Tax, Order, and Good Government: A New Political History of Canada, 1867-1917 9780773549630

Citation preview

T a x , O r d e r , a n d G o od Government

carleton library series The Carleton Library Series publishes books about Canadian economics, geography, history, politics, public policy, society and culture, and related topics, in the form of leading new scholarship and reprints of classics in these fields. The series is funded by Carleton University, published by McGill-Queen’s University Press, and is under the guidance of the Carleton Library Series Editorial Board, which consists of faculty members of Carleton University. Suggestions and proposals for manuscripts and new editions of classic works are welcome and may be directed to the Carleton Library Series Editorial Board c/o the Library, Carleton University, Ottawa K 1S 5B6, at [email protected], or on the web at www.carleton.ca/cls.

cls board members: John Clarke, Ross Eaman, Jennifer Henderson, Laura Macdonald, Paul Litt, Stanley Winer, Barry Wright 225 A Two-Edged Sword The Navy as an Instrument of Canadian Foreign Policy Nicholas Tracy 226 The Illustrated History of Canada 25th Anniversary Edition Edited by Craig Brown 227 In Duty Bound Men, Women, and the State in Upper Canada, 1783–1841 J.K. Johnson 228 Asleep at the Switch The Political Economy of Federal Research and Development Policy since 1960 Bruce Smardon 229 And We Go On Will R. Bird Introduction and Afterword by David Williams 230 The Great War as I Saw It Frederick George Scott Introduction by Mark G. McGowan 231 The Canadian Oral History Reader Edited by Kristina R. Llewellyn, Alexander Freund, and Nolan Reilly 232 Lives in Transition Longitudinal Analysis from Historical Sources Edited by Peter Baskerville and Kris Inwood 233 W.A. Mackintosh The Life of a Canadian Economist Hugh Grant

234 Green-lite Complexity in Fifty Years of Canadian Environmental Policy, Governance, and Democracy G. Bruce Doern, Graeme Auld, and Christopher Stoney 235 Canadian Expeditionary Force, 1914–1919 Official History of the Canadian Army in the First World War G.W.L. Nicholson Introduction by Mark Osborne Humphries 236 Trade, Industrial Policy, and International Competition, Second Edition Richard G. Harris Introduction by David A. Wolfe 237 An Undisciplined Economist Robert G. Evans on Health Economics, Health Care Policy, and Population Health Edited by Morris L. Barer, Greg L. Stoddart, Kimberlyn M. McGrail, and Chris B. McLeod 238 Wildlife, Land, and People A Century of Change in Prairie Canada Donald G. Wetherell 239 Filling the Ranks Manpower in the Canadian Expeditionary Force, 1914–1918 Richard Holt 240 Tax, Order, and Good Government A New Political History of Canada, 1867–1917 E.A. Heaman

Tax, Order, and Good Government A New Political History of Canada, 1867–1917

E . A . H e a ma n

Carleton Library Series 240

McGill-­Queen’s University Press Montreal & Kingston • London • Chicago

©  McGill-Queen’s University Press 2017 ISBN 978-0-7735-4962-3 (cloth) ISBN 978-0-7735-4963-0 (eP DF ) ISBN 978-0-7735-4964-7 (eP UB) Legal deposit second quarter 2017 Bibliothèque nationale du Québec Printed in Canada on acid-free paper that is 100% ancient forest free (100% post-consumer recycled), processed chlorine free This book has been published with the help of a grant from the Canadian Federation for the Humanities and Social Sciences, through the Awards to Scholarly Publications Program, using funds provided by the Social Sciences and Humanities Research Council of Canada. McGill-Queen’s University Press acknowl­edges the support of the Canada Council for the Arts for our publishing program. We also acknowl­edge the financial support of the Government of Canada through the Canada Book Fund for our publishing activities.

Library and Archives Canada Cataloguing in Publication Heaman, Elsbeth, 1964–, author Tax, order, and good government: a new political history of Canada, 1867–1917 / E.A. Heaman. (Carleton library series; 240) Includes bibliographical references and index. Issued in print and electronic formats. ISB N 978-0-7735-4962-3 (hardcover). – IS BN 978-0-7735-4963-0 (eP D F ). – ISB N 978-0-7735-4964-7 (eP UB) 1. Fiscal policy – Canada – History. 2. Taxation – Canada – History. 3. Canada – Politics and government – 1867–1896. 4. Canada – Politics and government – 1896–1911. 5. Canada – Economic conditions – 1867–1918. 6. Canada – History – 1867–1914. I. Title. II. Series: Carleton library series; 240 HJ 2449.H43 2017

336.7109

C 2017-900905-2 C 2017-900906-0

This book was typeset by Marquis Interscript in 10.5 / 13 Sabon.

Dedicated to my favourite historian, Michael Perceval-Maxwell

Contents

Figures and Tables  ix Acknowledgments  xi Introduction: Wealth, Poverty, and Taxes  3 Pa rt one   C o nst ruc t i ng F i scal F e d e ral i s m 1 Confederation, or How Not to Run a Tax Revolt  21 2 Tax Revolt in Nova Scotia in the 1860s: Fairness and Region  56 3 Tax Revolt in British Columbia in the 1870s: Fairness and Race  88 4 Macdonald to Laurier: Revolt against Liberalism  119 Pa rt two   R e c o nst ruc t i ng F i scal F e d e ral i s m 5 Tax Revolt in Montreal in the 1880s: Fairness and Poverty  185 6 Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 233 7 Single-Tax Revolt in the 1900s: Fairness over the Land  281 8 Laurier to Borden: Failed Revolt against the Tariff  332 9 Income Tax: Progressivism Triumphant  377 Conclusion: The Politics of Fairness  459 Glossary 465 Notes 471 Index 553

Figures and Tables

f ig u r es 0.1 Federal expenditures, borrowing, and taxes, as a percentage of g n p, Canada, 1870–1989  7 1.1 Henri Julien, “The Montreal City Taxes. The Two Sides of the Question”  35 1.2 Delegates to the Quebec Conference, October 1864  43 2.1 John Henry Walker, “Cross Roads: Shall We Go to Washington First, or How(e)?”  81 3.1 James Weston, “The Heathen Chinee in British Columbia”  107 4.1 J.W. Bengough, “Protestantism at Ottawa”  133 4.2 James Weston, “On the Fence”  134 4.3 A. Leroux, “The Vicissitudes of High Living”  144 4.4 Henri Julien, “Sugar. Gone Up, Out of Sight”  145 4.5 J.W. Bengough, “Riding into Power”  149 4.6 J.W. Bengough, “Centralization”  150 4.7 J.W. Bengough, “The Schoolmaster Schoolmastered”  155 4.8 “How Direct Taxation Works”  162 4.9 “Richard Lies Low”  166 4.10 “The Liberal Cabinet of Canada”  170 5.1 “Homestead”  212 5.2 Montreal water tax arrears, 1880–1900  226 5.3 Distribution of taxes in Montreal by sector, 1880–95  226 6.1 J.W. Bengough, “Sitting on the Poor Man”  235 6.2 J.W. Bengough, “Division of Labor”  239 6.3 Toronto Assessment Department, 1898  254

x

Figures and Tables

6.4 Rostap, “A Friend Indeed”  259 7.1 J.W. Bengough, “A Glorious Prospect”  290 8.1 Federal sources of revenue as a percentage of g n p, 1870–1917 356 8.2 Federal sources of revenue as a percentage of total fiscal requirements, 1868–1917  356 8.3 Arch Dale, “The Parting of the Ways”  366 9.1 Arch Dale, “How Canada Becomes Rich by Taxation”  403 9.2 “Landed at Last”  407 9.3 Borden and ministers  413 9.4 Arch Dale, “Nothing But His Life”  415 9.5 E.N. McConnell, “Quebec Must Not Rule All Canada /  Bourassa’s Dream”  440

Tables 4.1 Customs duties per head of population paid in each province and in the Dominion, 1868–83  178 5.1 Water tax in Toronto and Montreal  191 5.2 Recapitulative table of assessments and taxes in Montreal, 1876–86 216

Acknowledgments

This book reflects many years of collegiality, beginning with the initial invitation from Shirley Tillotson to join her in a tax history project and ending with the thoughtful and generous remarks of the anonymous reviewers. It was generously funded by the Social Sciences and Humanities Research Council of Canada (ssh rc ) and the Fonds de recherche du Québec – Société et culture. Those funds enabled me to draw on research assistance from: Jean-François Constant, Duncan Cowie, Max Hamon, Braden Hutchinson, Michael Kidechel, Robert Macmillan, Maria Melenchuk, Angela Rooke, Dan Rück, Emrah Sahin, Graham Splawski, Francesca Taddeo, Madeleine de Trenqualye, and Matthew Vasilev. I am especially grateful for funds from the Arts ari a Program at McGill University that enabled me to work extensively with Michael Kidechel and Matthew Vasilev, who helped me enormously. I owe a great deal to the many archives and archivists consulted. The book reflects research at Library and Archives Canada; provincial archives in New Brunswick, Nova Scotia, Prince Edward Island, Quebec, Ontario, Saskatchewan, and British Columbia; and municipal archives in  Halifax, Montreal, Toronto, Saskatoon, Calgary, and Vancouver. University archives consulted include Queen’s University Archives, Archives and Special Collections at the University of New Brunswick, McGill University Archives, and McGill University Library Rare Books and Special Collections, the Osler Library of the History of Medicine, as well as McCord Museum. Richard Virr and Christopher Lyons were knowl­edgeable and generous guides. I am particularly indebted to the University of Toronto Archives and its Thomas Fisher Rare Book Library, and especially Natalya Rattan and John Shoesmith. I also thank the Archives de Sciences Po in Paris.

xii Acknowledgments

Online resources have been a phenomenal help, and I am deeply indebted to organizations and websites that make these available, including Early Canadiana Online, j stor, HathiTrust Digital Library, ProQuest, Internet Archive (archive.org), Peel’s Prairie Provinces, Dictionary of Canadian Biography, Paper of Record, Google News Archive, archived newspapers posted online by different universities as well as the newspaper companies themselves, and the McGill University Library system with its own digitalization and its help accessing external resources. Thanks also to friends who hosted me during research trips, especially Raina and Bill Fyson, Colin Coates and Megan Davies, and my extended family in British Columbia. Réjeanne Gougeon sustained us all. I tried out some version of the arguments here in many different venues and remain grateful for advice. Thanks to the Canadian Historical Association and more particularly to its Political History Group; the Toronto Legal History Group; and at McGill University, the Department of History and Classical Studies and the Montreal History Group; and the McCord Museum workshop “Collecting Knowl­edge: New Dialogues on McCord Museum Collections” (November 2013). I also presented papers at the “Colloque international sur les révoltes fiscales” organized by Nicolas Delalande and Romain Huret (Paris, e h e s s , October 2010); “John A. Macdonald: Fresh Perspectives and New Legacies,” organized by Patrice Dutil, Roger Hall, and Andrew Smith (Toronto, Ryerson University, December 2010); “The Carter Commission 50 Years Later,” organized by Kim Brooks, (Halifax, Dalhousie University, 2012); and “Moralizing Capital,” organized by Stefan Berger and Alexandra Przyrembel (Berlin, FernUniversität in Hagen, March 2016). These papers appeared as: E.A. Heaman, “‘The Whites Are Wild about It’: Taxation and Racialization in Mid-Victorian British Columbia,” Journal of Policy History 25, 3 (2013): 354–84, by permission of Journal of Policy History; “John A. Macdonald and Fiscal Realpolitik,” in Patrice Dutil and Roger Hall, eds., John A. Macdonald at 200: New Reflections and Legacies (Toronto: Dundurn, 2014): 149–74, by permission of Dundurn; and “The Politics of Fairness: Income Tax in Canada before 1917,” in Kim Brooks, ed., The Quest for Tax Reform Continues: The Royal Commission on Taxation Fifty Years Later (Toronto: Carswell, 2013): 15–30, by permission of Carswell, a division of Thomson Reuters Canada Limited. I remain grateful also to Nicolas Delalande, Romain Huret, Patrice Dutil, Roger Hall, Kim Brooks, Stefan Berger, and Alexandra Przyrembel. There were also many stimulating conversations with colleagues. Thanks to Jerry Bannister, Elizabeth Mancke, Denis McKim,

Acknowledgments xiii

John Reid, Scott See and my other friends working on “Unrest, Violence, and the Search for Social Order” for helping me understand the “rules” around violence. I also wish particularly to thank Tassos Anastassiadis, Phil Buckner, Allison Christians, Colin Coates, Bruce Curtis, Michèle Dagenais, Megan Davies, Catherine Desbarats, Patrice Dutil, Darren Ferry, Mike Fronda, Don Fyson, Stephan Gervais, Jack Little, Laura Madokoro, Ian McKay, Jeffrey McNairn, David Meren, Bradley Miller, Christopher Moore, Suzanne Morton, Tom Naylor, Carman Nielson, Sherry Olson, Robert Raizenne, Jarrett Rudy, Eric Sager, Andrew Smith, Michael Stamm, Sylvie Taschereau, David Tough, and of course Shirley T. Phil Cercone and Jonathan Crago encouraged me to submit the manuscript to McGill-Queen’s University Press and shepherded it through the process of publication. I thank them and Ryan Van Huijstee and Jacqui Davis. Eleanor Gasparik did the heroic work of copy-editing with wry aplomb. K. Joan Harrison helped compile the index. The arguments here reflect debts to my teachers when I was a beginning historian. At the University of Victoria, Angus Maclaren’s introductory survey on European history was a revelation that set me on a path of  history or bust. A lot of mentoring from George Weisz at McGill University made it history not bust, specifically history with a lasting interest in knowl­edge claims. That interest was honed by Suzanne Zeller, W.H. Dray, Trevor Levere, and Ian Hacking at the University of Toronto, and further honed at the extraordinary, and now lamented, Centre for the History of Science, Technology and Medicine at Imperial College in London where I served an apprenticeship under David Edgerton, Rob Iliffe, Lara Marx, and Andy Warwick, with further mentoring at the extraordinary, and also now lamented, Wellcome Trust Centre for the History of Medicine. At McGill, Nancy Partner introduced me to Thucydides and discourse analysis; at Toronto, Clifford Orwin ramped it up on both counts. Carman Miller inducted me into twentieth-century Canadian history, Brian Young into nineteenth-century Canada, and both directed my attention to the interface of business, state, and society as a key question for social and political history, as did my long-suffering PhD supervisor Michael Bliss. Those three men, all now retired, generously consented to read part or all of this manuscript. They seriously disagreed with some of my more outlandish claims (now slightly tempered). What a debt I owe them for their many courtesies over more than three decades, and even more for their amazing scholarship. My own PhD students are my own first sounding board for new ideas, and I remain grateful for their great courtesies and scholarship: Colin Grittner,

xiv Acknowledgments

Max Hamon, Dan Rück, Glenn Walker, as well as Jean-François Constant and Robert Macmillan. Undergraduate students also helped me to hone my arguments with the animating and irreverent curiosity they bring to the classroom. I was on parental leave with my son Liam when invited to join the tax history project, and I signed the ssh rc grant application while sitting in the neonatal intensive care unit with my daughter Neela – small wonder this book comes out in favour of democracy, science, and social solidarity. My children probably think of tax history much as Charles Darwin’s children thought of natural history, as immortalized in the question one of them posed in regard to a neighbour’s house: “And where does he do his barnacles?” Shaun, who knew better, still tolerated all the taxing talk of the last decade. He remains my first and best critic, my generous partner in all things, and the great love of my life.

[Melian Dialogue: An imperializing Athens demands tribute from the autonomous island of Melos. The Melians prefer their independence. The Athenians reply that independence is no longer possible. When the Melians protest that such strong-arming is not fair, the Athenians respond that fairness can only exist among equals: this is about power not fairness.] A t h e ni a ns : You know as well as we do that right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must. Me l i a ns : As we think, at any rate, it is expedient – we speak as we are obliged, since you enjoin us to let right alone and talk only of interest – that you should not destroy what is our common protection, the privilege of being allowed in danger to invoke what is fair and right, and even to profit by arguments not strictly valid if they can be got to pass current. And you are as much interested in this as any, as your fall would be a signal of the heaviest vengeance and an example for the world to meditate upon. A t h e ni a ns : The end of our empire, if end it should, does not fright us: a rival empire like Lacedaemon, even if Lacedaemon was our real antagonist, is not so terrible to the vanquished as subjects who by themselves attack and overpower their rulers. This, however, is a risk that we are content to take. Thucydides, History of the Peloponnesian War (400 b c ), trans. Richard Crawley (London: J.M. Dent, 1904), 394. * * *

On Monday, April 3rd 1843, ten thousand tenant farmers gathered in Carrickmacross expecting to meet Mr Shirley and have their rents reduced. Instead they were addressed by William S. Trench, the newly appointed Shirley Estate agent. Amid the hustle, bustle and din of the very large crowd shouting for a reduction in rent, Trench tried to speak but could not be heard. A voice from the crowd shouted, “Get a chair boys, and let him stand on it so as we can see and hear him.” This being done the same voice from the crowd shouted, “Will you reduce our rents?” Trench replied that he could not. The same voice from the crowd shouted, “Down on your knees boys, we will ask him on our knees.” Ten thousand tenant farmers dropped to their knees and begged “for God’s sake” to reduce their rents. Trench told them that, “Mr

Shirley was resolved to make no reduction, or abatement whatsoever in his rents,” and that his duty was to compel them to pay their rents, which he was determined to do, “even at the point of a bayonet if necessary.” William Steuart Trench, Realities of Irish Life (1869) * * * This is how you remind me of what I really am. Nickelback (2001)

T a x , O r d e r , a n d G o od Government

In t ro du cti on

Wealth, Poverty, and Taxes

“Not just Canadian history, Canadian tax history.” My husband (a philosopher of mind) has been dining out on this claim for years, as clear title to the most boring work imaginable. The history of taxes in Canada – a country known for its tax compliance rather than its tax resistance – might well answer Germaine Greer’s notorious question posed about Rohinton Mistry’s novel A Fine Balance: “It’s a Canadian book about India. What could be worse? What could be more terrible?” Canadian tax history could be more terrible. Tax historians work with the most boring documents imaginable, and they focus on the kind of evidence that makes other historians’ eyes glaze over when they stumble across it. Tax rolls aren’t the worst of it. All those cranky letters in local newspapers are probably the worst of it. What could be more petty bourgeois than to complain about the county assessment rates? But tax debates got at some important fissures and problems in early Canadian society. Canada began to espouse liberal precepts – liberty, equality, rights of property – long before it had enough state apparatus to administer them fairly. Early Canadian tax policies were often highly illiberal, not to say predatory; and even if the policies were not predatory, many tax collectors were. Taxation wrought severe hardship in households. Take the example of J.B. Pilon, a “journalier” or day labourer, who owned a cottage in the village of Pointe-Claire on the west island of Montreal. In 1892, his cottage, evaluated at $50, was seized and sold out from under him as a penalty for fourteen cents worth of unpaid taxes.1 They were not even long overdue. Officials in that county seized property after sending out one notice and often sold it to one another. The well-todo were better able to protest such exactions. Daniel Stroud, an importer of tea and coffee, was angry when a friend telephoned to warn him that

4 Introduction

his house was advertised as to be sold for unpaid taxes to Pointe-Claire worth $1.60, and angrier still that the municipality charged him $68.37 to redeem the property. No less than the well-to-do, the poor and racialized poor also felt the bite of taxation. In December 1905, Metlakatla Indian agent George Morrow requested an extension on taxes due from Mrs James Rudland. Her husband had drowned and a third of the land being taxed had been washed away by the Bella Coola River: “This woman is very poor and if you can carry this over till spring for her it will greatly oblige her.”2 You didn’t need to have seizable property to suffer from harsh taxation. From one end of the country to another, poor people wrote to their local taxing authority pleading with them not to garnish their scanty wages, not to imprison them, not to turn off their water supply when they couldn’t pay local water taxes. In 1904, David Parsell, a ship joiner for the Canadian Pacific Railway, pointed out to the provincial collector in Victoria that he could only qualify for the tax they had taken from his wages if he worked incessantly, which he did not: “I wish to call your attention to the fact that I do not make over the $1000.00 when I work full time and take out Sundays and legal hollydays my wages is $3.50 per day and if I loose half a day or an hour I do not get payed for it.”3 In 1914, Joseph Hill, in Cassilis, Northumberland County New Brunswick, was resigned to the consequences of nonpayment of his road tax: “Dear Sir, I understand that you are the one responsible for the way I am hunted conserning road tax. Would like to ask how is one going to earn that money. I am not able to do a days work or never will be. If it will help the Cause any you can follow on. They may put me in jail but that is all it will ever amount to. Yours resp Joseph Hill.”4 In 1890, A. Goldstein, living in Ste-Cunégonde, an industrial suburb north of the Lachine Canal, was one of hundreds of Montrealers who couldn’t pay the municipal water tax (which was indexed to rents), and he begged for some extra time: “We were plagued with sickness from the later part of November until this time present and having a sick child yet and ourselfs not well yet during the sickness wee have used up anything and everything wee ad to our name we are behind even with rent for three months in November last wee have lost a boy thirteen years old unfortunately. As soon as I will be able to earn a dollar I will pay the little by degree, I hope you will be as kind and not to trouble us with the little water in you may just as well take our lifes if you do.”5 Baldly presented, such desperate pleas may command our sympathy. But how were they read at the time by tax authorities incessantly bombarded



Wealth, Poverty, and Taxes 5

with demands for relief? Ste-Cunégonde also housed the Montreal Rolling Mills and the Montreal Marine Works. Both annually complained of being “wronged” by “paralysing” taxation, as did a host of other inhabitants whose property values were impaired by the smoke and ash belching from the rolling mills or by the shipyards that blocked access to municipal services.6 The wealthier the taxpayer, the louder and more public the complaint of injustice. How to find merit amidst the cacophonous demands? Only by serious analytical work, by empirical, political, and moral weighing of interlocutors and arguments, does the cacophony resolve into something like a conversation – the eternal conversation, about the interface between rich and poor, state and citizen. All taxing communities are always already in the middle of a debate about wealth, poverty, and taxation. Which taxes amounted to “slavery” and which were legitimate in early Canada? Should taxes reflect benefits received from state protections or ability to pay? How poor was too poor? Did it matter if taxes on the poor made it harder for them to subsist? Did it matter politically or legally or according to a moral economy, a more or less unspoken understanding, how people should respond to one another’s needs? How could agreedupon principles be made to work in practice? Through such analysis, we can see in Canada’s tax history the beginnings of modern social “rights.” Turn-of-the-century reformers found ways to transform those private, whispered pleas for tax relief into forceful public demands for fiscal fairness. Histories of welfare policy in Canada have focused on spending priorities, but debates over taxing priorities were prior. Principles of economic justice were addressed as problems of revenue before they were addressed as problems of spending. The modern state emerged from debates about fair taxation. Taxes were either direct or indirect, assessed against property or collected as customs and excise. Some direct taxes targeted specific kinds of property, such as dogs, or taverns, while others provided for specific kinds of services, such as schools or sewers. Every colony before Confederation, and every province after it, had its own slate of taxes, often reflecting historical legacy. Most jurisdictions had a binary between upper levels of government that collected most of their revenues indirectly and lower levels of government that collected taxes assessed directly against property (real estate, personal or business property, and income which was considered a form of property). Consumption taxes – customs and excise – were easiest to collect: they required only a small bureaucracy and didn’t arouse the same ratepayer resistance as direct taxation. But they were regressive: they appropriated only a small percentage of a wealthy

6 Introduction

person’s income and a larger percentage of a poor person’s income. They also privileged producers over consumers, landed interests over trade interests, and manufacturing over agricultural interests. Every new tax had to balance these competing interests. The federal government constructed in 1867 reserved for itself the right of indirect taxation. The right to tax trade followed very obviously from the right to govern trade, which must be kept out of provincial hands so as to prevent internal trade barriers. Having control of customs and excise ensured that the federal government had the most lucrative revenue, as well as a series of substantial buildings across the country that reflected the importance of the customs house. Because the colonies that entered Confederation gave up their customs and excise, they were given federal subsidies as well as local taxing powers. Initially, the subsidies made it possible for provincial governments to avoid direct taxation, but as their responsibilities increased over time, one by one they began to contemplate direct taxation. The federal government could also tax directly but chose not to exercise that right before the First World War, instead leaving it for lower levels of government. That decision reflected both historic patterns in British North America and residual provincial control over “property and civil rights” under the British North America (b na ) Act that created modern Canada in 1867. Lower still, municipal governments were creatures of the provincial governments, which, always bearing in mind their own restrictions, defined municipal taxing powers. Thus, in Confederation-era Canada, municipal governments tended to tax property directly; provincial governments tended to define property but not to tax it; and the federal government mostly taxed consumption. The governments with the strongest powers of taxation had the least incentive to tax directly; the governments that taxed directly were least able to impose those taxes. Canadian taxes were, as immigration agents continually boasted, comparatively low.7 The United States and Great Britain paid higher taxes because they waged expensive wars. The First World War was a shock to traditional Canadian finance and provoked a national income tax. The constitutional history of Canadian taxes can be briefly or expansively recounted. J. Harvey Perry’s classic, two-volume textbook, published in 1955, Taxes, Tariff, and Subsidies: A History of Canadian Fiscal Development, takes the latter route, with a full description of tax laws and many statistical appendices to which I direct the reader.8 Here, I provide something different: a cultural history of taxation that reads social and economic concerns more squarely into tax conversations than Perry



Wealth, Poverty, and Taxes 7

Figure 0.1  Federal expenditures, borrowing, and taxes, as a percentage of gnp, Canada, 1870–1989. Source: W. Irwin Gillespie, Tax, Borrow and Spend: Financing Federal Spending in Canada, 1867­–1990 (Ottawa: Carleton University Press, 1995).

attempted to do. Where Perry focused on the fiscal demands made by the state, I tend to focus on the people’s reply to those demands: their desperate pleas and angry complaints, and their moments of resistance and revolt. Individual and collective action, words and deeds, were always interwoven in complicated ways that reveal changing consensus around what counted as legitimate taxation. Smuggling a few items in at the border was practically a national pastime, one widely thought more common among women than men. Newspapers alleged that at least one woman in ten crossing the border at Detroit was smuggling goods. They published many stories and cartoons of more or less well-organized peccadillos: “Canadian women at Niagara Falls are carrying on an extensive smuggling business in baby carriages, their method being to carry their infants to the American side, and wheel them back in the carriages.”9 There were other ways of

8 Introduction

defying tax collection. The Department of Inland Revenue contains a number of letters from people claiming not to know their private distilleries were illegal.10 Canadians, for all their reputation as docile taxpayers, also mounted collective tax revolts. Take the eighteen-year-long tax revolt of Low Township, near Gatineau. The county rate was a trivial one mil on the dollar, but the mainly Irish inhabitants of Low refused to pay it from 1878 until 1895. Though priests and bailiffs exhorted payment, they defied the priests and chased off the bailiffs. They may have noticed that the few taxes actually paid never made it to the county treasury, because, the treasurer later explained, “he had his own salary to provide for.” Civil administration failed utterly; the police force was also chased off. Finally, in 1895, the militia was sent to make the necessary seizures and the people of Low paid their county rates.11 Low’s revolt was not typical but nor was it atypical of popular resistance. The nascent Canadian state was too weak to administer taxes fairly and effectively. Taxation in early Canada was never a monologue. It was always a dialogue – and it was the place par excellence where consent was wooed from the people and states were legitimated.12 Even in Low, even as the troops were given twenty rounds of ball ammunition each, they were also given special orders to treat the locals “with the greatest courtesy.” Taxation was confiscation, and a liberal state had to tread lightly when it confiscated – doubly so when it met resistance. Tax debates reflect the rational self-interest of competing taxpayers, but they teach us the historical meanings of both rationality and self-interest. As Sven Steinmo observes: “Rationality itself is embedded in context. One cannot even define what a rational act is without examining the context of that behavior.”13 The tax revolts studied here were not narrowly self-­interested but were continually propelled towards first principles of authority, fairness, rights, and justice. Justice was not an abstract concept for my historical subjects. It was always a material concept, rooted in particular fiscal arrangements, that continually called them to speech and action. Justice, according to British tradition, was always grounded in property relations. That was the lesson of John Locke, and it continued to reverberate in Canada. Liberals themselves said explicitly and often that politics was always about property. Fair taxation of property was at the centre of Canadian debates because it was at the centre of British debates. That point was neatly made by the Marquess of Salisbury in the Quarterly Review in 1864: “The chief object of Government, in England at least, is the protection of property … Finance, which has been the main battle-field



Wealth, Poverty, and Taxes 9

of so many conflicts, is a contest between various classes waged for the purposes of resisting the imposition of what each considers an unfair proportion of that contribution from property by which the service of the State is carried on … As property is in the main the chief subject-matter of legislation, so it is almost the only motive power of agitation.”14 Not all disputes were about taxation, but most of the important ones had tax questions close to their heart. Britain, France, and the United States all had searching debates about how to balance “interests” or “sections” or “sectors” in their fiscal policies, and those stories have been told in big books of national-fiscal history by such prominent scholars as Sven Steinmo, Avner Offer, Martin Daunton, Frank Trentmann, Ajay Mehrotra, Robin Einhorn, Michael Kwass, Romain Huret, Nicolas Delalande, Nicolas Barreyre.15 Tax history is an important part of the history of the state and capitalism. Tax historians usually quote Joseph Schumpeter who made the case in 1918: “The spirit of a people, its cultural level, its social structures, the deeds its policy may prepare – all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else … The public finances are one of the best starting points for an investigation of society, especially though not exclusively of its political life.” With that argument, Schumpeter inaugurated modern “fiscal sociology” (though the phrase itself originated with his fellow Austrian Rudolf Goldschied in 1917).16 Modern Canada took shape, both chronologically and conceptually, between the remarks by Salisbury in 1864 and Schumpeter in 1918. It was constructed in 1867 amidst fierce debates about fair taxation and reconstructed in 1917 amidst even fiercer ones. The preamble of Canada’s founding constitution declared as its objective “Peace, order, and good government.” But that was little more than boilerplate: the real “juice” lay in the division of powers, taxing powers not least among them. I don’t want to suggest that taxes are the only, or even the best, way to understand how Canada was governed or how elections were won and lost. That would be misleading. But “gentlemanly” studies of Canadian politics, where “money rarely changes hands,” are no less misleading.17 Canada’s story must be inserted into the emerging tax history. Tax history has never been more interesting and important, thanks to Thomas Piketty, whose book Capital in the Twenty-First Century shows that a historical pattern of concentration of wealth began to reverse in the early twentieth century, as an arrow became a pendulum.18 War played an important role

10 Introduction

in that story but so did fiscal reform movements of the progressive era. Canadians shared in those international movements and their work deserves to be remembered. Canadian history has not been written as tax history. It has been written primarily as a story of competing regions, nationalisms, and racializations. But these were also political fights over resources. That is the basic definition of politics for social historians: “The mediation of struggles over power and inequality.”19 Politics in Canada was primarily about access to resources and the cultural mediation of that access, and Canadian politicians were sophisticated brokers of money and power. There were many backroom negotiations and fiscal transfers, but there was also much public advocacy. Power and money could only come with the consent of a politically engaged and empowered public. It was never an easy sell: the people were naturally disposed to a certain ratepayer-driven skepticism. John Stuart Mill remarked in 1861, in a widely read book on representative government, that “the interest of the government is to tax heavily; that of the community is, to be as little taxed as the necessary expenses of good government permit.”20 Liberals distrusted statist interventions and looked to ratepayer self-interest as the best guarantee of a small state. The state itself was one of the interests lined up in the fight for resources, and fiscal reformers never let the public forget that fact. Tax resistance did as much as rights talk to restrain misbehaving governments and call them to account. Because taxation was a form of confiscation, it was a source of tremendous vulnerability for the liberalizing state. You could not innovate in taxation without hearing accusations of unfair confiscation, because every tax privileged some interests against others – that was Salisbury’s point. Confederation in 1867, the National Policy of tariff protection in 1879, and the Income War Tax Act in 1917 were three big tax innovations that had to be defended as taxes, as new encroachments on private property that strengthened some interests and weakened others. Each was also defended with romantic, patriotic appeals, but something more hard-headed was always needed because property was always at stake. But property, literally things “proper to” the self, could never be defined wholly from above. Ordinary people continually reasoned from their own experience of property, much as they reasoned from their own experience of God: unorthodox, even heretical, notions were widespread and were often voiced with the language of “iniquity” and “evil.” An economic liberalism that made every person the best judge of his or her best interests tended to confirm that tendency to unorthodoxy, even when the logical consequence was an attack on



Wealth, Poverty, and Taxes 11

liberalism, as in one tract by Montrealer William Brown: “The false interpretations of a spurious economy float like an impenetrable mist over the seething caldron of English Political Economy.”21 Classic, mid-Victorian liberal political economy was primarily government of, by, and for property. In most Canadian jurisdictions, only propertied people voted.22 Property was simultaneously a measure of rationality and a force for political moderation, because governments and propertied publics both tended to prefer policies that shored up the stability of property. But property had a Trojan horse buried deep within: the concept of value, which was double-edged and pulled hard in two directions. It meant the monetary worth of something, as in “land values.” It also meant morality, as in “traditional values.” You could not have property without some conception of value hard-wired into it and that value was irreducibly social. Property was worth what people wanted to pay for it. Because value was socially constructed, so too was property. Tax assessors had to turn those shifting values into statist inventories rigorous enough to withstand judicial review. That put assessors at the heart of political fights over value, as political economists, corporate lawyers, and fiscal radicals all tried to impose their own definitions. The binary established at Confederation between national taxation of trade and local taxation of property was always an unstable one, continually threatening to unravel. National statesmen built up some kinds of claims about property and taxation, but rival models were continually lobbed at them by a variety of political, economic, and cultural stakeholders, always in reference to such great previous tax battles as the Magna Carta and the Atlantic revolutions of 1688, 1776, and 1789. Everywhere, people played creatively upon the relationship between the self, property, and society in all the discursive genres of the day. Big economic changes – urbanization, industrialization, and financialization – kept the conversation in constant turmoil. This book is structured around two themes. On the one hand, I have organized the chapters around discrete tax revolts that let us see popular political agency at work. On the other hand, I have focused on the way taxes mediated between wealth and poverty. Poverty has been written out of national political history. When I say that I’m interested in poverty and Confederation, I’m accused of making a category error. Poverty, I’m told, was an object of local, not national, governance. In fact, poverty was not “naturally” either local or national, a point that becomes immediately apparent if you focus on revenue rather than spending. The federal government might not spend on the poor, but it taxed the poor, and was continually told to consider the impact that its taxes had on the poor.

12 Introduction

Local debates also hinged on whether a given tax made it easier or harder for the poor to buy a loaf of bread. When the propertied sloughed off their tax burdens, they made it harder for the poor to buy that loaf. Even – perhaps especially – the petty bourgeois knew they must choose sides. In a general way, most Victorian liberals agreed that the state usually should not but probably must from time to time offer relief. But tax debates quickly propelled conversations beyond abstract principles and niceties and were always riddled with figures that aimed at making precise historical analysis or future prediction. The first requirement of a serious tax debate was to follow the money, to make a claim about where tax dollars ultimately came from and wound up. (Tax revolts with only hazy figures behind them are probably better described as tax grabs.) Economists gradually shifted debates away from the loaf of bread and towards newfangled professional tools for measuring poverty. Debates about taxation in Canada from 1867 to 1917 addressed problems of poverty head-on. But that element of those conversations has been almost eradicated from the historiography. Canadian historians have tended to make those debates about nationalism. In doing so, they have fallen squarely into the traps laid by the Fathers of Confederation. Con­federation, I argue, was designed to get poverty off the national agenda because liberal political economy advised politicians to write poverty out of national politics, and the Fathers of Confederation took that advice to heart when they drew up the bn a Act. At this point I could make a post-colonial-style argument about subtle readings of classic political discourses “against the grain” to get a subversive account of the founding Canadian debates. But I don’t need to because the arguments weren’t in the least bit subtle. English Canadians who resented subsidizing the “meagre resources” of French Canadians described themselves as “tied to a corpse.”23 Mid-Victorian liberals had no problems disenfranchising and marginalizing poverty but saw themselves as continually outmanoeuvred by politicians who trickily translated the claims of poverty into much less negligible kinds of claims, based upon race or region. They watched, aghast, as their carefully saved tax dollars went to subsidize interests and communities that they regarded as less provident. Debates about who was poor, why they were poor, and what they deserved from the state were continually translated back and forth between the languages of interest and of identity. That blurring of categories gave later historians – who seem to have been embarrassed by poverty and reluctant to ascribe it to Canadians – grounds to tell the story of Canadian history with poverty largely written out of it. But they reveal themselves



Wealth, Poverty, and Taxes 13

as captives of Victorian liberal conservatism when they do so. Fiscal debates in Canada were always debates about who should pay the taxes and who should benefit from them and whether region, class, or race was the best frame for understanding that conflict. They were always debates about the extent to which tax dollars could or should be distributive (actuarial, returned to the taxpayer) or redistributive (transferred to other groups). They were always debates about poverty and always central to larger political quarrels. This book is not an economic history of taxation: economists have their own valuable accounts of Canadian tax history.24 But we also need frankly political accounts of Canadian tax history that give due weight to public opinion. This book surveys the conversations that Canadians had about taxation, understanding taxation as a place where political, social, economic, and cultural history intersected. Tax debates were philosophically charged, politically consequential debates about the relationship between wealth and poverty, state and society – debates that remain surprisingly unknown today. It’s possible for recent, peer-reviewed scholarship to claim that Canada had no progressive reform movement comparable to movements elsewhere.25 Not only is that simply wrong but it’s also a telling error. Because Canadian history has been told as a story of competing nationalisms rather than competition over resources, that history has been largely written out of international analyses that focus on competition over resources. This book speaks to that gap. It asks what people actually said about wealth, poverty, and taxes, and it marvels to watch a country’s collective thinking evolve over time. It recounts how politics became social politics in Canada between 1867 and 1917. It tracks the shift from the constitutionalization of liberal ideas in the bna Act to the last stand of that liberalism at the height of the First World War. This is the story of how the liberal federal state was remade as an administrative state with a new commitment to socio-economic fairness, amidst other kinds of pressures that pulled it in different directions. Throughout, I focus on how public debate was conveyed: the newspapers, pamphlets, and speeches of legislators, aldermen, and other kinds of public advocates. As well, I bring in other sources to investigate activities such as behind-the-scenes lobbying or to probe the perplexities of tax administrators, but always with an eye to the constitution of public opinion by words and deeds. I explore the different kinds of claims to political and fiscal consideration, voiced as justice or expediency, evidence or common understanding, dire need or entitlement of strength. People sensed that the liberal, ratepayer public sphere constructed during

14 Introduction

the fight over responsible government was being reconstructed by an expanding marketplace in ways that empowered organized capital and consumers. People continually argued about the convergence and divergence of reasoned choices and material ones: the vote and the purchase. Taxation, too, was a reasoned and a material choice that simultaneously propped up and undermined popular agency, rational debate, and the state. In words and deeds, people remade their ideas and their institutions. They believed taxes gave them political agency and translated that agency into a bottom-up reconstruction of the state. The history of tax talk in Canada is also a history of popular state formation and of changing concepts and practices of authority, grounded on new mechanisms of knowl­edge and consensus. Knowl­edge matters a lot in taxation. Every act of taxation is an act of reckoning about people, goods, and money. It requires both political and intellectual authority. Without information about the things or people being taxed, no taxation is possible. Changes to tax policies reflect changing capacities for knowl­edge in the state and the market. Businessmen, liberal professionals, and academics were all professionalizing in the period under review, which is to say, they sought self-advancement and political privileges grounded on claims to autonomous knowl­edge. The new kinds of informational claims accreting around taxation intermingled with new kinds of social pressures. Businessmen claimed privileged understanding of business matters but refused to share private data; academics claimed deeper knowl­edge of broader patterns, but so, too, did radical popular reformers. A ferment of competing ideas and pressures undermined older claims and “facts” about the objects and incidence of taxation. Facts are always slightly mythological beasts: there’s no such thing as “just the facts,” according to the philosophers. But the best of those philosophers of history – for my purposes, W.H. Dray and Ian Hacking – do not debunk knowl­edge; rather, they provide superb tools for sophisticated and precise investigations into the historical construction of knowl­edge. They see knowl­edge as built around disciplines – historians in Dray’s case, statisticians and psychiatrists in Hacking’s – that could neither fully acknowl­edge nor fully negate their debts to state and public negotiations around such organizing frameworks as wars, chance, and madness. Hacking’s remarks about the taming of chance apply to taxation: behind a new avalanche of numbers “lay new technologies for classifying and enumerating, and new bureaucracies with the authority and continuity to deploy the technology. There is a sense in which many of the facts presented by the bureaucracies did not even exist ahead of time. Categories



Wealth, Poverty, and Taxes 15

had to be invented into which people could conveniently fall in order to be counted. The systematic collection of data about people has affected not only the ways in which we conceive of a society, but also the ways in which we describe our neighbour.”26 The insight owes much to Michel Foucault and to American pragmatic philosophers who identified the debt that knowl­edge owes to power. But that insight, once a casus belli of the “science wars,” lends closure to them in Hacking’s careful analyses of different ways of knowing.27 Taxes, too, attracted clusters of competing knowl­edge claims from scholars, bureaucrats, and moral economies that were as much led by as leading practical changes in tax regimes. My history of taxation in Canada is a social history of politics grounded on a social history of knowl­edge. Emulating Dray and Hacking, I provide exemplary case studies – moments when debates about basic facts and principles of taxation were most politically charged and most fully articulated, in ways that reflect unspoken epistemologies, more formalized paradigms, and larger social and political changes. Where other historians study the construction of subjectivities, I study the construction of objectivities – the emergence of intersubjective consensus around some basic fiscal facts and trends in the early history of Canada’s national life. I recount the story in two waves covering roughly two twenty-fiveyear periods. The first twenty-five years saw the development of a quasiimperial fiscal project under John A. Macdonald; the second twenty-five years saw a grassroots tax revolt against that quasi-imperial project. It needed a war, but ultimately, the federal state came around to the principle and practice of social politics. The fiscal fairness achieved in the progressive income tax came at a terrible cost. It was a conservative response to radicalized public opinion, itself deeply fissured with cultural and racial overdetermination. The discovery that value was a social construction empowered the best and worst elements of public opinion. Nonetheless, principles of fiscal justice had entered into Canadian politics, percolating upwards from lower to higher jurisdictions. In the long run, they would prove useful weapons for undermining state racialization projects that caused racialized impoverishment (as such projects always do). Current fiscal reform and social justice movements should know that they have a long heritage. I recount the story of how fiscal federalism was constructed in Canada as a dialogue between the national and the local. The first section focuses on the negotiations between the colonial governments of British North America and the impact of Confederation upon them. The first chapter looks at the province of Canada, the second at Nova Scotia, the third at

16 Introduction

British Columbia, and the fourth picks up the national perspective with an analysis of debates about the tariff from the 1870s to the 1890s. In the second section, three chapters provide municipal case studies. Direct taxation of property in Canadian cities pitted the propertied and the public against one another and generated fiscal reform movements. In Canada, as in Britain and the United States, progressive fiscal reform infiltrated national politics from below. The final two chapters return to the federal arena: one looks at the reciprocity election of 1911 as a failed tax revolt, and the other traces the movement for progressive income tax. Through these different debates, it’s possible to see broad changes in the relationship between identity, property, community, and knowl­edge. Pre-Confederation debates about how to free Upper Canada from French-Canadian influence were debates about how to protect Upper Canadian wealth from supposedly poor and tax-evading French Cana­ dians. The new constitution disenfranchised poverty federally. But Nova Scotia noticed that it transferred surplus value from the Maritimes to central Canada, and so began the process of reasserting the claims of the poor. This was no mere buyout of a few easily corrupted politicians, but a substantial debate about empires, peripheries, and poverty, fully informed by historical reflection on the impoverishment of the home colonies, Scotland and Ireland. British Columbia shared the fiscal resentment of the imperial periphery but its response – racialization of that resentment with complaints of tax evasion by the Chinese and the Indigenous peoples – probably made it more rather than less vulnerable to federal fiscal predation. Montreal aimed at the problem by focusing its terms more squarely on class rather than race or religion or region. Montrealers advanced the claims of the poor on grounds of poverty itself, insisting that the poor had claims upon the state. Quebec political bosses largely beat back that tax revolt, though not without substantial damage to the liberal order. Wealthy business interests in Toronto staged their own tax revolt as they punched holes through existing tax codes. Meanwhile, populist reformers began to denounce taxes on industry as “slavery” and called for all taxes to be put on land values instead. Their success in western Canada began to worry big business, which saw a trend towards confiscatory taxation of capital. Businessmen stepped out from behind the politicians and began to campaign openly for direct, managerial control of the economy. They won that campaign in 1911 but then had to concede some ground in 1917 when a graduated income tax, unthinkable half a century earlier, was forced upon them by public opinion. French Canada, once seen as the cause of high taxes, became an



Wealth, Poverty, and Taxes 17

obstacle to high taxes. A socially laissez-faire federal state was reconstructed according to new standards of legitimacy that had grown up around local tax reform movements. Now the minimal federal government of mid-Victorian liberals would begin to be transformed into a large, bureaucratic, and interventionist administrative state, with huge consequences for social welfare. The federal state learned how to identify and negotiate around wealth and poverty so as to govern them more symmetrically and empirically. It learned, we may say, how to “commit sociology.” Power came from revenue and revenue could no longer be got on any other terms. Germaine Greer laughed at Rohinton Mistry’s description of poverty in India. Four months spent teaching in that country had persuaded her that it was not really so bad. But Mistry, who spent the first twenty-three years of his life in India, had a far more profound grasp of poverty there, and felt called upon to tell the world about the human side of it. I hope to do something of the same here. The desperate pleas of the poor for relief from harsh taxation do matter. They give this book its moral centre, as they gave progressive-era public debate its moral centre. Modern dignity requires that the poor not be too poor and that the state – the place where deliberate and consensual choices are made – not make dire poverty still direr. The point began to seem unexceptionable, but turning principle into practice was and remains difficult. Progressive reformers made impressive efforts to rise to the challenge, and we can learn much from them.

