But it was chiefly the world-wide depression that began in his first year of office, 1873, which proved his undoing.Trade was stagnant, bankruptcies multiplied, and acute suffering occurred among the poor in the larger cities.Mackenzie had no solution to offer except patience and economy; and the Opposition were freer to frame an enticing policy.The country was turning toward a high tariff as the solution of its ills.Protection had not hitherto been a party issue in Canada, and it was still uncertain which party would take it up.Finally Mackenzie, who was an ardent free trader, and the Nova Scotia wing of his party triumphed over the protectionists in their own ranks and made a low tariff the party platform.Macdonald, who had been prepared to take up free trade if Mackenzie adopted protection, now boldly urged the high tariff panacea.The promise of work and wages for all, the appeal to national spirit made by the arguments of self-sufficiency and fully rounded development, the desire to retaliate against the United States, which was still deaf to any plea for more liberal trade relations, swept the country.The Conservative minority of over sixty was converted into a still greater majority in the general election of 1878, and the leader whom all men five years before had considered doomed, returned to power, never to lose it while life lasted.
The first task of the new Government, in which Tupper was Macdonald's chief supporter, was to carry out its high tariff pledges."Tell us how much protection you want, gentlemen," said Macdonald to a group of Ontario manufacturers, "and we'll give you what you need." In the new tariff needs were rated almost as high as wants.Particularly on textiles, sugar, and iron and steel products, duties were raised far beyond the old levels and stimulated investment just as the world-wide depression which had lasted since 1873 passed away.Canada shared in the recovery and gave the credit to the well-advertised political patent medicine taken just before the turn for the better came.For years the National Policy or "N.P.," as its supporters termed it, had all the vogue of a popular tonic.
The next task of the Government was to carry through in earnest the building of the railway to the Pacific.For over a year Macdonald persisted in Mackenzie's policy of government construction but with the same slow and unsatisfactory results.
Then an opportunity came to enlist the services of a private syndicate.Four Canadians, Donald A.Smith, a former Hudson's Bay Company factor, George Stephen, a leading merchant and banker of Montreal, James J.Hill and Norman W.Kittson, owners of a small line of boats on the Red River, had joined forces to revive a bankrupt Minnesota railway.* They had succeeded beyond all parallel, and the reconstructed road, which later developed into the Great Northern, made them all rich overnight.This success whetted their appetite for further western railway building and further millions of rich western acres in subsidies.They met Macdonald and Tupper half way.By the bargain completed in 1881the Canadian Pacific Railway Company undertook to build and operate the road from the Ottawa Valley to the Pacific coast, in return for the gift of the completed portions of the road (on which the Government spent over $37,000,000), a subsidy of $25,000,000 in cash, 25,000,000 selected acres of prairie land, exemption from taxes, exemption from regulation of rates until ten per cent was earned, and a promise on the part of the Dominion to charter no western lines connecting with the United States for twenty years.The terms were lavish and were fiercely denounced by the Opposition, now under the leadership of Edward Blake.But the people were too eager for railway expansion to criticize the terms.The Government was returned to power in 1882and the contract held.
* See "The Railroad Builders", by John Moody (in "The Chronicles of America").
The new company was rich in potential resources but weak in available cash.Neither in New York nor in London could purse strings be loosened for the purpose of building a road through what the world considered a barren and Arctic wilderness.But in the faith and vision of the president, George Stephen, and the ruthless energy of the general manager, William Van Horne, American born and trained, the Canadian Pacific had priceless assets.Aided in critical times by further government loans, they carried the project through, and by 1886, five years before the time fixed by their contract, trains were running from Montreal to Port Moody, opposite Vancouver.
A sudden burst of prosperity followed the building of the road.
Settlers poured into the West by tens of thousands, eastern investors promoted colonization companies, land values soared, and speculation gave a fillip to every line of trade.The middle eighties were years of achievement, of prosperity, and of confident hope.Then prosperity fled as quickly as it had come.
The West failed to hold its settlers.Farm and factory found neither markets nor profits.The country was bled white by emigration.Parliamentary contest and racial feud threatened the hard-won unity.Canada was passing through its darkest hours.
During this period, political friction was incessant.Canada was striving to solve in the eighties the difficult question which besets all federations--the limits between federal and provincial power.Ontario was the chief champion of provincial rights.The struggle was intensified by the fact that a Liberal Government reigned at Toronto and a Conservative Government at Ottawa, as well as by the keen personal rivalry between Mowat and Macdonald.
In nearly every constitutional duel Mowat triumphed.The accepted range of the legislative power of the provinces was widened by the decisions of the courts, particularly of the highest court of appeal, the Judicial Committee of the Privy Council in England.
