would come to its defence. Consequently, in the view of the British government, Great Britain should decide Canada’s foreign policy. The foreign policy of Great Britain was the foreign policy of all of its colonies.
Besieged with pressing domestic and international issues, at age sixty-five Macdonald told his friends, “It is better to wear out than to rust out,” but he urged his Cabinet to consider the issue of his succession on March 25, 1880. The Cabinet, however, would not let him go. Then again, Macdonald was not very serious about leaving. If he was addicted to anything, it was politics. He was passionate about the child he had created—Canada—and like an obsessed parent, he could not let go.
By 1879, due perhaps to Macdonald’s protectionist policies, the economy had begun to strengthen. In the eyes of the nation, Macdonald’s policies had been vindicated. Canada was growing again and was open for immigration. Macdonald’s Conservatives believed in immigration and the railway was essential to Canada’s growth and independence.
On October 21, 1880, the contract to build the Canadian Pacific Railroad was signed. It called for 1,900 miles of railroad between Callander, Ontario and Kamloops, B.C. Sir Hugh Allan was out and George Stephen was in as the railway’s president. Businessman Donald Smith, whom Macdonald once called “the biggest liar I ever saw,” was also involved. The railway was to be financed with British money, not American. Despite Macdonald’s protectionist and nationalist policies, the terms of the contract stated that all materials used for the construction of the railway were to be imported duty free. The consortium was exempt from taxes and could build whatever branches off the main rail line they chose. However, the railway contract, which included a subsidy of $26 million and a land grant of 25 million acres, would be profitable only if thousands of settlers took up the offers and purchased the land the railway had for sale.
While it made economic sense to divert the rail line south of the border, Macdonald would have none of it. Every single inch of the transcontinental railroad would have to go through Canada. To protect the economic viability of the all-Canadian routes, Canadian Pacific was given a monopoly over all rail traffic in Canada.
Liberals opposed the railway contract and its monopolistic provisions. Blake said it was irresponsible for the government to sanction a rail line through the scrub country north of Lake Superior, calling it a “criminal absurdity of nationalism.” Common sense, the Liberal leader suggested, was to go west through American territory. Macdonald scoffed at the notion, suggesting that the Liberals had American money and American media on their side.
When a competing bid surfaced after the Canadian Pacific deal had been arranged, Macdonald saw it as a Liberal-concocted American-friendly sham.
Mr. Speaker the whole thing is an attempt to destroy the Pacific Railway. I can trust to the intelligence of this House, and the patriotism of this country, I can trust not only to the patriotism but to the common sense of this country, to carry out an arrangement which will give us all we want, which will satisfy all the loyal, legitimate aspirations, which will give us a great, a united, a rich, an improving, a developing Canada, instead of making us tributary to American laws, to American railways, to American bondage, to American tools, to America’s freights, to all the little tricks and big tricks that American railways are addicted to for the purpose of destroying our road.
When the bill to create the railway company passed in the House of Commons on February 1, 1881, Alexander Morris, one of the men who had conceived of Confederation, and who helped bring Macdonald and Brown together, wrote to Macdonald: “I write to congratulate you on the second crowning triumph of your more recent life, second only to that of Confederation. You have now created a link to bind the provinces indissolubly together, and to give us a future and a British nationality.”
The election of 1882 on June 20 changed little in the composition of the House of Commons. Importantly, it confirmed the nation had indeed for given the Tories for the Pacific Scandal. Macdonald won support in all provinces, with a particularly strong showing in Québec, taking 52 of 65 seats. It was the first election for the new Liberal leader Edward Blake who, prior to Stéphane Dion, has the distinction of being the only official Liberal leader never to have served as prime minister.
It was inevitable that provincial governments seeking to assert their authority would clash with Macdonald’s vision of a strong central government. With residual powers, Macdonald believed he held the upper hand, stating, “We are not half a dozen provinces. We are one great Dominion.” He saw provincial lieutenant governors of the provinces as “officers of the Dominion.” Nonetheless, he was not prepared to usurp the provinces in all respects. When Macdonald’s French ministers wanted the Liberal-friendly lieutenant governor of Québec sacked, Macdonald resisted, telling the governor general that, “It was impossible to make Frenchmen understand constitutional government.”
Macdonald feared Ontario was becoming too large and too powerful. The federal and Ontario governments clashed over a number of issues, notably Ontario’s jurisdiction over liquor licenses. The federal government argued that its Temperance Act and residual powers trumped Ontario’s attempts to regulate this field of activity. Ultimately, Ontario’s legislation was upheld by the courts and other authorities.
The federal government’s hand in sorting out jurisdictional matters was supported by its power of disallowance, a power that had proved problematic over the course of Macdonald’s career as prime minister. Consistent with its monarchical beginnings, the British North America Act (section 55) requires royal Assent to any legislation passed by both houses of Parliament. (This “Imperial power of disallowance” has been used only once, in 1873. In 1930, it was agreed at an Imperial Conference that the power would never be used again.)
Another power of disallowance, articulated in section 90 of the British North America Act, gave the federal government the power to invalidate provincial legislation within one year of its enactment. As Father of Confederation and former prime minister Alexander Mackenzie noted, it was crucial that the federal government “have a control over the proceedings of the local legislatures to a certain extent ...[as] the want of this power was a great source of weakness in the United States.” This power was widely supported in pre-Confederation discussions by both the Colonial Office and Canadian politicians, although opponents such as member of Parliament Philip Moore, feared that “the veto power . . . if exercised frequently, would be almost certain to cause difficulty between the local and general governments.”
Unlike the Imperial power of disallowance, the federal power of disallowance over the provinces has been used on more than 100 occasions. Macdonald used the power 29 times between 1867 and 1881, mostly to void provincial legislation that reached into areas of federal jurisdiction. When pressed to reject New Brunswick legislation on nondenominational and mandatory schooling, Macdonald refused, arguing that because the legislation did not violate the BNA Act he had no right to intervene; that it would be a “. . . violent wrench of the Constitution.” During this time, Macdonald set himself up as a champion of provincial rights, but this would soon change.
In the 1880s, Macdonald set his principles aside and began to use disallowance power in an attempt to weaken the more powerful provinces, and as a partisan tool. When Ontario sought to expand its boundaries to the north and northwest, and then passed laws to regulate the use of rivers and streams, Macdonald was incensed at Ontario Premier Oliver Mowat, whom he once referred to as “a little tyrant.”
Macdonald tired of the fight with provinces. The economy, which had been strong in 1881–82, weakened in 1883. Immigration slowed. The growing season for farmers was poor. The CPR had run out of money and needed government guarantees to survive. Some banks holding railway loans were on the edge of bankruptcy. Some provincial leaders were threatening succession. The country was on the financial brink. In despair, Macdonald told a friend, “I have nearly made up my mind to get out of office. This is a good time for it and I’m breaking down. I can’t conceal this for myself, perhaps not from my friends.”
The Liberals opposed government support for the railway. Blake argued that the ill-conceived venture was underfinanced, monopolistic, and poorly designed. His arguments were not without foundation. Project management was indeed poor and the final price tag came in at double the original