P art on e Constructing Fiscal Federalism

1 Confederation, or How Not to Run a Tax Revolt

Modern Canada, like the three countries that shaped it, France, Britain, and the United States, began with a tax revolt. However, where they had successful, transformative “country” revolutions against high-spending “court” governments, Canada’s founding tax revolt actually consolidated the “court” party’s hold on power, and for that reason it has passed largely unnoticed in the writings of historians. But the true story of Confederation cannot be properly understood unless the language of outraged taxpayers is given prominent place. Tax protests can be an efficient way to organize political dissent and demand accountability. But for mid-century Canadian reformers, it was axiomatic that politics was about the money. Much like the United States in 1787, Canada needed a new constitution because it needed a new tax deal. This chapter outlines the causes, negotiations, and effects of that deal, focusing on the view from the “United Province of Canada,” the colony that would become Ontario and Quebec. Canada’s fiscal problem was really George Brown’s problem. The reformminded editor of the Toronto Globe newspaper was a stern Presbyterian continually excited to outrage by the shenanigans of John A. Macdonald and his Liberal-Conservative Party. Nothing outraged him more than a perceived disparity of income and spending under Canada’s Union government. In the aftermath of popular uprisings in Upper and Lower Canada, in 1841 the two provinces were yoked together in a shared legislature. Lord Durham had advised the British government that the yoking would assimilate the French-speaking and disaffected population of Lower Canada to English norms. But assimilation never quite occurred. French-Canadian reformers united with English-Canadian reformers and refused to co-operate with the executive branch unless responsible

22

Constructing Fiscal Federalism

government was ceded, as indeed it was. Henceforth, government would be in the hands of the political party that won enough votes and seats to control the legislature. Durham had recommended representation by population, but the British government rejected the recommendation because it would have given Lower Canada more seats in the new united legislature, so each province received the same number of seats. This was a short-sighted policy because Lower Canada’s population was growing much more slowly than Upper Canada’s. A decade later, in 1851, Upper Canada (renamed Canada West) outnumbered Lower Canada (Canada East) in population; two decades later, the demographic disparities made the Union seem like a straitjacket to expansive-minded Upper Canadians. George Brown complained long, loudly, and often of the demographic disparity and of a parallel disparity of wealth. According to Brown, a prospering Upper Canadian population and economy was not just yoked to a primitive Lower Canadian peasantry: it was transferring its hardearned wealth to that peasantry. Whereas English Canadians broke up into political parties with incompatible outlooks, the French-Canadian public largely united behind its political leadership. According to Edward Gibbon Wakefield, in a letter to the British Spectator in 1842: “It is understood by everybody here whose opinions deserve any attention, that the French Canadians have got what may be termed the casting-vote in the representation of United Canada … Under the Union, the French cannot be the majority, but they can give the majority to any other considerable party. This, their balancing-power, is felt and acknowl­edged by all who really know much about Canada politics.”1 Governors tried to ward off responsible government by negotiating an alliance between the FrenchCanadian political compact and English-Canadian conservatives. They failed in the 1840s, but in the 1850s John A. Macdonald built such an alliance with the French-Canadian bleu leader George-Étienne Cartier. Brown’s fiscal complaints came to the forefront in 1859. That year, Macdonald’s finance minister, Alexander Tilloch Galt, introduced a tariff that went beyond mere revenue towards something approaching protection for Canadian manufactures. The tariff was necessitated by a debt crisis. Canadians had been unable to join the North American railway boom in the 1840s because they were too polarized politically. Once responsible government was achieved, enabling legislation encouraged all levels of government to invest speculatively in railways and railway debts soon accumulated. Railways did not generate the expected profits, and by the mid-1850s, many towns and railway companies were close to or actually in default, while the Union government was spending nearly



Confederation, or How Not to Run a Tax Revolt 23

half its revenue servicing debts. In 1856, a board of audit was installed to bring some fiscal rigour to the imbroglio, but the next year saw a continental financial meltdown as a western land and railway bubble in the United States burst and caused a run on eastern banks.2 In Canada, Galt responded with a tariff in 1859 that raised the ad valorem rate from 12.5 per cent to 20–25 per cent for different items. This was primarily a revenue tariff, but revenue now coincided with protection for Canadian manufactures, even as Galt publicly disavowed any protectionist leanings. Annual per capita taxation rose from $1.51 in 1851 to $2.02 in 1860. The new taxes on foreign manufactures offended Americans and helped to precipitate a new protectionism exemplified in their Merrill duties of 1861 and their abrogation of reciprocity in 1866.3 George Brown was by political inclination a free trader and “country” politician. He believed Adam Smith’s arguments that economic meddling by politicians made for economic inefficiency and corrupt politics. It was “country” orthodoxy that small-spending governments, supported by direct taxes and vigilantly scrutinized by ratepayers, made the best governments. Indirect taxes that hit the producing and poorer classes harder than the rich corrupted politics. In attacking “unfair” taxation in Canada, the reformers were mobilizing British standards of “fair” government, and Macdonald’s Canada suffered from comparison with Gladstone’s Britain. British historian Martin Daunton argues that the British state at the end of the Napoleonic Wars was a “tax-eater” state, generally characterized as “Old Corruption,” and that it was “undemocratic, bloated, and inefficient,” as well as inequitable to classes and interests. It spent the next half-century gaining public trust by cutting spending, and by replacing indirect taxation with direct to get the state out of discreditable negotiations with private interests. Tax reform was strategically placed at the centre of British politics in the 1840s by Robert Peel and William Gladstone, who largely transferred national finance from indirect to direct exaction, from customs and excise to income tax. Customs and excise were lucrative, but they were also regressive and clientelist, and denounced as such. They were regressive because they taxed the poor disproportionately to the rich; they were clientelist because they made the state an effective partner of businessmen who stood to profit from the state’s intervention: “dispersed costs, concentrated benefits,” according to the economic adage quoted by Andrew Smith in his study of Confederation. Peel began and Gladstone implemented the promise of a more liberal, austere, and fair state – although, critics observed, in trying to protect the poor from unfair taxation, the statesmen left them too unprotected from

24

Constructing Fiscal Federalism

market adversity. Daunton believes they saved the British state from growing popular distrust. Income tax was denounced by some interests on grounds that it privileged property over labour, industry, and savings, and some saw an excess of statism in its “inquisitorial” operations. Still, the Gladstonian “fiscal constitution” survived such challenges through the Victorian era, thanks in part to the Grand Old Man’s political longevity. The one-time High Church Anglican Tory became a Liberal fiscal hawk, for whom “fiscal probity became the new morality” and “the annual budget became a matter of high theatricality.”4 Modern Canada was constructed in the shadow of those debates. Brown sought to remake Canada in the image of that reformed British fiscal constitution. He also admired the income tax instituted in the United States from 1861 to 1870, to pay for the Civil War, but Britain mattered more because Canada was both financed from and modelled after Britain. Investment capital poured into the colony because it was British enough to seem as safe as Britain itself for investors but with the higher returns commonly found outside Britain.5 But the more that the City of London rallied around Macdonaldian Canada, the more the City’s British enemies gravitated to the attack. Liberals John Bright and Richard Cobden advocated an anti-imperial “Little England” position because colonies augmented military expenses and state cronyism. For British fiscal hawks, Macdonaldian governance did not just exemplify the problem; it exacerbated it in Britain. For George Brown, Macdonald’s fiscal policies violated two cardinal principles of British political economy: they were clientelist and the clients were the enemies of the tax-paying middle classes. Brown was incensed by a perceived disconnect between the people who paid the taxes and the people who benefitted from those taxes. Upper Canadians were more prosperous than Lower Canadians (for reasons extensively debated by historians as reflecting some balance of environmental and cultural causes),6 bought more imported goods, and so paid more taxes, but the revenues were disproportionally spent in Lower Canada. That was the way the Globe saw things, and from 1859, anti-tax editorials began to dominate its pages. Because his newspaper was the most widely read paper in the country, because the personal self-interest of western farmers was said to be directly injured, and because the fiscal arguments reinforced long-standing ethnic hostilities, Brown’s complaints made Canada increasingly ungovernable. It was said of Brown that “back in the townships where the Globe carried its weekly message he had the authority of a prophet. He created the Liberal party of Upper Canada.”7



Confederation, or How Not to Run a Tax Revolt 25

Brown had almost no evidence for his grievances because Canada had very little state bureaucracy to track government revenue, and most goods entered Canada at Montreal (and subsequent analysis tended to prove him wrong). Perforce, he propped up his rickety data with highly expressive language. Some examples: •

•

•

•

11 March 1859: “The New Tariff Hostile to Upper Canada.” The new tariff was “flagrantly unjust” because it taxed the “necessaries of daily life” more heavily than luxuries and it made western Canada “tributary” to Montreal. “Does Mr Galt expect that Upper Canada will patiently submit to so gross a wrong?” 6 June 1859: “Shall the Union Be Maintained?” “The revenues of the Province have been levied by indirect taxation, so as to be unduly borne by the people of Upper Canada – while the expenditures, on the contrary, have been so rigorously regulated by the double system, shilling for shilling, that where outlay has become advisable in one section, an equal sum, needed or not, has been expended on the other.” But the spending was growing lopsided as projects “framed expressly to buy votes in Lower Canada, were forthcoming in abundance.” Notwithstanding economic distress, heavy new taxes were imposed: “In defiance of large Upper Canada majorities, the duties on many necessaries of life were largely increased – the iron duty was doubled – books were taxed ten per cent, and a newspaper rate was reimposed.” 30 August 1859: “The Union – What Shall Be Done with It?” “Besides drawing freely upon Upper Canada in regard to taxation and all pecuniary concerns, Lower Canada enjoys the distinction of being absolute master in the legislature … Were human ingenuity exercised to the utmost to discover a political machine by which one section – and that section, Lower Canada – should inflict the greatest possible amount of insult, injury, and costly injustice upon its partner of legislation, no better contrivance than the Union could be devised.” Upper Canada will not much longer patiently submit but will seek dissolution. 6 December 1859: “Upper Canada vs. Lower Canada: The Public Expenditure.” “About one-half the population of Montreal are frugal French Canadians, who consume few foreign articles in their houses … Our cities and towns are as much superior to those of Lower Canada as is the wealth of the yeomen of York and Peel, to that of the habitans of Rimouski.” Macdonald himself had said when in opposition that “Two-thirds of the whole taxation of the country is paid by the people of Upper Canada.”

26 •

•

Constructing Fiscal Federalism

15 December 1859: “Upper Canada vs. Lower Canada.” “Of the $2,086,400 collected in Lower Canada during the year 1858, $1,673,841 was received in Montreal. The only way of arriving at an estimate of the actual amount of duty paid at Montreal and Quebec, but which is ultimately disbursed by the Upper Canadian consumer, is by enquiries among those familiar with the trade of the two places. Many persons have been consulted, but we have never heard of one who estimated the proportion of goods sold to Upper Canada at less than one half, while some rate it as high as three-fourths.” 14 January 1860: “The Cost to Upper Canada.” “Upper Canada contributes three-fourths of the entire revenue … Give us a separation from Lower Canada with a ‘joint authority’ for a few matters which are common to both Provinces, and we shall reduce our expenses instead of increasing them. Most assuredly Upper Canada will no longer continue to pay $5.60 per head, while Lower Canada pays but $2.35.”

There were many more jeremiads, as in May 1860, when the Globe complained that “it is Lower Canada, with the aid of a miserable Upper Canada minority, which makes laws, imposes taxation, administers patronage, and assumes the entire functions of legislation and government for the whole Province.” Upper Canadian jurymen were paid by local taxes, Lower Canadian jurymen from the general revenue. To pay for local justice, Upper Canada raised $2,694,448 by fees and municipal taxation; Lower Canada raised $630,694 by fees and “nothing by taxation.”8 The Clear Grits, agrarian radicals from the western farming regions of Upper Canada, concurred with the analysis. Grit William McDougall gave a typical speech in April 1859: “Now, it has been admitted again and again that Upper Canada paid a larger amount to this Consolidated Fund than Lower Canada. The people of Lower Canada, or the great majority of them – especially the habitans – were simple in their habits, lived cheaply, and did not require so much of the products of foreign labour as the people of Upper Canada … Did gentlemen suppose that the people of Upper Canada would patiently submit to such an imposition as was now proposed?”9 The complaint that 70 per cent of all taxes were paid by Upper Canada was raised at a Reform Convention of Upper Canada in 1859 and prompted warnings of tax revolt: “There will be very little paid in the shape of taxes by Upper Canadians.”10 The complaint resounded across British North America. The Halifax Morning Chronicle declared in 1864: “The half civilized people of the sterile shores of the Saguenay – the shivering squatters away up by the Temiscouata



Confederation, or How Not to Run a Tax Revolt 27

Lake – had more political power vested in them than the wealthy, and substantial farmers and tradesmen on the shores of Lake Huron, or Lake Erie. The latter paid the taxes, the former controlled them.” Brown’s unrelenting campaign against the union, according to P.B. Waite, made “effective government in Canada an impossibility. The Brownite Reformers provided the accumulating force that was slowly destroying the compromises and the accommodations, the whole ramshackle, quasi-federal structure of the Union.”11 Brown did not really mean “rep by pop” but something like “rep by prop pop,” that is, greater power for the more propertied classes. Rep by pop had no precedent in Britain, where the forty-shillings franchise (voters must own property worth forty shillings rental income per year) disenfranchised 95 per cent of the population. But in Britain, the more propertied few governed the less propertied many, and according to British constitutional reasoning, the system safeguarded property, authority, and deferential social relationships. In Canada, the less propertied many governed the more propertied few, and the consequence must therefore be fiscal transfers from rich to poor (a.k.a. “robbery”) and instability of property and authority. The problem with the Union wasn’t just that it empowered one community over another but that it empowered a poor people over a rich one. For Brown, French Canadians didn’t deserve their political influence because they were poorer than English Canadians. French Canadians bought little because they had little. Poverty and a primitive outlook ran together for mid-Victorian liberals dreaming of material prosperity, especially in association with Catholicism. As Brown understood the case, Catholics tithed money that they should spend on material comfort and public infrastructure. The Church appropriated surplus value in Lower Canada and nurtured a primitive, anti-commercial outlook that kept the people impoverished but united. Catholicism stoked cultural solidarity and politicians translated that cultural solidarity into political power, that is, privileged access to state resources. Where Protestant churches in Upper Canada quarrelled violently over churchstate relations, the Catholic Church in Quebec commanded solidarity. It was enjoying a political, social, economic, and cultural renaissance thanks to highly strategic leadership, above all from Ignace Bourget, the ultramontane bishop of Montreal, that built up the Church as a state within the state and fought state taxation of Church property fiercely and effectively.12 Catholics in Upper Canada, mostly Irish rather than FrenchCanadian, were similarly denounced (erroneously) in the Globe of the 1850s as poor, ignorant, dirty, diseased, and criminal.13 But political

28

Constructing Fiscal Federalism

combination in Lower Canada made it the more serious threat because it put the state largely in the hands of the priests. Brown regularly railed against “priestly despotism,” “ecclesiastical despotism,” and “tyranny” that saw Catholics use the taxing state to transfer public wealth to taxexempt, Catholic ownership. In 1854, a representative editorial declared: “If we are ranged against Romanists as a class, it is because they require public money to support their sectarian schools, because they receive the authority of the Legislature to tax their people, and to accumulate lands in a manner dangerous to the state.”14 In 1863, another, reprinted from the Protestant Montreal Witness, complained that where Protestants were in a minority in Lower Canada, their taxes “– which may be equal to all the taxes of their poorer neighbours put together – will be wrenched from them for the purposes of teaching the Roman Cathechism, or the devotions of Ste Philome, and keeping alive the prejudices of creed and race.” Such a Protestant was “taxed, not for his own benefit, but taxed against himself – taxed so that his money may be spent by others to his personal detriment –taxed so as to take away from his children the means of education – taxed so as to make the social position of himself and children more uncomfortable in the future – taxed so as to be more and more securely surrounded by a separating fence of superstition, bigotry, and religious hatred.”15 Canada was losing the economic “race” to the United States because the Canadian state drained the wealth of Canada and channeled it to institutions that aimed more at obstructing than facilitating liberal modernity. Governments that gave money away pauperized the beneficiaries by undermining self-reliance. This was orthodox political economy, following Thomas Malthus’s argument in 1798 that charity turned incidental poverty into pauperism: “Do not give to the poor lest you actually create poverty.”16 Brown’s depiction of fiscal transfers from wealthy Upper Canada to impoverished Lower Canada needs some correction. Firstly, although Upper Canada had more ratepayers than Lower Canada, per capita ratepayer wealth was fairly even. In 1865, Upper Canada accounted for 59 per cent of Canadian ratepayers and 59 per cent of the assessed value of real estate.17 Furthermore, figures showed that the average Lower Canadian ratepayer held slightly more assessed property than the average Upper Canadian ratepayer ($808 to $798 per capita). Here again, Brown had to paper over the rickety data with virulent rhetoric. Secondly, the bleu press in Lower Canada denied any such fiscal transfers. It pointed out that Lower Canada had assumed Upper Canada’s heavy debts at the time of the Union, and their own calculations of infrastructure spending



Confederation, or How Not to Run a Tax Revolt 29

showed $35 million went to Upper Canada and $20 million to Lower Canada.18 Thirdly, if spending was redistributive, redistribution was upward towards the wealthy rather than downward towards the poor. The average rural farmer was poorer in Lower than Upper Canada, but wealth was also more concentrated there. Montreal was the first city in Canada to experience industrialization. Increasingly from the 1840s, waged labour and rents increased as work moved into factories around the Lachine Canal and working-class suburbs sprouted around them. Alongside the new working-class population emerged a new corporate elite as industrial capitalism began to remake social relationships.19 The big spending items in the 1850s were canals and railways, and commutation of seigneurial tenure (turning it into freehold) for which the large landowners were the first to apply.20 Upper Canada needed more canals than Lower Canada, and while the Grand Trunk Railway (gtr) had its head office in Montreal, more rail lines were built in the western regions, to get produce of the western frontier to transatlantic markets. Railways brought prosperity to that western frontier, but they also increased Montreal’s importance as the financial and industrial centre of Canada and the political centre of gravity. Westerners resented that concentration of fiscal and political power and the reconfiguration of political and economic relations that came with it. Canadian politicians were latecomers to the railway boom and determined to use the state to attract the necessary investment capital. Railways inaugurated new financial forms as bonds, hitherto used exclusively for state finance, were now applied to industrial corporations. New relations were created between the state and the investing classes, with tremendous opportunities for transferring public wealth – taxes – to those investing classes. Propertied, savvy investors, like George-Étienne Cartier, began to turn from land towards railway stock. When the railway bubble burst in 1857, the Canadian government had to infuse the gtr with what R.T. Naylor describes as “a never-ending series of special relief measures, some voted in parliament, some granted by order-in-council, and some just gratuitously handed out by particular ministers on their own authority.”21 The Canadian state began to hemorrhage money to the investing classes. Historian Frank Underhill described the gtr as “the bête noire of the Globe and the Clear Grits” and argued that it, rather than the Catholic Church, occupied “the major portion of the Globe’s space during the decade before Confederation.”22 For all the complaint of shivering peasants, in short, the real objection was the emergence of a modern industrial economy in Lower Canada with its extremes of wealth and poverty. Upper Canada’s resentment

30

Constructing Fiscal Federalism

reflected its self-understanding as composed of “middling” people – farmers, artisans, liberal professionals – without the economic extremes emerging in Lower Canada. Andrew C. Holman shows that mid-century, Upper Canadians saw themselves as a classless society, a “poor man’s country,” where poverty was, at worst, seasonal and, at best, a spur to the sober and industrious habits that must lead to “comparative affluence and independence.”23 But independence required economic autonomy – it required property. Waged labourers were thought to be too economically dependent on their employers to exercise political autonomy, as well as too ignorant to resist demagoguery. Liberal political economy was at threat wherever the public was too democratic and the elite too wealthy. Macdonald and Cartier seemed, to Upper Canadian reformers, to be using the state to transfer middle-class wealth to the enemies of the middle class: the rich and the poor. For such reformers, French-Canadian “political combination” was the enabling force for illiberal governance. English and French in Canada were seen to resemble English and French outside Canada. Pundits blamed the French Revolution on that country’s lack of a broadly prospering middle class (a category that overlapped with “yeomanry”), in contrast to an England seen to be stabilized by its middle class.24 Lord Durham built his political career by advocating the rights of the middle classes, and Brown’s critique built on Durham’s. From that perspective, French Canadians were politically assimilated enough to be ruthlessly efficient users of British parliamentary forms, but their retrograde nationalism let them wring subsidies from the national government. They must now learn fiscal disciplines comparable to the political ones. Durham had provided for political assimilation by swamping the French-Canadian vote in the English-Canadian one in a united legislature and by creating municipal institutions that would teach fiscal disciplines. Liberal voters typically voted with their tax bills in mind, and they learned that fiscal discipline from their experience of direct municipal taxation. In 1838, at the time of Durham’s tour, there were almost no municipal charters in British North America because authorities distrusted local public opinion. Durham blamed that absence for an illiberal, popular French-Canadian statism. He had advocated a “Durham franchise” of rates (taxes) and residency as a standard municipal franchise in Britain, and suggested the same for Canada. Montreal and Quebec City received the Durham franchise upon incorporation in 1840, but fiscal transfers blunted the assimilation project. If they could be cut off, then direct local taxation would teach French Canada to live within its means and to trade nationalism for liberalism. But, the Globe



Confederation, or How Not to Run a Tax Revolt 31

reflected mournfully in 1863, direct taxation could not come in a Canada so heavily dominated by Lower Canada. An editorial made the argument for fiscal discipline, only to continue: “But – and the but embraces the practical part of the case – what Finance Minister would propose direct taxation while Lower Canada maintains her present control over the affairs of the Province? He would not remain in office a week after committing such an act of folly. Lower Canada has ‘the advantage’ just now, and will not give it up. The Lower Canadians will not submit to direct taxation, unless they see that the present system will no longer be submitted to by Upper Canada.”25 French Canadians were thought to be particularly tax averse. In the 1800s, they opposed direct taxes on land, preferring indirect taxes on consumption. In the 1820s, they paralyzed the government by refusing money votes. In the 1840s, they resisted compulsory school taxes in what was described as a “candle-snuffers” war – a “guerre des éteignoirs.”26 Historians have seen a clash of civilizations between “a governing class  whose deepest instincts were towards improvement, expansion, and prosperity” and “the sullen, inert opposition of men who accepted unquestioningly the purposes, pursuits, and habits of their forefathers.”27 But French-Canada’s tax resistance reflected not its resistance to but, rather, its mastery of British political forms. Indeed, as, Jack Little shows, Lower Canadians did build up local institutions, even if they resented a school system more centrally organized and managed than west of the Ottawa River.28 Again, lack of evidence was no bar to recrimination. In November 1862, the Globe blamed the “failure” of public schooling on “the opposition offered by the ignorant populace, in many districts, to the collecting of school assessments. In some cases the authorities had to call out the militia to enforce the tax.”29 Schools educated children, taxes educated adults. But how to get that consent when “political combination” checked both education and taxation? Further weakening the Globe’s case, Upper Canadian municipalities were more improvident than their Lower Canadian counterparts, more invested in the railway boom.30 When Macdonald and Cartier began to top up insolvent municipalities in Upper Canada, reform outrage increased. The bailout, it was argued, would reward improvidence and corrupt Upper Canada after the fashion of Lower Canada. The fact that the most indebted municipalities were “represented in that House by gentlemen who sat behind the treasury benches” was not lost on the Grits. Lower Canadian reformers agreed: “Thus, to maintain themselves in power, the Ministry satisfy conflicting interests by throwing half a million pounds to

32

Constructing Fiscal Federalism

French Canadian farmers with one hand, and as much more to defaulting Upper Canada municipalities with the other, and the expense is borne by heaping new taxes on the people.”31 Rep by pop could not stop the tax transfers; for that, rep by prop was required. Part of the problem was the franchise. Because land was cheaper in Canada than in Britain, a forty-shilling freehold enfranchised many more in Canada than in Britain. In the aftermath of responsible government, colonial statesmen began to debate that franchise and to experiment with it, sometimes liberalizing requirements and other times making them more stringent. The leading architects of Confederation distrusted democracy and sought to entrench the rule of property. John A. Macdonald, George-Étienne Cartier, A.T. Galt, John Sandfield Macdonald, Charles Tupper, Joseph Howe, to name a few, saw in democracy an Americanstyle demagoguery. Cartier described property as the element that must govern the world.32 All believed that the political weight of the propertied classes had to be specially protected.33 Rep by pop would not resolve the real problem making Canada ungovernable because it would not impair Macdonald’s power base. In a private letter to a Montreal friend, written in 1856, Macdonald reflected on that base in reference to the lessons of British political history: “Supposing the numerical preponderance of British in Canada became much greater than it is, I think the French would give more trouble than they are said now to do. At present, they divide, as we do, they are split up into several sections, & are governed more or less by defined principles of action. As they become smaller and feebler, so they will be more united, from a sense of self preservation, they will act as one man & hold the balance of power. Look how in a house of 600 Pitt was supported thro’ Dundas by the whole Scotch vote, & remember that O Connell, with his tail, absolutely governed England after the Litchfield House bargain. So long as the French have 20 votes they will be a power, & must be conciliated.”34 French Canadians did indeed remain effective kingmakers long after Confederation. Macdonald argued that where public opinion ruled – as it did in Canada – politicians must “stoop to conquer” by appealing to public opinion. Based in Kingston, a loyalist stronghold, Macdonald distrusted Brown’s western stronghold as “occupied by Yankees and Covenanters, in fact the most yeasty and unsafe of populations.” Conservatives in Canada West needed French-Canadian reinforcement to maintain power, so that the public opinion to be conquered by stooping was disproportionately French Canadian. Durham had promised assimilation but the would-be



Confederation, or How Not to Run a Tax Revolt 33

assimilators and assimilatees must both compromise to find common ground. Macdonald spent his life constructing a liberal-conservative middle ground that Upper Canadian nativists spent their lives trying to deconstruct. The classic texts of Canadian history note that basic fact, but not the fiscal reading of it. Upper Canadians believed that the constitution defied the truths of liberal political economy. Historians who have understood Confederation as distant from everyday life ignore the extent to which reformers saw the pre-Confederation Canadian state as shaped by an illiberal popular culture that resisted the promised cultural and fiscal assimilation. Brown saw illiberal oligopoly building in Macdonald’s governing project and he blamed French Canada for it. Brown got Macdonald largely right but French Canada largely wrong. His misreading was grounded in orthodox economic theory and reveals the poverty of that theory. Upper Canadians subscribed to a fantasy of liberal rule as middle-class hegemony, a world without domination or poverty. Brown thought that in the new nation, Upper Canada or Ontario could rule Canada in the same way that Britain ruled its regions: with a fair state and free trade. That Britain was on display in the Great Exhibition held in London in 1851, which was designed to secure a quasi-spontaneous consent to rule by and of liberty. But that Britain was a fantasy, and it looked very different from the perspective of the conquered, including Indigenous, French, and Irish Canadians. Those communities were precociously aware that even as liberals preached an identity-neutral legal equality, they invested the distinction between propertied and unpropertied with crude cultural overtones that impeded legal equality. Propertied voters didn’t just claim that property should rule. They also demanded the coercive reconstruction of the poor whom they denounced as idle, insular, ignorant, and prone to corruption and violence. As we shall see, liberal reformers in the new Dominion espoused flagrantly illiberal and oppressive projects of racialized assimilation because they had a narrow understanding of rational agency. Whenever someone who could be racialized disagreed with them, they blamed racialized incapacity for the disagreement and demanded that the political process, and especially money votes, be insulated from that incapacity. To insist on the fiscal implications of race and religion was to rebrand ugly prejudices and passions so as to make them paradigmatic expressions of rational, liberal self-interest. Where Brown saw himself as speaking for a broad range of middling Upper Canadians, Lower Canadian politicians always spoke to a binary of the people versus the propertied. Reference to that binary continually

34

Constructing Fiscal Federalism

peppered political debates. It pitted Montreal against the rest of the province, and in Montreal, it pitted the wealthy anglophones against a working-class public that was both French and Irish. The language of that confrontation was second nature to Montrealers because economic inequality was a stark part of everyday life, from the luxurious mansions of Mount Royal to the rear tenements of the lower town. The propertied controlled city hall, including the all-powerful Finance Committee, which remained in English-Canadian hands until 1882. The people had their own channels of influence, which they exercised at the polls and in the streets. The forty-shilling freehold franchise ensured that the broad mass of French Canadians could vote. They were being disenfranchised municipally by “reformers” who raised the franchise to keep the vote in middle-class rather than labourer hands. But the people still voted provincially and still exercised their opinion in rowdy street demonstrations.35 The people had a vibrant moral economy, grounded in shared cultural, social, and economic experiences that populist politicians continually stoked and brandished. French and Irish councillors who represented the poorer suburbs to the east and south demanded greater rights for the people and staged noisy public gatherings to reinforce their claims. Anglo-Protestant councillors from the western part of the city claimed greater rights by reason of their heavier tax burden. Every civic resolution ran that gauntlet – even so simple a question as whether to situate a new smallpox hospital amongst the rich or the poor. In 1874, one English-speaking councillor argued that “though the Roman Catholics were greater in number, the Protestants paid the greater amount of taxes,” prompting a French-speaking councillor to reply that “it was the people who caught the small-pox and not the riches.” In 1878, during an argument about the costs of policing parades, an anglophone councillor remarked that “half the city taxes were paid by Protestants,” which drew the immediate response: “Because they are richer.”36 Ratepayer pressure continually pushed civic spending towards the richer rather than the poorer districts, contributing to terrible disparities of morbidity and mortality.37 But ratepayers still resented the fiscal transfers. Henri Julien captured “The Montreal City Taxes: The Two Sides of the Question” in a cartoon in 1876 that showed a well-to-do man in frock coat, waistcoat, and top hat who manages to look thunderously at both the tax bill for 1876 (which he obviously compares to a lower tax bill for 1875 held in the other hand) and at a working man in a bowler hat, with surveying equipment in his pocket, who greets the tax bill with a broad grin. Behind them, a woman with one hand raised in supplication, pleads with an impassivelooking official behind the counter (see figure 1.1).



Confederation, or How Not to Run a Tax Revolt 35

Figure 1.1  Henri Julien, “The Montreal City Taxes. The Two Sides of the Question” (Canadian Illustrated News, 2 September 1876). Julien captures the social tensions and human dramas hard-wired in relations of exaction. (Image courtesy of Rare Books and Special Collections, McGill University)

Again, there was no simple binary of rich versus poor. Both the municipal and the provincial state worked to transfer wealth from the people to the propertied classes. Viewed from the perspective of ethnicity, taxes were redistributive; viewed from the perspective of class, they were not. Some money trickled down to ordinary voters, especially in hard times, but much went to corrupt politicians and officials, landowners, investors, and contractors. Macdonald’s government was clientelist, in that it exchanged goods and services for political support. Clientelism remains the scourge of dysfunctional states, according to liberal political theorists who insist that state modernization must have impersonal state-citizen relationships.38 The gold standard of clientelism was Tammany Hall in

36

Constructing Fiscal Federalism

New York City, where the Tweed ring spent money according to a pattern that Theda Skocpol describes as responsive but not redistributive. Politicians extracted revenue from the many and reallocated it amongst the few, while performing ostentatious but fiscally meagre rituals of responsiveness to the wider population. Tammany’s George Washington Plunkitt memorably explained the logic of negotiation as going “right down among the poor families” to extend help when and where it was most needed. “If there’s a fire in Ninth, Tenth, or Eleventh Avenue, for example, any hour of the day or night, I’m usually there with some of my election district captains as soon as the fire engines. If a family is burned out I don’t ask whether they are Republicans or Democrats, and I don’t refer them to the Charity Organization Society, which would investigate their case in a month or two and decide they were worthy of help about the time they are dead from starvation. I just get quarters for them, buy clothes for them if their clothes were burned up, and fix them up until they get things runnin’ again. It’s philanthropy, but its politics, too – mighty good politics.”39 Many Canadian politicians – federal, provincial and municipal – behaved a lot like Plunkitt. They nurtured personal loyalties and gave back some small part of the wealth they extracted, but the larger pattern was crony capitalism and regressive taxation. Reformers blamed the impoverished, primitive French-Canadian public for the persistence of crony capitalism. In 1909, following the publication of a report on corruption in Montreal, the (Canadian-born) Harvard professor of municipal institutions, William Bennett Munro, described it as “not outmatched by New York City even in the days of the Tweed ring.”40 Clientelism in tax collection is particularly corrosive because people evade taxes that they feel are unfairly collected. Macdonald and Cartier were seen to translate local clientelism into a national paradigm. The tariff was the primary instrument for the fiscal transfer, but it was not the only one. Tariffs taxed foreign goods when they entered the country, thereby imposing taxes on those goods, but they also protected homeproduced goods so that their producers could charge a higher price than open competition permitted. The Galt tariff of 1859 was only the beginning. In subsequent years, Macdonald pushed the tariff and local prices far higher. Moreover, a government that could impose taxes on goods was continually subjected to lobbying and bribery, which went to party rather than state coffers. Macdonald continually transferred money and influence between state and party. But insofar as clientelism shaded into social networks, it shaded into discretion that respected long-standing political compromises. Canadian



Confederation, or How Not to Run a Tax Revolt 37

rights were never as abstract and individualized as American rights: they were the rights of the British subject and were constructed historically, in negotiations dating back to the Magna Carta (itself a tax deal). In Canada, those rights had a pre-liberal air. They were grounded in the negotiations around the Conquest of 1763 that protected pre-existing FrenchCanadian and Indigenous property rights (Indigenous formally and not effectively; French Canadian more informally and effectively). Historic accommodations done before the advent of liberal modernity, when governors didn’t want to impose positive law on conquered communities, came under threat as a liberal order framework dismantled obstructions to market hegemony.41 There was a fine line between historic rights and political clientelism. Canadian politicians played upon those distinctions with the virtuosity of concert violinists. Abolition of discretion came close to meaning the abolition of the French-Canadian, Catholic community’s ability to protect that historic way of doing things. From that perspective, clientelism was a form of nationalism with deep roots in French-Canadian political culture. This is not to say that French-Canadian nationalism was no more than corruption; rather, it had political and fiscal implications that liberal reformers called corruption. But the basic principle was the state’s responsiveness to an organized and insistent public opinion. Quebecers were better at organizing politically, and liberal reformers saw illiberal corruption at work in the priestcraft, backdoor negotiations, and popular demonstrations that made public opinion there a political force. George-Étienne Cartier owed his influence to an eclectic alliance including the Catholic Church that had educated him, French-Canadian associations and newspapers, and moneyed interests. Cartier chaired the railway committee for the fourteen years before Confederation, and under his watch, Montreal was the epicentre of railway finance and politics. The Grand Trunk Railway, the Bank of Montreal, the government, and party coffers all intertwined in complicated and lucrative ways. Where Macdonald owed his career to his ability to make French-Canadian political power flow from east to west, Cartier owed his career to his ability to make English-Canadian wealth flow from west to east. His early public speeches in the mid-1840s, advocating a projected railway to Portland, insisted upon the connection: “The prosperity of Montreal depends upon its position as the entrepôt of the commerce of the West.” Quoting that remark, historian Frank Underhill exclaims: “Here in 1846 is the whole gospel of the Montreal mercantile class upon the lips of a French Canadian.”42 Because he controlled close to half the votes in the legislative assembly of the United Canadas, Cartier could veto

38

Constructing Fiscal Federalism

constitutional reforms and obstruct Brown’s demands for reform or dissolution. He explained his logic in 1864: “He was not one of those who would like to see Upper and Lower Canada separated into distinct Provinces – one having the right to make its tariff, and the other the same right, both thus warring upon each other. What would be the consequence of this if permitted? The city of Montreal would be made a city in the corner. He had no reluctance to confess it, that the prosperity of Montreal was due, to a great extent, to Lower Canada, but to a still greater extent to the trade of Upper Canada. (Loud cheers.) … He would never consent to any system of Government under which Upper and Lower Canada should have a distinct power with regard to the tariff, trade, and commerce of the country.”43 For Cartier, money both reflected and recapitulated relations of power. He was more interested in powers than rights: French Canada had “rights” because it was in a position to demand them forcibly. Group rights, like the right of religion or language, existed where power existed. Identity existed concretely, in visible qualities that its bearers were prepared to uphold in heated political debate or by more direct means, like King John’s baronetcy. If you were not in a position to advocate for your identity, then it had no political existence. Political debate worked to show everyone just how much identity and power a given spokesman wielded and to facilitate alliance building. Whenever Macdonald wanted to woo a given community, he would teach it to demand group rights by organizing politically. Cartier exemplified the argument and so Cartier did the pedagogical work. He went with Macdonald to Nova Scotia in 1868 to negotiate “better terms” and to British Columbia in 1871 to persuade Confederation-minded locals that it wasn’t a wagon road that they needed but a transcontinental railway. Thus did a need become a right in Macdonaldian Canada. Budgets saw identity brokerage translated into practical politics. Finance minister A.T. Galt represented English-speaking Protestants in the Eastern Townships, while other politicians reflected other interests: Thomas D’Arcy McGee brokered Irish-Catholic demands in Montreal and Toronto.44 But brokerage politics that gave Lower Canada the whip hand seemed, to George Brown, to undermine middleclass hegemony. The middle classes, fresh from their fight for responsible government, must reassert their right to rule against corruption and violence emanating from both ends of the spectrum, the patrician and the plebeian. Frustrated by Cartier’s veto on reform, Brown rallied supporters to veto new spending under the unreformed system and to demand greater austerity and greater accountability that would track and limit



Confederation, or How Not to Run a Tax Revolt 39

interprovincial transfers. He sought to constitutionalize the mechanisms of responsiveness and so undermine traditional brokerage politics. Macdonald and Cartier fought hard for brokerage politics. Macdonald preferred to keep as much of his spending as possible subject to quiet, backroom negotiation rather than formal debate and control in the legislature. Not more but less transparency and formality provided the better protection for property and liberal economics, on that reading, because patronage created no precedent or entitlement. But there were some further protections for property that Macdonald carefully stickhandled to maintain Canadian political and fiscal equilibriums. The transfers must remain as close to invisible as possible. Macdonald’s fiscal bureaucracy was so minimal and inadequate that Upper Canada’s complaints of fiscal transfers through the tariff remained nebulous and, indeed, basic questions about the country’s gross national product before 1920 remain speculative and controversial.45 As well, Macdonald hard-wired some powerful champions of property into the bn a Act. His sympathies were Burkean ones. Edmund Burke had argued, in the late eighteenth century, that large landed proprietors were a kind of political ballast that protected small proprietors who would otherwise be too weak to protect themselves from a predatory state. During the Confederation debates, Macdonald advocated an appointed upper house on grounds that “we must protect the rights of minorities, and the rich are always fewer in number than the poor.”46 Members must be at least thirty years of age and own $4,000 of real property – an astronomically high qualification. Writing property rights into the Canadian constitution counterbalanced the practical transfers. Macdonald also bought off those highly propertied allies with fiscal transfers. His letter of 1856 observed that English Canadians in the province actually received the lion’s share of patronage: “It would surprise you to go over the names of Officials in a Lower Canada Almanac & reckon the ascendency you yet hold of official positions. Take care that the French don’t find it out & make a Counter Cry.”47 Macdonald knew that racialization of politics would threaten the cozy arrangement. The whole letter amounted to an argument that Montreal financier John Rose must curb his resentment of French Canadians: they were numerically superior and must be treated as such, lest they make political capital of the disproportionate spending. The alliance between wealth and poverty, Protestant and Catholic, English and French was always a ramshackle one that required terrific feats of diplomacy from Macdonald and Cartier who simultaneously paid off and disciplined the wealthy.

40

Constructing Fiscal Federalism

The diplomacy became harder to pull off as Brown’s arguments convinced more and more Upper Canadians that transfers of wealth made the English slaves of the French. Macdonald found it harder to get enough Upper Canadian support to lend a patina of respectability to his Lower Canadian stronghold. Cartier represented the real electoral power behind their government. Macdonald had to spend more to consolidate power, but the more he spent, the more Brown’s criticisms resonated. Macdonald had some other basic principles of appeal, of course, and above all the promise that he would sustain British identity and build prosperity.48 Galt’s tariff, which discriminated against British manufactures, weakened those planks, but by the early 1860s, civil war in the United States posed a much greater threat. As Britain and the United States swapped bellicose rhetoric, Canada suddenly seemed vulnerable. The colony had always relied on British protection as its front line of defence, but now the British looked at the American military machine and began to wonder if they were willing to fight for Canada on the new scale demanded. Certainly Canada must make some effort at self-defence as well, but because Canada was so much smaller than the United States, it could only be a nominal effort. In the spring of 1862, Macdonald’s government introduced a militia bill that would cost the country about a million dollars. The sum was laughably inadequate, but it was also a new draw on a beleaguered public purse at a time when the prime minister’s opponents believed that the “chief danger in Canada just now arises from the embarrassed finances of the Government,” as Brown had recently remarked in the Globe (regarding the appointment of a new adjutant general). John A. Macdonald thought wrongly if he thought that an appeal to loyalty would carry the bill. Lower Canada and reformers rejected the new militia taxes and the Macdonald-Cartier coalition fell, amidst furious accusations of cowardice and disloyalty from not only the Tories but even British sympathizers.49 The massed armies of the United States were apparently as nothing compared to the threat posed to the country by Macdonaldian fiscal irresponsibility. As fighting in the United States intensified, the mood in Canada changed. The next government did manage to pass a militia bill, but Macdonald had clearly overestimated patriotic fervour. His drinking binge that spring didn’t help, nor did the fact that most of his initiatives were partisan or nepotistic (the adjutant in question looked particularly incompetent), not to say corrupt. But the bigger lesson was that fiscal weakness undermined even the most non-partisan initiatives.



Confederation, or How Not to Run a Tax Revolt 41

Macdonald and Cartier stepped back to let their rivals have a chance to run the country, but two years later that ramshackle coalition fell in its turn. Upper and Lower Canada glared at one another too starkly. Some way had to be found to defuse that confrontation – some new constitutional order. The obvious choices were either to dissolve the union, or to federate it (giving each colony its own legislature with some overarching parliament for common interests), or to enlarge it by bringing in the other bna provinces. Restoring the two Canadas would be vetoed by Cartier, would damage Canada’s credit rating (because two small countries could not command the same confidence on the English money market), and would probably make them vulnerable to annexation by the United States, where repeal of economic reciprocity in 1864 was the beginning of a new, hard line intended to starve British North America into annexation. Dissolution seemed to point towards bankruptcy and / or Americanization. That same logic made bna union an attractive choice: a bigger country meant a bigger debt allowance. There were many practical objections, but Confederation would mitigate the fiscal confrontation and the constitutional deadlock, and improve the book value of the country. Galt and D’Arcy McGee had advocated British North American union for years, and in 1864, Cartier, Brown, and Macdonald agreed to unite with them behind an overture to the four Atlantic provinces: Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland. Together, these men represented effective political power in Canada. If they could agree on terms, then the deal would be passed. The Canadians sailed up the St Lawrence to woo the Atlantic provinces. There was lots to debate but taxes remained the bedrock issue for negotiation. Speaking in Halifax in 1864, Brown declared that Upper Canada paid “full three-fourths of the whole national taxation” but did not reap commensurate power. “A systematic agitation for the address of this great wrong was commenced in Upper Canada … and we scouted the idea of building more railways from the public chest until the taxpayers who were to bear the burden of their construction had their just share of control over the public purse … a dead lock was almost inevitable; when Mr Cartier, who wields great power in Lower Canada, boldly and manfully took the ground, that this evil must be met, and he would meet it.” His remarks were reprinted matter-of-factly in the bleu press which largely predicted easy resolution to fiscal negotiations.50 But the result was very much a made-in-Canada scheme that addressed Canadian rather than Atlantic problems. The remainder of this chapter examines

42

Constructing Fiscal Federalism

Canadian fiscal perspectives upon Confederation; the next chapter turns to Maritime perspectives. The key fiscal question in Canada was whether the new constitution would reflect the old brokerage politics. Cartier and Macdonald used the state to make economic and political power flow back and forth across the two colonies. Would the coming reform constitutionalize those relationships, turn a blind eye to them, or sever them? Who would be hived: Brown or Macdonald? This was a complicated question that required reasoning between formal and informal arrangements, and there could be no clear winner until the constitution had been in practical operation for a few years. Airy proposals voiced in the summer of 1864 were turned into concrete terms at the Quebec Conference that fall, with Galt and Brown representing Canadian fiscal interests. Galt, a wealthy land speculator and investor from the Eastern Townships, like Cartier pursued a commercial empire centred on Montreal that encompassed Upper Canada.51 If Brown and Galt could agree on terms, Confederation was achievable; if they could not, dissolution must follow. Their solution was unlikely to rest on direct taxation. In 1860, Galt had declared that direct taxation would be “perfectly hopeless” for purposes of national revenue: “We neither possess the required machinery to do it, nor are the people satisfied it is the most correct principle.”52 On the first day of the Quebec Conference, Galt declared that “many of us are of the opinion that direct taxation is what is best, but we must not insist on our individual opinions.”53 Brown wanted direct taxation to cover all local government expenses but he knew the thing was impossible. “Our friends in Lower Canada, I am afraid, have a constitutional disinclination to direct taxation [and] all the Lower Provinces stood in exactly the same position. They have not a municipal system such as we have, discharging many of the functions of government; but their General Government performs all the duties which in Upper Canada devolve upon our municipal councils, as well as upon Parliament.” Atlantic Canadians used general revenues, primarily drawn from tariffs, Crown land sales, and royalties, to  pay for bridges, roads, wharves, schools, and other improvements. Another commentator was less tactful: “With them the provincial government was a nursing mother and paid for everything … The devotion to indirect taxation, which is not absent from provinces with municipal bodies, was to them an all-absorbing passion. The Canadian delegates were unsympathetic.”54 Brown and Galt urged the Atlantic Canadians to modernize their local politics and build up municipal taxation.



Confederation, or How Not to Run a Tax Revolt 43

Figure 1.2  Delegates to the Quebec Conference, October 1864. The key English-Canada brokers, A.T. Galt, George Brown, and John A. Macdonald (the latter in white trousers), cluster grimly in the foreground to the left. The successful region / minority brokers cluster around É.P. Taché (presiding, centre): Charles Tupper to his right, and Leonard Tilley, George-Étienne Cartier, and Jonathan McCully to his left. Back-row protagonists include Oliver Mowat (second from left) and Adams Archibald (fourth from left). (Detail of “International Conference at Quebec,” photographed by Livernois, image courtesy of Library and Archives Canada, e011081147)

Confederation nearly foundered on this problem. According to John Hamilton Gray, a delegate from New Brunswick, “agreement seemed hopeless, and on or about the tenth morning, after the convention met, the conviction was general that it must break up without coming to any conclusion. The terms of mutual concession and demand had been drawn to their extremest tension and silence was all around. At last a proposition was made that the convention should adjourn for the day, and that in the meantime, the finance ministers of the several provinces should meet, discuss the matter amongst themselves, and see if they could not agree upon something.”55 Cloistered together, A.T. Galt, George Brown, Charles Tupper, Leonard Tilley, Adams Archibald, William Henry Pope, and Ambrose Shea finally came to an agreement. Brown explained how they reached that agreement in a banquet speech shortly afterwards.

