The National PolicyThe National Policy is the term used to describe the steps that the Canadian government took to create a continent-wide economy once it had acquired Rupert's Land from the Hudson's Bay Company. The three main elements of the National policy were public support for a trans-continental railways, high manufacturing tariffs, and immigration to Western Canada. Each of these elements was seen to be dependent on the others. The railway was needed both to bring immigrants to the West and to ship the grain that they grew to ports in Eastern Canada. The manufacturing tariffs were high taxes that were placed on manufactured goods imported into Canada. By keeping the price of imported goods above the price of good manufactured in Canada, the government hoped to help Canadian industries. Immigrants were needed to build the railways, settle the farms, and buy the goods that were to be produced by the protected industries. The money that the government received from the tariff was to be used to finance the railways.
Each element of the policy generated controversy and historians continue to disagree as to how successful the policy was and who actually benefited from it.
The Canadian government adopted a relatively open door immigration policy during this period. Restrictions on immigration to Canada from Europe were minimal: anyone who was healthy and unlikely to require public support was welcome to come. Chinese immigrants had to pay $500 to get into the country, while a series of complex rules severely restricted any other immigration from Asia. Discriminatory medical examinations kept out most African-Americans seeking to come to Canada during this period. In its pursuit of immigrants from Europe and the United States the government distributed millions of pieces of literature (Ref1, Ref2) advertising the benefits of life on the Prairies.
The cost of the Canadian Pacific Railway was staggering. The federal government had to give the owners of the CPR 25-million acres, $25-million, $38-million worth of rail lines, permanent tax exemptions and a guarantee that for 20 years it would have no competition on its mainline on the Prairies. Before the line was finished in 1885, the government had to give the company an additional $58-million. While the CPR transformed the Canadian Prairies, spreading settlement and providing farmers with a way to export their grain, farmers soon became bitter critics of the company's freight rates and its monopoly. They were not much happier about the protective tariff. Unlike Canadian manufacturers, farmers sold their grain in a world market where there was no protection from competition. Farmers wondered how they benefited from a tariff that increased the cost of farm implements by 35 per cent or more.
For the first 15 years of its operation the National Policy did not have much impact on immigration to this country. The problem was that more people were leaving the country than were coming to it. By 1890 there were nearly one-million ex-Canadians living in the United States. Prior to 1901 overall immigration to Canada was exceeded by emigration. Some historians have argued that rather than being responsible for the development of the West, the National Policy simply protected inefficient industries and encouraged over investment in railways. It was not until 1896 that what has been termed the second, and largest, wave of migration began to hit the Canadian prairie. This era of immigration and industrialization would remake the nation. It would also generate new hostility towards a policy that many Western Canadians, particularly farmers, had come to see not as a national policy, but a policy meant to benefit central Canada.