Canadian Reciprocity Treaty of 1854

Reciprocity Treaty (1854)
Introduction
The 1854 Reciprocity Treaty is one of the most famous economic treaties in Canadian history. The Reciprocity Treaty was a trade treaty that was signed between the economy of the United States and what was then known as the Province of Canada (Quebec and Ontario) and other smaller provinces of the then British North America. The treaty was a forerunner of the Canada-United States trade agreement of 1989. It was primarily intended to facilitate free trade in primary products such as coal, fish, timber, barley, oats, and wheat. The parties signed it on 5th June 1854, and it went into effect as soon as it was ratified by the lawmaking bodies of the parties to the treaty. The legislatures in the Canadian provinces approved it before the end of 1854, while the United States approved it in 1855 (Haynes, 1892, p. 18; Hinton, 2013). This work looks at the Reciprocity Treaty, its history, and the related history of Canada and the United States.
Origins of the treaty
The idea of drafting a reciprocity city was first conceived in the mid -the 1840s. It was a very popular idea, especially in export-oriented Canada West (Ontario) and in New Brunswick and other Maritime colonies. The Maritime colonies and the American fishermen fishing off the coast of Canada are the two parties that particularly felt that there was a need for a treaty (Gerriets & Gwyn, 1996; Officer & Smith, 1968). This is what led to discussions and a treaty being drafted and approved by the then United States Secretary of State, Mr. William Marcy, and the then Governor-General of British North America, Lord Elgin, in June 1854. Upon the signing of the treaty and its approval by the legislatures of the parties to the treaty, it was to remain in effect for ten years. After the ten years, any party to the treaty could give the notice to terminate it.
The Treaty was approved by American and Canadian legislatures between late 1854 and early 1855. Upon its approval, it led to the removal of duties on multiple primary goods including wool, turpentine, trees, tow, unmanufactured tobacco, timber, tar, tallow, stone, slate, shrubs, rice, rags, poultry, plants, pitch, metal ores, marble, manures, all kinds of lumber, livestock, lard, skins, hides, hemp, unground gypsum, grindstones, grains, pelts, furs, fruits, flour, flax, seafood, seafood products, fish, fish products, firewood, eggs, dyestuff, coal, cheese, butter, and breadstuffs (Hinton, 2013; Gerriets & Gwyn, 1996). In other words, the treaty allowed Canadian Provinces to export the above goods without paying American duties and allowed Americans to export their products to Canadian Provinces without also paying duties.
According to historians, the treaty was highly beneficial to both the United States and Canadian provinces and colonies. For instance, Nova Scotia exported vegetables, potatoes, salmon, shad, mackerel, herring, firewood, and coal to the United States. And while it exported large quantities of these goods, the quantities were relatively small when compared to how big the United States market was (Gerriets & Gwyn, 1996). So they did not significantly affect the price of the same commodities in the United States. This means that the exporters of the products could get more money for their products because they could sell their goods for the same prices as American goods and take all the money home without paying duties.
According to historians, the Reciprocity Treaty also significantly increased the trade between Canadian regions and the United States. As per official statistics, trade between Canadian regions and the United States increased by more than 100 percent in the ten years the treaty was in effect. However, the treaty was not the only factor that increased trade between Canada and the United States. Other factors that also increased trade between the United States and Canadian provinces and regions included the building of railroads to increase connectivity between various important towns and regions; the significant development witnessed in the border Great Lakes region and the Civil War. The main exports of the Canadian colonies included coal, livestock, meat, flour, and grain (Gerriets & Gwyn, 1996).
History of Canada-US relations around the treaty
The call for a reciprocity treaty began in earnest in the year 1848 after Britain repealed the Corn Laws. The Corn Laws were protectionist laws that imposed high duties on corn imports into Great Britain and its territories. The repeal of Corn Laws was the first step Britain took towards free trade. It was what made the United States try and reach an agreement with the country over fishing rights off the Canadian colonies. The United States was desperate to reach an agreement with Great Britain to ensure American fishermen could continue fishing in the fish-rich Canadian Atlantic fisheries. After comprehensive negotiations, several favorable factors including less opposition from protectionists and the formation of a pro-slavery and pro-export party allowed the Secretary of State of the United States and the Governor-General of British North America to start negotiating a trade treaty (Haynes, 1892; Hinton, 2013)
The treaty was finalized and signed in 1854. As per this treaty, the British North American colonies, including Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick, and Old Canada and the United States, eliminated duties imposed on many primary products. Among the primary products that could no longer attract duties included lumber, timber, coal, tallow, poultry, fish, fruit, meats, animals, breadstuffs, flour, and grain. The treaty also allowed American fishermen to fish in British colonial fisheries and granted British people the right to fish in American fisheries. Americans and British ships were also allowed equal access to Lake Michigan, Canadian Canals, and St. Lawrence under the treaty (Haynes, 1892).