44

Constructing Fiscal Federalism

I hope the day is not far distant when we may all be able to adopt direct taxation to a much greater extent than we have yet seen in Canada – but at present it was very clear that confederation could not be carried out unless we conceded on this point. We agreed to a compromise. We made the Finance Ministers of each section go carefully over the public expense of his Province, and cut down every item to the lowest point practicable after the new duties shall be thrown on the general government, and we found that the smallest sum for which the machinery of government in the different Provinces could be carried on was $2,633,000. This sum is to be distributed annually as a full settlement for all time for local purposes in the Provinces, and I am happy to say it is to be distributed on the basis of population; and as our population in Upper Canada is very large, of course we get a handsome share. The principle is so just that I do not see how any one can reasonably object to it; and as the sum distributed is not to increase, a very few years of progress will make it of comparative unimportance.56 This was the basis for the infamous calculation found in resolution 64: “In consideration of the transfer to the general parliament of the powers of taxation, an annual grant in aid of each province shall be made, equal to 80 cents per head of the population as established by the census of 1861, the population of Newfoundland being estimated at 130,000. Such aid shall be in full settlement of all future demands upon the general government for local purposes and shall be paid half-yearly in advance to each province.” There was widespread agreement that the deal, with its “full settlement,” achieved both fixity and finality.57 It did not separate local from national finances but did engineer gradual separation over time. The sum was miniscule and would remain fixed at 1861 levels, so that a province that doubled its population would receive only forty cents per capita. Federal subsidies would become insignificant in expanding regions, which must either shrink their state or turn to direct taxation. George Brown had, he thought, seen his tax revolt through to successful fulfillment, as rep by pop and by prop: “m r s p e ake r, the second feature of this scheme as a remedial measure is, that it removes, to a large extent, the injustice of which Upper Canada has complained in financial matters. We in Upper Canada have complained that though we paid into the public treasury more than three-fourths of the whole revenue, we had less control over the system of taxation and the expenditure of the public moneys than the people of Lower Canada.” Under the new scheme, by



Confederation, or How Not to Run a Tax Revolt 45

contrast, “the taxpayers of the country, wherever they reside, will have their just share of influence over revenue and expenditure. (Hear, hear.)” The federal government had exclusive access to indirect taxes, though it also kept the right to tax directly, but it was constitutionally limited to miniscule fiscal transfers. Any attempt to exceed that limit would unleash organized opposition by federal and provincial watchdogs in the courts and the court of public opinion. Even if hived federally, Ontario liberals would be empowered provincially to block encroachments on their pockets. Brown, observes Christopher Armstrong, “naturally assumed that the vast majority of Ontario representatives would be loyal Reformers, ready to rally round whenever the province’s interests were at stake.”58 Rights, after all, followed power, and power rested with an aroused public opinion. Brown wrote to his wife, at the end of the Quebec conference: “Is it not wonderful? the old French-domination entirely extinguished!”59 Brown would have preferred a more “country” solution and said so in a Globe editorial. “We could wish an arrangement which would place the financial burdens of the State more directly upon the property of the people than the present system of indirect taxation. But we know that that is unattainable at present, and are bound, therefore, to accept the agreement of the Conference relative to the finances as the best which can be got – as a vast improvement upon the present system – and as a decidedly better settlement than could reasonably have been anticipated.” When the leader of the Quebec rouge party, A.A. Dorion, complained that fiscal transfers could continue, Brown replied that they would be strictly limited rather than “swelled indefinitely so long as rapacious politicians have the assurance to make demands for local grants, or clever Finance Ministers are able to meet their demands either by tax or loan.” Until Dorion could persuade Quebecers to tax themselves directly, “he must not blame us for gladly accepting the financial scheme of the Conference as a means of limiting the local drains upon the common treasury.”60 In Quebec, the bleu response to Dorion was to accuse him and his colleagues of predatory taxation during their administration in 1862–64: not only had they “raised the taxes and impoverished these poor people with their crocodile-like love,” they had threatened to impose heavy direct taxation.61 Brown’s underlying goal was to disenfranchise culture federally. Culture, to mid-Victorian liberals, referred to whatever it was that defied rational, market-oriented decision-making. Your interests, as defined by your property, pulled you towards sober fiscal decisions; your cultural identity pulled the other way. The new scheme pitted culture and fiscal

46

Constructing Fiscal Federalism

restraint against one another. It created two legislatures to reflect these opposing interests: a federal parliament to reflect national economic interest and provincial legislatures to reflect local interests, including local development but more particularly religion, education, and ethnicity. J.C. Taché had first advocated local control of “the national and religious elements” in 1858 in an influential argument for British North American confederation.62 Canadians all shared in the economic interests of trade and development; now ethnicity and religion could no longer hold those interests back in the federal parliament. Anyone who wished to denounce modern materialism would find his or her federal influence decidedly limited. Provincial governments could cultivate progressive or retrograde values as they chose, subject to some protections for the rights of religious minorities. Confederation’s advocates envisioned a new civic nationality based on economic self-interest. The Dominion government would construct a panCanadian identity rooted in political economy because the invisible hand of the marketplace offered the best model for reconciling the otherwise irreconcilable differences between Canadians. The federal government would govern wealth, not identity and, in the process, create a new kind of virtuous citizen, one who looked to rational marketplace activity to advance his self-interests. Rather than competing for domestic resources against one another, on a quasi-mercantilist model, they would collectively advance a national interest in the global economy. Local politics would either paralyze itself with local disputes of identity or rise to fall in with the national prosperity project. Cartier predicted that healthy commercial rivalry would replace zero-sum ethnic rivalries: “We were of different races, not for the purpose of warring against each other, but in order to compete and emulate for the general welfare.” He identified a “political nationality” that was oblivious to ethnic origin and religion: “Under the federal system, granting to the control of the General Government, these large questions of general interest in which the differences of race or religion had no place, it could not be pretended that the rights of either race or religion could be invaded at all. We were to have a General Parliament to deal with the matters of defence, tariff, excise, public works, and these matters absorbed all individual interest.”63 Cartier had to push hard the argument for an identity-neutral political identity, one coeval with economic self-interest, to counter the obvious demographic and cultural threat to French Canadians from the numerically superior English Canadians. But Galt, in defending Confederation to his English-speaking constituents in Sherbrooke, had to push the



Confederation, or How Not to Run a Tax Revolt 47

argument still further to counter the greater threat to their identity. He gave a speech to his electors in November 1864 that was widely quoted by advocates and opponents of Confederation. In regard to the relationship between interest and identity, his argument was three-fold. Firstly, the economic interests of all inhabitants of Lower Canada were “identical,” namely, to ensure that the western trade continued to flow through their province. Secondly, the numerical superiority of the British “race” in the General Parliament secured their interests in that arena. “The interests of trade and commerce, those in which they felt more particularly concerned, which concerned the merchants of Montreal and Quebec, would be in the hands of a body where they could have no fear that any adverse race or creed would affect them. All those subjects would be taken out of the category of local questions, would be taken away from the control of those who might be under the influence of sectional feelings animated either by race or religion, and would be placed in the hands of a body where, if the interests of any class could be expected to be secure, surely it would be those of the British population of Lower Canada.”64 British identity would be protected in the central government because that identity amounted to a concern for trade and commerce. Culture was either non-existent or a local matter. Thirdly, regarding his constituents’ local interests, Galt had only a feeble argument that material self-interest would smooth relations there as well. Because each “race” had its own legislature, each could damage the other but the result would be mutually assured destruction: “Anything which tended to damage that position would be fatal to the interests both of the one and of the other. (Hear, hear.) He thought our material interests would have to govern us in this respect.” Any attempt to legislate racial identity – beyond minority schooling rights – would provoke resentment and trouble. The different visions of government’s role drew upon some version of liberal political economy, something that helped smooth over differences between the members of the Great Coalition. Adam Smith’s critique of business-state collusion was an established truth amongst the various founders.65 That vision played very well to the reform model of politics, one that vested ultimate political agency with the self-reliant producer. Supporters of Confederation could use that language of small government, direct taxation, and political virtue: they simply applied it to provinces rather than to the general government. Galt remarked, during the Confederation debates, that one of the “wisest provisions in the proposed Constitution” was “to be found in the fact that those who are called upon to administer public affairs will feel, when they resort to direct taxation,

48

Constructing Fiscal Federalism

that a solemn responsibility rests upon them, and that that responsibility will be exacted by the people in the most peremptory manner. (Hear, hear.)”66 The general government, unburdened by any such solemn responsibility, would look rather different. The argument for direct taxation did not enjoy a monopoly on pretensions to virtue. Macdonald could draw upon a century-old philosophy of prosperity to support his fiscal policy. Brown’s virtue was severe and political, but Macdonald’s was a more easy-going commercial form of virtue grounded in eighteenth-century reasoning about how liberalism evolved. That philosophy celebrated a uniquely British tradition of consent as a means of extracting surplus value from ordinary people, one grounded not just in money votes in Parliament but also in a rising tide of popular consumerism. Economic theorists from Bernard de Mandeville to David Hume celebrated a new consumerist ethos (to replace an older leisureoriented ethos) that conjoined British commercial imperialism and liberalism. Hume argued that it was violent and impracticable to force a labourer “to toil in order to raise from the land more than what subsists himself and his family. Furnish him with manufactures and commodities and he will do it himself.” By taxing transactions, the British state was relieved of the direct taxation of peasants that so hindered French tax collection (all too often resulting in calamities prohibited in England, such as the seizure of livestock). Thus was the one state unable and the other able to pay for its expensive eighteenth-century wars.67 By this standard, direct taxation looked feudal, and an obstacle to market-oriented activity. Philosophers of direct taxation seemed to have only a negative grasp of prosperity, as effete and corrupting luxury. The conservative tradition that stretched from Hume to Macdonald seemed better at banishing state coercion and creating conditions for a more modern and vigorous form of prosperity.68 Macdonald could continue to brandish his favourite rhetorical weapons by insisting that Confederation alone could nurture Britishness and prosperity. “If the House and country believe this union to be one which will ensure for us British laws, British connection, and British freedom – and increase and develope the social, political and material prosperity of the country, then I implore, this House and the country, to lay aside all prejudices, and accept the scheme which we offer.”69 Canada would still have to manoeuvre between British and American diplomats from a position of weakness, but it would be in a better position to encourage national and local economic development. So what was entailed in the project of nurturing prosperity? Government under such circumstances must be a hybrid of public and private



Confederation, or How Not to Run a Tax Revolt 49

considerations. There was very little conceptual conflation of public and private interests, very little of the quasi-magical transformation of private into public that Jürgen Habermas identified as a constituent of the discursive bourgeois public sphere.70 Talk was cheap, taxes were not – and Victorian statesmen bore that distinction in mind. Thus, during the Confederation debates, Macdonald was prepared to insist that existing government had a mandate for major constitutional reform, but he repudiated any suggestion that property would be appropriated in the process. “Not a farthing of money was being appropriated,” exclaimed Cartier, seconding Macdonald’s argument.71 They refused to convene the legislature as a committee of the whole, as a money bill would require, for fear of dragging out the debate, at the same time as they nudged debates away from scrutiny of the tax questions and towards drier constitutional ones. The government of prosperity meant that tax monies should be spent advancing the interests of the propertied. There was absolutely no intention to use taxation as a means of redistributing wealth. Local governments would look after social welfare; the federal government would do something different with its money. Whereas the pre-Confederation governments had to provide for progress and its social costs in the form of schools, workhouses, asylums, and prisons, the new arrangements separated these responsibilities. No concern for poverty or relief entered into the list of federal responsibilities. There were only two exceptions: marine hospitals (for sailors), which did not serve a local community like other hospitals, and penitentiaries, which were put there by the British as a revision to the draft bill. Galt explained the reasoning – before British revision – to his constituents at Sherbrooke: “The management of all the Penitentiaries and Prisons naturally fell under the scope of the local authorities; also that of Hospitals, Asylums, Charities, and eleemosynary Institutions. With regard to these, he (Galt) would merely say that there might be some which could hardly be considered local in their nature; such, for example, was the Marine Hospital at Quebec, a seaport where there was an enormous trade, and where thousands of seamen were annually coming in [and which] must necessarily be almost national in its character – certainly more national than local; but all would agree that most of the other hospitals and asylums of various kinds should be more properly supported by local than by general resources.”72 Galt anticipated a day when private charity, not parliamentary votes, would support such institutions. His reasoning reflected prevalent AngloAmerican reasoning, whereby, as one British politician remarked: “It is evidently wise to put as little on the Government whose overthrow causes

50

Constructing Fiscal Federalism

a revolution as you can and to have as much as you can on the local bodies, which may be overthrown a dozen times and nobody be the worse.”73 But Avner Offer shows that pressures were already mounting in Britain to turn national politics towards social problems. Local authorities could not bear the burden; ratepayers in poor areas had to pay higher rates than those in rich areas. Their MPs argued that the social costs of industrialization and urbanization had to be understood as national economic burdens. New institutions for long-term incarceration, above all lunatic asylums and penitentiaries, drew inmates from large territories and exceeded local resources. Lunacy was declared a “national calamity” in one British parliamentary report of 1871. Under pressure from landed interests, local authorities, and constituency-minded MPs, the British Parliament debated the pros and cons of vesting prosperity in a general government and poverty in a local one. In 1868, the Liberal front bench argued that it was unfair to pay for the Thames Embankment with general taxes and burdens of London’s East End with local taxes.74 It was according to this logic that the British government began to vote national funds towards local welfare and inserted penitentiaries into the bna Act as a federal responsibility. It would have done more but for the protests of Canadians.75 Canadians were only beginning to feel such pressures. The expense of keeping “pauper lunatics” was driving up local assessment rates in places like Halifax and being denounced by the grand jury there on those grounds.76 But most British North Americans, looking backwards, believed that progress lay in downsizing and downloading redistributive spending while centralizing spending on public works in the name of a “common good” that was largely defined by the well-being of the business classes. Canada had little of the apparatus of state-administered welfare because poor people were expected to turn to charities or hew themselves a farm from the wilderness. Observers, steeped in British economic theories, found it hard to understand how poverty could exist at all in British North America, given the availability of land and absence of taxation.77 Governments nurtured market-oriented behaviour in civil institutions because liberalism and religious doctrine defined poverty as a problem of civil society rather than the state.78 In both Upper and Lower Canada, most social services were privately funded and operated, though they usually received some state subsidies.79 Canadian politicians, therefore, had both theory and experience behind them when they planned to reduce provincial subsidies and let charity and / or direct taxation pay for social services. Either way, the federal government would take no interest in such matters.



Confederation, or How Not to Run a Tax Revolt 51

Confederation enhanced Macdonald’s ability to invoke a lofty national purpose, while permitting him to narrow his government’s focus to the interests of the propertied. But the consequence was a very onedimensional form of government with scant ability to recognize or respond to social identities and problems. The fiscal arrangements of Confederation were designed to administer poverty out of national political existence, by devolving it to the provinces and gradually restricting the monies that could be spent upon it. This was not an accidental oversight (as briefs for the later Royal Commission on Dominion–Provincial Relations, or “Rowell–Sirois Commission,” suggested). It was a carefully designed policy – and to overcome it in the twentieth century would take an enormous amount of legislative capital. To constitutionalize prosperity federally was to disenfranchise poverty. The exception that proved the rule was the Indigenous peoples of Canada: they alone would be governed federally, but as wards of the state. “Indians” were like “paupers”: state annuities made them dependent and disqualified them from voting.80 The government would protect them from the worst consequences of poverty (again, more in intention than in outcome – Indigenous mortality rates were appallingly high), but it must also protect property from “Indians” by depriving them of the vote. Only propertied people who relinquished their Indian status should vote under the Gradual Civilization Act of 1857 and the Indian Act of 1876. The federal government, committed to an understanding of federal identity as necessarily reducible to economic interest, spent decades trying to make Indigenous peoples conform to an economist’s caricature of human motivation, seeing in any expression of culture an obstacle to market-oriented self-interest. Liberals, the authors of the Indian Act, were particularly determined to obstruct the formation of another culturally cohesive, impoverished, and retrograde voting block in thrall to Macdonald. They saw another potential French Canada in the making, potentially a transnational one, and tried to defuse it by a process of individualization, now understood to be a process of cultural genocide. It was one thing to ignore the plea of disenfranchised minorities, but what of those demonstrative Montrealers? That was another achievement of the new political regime. During the “Great Depression” of the 1870s, working families in Montreal rioted for bread and firewood. In December 1875, foreign newspapers covered one such riot in lavish detail: “At 3 P.M. a disorderly throng of over two thousand men surrounded the City Hall, and, despite the presence of a large body of Police, the mob attacked a beer wagon and drank its contents. A bread Wagon was then cleaned out, and ten minutes later a fight took place.” Mayor

52

Constructing Fiscal Federalism

Hingston spoke to the crowd from a balcony: his pleas for non-violence were interrupted by cries of “We are suffering, and want food.” The mayor read aloud a letter from the new Liberal prime minister, Alexander Mackenzie, who rejected Hingston’s plea for aid on grounds that there was “too great a disposition to lean upon the Federal Government in this crisis. They could adopt no special policy touching the case.” Relief thus rested entirely on the city councillors, who put all comers to digging earthworks at sixty cents a day.81 A moulder expressed his disgust: “After months of want and misery, actual starvation drove our people to revolt (the thieves called it a riot) and then they are set to work by thousands at sixty cents per day.”82 But even such paltry relief offended economists. The bread riot and paternal legislation to keep the poor in bread were traditional touchstones of political legitimacy. In the 1770s, Adam Smith had challenged that logic when he argued that state intervention alone turned local shortages into famine and markets should be left to right themselves.83 E.P. Thompson argues that these new liberal ideas and practices offended popular moral economies. They threatened traditional countryside elites who responded by inciting popular violence, particularly bread riots.84 Thus, a bread riot in Montreal spoke to first principles of liberalism and warranted stern expressions of disapproval. The London Spectator blamed both riot and destitution upon popular improvidence and gave a stern lecture against the demoralizing municipal charity: “What can demoralise a society more surely than a system which thus encourages men to become a burden upon the community, by undertaking beforehand to support as many as offer themselves?” This was liberalism’s war on discretion with a vengeance. Any hint of responsiveness underlying even the most modest of fiscal transfers threatened the social order. Colonists should be self-supporting, but colonial cities like Montreal were “closely assimilated to the cities of the Old World. There is very much of the same ignorance, the same indolence, the same brutality, the same lawlessness that is to be found in London or Liverpool. By comparison with English towns, they are young communities, but they have a social history which has already made them old.” Because Montreal had no poor law, it was vulnerable to violent demands from the poor, according to a logic that would apply even in a poor-law-less England. Crowds would gather, violence would threaten or would break out, and municipal authorities, who had a clear duty to refuse charity, would extend it exactly as the Montreal authorities had done. “We do not say that the Mayor was right in using this language, or that the City Council was right in meeting



Confederation, or How Not to Run a Tax Revolt 53

to consider a case which, on strictly economical laws, had no proper claim to be considered. But we do say that no English mayor or town council would have acted differently, assuming, that is, that the crowd had not resorted to violence.” A massed destitution had forced Montreal to act on terms that would worsen the economic and moral standing of the city. But everyone knew that destitution so massed must always be answered: “The fact of destitution is one that cannot safely be disregarded. As soon as it shows itself on anything like a large scale, it becomes impossible to let it go unrelieved. If the good-feeling of the community is not shocked by the spectacle of men dying from starvation, the fears of the community will probably be excited by the prospect of what these same men may do to escape death from starvation.” Under a poor law, “destitution is dealt with individually, instead of in crowds, and this one circumstance makes the whole difference.”85 Poverty was collectivized in Canada, whereas properly governed it should be individualized and thereby stripped of its entitlements. Poverty had no rights where it could not force its demands on the political process. British political economists knew as well as George Brown that poverty in Canada coincided with particular regions and ethnicities that lent it strength. That the sums earned were pitifully small and came by hard labour was beside the point. Confederation was designed to ensure that even when poverty was politically enfranchised, it had no claim upon the purse. From that perspective, the bn a Act was designed as a kind of New Poor Law like that passed in Britain in 1834. No one wanted to see anyone starve to death, but the liberal reform project sought to create conditions that would nurture self-help. No community, no region should be able to reject self-help and fiscal discipline, but the old constitution of the Canadas seemed to permit that. The new constitution would pauper-proof the nation’s wealth. Mayors, even premiers, might be forced to make foolish choices; prime ministers need not. But if Prime Minister Alexander Mackenzie was well within his rights and powers to refuse the Montreal crowd its subsistence in 1875, he was unwise to do so and no less unwise when he told Montreal railway interests there would be no new taxes to pay for a transcontinental railway. At the next federal election, Mackenzie was thrown out and Macdonald was back in for the rest of his life. George Brown’s fiscal revolt had a huge flaw. Liberal governments were indeed well positioned to refuse subsidies to local interests. But the Conservative government of John A. Macdonald was well positioned to connive ways of circumventing the fiscal straitjacket and buying off interests with discretionary spending. Macdonald

54

Constructing Fiscal Federalism

had never taken his eyes off the tariff: someone had to manage it and that someone would have no small revenue to command. Brown could have his small, virtuous local legislature, and Macdonald could have his large, spendthrift national one. Brown thought he had imposed constraints on the national government that would restrict its powers of regional fiscal transfers. He was wrong. Reflecting on the first half-century of Confederation, journalist J.S. Willison remarked that “none of the opponents of Confederation seems to have had a full realisation of the immense patronage which the federal government of Canada would exercise.”86 P.B. Waite notes that the lively anti-Confederation paper, the Perth Courier, realized it.87 So did the opposition member for Drummond-Arthabaska, Christopher Dunkin, speaking during the constitutional debate. Where George Brown saw powerful restraints on local spending, Dunkin saw weak ones that let provinces demand subsidies instead of taxing directly: “The need of the neediest is made the measure of the aid given to all. The most embarrassed is to have enough for its purposes, and the rest are to receive, if not exactly in the same ratio, at least so nearly up to the mark as that they shall all be satisfied; while, on the other hand, the debts of all the provinces are to be, for all practical ends, raised to the full level of the most indebted.”88 Dunkin described the commitment to “full settlement” as no more than a “pleasant little expression,” and predicted that provincial politicians would campaign not on their cheap, modest governments but on their success in getting higher federal subventions. The system would encourage not austerity but excess and debt. Whatever Brown thought he had achieved, there were no constitutional restraints upon fiscal transfers. Confederation made it harder for Liberals and easier for Conservatives to indulge in federal patronage spending, and it propelled patronage-seekers into the Conservative camp. The ink was hardly dry on the bna Act before Macdonald, now prime minister, began to undermine it. Dorion saw his predictions of Confederation as “theft” vindicated in the months after Confederation, but he also saw a much more “dangerous doctrine” instantiated two years later when ­Macdonald formally asked Parliament to vote for cross-regional fiscal transfers – to tax one region for the benefit of another – that directly contravened the bna Act: “The Union would mean nothing, if, by a vote of this House, they could set aside the provisions of the Union Act.”89 Brown’s grievances persisted long after his death in 1880. The names of the political bosses changed (Cartier died in 1873), but little else. The Toronto Daily Mail asked rhetorically in 1887: “Does Mr CH AP L E AU



Confederation, or How Not to Run a Tax Revolt 55

think the Ontario taxpayer will always be content to be tied to a corpse? The habitant, as the Secretary well knows, pays next to nothing to the State, his meagre resources being exhausted when he has satisfied the tithe-gatherer.” But he also wanted railways and local government, “and here again the cost is defrayed, not by himself, but by the English taxpayer, the debts of the province being thrown upon the Federal treasury whenever they become too large for the provincial budget.”90 Richard Cartwright, the Liberal finance critic, complained to the Economist in 1892 that English Canada was being “bled white” by a federal tariff French Canadians hardly felt: “The French habitans of Quebec consume a very small quantity of dutiable goods.”91 The Toronto Mail knew whom to blame for the failure of Upper Canada’s constitutionalized austerity project: Everyone at that time believed that the arrangement would be final. Mr George Brown said that the beauty of it was that it could not possibly be disturbed, and that consequently there would be no more jealousy as to the division of the receipts. The same view was expressed by Sir Alexander Galt, who declared most positively that finality had been reached, adding that if the provinces exceeded their revenue they would have to make up the deficit through direct taxation. By Sir Hector Langevin the idea that direct taxation would ever be resorted to was not for a moment ascertained. He asserted that the allotment to each province was more than sufficient, and that there would always be a handsome surplus to be expended upon public works and railways. How soon the expectations of the Fathers of Confederation were disappointed we all know. The union had scarcely been accomplished when a new arrangement was made with Nova Scotia that disaffection there might be allayed, and that Joseph Howe, with his large following, might be brought into line. Since that date we have had frequent resorts to better terms.92 George Brown’s tax revolt was undone by another tax revolt, this one in Nova Scotia.

2 Tax Revolt in Nova Scotia in the 1860s: Fairness and Region

In 1864, politicians from the United Province of Canada turned to the other British North American provinces for help in breaking their political deadlock. A growing plurality of Upper Canadians believed themselves under-represented and overtaxed, and they demanded constitutional reform that would either increase their representation or decrease the fiscal transfers. A plurality of Lower Canadians rejected all proposals for reform. Together, the two pluralities appealed to Atlantic Canada to join the union and break the deadlock. Because the political deadlock was a product of unequal fiscal relations, those had to be addressed as well. How would the Atlantic provinces figure in the kind of fiscal transfers that had provoked the political stalemate? The answer was clear. All four Atlantic provinces were consuming provinces; all four could be expected to pay more than their share of customs. Because the Atlantic provinces inhabited a “reluctant land,” more marginal than that of the central Canadian agricultural heartland, they imported much of their basic foodstuffs and manufactures.1 Their debt loads were also below that of Canada. By uniting with them, Canada could increase its revenues and its credit. Local economies might be struggling in some places, but union, its advocates argued, would lead to regional prosperity. Opponents of Confederation had a variety of arguments, but taxes were one of their strongest lines of attack. In a relentless barrage of speeches and newspaper articles, leading anti-Confederation voices argued that, regardless of other benefits, the b na Act would appropriate much more than a few farthings and would draw them towards the centre of power, Ottawa, with scant evidence of comparable return eastward. Maritimers injected a spatialized perspective upon the austerity project built into the bn a Act. They described it as an imperial project that would transfer wealth



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 57

and power to the centre and impoverish the periphery. This chapter surveys their arguments and the Canadian replies, seeing a remarkably frank and open exchange about the mutual entitlements of wealth and poverty, might and right, with long-term consequences for Canadian political and fiscal history. Andrew Smith has recently argued that tax aversion was the major grounds for opposition to Confederation in Atlantic Canada, where “country” politicians resisted the big-spending “court” government of Macdonald and Cartier.2 Smith sees in the big-tax, big-government arguments of the pro-Confederation Unionists the birth of a “Toryinterventionist order” rather than a liberal one. I see a more mixed story: some Unionists defended higher taxes and better infrastructure building, but most did not. They insisted that if Confederation were a tax grab, there would indeed be good grounds for rejecting it, but it was not a tax grab, as the voluminous figures they had to hand could prove. Andrew Smith instances scholar Goldwin Smith as providing the classic liberal argument against Confederation, but his views were too impeccably orthodox to find favour in the real world of Canadian politics where, everybody knew, railways must be subsidized or built by governments. Maritimers weren’t having a precocious debate about the National Policy in 1864 but, rather, were arguing about how to get railways that they couldn’t afford at going rates of taxation. But, unlike direct local taxation that was spent locally, the new taxes must be backed by and channelled through central governments and banks, thereby transferring wealth from poor regions and interests to wealthier ones. There was a very obvious, common-sense problem with the fiscal project as it was formulated and sold to the people. On the one hand, the Canadian tariff would extract surplus revenue from the people; on the other hand, the method of returning that revenue – subsidies to the provincial governments – fell far short of what was fair or necessary. Both observations were unambiguously true, and Nova Scotia was particularly hard hit by the formula worked out in Quebec. The Unionist finance minister, James MacDonald, insisted that provincial responsibilities would be much reduced and revenues more than adequate. Historians disagree. Historian Phillip Buckner makes the point pithily: the fiscal deadlock at Quebec was only broken when “Tupper came up with a formula that deliberately underestimated the needs of the Nova Scotia government in order to arrive at a figure – an annual grant of eighty cents per capita – acceptable to the Canadians. This decision ensured that the Maritime provincial governments would be left with wholly inadequate

58

Constructing Fiscal Federalism

resources.”3 Writing during the 1920s, at a time of serious regional economic downturn, J.A. Maxwell confirmed the “Anti” argument that Nova Scotia lost 90 per cent of its revenue in Confederation but only about 55 per cent of its spending responsibilities.4 If the flow of money from Ottawa to Halifax was clearly spelled out and clearly restrictive, the flow of money from Halifax to Ottawa – the tariff – was murkier. Rates were never perfectly comparable, but Nova Scotia and Prince Edward Island had a general tariff of 10 per cent and New Brunswick 15 per cent, while the Province of Canada was at 20 per cent, lowered to 15 per cent in 1866 in preparation for union.5 Debates about how the Canadian tariff would affect the Atlantic region were speculative and empirical, grounded in ongoing debates about how existing tariffs worked. Antis saw much evidence for quasi-imperial and predatory taxation, and they launched a tax revolt against it. Much more than just a prelude to “better terms,” the agitation against Confederation was also a critique of fiscal imperialism. Whereas the Unionist camp filled their newspapers with glittering predictions of state-driven wealth, the Antis filled theirs with grim warnings of state-driven poverty. In the process, they dissected the meaning and consequences of regionalized poverty. These were self-conscious political agents enjoying extraordinary liberties, and in asking whether they could continue to enjoy them, the anti-Unionists developed a clear-sighted analysis of how power operated in an increasingly imperial world. The Quebec scheme, critics argued, would extract “tribute” from the peripheries and pull power and wealth to the political centre. That’s what empires did, and that’s what Canada was designed to become. Confederation supporter Thomas D’Arcy McGee had once, as an Irish radical, espoused the “commonplace” view that “monopoly capitalism was the driving force behind the empire.” In the 1860s, many expatriate Irish papers still took that view, but McGee had changed his tune and now championed both the British and Canadian unions.6 When McGee insisted that this would be a partnership of equals, like the Mohawk Confederacy, the anti-Unionist Halifax Morning Chronicle responded that the Mohawk Confederacy beautifully served “Indian tribes occupying contiguous hunting grounds” but would confer no such benefits on the Atlantic tribes should they choose to join. A Mi’kmaq chief would wisely respond with summary violence “if three of his young men had gone off to Canada and spent a month dancing and feasting and swallowing firewater, and had then come back with a proposition to put out the council fires, dishonor the tribe, and pay tribute forever to the Cocknawagas.”7 Maritimers saw freedom being sacrificed



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 59

to imperial exigencies. Like the Melians of the Peloponnese, they saw right sacrificed to might. Right meant the traditional rights of the free, tax-paying British subject; might, the imperial override of their claims. P.B. Waite has suggested that the debate over Confederation in Atlantic Canada was more interested in taxes than the Canadian debate, but that is a misreading of the Canadian debate.8 A scan of the respective legislative debates shows references to taxes, on average, every four pages in the records for Nova Scotia and every ten pages for those of Canada, a difference of degree not kind. Reformers in both regions invoked taxes because taxes were the best measure of consent, agency, legitimacy, and justice. To reason from taxation meant to reason from history, theory, and practice, on terms designed to appeal to ordinary voters. Brown manifestly cared about taxes. He thought he had written fiscal transfers out of the constitution, but Nova Scotians challenged his liberal version of frictionless power with a more historically informed analysis of imperial power that clustered and centralized as it operated over space. Defeated, they still left their mark on the political and intellectual heritage. For there to be a tax grab there had to be something to tax and a state apparatus that lent itself to the grabbing thereof. All four Atlantic provinces were consuming provinces, but there were other considerations that made each of them more or less taxable. Neither Newfoundland nor Prince Edward Island had the kind of wealthy landowning classes that provided Burke’s ballast. The small populations were mostly poor fishing and farming folk without much investment in the land. Newfoundland had a large Catholic minority that looked more like those shivering peasants in the Saguenay than the Protestant yeomen that the Globe continually exalted. In Prince Edward Island’s case, the land was largely owned by absentee landlords. Politics there revolved around projects of escheat, aimed at seizing the land from the landowners, that metropolitan authorities were continually repressing and suppressing. Thus, appropriately for a colony with few landowners, the local franchise required not property but three days of statute labour on the roads.9 So, while both Newfoundland and pei were heartily invited to join the projected union, neither could provide a solution to George Brown’s problem. What of New Brunswick and Nova Scotia? Did they most resemble Upper or Lower Canada? The evidence was mixed but tended towards an Upper Canada resemblance. Both boasted wealthy, conservative, landed classes, a loyalist heritage, and a moderate path to responsible government, and both could be expected to oppose such Americanisms as a universal male franchise. Actually, Nova Scotia had recently abolished its

60

Constructing Fiscal Federalism

property franchise for an assessment franchise and then abolished that franchise in favour of something approximating manhood suffrage, but no one seemed to like it. The Reform / Liberal government led by the champion of responsible government, Joseph Howe, had introduced legislation to restore property qualifications that would disenfranchise one voter in four, but then had to call an election before it took effect. The electorate that Howe was in the process of disenfranchising ousted him, but the new Conservative premier, Charles Tupper, sustained the restricted franchise. Nova Scotia was ostentatiously opting for property over people. Arguments for manhood suffrage were more marginal in the more conservative political culture of New Brunswick, where the premier, Leonard Tilley, was a moderate liberal with a reputation for fiscal soundness.10 Tupper and Tilley formed enduring alliances with John A. Macdonald. They were politically like-minded: pragmatic, liberal-conservative politicians who based their platforms on economic development. Reform liberals were less cohesive. They had fewer material interests in common and more occasion to quarrel. Take George Brown and Joseph Howe: both advocated responsible government in the 1840s and smallstate, liberal governments largely in the hands of the middling people in the 1860s. Brown had good reason to look hopefully to Nova Scotia for supporters. But the reasons why Brown should look to Nova Scotia to fix Canadian politics were reasons why Howe should reject the invitation. There was the fatal flaw: Confederation served Brown by precipitating his province out of the union’s straitjacket, but if Brown were in Nova Scotia, wouldn’t he see Confederation as precipitating his colony into a straitjacket? That was how Howe understood things. Confederation was designed to check Macdonald’s fiscal cronyism, but a cynic might find little evidence of a successful check. Why would any self-respecting liberal sign up? Howe voiced objections that Brown, were he in Howe’s shoes, would probably have voiced. Delegates to the Charlottetown and Quebec conferences knew that Upper Canadians did not actually want to raise heavy taxes from the Atlantic provinces and that Brown hoped Maritimers would help him lower Canadian tariffs. He said so in the debates and in the Globe: “In the Confederation … the free traders of the West in conjunction with those of the Maritime Provinces will surely be able to secure a tariff as low as that of Nova Scotia.”11 But to believe that taxes would indeed go down required faith that the Antis lacked. Arguments against Confederation as a tax grab were voiced early and often. Tilley had boasted during the constitutional debates that New Brunswick had a surplus that year of half a million dollars. Such boasts



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 61

played very well in selling New Brunswick to Canada but less well in selling Canada to New Brunswick. When Tilley introduced the deal at a public meeting in Saint John in mid-November, his fiscal explanations fell flat.12 Tilley described the basic terms, eighty cents a head and an additional top-up of $63,000 resulting in local revenue of $354,000, as more than enough to cover local purposes. He argued that industrialization in New Brunswick would reduce imports and taxes on imports, but the subsidies would not decline because they were fixed by law. There was much to criticize in this. The attack was led by the Saint John Freeman, an Irish-Catholic newspaper published by Timothy Anglin. His biographer remarks: “In very long, amazingly detailed, and cogent articles, Anglin poured scorn on the arguments and figures of Tilley.”13 He demonstrated that Confederation would raise an extra quarter of a million dollars annually from New Brunswick, and half a million from Nova Scotia. But even that would not meet Canada’s fiscal needs. Any idiot could see that the Intercolonial to the east, the western extension of canals and railways, and the projected new military spending must all drive expenses far beyond existing levels. Canada would need millions more per year and would look to the Atlantic region for much of it. Leader after leader debunked Tilley’s, Galt’s, and anybody else’s figures and produced a compelling body of evidence that all the other Antis reproduced. After weeks of this, on 13 December, Anglin announced, “Our readers will no doubt be almost as much gratified as we are that we have now concluded our examination of the financial condition of the Union,” though there were many Parthian shots. New Brunswick Antis had the wind in their sails and they harried Tilley over his figures in one meeting and newspaper after another. Nova Scotia Unionists gamely defended tax hikes. At the first public meeting for the returned delegates in early December 1864, Liberal (soon to be Liberal-Conservative) Jonathan McCully predicted glorious prosperity and was followed by Liberal (soon to be Liberal-Conservative) Adams Archibald who pooh-poohed predictions of higher taxes, but still admitted that if Nova Scotia was to be part of the Intercolonial Railway, “Your tariff must be raised.” Tupper, up next, argued that Confederation would benefit Nova Scotia rather than cost it revenue, but he also argued for more railways and higher taxes.14 The Nova Scotia Antis zeroed in on these claims and levelled damaging criticisms.15 A turning point came on 30 December at a meeting organized by Andrew Uniacke, a Halifax merchant, for the “Let Alones” to have their say. The running themes of the five-hour meeting were fiscal transfers and economic decline. Joseph

62

Constructing Fiscal Federalism

Howe attended the meeting but did not speak. Less than two weeks later, the first of Howe’s “Botheration Letters” appeared in the Halifax Morning Chronicle. The paper was edited by Jonathan McCully, who was antiTupper but pro-Confederation; he was dismissed and William Annand made the paper a standard-bearer against Confederation. Howe had welcomed the idea of Confederation in 1864, but he rejected the terms hammered out in Quebec as a political and fiscal assault on Nova Scotia. He couched his response in terms of the classic rights of the British subject, which was to say the British taxpayer. To exercise those rights, Nova Scotians needed control over their taxes, but the scheme provided no such agency either locally (because the provincial legislature would be too weak) or federally (for lack of numbers). As it became clear that Tupper would force the union despite popular objection, the Anti critique broadened beyond taxation to encompass due political process and British perfidy. But there remained a fiscal substratum: a hard-headed analysis of the impact that quasi-imperial taxation would have on ordinary citizens making their way at the periphery. In his first Botheration Letter, describing Nova Scotia’s representation in Ottawa, Howe saw his hard work in getting responsible government being undone. The province’s delegates to Ottawa would be too few and too politically divided to influence policy. Tupper and McCully, erstwhile rivals, had united around Confederation to be “friends from the teeth outwards” but once in Ottawa, “our members will be no longer unanimous, but split into two factions each following the fortunes of its leader, and each trying to bargain with the minister for the patronage and control of Nova Scotia.” Thus divided, they would be easily controlled by a “little knot of politicians 800 miles away.”16 The second letter contrasted a divided Nova Scotia with a united French Canada: “Ever since the Union of the two Provinces, the French Canadians, by sticking together, have controlled the Legislation and Government of Canada. They will do the same thing in a larger Union, and, as the English will split and divide, as they always do, the French members will, in nine cases out of ten, be masters of the situation.” Local governments would be too weak to object: “The Provincial Parliaments will have scarcely more dignity than the City Council, and of this we are quite sure, that neither Mr Archibald, Mr McCully nor Dr Tupper would take a seat in ours, were it offered free of costs and charges.”17 Given those imbalances of power, the argument continued in the third letter, Canada would steamroller its tariff over Nova Scotia interests. Canada was to Nova Scotia as Britain was to Canada: an industrial



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 63

powerhouse that would devastate the infant industries of the undeveloped partner. Whereas Nova Scotia got its revenue by taxing rum, Canada made its own rum and taxed manufactures. No reversal was likely because “a powerful party exists in Canada who advocate protection to Colonial manufactures.” The Canadian tariff, applied to Nova Scotia, would wipe out existing revenues and injure Nova Scotia’s trade with other British and colonial partners. It would devastate Nova Scotia’s “noble fleet of ships and annually extending foreign trade.”18 The fourth Botheration Letter, on 18 January, addressed defence. The fifth, on 20 January, compared the terms of union to those offered Scotland: whereas the British offered to tax the Scottish more lightly, “our delegates put the boot on the other leg. Not only are we not to be favored in the laying on of taxes but while our tariff is to be doubled, we are to make up a large proportion of what Upper Canada now loses by the unequal consumption of the French Canadians.” Howe’s sixth letter, on 23 January, decried economic inequality in Scotland: “She has been so managed that while the great body of the people have had a hard struggle for existence, the great proprietors have grown rich and property has been getting into few hands.” He juxtaposed the wealth of the Marquess of Breadalbane, the Duke of Sutherland, and the Duke of Richmond, possessed of vast holdings stretching “from sea to sea,” with cramped living conditions revealed by census more generally: 39,990 families living in single rooms (1,243 without a window); 38,136 in but two rooms; only 10 per cent of the population in three rooms per family; 4 per cent with four rooms, and 2 per cent with four or more rooms. “Let us hear no more then of how people are to be made prosperous by having their Parliaments wiped out, and having a distant and costly kind of control substituted for the priceless blessing of self government.” Once power and revenue were centralized, ambitious and wealthy citizens would follow in pursuit of fortune, patronage, and distinction, thereby forcing the labouring class to emigrate, as the Scottish and Irish now did. Howe’s seventh Botheration Letter extended the analysis to Ireland, with “her helpless minority struggling in Parliament, and her beggars wandering in the streets.” Again, Howe grounded the analysis in reams of economic data, comparing Irish and North American wages; and again, he observed that the ambitious and wealthy classes moved to London and “their rents and revenues go after them, so that there is a perpetual drain out of Ireland and into England, as there will be out of Nova Scotia and into Canada, so soon as like causes produce the same effects.”19 What cared the metropolis for colonial poverty? What claims had poor regions upon the metropolis? Howe identified poverty as a regionalized

64

Constructing Fiscal Federalism

product of empire. This is not to suggest that he took the pauper’s point of view or that he saw a heinous plot against Nova Scotia. But historical precedent established an economic and political pattern of self-­reinforcing inequality. This was a confrontation between political economy as theory and as practical experience. It grew from the same soil as British historical economics, inaugurated around the same time in a series of articles analyzing land tenure and impoverishment in Ireland comparative to England and continental Europe that T.E. Cliffe Leslie, a professor at Queen’s College in Belfast, built up into an argument for inductive economics as against deductive, liberal political economy.20 No such rigorous intellectual orientation characterized the anti-Confederation analysis of empire and poverty, but there was, nonetheless, an insistence that the two were not accidentally but systemically conjoined. This was very much a mid-Victorian debate about poverty, but it was a remarkably frank and sympathetic rendering of poverty’s outlook. Howe’s subsequent letters focused on constitutional processes and rights, but other Antis took up the historical analysis. Anglin produced his own letters on the “Confederation, The Constitutional Question,” by which he meant the history of Scotland and Ireland in the British Empire. Scotland, he argued, was said to flourish based on a superficial account of a few factories and shipyards on the Clyde, but the countryside was underdeveloped and overtaxed: it sent £6.1 million to England and received only £400,000 in return. Ireland’s sufferings were still worse: “The absentee landlords, the ruined liberties of Dublin and the other manufacturing towns in decay, the idle harbours and rivers, the drain of over two million pounds surplus revenue sent every year to England, and the hundreds of thousands of roofless cottages tell how all the promises were kept, – how miserably they were deceived who trusted in such promises.” Political union led to political and economic centralization in England and the de-industrialization of the home colonies. Ireland and Scotland, Anglin argued, produced more emigrants than any other part of Europe. “The advocates of Confederation say the union of a small with a large country must be advantageous to the small country. This is contrary to the experience and teachings of history.” He further pointed to Belgium, Portugal, Hungary, and France to prove the “great political truth that despotism inevitably follows centralization.”21 The analysis spread through the Anti press. The Halifax Morning Chronicle published other letters and leaders confirming it: a Canadian tariff would de-­ industrialize Nova Scotia, and de-industrialization would raise imports, and taxes along with them. Even in the unlikely event that the tariff did



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 65

encourage local manufactures in Nova Scotia, the poor would pay dearly for the privilege of buying local. One correspondent, “Truth,” argued that current Canadian taxes, imposed on Nova Scotia, would raise $4.02 per head annually, rather than the $2.60 that Nova Scotians currently paid, and the subsidies would not compensate.22 The Yarmouth Herald predicted de-industrialization and drew attention to Galt’s swindling ways with railways.23 Maritimers, like Canadians, posited a mutually reinforcing politics of identity and interest. The Unionists insisted that Maritimers would be crucial power-brokers in a divided Canada. Tilley made the claim in November 1864: “It is asked – Will you not impose heavier taxes? No. Heavier taxes would not be imposed. It seems taken for granted that the Canadian tariffs must be adopted. He repudiated the idea. For a number of years the Government of Canada had been sustained by very small majorities; and will it be said that forty-seven members, the representatives from the Lower Provinces, would not have some voice in the question of Tariff.”24 Archibald made the same claim two years later: local taxes would go into a common Canadian purse that Nova Scotia would have a right to share in, and “we shall be in a position to assert that right.” Canadians were divided by “differences permanent in their nature, and such as to create the elements of opposing parties.” Sharing qualities of each, Nova Scotia could vote according to self-interest. In religion, in origin, and in laws we have interests and feelings in common with the people of the West, whilst our geographical position, our commercial pursuits, our industries, largely identify us with the people of East. We are therefore in a position in which we may legitimately choose between the two political parties that divide Canada – that one which we shall consider the best exponent of those principles which are for the interest of our own people and of the people of the whole Confederacy. Need we fear that in Confederation the party which shall be supported by the Maritime Provinces – which shall owe its power very largely to their adhesion – will be in a position to refuse to the Provinces whose aid is so essential to them any fair advantage which they are entitled to ask? No sir, I have no fears on that point. If there is any portion of the Confederacy which may be in a position to ask more than its fair share from the public funds, that portion is not either of the Canadas, – and we may rest assured that the Maritime Provinces will receive, as they will be in a position to demand, the most ample justice.25

66

Constructing Fiscal Federalism

The Antis saw fantasy at work. Anglin ridiculed Tilley’s claims that not just the Maritimes but even Prince Edward Island could alone “turn the balance.” The claim was that Maritimers could ally with Upper Canada to keep Lower Canada in “perpetual subjection,” or with Lower Canada to “keep Upper Canada in check.” But the underlying theory was incoherent, argued Anglin. The federal Parliament was supposed to be organized around economic interests rather than identities. If that turned out to be true, if French Canadians, relieved “of anxiety about religion, language and laws, send representatives to the General Parliament to look after only their commercial and political interests, the state of affairs in which four or fifteen could turn the scale would be at an end, and we would find the representatives from the Montreal district at least uniting with the Upper Canadians in forcing on us those schemes for the development of the West for which we indeed would have to pay more than a share, but from which Montreal would derive great benefit, while we gained absolutely none.” On the other hand, if French Canadians felt as endangered as ever and the conflicts that had so long raged and injured Canada persisted, “should we not hesitate to involve ourselves in those quarrels and plunge into the vortex in which Canadian politics are now engulfed?”26 Maritimers would do better to avoid the Canadian morass and build the Intercolonial themselves. New Brunswickers were convinced, and in 1865, they voted Tilley out of office. Anglin’s attacks won him a place in the new anti-Unionist government of A.J. Smith.27 Confederation seemed to be dead in the water. In Nova Scotia, Tupper responded with a resolution in favour of Maritime union, but the debate that followed focused entirely on the pros and cons of the Quebec scheme. In defence of Confederation, Tupper also styled himself as an outraged taxpayer who combatted direct imperial taxation.28 But where Unionists made fuzzy predictions of wealth and unity, the Antis responded with long, detailed fiscal analyses. Annand argued that Canada “knows that we have a surplus revenue, that we are a largely consuming people, and would be a valuable acquisition to the central treasury.” Galt had said that, as well as that a Canadian tariff would increase taxation on the lower provinces from $2.5 million to $3 million. The difference would be paid by Nova Scotia because New Brunswick already paid high taxes and Prince Edward Island was too small to make much difference. Annand quoted the Globe’s remark that “There can be no doubt that (under Confederation) the Lower Provinces would be heavy tax-payers.” Taxes would rise 50 per cent and revenues shrink by $178,000 from a pre-Confederation budget of half a million dollars.



