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The imports of coal into Canada from the United States last year amounted to $112,000,000 in value, offset by an export thereto of the value of $6,600,000, leaving a balance of $105,400,000 against Canada.

But the tendency is towards diminution of coal imports. The water powers of the Dominion are being developed and are almost unlimited potentially. Under Government and private control systems the distribution of electrical energy is being rapidly extended and applied to manufacturing industries hitherto dependent upon coal. This tendency is equally noticeable as regards railway transport and future expansion in this direction will be extensive and fairly rapid. A Governmental experiment in briquetting the inferior grades of lignite in the West will, it is believed, result in making the Western provinces independent of the United States anthracite supply. Further development of the coal areas of Nova Scotia and British Columbia taken in connection with the above considerations opens up the possibility in the future of a complete or nearly complete domestic supply for the necessities of home, farm, factory, and land transport.

In fisheries Canada is easily self-supporting. Her Atlantic seaboard, her immense lakes, bays and rivers, insure her independence.

In forestry products both countries are still comparatively rich, though extravagant and wasteful methods plus fires have sadly depleted the almost boundless stores with which nature had blessed us.

But the one hundred and ten million population of the United States with its yearly accretions make a tremendous call for wood and its products in various forms, notably for pulp and paper, which draws heavily upon home and Canadian sources, and the United States, therefore, is interested in procuring supplies from Canada as easily, as cheaply and for as long a time as possible. In 1921 the United States purchased from Canada wood and wood products and paper to the value of $216,000,000.

When it comes to industrial activities Canada has obtained and does yet obtain from the United States vast quantities of raw material and partly and wholly manufactured products. For cotton she must go almost entirely to the Southern States. For wools and hides she relies in part on United States markets, as also for other materials necessary to the processes of completing industrial production.

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3

e imports of coal into Canada from the United States last year punted to $112,000,000 in value, offset by an export thereto he value of $6,600,000, leaving a balance of $105,400,000 against ada. ut the tendency is towards diminution of coal imports. The 'r powers of the Dominion are being developed and are almost nited potentially. Under Government and private control mis the distribution of electrical energy is being rapidly erd and applied to manufacturing industries hitherto dependent coal. This tendency is equally noticeable as regards railway

port and future expansion in this direction will be extensive airly rapid. A Governmental experiment in briquetting the or grades of lignite in the West will, it is believed, result in g the Western provinces independent of the United States ucite supply. Further development of the coal areas of Nova

and British Columbia taken in connection with the above erations opens up the possibility in the future of a complete ly complete domestic supply for the necessities of home, farm, ;

and land transport. sheries Canada is easily self-supporting. Her Atlantic seaher immense lakes, bays and rivers, insure her independence.

But two things are to be considered. Cotton may before many years be very extensively raised outside the Southern States; wool and hides are produced largely in Africa and Australia, in South American States and in Canada itself. And all the while the increasing millions of the United States make greater demands on its home resources. The raw material market is as wide as the world and constantly changes. Again, the industrial development of Canada has made great progress in the last two decades. A tremendous stimulus as to variety, quantity and quality of production was imparted by the calls of the war, and the consciousness power and the acquirement of skill and accuracy in work and nicety in finish gained thereby will greatly inure to persistence and extension along industrial lines.

Taking the statistics as a guide we find that while the output of the industries in Canada in 1881 was in round figures three hundred and ten million dollars, in 1921 it was three billion, eight hundred million dollars, and in excess of the total output of agriculture, forestry, fisheries and minerals combined by about one billion dollars. So that one would miss an essential fact if he conceived the idea that Canada was a country of activities centred wholly or chiefly in the exploitation of her great natural resources. She is the latter, decidedly, but she is also a country of great industrial development and capacity.

Consider also the status of Canada as a customer of the United States. Turning to statistics again they warrant a statement which will probably surprise many a reader in the United States.