While the treaty was largely welcomed, some American protectionists were not impressed by it. And less than two years after its signing, they started calling for its abolishment. The American protectionists who did not want the treaty were those with shipping and manufacturing interests. The protectionists cited Canadian tariff increases between 1858 and 1859 as a violation of the Reciprocity Treaty (Porritt, 1908). Moreover, in the American Civil War, there are suspicions that Great Britain supported the Southern secessionists. This also increased opposition to the reciprocity agreement in the United States (Haynes, 1892). In the end, the above factors plus other political and economic factors led to the March 1866 abrogation of the treaty by America.
Between the abrogation of the treaty and the start of the twentieth century, Canadians made many efforts to get another similar treaty. For example, after the Civil War, the MacDonald government tried to negotiate a new trade treaty. In 1869, Canada's Minister of Finance visited Washington to negotiate a deal. Both attempts were unsuccessful. The hopes of security another trade treaty with the United States were diminished after the signing of the 1871 Treaty of Washington that gave America important navigation and fishing rights without giving Canadian colonies the right to free trade or the reduction of duties except on their fish (Haynes, 1892). However, in 1874, the British and the Americans negotiated a trade agreement. The agreement was supposed to last for 21 years and to reduce tariffs on manufactured goods, agricultural implements, and natural products. However, while the Secretary of State agreed to it, the Senate rejected it and, therefore, this treaty did not come into force. In the 1880s, there was a clamor to adopt a policy of reciprocity between Canada and America that was led by Goldwin Smith and Erastus Wiman, who were liberal party leaders (Haynes, 1892; Saunders, 1934). Between the early 1890s and the late 1890s, both Conservative and Liberal governments sent trade representatives to the United States to try and get a treaty but were unsuccessful.
Both countries did not discuss or seriously consider reciprocity in trade tariff elimination or a trade deal between 1900 and 1910. However, in 1911, negotiations between the President of the United States and the Canadian Minister for Finance were successful and resulted in a reciprocal deal. The legislature ratified the deal in both territories (Masters, 1963). The deal was essentially a free trade deal that allowed the free trade of farm products such as farm animals, vegetables, fruits, and grain and reduced the duties on secondary form farm products such as flour, canned goods, and meats. The agreement also reduced duties on agricultural equipment, some lumber products, and building materials (Saunders, 1934). The United States approved the agreement, but the Laurier-led Canadian government that negotiated the deal did not because it lost in general elections. It lost in general elections primarily because of the agreement.
After the failure of the 1911 agreement, both countries did not get into any negotiations for over two decades. However, the passing of the Reciprocal Trade Agreements Act by the American legislature opened new negotiations in 1934. And when the Liberals won the election in 1935, they agreed to sign a deal with the United States government based on the Act. The negotiations allowed the signing of the King-Hull agreement between the two countries. The treaty was to last approximately three years (Masters, 1963). According to this new treaty, America was to lower duties on multiple Canadian exports, including seed potatoes, maple sugar, cheddar cheese, sawed timber, deals, planks, sawed boards, whiskey, horses, and cattle. America was also to allow the free entry of Canadian products such as wood shingles, pulpwoods, wood pulp, and newsprint paper. In return, Canada agreed to lower tariffs on multiple American products (Masters, 1963). Moreover, both countries agreed to give the other favorite treatment with regards to duties on certain products such as steel, iron, textiles, agriculture, and industrial products.
Comparison of the US and Canada histories
Great Britain negotiated the 1854 Reciprocity Treaty by prioritizing political expediency over commercial benefits. Because the Treaty immediately established differential duties between Canada and the United States, it was against Great Britain because she was not included in the negotiations and this was against the policy of free trade that the country had just adapted as a commercial policy in the British Isles and its territories across the world (Masters, 1963). Therefore, the Reciprocity Treaty seems to have been agreed to by Britain (which controlled Canada), not because of exciting commercial benefits but because Britain wanted to achieve other goals. To better understand the 1854 agreement, it is important to understand that the negotiations for the agreement were done in difficult circumstances. The circumstances were dominated by the fact that there was tension between the Northern and Southern States; this tension later erupted in a full-scale war between the North and the South (Masters, 1963). This war is now known as the American Civil War, and one of the main reasons why it was fought was to establish which economic system between the free trade system championed by the North and the raw material and slave labor-based economic system championed by the South. The North largely controlled the federal government, and the North wanted resources to reduce reliance on the South and to grow even faster. This is how the agreement ended up passing.
The agreement gave American fishermen fishing rights in the coastal fisheries off the Canadian territories. It also gave Canadian fishermen fishing rights in the coastal fisheries off the East Coast of the United States. The 1854 eliminated duties and, therefore, allowed the free trade of multiple goods and resources. This led to a significant increase in trade between the United States and the British North American colonies (Saunders, 1934). However, it has been noted several that the sharp increase in trade was not the only reason for the sharp increase in trade between the United States and Canadian colonies. Other factors, including the building of the significant development of the Canadian railway system after 1854 and the breakout of the American Civil War, also significantly contributed to the increase in trade.