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 67

Would the cuts be to roads, bridges, or schools? Archibald McLelan followed Annand with an even longer analysis of debt allowances, revenues, and subsidies. Currently, Nova Scotia had “the largest sum of any of the Colonies for local purposes, per head $1.96, but under the Quebec arrangement will have the least – $1.12¼.” Nova Scotia would pay double per capita what Canadians paid in customs. Confederation would “surrender to Canada the power to tax us to any extent that their extravagance may render necessary.” He predicted a $782,560 transfer to Ottawa from the outset.29 Nova Scotians did not come cold to these debates. They had their own debates about their own taxes and tariffs. Like Cartier in Quebec, Tupper was imposing compulsory and highly unpopular centralized school taxes. He shrugged off that unpopularity. Governments must force modernity on recalcitrant populations, and it was enough, he argued, to have the “intelligent sentiment of the country” on side in regard to education, the franchise, and Confederation.30 But, objected the opposition, Tupper’s school taxes benefitted the rich disproportionately. They were too onerous and “did not provide sufficiently for the poorer sections” of the province. Tupper defended the higher tax and admitted the burden on the poor, but, he explained, it was “almost impossible … to frame any law that did not more or less benefit the rich and populous sections.” When the opposition urged indirect rather than direct taxes to pay for schools, the attorney general responded that “the indirect tax was the dearest that a man ever paid” and that grumbling only persisted because people were “continually being stirred up” by the opposition.31 The Confederationists wanted to keep lucrative and demoralizing taxes out of the hands of locals by removing them to Ottawa, even as they admitted that wealthy, populous central regions must disproportionately benefit from centralization of taxation and spending. What of Nova Scotia’s experience with its own tariff? Did it protect or injure the poor? Grain for bread must be imported and was more cheaply imported from the United States than from Canada, even after the ­Americans ended reciprocity. Should the colony unilaterally remit the duty on American flour, enabling the poor to buy cheap bread, or should it keep up a retaliatory duty and buy Canadian flour? Where Tupper and Archibald defended a duty, Liberals replied that the price of flour was “enormous,” devastatingly so in the poor western counties. Archibald McLelan argued that “it was very hard that the poor people should have been obliged to pay a tax of $28,000 during six months on flour at a time when it was up to the exorbitant price of $8 or $9 a barrel,” and William

68

Constructing Fiscal Federalism

Blackwood that “it was the duty of the Legislature to impose as few burthens as possible upon the masses.” Bread was only the beginning. Nova Scotians must also buy expensive Canadian manufactures.32 The loaf-of-bread argument invoked venerable arguments about how the state should respond to popular need. Whereas Nova Scotia was governed by the old English Poor Laws that required local authorities to provide for the upkeep of poor families, Canadians left such problems to charity.33 Confederation would follow the Canadian template and write poverty out of national politics. Those liberalizing Upper Canadian ambitions were a shock to Nova Scotians, who recognized the breach with popular moral economies. States should intervene in hard times to make bread available to the people, whether by relieving them directly or by adjusting the tariff. Confederation would actively encourage a distant quasi-imperial state to make it harder for the poor man to buy his loaf of bread. It would sever mechanisms of responsiveness, making the poor man’s plea too distant and muffled to trouble far-off governors. When people could not get bread, they were apt to riot; when traditional local elites declined economically, they were apt to orchestrate such riots.34 Traditional Nova Scotian elites, the largely Anti merchants, began to orchestrate popular discontent. Joseph Howe saw identical causes operating to impoverish the workingman and the region. Canadian financial distress constituted the “secret history of Confederation,” and the revenues of Nova Scotia would go to Canada’s creditors. Distress in Nova Scotia would grow while the means to relieve it would shrink: “You are generously permitted to maintain ‘the poor,’ and to provide for your ‘hospitals, prisons and lunatic asylums.’ We have it on divine authority that the poor ‘will be always with us,’ and come what may we must provide for them. What I fear is that, under confederation, the number will be largely increased, and that when the country is taxed and drained of its circulation, the rich will be poorer and the industrious classes severely straitened.” Worse, poverty would provoke violence: “If you take away from us £100,000 a year you will find it tell on our finances, cripple the discounts of the banks, check commercial enterprise, limiting the comforts of poor, diminishing the wealth of the rich. I am not sure that we will be content to bear it until we are reduced to milk and potatoes; before that comes we will take up our rifles, but I do say that what has happened to Ireland – the drawing of the life blood out of her is just what is likely to happen to us.”35 This was not traditional British rule but something very different, Howe argued in a letter. The imperial metropolis, though it had controlled some casual revenues,



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 69

rarely interfered with inferior patronage and “could levy no new taxes.” The new “Downing Street at Ottawa will appoint our Governors, Councillors, and Judges – will have unlimited powers of external and internal taxation – At the start, will control and dispense a surplus revenue, drawn from Nova Scotia alone, of £234,000 or nearly twenty times the highest amount that the Colonial Secretary ever dispensed. And besides Downing Street never took a pound out of the country. If sometimes lavishly expended, the Casual revenue was all spent in the Country which raised it, but the Finance Minister of Canada may, annually, draw out of Nova Scotia an enormous sum and spend it where he likes. That our nineteen members will afford us any protection it is in vain to hope.”36 By undemocratizing Nova Scotia, Howe was returning to older mechanisms of political responsiveness that he saw Canadians actively dismantling. Ottawa would be more unaccountable and unresponsive to Nova Scotia electors than anything previously seen there. Neither Canadian nor British politicians could remain entirely deaf to the grievances. It was becoming clear that Prince Edward Island and Newfoundland would not accept any version of the deal on offer, but that Nova Scotia and New Brunswick might. New Brunswick’s opposition was eroded partly by British diplomatic pressure, partly by disappointing talks around trade and railway construction with the United States, and partly by a new Fenian threat that brought down Timothy Anglin. The Fenians, or Irish Republican Brotherhood, were founded in Dublin in 1858 and aimed to lead Ireland out of British union. When the movement was violently repressed in Britain in 1865, Fenian veterans of the American Civil War threatened to strike back in British North America, prompting panicked reinforcement of borders there. In New Brunswick, the Fenian panic triggered an outpouring of hostility towards Irish Catholics and their sympathizers, above all Anglin. The New Brunswick Reporter asked “whether Mr Anglin is to rule this Province, or this Province to rule Mr Anglin; whether loyalty or Fenianism is the chief power in the land?” The vitriol won them a by-election and Anglin’s resignation.37 Unionists realized that the loyalty cry could swing a general election and forced one in April 1866, shortly after a Fenian raid materialized against Campobello. Leonard Tilley won 33 of 41 seats. The openly Anti forces won only three seats, all of them representing large Acadian populations. Confederation was then approved in the New Brunswick legislature by a vote of 38 to 1. Nativism overwhelmed the argument from regressive taxation, and not for the last time. New Brunswick and Nova Scotia were now both in Unionist hands. William Miller, an anti-Unionist representing Richmond, suggested that

70

Constructing Fiscal Federalism

better terms might effect a compromise. In London that December, delegates from New Brunswick, Nova Scotia, and Canada met to adjust the terms. There were ten changes on subjects ranging from the pardoning power to control of fisheries. Slightly better fiscal terms were now offered to New Brunswick and Nova Scotia: their revenue of eighty cents per head would not be capped at the 1861 census but allowed to rise until the population reached 400,000. As well, there would be an increased subsidy of $80,000 to Upper Canada, $70,000 to Lower Canada, $60,000 to Nova Scotia, and $50,000 to New Brunswick.38 In the ensuing debate in Nova Scotia, where the Antis had flagged Upper Canadian gloating over the first fiscal deal, the Unionists could now flag Upper Canadian dismay at the second. For Adams Archibald, the better terms proved that Nova Scotia controlled the balance of power. He quoted George Brown on the new arrangements that gave Upper Canada sixty cents per capita, Lower Canada seventy-four cents, Nova Scotia eighty-eight cents, and New Brunswick $1.10: “Nothing could be more scandalously unjust to Upper Canada than this.” Nothing except, perhaps, the new distribution of seats in the upper house, about which Brown declared: “The thing is utterly unfair.” So many outraged expostulations proved that Maritimers, too, could form a political combination. Other pro-Confederationists pointed to Cape Breton, where grumbling over its annexation had died away as locals demanded and obtained fair treatment: “If Cape Breton gets justice it is because we are bound to have it – because there is not a government in this country that would dare to ignore the claims of that island for a single year.”39 Unpersuaded, Annand insisted that revenue would drop from $800,000 in 1866 to $585,000 in 1868. Even people unfamiliar with constitutional treatises “well understand transactions in money in which their pecuniary interests are involved.” McLelan concurred: Confederation was a tax grab. “In Lower Canada there were over a million of people paying comparatively nothing to the revenue. The great difficulty of Canadian finances arose from the fact that while these people contributed little or nothing, they claimed an equal share of the revenue.” Nova Scotia would make up the difference, as shown by a comparison of current taxes on tea, sugar, molasses and flour, “the necessaries of life to the poor man.”40 The unspoken Unionist rejoinder was that those taxes would find their way back to Nova Scotia, if not as subsidies, then as patronage spending. Macdonald’s hand was all over the bna Act. Because local governments were intended to check federal spending by championing local ratepayer interests, Macdonald had every interest in ensuring that they were as



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 71

underfunded as possible. A fiscally beleaguered province could only carry opposition to Ottawa so far. There can be little doubt that the combination of a rich federal government and a poor provincial one was intended to make federal rather than provincial patronage carry more weight. Macdonald would be highly motivated to buy off Nova Scotia handsomely, as he had always bought off Quebec handsomely – that was the crux of the Unionist argument about the balance of power. But the Nova Scotia Antis saw weakness rather than strength in those covert dealings, and they also predicted that Maritimers could not long sustain the unity that had secured French Canada its concessions. Both views had truth to them. Macdonald stocked his government with important Maritime powerbrokers and put them in control of the tariff. Early industrialization in Canada was consciously steered towards the industrialization of the Maritime provinces. But as Canada expanded westward in the twentieth century, as Anglin had foreseen, Maritime economic and political influence dwindled. Confederation passed, despite popular hostility in Nova Scotia, because established authority backed it. The Antis could only ask for consideration, and they did not receive it. Joseph Howe was disgusted by the official indifference that greeted the Anti agitation and petitions in Britain and no less disgusted by the indifference in the new Dominion when, on the eve of the new Parliament’s inauguration, he travelled to Ontario and gave speeches that the press ignored. But once Confederation was in force, elections gave the Nova Scotia Antis an overwhelming majority in the local legislature and an overwhelming preponderance among Maritime members of the federal Parliament. Tupper was the lone Confederationist returned to Ottawa, and Macdonald had to name such defeated Unionist candidates as McCully and Archibald to the Senate. In Nova Scotia, Premier Annand’s government rallied resistance and pursued repeal of the union. As ever, this was a battle fought on many fronts: public meetings, newspapers, legislative resolutions, and delegations. Agitators invoked the spectre of tax resistance that threatened to explode into “violence and bloodshed.”41 Much of the fire emitted from Martin Wilkins, the attorney general, who won his seat in Pictou on a strong Anti platform and, early in 1868, produced a manifesto against the forced scheme. Confederation was tyranny because it wrested taxes from Nova Scotia without its consent, and taxes, for Wilkins, were the measure of free political agency. “Before the British America Act was imposed upon us Nova Scotia was as free as the air. How could the people of this country be taxed? There was no power to tax them except this

72

Constructing Fiscal Federalism

House, their own servants, whom they commissioned to tax them. Is that the state of things now? Have we any power over the taxation of this country? Does not the Act in question confer upon Canada the fullest power of taxing all the property of Nova Scotia at their arbitrary will?” Britain had no power to tax Nova Scotia and, therefore, no power to impose the b na Act. There is no power in the Constitution for taking a shilling out of a man’s pocket; – he only parts with his money by his free will and the process by which the maintenance of government is secured in the British Empire is this: that the people elect representatives with the power of levying taxes. There is no other power known to the constitution which can lay its hands on a man’s property in this country. These are the sound principles of the constitution, and we find that in former times the taxes were called benevolences, subsidies, gifts, and a number of other expressions were used to imply, and which all implied that everything which the Crown demanded from the people was their voluntary gift for the purpose of maintaining and carrying on the government. The British parliament could not tax Nova Scotia, and it could not delegate that power to any other government. See, he exclaimed: Nova Scotia property illegally confiscated. “See stamp duties and tea duties imposed upon them. Those very acts which forced the old thirteen colonies to rebellion have been imposed upon Nova Scotia with the same extraordinary fatuity.” Nominal representation in Ottawa was practical despoliation. The fact that loyal Nova Scotia would be subjected to rebellious French Canada, that imperium in imperio, was, to Wilkins, the crowning indignity. So far violence had been limited to burning in effigy but, Wilkins thundered, “the time for forbearance is at an end.”42 Wilkins’s remarks coincided with the release of the first Dominion tariff, which raised taxes on many Nova Scotia staples. Del Muise remarks that it “came like the fulfilment of some biblical prophecy.”43 There was also an unprecedented new stamp tax that even Tupper and D’Arcy McGee opposed as a tax on knowl­edge. But Macdonald insisted that although people wanted their papers free, government must “resist popular feeling.”44 Repeal meetings soon began to spread across Nova Scotia and then New Brunswick. One rural meeting that drew 250 people to the courthouse in Barrington, Shelburne County, Nova Scotia, unanimously resolved that luxuries were undertaxed, necessities overtaxed, and such a



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 73

policy “must prove disastrous to the poor and middling classes.”45 While the Antis felt vindicated, the Unionists were deeply embarrassed by the new taxes and flooded Macdonald’s inbox with protestations. These letters and Macdonald’s responses to them merit scrutiny because they show the covert networks of influence and suasion at work. Grievances voiced by enemies must be categorically rejected, but those voiced by friends must be addressed if not redressed. Macdonald’s reply to those informed and detailed letters conveys exactly how he reckoned with the problem – both real and potential – of poverty in the Maritime region. It will come as no surprise to the reader that he dismissed it outright as a matter for federal politics. But he was forced to compromise to carry the province. Two early letters came from now-senator Jonathan McCully, and would-be senator Philip Carteret Hill, briefly a co-premier of Nova Scotia in the interval between Confederation and the provincial election. Both men noted that Howe had begun to moderate his tone, but the tariff was reigniting both Howe’s and popular extremism. Hill blamed the Anti newspapers, which “have been most unscrupulous in their efforts to excite the people against the Tariff.” He was trying to counteract them in his British Colonist, but Macdonald’s government must lower the tax on “2 or 3 articles of large consumption by the poorer classes here.” He recommended lower taxes on corn and higher ones on wine.46 McCully similarly warned that “The duty on Corn & Cornmeal & other lowpriced flour is very objectionable & must be modified. The millers are outraged at the tariff on corn especially. But with a little modification & after a little expense, my opinion is that the Resentment created will presently subside.”47 Macdonald badly misread these warnings. His response was deaf to the very real fears of poverty and violence. Responding to McCully on 2 January 1868, Macdonald began with thanks and the remark that “I really do think that Howe’s fire is expended and that he won’t give us much trouble hereafter.” As for the tariff, Macdonald declared, he could well understand that the Antis were making political capital from it, but remission of the duty, if it were within the power of the Government, which it is not, would be of no appreciable value to those destitute people. Meanwhile, you must remember that we have got a distinct policy in view as to our dealings with the United States, and that policy must not be interfered with from any accidental poverty in one section of the Dominion. It would be the duty if private or municipal

74

Constructing Fiscal Federalism

charity is insufficient of the Local Legislature to look after those poor people, and it would be much better for the Central Parliament to supplement any such relief rather than to change their policy. The whole subject however will come up in March next and I hope we will be able to deal with it in a manner that will meet with your approbation and support.48 The reference to “accidental poverty” speaks volumes. Nova Scotians worried that the Canadians might drive the province and the poorer classes within it into poverty, unrest, and violence. John A. Macdonald responded with a lecture that such poverty could be no more than “accidental”; that it was not a political problem and not his problem. This was closer to liberalism than Tory interventionism. Charities and municipalities relieved poverty; serious governments did not deign to take notice of such things. Federal policy must reflect the truths of political economy, according to which poverty could not be other than accidental and temporary. To recognize poverty as something that had a claim on his government would be to hard-wire entitlements. Better, Macdonald suggested, ad hoc federal injections of cash subject to discretion. The poor would be hostages to their partisan loyalties. I do not want to suggest that Macdonald actually sought to cultivate poverty in Nova Scotia. But he was very well aware that, should poverty “accidentally” occur, the more impoverished the people, the more likely they were to rally around an open-handed party. His was no plot to reduce the people, but he was not ignorant of the Machiavellian maxim that government is strong when it is richer than the people. McCully took some time to reply, but when he did, his long letter reflected profound consternation. He was troubled by widespread “undisguised expressions of disloyalty and disaffection” and no less troubled by Macdonald’s attempts to turn them to Tory partisan purposes. His response was a serious rebuke of Macdonald’s fiscal federalism. First, he had to persuade Macdonald that the agitation against the tariff was no passing whim but a “current of public sentiment” that would, unless stemmed or channelled, “ere long be a feeling of chronic discontent, so general and so deep rooted, that it will be difficult if not impossible to overcome. I am not an alarmist. But no man possessed of the means for acquainting himself with what is transpiring in this Province, but must feel that the tide is setting in an adverse direction to that which every friend of Imperial identity would desire. The anti-Union press of the province is openly engaged in disseminating the most seditious sentiments that can be devised.” Wilkins was spearheading dissidence in the provincial



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 75

legislature. He was prompting “the militia of Pictou County to mutiny & insubordination some time since, by announcing that the Militia Laws could not be enforced, & telling people that they could not be compelled to attend at trainings, or do Militia Duty.” Whole companies refused to obey their officers. When constables tried to collect fines against them, they had “the property rescued out of their hands by organized bodies of men, and the officers of the law have been put at defiance & driven away.” The province was still loyal but might not long remain so given such agitation, as well as silent influences and a venal press. Violent conflagration was a real possibility. Second, the crisis revealed a serious flaw in the constitution. Federal legislators and senators were too distant from the people to woo their loyalty. “I for one do not believe that it will be possible to hold the affections of a people so remote as we are from Ottawa by means of a couple of public officers, whose duties require their residence at the Seat of Government … The seat of Government is very, very far away from the Maritime Provinces. The cord is too attenuated that connects us.” McCully realized he was powerless both at home and in Ottawa. His urgent warnings against the tariff had been ignored. “At the very earliest intimation I had in Ottawa of the obnoxious food tax, I denounced it, as Mr Archibald well knows, as prolific of mischief, and when I was left to advocate a Govt. Policy on Senate Contingencies settled in a committee room, as I supposed, and then forsaken by the Government, with a single exception, I foresaw what would be said & has already been said, both here, & in New Brunswick – and the use that would be made of it.” Something must be done to strengthen regional influence in Ottawa and federal influence in Nova Scotia.49 McCully was expressing his frustrations with the Senate as much as the tariff. The Senate was designed to enable regional influences to counterbalance the numerical majority of central Canada. But the debates over the new taxes demonstrated that no check upon government budgets was possible. It was appointed, a mere creature of the federal prime minister, and it had a high property qualification. Christopher Moore argues that Brown and McCully advocated high qualifications to make the Senate too weak to challenge the legitimacy of the Commons.50 Wealthy, unelected appointees lacked the reciprocal relations that electioneering generated and could not persuasively claim to speak for the poor. Luc Letellier de Saint-Just tried to claim in 1870 that the Senate had a special role as “a sort of intermediary between the crown and the people, to take care that they did not sanction any proceeding which would injuriously affect the

76

Constructing Fiscal Federalism

public welfare,” as the latest budget did with bread and coal taxes that would benefit Ontario and Nova Scotia but not Quebec and New Brunswick. His argument was rebuffed by Conservative Sir Alexander Campbell on grounds that British traditions restricted upper houses from interfering with taxation.51 Taxation must be consensual and wholly controlled by elected politicians. It was not entirely clear what the restrictions actually were. Liberal senators claimed that they could amend budgets, but even they could not find British precedent for emendation of a general tariff. On some occasions, the Senate has indeed intervened in regard to tax bills. But it was already clear in the spring of 1868 that the Senate was an exceedingly weak place to check a budget. The Antis merrily reprinted all the earlier promises of their opponents, including Tilley’s: “we will not be subjected to extra taxation.”52 Anglin again drew lengthy comparisons with the predatory paternalism seen in Ireland.53 Unionist newspapers deplored the new taxes and Macdonald’s inbox swelled with more alerts. A friendly letter from the archbishop of Halifax, T.L. Connolly, warned that Howe had dropped all moderation and “war to the knife was the key note. The difficulty now is that the wildest and most absurd fictions are honestly believed by the masses. We have no prominent politician to stem such a tide of absurdity.” The Unionists were sweeping whole districts. “Between the blundering about the tariff and the lies and misrepresentations it gave rise to,” he feared serious consequences “until the honest and intelligent among us will be set to right especially on the financial question.” Connolly read Macdonald a sermon on responsiveness: “It would be most politic if you in your place in the House of Commons came out strong in your sympathy for N. Scotia. If you could go even to the extent of regretting that the people were not consulted it would be desirable.”54 Macdonald also got an earful from Peter Stevens Hamilton, former commissioner of mines, who warned: “That unfortunate tariff of Mr Rose’s has aroused the fears of a great many Union men and made of some of them open Antis, as it bears rather more heavily upon the Maritime than the Inland Provinces.” A majority government had no excuse for showing “so little regard for the feelings and interests of their fellow subjects.”55 Macdonald was slightly chastened by this barrage. He thanked McCully for his “instructive and exhaustive letter,” which he showed to the governor general, Lord Monck. But he remained confident that public opinion could be contained, he told McCully and other correspondents, so long as the Colonial Office advised the Antis – who had gone to London to petition for repeal – “that they have nothing to hope or expect



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 77

from the British government.”56 Fortunately for Macdonald, the Duke of Buckingham came through in that regard. In a June 1868 memo to Lord Monck, he dismissed the appeal but did urge Canadian legislators to “relax or modify any arrangements on those subjects which may prejudice the peculiar interests of Nova Scotia and of the maritime portion of the Dominion.” The advice gave Macdonald some new leeway for negotiation. Meanwhile, John Rose reduced the tariff on bread, molasses, sugar, and shipping tonnages. Hard negotiation still lay ahead. Macdonald was willing to adjust the tariff and sweeten the deal offered to Nova Scotia, but as much as possible, he wanted to keep the terms subject to backroom negotiation rather than formal amendment. He wanted to control the fiscal transfers personally, quietly patronizing political friends rather than formally subsidizing political enemies. To persuade him to relinquish that project was hard work, much of it done by Joseph Howe. Howe’s decision to join Macdonald’s cabinet has been decried as a cynical sellout,57 but that view does not do him justice. Howe had always welcomed union in principle and had always suspected that better terms were the likeliest best outcome. Now, perforce, he changed tactics. He continued to fight for Nova Scotia but now he would play by Macdonald’s rules: he would loudly rally opinion, quietly pull strings, and force material concessions. In London, before the decision came down, Charles Tupper called on Howe and urged him to lay down arms in the event of failure. As Howe described the conversation in a private letter, “he thinks the Canadians will offer us any terms, and that he and I combined might rule the Dominion. Of course I gave him no satisfaction.”58 Tupper’s account in a letter to Macdonald bears out Howe’s description: “I told him that between us we could rally to his support three-fourths of the wealth, education and influence of the country.”59 But Tupper’s recollections also reveal that the two men openly discussed the possibility of tax revolt and violent repression. Asked what would be his next step, Howe told Tupper: “‘I have eight hundred men in each county in Nova Scotia who will take an oath that they will never pay a cent of taxation to the Dominion, and I defy the Government to enforce Confederation.’ ‘You have no power of taxation, Howe,’ I replied, ‘and in a few years you will have every sensible man cursing you, as there will be no money for schools, roads or bridges. I will not ask that troops be sent to Nova Scotia, but I shall recommend that if the people refuse to obey the law, that the Federal subsidy be withheld.’”60 Tupper could stare down any tax revolt. He need not fear violence from Howe, who had always congratulated himself that his political

78

Constructing Fiscal Federalism

struggles had not broken so much as a pane of glass. Liberal reform and violence were incompatible for Howe. But without violence – seizure of the customs house – tax revolt could not stop the flow of revenue to Ottawa; it could only prevent its return to Nova Scotia. But Howe still had meaningful choices. Reviewing them in a letter, he remarked that if the Antis “admitted defeat and laid down arms, I have no doubt they would make large sacrifices, personal and pecuniary, large enough to justify our opposition down to the point of surrender.” But concessions could only be got if Anti agitation forced them on Macdonald. There was such a thing as Maritime political combination and it could be harnessed to serious political purpose in the Confederation. In a world where money followed performances of power, Nova Scotia had earned fiscal transfers. It remained only to find mechanisms to unite the province federally behind the new Tupper–Howe combination, a transition that Howe understood to be much more delicate than did Macdonald. Macdonald, for all his patrician disdain of democracy, always responded to widespread and noisy public movements and did so now with alacrity once persuaded that this was no passing whim. Both Archibald and Tilley wrote in mid-July 1868 to urge conciliation. Archibald advised Macdonald that if he could pacify Nova Scotia, New Brunswick would follow. “N.S. peaceful, N.B. is firm. The question of Nova Scotia is therefore the question of the Union.” A personal visit by Macdonald, a personal meeting with Howe in Halifax would clear the atmosphere and “give Howe immense power … Everybody here thinks negotiation the remedy and you the man.” But, Archibald remarked, there must be fiscal concession: “A pecuniary concession is nothing to the Dominion, while it is the easiest & simplest & most defensible form that concession can take.”61 Leonard Tilley went to Windsor to feel the “public pulse” and concluded that Howe could not have set the whole country ablaze without “sufficient inflammable material” already to hand. “Many of the people are worked up to a perfect frenzy and ready for the most extreme measures.” Tupper, he reported, agreed with him that “the true policy is conciliation.” But Howe told Tilley and Tilley told Macdonald that the concessions must not be to himself but to the local government, negotiated through a royal commission or a “friendly conference … The reasonable men want an excuse to enable them to hold back the violent and unreasonable of their party and this excuse ought to be given them.” Waite observes: “The plain good sense of that letter Macdonald did, indeed, pay attention to.”62 Within weeks, Macdonald and Cartier were in Nova Scotia to hear the grievances and make contact with Howe.



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 79

Through the fall and early winter of 1868, Macdonald and Howe exchanged secret letters. Howe fought hard for formal concessions for Nova Scotia. “Here we all conscientiously believe that without modifications the scheme is unfair to the extent of millions of dollars, to say nothing of the sentimental grievances, When you say you will readjust this on equitable principles, we can negotiate, but if matters are to remain as they are I could not recede a step, and nobody would follow me if I did. Give me a fair case to our people, and the business is more than half done.”63 But where Howe was reasoning from the provincial standpoint, Macdonald was still reasoning from partisan principles. He would concede better terms, but he wanted to nobble provincial Liberals at the same time: “My idea is this – that the financial question should be settled in a manner favourable to Nova Scotia interests and that this once effected you should openly appeal, in the spirit of our late admirable letter lately published, the loyalty, moderation and good sense of the whole people.” With “all men of property who desire the cessation of this ruinous agitation, and the whole union party at your back,” Howe could force a dissolution and take control of the local legislature. Set yourself up as a Mirabeau for Nova Scotia, Macdonald urged Howe, and play a bold game. The Comte de Mirabeau was a startling choice of reference: the French aristocrat had been an early leader in the French Revolution and an early advocate for graduated income tax and free trade. His treatise of 1785 had argued that taxation should be a tribute offered by citizens, rather than a spoil seized by the state.64 Mirabeau was, moreover, as Howe pointed out, notoriously unprincipled and posthumously discovered to have been in the king’s pay. Howe’s letter shared the tone of McCully’s: incredulity at Macdonald’s ignorance and arrogance. He explained that if he were too obviously bought, the public would not follow him. Nor could Macdonald carry Nova Scotia by appointing a handful of locally unpopular men to the Senate. Already one patronage appointment – a postmaster – had offended locals, and greater care must be taken in future, Howe warned Macdonald in closing. The provincial Liberals continued to stoke discontent in the legislature and the press. The Halifax Chronicle remained a vibrant focus for antiConfederate debate: one young reporter there, William Stevens Fielding, imbibed a passionate admiration for Howe, patriotism, and tax protest that he was still injecting into federal politics half a century later. One editorial warned that the Canadians, not content with taxing “the bread we eat, everything we consume,” were now using those taxes to “hold our young men under military rule, and march them to the outmost verge of

80

Constructing Fiscal Federalism

the wilds of Canada.”65 Every grievance was a fiscal grievance because every federal policy had Nova Scotia taxes behind it. Brown had made the Province of Canada ungovernable by hammering home that fiscal analysis, and Annand seemed determined to do the same. His government sustained the argument of provincial impoverishment by running up a deficit of $70,000 in its first year of operation under the new constitution. Some Antis urged American annexation. (See figure 2.1) It was not obvious that American taxes would be lower than Canadian: one calculation set Canada’s debt at $3.86 per capita and American debt at $11.46 per capita (with England’s at $10.92). But the Antis noted that the Americans were fast paying off their Civil War debt with an enviable income tax that taxed the rich rather than the poor.66 In December, memos by Rose and Howe hammered out better terms that raised the debt allowance and the subsidy. Now Howe could openly switch sides and begin to defuse the Anti agitation. By January, Howe noted that his defection was perplexing locals who could no longer see clear mechanisms of resistance: “A General strike as suggested by me in August is the only thing that is practical but that involves sacrifices which I doubt if they are prepared to make.” By February, Howe’s letters to Macdonald mostly pressed patronage appointments, like most of the other letters in Macdonald’s inbox. But Howe’s defection was not mere corruption: he realized that the battle could be won no other way. George Brown’s Confederation project aimed at restricting both taxation and fiscal transfers. Macdonald perverted Brown’s tax revolt: tax money would continue to flow in from the periphery, but it would not flow back out, at least formally. The Antis, thus, had to confront simultaneously two very different and apparently incompatible quasi-imperial projects, one rooted in a totalizing liberalism designed to erase poverty from political consciousness, and the other drenched in ancien-régime cronyism that promised to enrich the rich while casting a few crumbs to the poor. On both counts, Maritimers saw economic and fiscal dangers. Because Macdonald was forcing fiscal negotiations into private rather than public channels, Howe must fight the battle in both realms. Backed by a united public opinion, Howe forced Macdonald to concede formal transfers and rupture the supposedly iron-clad terms of the bna Act. Nova Scotia’s tax revolt was not unsuccessful: the tariff was reduced and the fiscal transfers increased. No less important, the performance of political responsiveness facilitated negotiations around the integration of Prince Edward Island in 1873. Macdonald’s responsiveness was conservative and clientelist, but it was better than the chilling lack of responsiveness that the Antis



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 81

Figure 2.1  John Henry Walker, “Cross Roads: Shall We Go to Washington First, or How(e)?” (November 1868). Light Canadian taxes versus heavy American taxes lure Nova Scotia towards Ottawa. Image reproduced from Caricature History of Canadian Politics: Events from the Union of 1841 illustrated by cartoons (Toronto: Grip, 1886, 85). (Courtesy of Rare Books and Special Collections, McGill University)

experienced in London. There, Annand’s Morning Chronicle remarked, British legislators took a greater interest in a dog tax that “concerned, perhaps, two hundred thousand dogs and puppies of high and low degree” than in colonial legislation affecting 3 million subjects. A Nova Scotian in London had less influence or interest in play than a mutt; he was ruled not according to his rights but wholly by imperial might. “Indifference was as ruinous to us as a positive hostility could have been, and was as well calculated to awaken disgust of British rule as any positive injustice ever committed by a British government.”67 Nova Scotians

82

Constructing Fiscal Federalism

had believed themselves vested with that unique combination of might and right, the “rights of the British subject.” But those rights were vested in taxation. If British politics really were about property, then the fact that colonials paid no taxes to the imperial metropolis left them with no claims there. Nova Scotians learned that they could not presume on their historic rights and identity but must fight for every scrap of political influence, in a continental rather than an imperial forum. It was a rude awakening, but a salutary one, and they acquitted themselves impressively in this new battle. Popular discontent still simmered. Some Antis wanted a tax revolt. They wanted to beat up federal tax collectors and refuse to pay their taxes. In January 1869, the Morning Chronicle hoped to hear a new Nova Scotia Repeal League, led by A.G. Jones, declare: “We will not endure Union with Canada, we shall pay no taxes to the Dominion Government, except when we are forced to by the bayonets.”68 And, indeed, there were popular instances of violence, such as the seizure, described by McCully, of fines imposed on militiamen who refused to muster. Tax collecting was always an uncertain business, capable of inspiring violent resentment, especially if political forms were new and state administration minimal. It was understaffed, and collectors, especially in the Maritimes, were demoralized, outmanoeuvred, and regularly threatened with violence. In the dying days of the colonial regime, one customs agent based at Port Mulgrave complained of “many threats laid against me” during a recent seizure in the aptly named Pirate’s Harbour. In August 1868, another collector at Cape Canso “ran the risk of my life” when he seized ten fish barrels filled with illicit liquor.69 Resistance to Confederation need not storm the Citadel: the tax riot continually suggested itself wherever local moral economies were outraged. But the threatened violence of smugglers was ordinary, workaday fare, and there were few signs of deeper stirrings. Violence against a custom agent had a certain moral-economy logic, but it was a temerarious one and, on the whole, gratuitously so when the act of smuggling itself probably sufficed for the same purpose. An underground economy of contraband had its own logic and legitimacy, not to mention lucrative payback. Nova Scotia coastline was a smuggler’s paradise, and the practice persisted around Nova Scotia and, indeed, across Canada for many years after Confederation.70 Direct taxes were another matter: the new school taxes were widely resented. Walton Township, in Hants County, staged something like its own guerre des éteignoirs in 1870. Forty-one ratepayers there submitted a petition that declared “every rate payer in the Township will stand



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 83

shoulder to shoulder to avoid the payment of the unjust, iniquitous and unlawful assessment.”71 A series of letters from Michael Burgess, Walton’s tax collector, describe his frustration in the face of that collective resistance: “The People says they will defend one another against anney Sherif from taking goods I will have a hard time of it, it is bad to contend with a few let alone a whole Township.” As the situation deteriorated, “you never heard such a cry about a county tax as there is about this one here the people are exasperated some swares and some prayes and I dont know wither I shall get out of the scrape with a sound head or not.” Another letter complained: “I have called upon many repeatedly to pay but all of no use. As a bodey they will contend with a Constable to protect one another this is a bad state of things”; in yet another letter, he refused to collect without a promise of protection from damages and expenses that might follow warrants of distress to seize property in lieu of arrears.72 The political leadership of Nova Scotia had far more to lose than the federal government in any anti-tax agitation because it taxed people more directly, and the people were likely to be indiscriminate in any attacks on tax collectors. Responsible government had been for reformers a trajectory away from violence and towards stable, moderate rule with security of property. Nova Scotia’s statesmen were, in the 1860s, collectively reconstructing the electorate to make it more respectable, liberal, and propertied. Both sides agreed to disenfranchise the unpropertied. They wanted the poor to request political concessions from a position of weakness rather than demand them from a position of strength. That was how Nova Scotia politicians were reconstructing their polity on the eve of Confederation and that was how the Antis feared seeing themselves reconstructed under Confederation: as a small, weak people able to ask for but not demand things. The familiarity of the argument lent a frantic note to the Anti campaign. But this was a liberalizing age. Timeless mechanisms of responsiveness were being called on the carpet by liberals and sternly told to disestablish themselves. Why should Nova Scotia as a province expect to escape the treatment it was meting out to its poorest citizens? Nova Scotia Liberals were hoisted with their own petard. They argued that it was precisely because the new Canadian tariff would hit the poor so hard that Tupper refused to take the measure to the people. In May 1867, for example, the Morning Chronicle argued that the Antis spoke for the poor while the Unionists scorned them: “Now, what have the two parties severally proposed to do for the poor? Unionists to tax all parties for the support of a standing army, for double legislatures, to make the

84

Constructing Fiscal Federalism

poor man’s tea, sugar, molasses and flour far dearer than at present, to double the cost of his clothes.” The bankers and merchants, on the other hand, wanted to provide cheap money and light taxation and that “the poor man’s loaf should be admitted duty free … The industrious poor know which party acted in their interests, and no bunkum howling, no crocodile tears over cruelty of bankers and merchants, will now deceive the people.”73 But there was a hollow note to such claims. Tupper turned the accusation of scorning the poor man back on the Liberals: “Mr Howe denies the right of the Legislature of the colony to change the Constitution of the country with the concurrence of the Imperial Parliament, when they are told that the last act of his Government was to introduce a measure to disfranchise more than one quarter of the electors who had elected the Parliament in which he was then sitting.”74 Where Howe was torn by competing impulses, Tupper had no such qualms: he frankly believed that backward-looking Nova Scotians must have modernity forced upon them. Imposing compulsory school taxation, raising the franchise, and delegating upward the power of the purse were all aspects of that forced modernization project. The end – economic development and prosperity – justified the means because it would enfranchise the region as a whole, by replacing need with interest, the political weightlessness of poverty with the political weightiness of prosperity. But Tupper’s vision was always a speculative gamble, and there was always a danger of regionalized poverty and weightlessness. Real fiscal victories were wrung from the union in 1869. It could be objected that in the long term too little had been conceded. But Howe might justifiably respond that the long term was well empowered to look after itself. Nova Scotia had mounted a spectacular declaration that Maritimers, like French Canadians, were a political force. By public agitation, they would maintain their rights and privileges in the new union. They had a local champion in the provincial government and powerful federal champions. The men who ran Macdonald’s National Policy of tariff protection were all Maritimers: Tilley (1878–85), McLelan (1885–87); Tupper (1887–88), and George Foster from New Brunswick (1888–96). Wilfrid Laurier did the same with Fielding (1896–1911). Such men did much to nurture a modern industrial economy in the Maritimes. During the 1880s, Nova Scotia’s industrial growth rate outstripped all other eastern provinces, while Saint John grew faster than Hamilton, Ontario’s pre-eminent industrial city.75 Recent estimates of per capita income in 1871 and 1891 show that Nova Scotia increased its share of wealth, rising from 64 per cent to 74 percent of the per capita income of Ontario.



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 85

New Brunswick and Quebec did less well.76 Serious industrial decline in the Maritimes occurred after 1900. Better terms were an important precedent that opened the door to other claims. In 1871, New Brunswick pointed out that the federal government had paid for the lighthouses that the colony had built, but not for the “materials and stores” in those lighthouses. Ontario Liberals were outraged to see the fiscal constraints shattered.77 Only French-Canadian tax compliance, observed one Ontarian, saved Canada from “the verge of revolution.”78 Ontario found a champion in Edward Blake, a constitutional lawyer with a seat in both legislatures who framed one resolution after another to denounce better terms. Premier John Sandfield Macdonald squelched twelve but passed the thirteenth for fear of losing the province. He lost the province anyway: the provincial Liberal Party, led first by Blake and then by Oliver Mowat, another constitutional lawyer, won consecutive victories in 1871, 1875, 1879, 1883, 1886, 1890, and 1894 (and two more under their successors) and perpetually denounced fiscal transfers from Ontario to regions that could not or would not tax their populations locally and directly to pay for schools, roads, and the like. In fact, even wealthy Ontario could do no such thing: its municipalities were $12 million in debt in 1873 when Mowat bailed them out with payments of $3.3 million or $12 per head, largely drawn from the province’s capital account with Ottawa.79 The federal Liberal Party, dominated by such Ontario austerity warriors as Brown, Blake, and Mackenzie, strenuously advocated a freeze on the fiscal arrangements, but that view was profoundly unpalatable outside Ontario. When Annand’s government accepted Macdonald’s new deal, it did so only as a temporary measure, awaiting, it declared, a fuller analysis. Federal MPs from Nova Scotia were no more likely to support a fiscal freeze. Del Muise argues that better terms had two benefits for Macdonald: they made politicians focus on Ottawa as the best place to advance Maritime interests and they pushed Maritime MPs into the Tory camp.80 Nova Scotia elected Liberal majorities provincially, as Annand quietly dropped secessionism during the 1871 election. But in 1872, Nova Scotia sent to Ottawa candidates more or less openly loyal to Macdonald, thereby earning hearty denunciations from the federal Liberals that further alienated them from that party. Macdonald lost heavily in Ontario in 1872 and spent the next decade paying for that loss with new heights of bribery and taxation. Richard Cartwright, a one-time Tory (who claimed that the defection enabled him to spend much less money bribing voters) and later Liberal finance

86

Constructing Fiscal Federalism

minister, blamed the loss of Ontario on the killing of an Orangeman in the Red River uprising of 1869–70, for which Ontario demanded a bloodier retribution than Macdonald provided: “The volley that killed Scott cost Canada more than a hundred million of dollars.”81 Macdonald offered more plums to the provinces by means of new debt allowances. Ontario and Quebec could not agree on how to divvy up the original Canadian debt after three arbitrators representing Canada, Ontario, and Quebec failed to come to terms. The first two wanted to divide the debt according to assets each acquired provincially, while federal debts – railways, canals, defence – would be allocated according to their physical location, resulting in about 53 per cent to Ontario and 47 per cent to Quebec. But Quebec wanted consideration of the debts each colony had brought into the Union of the Canadas in 1841. Because Upper Canada then lacked a port of its own, Ontario would have borne 80 per cent of the federal debt according to that calculation. While this negotiation wound its way through judicial appeals, Macdonald decided to raise every province’s debt allowance so that none need pay interest to Canada. Mowat was furious to see the deal extended to the Maritimes.82 More money was continually needed and so it was that both need and opportunity led Macdonald to accept enormous sums (channelled through Canadians) from American railway men interested in building a projected transcontinental railway. The Liberals raided Tory offices and produced evidence of corruption that forced Macdonald’s resignation late in 1873. In the 1874 election, Nova Scotia, like the other provinces, sent mostly Liberals to Ottawa. But economic downturn turned Mackenzie’s rule into a brief interregnum. In 1878, Nova Scotia was back in the federal Conservative camp, persuaded by arguments that, whereas both parties were protectionist, Mackenzie’s protectionism strategically enriched Ontario, “the most powerful, most selfish” province, at everyone else’s expense.83 Nova Scotia remained Tory blue until the turn of the century. Provincially, Nova Scotia consistently re-elected Liberals, who complained about fiscal stringency and spent more than they had, digging into their debt allowances to pay the ordinary costs of government.84 New poll taxes were mooted in 1869 but were rejected on grounds that they would be impossible to collect from people too mobile or too poor to own property. Experiences in Halifax and Victoria counties showed that the tax cost more to collect than it brought in and would further alienate a population already convinced that school taxes were “oppressive and tyrannical.” In 1870, the provincial legislators imposed a new tax on vacant land to relieve resident taxpayers, but it was drastically



Tax Revolt in Nova Scotia in the 1860s: Fairness and Region 87

reduced before it passed (from fourteen down to five cents per acre) and was a tiny inroad on the problem of a dispersed population that could not afford its roads, bridges, and railways.85 Nova Scotia’s tax revolt had limited success. It challenged Macdonald’s fiscal federalism with well-founded accusations of imperial “tribute.” Where Macdonald saw mere “accidental poverty,” Nova Scotians saw something more systematic at work in the centralization of political and fiscal power. They advocated the rights of the poor and roused enough popular outrage to check Macdonald’s fiscal imperialism with formal concessions of better terms. But though he made some concessions, Macdonald’s political project largely contained the tax revolt. Liberal advocacy of the rights of the poor citizen and poor region was undermined by an attack on popular agency. If the poor had no political rights within Nova Scotia, why should they have any claims on the Dominion? Tupper was on stronger ground with his more pragmatic approach to resource allocation, and Nova Scotians, delivered to him by Howe, consented to follow his lead for decades. Under such circumstances, poverty must remain “accidental” and politically irrelevant in Canada a little longer.

