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Retreat from Protectionism: R. B. Bennett and the Movement to Freer Trade in Canada, 1930–1935

Published online by Cambridge University Press:  01 October 2009

Anthony Patrick O’Brien  and
Judith A. McDonald
Anthony Patrick O’Brien
Affiliation:
Lehigh University
Judith A. McDonald
Affiliation:
Lehigh University
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Journal of Policy History , Volume 21 , Issue 4 , October 2009 , pp. 331 - 365
Copyright
Copyright © Donald Critchlow and Cambridge University Press 2009

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References

NOTES

1. For a discussion of the movement away from protectionism in the United States, see Irwin, Douglas A., “From Smoot-Hawley to Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s,” in The Defining Moment: The Great Depression and the American Economy, ed. Bordo, Michael, Goldin, Claudia, and White, Eugene (Chicago, 1998)Google Scholar, and Irwin, Douglas A. and Kroszner, Randall S., “Interests, Institutions, and Ideology in Securing Policy Change: The Republican Conversion to Trade Liberalization after Smoot-Hawley,” Journal of Law and Economics 42 (1999): 643–73.CrossRefGoogle ScholarHart, Michael, A Trading Nation: Canadian Trade Policy from Colonialism to Globalization (Vancouver, B.C., 2002), 106–13Google Scholar, mentions Bennett’s trade policies, but he does not address the reasons for Bennett’s dramatic change.

2. McDonald, Judith A., O’Brien, Anthony Patrick, and Callahan, Colleen M., “Tariff Wars: Canada’s Reaction to the Smoot-Hawley Tariff,” Journal of Economic History 57 (1997): 802–26.CrossRefGoogle Scholar

3. Hart, A Trading Nation, 208.

4. Relatively recent exceptions appear to be Hillary Clinton and Barack Obama, whose “campaign[s] have looked like a contest over who hates free trade more,” The New Yorker, 26 May 2008, 30. Many analysts consider this to be political rhetoric, however, as evidenced by Obama’s economic adviser Austan Goolsbee assuring Canadians that Obama’s “rhetoric” on NAFTA “should be viewed as more about political positioning than a clear articulation of policy plans,” the Toronto Star. Available from www.TheStar.com/ (accessed 4 June 2008). During early 2009, the inclusion of “Buy American” provisions in the U.S. fiscal stimulus package raised again questions of whether the severe worldwide recession might lead to a renewal of protectionism.

5. Hart, A Trading Nation, 100.

6. Ibid., 108.

7. While it is certainly true that tariffs are taxes, in this article we do not consider them to be traditional fiscal-policy tools.

8. Speech at Winnipeg, 9 June 1930, as reproduced in The Canadian, 6 June 1930, 34, in Richard B. Bennett, The Collected Papers of Richard Bedford Bennett (hereafter cited as Bennett Papers), National Archives of Canada (hereafter cited as NAC), Ottawa, reel M1207.

9. Montreal Gazette, 15 July 1930, 15.

10. Glassford, Larry A., Reaction and Reform: The Politics of the Conservative Party Under R. B. Bennett, 1927–1938 (Toronto, 1992), 113.CrossRefGoogle Scholar

11. Ibid., 116–17.

12. Chisholm, Ann and Davie, Michael, Lord Beaverbrook: A Life (New York, 1993), 279.Google Scholar

13. Speech by Bennett as quoted in Morrison, Alfred Eugene, “R. B. Bennett and the Imperial Preferential Trade Agreements of 1932” (M.A. thesis, University of New Brunswick, 1966), 23.Google Scholar

14. Speech by Bennett in the House of Commons, 17 February 1927, as quoted in Morrison, “R. B. Bennett,” 28.

15. William Lyon Mackenzie King Diary (hereafter cited as King Diary), 1932–49 (Toronto, 1980), 5 April 1930, 82, NAC.

16. Speech at Winnipeg, 9 June 1930, as reproduced in The Canadian, 16 June 1930, 27, Bennett Papers, NAC, reel M1207.

17. Stacey, Charles P., ed., Historical Documents of Canada, Vol. V: The Arts of War and Peace, 1914–1945 (New York, 1972), 483–84.Google Scholar

18. The discussion that follows on views in Britain on protectionism relies on Skidelsky, Robert, Politicians and the Slump: The Labour Government of 1929–1931 (London, 1994).Google Scholar