U.S. Exports to and Imports from Canada
1913

1920
Exports Imports Exports Imports

$ Europe

1483 millions 865 millions 4400 millions 1225 millions S. America 146

198
616

761 Asia

126
281
776

1283 Africa

29
24
165

150 France

150
139
662

166 Canada

388
142
933

612 U.K.

537
229
1652

436 Take the year 1913, before war disturbances had changed the normal courses of trade, and 1920, when they began to approach the

orestry products both countries are still comparatively ough extravagant and wasteful methods plus fires have pleted the almost boundless stores with which nature had is. But the one hundred and ten million population of the tates with its yearly accretions make a tremendous call for dits products in various forms, notably for pulp and paper, aws heavily upon home and Canadian sources

, and the tates, therefore, is interested in procuring supplies from is easily, as cheaply and for as long a time as possible

. In United States purchased from Canada wood and wood

and paper to the value of $216,000,000. t comes to industrial activities Canada has obtained and btain from the United States vast quantities of raw material and wholly manufactured products. For cotton she must entirely to the Southern States

. For wools and hides she urt on United States markets, as also for other materials to the processes of completing industrial production.

normal, and the foregoing table shows the situation. These figures are taken from United States returns.

In the normal peace year 1913 Canada stood next in total trade to the United Kingdom, and as a purchaser of United States products exceeded the whole of South America, Asia and Africa combined, by eighty-seven millions of dollars, and France by two hundred thirty-eight millions. In that year she took nearly one-sixth of the total exports of the United States.

In 1920, with all the changed conditions of the war, Canada still remains next to the United Kingdom in total trade, and as a customer of the United States overtops all of South America and Africa by one hundred fifty-two millions, France by two hundred seventy millions, and absorbs nearly one-eighth of the total exports of the United States.

We thus get an interesting, if not a surprising view, of the extent of the transactions between the two countries, absolutely as well as comparatively. Canada appears as the second best world customer of the United States with the balance in trade vastly in favor of the latter. During the ten years ending 1921, Canada paid in cash or kind $5,522,000,000 to the producers of the United States, distributed to the furthest limits, east, west, south and north, or at the rate of $70 a head of her population. In that period the consumers of the United States paid the producers of Canada $2,905,000,000, at the rate of $3 a head of her population. This left a balance in favor of the United States of $2,617,000,000.

In 1878 the Canadian electorate after a prolonged and lively contest decided by a sweeping majority to adopt a protective policy and to apply the Customs duties in such a manner as would encourage the development of Canadian industries and maintain them against undue competition from abroad. The protection was never abnormally high, and has in the passing years and with the growth of our industries been gradually and materially lowered. In 1886 the ad valorem on dutiable imports was 22.8 per cent, in 1896 26.7 per cent, in 1906 27 per cent, in 1911 25.9 per cent, and in 1921 20.3

per cent.

But the significant fact is that whatever the Liberal party, which in 1878 opposed protection, may have advocated when in Opposition, no Government since 1878 has ventured to abolish protective duties

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al, and the foregoing table shows the situation. These figures iken from United States returns. the normal peace year 1913 Canada stood next in total trade

United Kingdom, and as a purchaser of United States prodxceeded the whole of South America, Asia and Africa com

by eighty-seven millions of dollars, and France by two hunhirty-eight millions. In that year she took nearly one-sixth total exports of the United States. 920, with all the changed conditions of the war, Canada still s next to the United Kingdom in total trade, and as a er of the United States overtops all of South America and

by one hundred fifty-two millions, France by two hundred - millions, and absorbs nearly one-eighth of the total exports Inited States. nus get an interesting, if not a surprising view, of the extent ansactions between the two countries, absolutely as well as tively. Canada appears as the second best world customer nited States with the balance in trade vastly in favor of r. During the ten years ending 1921, Canada paid in ind $5,522,000,000 to the producers of the United States, ed to the furthest limits, east, west, south and north, : rate of $70 a head of her population. In that period

or abandon the principle and practice adopted in 1878. Nor do I think the present Liberal Government elected in December last will change it in any essential particular. For both national and economic reasons Canadians in a decided majority have hitherto held to the above policy and I believe will continue to do so. In every general election since 1878 this view has prevailed, and in no election more decisively than that of 1911, when the electorate was tested over the proposed partial reciprocity pact between the United States and Canada then submitted for its decision. Another fact must be considered:

Canada has incorporated in her fiscal system the principle that within the Empire of which she forms a part preferential treatment is accorded to the other members of the Empire. Beginning in 1898 when a preference without return was granted to Great Britain and the West Indies on their imported products, the scope has been gradually widened until at present Canada gives a preference to the extent of from 25 to 50 per cent of the duty to all portions of the British Empire except Australia and Newfoundland, and receives preferential return treatment in Great Britain, South Africa, India, New Zealand, and the West Indies, in which category Australia will in all probability soon be included.

So that in coming to closer grips with the question of possible trade relations between the United States and Canada, we must accept as a basis the facts above mentioned.

These summarized are that, geographically and climatically, both countries along a wide range of contiguous territory produce similar commodities and generally in surplus quantities; that each country has the easiest and quickest recourse to very important sources of supply in the other; that both countries base their tariffs on the principle of protection and the practice of preferential treatment within the family; that both have strong aspirations towards national growth and development and thus combine national and economic considerations in the determination of their fiscal policy, and that, while freely acknowledging these fundamentals and being guided thereby, both peoples have the most cordial feelings of good will and friendship towards each other and a desire to do the largest amount of trade with each other possible under conditions as detailed above.

imers of the United States paid the producers of Canada 0,000, at the rate of $3 a head of her population. This lance in favor of the United States of $2,617,000,000. 3 the Canadian electorate after a prolonged and lively cided by a sweeping majority to adopt a protective policy ly the Customs duties in such a manner as would encourevelopment of Canadian industries and maintain them due competition from abroad. The protection was never , high, and has in the passing years and with the growth istries been gradually and materially lowered. In 1886 rem on dutiable imports was 22.8 per cent, in 1896 26.7

1906 27 per cent, in 1911 25.9 per cent, and in 1921 20.3

ignificant fact is that whatever the Liberal party, which

used protection, may have advocated when in Opposition,

nent since 1878 has ventured to abolish protective duties

What then is possible?

First, that despite all tariffs there will be a large exchange of products between the two countries arising out of contiguity of territory along an international frontier of such great length. Short transport, sectional and seasonal conditions, comparative excellence of product, et cetera, will largely determine questions of purchase and sale, and increase of population and production will augment these exchanges. We may look, therefore, for a steady average increase in trade in this respect.

In the second place, we should be able to rely upon good business sense and experience in both countries to apply the balance wheel on behalf of the general interest as opposed to the considerations of party exigency and the teachings of doctrinaires, in moderating the demands for unreasonable tariffs for particular interests, and thus consistently with reasonable protection make a greater exchange of products possible.

Wise statesmen will always weigh the reflex effect of tariffs upon outside countries. If a tariff excludes staple products, natural or industrial, from 'reasonable entrance into the markets, it diminishes the capacity of the country thereby affected to continue purchases in these markets and thus tends to limit rather than extend trade.

Perhaps no better example could be given than the one close at hand. Figures given above show the extent of purchases made by Canada from the United States under the handicap of an adverse exchange running as high as 15 or 20 per cent. Still so long as Canada had reasonable access to the United States for her agricultural products she went on and met the balance against her as best she could. Now the demand comes from the United States farmers, the pledges of the Republican party during the Presidential campaign, and the to us unwelcome partial answer embodied in the Fordney Emergency Bill of May 28, 1921, and the possible completion of that answer in the proposed permanent Tariff Bill. This greatly diminishes and in part practically prohibits entrance into the United States market of Canadian products formerly exported to the value of $170,000,000. The exports of Canada to the United States in Fordney Bill commodities in the four months in 1921, as compared with the four months in 1920, fell from thirty-three and a half million dollars to ten million dollars. As

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