3 Tax Revolt in British Columbia in the 1870s: Fairness and Race

Canada’s infant fiscal structures were tested during the Great Depression of the 1870s. If federal revenues were hard hit, provincial revenues were harder hit. Their per-capita subsidies decreased as population increased: in fast-growing Ontario they dipped to sixty cents in 1881 and fifty-one cents in 1901; in Quebec they were sixty-five cents and fifty-four cents, respectively.1 Maritimers had negotiated marginally better terms and grew more slowly. In the event of shortfall, provinces could turn to direct taxation, but as Garth Stevenson observes, “the provincial power to impose direct taxes was of little immediate value, since such taxes would have been politically unacceptable.”2 Direct taxes remained unthinkable in the original founding provinces but not in the two new ones, Prince Edward Island and British Columbia. They experimented with direct provincial taxation in the 1870s, while Quebec introduced corporate taxes in the 1880s. This chapter outlines the early negotiations around provincial finance and direct taxation and then turns the focus to British Columbia, taking as a case study that province’s stand-alone decision to impose and sustain direct provincial taxation on the general public. The combination of a weak and clientelist state and a garrison mentality amongst the small and dispersed settler population resulted in a particularly harsh tax regime. B C ’s electorate did not want liberal rule; it wanted white rule, and used the tax system to try to get it.3 The tax structure written into the b na Act was designed to empower the federal government at the expense of the provinces. It played to Liberal sensibilities by forcing provincial governments to restrain themselves or tax themselves, and to Conservative sensibilities by making the provinces clients of the federal state. Macdonald confided to friends that he hoped to reduce the provinces to the status of municipalities; direct



Tax Revolt in British Columbia in the 1870s: Fairness and Race 89

taxation was intended to keep them small and accountable.4 By the mid1870s, most of the provinces were predictably short of funds. Ontario was the exception. Gifted with rich land, dense settlement, nearby markets, and easy transport, it was the economic hub of Canada. It also checked Macdonald’s imperial ambitions with successful legal challenges against federal attempts to municipalize the provinces.5 As everywhere else, local governments in Ontario struggled to pay for local expenses, but the provincial government was rich enough to bail them out, even as it denounced bailouts elsewhere. Austerity hardly characterized Ontario’s political culture in the 1870s and 1880s, but its politicians championed austerity as a national ideal in order to keep Ontario wealth in Ontario pockets. But local success was bought with failure everywhere else. Other provinces necessarily subscribed to some form of better terms; all were too impecunious to do otherwise. The federal Liberals could not engineer a national consensus around austerity. Predictions that premiers would rather demand more subsidies than impose austerity or direct taxation proved prescient. All the provinces save Ontario pressured Macdonald for increased subsidies. The ten years of better terms that Joseph Howe had negotiated for Nova Scotia ended all too soon. When the Liberals running the province sought a renewal from Liberal prime minister Alexander Mackenzie, they were disappointed. Mackenzie told them too much was already being paid out as provincial subsidies and “to go any further in the direction you indicate would simply make the Dominion Government the Collectors of revenue for the Provinces.” Finance Minister Richard Cartwright further added that any increase would work against Nova Scotians by compelling them “to pay more into the exchequer of the Dominion than they could possibly receive again.”6 By the end of the decade, Conservatives controlled both governments but Macdonald, too, refused to renew the subsidy. When Nova Scotia’s premier John Thompson passed a bill to establish county governments that would impose local taxes for roads and bridges, as in central Canada and, since 1877, in New Brunswick, he lost the next election.7 The Liberals, initially under W.T. Pipes and from 1884 under W.S. Fielding (now the editor of the Morning Chronicle), met with no more success in their federal deputations. Fielding insisted that the great “wrong of ’67” must be rectified with “large grants from the Federal Treasury.” When Macdonald vetoed the request, the Morning Chronicle exclaimed, in February 1886, that “only two alternatives are open to us – direct taxation or repeal.” Fielding led the province into a “repeal” election that saw bygone arguments revived: “We thrived before

90

Constructing Fiscal Federalism

we endured the exactions of Canucks, we shall thrive when we are once again free from those exactions.”8 But popular support was tepid. One commentator remarked of the legislative debate on repeal: “Today we have the same sentiments, the same arguments, the same words, but the seats are vacant, the lobbies are scarcely tenanted, and the galleries are almost empty.”9 Fielding won his election, but the tax revolt ended with the federal election of 1887. Macdonald recalled Tupper from the High Commission in London (where political differences had landed him) with the dual mandate of winning back Nova Scotia and upholding the tariff against the “taking program for the Maritime Provinces.”10 Tupper won fourteen of twenty-one seats in Nova Scotia. The price was a protective tariff for Nova Scotia coal that drove up manufacturing costs in central Canada. That did not help the provincial government, of course, and Fielding began to toy with the idea of direct taxation, noting that “the principle of income tax has been recognized in many other countries as a wholesome form of taxation.”11 But, ultimately, he relied on the province’s capital account, coal royalties, and loans, while also joining in another mechanism that suddenly presented itself as an avenue to higher subsidies: interprovincial co-operation. In the 1880s, Quebec took the lead in the fight for higher subsidies. Direct taxation was thought to be most inconceivable in Quebec, as the Monetary Times remarked in 1887: “Quebec, the common belief is, fears and abhors direct taxation.”12 In fact, Quebecers paid direct taxes (La Presse declared that people unjustly accused “our population of ignorance” in regard to direct taxation) and direct provincial taxation was no less of a “bugbear” in Ontario, no less likely to cause revolt.13 But Ontario, so the story went, opposed provincial taxes because it had effective local states and taxes, whereas Quebecers were seen to lack them on grounds that the Catholic Church, to protect its educational and welfare institutions, policed the public-private boundary and held the provincial state to a more liberal standard than prevailed elsewhere. But, however restrained was Quebec’s social spending, its infrastructure spending, especially on the North Shore Railway, was much less restrained. By the mid-1880s, 25 per cent of the province’s budget went directly towards interest on the debt.14 Still, the Quebec government could rally popular support for projects aimed at transferring wealth from English to French. In the 1880s, it developed two formulas to do so provincially and federally. First, in 1882, the province introduced direct taxation of commercial corporations. The companies immediately challenged the new tax legally on grounds that it regulated trade, a federal concern, and that corporate



Tax Revolt in British Columbia in the 1870s: Fairness and Race 91

taxes were always indirect. A direct tax, according to John Stuart Mill, was a tax that could not be shifted to someone else. The courts had to decide whether corporations shifted their taxes on to their customers. In 1887, the Judicial Committee of the Privy Council (j cp c) (the final court of legal appeal) upheld the tax, prompting other provinces to follow Quebec’s lead.15 The English-language press saw the tax as a racialized attack on enterprise. According to the Protestant Montreal Witness, a “corrupt and extravagant” government faced a ruinous deficit but dared not impose personalty (personal property) taxes or the “French-Canadian farmers would execrate them and hurl them from power. The trade, commerce and manufactures of this Province were mostly in the hands of English-speaking people, however, and a tax upon them would be to the habitant what spoiling the Egyptians was to the Hebrews, and consequently popular.”16 Liberals and Conservatives argued as to who better protected French-Canadian farmers from direct taxation. Liberal Honoré Mercier, pointing to the corporation tax, denounced direct taxation as a typical bleu “draconian politics” that squeezed tax dollars from farmers who should be encouraged rather than hit up. The bleus responded by quoting panegyrics to direct taxation by George Brown and Richard Cartwright, in contrast to Conservative MP Thomas White, publisher of the Montreal Gazette, who insisted that direct taxation “would be very onerous for the poorer class.” When bankers formed a deputation to request relief from the corporations tax in 1887, Honoré Mercier, now premier, advised them that Tory agitation against direct taxes on farmers had effectively made such taxation impossible; hence, his need for corporate taxation. But if influential businessmen truly sought tax relief, Mercier advised, they should rally around his other fiscal project: increasing the subsidies.17 The second lasting fiscal innovation, inaugurated by Mercier in 1887, was to band with the other premiers in annual meetings to strengthen the demand for better terms. At the first such meeting, according to John Davidson, a professor at the University of New Brunswick, the premiers “cut and carved at the B.N.A. Act with apparent pleasure … there was a certain political piquancy about their proceedings, for most of them were Liberals and the Dominion Government was Conservative.” The premiers demanded higher subsidies, which had accounted for 20 per cent of the federal budget in 1867 but had fallen to 13 per cent in 1887 (and would fall to 10 per cent in 1900).18 The subsidies clause of the bn a Act was finally revised in 1907, when the 400,000-person cap was removed by the Liberal finance minister – none other than W.S. Fielding. But the

92

Constructing Fiscal Federalism

change benefitted the fast-growing central and western provinces far more than the Maritimes. One scholar reckons the latter obtained 2.2 per cent of the $4.7-million increase in subsidies.19 British Columbia and Prince Edward Island joined in the collective demands, well aware that with their small voting populations and miniscule federal representation they lacked negotiating power of their own. In 1887, all six seats in pei went Liberal and all six seats in BC went Conservative, but it hardly mattered either way. Both provinces lacked municipal institutions, so their provincial governments had to administer taxes for schools, roads, and other local services. Both provinces, therefore, grasped the nettle of direct taxation far earlier than the other provinces. Neither experiment with direct taxation can be considered a success: in both cases, the government that imposed the taxes was rejected at the first opportunity. The successor government in pei promptly reversed the tax. In B C , the tax remained but the legacy was rather darker. Railways were at the heart of most fiscal shortcomings, dragging provincial governments into speculation and scandal. Prince Edward Island had originally refused to join a Confederation organized around railway debt because railways did not benefit it directly enough. In 1871, the colony passed its own railway bill, and two years later found itself so precariously indebted that it had to either impose direct taxation or join the Confederation. The public was advised “that increased taxation, besides being unbearable, would only postpone the inevitable which in the end would have to be accepted. The people reluctantly yielded to these arguments.”20 The deal that brought p e i into Canada provided a subsidy to compensate for the lack of Crown lands and generous percapita subsidies, which were above $2 in the early twentieth century (50  per cent higher than in New Brunswick, more than 100 per cent higher than Nova Scotia). Domestically in p e i , colonial legislation passed at mid-century put the burden of road building on statute labour. Eligible men had to perform work on the roads and earned the right to vote by that labour. The result, Colin Grittner notes, was an extraordinarily democratic franchise – one well suited to a province largely inhabited by tenant farmers on land owned by absentee landlords who resided in Britain and enjoyed political influence there. Colonial politicians campaigned on more or less openly confiscatory platforms that the imperial government continually blocked. In 1877, the Liberal premier, Louis Henry Davies, ended statute labour and imposed a poll tax of $1 on all men twenty-one years of age or older. But the new tax was hard to collect, in part because all new taxes lack



Tax Revolt in British Columbia in the 1870s: Fairness and Race 93

popular legitimacy, in part because times were hard. There were indignation meetings across the province, well covered by the opposition press: “The acerbic editor of The Presbyterian and Evangelical Protestant Union devoted over a dozen sequential editorials to the ‘tax curse’ and the ‘haughty, tyrannical’ legislators who imposed it.”21 In 1878, onequarter of taxes were unpaid, and the sums collected met less than half the costs of road building. Davies’s government fell to a non-confidence vote in March 1879, and the new Conservative government of William W. Sullivan repealed the compulsory poll tax and restored statute labour. Replacement of the statute labour franchise with a ratepayer’s franchise came only in 1901. There was also a direct provincial income tax beginning in 1894, but it raised only very small sums: $5,505 in 1900. Macdonald never responded to Maritime grievances with an open hand, but his was less firmly clenched than that of the federal Liberals. But eastern payoffs were dwarfed by the massive redistribution project that was the transcontinental railway built as British Columbia’s price of admission into Confederation. For Ontario, the Canadian Pacific Railway put the province back where it had been in the 1850s: showering money upon impecunious partners. Edward Blake, who went to England in June 1876 to negotiate with the colonial secretary, Lord Carnarvon, poured out his complaints. In Joseph Schull’s summary: “Money was to surmount geography, but it promised no real union. What it promised was an already imminent revolt in the central provinces. It was Ontario and Quebec, the settled revenue-producers, who had contributed most of the taxes to fulfill Macdonald’s arrangements. They had paid the shot for the acquisition of territory, while their own needs for development had been simply brushed aside. They were awake to that now, particularly in hard times, and the disproportion in expenditure was the greatest problem of the country.” These were George Brown’s complaints all over again. The Liberal government couldn’t quite veto the railway formally, so it did so informally by insisting there would be no new taxes for it. But Carnarvon and his Canadian appointee, Lord Dufferin, wanted to see the railway built. Dufferin complained to Carnarvon that Blake was the principal obstacle to its construction: he was too much the lawyer and too obsessed with “logical symmetry” to grasp the larger and more generous requirements of nation building.22 Indeed, Blake spoke for Ontario, not for Quebec. The consortium that built the railway was organized by the president of the Bank of Montreal and helped to prolong that city’s financial hegemony. Quebecers also knew that spending in western Canada must provoke spending elsewhere. Cartier was not around to see the

94

Constructing Fiscal Federalism

denouement, but the logic was ineluctable and Quebec’s North Shore Railway benefitted very directly from votes to the cp r. Where easterners saw British Columbia as the spoiled child of Confederation, settlers in that region saw themselves as struggling with uniquely challenging obstacles. Like Prince Edward Islanders, they too resented absentee landowners, and especially the British-based “cunning and designing” Hudson’s Bay Company, which was accused of retarding settlement by circulating reports of “a bleak and inhospitable region, infested with wild beasts, mosquitoes, and savage Indians.”23 The province early introduced special taxes on vacant land to facilitate settlement, but the rough terrain slowed settlement and drove up infrastructural costs. Road building would always be more expensive in BC than anywhere else. The Cariboo Trail from Yale to Barkerville cost $1 million to build between 1862 and 1864, and in subsequent years it had to be kept up, largely by toll charges on goods carried. Even more worrying to settlers than either geography or absentee ownership were the demographics of the region. “White” settler immigrants in BC were heavily outnumbered by non-white populations. Locals worried intensely about their fraught and fragile British identity. Girded by ocean, mountains, and Americans to the north and south, the region seemed precariously connected to both Britain and Canada. Everywhere, Indigenous peoples were densely settled and well established in flourishing villages that had substantial local resources, so displacing them to accommodate land-hungry European settlers would not be a quick or easy job. From mid-century, BC also became an important destination for Chinese immigrants, and a profoundly more hostile one as each influx added to settler insecurities. The first Chinese immigrants from California arrived in Victoria in June 1848, and within two decades thousands more followed, as dearth, demography, and the Taiping Rebellion of 1850–64 provoked a large out-migration.24 In 1858, news of a gold rush in the interior of British Columbia attracted thousands of miners, many of whom came up the coast from California. Colonial officials welcomed the arrival of people and money into the region, but they worried that such an international population threatened British loyalties. The racial categories were loose – whiteness was a fantastical and “imagined” construct in B C as everywhere – but they fuelled local political culture. At Confederation, British Columbia had fewer than 50,000 inhabitants, half of them Indigenous and 3,000 to 4,000 (almost 20 per cent of the non-Indigenous population) of them recent Chinese immigrants. Geographers Robert Gallois and Cole Harris identify deep social



Tax Revolt in British Columbia in the 1870s: Fairness and Race 95

and cultural cleavages “that corresponded, broadly, to the boundaries between ‘white,’ ‘Chinese,’ and ‘Indian.’”25 Historians agree that economic competition underwrote much of the hostility in British Columbia towards the Chinese. Large-scale employers, especially mine owners, avidly sought Chinese labourers because they could pay them $1 per day, compared to $3 and $2 for white and Indigenous labourers, respectively. Capitalists tend to exploit the most vulnerable workers most ruthlessly and the Chinese were vulnerable. Unionized workers resented cheap competition that drove down wages. In 1859, for example, a Victoria paper copied a diatribe from a San Francisco newspaper that predicted grievances wherever a white man was “placed alongside” Chinese immigrants “fed on rice and dog-fish, and made to measure the price of his day’s work by the price of theirs.”26 Such complaints reached critical force in British Columbia when Robert Dunsmuir used it to break a coal miners’ strike in 1877 and gained momentum in the 1880s as thousands more Chinese came to Canada to work on the railway. But anti-Asian sentiment went beyond economic resentment to reflect deeper cultural concerns. David Goutor argues that the Chinese in BC, like blacks in the United States, were seen to epitomize the threat that industrial capitalism posed to the dignity and autonomy of the workingman: wage slavery. Chinese workers were described as “models of industrial slaves, highly coerced and disciplined, ‘without manhood, without ambition, and without self-respect.’ Indeed, Canadian labour leaders probably used the terms ‘slave,’ ‘virtual slave,’ or ‘slave labor’ in reference to Asian immigration more than any other subject.” Goutor quotes one speaker at a public demonstration in Victoria in 1885: “We will shed blood before we become slaves.”27 But anti-Chinese legislation in BC predated the emergence of organized labour. To some degree it can be attributed to attitudes imported amongst the original wave of gold-rush immigrants. But BC was like New South Wales in Australia, where Chinese immigrants mined for gold using placer rather than industrial methods and worked claims abandoned by Europeans, so that there was little direct competition.28 If the language of wage slavery perfectly captures anti-Chinese sentiment during the 1880s, it does not reflect the discourse of the 1870s, which emphasized not Chinese tractability as employees but their intractability as citizens. In that decade, public officials and political reformers orchestrated a campaign against the Chinese around the complaint of tax evasion. The provincial state in BC, like its counterparts elsewhere, gave up its tariff (which included special taxes on rice) when it entered Confederation.29 But BC was particularly hard hit: colonial settlement had begun more

96

Constructing Fiscal Federalism

recently there, and both settler population and local state institutions were less developed than elsewhere. The new provincial government ran out of money because it lacked state institutions to tax people directly. It relied primarily on federal subsidies and loans, but the growing deficits began to worry bankers. In Ottawa, Mackenzie was understood to offer a special subsidy of $750,000 in return for reneging on the promise to build a transcontinental railway, and Premier George Walkem seemed desperate enough to accept. Per capita revenue versus per capita spending was so massively unbalanced that Walkem thought it hardly made sense to impose taxes at all. Better, he argued, to look to future prosperity to pay present debts. But when the money ran out, his government lost a nonconfidence motion and an election on the issue of public finance. People talked taxes continually in BC during the 1870s, and they racialized those conversations. White settlers believed that they bore the fiscal burden of local government services that Indigenous peoples and Chinese immigrants used but did not pay for. Status Indians were constitutionally exempted from provincial taxation.30 The Chinese enjoyed no such constitutional exemption; their evasion was purposeful and strategic, according to their critics. These tensions were visible in a tax revolt that occurred in July 1881 on the c p r tracks under construction. The confrontation pitted two archetypes of the Canadian West against one another. On one side, Officer Jack Kirkup, the “mountain sheriff” of the Cariboo range, profiled by Harper’s Monthly as a legendary enforcer of the frontier. This six-foot, 300-pound “superb example of manhood,” with the “symmetry of an Apollo,”31 had come to enforce a $3 head tax. But when he faced off against a group of newly arrived coolies labourers, the result was not the stuff of legend: Kirkup was ignominiously sent packing. Two months earlier, the labourers had rioted against excessive deductions and short rations by their employer, but on that occasion two policemen restored order. The tax revolt was more serious: it took five months and armed men “in battle array” to extract the taxes. For the citizens of B C , these were not isolated episodes. They had complained for years that the Chinese refused to pay their taxes. We need not be surprised: tax riots by Chinese immigrants were as old as Chinese immigration itself. Tax impositions in the Philippines in 1639 provoked a violent uprising amongst Chinese immigrants that left thousands dead.32 State officials were as ruthless as capitalists at trying to extract surplus value from the vulnerable. Everywhere the Chinese sojourned, capitalists and officials alike tried to squeeze from them as much money as possible, presuming upon their lack of political influence.



Tax Revolt in British Columbia in the 1870s: Fairness and Race 97

The liberal state being constructed in mid-Victorian Canada claimed to apply equal treatment of all before the law. Moreover, Britain was pledged to just such treatment, according to treaties signed with China. A journalist writing in the North American Review boasted in 1846: “What under her [English] law is the law for the white man is the law for his black, red and yellow brother” and enforced through courts as “open to him for redress and protection as speedily and impartially as to any white man.”33 But such supposed legislative impartiality was seen to privilege the Chinese, and nowhere more than in tax laws. The prevalent tax regime was thought to be quite good at taxing those of European descent but quite bad at taxing people with different habits and modes of holding property. Some modification of the tax regime was required if other “races” were to be taxed effectively and “fairly.” The local state’s perceived failure to tax a large section of the local population threatened to seriously discredit it. In British Columbia, a modern tax regime and racist categories of citizenship were constructed in tandem. When they introduced direct taxation in the mid-1870s, BC’s politicians tried, as much as possible, to tax by race. They continually ran into constitutional, legal, and practical obstacles, but it remained a primary objective. The BC state confronted a paradox: it could only collect taxes by demonstrating fairness, but it could only demonstrate fairness by collecting and spending money fairly. For lack of income and solidly entrenched institutions, it could not tax effectively or fairly. The civil service was small, frankly partisan, and often incompetent.34 By scapegoating a racially discrete and politically impotent class of purported tax resisters, government officials could make spectacular displays of purported fairness, even as they fatally undermined anything like genuine political, social, or economic equality. The problem was not simply the cultural difference or “otherness” that supposedly permitted the Chinese to defy Canadian taxes and culture. There was a deeper problem of similarity. Greg Dening observes that when eighteenth-century British writers discussed Tahitians, they were struck by their sexual licence, a licence that seemed entirely familiar: “The Tahitian were not Other at all: they were the same only worse. Even the most tenuous cultural relativism in understanding the Tahitians as they were threatened this common-sense realism.”35 Taxes were like sexuality, a realm of repression, frustration, and secret envy. Chinese tax evaders were living out the fantasy of all taxpayers. The Chinese immigrants’ defiance of the modernizing state in British Columbia during the 1870s amounted to a serious challenge to its still-tenuous power and

98

Constructing Fiscal Federalism

authority. Individually, they were in ways hard to tax, which annoyed and frustrated collectors. Collectively, they mounted challenges to tax impositions, sometimes through the courts and sometimes by direct action. Provincial politicians responded by escalating their racialized dichotomies of citizenship. They thundered against tax evasion amongst the Chinese and promised retribution. The racism that exploded into public prominence in mid-Victorian British Columbia was, to no small degree, provoked by the establishment of a modern liberal state that posited equality of citizenship in principle but racialized its inability to tax fairly. Two decades earlier, reflecting on the state in ancien-régime France, Alexis de Tocqueville had observed that direct taxation could create expectations of constitutional and legal equality, with dangerous results for regimes lacking the capacity to meet them.36 Racialized scapegoating was, from that perspective, an easy out for office-holders, from the premier’s office to the local assessor, and one that they did not scruple to use. In fact, the people of BC were in general tax avoiders, not to say resisters. In 1880, taxes accounted for a little over 7 per cent of the province’s income. Per capita, British Columbia paid about $1 per head to their provincial government; deducting “Indians,” the rate was closer to $2 per head. The events in British Columbia during the 1870s reflect the gap between liberal fantasies of fair, consensual governance and the rather darker, coercive process of state imposition upon an unruly, complex social world as experienced by hapless government officials and their quarry at the interface between state and society, in what may be better described as a reign of terror rather than rule of law. Calls for special Chinese taxes predated Confederation. In 1865, the Legislative Council of British Columbia debated a motion to impose special taxes on Chinese miners but rebuffed it on grounds that existing licence laws need only be better enforced and the Chinese miners were mostly “too poor to be able to pay any tax, and the jails would only be filled with Chinamen at a great expense to the colony.”37 Walkem, repudiating an earlier hostility to “invidious distinctions between white men and Chinamen,” voted for the motion, presaging his position of a decade later. On the eve of Confederation, when colonial legislators again discussed Chinese taxation, the Chinese were now more overtly denounced as tax evaders who didn’t pay indirect taxes because “every dollar earned is carefully hoarded up for transmission to China,” and didn’t pay direct taxes because they tricked tax collectors. Arthur Bunster, member for Nanaimo, exclaimed in the legislature that “everybody knows the Chinaman don’t pay any taxes if he can help it … You go to one of ’em



Tax Revolt in British Columbia in the 1870s: Fairness and Race 99

for taxes and see what he’ll tell you. He’ll say – ‘Me no got no money. Me work for Kwong Lee!’ … There must be some other way to get at them. We have to pay taxes, why don’t you make them pay.” Thomas Basil Humphreys from Lillooet answered: “It was quite true that Chinamen avoided paying taxes, but they were industrious and frugal and in some respects valuable.” Bunster withdrew the motion but promised to campaign on it.38 John Robson, elected in Nanaimo later that year, took up the campaign in the legislature and the Victoria British Colonist that he edited. In January 1872, Robson’s paper complained of a plague of Chinese peddlers. They avoided the licence taxes that established merchants had to pay to municipal and provincial coffers, and their penurious mode of life supported neither the local economy nor the revenue. While the legitimate trader is thus struggling under dual taxation, and perplexing his mind as to how he shall meet all the demands upon him consequent upon keeping up a public and private establishment, and while the multifarious objects of charity and beneficent enterprise keep one hand almost continually in his pocket, his longtailed competitor emerges from his individual den in the morning and, with bamboo sticks and baskets, supplies at their fireside those who would otherwise be his customers. The latter (the Chinese) lives like a rat in a corner, pays little or no taxes, keeps up neither public nor private establishment; contributes nothing towards the charities and enterprises of the day, and the consequence is that his expenses are almost nil and his entire profits are saved. This is why the Chinese peddler can cut off so much of the regular retail merchant’s trade to town.39 The remedy, for Robson, was to lighten the merchant’s burden and increase that of the itinerant. Robson was voicing the kind of ratepayer grumbling that newspaper readers generally expected from editors. The fact that the early complaints against the Chinese in British Columbia occurred in the context of tax protest gave the complaint respectability and momentum. Some of that momentum doubtless reflected widespread objections to separate schools and school taxes: Robson supported secular public schools.40 Robson rehearsed the arguments again in February 1872 when he moved for a $50 annual tax on every Chinese person in BC on the grounds that, “owing to the peculiar habits of the race, Chinese did not pay anything like their fair share of taxation.” The proposal was repudiated as illegal and lost

100

Constructing Fiscal Federalism

by fourteen votes to six, but Robson observed that government leaders did concede the basic premise of unfair taxation of white merchants. When the Victoria Standard complained of Robson’s “unreasonable prejudice,” Robson replied that the complaint was completely rational because measurable in concrete fiscal terms. The Chinese lived in hovels, crammed together, so they did not pay existing property taxes; and they paid minimal customs or excise, especially since the federal government had relaxed rice duties. The state rested on property taxes and property taxes could not make a “Mongolian laborer” who refused to consume do “his part towards maintaining all the institutions of a civilized and Christian community.”41 The same logic, Robson explained, mandated a ban on their employment on public works. Patronage was supposed to be a return on taxes, a fiscal transfer to reciprocate for a fiscal transfer. Robson did not get his ban immediately, but just such a ban was in force from 1878 to 1958.42 Public works was sufficiently broadly defined that government agents had to start chopping their own firewood. Resentments in B C ranged well beyond taxation, but they were translated into the rhetoric of taxation because property arguments were a trump card in mid-Victorian Canadian politics. By the logic of the discourse, special taxation was not unreasonable persecution but redress of fiscal transfers made unequal not by “nature” but by ham-fisted governments that taxed “Caucasians” too heavily. Government taxation had created the problem and must repair it. “No general taxation can do it, for what is sauce for the Mongolian goose is not sauce for the Caucasian gander. The habits and modes of life of the two races are essentially different and they must be exceptionally dealt with.”43 But discrimination did not come naturally. In 1872, Robson failed to convince either fellow legislators or his own readership that the Chinese evaded taxes. The weight of readers’ letters took the view that Chinese consumption was no more peculiar than anyone else’s – one might as well say workingmen should drink champagne rather than beer; moreover, the wages demanded by whites were too high. Robson returned to the topic with occasional leaders and a motion in early 1874, but without advancing the question. Sympathetic legislators invoked the constitutional objections and hostile ones argued that the Chinese did pay taxes.44 m l as were willing to deny voting rights to status Indians and Chinese but not willing to impose special taxes upon them. By 1875, Robson was out of the legislature, repudiated by electors with other priorities. And yet in 1878, the legislature did pass stringent anti-Chinese measures: the ban on public employment as well as special licence taxes of $40 per annum. That tax was



Tax Revolt in British Columbia in the 1870s: Fairness and Race 101

overturned in the courts, but the die was cast. Anti-Chinese agitation elsewhere was one factor, labour’s complaints were another, but equally important was a tax revolution in the mid-1870s that greatly aggravated ratepayer resentments. Walkem was defeated in 1875 on grounds of recklessly mortgaging British Columbia’s future. The new ministry of A.C. Elliott faced a depleted treasury and no obvious source of revenue. Elliot increased existing taxes; added new ones on property, income, and the person; and reinstated tolls along the Cariboo Road. Robson’s British Colonist, fully backing the new regime, explained that taxation was progressive and necessary, a sine qua non of civilized government. An editorial in April 1875 pronounced that “the taxation policy is a bold and manly one”; another in early May described the taxes as light, equitable, wholesome, statesmanlike, and conformable to Adam Smith’s precepts; another leader expounded the “science of wealth” underlying the new taxes with references to Malthus, Ricardo, Cobden and others. Opposition legislators quibbled over details, but essentially conceded the need for increased revenue. The new taxes were unambiguously direct: inhabitants had to declare their incomes and their property holdings, though they paid taxes only on whichever was higher. House furnishings and books were exempt from the property tax, but all else was subject to taxation, including merchants’ stocks, farmers’ equipment and crops, and debts. There was also a $3 annual “school tax” to replace the earlier $2 road tax. Elliott explained that while special Chinese taxes would be unconstitutional, the school tax would “catch” the Chinese, and the Cariboo Road tax would catch both Chinese and Indigenous in that region. The new school taxes would see $17,000 transferred from the Chinese to the white population, and Catholics, too, would pay their share for the common schools. Cheers greeted his remarks.45 The new taxes were extensively debated in and out of the legislature. They initiated a more intimate relationship with the state than most inhabitants had hitherto experienced, and few liked that prospect. Walkem exclaimed: “No man liked to be asked what his income is, what it cost him to live, how he kept his wife or other searching questions of a like nature.” John Ash of Comox thought it unwise to send a miner to prison for a $3 poll tax. Some called for a graduated rather than a flat tax. Legislators from the interior denounced the tolls, while their urban counterparts objected to the double taxation of property by two layers of government. Elliott’s supporters defended the regime as progressive and argued that the new intimacy would help to rein in government.46 But the new tax regime provoked enormous ratepayer resentment. One Victoria

102

Constructing Fiscal Federalism

real estate speculator, J.W. Williams, after having exhausted the appeal process, ran for election in Esquimalt in 1878, arguing that overtaxation had driven him to politics.47 Williams became one of the most vehement anti-Chinese exclusionists. Resentments and frustrations under the new tax regime soon began to coalesce around the complaint of Chinese free-riders. Tax collectors fuelled the flames with stories of tax resistance amongst the Chinese and commensurate resentment amongst local ratepayers. In 1876, Edward Allen, who collected on the Fraser River, observed that he “had great difficulty in collecting from the Chinamen on the River.” Only seizure and auctioning of goods obtained results.48 The next year, a letter to the premier described new political tensions: “There are at least 250 Chinamen in my district on the Fraser River who are determined if possible to avoid paying taxes of any kind and to accomplish this they will leave there [sic] claims for days when they know the tax collector is coming. The fact is they never paid any taxes as Mr Pope said it did not pay him to go after them at 10 per cent for collecting. Through this the Chinamen gained there [sic] purpose and the Government lost at least $1500.00 yearly in the first place not one in fifty paid Mining License or Road Tax and this year I could not describe the trouble I had with them. The Whites are wild about it and are anxious to have Legislation on the matter.” Allen wrote many more letters in the same vein. He blamed recalcitrant Chinese around Lillooet and Soda Creek when his collection fell $350 short of the expected $1,200: “They only laugh at the collector. They well know they are a long way from a lock-up or justice of the peace.” In 1879, he told the finance minister that “the Chinaman on the river is very obstinate and requires the law to be strictly carried out. They will not pay mining licenses or school tax unless made to do so with the strong arm of the law.” Send him a second man to help enforce the law and “the Chinamen will be easily managed afterwards.” One Chinese miner who refused to give his name was imprisoned for a week.49 Edward Allen is not a credible witness: he lied about the presence of Chinese miners to get a special commission to collect their fees, and in 1879, he was fired for corruption after he reduced taxes in return for favours. Perhaps he pocketed the taxes paid by the Chinese, reportedly a widespread practice.50 But true or false, his letters reveal how objections to taxes and to the Chinese dovetailed to become an explosive political controversy. Other interests and identities also drew resentment. In 1878, provincial legislators debated whether to impose new taxes on lawyers, physicians, surgeons, and land surveyors. But whereas such professionals were well



Tax Revolt in British Columbia in the 1870s: Fairness and Race 103

represented in the legislature, Chinese people had been stripped of their vote in 1872. What might have been a debate became a lynching. Anyone who paid the new taxes wanted reassurance that the pain was fairly distributed. But that was not the case. Waged workers could not conceal their income; professionals could and did. In remote regions where the 10 per cent commission paid to collectors failed to cover expenses, there was often what the gold commissioner in Cassiar described as a “want of energy” on their part, which, coupled with reduced circumstances of miners, resulted in only “trifling” sums for the school tax there in 1879. (Meanwhile, Allen was trying to wring $22.47 in property taxes from a “completely broken down” Lillooet man unable to pay his $3 school tax and, simultaneously, failing to extract the more considerable taxes owed by cabinet minister Robert Beaven on his land there.51) George Walkem was able to bring down Elliott’s government by stirring up anti-taxation sentiment and joining it to anti-Chinese sentiment. These were the two defining issues in the 1878 election. After he won, Walkem quietly perpetuated most of Elliott’s taxes, though he did abolish provincial property taxes in municipalities, a major concession to urban voters. He also passed a special quarterly “Chinese” tax, initially set at $60 but reduced to $40 in the bill that became law. BC Supreme Court Justice J.H. Gray (the New Brunswick Confederationist) overturned the tax as illegal a month later on grounds that it was ultra vires, as well as profoundly illiberal: There were no exemptions for women or children nor for poverty, lunacy, or any other mitigating factors. The penalties were imposed far too easily, on the say-so of one collector and one magistrate; moreover, they condemned individuals to perpetual forced labour on the roads because the labour of the condemned was valued lower than the amount that the government could charge for board and tools. Property belonging to one person could be seized to pay the taxes of an unrelated person – the result of tax collectors’ long frustration with claims that property really belonged to someone else. But no Chinese immigrant could securely hold property under such a law. The British Colonist, no friend to the Chinese, denounced the law as indefensible and noted that Walkem did not appeal it. But a diabolical dialectic was being established as the state struggled to tax the purportedly untaxable. Most Chinese were poorer than the whites around them: Chinese peddlers had fewer goods than shopkeepers; miners worked poorer claims; labourers earned lower wages. It was hardly fiscal logic that led politicians to impose higher taxes upon them. The more prohibitive the tax, the less likely it was that the Chinese in B C could actually pay it. Thus the higher

104

Constructing Fiscal Federalism

the taxes imposed on the Chinese, the more nativists could complain that they were evading taxation. Tax evasion became a self-fulfilling prophecy and a reified characteristic of Chinese identity. Tax collectors knew that the taxes could not be collected and they said so. Collectors paid by commission had no incentive to pursue the destitute and most did not bother trying. George Byrne in Barkerville remarked that existing state resources were inadequate: “You may depend I will collect all that is possible under the Act but from any knowl­edge of the Chinese in Cariboo district, I am sure that there will be a great many from whom it will be impossible to collect, on account of their poverty,” and it couldn’t be done without extra overseers at Barkerville, Stanley, and Quesnel. In Nanaimo, Edward G. Prior, a future premier, refused to collect unless the government paid his commission on any Chinese sent to work on the roads. In Lytton, George Cox observed: “The rumours are here that the Chinamen have been instructed from Victoria to refuse payment.”52 The Chinese knew a legal challenge was underway and waited to hear the verdict. Poor and dispersed though they might be, the Chinese residents of British Columbia remained informed by and connected to powerful businessmen, contractors, and fraternal associations with deep pockets.53 They were better organized and informed than the tax collectors, and they had imperial law on their side. If the state could not discriminate in law, it could discriminate in practice. The tax process was riddled with loopholes that provided for a great deal of discretion. Wealthy insiders could reduce their tax bills by quiet negotiation with state officials or by challenging the levy in the courts. At one court of revision in Esquimalt in 1876, appellants included three mla s (Williams, Beaven, and J.S. Helmecken), a bishop, a chief justice, a bank manager, and the chief factor of the Hudson’s Bay Company, who managed to wangle down the assessment for Constance Cove Farm from $20,000 to $10,000.54 Tax resistance by impoverished outsiders took different forms. In the fall of 1880, a man beating for grouse near Victoria was startled to see men working in a field run away as fast as they could when he hailed them. A farmer explained that these men were new immigrants without a dollar to their names who had, doubtless, mistaken him for the tax collector. The hunter further learned that farmers along the Saanich Road couldn’t retain fieldworkers for more than a few weeks as they were “driven out” by assessors.55 Where the assessment office was vested in bigots, it was an instrument of oppression. There were some loopholes that let the poor delay if not reduce their tax burden but that were conspicuously refused Chinese



Tax Revolt in British Columbia in the 1870s: Fairness and Race 105

taxpayers. The school tax was officially due in January, but most people paid in June when the penalties kicked in. That room for discretion provided room for oppression in the hands of such an openly bigoted man as Noah Shakespeare, collector for Victoria. In one case that appeared before the courts in 1880, Shakespeare demanded that Sing Koo, a vegetable farmer, pay his school tax in early April. When Sing Koo replied that the hard winter had slowed vegetable growth, so he couldn’t pay but would do so soon, Shakespeare seized the man’s horse and cart and imposed $3.50 in penalty costs. Sing Koo had Shakespeare summoned before the courts, but his complaint before Judge Pembury was dismissed. Shakespeare’s actions were legal, if unduly harsh.56 The ruling licensed a double standard not of law but of practice. Again, in Kamloops in 1881, a collector wrote: “Money is so very scarce here this spring that it is impossible to collect the School Tax due for the year 1880 and the present year until later in the summer. I can obtain the tax at an earlier date by adopting measures of a stringent character, but this course would be productive of a bitter feeling of enmity towards the Govt. which two or three months delay would avoid.” He had already collected taxes from the Chinese in town; their enmity was politically irrelevant.57 Chinese inhabitants protested erroneous assessments just like other taxpayers,58 but they also experienced more abusive exactions. One such incident was witnessed in Lillooet in 1883 by an outraged local doctor, Henry Featherstone. Six Chinese miners living opposite the town had paid their taxes in Victoria, but the collector rejected their certificates and also demanded a miner’s licence from one of the men who was working as a cook. He seized their goods and then left town. “The poor men are now idle, losing $20 a day. This mode of collecting seems a most cruel, illegal and unnecessary one.”59 Where taxpayers had no vote, their protests against excessive or brutal tax collection could be ignored. The provincial state in British Columbia was torn by conflicting impulses: it wanted to flaunt its Sinophobia but it also wanted the money. The Chinese did pay substantial taxes and could be shown to have done so. The correlation between the census and the assessment rolls was not easily made and so, in 1879, agents across BC were asked to provide statistics on the Chinese in the district: how many they were, their employment, the taxes they paid, and their criminal statistics. Some agents produced precise statistics. In Kamloops, John Usher listed every Chinese resident by name, claiming to have extracted $3 in arrears, plus licence fees and taxes, from all. In the Okanagan, 8 of 12 recorded Chinese paid school taxes. In Richfield, 466 of the 491 Chinese inhabitants paid taxes

106

Constructing Fiscal Federalism

worth $5,042. But people moved around a great deal and had often paid elsewhere. In Nanaimo, Prior managed to collect taxes from only 237 of the 437 Chinese living there: “It is almost impossible to ascertain what men have paid & what have not. The Mine Managers themselves do not know the difference between many of them. Some of these men have most likely paid elsewhere, but still a great many must escape payment.” Around Yale and Hope, William Teague estimated 45 Chinese, 41 of them male, with 12 having paid taxes (amounting to $231). Arthur Vowell in Cassiar reported 600 men and 5 women of Chinese extraction: only half paid their taxes to him and the others were unemployed and “hanging around the Chinese stores.” The Victoria agent, Noah Shakespeare, reported 2,370 Chinese for that town, who paid $1,994 in taxes among them. He estimated that only 382 paid taxes, but inland agents often reported that miners had already obtained tax certificates from Shakespeare, who seized the tax the instant that Chinese immigrants landed.60 The estimate for New Westminster was set at 250 to 300 men and perhaps 10 women; 238 of this total paid taxes worth $714. In Quesnel Forks, William Stephenson estimated 109 women and 375 men, most of whom worked as miners for about $2 per day, with other activities including butchering, cooking, farming, carpentering, and washing; 36 were without obvious occupation; and 3 lived “chiefly by gambling or any other rascality.” Together, the Chinese community in Quesnel Forks paid $1,205 in taxes, nearly all of it ($1,100) in school taxes, and only 8 individuals paid property taxes.61 The inquiry cannot tell us how much money agents actually exacted but does prove payment rather than nonpayment of taxes. The difficulty in obtaining documentary evidence reflected shoddy practices that began in 1873 when, as attorney general, Walkem encouraged agents to “waive the strict letter of the law” that required documentation of taxpayers.62 Agents would issue receipts for the poll tax under the name “Chinaman.” It cannot have come as a surprise that some might traffic in these generic certificates. The state’s imprecision fuelled the archetype of evasion. Lack of evidence didn’t much worry BC’s politicians: they acted without it, although the ultra vires ruling reoriented their efforts. Now they began to denounce the federal government for obstructing their anti-Chinese taxes. Harbouring a grievance against eastern political domination has always played well in BC.63 The lack of evidence served John A. Macdonald, who listened silently but attentively in the spring of 1879 as BC MPs demanded exclusionary legislation that Liberal MPs denounced as unenlightened. Rather than intervene, he named a committee of investigation. The fiercely anti-Chinese Amor De Cosmos chaired the committee, which heard



Tax Revolt in British Columbia in the 1870s: Fairness and Race 107

Figure 3.1  James Weston, “The Heathen Chinee in British Columbia” (Canadian Illustrated News, 26 April 1879). At a moment of heightened antiChinese tax panic and preliminary provincial and federal response to it, Amor De Cosmos sternly collars an apparently inoffensive Chinese businessman quietly going about his business: “You don’t drink whiskey, and talk politics and vote like us.” (Image courtesy of Rare Books and Special Collections, McGill University)

witnesses in April and May 1879. An initial report recommended restricting immigration and public employment. But with the cpr construction underway, Macdonald was not disposed to agree and the committee was closed down.64 Aggravatingly, Macdonald privately advised premiers not to try to tax the Chinese while publicly insisting that no one had ever drawn BC’s Chinese problem to his attention. Tensions grew in British Columbia in the early 1880s as thousands of Chinese labourers were brought in by Andrew Onderdonk to build the

108

Constructing Fiscal Federalism

cpr, about 6,000 directly from China and 7,000 from California. The provincial government and Onderdonk played a cat-and-mouse game over the taxation of these workers, all of whom were expected to pay the school tax, usually out of their first paycheque. The Chinese came to Canada on the promise of $2 per day but deductions by recruiters and for board and lodgings reduced the sums drastically.65 They took the news of the tax badly. In June 1881, Frederick Hussey, agent at Lytton, reported that neither engineers nor Chinese labourers would pay school taxes. Engineers claimed exemption as federal employees while the Chinese simply refused to accept their paycheques if the school tax was deducted from it.66 On 12 July, a payday, Officer Kirkup was sent to the camps to collect the tax from railway paymasters, who told him to collect it from the men directly. Kirkup tried to seize the money from a cpr foreman but was attacked by the workingmen and beaten back. Onderdonk refused to intervene, insisting that the men were not his employees but, rather, under contract to a boss in San Francisco, Lee Chuck, to whom the tax collectors should apply for payment – and he warned of bloodshed if the collectors persisted in either the white or the Chinese camps. The Yale collector, Walter Dewdney, who spent many days sitting ignored in cpr offices, ruefully remarked that “with the small force we have here it is useless to attempt it.”67 Cables and letters flew back and forth along the line, fines were threatened and negotiated. Local boss Lee Soon would only agree to collect the tax if the government sent thirty special constables.68 Tax collectors demanded that the North-West Mounted Police enforce their collection.69 Eventually, the treasury and the cpr did a deal that would give company paymasters 5 per cent for collecting the tax. Corporate bureaucracy stood in for an inadequate state bureaucracy.70 But the larger complaint of a property tax that inadequately taxed Chinese property persisted. In 1882, Noah Shakespeare, now mayor of Victoria, submitted a petition, the result of a public meeting, which complained that soaring numbers of tax-evading Chinese were driving out white labour, starving the treasury, and repelling the “Anglo-Saxon race” of settlers: “As residents of this Province the Chinese contribute but a very small quota to the revenue, owing to non-possession of property. The taxes cannot be levied, and at the present time not one-fourth of these men pay the ordinary taxes, although unusual exertions are made to collect it.”71 Labourers also worried about what would happen when the railway works closed and the Chinese immigrants, seeking other work, reduced other labourers to their level of penury. The low wages, coupled with the evasion, were seen to make the whole settler society



Tax Revolt in British Columbia in the 1870s: Fairness and Race 109

vulnerable. The numbers were very real to British Columbians. Ratepayers in B C were considerably outnumbered by non-ratepayers, voters by nonvoters, and numbers were continually bandied about in political debates. Some of the least populated regions paid the highest taxes: Cassiar had no registered voters but yielded over $20,000 in taxes in 1878, while Kootenay, with its twenty-nine voters and two legislators, paid $1,112 in taxes.72 Amor De Cosmos was furious when Edward Blake claimed that his own speeches drew crowds larger than the propertied population of B C and told the Liberal leader that, apparently, British Columbia paid more taxes per capita to Ottawa than did Ontario.73 The claim only proved that the non-voting public paid taxes too. But, and here was the rub, they paid them to Ottawa. If the imposition of direct taxation was tinder for a fire, Macdonald’s National Policy of tariff protection, enacted in 1879, was a lit match. The early returns showed that BC paid more than half a million dollars per year into the federal treasury. It appeared that Ottawa was successfully taxing the Chinese and the Indigenous peoples by taxing consumption, and doing so with relatively little trouble or expense, while British Columbia’s government was at terrible pains to extract a fraction of that sum. Licences, tolls, and taxes together came to less than $100,000 for the year ending June 1880. Introducing the provincial estimates in March 1881, Robert Beaven now coupled the Indigenous peoples and the Chinese together as tax evaders: “Under the system the Chinese and Indians escaped direct taxation while the Dominion reaped large results from the dutiable goods consumed by the two classes. The Chinese evade the payment of taxes and they cannot assimilate with the white race – cannot become beneficial citizens. The Chinese laborers were in the position of slaves and if the province could devise a method for making the Indians and Chinese contribute towards the revenue in proportion with the white population the problem of sustaining the provincial government by direct taxation would be solved.”74 In both cases, culture reportedly obstructed assimilation but in different ways. Chinese culture supposedly made its possessors more rather than less economically efficient. The Chinese were “slaves” because they did not use their freedom to cultivate higher cultural ideals but were, instead, reduced to a mere existence of, by, and for profits. Because the Chinese workingman was “unassimilable,” he could not be taxed to better standards of citizenship but only forced to pay his fair share. Taxation of Indigenous peoples was understood very differently. Their threat to settler society rested on their economic inefficiency rather than