19. Ibid., 250.

20. Chisholm and Davie, Lord Beaverbrook, 280.

21. Times (London), 10 October 1930, 12.

22. Cox, Howard, The Global Cigarette: Origins and Evolution of British American Tobacco, 1880–1945 (Oxford, 2000), 312–13.CrossRefGoogle Scholar

23. Stacey, Historical Documents, 484.

24. Times, 10 October 1930, 14.

25. Beaverbrook, Lord, Friends: Sixty Years of Personal Relations with Richard Bedford Bennett (London, 1959), 58.Google Scholar

26. Ibid.

27. See the memorandum from Thomas to the British cabinet reproduced in Drummond, Ian, British Economic Policy and the Empire, 1919–1939 (London, 1972), 182–85.Google Scholar

28. Stacey, Historical Documents, 481.

29. Barry Eichengreen, “The Keynesian Revolution and the Nominal Revolution: Was There a Paradigm Shift in Economic Policy in the 1930s?” mimeo, University of California at Berkeley, 1999.

30. Data are from Statistics Canada, Historical Statistics of Canada, 2nd. ed. Available at www.statcan.ca/bsolc/english/bsolc?catno=11-516-X.

31. The discussion in this paragraph relies on Bordo, Michael D. and Redish, Angela, “Credible Commitment and Exchange Rate Stability: Canada’s Interwar Experience,” Canadian Journal of Economics 23 (1990): 357–80.CrossRefGoogle Scholar

32. Ibid., 364.

33. Stacey, Historical Documents, 227–28.

34. Series L 139 (production of wheat and wheat flour) and Series L 145 (exports of wheat and wheat flour) from Urquhart and Buckley, eds., Historical Statistics, 363–64.

35. Ibid. Series K 160 (value of total paper products), Series K 164 (value of total exports of paper), Series K 149 (value of total pulp production), Series K 153 (value of total pulp exports), Series K 130 (value of total lumber production), and Series K 135 (value of total lumber exports).

36. Export data are from Canada, Dominion Bureau of Statistics, Department of Trade and Commerce, Quarterly Report (Ottawa, 1930), xxi–xxv.Google Scholar

37. King Diary, 29 July 1930, 179, NAC.

38. Craig, F. W. S., British Electoral Facts, 1832–1987 (Aldershot, U.K., 1989)Google Scholar, table 1.26, 31.

39. Lord Beaverbrook, Friends, 65–68.

40. Ibid., 68.

41. Morrison, “R. B. Bennett,” 115.

42. Ibid., 126.

43. Government of Canada, Department of Trade and Commerce, Report of the Royal Commission on Dominion-Provincial Relations (Ottawa, 1940), 162.Google Scholar

44. Canada, Department of Trade and Commerce, House of Commons, Debates (Ottawa), 8 February 1932, 41.

45. Ibid., 26 April 1932, 2385.

46. Letter to Dr. Ira A. MacKay, McGill University, 20 March 1932, quoted in Morrison, “R. B. Bennett,” 121.

47. Letter from Herridge to Bennett, dated 9 May 1934, Bennett Papers, NAC, reel M-1025.

48. Morrison, “R. B. Bennett,” 125.

49. Letter from Bennett to J. K. Walsh, dated 11 July 1930, as reproduced in Drummond, British Economic Policy, 195.

50. Bryce, Robert B., Maturing in Hard Times: Canada’s Department of Finance Through the Great Depression (Kingston, Ontario, 1986), 88–90.CrossRefGoogle Scholar

51. Morrison, “R. B. Bennett,” 127.

52. Ibid., 150–51.

53. This type of tariff, known as a “scientific” tariff, completely undoes the gains from trade that are based on comparative advantage—that trading partners gain when they import from each other the good that they are relatively less efficient at, i.e., that they produce at a higher real cost.

54. Bryce, Maturing, 93–94 and Stacey, ed., Historical Documents, 209–11.

55. Canada, Dominion Bureau of Statistics, Department of Trade and Commerce, 1939 Canada Year Book (Ottawa, 1939), 506.Google Scholar

56. Document prepared by Herridge for Bennett, dated 15 November 1932, in Bennett Papers, NAC, reel M-1025.

57. Brebner, John B., “Canada’s Tariff Gamble,” Independent Journal of Columbia University (1935): 1.Google Scholar

58. Richard Bedford Bennett, “Address by the Right Honorable R. B. Bennett, K.C., P.C., LL.B., LL.D., Prime Minister of Canada, Delivered at the Annual Meeting of the Board of Trade of the City of Toronto, 23 January 1933,” n.p., n.d., 11, Bennett Papers, NAC.

