painful necessities that ought not to be duplicated.”
Laurier believed that we lived in a world in which people and societies compete for the most desirable things — whether they be immigrants, or industry or capital — and that Canada could not win that competition by trying to throw up walls against it. Instead, the winner of the competition would be the country that proved most open and hospitable to these footloose forces. A vital part of his plan therefore was to find a way to create a distinctive set of Canadian advantages that would help the young Dominion win the competitive struggle with others. Again, this preoccupation of Laurier’s has an arrestingly modern feel to it.
SELF-CONFIDENT ENGAGEMENT WITH THE AMERICANS
The third part of Laurier’s plan for the Canadian century was the certitude that Canada could not shrink before the challenge posed by American dynamism and proximity, but instead Canada must meet it head-on, turning it as best we could to our own account, especially as the British imperial power faded slowly from the scene. Laurier was a Canadian nationalist and a realist who knew that Britain took but scant interest in Canada, while we were not strong enough to impose our will on America, and so we had to play our few cards cleverly and well.
American arrogance and brashness, manifest destiny, hostility to the former colonial power, Britain, and its continued presence in North America, and the unsettled nature of the boundaries between much of Canada and the U.S., helped to give rise to many conflicts between Canada and the U.S. Britain, which kept control over all questions of Canadian foreign policy (which they saw as merely a part of imperial policy), often sacrificed Canadian interests to further larger imperial objectives that required friendly relations with Washington.
Laurier lived through a classic example of Canada being sacrificed on the altar of British-U.S. power politics in the resolution of the dispute over the border with Alaska in 1903.
The lesson that he learned was that Canada could not look to any power, whether Britain or the U.S., to protect the interests of Canada. We would always be sacrificed when it was convenient. Canada had to look to its own interests, while claiming from Britain increasing jurisdiction over its foreign relations.
Beyond that, however, it had to seek to bind the more powerful nations to agreed and enforceable rules of behaviour that limit their ability to win their point through sheer brute force.
FREE TRADE
Free trade deserves its own separate treatment as a central part of Laurier’s plan. While the object of his efforts to negotiate free trade was the United States, free trade on a broad scale was, in his view, an end in itself. The fourth piece of Laurier’s plan was therefore to move the country by degrees toward the regime of full free trade he so admired in Britain. Laurier believed that free and open trade were the cornerstone of economic prosperity and entrepreneurship and that government’s role included working to throw open foreign markets to Canadian products while not obstructing the entry of products from abroad.
For Laurier and his cabinet colleagues, British free trade was the ideal, but was politically unattainable in the face of the powerful manufacturing interests that had grown up behind the tariff curtain of Sir John A. Macdonald’s National Policy. Laurier stoutly defended his government’s commitment to finding new markets for the country’s burgeoning production in the House of Commons in 1911: “Our policy has been, is and will be … to seek markets wherever markets are to be found.”
However much his eyes may have been fixed on markets wherever they were to be found, those same eyes could see clearly that the market that really mattered for the future was the United States. And so the next major step in freeing Canadians’ access to foreign markets was securing more favourable terms for the entry of Canadian products into the U.S. market. That effort was crowned with success in 1911 when after protracted negotiations his finance minister, William Stevens Fielding, returned triumphantly from Washington with a new reciprocity agreement with the Americans, one that seemed to set extremely favourable terms for Canada. The Liberals were ecstatic and the Tories despondent, convinced that the old fox Laurier, with his “sunny ways,” had dished them yet again.
To the surprise of almost everyone, the outcome of the 1911 election was the rejection of reciprocity by the voters, for a complex tangle of reasons that need not detain us too long. In English Canada, an aggressive British imperialist movement called for the Empire to be made a kind of free trade zone and tariffs to be erected against external parties, including the U.S. In French Canada, by contrast, Henri Bourassa and the nationalist movement he had breathed such life into abandoned the Liberals for being insufficiently ardent defenders of an independent Canadian policy in the face of growing imperialist sentiment. Even though the reciprocity agreement with the U.S. continued protection for Canadian manufacturers, central Canadian industry feared the thin edge of a tariff-busting wedge. And of course the Americans, with the tin ear so typical of their sensitivity to Canadian concerns, gave Laurier’s opponents lots of ammunition. Champ Clark, the speaker-designate of the House of Representatives, announced in Congress that “’I hope to see the day when the American flag will float over every square foot of the British-North American possessions clear to the North Pole.’” Reciprocity went down to defeat.
But Laurier’s positive vision for the country would come under further stress in the middle of the 20th century. Laurier’s belief in the rugged individualism of Canadians, and the freedom, within the rule of law, that made individualism the source of great prosperity and social programs, seemed overtaken by events. The new zeitgeist called for an expansive state, great new social programs, and vast extension of state employment and state enterprise. Against all this Laurier had warned, and those warnings increasingly fell on deaf ears.
Laurier believed that free and open trade were the cornerstone of economic prosperity and entrepreneurship.
Brian Lee Crowley (twitter.com/ brianleecrowley) is the managing director of the Macdonald-Laurier Institute, an independent nonpartisan public policy think tank in Ottawa: macdonaldlaurier.ca.