110

Constructing Fiscal Federalism

their efficiency. Where the Chinese earned too much and spent too little, Indigenous peoples were seen to earn too little and spend too much and unwisely; worse yet, their collective mechanism of redistribution – the potlatch – redistributed wealth downward not upward. The potlatch was the antithesis of liberal taxation. Where the potlatch was prohibited by federal law in 1885, taxation was encouraged as a mechanism for teaching fiscal and economic disciplines. Durham had made the case for taxation as civic education and that logic was applied to British Columbia by a Durhamite in the Colonial Office, Edward Bulwer-Lytton. In 1858, he advised B C governor Sir James Douglas that, settled in villages, local tribes should be persuaded to consent to “some light and simple form of direct taxation, the proceeds of which would be expended strictly and solely on their own wants and improvements.”75 In 1863, missionary William Duncan described a system of village taxation he introduced in a Tsimshian community at Metlakatla, near Prince Rupert: $2.50 or one blanket for adult men and $1 or a shirt for those not yet men. Of 130 amenable, only 10 defaulted “and these were excused on account of poverty.” Even as he wrote taxation into his village constitution, Duncan protested against illegal provincial taxes exacted from inhabitants.76 In fact, Indigenous peoples were deeply enmeshed within provincial taxation networks. Taxation was work and they were indispensable workers. In 1877, one J. Rabon was handed tax papers “by Indians. I asked the Indian if he was the assessor he said all the same as white man.”77 Other records show tax assessors conveyed by Indigenous paddlers; in 1880, Henry Fry invoiced the Treasury $16 for a canoe hire, $12 for the labour of “two Indians,” and $4 for four days of provisions to collect taxes around Maple Bay, North Cowichan. (Although Indigenous people could execute taxes on white people, they could not impose them. When band councils in Ontario tried to tax whites living on reserve lands, such taxes were disallowed on grounds that whites were mere occupants on Indian-owned land.78) But Indigenous peoples were also taxed. Presented with a complaint in 1871, the attorney general insisted that Nanaimo Salish paid the road tax “cheerfully” where they worked in competition with white men and that by taxing them, the province was raising them up to white standards. But authorities quickly backtracked when their illegal taxes threatened to draw too much fire. Later that year, six chiefs signed a petition complaining that “they have taken our land with coal, timber, and grass, and we have had nothing in return for it, and now they ask us to make roads for them; last year we all had to pay $2 and if not our canoes were to be sold to raise it.” The



Tax Revolt in British Columbia in the 1870s: Fairness and Race 111

government, now less autonomous, decided it was “not expedient” to impose the tax and ordered the $20 refunded.79 But Walkem resented the constitutional exemption. In May 1879, he fumed when confronted with a chit to pay for a constable sent to investigate a dispute on a reserve. Such things should be paid by the federal government, but instead “the local Government has had to bear the whole cost although they have no control over the Indians or their lands and are not allowed to tax them and thus make them pay a share of the expense of looking after them which I think should not be cast upon the Province.”80 It was no stretch for B C politicians to widen their project of taxing the untaxable. The sense of fiscal grievance intensified in the early 1880s as trouble broke out at Metlakatla, where Duncan waged a private war with officials of the Church Missionary Society and rival priests. When violence threatened the polarized community, the federal government recommended that a stipendiary magistrate be stationed there (his salary a provincial affair), while the province demanded that a federal Indian agent be stationed in what was a “purely Indian settlement.” In 1883, a new premier, William Smithe, along with his provincial secretary, John Robson, reiterated the complaints in a report on Metlakatla: “The Indians in this Province do not contribute to the Provincial Revenue, yet a great portion of the costs of the administration of justice is caused by the Indians. They fill the Provincial gaols and are a continual source of expense and trouble.” Federal politicians were not unsympathetic. Justice Minister Sir Alexander Campbell observed: “The Indians off the reserve are much on a level with the ordinary labouring classes in this part of the country, and there is no reason why they should not pay such tax as Mr Robson speaks of. Men who can and do earn $20 and $30 and $40 a month should have no objections to contribute in so small a degree to the revenue of the country.”81 The federal government drew up a draft bill to extend the poll tax to Indians living off reserve but the project stalled when officials could not agree on what counted as habitual domicile. Moreover, Ottawa’s chief Indian Agent in BC, J.I. Powell, warned that taxing the “hardworking and self-reliant Indian” would be difficult and contrary to the civilizing program, although, he thought, parents might welcome the tax if they could then send their children to the common schools.82 BC agitation around taxation crescendoed, and in April 1884, Macdonald signed a memo of concession. Immediately, the provincial treasurer directed tax collectors to begin collecting the poll tax from Indigenous peoples living off reserve. But when an armed uprising broke out on the plains in 1885, federal officials abruptly reconsidered the

112

Constructing Fiscal Federalism

wisdom of the tax. There was too much simmering resentment that might translate into violence. The Riel uprising itself had suddenly blown up out of seemingly minor questions of land regulations. Like settlers everywhere, the Métis settlers wanted rule of law and security of property, and bureaucratic flexibility regarding the shape and backdating of property registration. Instead they got bureaucratic obstreperousness, which threatened their tenure on grounds that Thomas Flanagan, boiling the case down to essentials, describes as the importance of “rules.”83 Flanagan’s political instincts fail him here. Macdonaldian Canada was not rule-governed; it was governed by mechanisms of discretion that marshalled and reflected the weight of public opinion. The Métis thought they represented public opinion in the region and engaged in the kind of popular violence that usually secured state responsiveness. But in 1885, Macdonald chose to respond to that violence not with concessions but with exemplary retaliation, deployed to protect his political base in Ontario. On the other hand, the threat of popular violence did succeed in British Columbia (where Ontario was less invested). In 1885, warnings began to reach federal officials in the Department of Indian Affairs that the taxes imposed on the Indigenous peoples of the Pacific Northwest were imperial overreach that hit an impoverished people too hard and threatened to provoke retaliatory violence. A missionary at Lillooet, seconded by the bishop of New Westminster, warned that the tax was inhumane, imprudent, and immoral: the reserve there was so small that people could barely eke out a living without going off reserve to work. Those who sought work, the missionaries exclaimed, were “good Indians” who might yet be incited to rebellion by bad government: “After it has ignored the title of the Indians to their land, after it has allowed the Indians only small and poor reserves where generally they die of hunger if they are forced to remain there, to impose upon them taxes and licences when they go elsewhere than on their Reserves to obtain the wherewithall to feed and clothe themselves, the Indians in their good common sense regard it as unjust and cruel.” Further advice from agents confirmed that the tax bore heavily, while provincial schools remained closed to Indigenous children. By the spring of 1887, as tax season got underway, seventeen chiefs who came to New Westminster to protest the $3 tax promised that violence would follow if the tax collectors came again, “hunting us from tent to tent and from shanty to shanty, with their revolvers sticking out of their back pockets … we want to live in peace, but if fight is forced upon us, fight we will.” Officials took the threat very seriously. Deputy Superintendent Lawrence



Tax Revolt in British Columbia in the 1870s: Fairness and Race 113

Vankoughnet warned Macdonald by cable that “if collecting persisted in, serious trouble may be expected,” while Powell described instances of great hardship following seizures of property for taxes. Collectors were quickly told to desist, and the province did not again try a systematic collection of poll taxes.84 But forbearance, such as it was, did not last long. From 1895, with federal approval, the province again began to tax “Indian” property off reserve. Whereas the Department of Justice pointed out that such taxation was unconstitutional, Indian Affairs took the province’s view: “The Department does not feel disposed to take much exception to the doctrine that an Indian who may leave his reserve and enter into business competition with other members of the community renders himself liable to lawful taxation.”85 The “rules” remained very much a matter of interpretation and privilege. Macdonald’s 1884 memo also promised to address the Chinese “problem.” This was the signal for a Royal Commission on Chinese Immigration that reported in 1885. By pleading a need for more information, Macdonald was able to delay legislating a head tax until the last spike was driven on the cpr. The fact that Justice Gray was one of the two commissioners, the other being Joseph-Adolphe Chapleau, Macdonald’s Quebec lieutenant, suggested that Macdonald wished to dampen anti-Chinese ardour rather than cater to it. Some anti-Chinese organizations boycotted the commission for that reason. Early witnesses before the commission raised the complaint of tax evasion. Charles Wilson, ml a for Cariboo, attributed low receipts for poll taxes in the Cariboo districts entirely to the Chinese population on the grounds that the tax collectors “know every white man residing in them.” W.K. Bull, tax collector in Victoria, claimed that only 750 of 3,000 Chinese resident in Victoria had paid the poll tax that year, after a terrible fire had left many “so poor that there is nothing to seize in case they will not pay their taxes but a table or a chair.” Richard Jones, another collector, complained that the Chinese payments were “a drop in the bucket” in proportion to white payments and that they lent their receipts to one another, adding that “once I put three in the chain-gang for the offence. They are difficult to recognise as they all dress so much alike and are similar in features.”86 But later witnesses did not much mention tax evasion. Partway through the hearings, the commissioners drew up a list of twenty-seven questions for witnesses, and they did not solicit evidence on tax evasion. Thus, late witness Walter Stephenson, tax collector for Quesnel Forks (and

114

Constructing Fiscal Federalism

reportedly the only white man living there at the time), complained of tax evasion in his official correspondence but not in his testimony to the Royal Commission.87 Taxation was largely written out of later testimony. Frustrated by Macdonald’s delaying tactics, in 1884, the BC legislature tried to impose a new Chinese licence tax of $10 to be added to the cost of all existing licences. Chinese miners, for example, would be charged $15 rather than the usual $5 for a licence. That winter was a harsh one and the poor suffered terribly. When collectors were ordered to start collecting the licence tax in the spring of 1885, they fully understood the difficulty and inhumanity of the project. Marshall Bray in Nanaimo asked for additional help in the form of an assistant collector to spend his whole time at the work. Henry Nicholson in Osoyoos declared: “I feel convinced that the Tax in this section will be resisted by the Chinese to the utmost, and doubtless before the collection of the tax can be successfully accomplished, some striking examples will have to be made of the determination on the part of the authorities to carry out the law, so that at the outset of the collection the Chinese may realize the fact that one and all have to pay.” He asked for instructions regarding “the disposal of Chinamen whose property may not realize sufficient to pay the taxes.” In Lillooet, Charles Phair warned that “nearly all the Chinese in this District are poor miners from whom it will be impossible to collect $15, so a large number of them will have to be imprisoned. The gaol here is too small & unfit for prisoners, so I will send them to Clinton unless otherwise ordered.” Phair was quickly instructed by cable to use “any means other than imprisonment in collection of Chinese taxes.” John Mollett in Alberni demanded a posse to round up fleeing miners: “If it is your desire that the provisions of the Chinese Regulation Act be carried out, it will be necessary for you to allow me the assistance of at least four or five other men in order to prevent these people from running away to the woods as I understand they usually do. It will be necessary to take a camping outfit up the creek and remain there for one or two days until our work is through.” He would not accept the commission without a promise of the extra help, and money, required.88 Frederick Hussey, an experienced officer at Spences Bridge, warned that collecting taxes from Chinese miners scattered along riverbanks was too difficult and expensive to be worthwhile. “They are hard to find and it is difficult to obtain money from them. It is a mistake to charge $15 in this District for Chinese Mining Licenses as the majority of Chinese so employed are making small pay and therefore refuse to take out Mining Certificates. It does not pay the collector to distrain as in most cases their goods if seized are not worth the amount of



Tax Revolt in British Columbia in the 1870s: Fairness and Race 115

the taxes and the owners are willing to forfeit them in preference to paying even if they had the money to do so. It may be different in districts where claims are more valuable.” Hussey did not have to collect the Chinese miners’ licences since the Act was overturned by the courts in August 1885. But the difficulties of collecting even the usual licence and other taxes continued to require extraordinary efforts in harsh times, like the spring of 1887: “I have collected from Chinese miners on Fraser River about $588.00 for Licenses and Prov. Rev. Tax. The costs of collection are heavy, about $90.00, as I had to levy by distress in almost every case and afterwards make the best bargain possible with the Chinese. To do this I employed Indians to assist me and without their aid one half the sum would not have been obtained.” Allan Graham, agent at Lorne Creek, had no such trouble because he had already chased out of town the six Chinese miners who came to his district, warning them that local miners and Indians were hostile to them. He considered those actions “wise and not inconsistent” with the ordinance.89 The image is haunting: poor, frightened men hounded from town and running through the woods, hunted by armed bands that could seize everything they possessed. The Indigenous peoples and the Chinese in British Columbia encountered a very different tax regime than did residents of European descent, one marked by casual brutality that voters would not have tolerated. Tax collectors marched into Indigenous households with guns ostentatiously poking out of their back pockets and hunted down Chinese in armed bands that looked more like brigandage than law enforcement. Such behaviour was shocking then as now. The fight between Kirkup and the railway workers in 1881 ended in a confrontation that horrified one newspaper correspondent. According to a report: Captain Charles Todd proceeded up the railway with nine men whom he placed “in battle array, all well armed with first-class revolvers. This caused the Chinese to weaken, and becoming docile they paid their taxes like little men.” The letter writer, “Point Blank,” was outraged by the very principle of a head tax as both unfair and susceptible to fraud by collectors. But he was also outraged by the use of force: “Taxation is tyranny when the tax is collected with pistols.”90 It was a form of tyranny that Chinese and Indigenous peoples in B C knew all too intimately. Tax collectors kitted themselves out with symbols of violence to underscore their right and power to strip these impoverished peoples of their few belongings. The contact between taxpayer and collector approximated as nearly as possible pure coercion, without the cultural mediations that the liberal state

116

Constructing Fiscal Federalism

ordinarily uses to conceal violence and without the discretion shown to other taxpayers. Taxation is normally a political negotiation designed to elicit consensus and an administrative process grounded in data and documentation; it is also, not incidentally, supposed to elicit revenue. Racialized taxation in British Columbia did none of those things well. There could be no consensus in the absence of political representation. Tax collectors refused to acquire data that would enable them to tax efficiently, preferring to denounce their quarry as evasive and unknowable because they were anomalous in their property relations. Furthermore, revenue was subordinated to domination, as can be seen from the explicit recognition that even those Chinese who were too poor to tax would, nonetheless, be forcibly and painfully taxed with all the coercive powers that the provincial state could muster, and then some. Ideological and cultural arguments remained closely intertwined with political and economic reasoning and with relations of power exercised intimately upon the bodies and properties of racialized populations. B C was determined to tax the poor. When later premier and minister of finance J.H. Turner received a letter from a priest seeking relief from taxation, on grounds that no Christian country aimed its taxes at the poor, Turner corrected him. That was how they all did it: “As a matter of fact all taxes have the same effect, and are usually paid by the last and poorest person.”91 The early Walkem government sought to avoid taxing people and property in any way that required serious scrutiny of those people and their property. Once Elliott had started the province down that path, there was no going back, but it became increasingly apparent that the minimal state that existed in B C was incompetent to tax the poor. Indigenous peoples and the Chinese, disenfranchised and the poorest of the poor, became the objects of a tax vendetta from which, in the absence of a sympathetic judge, there was no appeal. Other people had more avenues of protest and were less likely to experience taxation as a direct and personal attack performed at gunpoint. The federal head tax of $50 imposed on all arriving Chinese immigrants as of 1886 eased only some tax tensions. The fact that it forced Chinese newcomers to live with the “utmost frugality” perpetuated the old resentments of non-­ circulating wealth. Moreover, British Columbians convinced themselves that ultimately they paid that head tax. Conservative minister Price Ellison remarked, in 1911, that “the people of British Columbia are really paying the [increased] $500 Chinese Head Tax now in the higher prices demanded by Chinese workers.”92 Taxation of Indigenous peoples working off reserve eased other tensions and perpetuated other problems and



Tax Revolt in British Columbia in the 1870s: Fairness and Race 117

persecutions. The sense of an economically and fiscally beleaguered middle class in British Columbia did not disappear at the end of the nineteenth century. But by that time, in concert with other western provinces, B C was reverting back to earlier impulses in the form of renewed efforts to tax undeveloped lands. The relationship between race, taxes, and the state in early British Columbia requires exceptionally careful disentanglement and that we “bring the state back in” as a crucial variable.93 The state chose fiscal policy as a privileged place to negotiate with public prejudices and translate them into finely calibrated, legally rigorous criteria of citizenship. Taxation provided a crucial initial mediation between the cultural labels attached to the categories “Chinese” and “Indian” and the exercise of state coercive power over them. State institutions in mid-Victorian British Columbia patently struggled to conform to broadly conceived standards as to what states in general looked like and undertook to do. Setting aside complicated questions of provincial, federal, and local government jurisdictions, it can reasonably be argued that the sine qua non for a provincial state in the 1870s was to make some credible claim to bring in revenue, uphold public order, and sustain equality. Failure in one of these three areas could translate into failure elsewhere. Tax evasion, especially when coupled with the spectre of violent resistance, threatened public revenues, public order, and substantive equality of the burdens of citizenship. In British Columbia, the Chinese did not seriously threaten the state on any of these counts. But by scapegoating the Chinese, the BC government could ostentatiously claim to confront and resolve complaints that it was not effective and not fair in its management of public revenues more generally. Ironically, thus, the need to ground legislation in a rhetoric of fiscal fairness justified the extraordinary racialization of public discourse during the 1870s. However specious the logic of that fairness, so one-sided was the conversation, so limited the recourse of Chinese and Indigenous taxpayers, and so culturally freighted the language that the movement gained ever greater momentum and became ever more divorced from the banal reality of assessment and payment. B C shared with Nova Scotia the fear of regionalized impoverishment, but it racialized that fear. The liberalizing state of the late nineteenth century exerted itself to try to tax the poor, even as it fuelled the flames of resentment against them on grounds of tax evasion. The fearmongering gave politicians local victories but not federal ones. The National Policy exacerbated regional poverty and racialized hostility along with it, but B C chose to register its grievances by demanding racial retaliation. By

118

Constructing Fiscal Federalism

focusing on race, B C deflected attention from poverty. George Foster, Tory MP and future finance minister, remarked in the House of Commons in 1883 that the province had replaced regional fiscal complaints with racial ones: “British Columbia which, as I know from reading the debates, used to come down here and talk about its being so badly used, now seems to be perfectly quiet, and its able members are philosophically contemplating the problem of the extinction of the Chinese.”94 The translation of fiscal into racial grievances worked to John A. Macdonald’s benefit. Rather than concede better terms to British Columbia, he need only stage more or less substantive performances of racial animosity as the key to holding the province politically. Thus did Macdonaldian fiscal federalism withstand a second great test. Serious challenge must come from another quarter.

4 Macdonald to Laurier: Revolt against Liberalism

Macdonald’s “court” economics and politics became courtlier after 1879 when he introduced a National Policy of tariff protection that affronted laissez-faire economics. Before the 1870s, some influential protectionists existed, but most public men in British North America shared the British view that indirect taxes were regressive in ways that must retard economic growth and discredit any state that defended them on grounds of protection rather than revenue. According to Martin Daunton’s description of classic, mid-century economic liberalism, “free trade was a prophylactic against monopoly power and corruption. It was about transparency. In this Liberal view of the world, free trade meant liberty and prosperity, protectionism implied autocracy and poverty.”1 As late as 1876, John A. Macdonald was heard to exclaim: “I’m not a protectionist.” But whatever his private beliefs, in public he decisively reoriented Canadian trade policy towards a lasting protectionism. Confederation made a nationalist of Macdonald. Perennially weak in Ontario, he won a plurality of votes there in 1867, only to lose it again in 1872 as the renewed Liberal complaints of fiscal transfers won back voters. In political exile from 1873 to 1878, Macdonald mused on that lesson. Perhaps he was going about things wrongly. Perhaps, instead of using the state to transfer wealth from Ontario, he should transfer wealth to Ontario. Increased protection would accomplish the deed and its justification lay in discarding British liberal nationalism for Canadian economic nationalism. Macdonald rewrote the fiscal playbook so successfully that the Liberals, too, would have to rewrite their tax policies accordingly. But there was an important consequence: Macdonald’s new-found majoritarianism and fiscal nationalism was a natural focus for ethnic nationalism. His Conservative Party itself began to attract and amplify

120

Constructing Fiscal Federalism

complaints of fiscal transfers from Protestant to Catholic, and English to French Canada. Both Macdonald and Laurier tried to quash such complaints; both failed to do so. George Brown’s accusation of racialized tax evasion continued to roil Canadian politics. This chapter surveys the way that the tariff was negotiated in terms of social and cultural politics, as a mechanism for governing wealth and poverty. Much has been written about the National Policy as an instrument of economic growth and nationalism, but surprisingly little has been written about it as a tax. Its status as a tax was part of what was under debate. The Canadian Manufacturers Association (cm a) insisted that the tariff was not a tax because it was not paid by the consumer. Liberals insisted the reverse was true: “Protection is Taxation,” read one headline in La Patrie in 1880.2 This chapter further focuses on debates about how the Canadian state legitimated its taxing powers and policies, seeing in those policies of legitimation changing conceptions of wealth, poverty, information, and the state itself. The federal government could not duck the fact that it was implicated in poverty because it taxed the poor. Every election was to some degree a referendum on the tariff and a debate about the relationship between wealth and poverty in Canada. Should Canada protect the poor and tax the rich, or should it tax the poor and protect the rich? Which did it actually do? Like the other national tax “revolts” studied here – in 1867, 1911, and 1917 – that of 1879 might be better described as a tax coup than as a revolt. But seeing these events as tax revolts highlights some important truths about Canadian fiscal federalism. All were defended as tax adjustments that would ease conditions for ordinary people and all were popular. The techniques of popularity changed over time, reflecting changes in the liberal public sphere itself, something we miss if we think of these innovations as done in defiance of public opinion. John A. Macdonald was the vital centre of a political project that fused popular and patrician principles. But success required repudiation of the liberalism written into the constitutional fabric of Canada. However well it protected the country against American republicanism, liberalism manifestly failed to protect it from a growing threat of Americanization by consumerism. As political agents, Canadians identified strongly with British political forms, but as consumers, they seemed to emulate Americans. They began to look like an internal fifth column that had to be more aggressively managed from above. Macdonald reworked the fiscal constitution to make it more closely resemble the American version than the liberal version still upheld by Gladstone in Britain. The change reflected declining British and growing American economic hegemony.



Macdonald to Laurier: Revolt against Liberalism 121

The United States became an economic behemoth in the half century after 1867. By 1913, according to Patrick O’Brien, “the size of the Amer­ ican home market – unified by transportation and integrated by a ­common language, homogeneous tastes, a relatively egalitarian distribution of income and a unified monetary system – was already roughly equal to the combined domestic markets of Britain, France, and Germany.”3 Americans inaugurated a new wave of global protectionism rooted in anti-British sentiment that, by the end of our period, was undermining liberal political economy even in British heartlands.4 Protectionists were still losing electoral battles on the eve of the First World War, but opinion was shifting in favour of renationalization of the economy as the price of governing it: such was the conclusion of John Maynard Keynes. Because the United States led the change, Canada was, from the beginning, on its front lines, the first to confront the “informal” American empire of consumer culture. Ben Forster remarks that foreign competitors were “a far more powerful presence in the Canadian market than in the American or British.”5 The National Policy was a Tory-interventionist response to these new pressures from without, but it also reflected political and economic pressures within Canada, coming from groups who believed themselves ill served by liberal political economy. Nationalism was an important trump card in that transition – the romantic nationalism that John A. Macdonald invoked in his final campaign in 1891 with the cry: “A British citizen I was born and a British citizen I will die.” But it was not some sort of get-out-of-jail-free card that let Macdonald ignore the domestic implications of protection. Politics remained squarely organized around property, and tariff policies were continually interrogated for their effect on the social politics of property and the public sphere of reasoned debate. Canadians thought of themselves as having a producerist economy organized around a balance between resource extraction (including agriculture) and manufacturing. Manufacturers were a minor factor in the move towards Confederation, but the creation of a transcontinental constitution gave them opportunities to pursue wider markets that, in the 1870s, they translated into the National Policy. Forster has told that story in detail as A Conjunction of Interests amongst businessmen and politicians. Early industrial expansion was badly checked by an economic downturn in the 1870s that showed Canadian manufacturers could not compete against American counterparts. There had always been protectionist ideologues but now they burgeoned. Early business organizations were either not markedly protectionist – e.g., the Dominion Board of Trade – or not successfully so – e.g., an ineffectual Montreal Manufacturers’ and Mechanics’ Association. But an important exception was the Ontario

122

Constructing Fiscal Federalism

Manufacturers’ Association, presided over by a protectionist, W.H. Howland. Protectionism found increasing favour with business and with working people and farmers in eastern Canada, whose sons and daughters migrated west or to American mill towns looking for work. Beginning in 1870, Charles Tupper orchestrated a protectionist movement in the Maritimes with demands for “a purely national policy of our own.” Business and political leaders collaborated in such movements; free traders did much less collaborating. The architect of the Tory–business coalition was John A. Macdonald, who made incidental protection a centrepiece of the Conservative campaign in 1872 and carefully sold it to leading businessmen. For example, Macdonald observed to Montreal financier George Stephen that he was amazed at the farmers’ support for tariffs on breadstuffs, which tended to point towards protection for manufacturers. Forster says: “Stephen well knew that his opinion was being sought,” and he replied that, despite his free-trade leanings, “I as a manufacturer could not be expected violently to oppose a policy which would tend to secure the more complete control of our own market for my products.”6 But if manufacturers and voters were equivocal in 1872, they were no longer so in 1878. Manufacturers made themselves an effective political and economic force in those years and made it worth Macdonald’s while to embrace a protective tariff. Forster’s is a comprehensive account that needs no embellishment to explain the coming of the National Policy. Nonetheless, I will embellish it with some attention to mechanisms of popular legitimation. Abandoning liberal political economy required abandoning liberal agnosticism. Where the liberal state mediated between competing sectors and interests, the protectionist state had to claim mechanisms of knowl­ edge and authority that warranted it to privilege some economic sectors over others. Privilege is primarily a political concept and had to be constructed in the political arena, in relationship to the balance of interests and powers represented there. Privilege smacked of ancien-régime France; it was what had been overthrown by the Atlantic revolutions of the eighteenth and nineteenth centuries. Its reappearance in a protectionist tariff horrified doctrinaire liberals. The tariff could be defended as creating reciprocal relations between agricultural and manufacturing sectors, but it was harder to defend when viewed through a different lens: the relationship of wealth and poverty. The tariff unambiguously transferred money from the poor to the rich, according to the social reading that Macdonald successfully routed. Confederation had created a federal polity with a mandate to govern prosperity and ignore poverty, and the



Macdonald to Laurier: Revolt against Liberalism 123

1880s saw the apotheosis of that project. But you couldn’t just wave a fairy wand to exalt prosperity as a mode of rule. You had to build on the constitutional framework to insinuate it more deeply and effectively into the fabric of everyday life. Macdonald pursued that goal strategically in many different arenas. In the courts, he challenged provincial legislation that undermined Tory readings of property and prosperity, most notoriously in the Rivers and Streams Act, as his government tried to argue that the exercise of the federal veto should come into play when, and only when, the rights of property were at issue. He lost that battle but he decisively won the battle over the tariff, and that victory strengthened his hand in many other areas. It was not easy to follow Macdonald’s money trail because taxation was embedded in a broader system of fiscal transfers. First, customs and excise taxed consumers on their purchases to fill state coffers. Second, taxes on imports permitted manufacturers to raise their prices without fear of being undercut by cheaper foreign goods. That markup was created and regulated by the state but went directly into private pockets. To critics, all such coerced exactions were “taxes.” In the words of Liberal MP Frederick Borden speaking in Parliament in 1891, “there are two kinds of taxation – the kind of taxation that goes into the treasury, and the taxation which goes into the pocket of the combines, and of those in whose behalf the National Policy has largely been created.” He estimated them at around $20 million each.7 There was yet a third fiscal transfer: patronage. Because taxes regulated prices, the government was always under pressure to adjust prices by raising or lowering taxes, and much of the pressure took the form of bribery. Such relations of reciprocity imbued all levels of government. Ontario’s first post-Confederation premier, John Sandfield Macdonald, famously if petulantly gave voice to those expectations when he met a grant-seeking delegation from Strathroy with the query: “What the hell has Strathroy done for me?” But John A. Macdonald’s mastery of patronage politics was in a class by itself, as Sandfield – like Howe, a rival turned ally – could testify. Scandalous donations from American railway interests propelled Macdonald out of office in 1873, but on his return in 1878, the money continued to flow. Historian Michael Bliss notes that the Canadian Pacific Railway, whose president was George Stephen, donated more than a million dollars: “The Conservative Party must have been so flush with cpr and manufacturers’ money in the 1880s that general elections were close to meaningless.” In building up a legendary Tory machine and hard-wiring the politics of “pelf and plunder,” Macdonald “set the genetic code for the role of Prime Minister in Canada.”8

124

Constructing Fiscal Federalism

Taxes always exist in a reciprocal relationship. Nowadays, they buy state services but the denizens of Macdonaldian Canada had different expectations of payback. Fiscal transfers reflected clientelist relationships: the clout of wealthy corporate interests and the moral economy of the crowd. The state had a mandate to build up the economy, and it accomplished that by providing infrastructure and protection to the business interests. Macdonald identified with the interests of the wealthy and served as their apologist. But he also had an informal mandate to get some of that wealth back to the people, not just indirectly through economic growth but also directly, sometimes using state and sometimes party channels. Social and fiscal reciprocity were particularly expected during election campaigns when patronage was freely dispensed according to a wide range of pretexts. The roads overseer might direct money to party faithful, or farmers’ carriages might be commissioned to get out the vote. Often, provincial and federal patronage networks competed. “In Manitoba, government employees, on the instructions of the ‘Hon. Bob’ Robert Rogers, drilled wells with government equipment on government time for potential and actual Conservative voters who settled in the province. Sometimes, however, Clifford Sifton’s ‘army’ of immigration agents and land agents had got to the new Manitobans first, and captured them for the Liberals before the well was drilled.”9 In Ontario, Mowat dominated politics from 1871 to 1896 with what Liberals called “honest graft.”10 Macdonald rejected the distinction. He described Mowat as “that little tyrant, who had attempted to control public opinion by getting hold of every little office, from that of a Division Court bailiff to a tavern-keeper.”11 Pot and kettle were well met. Macdonald carefully nurtured public and private, state and party fiscal transfers, but he had a bias towards party. State accounting was continually subjected to pressure for transparency, party much less so.12 In many respects, the party had more capacity than the state to gather and disperse funds. Where the state was wholly ignorant of private households, the party generally knew someone who knew something of the circumstances of a given voter. Not all MPs knew their constituents, but John English remarks that personal connection was still broadly possible until the First World War.13 The total sums spent are unknowable, of course, but many described them as substantial. The first federal election in Nova Scotia was said to reach new heights, especially in Cumberland County where Annand bearded Tupper in his den. At one remote household, Tupper “called upon a man in very poor circumstances who had always supported him. This man’s attitude was unusual and his replies rather evasive.



Macdonald to Laurier: Revolt against Liberalism 125

Tupper, suspecting some reason which had not been revealed, followed him into the house where the wife finally said ‘Why do you not tell Mr  Tupper the whole story?’ He then confessed that Mr Annand had called upon him and that finally he had promised Annand his vote in consideration of receiving an order upon a merchant in a neighbouring town for a barrel of flour. He pleaded his extreme poverty, and hoped that Tupper would forgive him. Tupper, finding that the order was still in the elector’s possession and was signed by Mr Annand, offered in exchange for it the price in cash of a barrel of flour.” Tupper then used the note to suppress accusations of corruption by Annand.14 The episode reflects Tammany-style clientelism: it was a material exchange but also a very personal one that established the claims an impoverished elector had upon his representative. The same sense of intimacy characterized Macdonald’s personal grassroots networks: “Sir John’s real ‘old guard’ were not the men who stood with him at Ottawa, but the greater old guard who stood and fought for him in every township year after year, and to whom a call by name or a nod of the head was all the recompense they got and yet the recompense they most prized.”15 The sums were small and the elector’s clout minimal, but personal contact made people feel connected to the state and blunted liberalism as an instrument of forced modernization. In Montreal, in that first national election, George-Étienne Cartier was heard to say that Irish voters could be bought for “a barrel of flour a piece and some salt fish thrown in for the leaders,” but Cartier was also accused of paying the astronomical sum of $10 per vote, as was Tilley in 1865.16 In Huntingdon, Quebec, candidates paid voters’ taxes, while Hector Langevin estimated the cost of his Dorchester, Quebec, seat at $8,000 to $10,000 and informed Macdonald that “the masses believe me to be a wealthy man, and a large number will not turn out to vote unless I pay them well.”17 And so it went. In 1891, the Courier de St Hyacinthe distinguished between three classes of corrupt voters: “Those who demanded spot cash for their votes; those who waived cash, but insisted on something being done for their families, such as the payment of a store bill; and those who with greater modesty refused to go to the polls unless they were paid for the day’s expenses.”18 In Richelieu in 1889, a seat cost $1,000; in Ontario in 1904, the price started at $4,000 and could rise as high as $20,000. In Halifax in 1891, the Tories were said to be spending $2 to $10 per vote, and in hard-fought Antigonish as much as $100 per vote to get Sir John Thompson re-elected.19 In the “carnival of corruption” that was the Yukon in 1904, as much as $10 went to every voter; in BC in 1911, $4 was the going rate for a vote.20 The party’s logic

126

Constructing Fiscal Federalism

of deserving versus undeserving jarred with the logic of liberalism, but spoke to popular moral economies. Clientelism and patronage were the glue that held the country together. Macdonald protected his pre-eminent clients – vested elites and crowds – against fulminating ratepayers. So long as they maintained their strength, so long would he buy them off. The businessmen joined together in trade associations and combines, while the working-class public demonstrated its massed physical presence in street demonstrations, parades, and picnics. Macdonald rebuilt his political fortunes at such picnics during the 1870s, and they remained everywhere a party staple. At Dartmouth, a suburb of Halifax, voters were wooed with cold meat, cheese, biscuits, and beer. Such gatherings reminded the governing classes that the public was not just an imagined community but a vibrant physical presence and political force. From the Malthusian perspective, the pervasiveness of such exchanges corrupted and pauperized the nation as a whole. Liberal reformers denounced both public and private payoffs as pre-liberal hangovers to be dismantled. They tried to extract taxation from broader political and economic relationships and reduce it to mechanisms of accounting that calculated to a penny what was being transferred and how it was spent. They wanted to calculate the value of every citizen’s taxes and to block the fiscal transfers that inevitably followed informal mechanisms of political agency. Non-consensual payments in any form were “taxes” and an abuse of power. Anything that did not fit their flattened, legalistic forms of accounting was incompatible with a modern, liberal state. Revenue should be spent according to the abstract merits of the claim, not the political influence of the demand. Francis Fukuyama observes that the middling classes understood that they were not well served by clientelism; they were “too rich to be bought and not rich enough to buy votes.”21 Their preferred public sphere was a diffuse and defused imagined community of ratepayers that expressed itself at the ballot box, not as rowdy crowd sport. But reformers also had to take the public as they found it: hence their recourse, however reluctant, to “honest” or modest graft.22 Their often-flagging purpose was regularly reinvigorated by popular reform movements against high-spending “court” politics, including in the 1870s the Grange, which organized agricultural discontent, and in the 1880s the Knights of Labor, which organized workers’ discontent. Tax revenues rose over the half-century after Confederation. Total federal taxes, exclusively drawn from customs and excise, were at $11.7 million in 1868 and at $23.2 million in 1891, the year Macdonald died.23



Macdonald to Laurier: Revolt against Liberalism 127

The per capita rise (from $3.20 to $5.41) was not the austerity that Brown had hoped for. That part of Brown’s tax revolt was a failure, as was the attempt to sever ties between business and the state. But if the revenue flowed from people to state faster than ever, there was some curtailment on the return of spending to the people. After Macdonald’s death, Liberals and Conservatives both nudged the federal state towards greater impersonality and more transparent accountability. Robert Borden, tasked with rebuilding a moribund Conservative Party, cancelled the traditional picnics in Dartmouth and scorned the offended picnickers. In his memoirs, Borden quoted “Peter,” whose reponse was: “well, ah’ll tell you, suh, if dat’s so, there aint gwine to be nobody elected.”24 Borden wore his disdain for the poor, easily bought voter as a badge of progressive pride. He still channelled official patronage through party and personal networks, of course, but the public performances of political reciprocity declined. 25 Confederation began the change when it steered the federal state away from intimate involvement with the everyday life of the people and towards intimate involvement with the banks, railways, and manufacturers. The constitution had narrowed the scope of federal spending without restraining the scope of federal revenue. The more revenue the state gathered, the more it must channel towards the interests of the wealthy; it could do nothing else with its funds. Low federal taxes were never an option, thanks to Macdonald’s high-spending ways. Canada was a congeries of regions imperfectly knitted together by means of party, railway, and taxation. If Canada wanted railways, it must have substantial taxes as well as substantial loans on the international money market. In the process, tax dollars were transferred to the investing classes. “Country” theorists hadn’t liked that fiscal flow in the eighteenth century, and ratepayers weren’t much more approving in the nineteenth. It was hard to square huge interest payments with rational self-interest, and only the tariff could extract enough wealth to keep Canadian bonds buoyant. Fiscal crisis had precipitated Confederation, but Confederation did not much alter fiscal practices in Canada. Liberals and Maritimers pressed for low tariffs, but Macdonald had no interest in seeking other kinds of revenues. He did not emulate the national income taxes seen in both Britain and the United States at the time of Confederation, put there by liberal theory and war, respectively. Macdonald eschewed theories, wars, and the fiscal debates that they provoked. Governments that taxed income had to confront two extremely controversial questions: on the one hand, whether taxation should be graduated or flat rate and, on the

128

Constructing Fiscal Federalism

other, whether there should be exemptions for the poor. Minimum tax thresholds amounted to “class” legislation that obstructed the fiscal disciplines that taxation was supposed to inculcate. You could either protect the poor from taxes or educate them with taxes, but you could not do both simultaneously. The question of graduation was even more classladen, and mid-Victorian liberal orthodoxy insisted on flat-rate taxation. According to John Stuart Mill’s Principles of Political Economy, published in 1848: “I do not see how you can, either with justice or policy, tax a person more heavily because he earns more, or because, after having earned more, he saves more. I do not think you can lay a tax upon energy, or industry, or prudence.” (The only exception Mill entertained was succession duties: inherited wealth was the only unearned wealth.26 Succession duties would be introduced by Canadian provincial governments during the 1890s, as the least controversial form of direct taxation.) In 1863, those principles were reiterated by William Gladstone and Goldwin Smith. Gladstone saw graduated income tax (which Karl Marx advocated) as a recipe for “universal war – a universal scramble amongst all classes, every one endeavouring to relieve himself at the expense of his neighbour – and an end being put to all social peace and to any common principle on which the burdens of the state can be adjusted.” He looked for fairness by sector.27 Goldwin Smith further denounced the income tax’s “inquisitorial character, and the arbitrary power almost inevitably given to the Exchequer in assessing it.”28 Direct taxation in Canada would be much more intolerable with that inquisitorial and arbitrary power controlled by so notoriously clientelist a government. Indirect taxes were regressive, but the rules were writ large for all to see. Direct taxation would enable an army of amateur, taxexempt, Tory-appointed officials to appropriate as much wealth from their political opponents as the judges (also tax-exempt Tory appointees) let them. The tariff posed fewer threats to the autonomy of civil society, as even the Toronto Globe came to realize. In 1862, it praised the new American income tax: it would “have a very beneficial effect on the people, in making them watch closely the conduct of their rulers, and check corruption and extravagance. It will also cause the people to be more economical in their own expenditure, and teach them the great duty of self-denial.” But in 1876, the newspaper denounced the income tax as insuperably unfair. “Income tax we have often shown to be both offensively inquisitorial and very unequal in its pressure, while in the nature of things it tempts to fraud and falsehood.”29 In 1862, direct taxation promised liberal modernization; in 1876, it promised Liberal defeat. The



Macdonald to Laurier: Revolt against Liberalism 129

prospect of tax collectors going door to door asking an economically beleaguered population to count its scarce possessions had little appeal for the now-governing Liberals. Brown’s views also reflected mounting American hostility to income tax. During and immediately after the Civil War, it was seen to bolster security of property and the country’s credit, both potentially vulnerable given the enormous debts. But once the dangers were over, northeastern moneyed interests began to denounce income tax as reflecting the regionalized, “socialistic animus” of the impoverished South or western demagogues who (according to the New York Times in 1878) sought to accomplish “to a limited extent what the communist seeks to accomplish by his social panacea – the division of property.”30 They complained that they were paying 75 per cent of national income tax revenue. The federal tariff was not much less “sectional,” but it had powerful advocates in those northeastern moneyed and manufacturing interests, for whom, Joanne Reitano argues, “monopoly became a more modern version of natural law, a bulwark to the American faith in progress and the equally American desire for limitless wealth.”31 There was also a constitutional restriction: the American federal state must tax indirectly, the individual states directly. When the federal government, under pressure from progressive reformers, passed a national income tax in early 1894 (designed to take 2 per cent from incomes over $4,000 to cover tariff reductions), the tax was overturned as unconstitutional in 1895. By contrast, the b na Act permitted the Canadian federal government to tax as it liked, and it liked indirect taxation. Macdonald eschewed the necessary bureaucracy and the necessary disputes about wealth as a political and social entity, thereby muffling debate about the nature and meaning of property. Jurisdictions that taxed property saw far more direct disputes about the rule of property. Macdonald forced such conversations out of the federal arena. He could not keep them out of the courts and found his government repeatedly on the losing side of legalconstitutional disputes about the governance of property, but at least he could steer such conversations towards legal formulations and away from the more philosophically and socially charged interrogations of wealth and poverty seen in local jurisdictions that bore the burden of direct taxation and welfare. Macdonald sought to tax the poor and protect the rich. He nurtured prosperity and ignored poverty because liberal political economy predicted that, properly governed, wealth would displace poverty. But it must be protected from poverty to do its work, and Macdonald ever protected it. In 1870, when Liberal David Mills called

130

Constructing Fiscal Federalism

for the enfranchisement of intelligence rather than the mere “accident of property,” Macdonald replied that “there is no greater danger than an ill-regulated intellect.”32 In the mid-1880s, he achieved a long-cherished ambition of a federal franchise grounded on property that repelled democratization. He also warded off tax encroachments on property, as when he argued, in Parliament and in meetings with Manchester Cobdenites, that Canada could not afford direct taxation: “An income-tax would be a failure, because there was nothing to levy it upon; therefore, they were obliged to have recourse to the tariff.”33 Formally, his government upheld the interests of the “respectable,” propertied elements of society, but the emphasis on indirect taxation checked the kind of organized ratepayer protest seen in municipal politics. Macdonald deferred to the opinion of the propertied public, but that propertied opinion began to prove surprisingly volatile and un-ballastlike. The opining public was also a consuming and producing public, continually finding new ways of aligning its economic choices with its political voice, and the rise of popular consumption posed new challenges. The 1870s saw a new consumerism spread across British North America, a new “gilded age” – a phrase coined by Mark Twain in 1873 – that percolated through society as a whole and transformed political agency. It gave ordinary people more power to remake their worlds by remaking such institutions of the classic public sphere as newspapers, in ways that continually flattered and expanded popular agency. Consumerism gave popular culture a new purchase on the global marketplace, and it bespoke a reconstruction of public discourse comparable to the one that caused responsible government a generation earlier. If the federal state was wholly funded by popular consumption (and the provinces largely so), how could Macdonald maintain his anti-democratic Tory tilt? Didn’t popular consumers own the state? Modern popular consumption infiltrated into public consciousness around the middle of the nineteenth century. Jules Michelet described a dramatic moment in France when, with warehouses full and factories idle, the price of cotton fell to six sous, and suddenly, “millions of purchasers, poor people who never bought any thing, began to stir. Then we saw what an immense and powerful consumer the people is.” Factories sprang to life, and linens and curtains appeared in the homes of “whole classes … who had had none since the beginning of the world.34 At the British Great Exhibition in 1851, pundits discovered that a large working-class crowd could admire a pageant of material wealth, and they toned down the “dangerous classes” rhetoric of the Hungry Forties.35



Macdonald to Laurier: Revolt against Liberalism 131

Canada sent artifacts for display in international exhibitions and staged local, provincial, and even some national exhibitions, always with lavish press coverage. The massed crowds of producers and consumers were simultaneously educated and empowered at such gatherings, their passions and interests wooed.36 From the 1860s, an advertising industry emerged to shape buying choices. Brand-name advertising, beginning with patent medicines and tobacco, spread in the 1870s, aided by the development of department stores, colour lithography, standardized rates, and advertising agencies.37 Luxury branded products like Pears soaps and Cadbury chocolates were joined, through the 1880s, with mass market, mechanically packaged products like Quaker cereals, Heinz ketchup, and a host of cracker, cookie, toiletry, soup, soft drink, and other products.38 David Monod and Beatrice Craig date modern Canadian consumerism to the late 1860s and early 1870s.39 Spending on foodstuffs and clothing rose by more than 50 per cent during the 1870s, while spending on household goods more than doubled (while population rose less than 20 per cent).40 From 1884, Eaton’s began to reach a wider market with its catalogues.41 Spending on newspapers, sports, and other entertainment increased. But where some welcomed the “better houses, richer furniture, handsomer grounds, costlier entertainments, higher personal graces, broader hospitality,”42 others saw a cheapening of taste. Dr Williams’s Pink Pills for Pale People, acquired by Brockville, Ontario, entrepreneur G.T. Fulford, began its own ubiquitous marketing campaigns in 1890. Consumer power enabled ordinary people to upend the political verities and the moralizing dictates of politicians, priests, pundits, and professors. Earnest and improving papers lost market share to the new penny press, like the Montreal Star and the Toronto Star: commercial extravaganzas driven by advertising that reached into working-class households as the old Herald and Globe never had.43 Improvers like the Farmer’s Advocate and the Gazette des campagnes lamented the change and complained of the new “desire to appear and eclipse one’s neighbours by showing off beautiful harnesses, carriages, and outfits purchased in shops.” Urban workers were also seen to be buying beyond their station and driving themselves into debt and poverty. Such concerns played out on the fairground where prize livestock vied for attention with “snake charmers and scantily clad females.”44 The problem with consumption was not just that people wanted new goods – they wanted new American goods. Americans had a remarkable degree of consumer patriotism; Canadians had remarkably little. When consulted, they claimed that they liked to buy Canadian goods, but their