59. Canada, Debates, 20 February 1933, 2293.

60. King Diary, 18 February 1935 (pages in the typescript for 1935 are unnumbered), NAC.

61. Finlayson, R. K., Life with R.B.: That Man Bennett (Ottawa, NAC), 171.Google Scholar Microfilm H-1310, MG 30 E 143.

62. Tasca, Henry J., The Reciprocal Trade Policy of the United States: A Study in Trade Philosophy (New York, 1967), 91 n. 64.Google Scholar

63. Ibid., chap. 2.

64. Letter from Herridge to Bennett, dated 7 April 1934, in Bennett Papers, NAC, reel M-1025.

65. Hill, O. Mary, Canada’s Salesman to the World: The Department of Trade and Commerce, 1892–1939 (Kingston, Ontario, 1977), 545.Google Scholar

66. Drummond, Ian and Hillmer, Norman, Negotiating Freer Trade: The United Kingdom, the United States, Canada, and the Trade Agreements of 1938 (Waterloo, Ontario, 1989), 172–73 n. 42.Google Scholar

67. Finlayson, , Life with R.B., NAC, H-1310, 177–80.Google Scholar

68. Letter from Herridge to O. D. Skelton, Canadian Undersecretary of State for External Affairs, dated 15 November 1934, in Bennett Papers, NAC, reel M-1025.

69. Safarian, A. E., The Canadian Economy in the Great Depression (Toronto, 1959), 50.Google Scholar With 1926=100, Table 12 shows that from 1929 to 1933 import prices and domestic prices fell almost in tandem; e.g., import prices fell from 90.5 to 64.5 and consumers’ goods prices fell from 94.7 to 71.1; domestic farm prices fell relatively more, whereas domestic building materials’ prices fell relatively less.

70. Innis, H. A. and Plumptre, A. F. W., eds., The Canadian Economy and Its Problems (Toronto, 1934), 23.Google Scholar

71. Hart, A Trading Nation, 105–6.

72. McDiarmid, O. J., “Canadian Tariff Policy,” Annals of the American Academy of Political and Social Science 253 (1947): 150–57.CrossRefGoogle Scholar H. R. Kemp (in Innis and Plumptre, The Canadian Economy, 326) postulated three principal causes of Canadian protectionism: instability of foreign markets for Canadian exports due to, e.g., “the rise of protective tariffs”; the desirability of encouraging a diversity of occupations in Canada, which ensures a more “complex division of labour”; and to achieve a positive balance of payments in the face of falling export prices.

73. McDiarmid, “Canadian Tariff Policy,” 153.

74. Hart, A Trading Nation, 107; see also table 4.8, 107.

75. Innis and Plumptre, The Canadian Economy, 326– 27.

76. W. A. Mackintosh, “Canadian Tariff Policy,” in Canadian Institute of International Affairs, Canadian Papers 1933, 14. This was a pamphlet prepared for the Fifth Biennial Conference of the Institute of Pacific Relations, which was held in Banff, Canada, 14–28 August 1933.

77. It should be noted that the Smoot-Hawley Tariff Act also included new antidumping and countervailing duty provisions.

78. McDiarmid, “Canadian Tariff Policy,” 153.

79. Mackintosh, “Canadian Tariff Policy,” 15.

80. Historical Statistics of Canada online. In 1910, total imports were C$370 million.

81. Table 12 from Safarian, The Canadian Economy, 50, shows that if 1926=100, from 1929 to 1933, export prices fell more than most domestic price series (e.g., export prices fell from 91.2 to 57.1 and consumers’ goods prices fell from 94.7 to 71.1; domestic farm prices fell relatively more, whereas domestic building materials’ prices fell relatively less).

82. Ibid., 56.

83. Irwin, “From Smoot-Hawley,” 338–39.

84. Ibid., 340, 345–49.

85. Waite, P. B., The Loner: Three Sketches of the Personal Life and Ideas of R. B. Bennett, 1870–1947 (Toronto, 1992), xiii;CrossRefGoogle Scholar Hillmer and Granatstein are quoted from Maclean’s, 21 April 1997. Available at http://www.ggower.com/dief/text/maclean2.shtml (accessed 12 June 2008).