When the British Empire shifted to free trade from mercantilism in the year 1847, it allowed many of its colonies to do the same. It allowed them to set their tariffs largely independently. The colonies in British North America were among the first to change their policies and adopt free trade or lower duties for goods and products instead of their previous protective tariffs. However, the United States did not respond by removing or lowering duties on Nova Scotian goods and natural resources or natural resources from any other Canadian colonies. The reciprocal lowering of duties and elimination of duties in some cases was achieved via the adoption of the 1854 Reciprocity Treaty. The Treaty allowed the free trade of goods and natural products between the United States and the Canadian colonies relieving Nova Scotia and other colonies of the burden American tariffs and duties and eliminating Canadian duties on multiple other American products (Gerriets & Gwyn, 1996).
Several analyses of the Treaty of Reciprocity show that it followed the same political process that was followed by Great Britain in adopting free trade. Furthermore, an analysis of the relationship between Nova Scotia and the United States shows that the two parties had closer integration before the treaty even though the integration was largely one-sided and hence the reason why the treaty, which came later, was referred to as the treaty of reciprocity. The integration of the economic relationship between Nova Scotia and the United States was also informed by the economic depression that occurred in the 1840s in Nova Scotia. Because of this, the colony wanted to recover and wanted to do it faster and, therefore, lowered or reduced tariffs on American products in the hope of reciprocal treatment of the natural products it was exporting to the United States to encourage increased sales and trade (Gerriets & Gwyn, 1996).
After the signing of the agreement, it was time to implement its provisions. This was to occur from the date of ratification by respective legislative bodies. The Home Government tried as much as possible with little success to reconcile the Reciprocity Treaty with the economic policy of free trade that had been adopted by Great Britain. However, this was near-impossible because the treaty was much popular than the universal free trade that was being championed by the Empire. In America, the popularity of the treaty was informed by the fact that it stopped the fishing controversy and, therefore, allowed American fishermen to become more prosperous by fishing in seafood-rich Canadian waters. It also allowed businesses in the United States to get cheap raw materials for manufacturing other products. By the year 1855, because of its popularity in the colonies, the Imperial parliament, and in the United States, the treaty had been approved in all the legislative bodies where it needed approval (Masters, 1963). However, while the treaty was approved relatively quickly, it did not last as long as its proponents and advocates envisioned. This is because several events including the outbreak of the American Civil War (which worsened the relationship between the United States and Britain), the 1857 economic depression (which reduced Canada's economic power), and the championing of protectionism in Canada by politicians led to its downfall about 12 years after it was ratified (Gerriets & Gwyn, 1996; Masters, 1963). The political animosity between the United States and Great Britain was ultimately the reason why the United States opted to end the treaty (Ankli, 1971).
Conclusion
The interplay between political and economic forces during the treaty makes it difficult to establish if the treaty alone contributed to the sharp rise in trade between the United States and the colonies. This is because there were many significant political and economic events during the period the treaty was in effect that certainly contributed to the increase in trade. Examples include the American Civil War, the rapid development in both territories, the building up of railroads in both Canada and the United States, and the removal of political and physical barriers for easier transport in the Great Lakes waterways system. The increase in production of timber, lumber, and grain in Canada and grain in the United States also contributed to the increase in trade. However, there was a feeling in Canada that the strength of the United States economy could increase and that this could lead to calls for the annexation of the colonies. This made Canadians apprehensive about the treaty. The political fallout between the United States and Great Britain after the American Civil War also made the Americans negative about the reciprocity agreement. This is what led to the Americans ending the agreement. After the end of this agreement, it took many years for the two countries to sit on the table again and draft a new trade agreement.


References
Ankli, R. E. (1971). The reciprocity treaty of 1854. The Canadian Journal of Economics/Revue canadienne d'Economique, 4(1), 1-20.
Gerriets, M., & Gwyn, J. (1996). Tariffs, trade, and reciprocity: Nova Scotia, 1830-1866. Acadiensis, 25(2), 62-81.
Haynes, F. E. (1892). The Reciprocity treaty with Canada of 1854 (Vol. 7, No. 6). Baltimore, Md.: American Economic Association.
Hinton, M. (2013). Canadian economic growth and the reciprocity treaty of 1854. Working Papers 13038, Economic History Society.
Masters, D. C. (1963). The reciprocity treaty of 1854: its history, its relation to British colonial and foreign policy, and to the development of Canadian fiscal autonomy (Vol. 9). McGill-Queen's Press-MQUP.
Officer, L. H., & Smith, L. B. (1968). The Canadian-American reciprocity treaty of 1855 to 1866. Journal of Economic History, 598-623.
Porritt, E. (1908). Sixty Years of Protection in Canada, 1846-1907: Where Industry Leans on the Politician. London: Macmillan.
Saunders, S. A. (1934). The Maritime Provinces and the Reciprocity Treaty. The Dalhousie Review.