132

Constructing Fiscal Federalism

actions spoke very differently. American consumer culture filled Canadian publications, and American brands nudged out Canadian ones on store shelves.45 And because unenfranchised people had more consumer agency than political agency, the ironic distance between purported identity and practice confounded nationalist rhetoric. American goods were sold cheaply in Canada, partly because Americans had economies of scale and better transportation, partly because surplus could be dumped cheaply here. There was no need to drop your price to six sous at home if you could sell off your surplus in Canada. The upshot was that consumerism seemed to be Americanizing Canada, importing in through the back door all the republicanism that Macdonald had so carefully shown out the front. American politicians, mandated by the same popular nationalism that preferred American-made goods, informed Canadian politicians that there would be no more reciprocity and that Canadians must join the Union if they wished to sell to the Union. They smirked as depression drove Canadian manufacturers to the wall. Where was the federal prosperity project now? Liberal and Conservative responses to the problem differed, the one looking to popular agency and the other to elite managerialism. The Liberals believed that a free economy would be a strong economy and that Canada would thrive with freer trade. That view was also widespread amongst Macdonald’s “Liberal Conservatives,”46 as Andrew Smith shows in arguments from the mid-1860s: “The fear that Canada might adopt a protectionist tariff policy was groundless … in such a scientific age, a Canadian ministry containing such intelligent men as George Brown and A.T. Galt would no more ‘return to the exploded theory of protection’ than they would propose to ‘defend the Canadian frontier with bows and arrows.’”47 But the 1870s shook that faith. Manufacturers lobbied for a tariff equal to the American one, while fiscal shortfalls forced Mackenzie to increase the tariff by 2½ per cent not once but twice. He set rookie MP Wilfrid Laurier to defend the second raise, who argued that protection was neither Liberal nor Conservative: “I see nothing political about it; it is purely a matter of social economy,” so long as the “necessaries of life” were not taxed in a manner to force up the cost of living.48 Laurier was speedily inducted into the cabinet as Minister of Internal Revenue, but his tenure was brief. Macdonald scented weakness in the Liberal fiscal policy and rallied his party to a protectionist platform that put him back in power until his death. The manufacturers put wealth and advertising to work for Conservatism and protection.49 Patriotism figured prominently in the appeal: many

Figure 4.1  J.W. Bengough, “Protestantism at Ottawa; or, ‘Job’ Cartwright’s Comforters. Being One of the ‘Pleasantries of Public Life’” (Grip, 25 April 1874). Every budget triggered a cacophony of protests and special pleading from men and women alike, as Liberal Minister of Finance Richard Cartwright discovered in 1874. (Image courtesy of Rare Books and Special Collections, McGill University)

134

Constructing Fiscal Federalism

Figure 4.2  James Weston, “On the Fence” (Canadian Illustrated News, 29 March 1879). “Officer” John A. Macdonald insists that an American peddler of “Yankee Notions” must submit to the new National Policy of tariff protection. Weston liked the pose so much that he used it for his cartoon of Amor De Cosmos a few weeks later. In that cartoon (see figure 3.1), Chee Lung’s hands look like they might have rested on a gate in a first draft of the cartoon; the proximity of the ship also suggests a border crossing. (Image courtesy of Rare Books and Special Collections, McGill University)

cartoons showed a stern-looking John A. Macdonald turning away Yankee peddlers trying to sneak into Canada (see figure 4.2). But patriotism was not enough to carry the debate about the governance of wealth and poverty. Protectionists continually tugged the tariff debate towards a nationalist justification: better to be taxed at home than controlled abroad. But their critics continually tugged it towards domestic social relationships. They explored the way that economic clout and political



Macdonald to Laurier: Revolt against Liberalism 135

coercion translated into one another and what impact they had upon the public sphere. Macdonald could no more banish poverty from federal tax debates than he could banish religion or education. Part of what was under dispute was knowl­edge. Information had only a limited warrant in mid-Victorian political debate. O.D. Skelton, a professor of political economy at Queen’s University, remarked in 1923: “In the struggle for responsible government, in the controversies between warring creeds and tongues, in the solution of the early tasks of taxation, currency and transportation, and most notably in the handling of the difficulties which found their temporary solution in Confederation, there was statesmanship of a high order, there were practical solutions of enduring value, but there was little attempt to view the problems in the light of the ordered experience of mankind … Much heat and much ability went into these discussions, but relatively little light; we fought for a generation over tariff theories with little actual enquiry into the actual working of tariff schedules.”50 Skelton, who became an important civil servant, struggled to integrate knowl­edge and policy. He had to undo previous mechanisms of legitimation designed to keep politics in the grip of the politicians. Tory paternalism and liberalism each had their preferred ways of knowing: the former vested in the state and the latter in the public. But both were being challenged by new informational technologies emerging from business, academe, and radical politics. Politicians leaned first one way, then another. Mackenzie’s Liberals looked to public opinion to resolve public problems, and in the mid-1870s, they held public hearings to take advice from struggling businessmen. The process worked to privilege liberal and Liberal witnesses, and it beat back protectionist arguments with classic liberal suspicion. Being a liberal meant to be suspicious: a kind of economic Protestant in the face of protectionist miracle-claims.51 In 1874, a Liberal parliamentary commission investigated claims that “slaughtered” competition harmed Canadian manufacturers and concluded against intervention. Woolens makers like W.E. Sanford, who complained that low-quality foreign “shoddy” (inferior fabric made from waste cloth) defrauded consumers, were sharply rebuked: “The goods last referred to are purchased largely by persons of limited means, and your Committee do not regard it as the function of the State either to enact sumptuary laws or legislation tending to interfere with the rights of the people to exercise their own intelligence in the choice of their wearing apparel.” Anyway, tariffs were a counterintuitive solution to high prices: “As a general rule legislation guaranteeing a commercial monopoly to the producer appears to them an unlikely method of securing cheapness for the consumer.”52

136

Constructing Fiscal Federalism

Liberal suspicion could debunk protectionist narratives but had no practical program to supplant tariffs. As conditions worsened, protectionist petitions increased. But in February 1876, when Liberal David Mills moved for a wider investigation into “the causes of the present financial depression,” Macdonald took this motion as one of non-confidence in the government. Such a committee would effectively assume the powers and responsibilities of the government.53 In other words, the government’s responsibility, qua government, was to know the condition of the country; if it did not know, then it lacked legitimacy. For Macdonald, elections largely sufficed to legitimate policies. The sovereign state was a melting pot where knowl­edge and power combined to create political truths.54 The Liberals persisted with the Mills Commission, which heard from leading manufacturers and traders, many of them Liberals. The evidence was slanted towards free-trade sectors, like lumbering, but protectionist arguments were also aired. Many producers insisted they could compete freely with Americans on equal terms if they had matching tariffs. But the final report presented by Mills amounted to a lecture on liberal orthodoxies. It argued that the causes of the downturn were not Canadian but general and “quite beyond legislative control in this country.”55 Such conclusions could not breach the growing gap between liberal orthodoxy and popular opinion. Change within the Liberal constituency is visible in an exchange before Mills’s commission between Guelph miller David McCrae (father of the future poet) and J.W. Carmichael, a shipping merchant from New Glasgow, Nova Scotia.56 There was a generation between Carmichael, born in 1819, and McCrae, born in 1845, and it showed in their respective political economies. Where Carmichael looked for moral causes of the economic downturn, McCrae looked for economic ones; where Carmichael disapproved of consumerism, McCrae welcomed it. When Carmichael asked: “Do you not consider that the universal depression which prevails all over the world must result from waste or extravagance in living, or from a waste of capital in some form?” McCrae called for more extravagance: “If you could make a man wear two suits of clothes where before he had only worn one a year, it would help manufacturers wonderfully. [Carmichael]: It would not help me to buy them? [McCrae]: The larger you can make the consumption the better for the manufacturers.” Where Carmichael saw moral causes and solutions to the problem, McCrae saw “commercial waves which rise and fall like waves of the sea.” The commissioners agreed with Carmichael and with John Macdonald, a Toronto dry goods merchant and MP, who blamed the downturn on an overextension of credit to undeserving consumers,



Macdonald to Laurier: Revolt against Liberalism 137

and they warned that trying to tax one’s way out of the downturn would amount to an illiberal “redistribution of property.”57 While the Liberals tried to educate public opinion up to sober liberal orthodoxies, Sir John A. tugged it the other way at rowdy, boozy picnics. Macdonald drew crowds because he was a consummate entertainer: “‘How are you boys?’ he would call out with a carefree wave and a twinkle in his eye,” before launching into witty diatribes against “fanatical” liberalism and promising work for all in a protected marketplace. Liberals accused him of “froth and bunkum,” but they also began to hold their own picnics, which the Tories mocked as small and unenthusiastic, and the Liberals defended for their “plain, earnest manner.”58 But the charismatic Macdonald, unlike the plain Mackenzie or the dour Blake, was in his element at such gatherings. Liberals were perplexed by his habit of making “outrageous” claims at a venue too informal to be held to account through the usual channels (newspapers and parliamentary debate), and they sent paid agitators to argue with him. But they also pondered a deeper perplexity: how could the Liberal formula of self-denial compete with swaggering American consumerism for national hegemony? The carnival atmosphere of the picnic was a miniature re-enactment of the commercializing economy, a promise of pleasure, profit, and empowerment. Where the Liberals would repress such things, Macdonald would harness them. Macdonald’s picnics inaugurated a populist note that, once back in power, he began to recognize more formally. In the 1880s, he continued to devolve political power upwards, but he also staged big consultative exercises, with royal commissions to hear public opinion on Chinese immigration and the relations of capital and labour that were designed to defer to public opinion even as they circumvented it. Macdonald, Tupper, Tilley, and the rest built up a popular mandate for protection that carried their party back into office with a majority in 1878. They also promised relief from what Quebec MP Adolphe Caron called “heavy and injudicious taxation,” while Liberals said much the same in longer speeches with more figures.59 Both sides warned that corruption would result from too much or too little trade restriction: Conservatives argued that free trade would enable American businessmen to corrupt Canadians as they had done Americans, while Liberals argued that protection itself was the “mother” of all corruption. But where the Liberals sought to educate the public with debate, protectionists preferred to educate more forcibly with coercive laws to Canadianize consumer choices. But they also flattered it with advertising. They rewrote the heroic Canadian story to found it upon “the admirable courage and self-denial

138

Constructing Fiscal Federalism

of the small band of patriots, the pioneers of Protection in Canada,” who began on a “narrow and rugged” path but finally triumphed in 1878 with “the resistless might of a great army marching to victory.”60 Garlanded with victory, Macdonald could force a protective tariff through Parliament, just as he had once forced Confederation. Drawing up a new tariff was easy enough. He called Galt out of retirement to help Tilley negotiate with the small army of importuning businessmen who ­descended upon Ottawa. Within the government, Tilley and Macdonald largely oversaw the policy without creating any new bureaucratic institutions to manage it.61 But Macdonald also needed public legitimation for the process. The high American tariff was both motive and evidence enough for the new policy, but Macdonald disliked Americans too much to rely on that appeal. He couldn’t say “it works for them” without rejecting too much else that he’d always stood for. Nor could he fall back on arguments for British-style prosperity that had justified all his previous policies when Manchester liberals were denouncing his fiscal heresies. Instead, Macdonald legitimated his tariff by calling it “scientific.” Though the Liberal tariff rose from 15 to 20 per cent, it remained ad valorem, imposed more or less uniformly. The new law would apply specific taxes on specific items, each valued according to such considerations as the availability of raw materials, prospects for commercial manufacture in Canada, and necessity versus luxury. On 2 March 1877, Macdonald used the word “scientific” three times in one speech; on 22 March 1878, he complained of the “inartistic, unscientific” Liberal tariff and called for an adjustment that was “carefully, scientifically, and properly carried out.”62 How could a tariff be scientific? What did Macdonald mean by invoking science? Whatever science was, it was clearly not democratic; that much was in its favour. State support for science dated back to creation of the Geological Survey of Canada in 1841 to map the geological resources of the country, in hopes of finding coalfields. At a time of intense political differences, everyone could agree on the project of scientific development. The Survey predated Macdonald’s entry into politics by three years, but Macdonald had supported the Survey through the 1850s and 1860s, when its maps had won international acclaim.63 Macdonald moved the Survey to Ottawa, expanded its scope to include natural history, and in 1883 shielded its director, Alfred Selwyn, from partisan attacks with the observation that “it would in some degree interfere with this system, if we were to interpose our own ideas upon scientific matters connected with the survey.” Also in the 1880s, Macdonald’s government introduced



Macdonald to Laurier: Revolt against Liberalism 139

fisheries conservation, experimental farms, and the Royal Society of Canada. In April 1884, he recommended funding for the Society’s Proceedings and Transactions on account of its valuable scientific papers, “as far as an inexpert like myself can judge.”64 What of economic science? Macdonald and his colleagues mined extant political economy for protectionist evidence. Academic economists scarcely existed in Canada so the mining was largely foreign. But they could cite arguments by John Rae, a schoolmaster in Williamstown, Upper Canada, who had demonstrated even to John Stuart Mill’s apparent satisfaction that infant industries in one country might need initial protection against advanced industrial economies. (Richard Cobden believed that the harm Mill did in that remark “outweighed all the good which may have been caused by his other writings.”65) Rae accused Adam Smith of making unscientific claims: where Sir Francis Bacon had argued that true science replaced loose popular notions with precisely defined concepts, Smith had reasoned loosely from such popular notions. Where Smith had understood individual and national wealth as similar, Rae distinguished them: he argued that individuals became rich by seizing a bigger piece of the national economic pie, while nations became rich by creating new wealth, primarily through new technologies. It followed that states could improve national wealth by encouraging new technologies.66 Macdonald brandished Rae’s arguments in Canada in 1879 and again in Britain in 1880 amongst Manchester Liberals who claimed that Mill had “recanted that monstrous doctrine.”67 Tories also found evidence for their position in the British school of historical economics. In the House of Commons, merchant John McLennan gave it on scientific authority that “political economy cannot assume the uniformity of nature in the same way that astronomy does, and hence it has no scientific position from which to slight the doctrines of those who maintain that a new and wholly different régime might supersede that which Ricardo and his school have so clearly decided.”68 James Colebrook Patterson, a lawyer representing Essex North, quoted another authority: “Political economy is not a universal science, of which all the principles are applicable to all men, under all circumstances, and equally good and true for all nations; but every country has a political economy of its own, suitable to its own physical circumstances of position on the globe, ­climate, soil and products, and to the habits, character, and idiosyncrasy of its inhabitants, formed or modified by such circumstances.”69 Protectionism, so long debunked by skeptical liberal economy, now had

140

Constructing Fiscal Federalism

its own Protestant-style skepticism to direct against the deductive truths of liberal economics, one that could generate new facts as well as suspicions. Science from this perspective was an inventory science, like Canada’s prize-winning geology. It was informed as much by colonial data as by metropolitan reasoning. But inventory science could only seek out and measure wealth, not poverty. Macdonald’s scientific political economy aimed to inventory wealth and accord it commensurate economic privilege. After all, businessmen were the experts in matters of business. Their guesses as to what might be commercially manufactured in Canada were speculative, but no one else knew any better. They were the most interested and best judges of the market’s prospects. But where Mackenzie made consultations public, Macdonald nudged them towards backroom conversations. “Tell us what you want,” said Macdonald, “and we will give it to you.” And that was what happened – the deals mostly done in the notorious “Red Parlour” of the Queen’s Hotel in Toronto. In that respect, Macdonald’s science shared an important feature of the new laboratory science of the seventeenth century: it occurred in spaces that were nominally public but in fact accommodated only select invitees who shared the outlook and disciplines of the experimenters.70 Macdonald’s tariff “science” similarly emerged from cloaked talks with specialist participant-observers. For example, Macdonald asked George Drummond, a sugar manufacturer and Tory, for advice on the appropriate level of protection. The bill, when introduced, applied a specific duty of one cent a pound on refined sugar with an ad valorem duty that could rise to 35 per cent. The Liberals observed presciently that the tariff would create sugar millionaires.71 Thus, properly understood, economic knowl­edge dovetailed with scientific knowl­edge to produce not data, but authority, which was to say power. Producerist knowl­edge was weightier than the merely academic form. Because economics largely entered academe as liberal political economy, protectionism in both Canada and the United States had an anti-intellectual bent and liberal economics were denounced as mere bookishness. During a debate about the tariff in 1888, William McKinley remarked that America preferred “a political economy founded upon the everyday experience of the puddler or the potter [rather] than the learning of the professor.”72 In Canada, federal anti-intellectualism was exacerbated by the fact that academic appointments were objects of provincial rather than federal patronage. The University of Toronto’s first economist, historicist W.J. Ashley, was interviewed by Liberal Party leaders Oliver Mowat and Edward Blake.73 Macdonald did not outsource science to the



Macdonald to Laurier: Revolt against Liberalism 141

universities. He hired his own scientists, kept them strictly in their departmental places, and repeatedly shouted down demands for expert bureaucrats within non-scientific branches of the civil service. Keenly aware that few Tory supporters could boast scholarly credentials, Liberals regularly pushed for more scientific appointments – for a cattle inspector, for military commissions, and for the civil service in general.74 In 1884, regarding a Dominion librarian, Macdonald insisted that “a man may be a very scientific man or a very literary man, and yet make a bad Librarian.” In 1885, when David Mills demanded that a chief superintendent of mines be a man with “practical scientific knowl­edge,” Macdonald responded that an ability to settle disputes between rowdy miners was more important. In 1886, Hector Langevin practically apologized for including a scientific text in the report on public works – the work of a hobbyist in his department – and promised there would be no recurrence.75 Finance Minister George Foster was teased about a slightly discreditable past as a classics professor. The Canadian Manufacturers Association reinforced such claims with tirades against the pseudoscience of free trade with its “poor man’s loaf argument.”76 Macdonald’s producerist views were on display in a speech that he gave in 1882 to “workingmen” that insisted on their agency. “For four years they were wandering round imploring the people to give them work. Now, in Ottawa the boot is on the other leg, and if I want any work done I cannot get it done because the men are so fully employed – (loud cheers).”77 Where Conservatives insisted that workingmen were empowered by the tariff, Liberals tried to insist that consumers were enslaved by it. Where Macdonald flattered the workingman’s agency, Liberals produced a more jaundiced account to stoke class resentment. An argument in the Globe in 1879 drew on the language of utility, reworked by British economist Stanley Jevons, to denounce the tariff. Jevons argued that economics should be mathematized by means of a Benthamite calculation of pain and pleasure, understanding human thought processes as akin to mechanical balances.78 So viewed, the Globe argued, the tariff preferred the pleasure of the few to the suffering of the many. According to its caricature of Tory reasoning, “the families of the men on fixed incomes dressed and fed too well for their station in life. It was desirable that they should be taught their places. Were the manufacturers to be pained by the spectacle of the increased comfort of an inferior class, while they were compelled to reduce their own expenditure? Human nature could not be expected to endure such an outrage.” The Tories weighed the sensibilities and the prosperity of the few against those of the many, and they sided

142

Constructing Fiscal Federalism

with the few: “The mere physical suffering caused to the labouring classes by higher taxation would have been inconsiderable, and their mental distress not worth talking about in comparison with that of the capitalist.”79 This was a well-aimed attack made with new academic fodder. But how persuasive could such an argument be, coming from a political party largely in the hands of old-style austerity Liberals who distrusted unreconstructed consumers as much as they distrusted unreconstructed voters? Coercive Tory paternalism had no such qualms. The gender of consumption played to that paternalism. Women were more likely than men to do household purchasing, but women’s political voice was too marginal to carry their interests into the debates. Few women could vote in late-Victorian Canada, and none could vote in federal elections. Macdonald championed the enfranchisement of propertied women in 1885 as did Ontario Liberal James McMullen on grounds that “the ladies are heavy taxpayers,” but Conservatives from Quebec vetoed any such change.80 Women’s purported interests were continually invoked, but at one remove by men posing as their champions. Both sides agreed that women made the key purchasing decisions and both invoked that expertise. In 1879, La Patrie found it particularly cruel that the tariff was introduced in the early spring, just before women did their spring shopping – for a dish set, or perhaps a clock – only to find that the Tories had hiked the prices: “And our housewives must pay the difference. Beautiful thing that protection, O brave mothers.” Laurier ended a speech against the tariff with the observation that it would cruelly tax “the necessaries of the poor … Before six months expired, he predicted that every mother in every Quebec cottage would curse the day this tariff was introduced.” The Montreal Witness also overheard hostility to the tariff amongst the “struggling poor”: “They are very decided in their opinion and expressions of it in this matter, especially the ladies.” When Tilley insisted sugar prices were down, Liberal MP Thomas Bain exclaimed: “One thing he did know, and the poorest woman of the country knew, that the effect of this tariff had been to advance the price of sugar to the consumer.” But the Tories also championed women’s knowl­edge. Thomas Farrow of Huron East insisted: “I have canvassed the neighborhood in which I live, and every lady who manages a household and goes to the store from week to week to buy her groceries, declares that in all her experience in Canada she never knew groceries, cottons, woollens, and everything else the family requires as cheap as they have been during the regime of my hon. friend the Finance Minister.” They could invoke “home protection,” a concept coined by activist Letitia Youmans, to exalt women’s work.81



Macdonald to Laurier: Revolt against Liberalism 143

But a discourse that enabled men to speak for women could not but be shot through with misogyny. Many cartoons showed an idealized Miss Canada as a commodity, either sold off by a pimping Richard Cartwright or gallantly protected by a chivalric John A. Macdonald.82 Leading articles and cartoons, under such titles as “Luxury Leads to Ruination and Crime” and “The Vicissitudes of High Living,” showed well-to-do women shamefacedly disavowing their ruinous consumption (see figure 4.3). British Columbia was not just the spoiled child but the spoiled girl child of Confederation.83 Sometimes women smartly informed hectoring husbands that they, too, should economize on such luxuries as “cigars, wine and club life.” One “rare” cartoon by Henri Julien represented an ordinary woman doing ordinary things competently: a woman with a child clinging to her skirts complains about the price of sugar, and her frustrations are confirmed by male authorities, namely the shopkeeper and the newspaper itself. “Customer: ‘Them’s free-trade prices to consumers, be they? Then protect Home Manufactures to death, sez I. I’d a’taken two pounds refined at the old Redpath price. Gi’me a quarter pound brown; that’ll have to do for a week, now.’ Grocer: ‘Very sorry, Ma’am, but we are positively losing money on sugar, even at these prices.’ (More’s the pity. Ed note.)”84 (See figure 4.4.) Women’s voices were muffled in the Royal Commission on the Relations of Labour and Capital, which reported in 1889. Historian Stephen Cole observes that the commissioners interviewed a handful of women but asked them only about their experience at the workplace, never about their shopping. They did ask some men about household consumption, only to be told that that was a wife’s business. As a consequence, the commission failed to address the lived experience of poverty. It can hardly be surprising that the governing Tories did not want to stir up an innovative and potentially radicalizing investigation into the experience and causes of poverty; or that, having found themselves doing precisely that, they pulled back. In January 1888, shortly before the commission went to Montreal, John A. Macdonald told the chair that “you are going into this matter too elaborately.”85 If the tariff worsened poverty and women knew it, all the more reason not to hear from the women. Could a masculine knowl­edge of consumption be constructed? Ontario decided that it could. In 1882, the province created a Bureau of Industries designed to track the economic experiences of workingmen. American states had established similar bureaus in the previous decade, at the urging of organized labour (beginning with the Knights of Labor, and acting through Trades and Labor Council, formed in 1881).86 In Ontario,

144

Constructing Fiscal Federalism

Figure 4.3  A. Leroux, “The Vicissitudes of High Living” (Canadian Illustrated News, 17 March 1877). Consumer frailty, thy name is woman: “Now-a-days the girl who earns her own wages is safer than the lady that rolls in wealth.” (Image courtesy of Rare Books and Special Collections, McGill University)

bureau secretary Archibald Blue wrote to trade unions asking for information on wages, rents, and similar information from which he produced some statistical tables of regional prices and wages during the 1880s and 1890s that gradually began to appear in and influence political debates. Also in 1882, the Globe sent a labour columnist and activist, Phillips Thompson, to investigate the cotton industry. He devoted dozens of paragraphs to analysis of the extraordinarily complicated scale of prices for such class-specific goods as the different varieties of cotton. A leading article screamed: “alarming increase of household



Macdonald to Laurier: Revolt against Liberalism 145

Figure 4.4  Henri Julien, “Sugar. Gone Up, Out of Sight” (Canadian Illustrated News, 9 December 1876). Julien provides an early sympathetic image of a consumer hit hard by the tariff. (Image courtesy of Rare Books and Special Collections, McGill University)

expenses.” It tabulated the cost of living for the “average artisan’s family,” listing all the taxes that were paid on necessary expenses (365 loaves of bread, 200 pounds of sugar, 150 pounds of pork, 6 tons of coal, 10 gallons of coal oil, one pair of blankets, $20 of woolen clothes, $10 of cottons, $20 of boots and shoes, two pairs of rubbers, and $75 groceries and dry goods). The tax total of $40.95 was far below the real cost to the consumer because, the Globe explained, it had lowballed cotton and woollen purchases for working families and ignored big ticket items like stoves and furniture; the real sum was probably closer to $1 per week.

146

Constructing Fiscal Federalism

And, the Globe, insisted, “every father of a family knows that these expenses have increased fearfully … Every one of them can see this for himself; if he cannot his wife can.” But political momentum was depleted in that gap between “every father” and “his wife.” Consumer politics could not become mainstream politics without incorporating women’s voices. Women, of course, were not the only interests disenfranchised. The poorer the constituent, the less likely he was to vote federally. Racialized minorities, the poorest of the poor, were targeted with special disen­ franchisement laws. Another disenfranchised and silenced community was the economic exiles, driven from Canada to seek work in the United States. The Quebec press noted that those emigrants were disproportionately French-Canadian. Honoré Beaugrand described in 1874 the honest family father, sighing along the path to exile, asking himself where all the taxes and public spending went.87 The Liberal Patrie seconded the observation under such headlines as “To the United States, To the United States,” and “Taxes! Taxes! Deficits! Pay, poor people!”88 Canadian political economy remained largely ignorant of what consumers needed, especially impoverished consumers. It was predicated on heavily moralized binaries between good and bad consumers and consumables. Items that were too American or too luxurious should be taxed heavily, as part of the process of educating good consumers into existence from the undisciplined masses, but the categories were vague and malleable. Was tobacco a luxury, for example? The Charlottetown Presbyterian denounced Mackenzie’s heavy taxes on “the almost necessary tobacco of these poor men,” a position that drew fire from the Charlottetown Patriot as preferring taxes on the food and fuel of the poor.89 The Winnipeg Commercial saw canned foods as luxuries in the east but “absolute necessities for the health of the people” in Manitoba.90 But to distinguish real from nominal regressivity in taxation, you needed knowl­edge of economic circumstances and consumption. You had to know who bought what. That knowl­edge was not easy to obtain and Macdonald conspicuously failed to obtain it. Facts cannot exist as objective knowl­edge without social networks to marshal intersubjectivity. “Art is myself, science is ourselves,” observed the great French experimental physiologist Claude Bernard in 1865.91 But social networks around economic facts in Macdonaldian Canada were so partisan that any data embedded in them could not rise above the status of propaganda, vehemently attacked or defended as such. You trotted out your facts for purposes of political debate and then put them away again. Knowl­edge deferred to power because it was, for Macdonald, largely a by-product of power. He held



Macdonald to Laurier: Revolt against Liberalism 147

the necessary power and carefully policed its boundaries to obstruct academic and other inroads into its convergence with knowl­edge and wealth. Macdonald’s adversaries had good grounds to distrust knowl­edge as a check upon power. The Liberals chose to ground their criticisms of the National Policy on classic liberal agnosticism rather than on data, because data required social privilege. To build up social networks that could deploy intellectual authority – bringing academic knowl­edge to bear on political disputes – would create forms of social disequilibrium comparable to the ones they were supposedly attacking in business lobbying groups. If the gold standard for governance was prosperity, it was far from obvious that subordinating business experience to academic expertise would better serve that outcome. Organized labour and farmers shared that distrust of academic expertise, and indeed, the distrust was largely mutual. Expertise and grassroots public opinion were not natural allies. But there was, in another respect, a huge fissure between the partisan and the anti-partisan critics of the National Policy around the question of evidence. Protection in Canada, everybody knew, was strategically aimed at the consumption of the poor. Industries that could be or were already developed in Canada were particularly targeted for taxation, and cheap goods were easier to manufacture and market in Canada than high-quality goods requiring highly skilled labour. Therefore, manufacturers continually pressed for higher taxes on cheaper wares, and short of abandoning protection outright, no finance minister, Liberal or Conservative, could ignore that pressure; all must privilege the manufacturer over the poorest consumer. Evidence would be political death to any mainstream party hoping to remain on cordial terms with manufacturers. “But you tax the poor more heavily than the rich!” was an accusation constantly made by organized labour and farmers, and reiterated, with much less conviction, by partisan finance critics. Regionalized data would show the same thing. Neither federal party cultivated any practical mechanisms for gathering data about the absolute or relative incidence of consumer taxes. The beginnings of such data would emerge outside the mainstream parties. Meanwhile, the lack of data played to Macdonald’s strengths. Macdonald’s National Policy made him virtually impregnable. He had remarked in 1872 that Confederation “is only yet in the gristle, and it will require five years more before it hardens into bone.”92 A decade later, economic and political consolidation gave Macdonald a quasi-imperial rule that J.W. Bengough represented in political cartoons where the prime minister looked down from on high – from pedestals, steamrollers, and elephants – at pipsqueak, impotent Liberals and premiers (see figures 4.5

148

Constructing Fiscal Federalism

and 4.6.) The high–low metaphor beautifully conveyed the imbalance between a powerful, unchecked prime minister and a diminished people. Macdonald trumped Ontario ratepayer politics at many levels, and his ace in the hole was always railway building. If the cp r hadn’t sustained Macdonald’s high-spending government, he would have had to invent other excuses. That’s not to say that the fiscal demands made upon him were easily met. In 1884, the c p r almost failed: it couldn’t sell its stocks at any price, even with government backing, and urgently needed an outright loan of $22.5 million, which Macdonald refused. So the railwaymen importuned the minister of railways, J.H. Pope, who bluntly informed the prime minister that “the day the Canadian Pacific busts, the Conservative Party busts the day after.” But the Quebec members of his caucus refused to vote the necessary sum unless Quebec received $3 million for its north-shore railway project. Macdonald held out as long as he could against the “blackmail,” but at the last possible moment the money was promised. Of course, that concession provoked others and a “general levelling up all around of provincial subsidies.” Goldwin Smith concluded mordantly: “By giving the public the full benefit of his tact, knowl­edge and strategy, he has probably done the work for us as cheaply as it was possible to do it. Let it be written on his tomb, that he held out for the country against the blackmailers till the second bell had rung.”93 Macdonald became confident enough in his Confederation to defy popular protest movements to which he had earlier capitulated. Nova Scotia was refused better terms, and the execution of Riel sharply informed French-Canadian Catholics that they would be sacrificed to opinion in Ontario. But this new, hard line put his government under terrific strain. Fielding rallied Nova Scotia around repeal while Quebecers burnt Macdonald in effigy. Laurier and Mercier were resolving the Liberal Party’s differences with the Catholic Church and taking the leadership of popular opinion. Still, in the election of 1887, neither Quebec nor Nova Scotia was disenchanted enough to back a Liberal Party still too wedded to austerity and Protestant supremacy. Brown’s death in 1880 permitted some relaxation of those platforms but also weakened the Globe as an instrument of party unity.94 Edward Blake, Liberal leader from 1880 to 1887, struggled to take that party in more salient directions but was continually undone by tariff politics. Blake regularly introduced motions for lower taxes on fuel, breadstuffs, sugar, and cheaper cottons and woollens, but he also saw some need for moderate protection of Canadian manufactures.95 The free-trade warriors in the party, led by Richard Cartwright, called for

Figure 4.5  J.W. Bengough, “Riding into Power” (Grip, 28 September 1878). Armed with a protectionist treatise written by a Liberal, Macdonald and his party stalwarts (Tilley sits on his shoulders, Tupper seems in danger of slipping off the elephant’s backside, Mowat is extra baggage), trample the Liberals (Alexander Mackenzie and Richard Cartwright in front, David Mills and George Brown behind) and their revenue tariff. (Image courtesy of Thomas Fisher Rare Book Library, University of Toronto)

Figure 4.6  J.W. Bengough, “Centralization: Or, ‘Provincial Autonomy Abolished.’ Is This What Sir John Is Aiming At?” (Grip, 11 February 1882). Many cartoons of the day capture the apogee of John A. Macdonald’s quasi-imperial fiscal federalism. The premiers, left to right, are George Walkem of British Columbia, Oliver Mowat of Ontario, Simon Holmes of Nova Scotia, John James Fraser of New Brunswick, William Sullivan of Prince Edward Island, J.-A. Chapleau of Quebec, and John Norquay of Manitoba. (Image courtesy of Thomas Fisher Rare Book Library, University of Toronto)



Macdonald to Laurier: Revolt against Liberalism 151

reciprocity between Canada and the United States. For Cartwright, according to his budget speech of 1878, taxation for anything other than bare government administration was “simply in one shape or other, legalized robbery.”96 Blake’s more moderate position was too cautious to win elections. (Similar problems dogged American tariff reformers, who were forced to spend an “inordinate amount of time denying that they were absolute free traders.”97) For Blake, indirect taxation was necessary but abhorrent. Where Macdonald argued that high taxes could build up infant industries, Blake insisted that government actions could only make men poorer, not richer. “It was impossible to make men richer by law. They could make men poorer. What they could do was to see that the people’s burdens were lightened as far as possible, that their government was honestly, economically and frugally managed, and that their liberties were restricted as little as the fiscal necessities of the country required.”98 The government, on this model, could never spend wisely, at least from an economic perspective (defence, for example, might be another story). But how could Blake tax fairly if he didn’t believe that any protective duties were fair? The Toronto World mocked him as saying, virtually: “I will endure the protection animal; but I do not like him: he would be improved by cutting off his head and his feet.”99 Moreover, direct taxation was no longer what it had been. New theories of taxation were spreading through Canada in the 1880s and posing new challenges to the narrow debates about the tariff. Blake could not resist trying to draw some new inspiration from them, but he scorched his fingers in the process. The new ideas emerged from a book called Progress and Poverty, published in 1879 by western American radical Henry George, with an unusually absolute distinction between public and private. Labour was private and the government had no right to tax it. Forced labour was slavery and, therefore, so were taxes on labour. Land, on the other hand, belonged to the whole people of the earth, and the state should use confiscatory taxes to transfer its value back to public ownership. The value of land, George argued, rose as society grew up around it, but landlords were appropriating those incremental increases in value. Valuable urban property should be taxed upon that “unearned increment” to the point of nationalization. George’s theory became known as the “single tax” because he rejected all other taxes on grounds that they unjustly taxed industry and taxed “poverty far more than wealth.”100 Progress and Poverty was said to educate people who never read any other book, and John Dewey estimated that it “had a wider distribution than almost all other books on political economy put together.”101 Public opinion was

152

Constructing Fiscal Federalism

informed, passionate, and engaged. In 1881, Henry George gave lectures in Toronto, Ottawa, and Montreal with growing success. He found allies in the Knights of Labor when a Hamilton branch organized itself as a social club to read and discuss George’s book and publish its reflections in its Palladium of Labor during the fall of 1883. Ramsay Cook identifies that moment as the birth of the social gospel in Canada.102 In 1884, Henry George joined the Hamilton Knights at their annual demonstration and 10,000 people thronged to hear him speak.103 The following year, the Globe serialized some of George’s anti-tariff writings and described him as “the most widely read of modern writers.” George’s attacks on landlordism went over well in Ireland in the 1880s, and his campaign for mayor of New York in 1886, though it failed, won him enough popular support to shock the pundits. The single taxers were at the forefront of a growing anti-poverty cry. They invigorated debates around poverty because they focused on consumption – on the inability of the workingman to obtain what he needed. Rising rents were not just driving up other costs; they were also forcing hard-working families into overcrowded slums, marked by poverty, dirt, and immorality.104 The concept of poverty was an organizing category for single taxers. When Toronto Georgeites organized in 1887, they followed American precedent and called themselves the Anti-Poverty Society. Their petitions to federal and provincial governments to safeguard land value for future generations were supposed to ease public alarm, but liberals were well alarmed.105 The Toronto Daily Mail, vigorously edited by Edward Farrer, denounced “the Anti Povs” as confiscators. Farrer argued that the West could never be settled if single-tax principles applied. The land speculator earned his increment, as did the financial speculator. There was no remedy for poverty save “individual effort, and unfortunately, that is not an infallible specific.”106 The Christian Guardian agreed: “We have no faith in the abolition of poverty by any laws that can be made in legislatures.”107 But progressive thinkers wanted secular as well as moral explanations for poverty. Marx offered one such, but the single tax also excelled as a “deep” explanation of poverty. George had many lessons for his readers but probably none more powerful than the insight that poverty was systemic in the new world as in the old. How or why was not obvious. Oldworld theories that invoked Malthusian demographies were patently inapplicable to North America. Malthus had argued that population multiplied faster than subsistence. “Preposterous!” stormed George, pointing to the expanses of available farmland. Overproduction as an



Macdonald to Laurier: Revolt against Liberalism 153

explanation was “transcendently preposterous”: the availability of cheap goods could not explain why people could not buy necessities.108 George made a neo-Ricardian argument that poverty occurred because the privatization of land pushed up rents. Governments worsened matters with taxes on labour that further concentrated wealth. That basic insight was at the heart of the single-tax movement, and single taxers translated it into all the social and political languages of the day. Mehrotra describes George as “a kind of fly-paper for social movements.”109 Clerics, early converts to the new outlook, insisted that unfair taxation was both a moral and an empirical fact. In February 1888, R.L. Lewis gave a lecture on “What Causes Poverty and What Poverty Causes,” that blamed drunkenness and hard times on unfair distribution of wealth.110 The ambiguity of causes versus effects was a lively trope at the AntiPoverty Society and underwrote a remark by society president W.A. Douglass at that meeting: “Grangers were true disciples of Henry George without being aware of the fact.” The Anti-Povs also read the state into these relationships of wealth and poverty. In December 1888, Samuel T. Wood spoke on “Government and its functions.” Taking a quasi-­ Macdonaldian view of the role of government – i.e., protection of wealth and the wealthy – Wood extended the argument to “natural wealth,” arguing that it must be protected for the people, and denounced the state’s definition of property as politically loaded and incompatible with a free market.111 In August 1889, the Anti-Povs heard unadulterated antipoverty talk from the founder of the first Anti-Poverty Society, Edward McGlynn: “With the tear of poverty the crimes of greed would cease. Carlyle had described poverty as the Englishman’s hell. It was equally the hell of every human being. Starving people would not listen to the prating of well-fed priests and ministers on the beauty of poverty. (Loud applause.)”112 In November 1889, when Henry George came to speak, the auditorium and gallery were filled to capacity. The Daily Mail saw not just workingmen “whose interests Mr George has at heart” but also teachers, students, professors, clergymen, journalists, and some leading statesmen come to hear “a new idea in the history of civilization.” Included in the audience were journalist Willison, historical economist Ashley, and prominent Liberals A.S. Hardy, John Gibson, and William Mulock alongside ardent single taxers Wood, Douglass, and Phillips Thompson. Single taxers in Ontario canvassed authorities for land reforms and base tax exemptions for the poor; they also criticized huge land giveaways to corporations, including railway and mining interests and speculators in northern Ontario.113 In January 1889, they scored a palpable hit when

154

Constructing Fiscal Federalism

they met the Mowat government and claimed that a base tax exemption would cost no more than $9 per household. Where Mowat saw the sum as too trivial to matter, his education minister, George Ross, saw revolutionary confiscation. But even Ross accepted the single-tax premise of fiscal injustice: “I admit that the poor man is proportionately paying more taxes than the rich man, but I think you are working the wrong way to right this evil.” Mowat, too, sympathized but worried where the demand would end.114 In 1890, the Anti-Poverty Society became the Single Tax Association, after McGlynn discredited himself by falling out with Catholics and organized labour.115 Still, poverty remained its core focus. During the 1891 federal election, the association declared that “the present distress in Toronto is not feigned for party purposes but is genuine and abnormal; that contrary to the teaching of some politicians, grinding poverty is not a necessary element in an advanced civilization, but is a blot and a disgrace to it.”116 Attendees voted support to a Georgeite in Kingston challenging Macdonald for his seat. Another Kingston adversary was Principal George Monro Grant of Queen’s University, whose criticisms prompted a cartoon by Bengough, himself a single taxer, that showed Henry George giving Grant a hiding: “The Schoolmaster Schoolmastered”117 (see figure 4.7). Federal politicians were only very distantly troubled by the single tax as a practical policy, but they could not be deaf to the new rhetoric of wealth and poverty that George was propelling into the public sphere. John Stuart Mill had justified succession taxes with a distinction between “earned” and “unearned” wealth, but George generalized the distinction by describing rising land values as an “unearned increment,” a phrase that was soon ubiquitous in leftist newspapers and beginning to infiltrate liberal ones. How could Blake’s liberal anti-statism or Macdonald’s paternal managerialism accommodate the argument that the supposedly neutral state was systematically redistributing property from the public to the private and from poor to rich? George explicitly linked direct and indirect taxation by advocating free trade as part of the single-tax package. For many people the new theories reinvigorated the tariff debate. Blake decided that the notion of “unearned” wealth might resolve his fiscal dilemmas. He was driven there by Macdonald’s exaggerated claims for the poverty-reducing qualities of the tariff. In November 1886, speaking to labourers, Macdonald compared the previous decade’s penury that forced workingmen to beg for work and to “send their children to the soup kitchens for support” with the “full and profitable employment” of the National Policy.118 A few days later, Blake replied that tariffs could not cause prosperity or raise wages. Wage rates were set in the United



Macdonald to Laurier: Revolt against Liberalism 155

Figure 4.7  J.W. Bengough, “The Schoolmaster Schoolmastered” (Grip, 31 January 1891). For Bengough, Henry George’s arguments in favour of a “single tax” on land values debunked liberal political economy and academic pseudo-knowl­edge. (Image courtesy of Rare Books and Special Collections, McGill University)

States, and Macdonald only lowered them when he raised taxes. Blake mined the Ontario Bureau of Industries to show that taxes had increased 50 to 60 per cent and that the average annual amount paid into the treasury was now at “$30 per head of every white family” and probably higher on mechanics who bought small quantities, perhaps $42–45. He calculated that by the time the average “picked” mechanic with his family of

156

Constructing Fiscal Federalism

4.5 children had paid out the average annual cost of food ($216.42), fuel ($40.53), rent ($72.41), and clothing ($86.39), there remained only $29.85. This was not prosperity but misery and injustice. “To increase the taxes of the rich might, to them, not be of very much moment, but to the working classes it meant the consideration of what necessaries in life they would have to part with. His idea, therefore, was to impose a succession tax under which realized capital or succession would yield some portion of its unearned increment. He advocated a graduated income tax, fixing it on such a scale as to make it bear lightest on wage-earners and not exceeding that point at which it would produce fraud and evasion of the law.”119 There were several problems here. First, the statistics were complicated by race. In another speech at Oakville, Blake admitted adjustments to his typical family: he was not counting “the Western Indians as taxpayers; they are only tax consumers – (laughter) – nor do I reckon the Chinese as appreciable taxpayers. Besides, I think the population overestimated. Again, looking at the fecundity of the French which alarms the Mail so much – (laughter) – I think five to a family rather under the mark.”120 Blake’s liberal consuming subject was not so much generated by the statistics as in defiance of the statistics. He wanted to empower consumers as taxpayers but did not want that empowerment to encompass racialized populations, so he simply wrote them out. The supposedly egalitarian liberal project was weakened by its refusal to de-racialize its moral and empirical categories. John A. Macdonald had the upper hand in terms of the racial politics of taxation, and in 1885, he wielded it when he argued that “Indians” who met the property franchise, whether they kept their status or not, should be eligible to vote. Horrified Liberals exclaimed that “Indians” were not free and “not taxed.” But they were taxed, replied Macdonald: “The Indian contributes to the revenue just as well as the white man. He buys taxed goods, he wears taxed clothes, he drinks taxed tea, or perhaps excised whiskey, just as well as the white man; and according to the liberal principle, we are to have taxation without representation in the case of the poor Indian.” “What about the Chinese?” asked Mill. “The hon. gentleman wants now to change the subject,” replied Macdonald, deftly turning the conversation back to “the Indian.” Enfranchising Chinese immigrants would lose him British Columbia, so he pandered to Sinophobia there.121 The Liberals protested that Macdonald sought to create a new community of political clients whose votes he could control. Second, Blake’s remarks were weak as theory as well as data. In advocating progressive taxation on unearned increments, the bookish Blake



Macdonald to Laurier: Revolt against Liberalism 157

was far in advance of liberal public opinion. Pundits abominated confiscatory taxation of “unearned” capital, and here was one of Canada’s leading statesmen apparently extending such principles to all property. The Toronto Monetary Times was aghast: “A succession duty is no new thing; but it is new to speak of all capital as containing an ‘unearned increment.’” Blake was making a “perilous” distinction between “what has been earned and what has not been earned by the owners of property,” and “he unfortunately assumes that, in every form of property there is a part which the nominal owner has not earned.” Socialists would speedily apply such distinctions and assumptions indiscriminately until “the State absorbed the last dollar of the capital.”122 Attacked in the press and in Parliament, Blake quickly backtracked, insisting federal taxation should remain indirect,123 but his position was confusing and unconvincing as a prop to security of property. Lower indirect taxes required higher direct taxes that seemed to slide towards confiscation of capital. Politicians could score few points by invoking direct federal taxation and few did so. In the campaign of 1887, Macdonald ridiculed such impractical knowl­ edge: “Mr Blake was a great lawyer, but he did not understand politics, commerce, trade, financial or fiscal arrangements.”124 Businessmen seconded the argument. The governor general, Lord Lansdowne, wrote a long memo in 1887 on Liberal arguments for freer trade with the United States, noting it was probably a good thing economically, but unlikely to pass given the manufacturers’ position.125 Macdonald’s victory in 1887 signalled an end to George Brown’s political project. If the party of the Ontario ratepayer could not beat Macdonald in that election, it probably never would. Blake quit the leadership and insisted that the party rally around Laurier rather than Cartwright, a choice that reflected both his protective impulse and the limits of Ontario ratepayer outrage. The Liberals determined to shoulder the larger costs of a transcontinental union with more grace. Indeed, the old binary of a rate-paying Ontario versus an impoverished and clamorous rest-ofCanada was breaking down, dissolved by deeper social changes. Ontario was undergoing an industrial revolution and acquiring extremes of wealth and poverty. The more that Ontario industrialized, the more it stood to benefit from Macdonald’s clientelism, and Macdonald made gains amongst the wealthy. Middle-class and working-class ratepayers flocked to leftist movements that promised tax reform, including Georgeites, the Knights of Labor, the Grange, and many more. The mid-1880s marked the beginning of change, but only gradually. The Liberal leadership still largely looked to free trade to dissolve political resentments because, after

158

Constructing Fiscal Federalism

all, Adam Smith had said it would. Laurier allowed Cartwright to propel the party on the trade issue, seeing it as the only really obvious Liberal plank. When Willison became editor of the Toronto Globe in 1890, Laurier gave him two orders: to write well and to take up the “old groove” in respect of the trade question and “firmly adhere to it. The subject is a vast one, and I am pretty sure that between you and Farrer you will compel the people of the Dominion to think of nothing else.”126 In 1889, Cartwright introduced a parliamentary motion for unrestricted reciprocity, and early in 1891, with an election looming, he persuaded Laurier to call a convention that would rally the party around unrestricted reciprocity. Blake managed to get that convention cancelled by threatening to denounce it as covert annexationism, and he had important allies, including Mowat, who had no intention of letting free trade impair Ontario’s industrial economy. Many Canadians feared that freer trade would intensify American economic bullying.127 The 1880s saw Americans debating free trade versus high protective walls and opting for high protective walls. When the protectionist Benjamin Harrison beat free-trader Grover Cleveland for the presidency in 1888, the consequence was the highly protectionist McKinley Tariff of 1890, which provided for retaliatory tariffs against countries with their own tariffs, beginning with Canada. It signalled a shift in American thinking, away from a primary concern with protecting their market and towards the pursuit of foreign markets. Before 1890, Americans mostly exported raw materials and agricultural goods; after 1890, they exported increasing quantities of manufactures, especially iron and steel. Manufactures accounted for 20 per cent of American exports in 1890, 35 per cent in 1900, and more than 50 per cent by 1913. Canadian imports of American merchandise marked a steady growth from $18.4 million in 1870 to $28.4 million in 1880, $40 million in 1890, and $95 million in 1900.128 American economic nationalism became economic imperialism in the McKinley Tariff, according to Marc-William Palen, and it accompanied a political crisis around access to Canadian fisheries that the bellicose American secretary of state, James Blaine, seemed prepared to use as a pretext for invasion.129 By hook or by crook, American businessmen and politicians seemed determined to impose a new “fiscal feudalism” both at home and abroad. Their domestic critics levelled complaints of bullying that were soon taken up by Canadians. Macdonald’s protectionism seemed vindicated by the turn of events: it defied not only the levelling republican threat to Canada but also the new aristocracy of wealth so conspicuously throwing its weight around.



