Canada An American Nation

Advantages of Reciprocal Trade

These statistics are full of enlightenment—particularly to Americans if they would but study them. They show that Canada supplies the United States with one of its most valuable markets. In 1929 the United States sold more goods to 10,000,000 people in Canada than to the 40,000,000 or more in Great Britain, the 70,000,000 in Germany, the 170,000,000 in Russia, the 400,000,000 in China—in fact Canada was that year the best customer of the United States in the whole world. In its trade with Canada in 1929 the United States fell short of taking payment for its exports in imports by $368,000,000, necessitating the transfer to that country of credits arising from Canadian exports to other parts of the world. It would not be {117} unreasonable perhaps to think that the United States should have regarded the trade relations with Canada as ideal; should have gone to some trouble to preserve them and to keep so valued a customer in a friendly frame of mind.[5] But the very next year by the Hawley-Smoot tariff higher duties, many of them prohibitive, were imposed upon every Canadian export to the United States that caused inconvenience to a domestic producer. The proceeding was insensate except on the explanation that the tariff makers did not know what they were doing. They were in fact bemused by the mercantilist fallacy. They thought they could cut down the $521,000,000 of imports from Canada, the sight of which as they flowed over the already high tariff walls gave them inexpressible pain, without the outflow of $868,000,000 of exports to Canada being cut down by a dollar. Thus the already “favorable balance” of $368,000,000 perhaps would be doubled to the great advantage of the United States. The incredible shrinking of the trade between the two countries since that time is of course part of the general record of the depression; but the steady narrowing of the favorable differential between exports and imports is due directly to the United States tariff and to tariff retaliation by Canada. In the ten months of the last fiscal year for which figures are available the United States’s advantage in Canadian-American trade {118} was just $30,000,000. Thus it can be seen that the Hawley-Smoot tariff back-fired.

At the moment negotiations are going on between the two countries looking to a betterment of trade relations through tariff adjustments. Being familiar with the history of the tariff relations between the two countries for the past eighty years, I have been profoundly skeptical of the possibility of any satisfactory reciprocal arrangement.[6] Speaking to an audience in Chicago seven years ago I said that it would be futile for the two countries to attempt to exchange tariff concessions. “These,” I said, “are apparently impossible to obtain; and if they were obtained they would not endure beyond the moment when one party to the arrangement found, or imagined it found, that the other party enjoyed an advantage.” The prospects today are brighter by just the degree of economic enlightenment that has come to the people of the two countries by their experiences of the past few years; unless this is very considerable the arrangement will be wrecked, either in the making or the ratification, by the inability of one side or both to see that the other party to the understanding must get concessions for concessions given and that these must not be recallable as soon as there is political clamor from interests that find themselves unsheltered from competition.


The desirability of a trade arrangement that will permit, within much freer limits, the flow of commerce is to Canada very great. More than any country in the world Canada is the result of political, not economic, forces; and the economic disharmony between its geographical divisions is too great to be adjusted by policies of national exclusiveness. Unless we can trade with the outside world our condition must be one of stagnation, with a standard of living falling to ever lower levels, and with increasing strains upon the bonds that keep our federation together. No other country, no combination of other countries can do for us, in this respect, what the United States could do to her own net profit when the balance is struck between advantage and disadvantage. The general advantage to both countries would be immeasurable; but the line-up in each country of the opposing interests and prejudices to any arrangement that may be made will be formidable. As has always been the case each country will be told that its interests have been sacrificed by incompetent negotiations and that, unless the people arise and destroy the agreement, they will be delivered to be shorn to hereditary and inveterate enemies. This has always been the line of attack; and it has never yet failed. Dealing with the recurring agitations in both countries over their tariff relations, Dr. O. D. Skelton, in his General Economic History of Canada, says: “It is curious to observe the persistent belief in each of the countries concerned {120} that its case was rooted in immutable justice, but that its negotiators were as babes in the hands of the wily and unscrupulous representatives from across the border.”[7] The present negotiations, if successful, will register the extent to which these hitherto invincible prejudices have lost their wrecking power; and the result may show that the economic feud which has reduced the potential wealth of North America by billions of dollars to the impoverishment of both countries is over; and that the day for intelligent, self-respecting, neighborly coöperation has begun.

This view, it might be contended, gets little support from the fate of the St. Lawrence Seaway Treaty which has just been rejected by the United States Senate. There the old cry—that the United States interests had been sacrificed to the greater shrewdness of Canadian diplomats—once again proved its power. Canadians cannot, however, find in this unfortunate circumstance anything to support a feeling of superiority; because we know that if the treaty had not been killed in the United States Senate the arguments there employed with such effect would have been heard in reverse in the Canadian Parliament. The Canadian public would have been told that the Americans had taken our negotiators into camp; that in consequence we had got much the worst of the arrangement; that the United States was securing rights of intervention {121} in the control of the St. Lawrence which would destroy our sovereignty over those waters; with more nonsense of the same kind. And large numbers of Canadians would have believed all this and would have regarded the ratification of the treaty as a disaster. But prejudices hold their power by lessening margins.

Moreover the record of our diplomatic negotiations is not one of unrelieved failure. There is a considerable list of useful if minor conventions in operation between the two countries; and there has been one great and hopeful achievement which, in its usefulness and wisdom, is unique among the world’s diplomatic instruments. I refer of course to the Boundary Waters Treaty of 1909 between Great Britain (on behalf of Canada) and the United States. This treaty created what is, in effect, an international court, a single homogeneous body, which for twenty-five years has been settling, without a single failure and always with complete unanimity, disputes arising over the boundary waters of the two countries.[8] The Commission, on behalf of both governments, has carried out a number of investigations into matters of the highest importance. There is also a provision by which this Commission may, by the action of both governments, be clothed with power to deal with all questions or matters of difference arising between the two {122} countries. Within the past few months I have watched this Commission at work dealing with the highly complicated question of how the waters of a boundary river should be allocated and controlled; and the technical competence of the court, the confidence and respect which it commanded from those who brought their cases before it and above all the complete absence of anything indicating that the court was made up of two national halves, vindicated the faith that self-respecting and efficient coöperation between the two countries is attainable if we can but discard those attitudes of fear, suspicion, and selfishness which have too often warped our minds. The Joint High Commission is the proof that, even under conditions as they are, these two countries can develop conjoint North American institutions; and it is a symbol of the fuller friendship and coöperation that the future will bring.