Macdonald to Laurier: Revolt against Liberalism 159

The Liberals were terribly weakened by this new American menace. Free trade was supposed to dissolve clientelist alliances between the state and business but was coming to seem a naïve fantasy that would, in practice, force Canada into new heights of American-imposed clientelism.130 Macdonald himself, during his final election campaign in 1891, accused the reciprocity branch of “veiled treason” and proclaimed his own Britishness unto death. Blake made similar accusations from within the Liberal party. Laurier managed to keep those off the front pages during the campaign, but the day after the Conservative victory, just such an attack headlined the London Times. Blake declared high protection to be ruinous, moderate protection impossible, direct taxation inconceivable, and reciprocity and annexation inevitable.131 The letter proved a useful anti-Liberal cudgel in subsequent by-elections. But if patriotism carried the election, it could not negate the growing anti-poverty cry at home. Across Canada, an economic downturn was escalating hostility towards the tariff in the columns of liberal, independent, labourist, and agricultural newspapers. The arguments from single taxers and free-trade liberals were made to dovetail in leading articles and letters from readers in newspapers like the Manitoba Free Press.132 The Edmonton Bulletin dodged and twisted as it balanced a preference for free trade with an antipathy to Americanization.133 The new calculus of wealth and poverty brought new voices into the debate. Women, a growing presence in newspapers and reform organizations, frankly declared their interest in taxation. Single taxers in the Working Women’s Protective Association included Jennie Hepburn and Marie Joussaye.134 In Kingston, Agnes Maule Machar wrote a single-tax novel in 1892, Roland Graeme: Knight, based on her barrister-brother who was both a Knight of Labor and a Georgeite.135 On the women’s page of the Toronto Daily Mail, columnist Flaneur declared that “taxation and the incidence of taxation and the labour question are going to be two leading topics of the next few years” and described the tariff as a relic of barbarism.136 Macdonald could not pretend to not notice such arguments; he had to say something about the poverty that the National Policy had failed to banish. In his Kingston riding, Macdonald was facing Major Eustace Edwards, an instructor at the Royal Military College of Canada who espoused free trade, single tax, public ownership of utilities, and universal suffrage.137 Edwards expected to get “hopelessly beaten” but sought, in the process, “to get his reforms before the people.” He lost (securing only 29 votes) but he was in good company: Robert Cartwright, son of Sir Richard, was another early Georgeite. People did not expect Macdonald

160

Constructing Fiscal Federalism

to lose his riding, but they wanted to hear what he would say in reply. Campaigning in 1891, Macdonald spoke to taxation directly. He knew that every hit against direct taxation weakened both provincial and federal rivals, so he had good reason to paint an extremely bleak picture of it. Poverty, he contended, was the best argument not for but against direct taxation. Unrestricted reciprocity would necessitate the imposition of direct taxation, amounting to not less than fourteen millions of dollars annually, upon the people of this country … You – I speak now more particularly to the people of this Province of Ontario – are already taxed directly for school purposes, for township purposes, for county purposes, while to the Provincial Government there is expressly given by the constitution the right to impose direct taxation. This latter evil you have so far escaped, but as the material resources of the province diminish, as they are now diminishing, the Local Government will be driven to supplement its revenue derived from fixed sources by a direct tax. And is not this enough, think you, without your being called on by a Dominion tax gatherer with a yearly demand for $15 a family to meet the obligations of the Central Government? … Under our present system a man may largely determine the amount of his contributions to the Dominion exchequer. The amount of his tax is always in direct proportion to his means. If he is rich and can afford to drink champagne, he has to pay a tax of $1.50 for every bottle he buys. If he be a poor man, he contents himself with a cup of tea, on which there is no duty, and so on all through the list. If he is able to afford all manner of luxuries, he pays a large sum into the coffers of the Government. If he is a man of moderate means and able to enjoy an occasional luxury, he pays accordingly. If he is a poor man his contributions to the treasury are reduced to a minimum. With direct taxation, no matter what may be the pecuniary position of the taxpayer – times may be hard; crops maybe have failed; sickness or other calamity may have fallen on the family, still the inexorable tax collector comes and exacts his tribute. Does not ours seem to be the more equitable plan?138 For Macdonald, the state’s inability to measure and negotiate poverty militated against direct taxes. He kept his bureaucracy small and inexpert so as to preserve responsiveness in the hands of party machinery and because he valued personal and corporate privacy over state capacity. This was no mere posturing on Macdonald’s part. His account of



Macdonald to Laurier: Revolt against Liberalism 161

inexorable taxation was not dystopic: he was describing the Canada of his day, a Canada where the poorest of the poor were inexorably, even brutally, taxed. Direct taxation, identity politics, and partisan rule led all too easily to terrible cruelties, as seen in British Columbia or (as we shall see) in Montreal, irrespective of ability to pay. The rich, too, would be taxed irrespective of ability to pay because they would demand clientelist discretion in their taxes. Far better to keep the federal state not just ignorant of but also alien to the property of the people. Elsewhere at this time, Yanni Kotsonis has observed, “treasuries avoided a direct encounter with the person,” but they began the process of undermining personal privacy with taxes that struck “where personhood and individual autonomy were already in doubt: dead people and their estates and juridical persons (corporations).”139 Whereas Canadian provinces began to impose succession taxes in 1892, Canada’s national government resisted that change longer than most. What the state could not do, the people could: they could graduate their own tax bills by their buying choices. The consumer, like the worker, was in control of his or her fate. Macdonald was a liberal conservative, and his system checked a very real capacity for tyranny in the emerging administrative state. But it checked power not poverty and was studiously callous towards people who lacked the agencies of consumption, property, and the vote: the poor, and especially the racialized and disenfranchised poor – all of whom were taxed efficiently. A series of pamphlets with titles like “The Taxation Cry,” “Direct Taxation,” and “La Taxe Directe” argued that most consumption taxes were paid by the rich who, everybody knew, evaded direct taxation: a New York State Tax Commission tallied evasion at 85 per cent. Catching that undeclared property for direct taxation would necessitate additional expenses in “an army of tax-gatherers who would go about the country every year exacting a payment in hard cash from every male adult.” The rich could shrug off such taxes; the farmer and mechanic with his $400 to $500 a year “would be ground into misery and distress if he had to pay $50 of his earnings into the public treasury.”140 Visual images promised prosperity under the National Policy, poverty under a reciprocity agreement, and intrusive seizure of assets under a direct-tax regime (see figure 4.8). Conservative papers played the same tune: “Under the present administration,” argued the Qu’Appelle Progress, “the necessaries of life are almost free, and, unless we wish to indulge in luxuries, we pay no taxes to the Dominion Government. Do farmers wish a heavy burden to be laid upon them by direct taxation, for this is what the Liberal party advocates as being just to the poor man.”141 The finance minister, a

162

Constructing Fiscal Federalism

Figure 4.8  “How Direct Taxation Works” (1891, Toronto Lithograph Company, published by the Industrial League). A farmer is shocked and appalled to see his earnings seized by Sir Richard Cartwight, leaving him with mere coins for the year’s work. (Image courtesy of Library and Archives Canada, e010782429)

former temperance lecturer, also stressed volition in regard to taxes on tobacco and alcohol.142 Quebec Liberal papers were particularly hamstrung by such arguments: La Patrie’s claim that, in countries with direct taxation, the poor were not taxed – “where there is nothing, the king loses his rights” – carried scant conviction.143 As ever, Macdonald’s formula flattered popular agency and advocated only so much identity as prosperity and Britishness supplied. But the Conservatives, too, were being drawn inexorably into the new tax politics as reflected in the above quotes from the New York State Tax Commission. Beginning in 1871, the commission inaugurated progressive fiscal reform in a series of annual reports that generated the first serious empirical studies of taxation. They were written by David Ames Wells, who had lost the position of special commissioner of the revenue when he denounced the tariff as regressive. Relocated, Wells launched a new campaign aimed at repealing the much-evaded general property tax and at taxing undertaxed monopoly corporations, especially railways and banks.144 In the United States, that project was designed to challenge the close ties between businessmen and the state; in Canada, it was used to defend those ties. In the



Macdonald to Laurier: Revolt against Liberalism 163

long run, the argument might prove a short-sighted one, but in 1891, it sat comfortably alongside the new heights of patronage that characterized an election that Goldwin Smith described as “the last and most bitter fruit of Confederation.”145 Vested economic interests with transcontinental markets rallied around Macdonald, especially the cpr, which particularly dreaded any disruption to its still-nascent east-west trade lines. William Van Horne campaigned openly for protection, claiming that he spoke neither for the cpr, “nor as a Liberal or a Conservative,” nor even as a patriot, but “from a strictly business standpoint.”146 Thanks to the cpr’s intervention, western Canada voted solidly for the Conservative Party everywhere except in Marquette, Manitoba, where the Liberals won by 36 votes (“purely by oversight,” Van Horne explained apologetically to Macdonald).147 But the Conservative hold on the country was weak. Macdonald had called the election because devastating political scandals loomed on the horizon. The strenuous campaigning was the death of Macdonald: he collapsed in the middle of a speech and, after weeks of illness, suffered his final, fatal stroke. Without him, the party had local strengths but no centripetal force, no comparably congenial face to mitigate the almost unchecked power that lifted Canadian prime ministers to their commanding heights. It was one thing to see Macdonald elevated so high, quite another to see Orangeman Mackenzie Bowell (prime minister, 1894–1896) or the bulldog-like Tupper (prime minister, 1896) so elevated – especially if, behind Oz’s curtain, businessmen not politicians were the real wielders of those unaccountable powers. According to one editorial of 1894: “Superficially, the question before civilization to-day is a question of taxation; fundamentally, it is a question of justice between man and man. Our nineteenth-century ‘noblesse’ do not wish to be taxed. They are succeeding splendidly in their attempt at permanent immunity from taxation.”148 If the new feudal overlords were invisibly in control, that very invisibility was made manifest in new ways. One place to learn that lesson was on the fairgrounds of the annual provincial and industrial exhibitions regularly held across the country. The exhibition that flaunted popular consumer agency also flaunted conservative checks upon that agency. In 1893, S.C. Stevenson, manager of the Montreal exhibition, complained that the manufacturers were no longer accountable to the public. “Ever since the National Policy came into force, the industrial exhibits have steadily deteriorated. Indeed, if a stranger were to walk through one of our exhibitions, he would never know that there was a cotton or a woollen mill or a sugar refinery in the country. Before the N.P. came in industries

164

Constructing Fiscal Federalism

exhibited; but now, thanks to the tariff, they are all controlled by powerful trusts or combines, who look upon exhibitions with contempt. People must buy from them anyway, so they have no need to show their goods. Now this is all wrong. The National Policy is sustained and paid for by the people, and the people have a right to see and judge for themselves what it has achieved.”149 There seemed no personal reciprocity between the people and their new overlords. The Conservatives had conflated political and economic power, and relinquished even nominal checks upon it. The 1880s had seen improving standards of living, as workers took home a larger slice of the economic pie; in the 1890s, those gains began to reverse. Both wealth and poverty seemed to be ostentatiously increasing and eroding the middlemost in the process. Those infant industries were now overgrown and obese – a point reinforced by cartoons that clothed fat businessmen in infant swaddlings. The Waterloo Advertiser remarked: “It is high time our infant industries tried to stand alone anyway. For fifteen years Canadian consumers have been rocking their cradle … Senator Drummond, for instance, is worth as much as a whole county. Is it such a hardship to say that for the future he shall keep his hands out of the pockets of the five million consumers who are obliged to buy his sugar?”150 The Liberals marshalled such arguments with devastating effectiveness: in Parliament, Frederick Borden gave a long speech in 1894 that debunked the specious statistics used to defend the tariff.151 Protectionism remained unshakeable in its industrial strongholds but elsewhere opposition was mounting. Whereas in 1872, Macdonald and George Stephen reflected on the surprising strength of protection amongst the farmers, in 1891, they reflected on its weakness. Macdonald confided of the narrow victory (51.1 per cent of the popular vote to the Liberals’ 48.9 per cent): “I was surprised and grieved to find the hold unrestricted reciprocity had got of our farmers.”152 By 1891, farmers were everywhere highly organized and mostly hostile to protection.153 The tariff remained in the capable hands of Sir George Foster, who made regular adjustments. In 1890, in a major concession to popular consumers, he abolished the duty on raw sugar and reduced it on refined sugar, which lopped 15 per cent off the tariff’s revenue. He offset the cut with increases in excise; nonetheless, sugar taxes soon rose again. There were tariff reductions to iron and steel, as well as agricultural implements.154 But the economic downturn caused revenues to drop and debt to rise, leaving Canada, as described by the New York Times, burdened with staggering debt but fearful either to raise indirect taxes or to attempt direct taxation.155 In his last budget, in January 1896, despite a looming election, Foster had to raise the tariff.



Macdonald to Laurier: Revolt against Liberalism 165

An important backdrop to the election of 1896 was, once again, the American political scene, where a bank panic in 1893 had fuelled labour and agrarian unrest. A new Populist party demanded tariff reform, direct and land value taxation, and the end of the gold standard. McKinley won back control for the Republicans in 1896 with promises of “sound money” and high tariffs. The gold standard question complicated the tariff question in the United States, but much less so in Canada, where farmers kept their eyes fixed firmly on the tariff and eschewed bimetallism. John Davidson remarked with sardonic approval: “The majority cannot pin their faith to more than one panacea at a time.” Agricultural discontent was weaker, he explained, and less directed against the banks, in part because most capital was borrowed abroad, in part because Canadian banks were bigger and sounder than American ones; that was also the conclusion of the Canadian Bankers Association.156 To take control of Parliament, Laurier had to overcome the Liberal schism over the tariff. He called a national convention for June 1893, the first such since the Great Reform Convention of 1859. Oliver Mowat, present at the earlier gathering, presided over the new one with an opening appeal for trade “on fair and honourable terms” that would protect Canadian autonomy. Laurier, for his part, pledged pursuit of “free trade as they have it in England.” A resolutions committee recommended reciprocity and a revenue tariff, both of which passed unanimously. But, crucially, the chair of the resolutions committee was W.S. Fielding, once a separatist but now, like Mowat, a popular premier of a protected and industrializing province, the champion of protected coal and steel interests. The convention was designed to prove that Cartwright was not dictating Liberal trade policies and that a revenue tariff could coincide with incidental protection. The party held to that position and used it to build bridges to the business community. Leading Toronto financiers, including George Cox and B.E. Walker of the Canadian Bank of Commerce, were carefully approached. Provincial Liberals did much of the bridge building.157 Mowat and Laurier wrote open letters calculated to reas­ sure the manufacturers. A Liberal engine-builder, George H. Bertram, remarked in an open letter that “free trade as it is in England” would be a revolution not a reform and asked for greater reassurance to “the manufacturers of the country who are manufacturing under proper conditions and are willing that the interests of the great body of the people should be cared for.” Laurier replied that any lessening of protection would be across the different economic sectors, with an emphasis on luxuries.158

Figure 4.9  “Richard Lies Low” (Toronto World, 11 June 1896). On the eve of election, Sir Richard Cartwright and his free-trade paraphernalia hide while Wilfrid Laurier reassures “Canadian Anti Free Trade Sentiment” that he does not mean free trade. (Image courtesy of the Nova Scotia Archives)



Macdonald to Laurier: Revolt against Liberalism 167

Liberals insisted that only the trusts and combines could oppose such a moderate policy, documented various collusions, and complained of imperial “tribute.” The Globe argued: “Privileged classes were armed with power not only to levy tribute on the people but to dictate how the people should vote. They contributed to Tory corruption funds, and they forced their employees under threats of dismissal to vote for Tory candidates.”159 For Frank Oliver in the Edmonton Bulletin, distressed western farmers, “engaged in a life and death struggle with low prices,” were being robbed by highwaymen who held pistols “at the government’s head demanding plunder.”160 In 1896, many vested interests, including the cpr, chose to stay out of a fight that it seemed obvious they could not win. The Waterloo Advertiser’s description of the public mood as “simply waiting for the moribund ministry to go to the country or pack up their political duds and get out” was not unpartisan but not untrue; a “Conservative Waterloo” was obvious months in advance.161 In vain did the Canadian Industrial League offer $50 in prizes for the “best popular songs suitable for campaign purposes intended to be sung at a gathering of people who believe in tariff protection for Canadian industries”; or the Canadian Manufacturer insist that protection “should not be a question of politics”; or cma president, Toronto tinware manufacturer A.E. Kemp, warn that in Britain, “the free trade tax gatherer haunts every tea-table, hawkers’ cottage, farm dog kennel, gun rack, servants’ hall, drug store, restaurant keeper, trader’s desk and every bank office”; or the Qu’Appelle Progress valiantly argue that “a ‘tariff for revenue only’ may mean a higher tariff than the one you have now. It may mean anything” at the hands of a Cartwright.162 The Liberal press insisted that the party platform, not Cartwright, would prevail.163 Sir Charles Tupper won a plurality of the popular vote and held Nova Scotia, New Brunswick, and much of Ontario and Manitoba, but Laurier won an overwhelming victory in Quebec that cemented other successes into a plurality of seats. The election of 1896 did not repudiate the Macdonaldian political project but, rather, placed Laurier in charge of it. The tariff was not the only tax question central to the election. The Conservatives also fumbled an issue of local taxation even more divisive than the tariff: the funding of Manitoba schools. Manitoba in the 1880s had inherited some of Canada’s most intractable problems, including the kinds of tensions between French and English, Protestant and Catholic, that had originally provoked Confederation. Anticipating such tensions, the Manitoba Act of 1870 had explicitly protected “Denominational Schools which any class of persons have by Law or practice” at the time

168

Constructing Fiscal Federalism

of Union and provided for a federal veto over provincial legislation that affected any educational “right or privilege of the Protestant or Roman Catholic minority.”164 But in expanding regions, schools tended to cost more than local, scattered populations could sustain. Separate schools for Catholics that let them opt out of taxes for common schools created two pools where finding funds for even one school was often difficult. Protestants began to demand the separate schools be dismantled on grounds of dwindling numbers: the census of 1885–86 showed that Protestants outnumbered Catholics by about six to one. The Liberal provincial government kept a tight rein on school funds, leaving localities largely responsible for their own school costs, struggling to pay their bills and retain teachers. Separate Catholic schools across Manitoba were seen to undermine both Protestantism and state capacity.165 In the spring of 1889, when the Brandon Sun identified a $14,000 surplus in the hands of the Catholic section of the Board of Education, it demanded the abolition of separate schooling, as did Protestant organizations such as the Orange Order. The provincial government, according to historian D.J. Hall, was already contemplating action of that sort and may have planted the story in the Sun. Anti-Catholic agitators from Ontario seized upon the local events. A nativist branch of the national Conservative Party, led by D’Alton McCarthy, connected that struggle in Manitoba to the campaign against the Jesuits’ Estates Act, which saw the Pope arbitrate compensation for Jesuit lands seized after the Conquest. Speaking in Winnipeg in August 1889, McCarthy demanded a concerted movement by the Englishspeaking people to eradicate an aggressive French-Canadian nationalism not only outside Quebec but even within Quebec. Early in 1890, the Manitoba government created a “national” school system based on compulsory taxation of all. Catholics could no longer opt out of the public system; if they wanted separate schools, they must pay double taxes. The plan would effectively abolish Catholic schooling in Manitoba, notwithstanding the constitutional protection. During the debate on the measures, a young backbencher from Brandon, Clifford Sifton, gave a four-hour speech in their favour. He attacked Vatican meddling in Canadian education, denounced the Catholics running the existing machinery as ignorant, and demanded ratepayer accountability over the sums gathered and spent. By 1891, Sifton was attorney general and chief party strategist, pre-emptively denouncing a federal veto on grounds of provincial rights. He drew on a party associate, F.C. Wade, for statistical data for his campaign. Réal Bélanger remarks: “The crisis in English Canada has a name: Clifford Sifton.”166



Macdonald to Laurier: Revolt against Liberalism 169

Clifford Sifton’s father, John Wright Sifton, had been a provincial politician and a supporter of George Brown and Alexander Mackenzie, who attacked John A. Macdonald’s National Policy. Sifton fils kept the nativist elements of Brown and Mackenzie’s fiscal revolt, the attack on FrenchCanadian Catholicism as a tax grab, but jettisoned the anti-tariff part of that revolt. He was a wealthy man with many corporate investments and a stalwart defender of the protective tariff. Sifton’s local political success, along with his mastery of Liberal political machinery, won the Liberals many friends in Manitoba in 1896 and was rewarded with a seat in Laurier’s cabinet, just days after Laurier and Sifton together negotiated a compromise on the schools question. But although the compromise provided for limited religious and bilingual education where ten or more pupils demanded them, the Catholic francophone minority lost any right to separate education under its own control – a major defeat.167 Laurier rode not one but two tax revolts into office in 1896. He promised moderate, conciliatory policies and protections for everyone, including manufacturers and minorities, and put that program to work in his cabinet making. Sifton became the minister of the interior and superintendent of Indian affairs, justice went to Mowat, and customs went to William Paterson, a protectionist biscuit-maker from South Brant. Finance went not to Cartwright, who was relegated to trade and commerce, but to Fielding, who would hold it continuously until 1911. A deputation of Canadian bankers backed by Mowat threatened to withdraw $125 million in call loans if Cartwright were appointed to finance – they feared not only his views on the tariff but also his hostility to the c pr . J.M. Gibson, Mowat’s provincial secretary, told Laurier that a Cartwright appointment “will never do,” while Fielding had the backing of future Ontario premiers A.S. Hardy and George Ross.168 Fielding and Laurier promised they would avoid “rash or ill-considered measures,” and would preserve and consult “that business confidence which was so important an element in the prosperity of a country.”169 They were in a sensitive position. Liberals had spent so long denouncing the tariff that they must perform some new ritual of legitimation. How to tinker with it while promising stability? How to legitimate and moderate simultaneously? The Canadian state of the 1890s had only two serious mechanisms of legitimation: the election and the royal commission. Advised by Willison to reform the tariff immediately, Laurier refused: “This I consider absolutely impossible. The tariff should not be reformed, in my estimation, except after ample discussion with the business men … If they are freely and amply consulted the business men will feel reassured

170

Constructing Fiscal Federalism

Figure 4.10  “The Liberal Cabinet of Canada.” Wilfrid Laurier, far left, presides over an impressive cabinet. Richard Cartwright, Oliver Mowat, and W.S. Fielding dominate the foreground. Behind the table, L.H. Davies is standing; to the right of him are A.G. Blair, followed by Clifford Sifton, William Mulock, and J.I. Tarte. Sydney Fisher and F.W. Borden are at the far right. (Image courtesy of Library and Archives Canada, e010947242)

and they will make their calculations according to the fact that no change can take place before, say, the month of March.” There would be a tariff commission to solicit public opinion. This would be a more elaborate affair than those done under Mackenzie, but like them, it would mostly solicit opinions from the business public, simultaneously introducing Fielding to the businessmen. But unlike Macdonald’s deal making, negotiations would be public rather than private, with occasional closed sessions for particularly sensitive information.170 A show of public support for reform would not just bring the manufacturers in line but also distinguish deserving from undeserving. The Liberals, called upon to sustain a system of corporate welfare, sought evidence to identify the manufacturers who were, in George Bertram’s happy phrase,



Macdonald to Laurier: Revolt against Liberalism 171

manufacturing “under proper conditions.” The commission would be to corporate welfare as the new Charity Organization Society was to private welfare: an attempt to put it on “scientific” footing. Scientific still did not mean academic. The commissioners were all cabinet members. Rather, they would translate into public policy the economic facts and experiences publicly aired before them. Liberal political truth still came from argument and compromise rather than from statistical analysis. The state, business, and the press would negotiate those compromises face to face and mutually educate one another, in the process constructing the rational public that the Liberals believed must eventually dominate Canadian public life. Data would be less partisan and more objective for being aired in this way, though the exercise was innovative enough to rouse Sir George Foster to a sense of Macdonaldian outrage: How could the Liberals spend $6,000 “in conducting a tariff enquiry, when for eighteen years they had been declaring they knew what the tariff needs of the country were, and would put their views into operation the moment they got into power?”171 The argument was flimsy in 1897; it was ludicrously so when Foster made it again fifteen years later. The commission was small but choice, consisting of Fielding, Cartwright, and Paterson, though other MPs also attended meetings.172 Over several months, the “Fielding Commission” wound its leisurely way through the land, from Manitoba to Nova Scotia (westerners took it as an ominous sign that it did not go west of Winnipeg173), producing thousands of pages of interviews and written submissions. Paterson largely focused on the workings of the customs department, and Fielding and Cartwright did most of the interrogation. They let the manufacturers have their say, but they also demanded something more than a sermon to the choir. It was the commissioners’ task to ask “But what about the revenue?” whenever an interest called for lower tariffs, and “But what about the consumer?” whenever a different interest called for higher tariffs. “Is there a combination in your industry?” was another frequent question intended to measure deservingness. Fielding visibly relished asking manufacturers to consider the position of the Cape Breton miner or (speaking to Montreal miller W.W. Ogilvie) to “put yourself in the place of a fisherman in Yarmouth or Shelburne” who sold his catch in New England and wanted to bring some cheap flour back: “Cannot you imagine that he feels this duty to be a great burden?” Ogilvie’s answer, “But these men have not complained,” drew the dry response: “Have you been through the Maritime Provinces much?” Fielding showed that manufacturers who complained that American dumping ruined them were inflicting the same ruination in

172

Constructing Fiscal Federalism

the Maritimes.174 In Ottawa, commissioners sparred with lumber barons about the value of pork and protection with such questions as: What, after all, were the “necessaries of life”? (Fielding) Was there money in pork-raising today? (Laurier) And was there money in lumbering? (fisheries minister and former pei premier L.H. Davies) Not much, replied J.R. Booth, to a burst of laughter (he was “said to be worth $5,000,000”). Booth and Fielding argued whether low or high tariffs better sustained business stability and low prices: when Booth demanded long-term guarantees of protection, Fielding countered that there must be “some system by which the people have a right to a change. You have to trust to public opinion to do that; there is no other way.”175 Many agendas came into play. The election campaign of 1896 was refought by many speakers who argued about how and why Laurier had won the election. Free traders invoked free trade; protectionists claimed that the schools issue had done it. W.B. Fawcett, a Sackville farmer, debunked the “great effort” being made to attribute Laurier’s win to the support of the manufacturers; rather, Laurier won the farmers by his promise “to eliminate every vestige of protection from the tariff.”176 Everyone hated paying taxes on packaging. Many, especially jewellers and watchmakers, complained of smuggling; tobacco and ostrich feather smuggling via Témiscouata and Edmundston annoyed Quebec retailers, as did “aged two years” claims made of seized liquor stored in steel vats and then sold in the market. Booksellers objected to taxes on knowl­edge: one bookseller insisted that Harper’s Bazaar was “educating” because it raised women’s hemlines (“Mr Fielding: That must be in Brockville – not where I come from”). Some witnesses thought the tariff should be used to keep out noxious substances or adulterations (like turnips in the peach jam), while others complained of errors and incompetence in the customs house. How could a producer of shirtwaists compete with American competition in “blouses” when Canada had no such category? Hardware merchants everywhere complained of illogical and erroneous descriptions and distinctions. One dry goods merchant complained that, outside Toronto and Montreal, customs officers chose the most expensive possible interpretation.177 This was both a technical and a political objection. Customs duties were supposed to hit the rich harder than the poor by taxing luxuries at a higher rate. But the proliferation of consumer goods was exploding anachronistic concepts of class-based consumption. Merchants complained that as soon as you added a hem or a thread of colour to aprons, you turned them into luxury goods, taxed at the highest rate, 30 per cent. Did the state really want to suggest that the poor should only wear unhemmed and



Macdonald to Laurier: Revolt against Liberalism 173

undyed aprons? An artificial flower attached to a hat rated a 25 per cent tax, a feather earned 30 per cent tax – but “it is hard to distinguish now as to what are flowers and what are feathers.” Moreover, the aprons and hats in question were not luxury goods but were worn by people of ordinary means … If a man in receipt of a dollar a day has five or six girls to support, they must all have hats. You must understand that millinery, flowers and feathers are not for the rich exclusively. The poor as well wear these goods. There is no reason why a higher rate of duty should be charged upon these goods upon many other classes. Mr Paterson. Of course you are aware that these articles are generally regarded as articles of luxury? Mr Burns. But I put the case to you. Especially in Summer time, there is not even a little girl going to Sunday School but must have a nice hat. It may not cost more than 50¢ or a dollar, and she may be a poor man’s child, but her parents regard this as necessary, If you tax these with the idea that the rich alone will pay this tax on flowers, feathers and ribbons, you find that it is a tax resting upon all classes, the poor as well as the rich.” Burns insisted that the very distinction between luxury and necessary goods misrepresented purchasers’ motivations: “You have heard it said a thousand times that the servant girls wear more expensive bonnets than their mistresses. There is no doubt you can hardly distinguish the classes of goods in that way. For instance, a neat and careful woman who has three or four girls, is willing to go without many things herself, while her girls must have natty hats and bonnets. I do not think you could tell the proportions in that way.” Similarly, when manufacturers demanded that crepe be taxed as a luxury, Fielding and Paterson expostulated that “even the poorest” wanted crepe “when there is a death in the family.”178 The tariff was a blunt instrument, hostage to simplistic categories and readings. It was a clunky, bureaucratic representation of a complex and fastchanging material world. What did the average political placeman in the customs office, probably a broken-down relic of long-ago political battles, know of blouses and feathers and fashions? But if he did not know, then the current season’s expensive goods were apt to be imported as last season’s throwaways. The tariff required customs agents to know the actual sale price of goods in the United States; if a Canadian retailer got a discount on that price, he was apt to see his goods seized at the border

174

Constructing Fiscal Federalism

by agents who, because they took a cut of anything seized, were well motivated to discover specious frauds. Retailers wanted objective categories and evaluations, but no such objectivity was possible. Others plotted how to slant objectivity: one rice dealer argued that with carefully defined taxes on uncleaned rice you could get an extra $40,000 to $50,000 from the Chinese in B C , “and it would be perfectly fair, because they pay nothing towards the support of the country.”179 The distinction between luxury and necessity relied too much on Victorian moralities. People were formulating their own arguments about what they wanted and deserved to buy, and they resented restraints upon their choices. It was one thing for the market to price feathers out of their reach, another thing for the state to do so. Consumers openly claimed the right to consume above their station. Emulative consumption had been the driving force behind consumerism from its beginnings, as a growing market and the anonymity of the city enabled consumers to appropriate markers of superior social status.180 The stakes were nicely illustrated in an account, from Canadian Magazine in 1893, of a confrontation between an old-style moralist and the object of his moralizing ­disapprobation, a young female consumer. According to the author, J.L. Payne, young women avid to consume were getting clerical jobs, thereby depriving men. “The prime incentive to all this is the feverish desire of the great middle class to live like the rich; and the second cause is revealed in the popular doctrine of women’s independence. The wearing of expensive clothes, the renting of fine houses, and the consumption of luxuries in many forms, have enhanced the scale of general living to a high point. Neither young men nor young women are content to live as did young men and women a generation ago.” Payne sought a return to proper stations. When he told an acquaintance who hankered to attend a ball at Rideau Hall that such things should not be for common people, she triumphantly responded: “‘You forget that I have the clothes to go in!’ So she had. Although obliged to earn her living, she had heedlessly plunged into debt for the necessary equipment to move in aristocratic circles whenever, by hook or by crook she could get the requisite invitation card.”181 Morality was hopelessly outgunned in such confrontations. That same feminine will-to-buy was infiltrating the political arena according to a cartoon from Saint John, dated 1894, that showed an “irate Miss Canada” terrorizing the prime minister and finance minister with a broom as she complains, “So you would deprive me of a velveteen suit – (thwack!) – and stop my Ceylon Tea – (thwack!) – by your wretched tariff tinkering – (thwack!) – and wink at combine swindles! – (Thwack!)



Macdonald to Laurier: Revolt against Liberalism 175

I will have my revenge! – (Thwack!)”182 The tariff is labelled “deformed,” the politicians appear fearful and emasculated (the prime minister straddles a sword labelled “b udge t ”), and Miss Canada clearly represents the wronged public. But she still speaks as a fictional “Miss Canada” rather than a real woman. Women were not invited to give evidence before the Fielding Commission. The voice of business predominated, and it defended a paternalism that forced expensive Canadian goods on consumers. Ogilvie insisted he was giving consumers “a better barrel of flour than they can buy in Boston, and with a good barrel of flour in the house, there is always happiness in the family.”183 W.E. Sanford gave evidence, as he had done before the Mills Commission, against cheap shoddy that undermined Canadian woollen wares. He had thrived under the National Policy, building up national retail chains. When Macdonald named him to the senate in 1887, Liberal newspapers objected: “The appointment of such men as Messrs Drummond, Ogilvie and Sanford to the Senate by Sir John Macdonald had a suspicious look about it. These men have pocket reasons for desiring to keep high duties on sugar, flour and clothing, and they might throw many obstacles in the way of a Reform majority in the Commons attempting to make the lot of the working classes easier by reducing or abolishing the taxes on the necessaries of life.”184 About the time that Sanford appeared before the Fielding Commission, he was imposing double-digit wage cuts on his employees. No doubt he expected a rough ride from the commissioners. The better to plead his case, Sanford brought some sample garments to show them. Here was a Canadian garment, with wool lining and buttons, warm and durable, designed to give a farmer three years’ use. It cost $3.75 and, he assured the commissioners, one in four members of the House of Commons wore the style. Then he showed them the American version, made with cotton rather than wool, kept together with cheap bagging and likely to fall apart in the first rainstorm, which cost $1.30 bought wholesale in New York, with a 50 per cent duty that raised the price to $1.83 in Canada. (Moncton merchants doubted that there was “such a coat, except for the purpose of showing to the Tariff Commissioners.”) Sanford lectured the cabinet members: “It is your duty to protect the public against such stuff, as it is to protect them in the use of butter and cheese, by keeping out oleomargerine and other counterfeits. This garment cannot be of service to the wearer.”185 But wouldn’t the consumer find that out himself soon enough, asked Fielding. Yes, but there was always another first-time buyer, and meanwhile workers stood idle. Sanford insisted that there was no cotton combine, and Tory MP and

176

Constructing Fiscal Federalism

woolen miller Bennett Rosamond admitted only to a “mutual improvement” association, but another manufacturer present admitted to a “standard price.”186 Many variations on that conversation occurred. Canadian fruit-tree sellers wanted protection from cheap “negro” labour and from stock that Canadian farmers only discovered was worthless years later. But didn’t farmers learn by experience, asked Fielding? No, they patronized anyone who dressed to impress. But wouldn’t they learn eventually? No, they were too tempted by cheapness. Cartwright took over: was there really no advantage in cheap stock? No, none. Blanket makers argued that English manufacturers could produce cheap blankets as fine looking as superior Canadian blankets, “so cleverly manipulated and finished that the ordinary consumer is deceived and does not know what a worthless article he has purchased until he begins to wear it”; chocolatiers complained that cheap foreign adulteration “educates the taste of the people for these common goods.” Sewing machine makers described Canadians as “very easily taken in”; binder twine makers thought farmers poor judges; grocers declared that “the people are not judges of teas;” bicycle makers declared that “the generality of people cannot judge a good bicycle.” Retailers demanded higher tariffs to drive up standards and prices of imported goods and lower tariffs to drive domestic production of pickles, soaps, and sauces from the market.187 But the Petrolia oilman who declared that anybody who hadn’t seen an oil refinery was not “competent to judge or act intelligently” on the oil question was immediately rebuked by Fielding for his insinuations against the competence of MPs.188 “Won’t somebody speak for the poor consumer?” asked one cartoon. The initial sortie through Ontario heard from producers, not consumers; a second tour followed after that bias became too obvious and embarrassing. But even those who described themselves as consumers tended to take a producerist line. Quebec farmers described themselves as “really the great manufacturers of the country,” as did a peripatetic builder of baking ovens, James Dempster, who ridiculed the purported paternalism of the tariff: “From the arguments used by the clothing manufacturers, they seem to imagine that if they close up their factories to-day in six months I should be going around naked. But I do not wear clothing because the manufacturer provides it for me, but he manufactures because there is a demand for his goods. If Senator Sanford and others ceased to manufacture, I should still wear clothes.”189 Another self-identified consumer was socialist tailor Alfred Jury. In 1878, he had infiltrated Macdonald’s picnics to denounce protection; in 1895, a planned debate



Macdonald to Laurier: Revolt against Liberalism 177

with Phillips Thompson, organized by students at the University of Toronto, was cancelled as too radical. But Jury had his say before the commission, likening the protected manufacturer to “the pauper who applies for parish relief” and urged that bounties be paid directly to workingmen rather than their employers.190 Central Canadian businessmen had the first and longest say, but producers to the east and west followed their testimony closely and replied, often point for point. John E. Starr from Cornwallis declared that the farmer “does not ask to be allowed to take his neighbour by the throat and demand of him two prices for goods and call it protection. Protection used to mean shelter from harm. Now, it seems to me licence to rob.” He dismissed the quarrels about whether producers or consumers paid the taxes: it was consumers. New Brunswick fishermen complained that “taxation levied upon the fisherman makes the cost of living so high that his occupation does not pay him.” Nova Scotia coal and iron interests defended protection by invoking the indirect benefits for poor farmers who could not make a living from farming and enlisted “ratepayers” and workingmen’s associations to second the argument. Arthur Drysdale, mla for Springhill, argued that any reduction in coal protection would hit the provincial revenue and require “better terms” or direct taxation.191 When the commissioners came to Manitoba, they were practically mobbed by organized farmers determined to make the most of the occasion: whatever rational debate could do, they would do. That meant producing unassailable evidence of fiscal transfers (west to east, farmer to manufacturer, poor to rich) and proving the independence and representative nature of their witnesses. The Manitoba Central Farmers’ Institute pored over census and trade records to produce table after table: comparative and absolute taxes paid by region, by goods purchased, in comparison to American farmers, etc. They estimated the per capita customs duties paid across Canada for the years 1868 to 1883, to show that Ontario systematically paid some of the lowest taxes (along with Prince Edward Island), often less than half what Quebec paid per capita, and a fraction of what western provinces paid. In 1883, they calculated, Ontario paid $3.98 per capita, Quebec $6.80, Nova Scotia $4.16, New Brunswick $4.71, Manitoba $9.02, and British Columbia $18.38 (see table 4.1). (But such figures did not include local taxation that central manufacturers wrote back into the story: the Dominion Wadding Company of SteCunégonde calculated that local taxation cost them seven cents per bale or one-third of the duty.)192 When a supposed Mennonite farmer claimed that the Mennonites represented more wealth than other farmers and

178

Constructing Fiscal Federalism

Table 4.1  Annual customs duties per head of population paid in each province and in the Dominion, 1868–83, according to the Manitoba Central Farmers’ Institute in its submission to the Fielding Tariff Commission Year

Ontario

Quebec

Nova Scotia

New Brunswick

1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883

$1.44 $1.32 $1.51 $2.05 $2.38 $2.65 $2.69 $2.97 $2.71 $2.87 $2.90 $3.06 $3.14 $3.32 $3.82 $3.98

$3.89 $3.60 $4.10 $4.99 $5.18 $4.93 $5.55 $5.68 $4.28 $3.87 $3.79 $3.97 $5.03 $5.94 $6.74 $6.80

$3.06 $2.86 $3.04 $3.42 $3.44 $3.21 $3.63 $3.85 $3.18 $3.35 $3.14 $3.05 $3.14 $3.40 $3.99 $4.16

$3.22 $3.22 $3.60 $4.24 $4.46 $4.36 $4.89 $4.79 $3.65 $3.82 $5.07 $3.67 $3.05 $3.91 $4.54 $4.71

Manitoba

$2.63 $3.95 $4.05 $5.69 $14.46 $20.69 $6.41 $7.45 $9.14 $9.92 $8.84 $16.00 $9.02 (inc nw t )

British Columbia

$6.85 $6.04 $6.73 $8.27 $9.76 $8.07 $8.52 $10.32 $9.00 $9.99 $13.72 $18.38

pei

Dominion

$2.33 $2.37 $2.12 $2.83 $2.46 $2.19 $2.11 $2.38 $1.82 $1.53

$2.62 $2.43 $2.74 $2.39 $3.64 $3.63 $3.93 $4.19 $2.44 $3.39 $3.46 $3.50 $3.83 $4.25 $5.02 $5.26

Source: Library and Archives Canada, RG36-8, Tariff Commission, 1896–97, 3615.

wanted protection, the audience cheered when he was unmasked as a grain purchaser for Montreal millers and unable to prove Mennonite consensus. The western farmers showed that the state systematically transferred wealth from west to east. But so long as the farmers were prospering, as counter-evidence suggested, their complaints fell on fallow ground: critics and commissioners could defend regressive taxes on grounds of larger economic benefits. In vain did farmers argue that many could not send their children to school because they could not afford clothing. Poverty they could not prove, though they could and did applaud every mention of direct taxation and “ability to pay.”193 But there were many still queued up to testify when the commissioners ended western hearings and returned to Ottawa to give the manufacturers the last word. Implement makers resented the “humiliation” of having to “appear before the Commissioners and even seem to be in the position of suppliance,” but they gamely accused the existing tariff of injustice and urged the “brave” step of an increase.194



Macdonald to Laurier: Revolt against Liberalism 179

There was no formal report, but the hearings informed Fielding’s budget of April 1897. Decaying distinctions between luxuries and necessities, raw material and finished goods were too strong to be abandoned but too weak to bear the burden of reform. Such categories were not sufficiently exclusive to resolve Fielding’s perplexities. Toolmakers wanted cheap screws; screw makers wanted protection. Some had intricate lists: carriage makers could get some things from Canada but not the special fabrics or carriage lamps they needed. They also needed cheap iron, as did engine makers like George Bertram, while iron foundries wanted protection. The press was excluded from the session that heard from engine makers, who complained of problems with steel grades, the screw combine, specific duties that applied differently to various gauges, and low prices that they blamed upon American slaughtering, but that Cartwright blamed upon hothouse domestic competition. Bertram countered: “You are supposed to be, as Sir Oliver Mowat says, reformers, not revolutionaries.”195 Laurier and Fielding were not revolutionaries, and they found a moderate solution to their quandary in an imperial preference. Reciprocal preferences would require taxes on breadstuffs – once unthinkable but, predicted imperial federationist George Denison, likely to come in to reduce regressive luxury taxes on such working-class staples as tea and tobacco. Denison accused Canadian manufacturers of obstructing the new imperialism: “If we can increase this country’s population to 10,000,000 by bringing in farmers are we not to do it because some manufacturer will be dissatisfied. Are the rest of us not to be considered?”196 The argument was premature: in 1905, Joseph Chamberlain’s campaign for a bread tax failed in a landslide. Nonetheless, here were grounds for a strategic tariff reduction. Fielding’s budget made only modest changes to the tariff: the biggest concession to western interests was to add binder twine and barbed wire to the free list. Tariffs on steam machinery and tools were reduced, coal oil slightly reduced, pig iron was down, but agricultural implements remained up. The sugar tariff was down, coal was up. The list of changes was long, reflecting the decision to maintain complicated classifications and special rates. W.A. Mackintosh remarked, in the Rowell–Sirois Commission Report, that Fielding’s tariff was “on the whole … a reduction though it would be difficult to offer unequivocal evidence of this.”197 The real innovation was a new imperial preference that took one-eighth off British goods without trying to secure reciprocal concessions. In fact, it embarrassed a British government committed, by treaties with Germany and Belgium, to put those countries and its colonies on favoured-nation status. Canada’s tariff worked to undo that commitment and set in motion

180

Constructing Fiscal Federalism

an imperial preference more generally, albeit one that was little more than nominal in Canada’s case. Still, this was a significant concession to both consumers and imperialists that wrong-footed the Conservatives. Where Tupper denounced the tariff as radically innovative, Foster described it as indistinguishable from his final budget. It was the Conservatives’ turn to be disorganized and contradictory. Skelton – not an unbiased source – described Fielding’s budget as a “masterly achievement. It was a careful and informed endeavour to harmonize and reduce the tariff.” For Skelton, the only unfortunate aspect was that a first step proved a last step.198 British economist J.A. Hobson stated: “A more astute stroke of party politics has never been devised; but it meant, as is now apparent, the betrayal of the Free Trade future of Canada.”199 Fielding’s tariff bought ten years of stability in central Canada. It responded to gathering demands for freer trade but also showed the limited political clout of the free traders. Rather than reform the tariff, the Liberal Party chose to perform responsiveness as political theatre. Rather than checking the manufacturers outright, it persuaded them to support a negotiated conclusion. Bertram campaigned on the tariff during a byelection in Toronto in November 1897, and his victory sealed the new deal between the Liberal Party and the manufacturers. Toronto was pleased; the Maritimes were mollified; only western Canada remained disgruntled (outside the Grit press, which had no small verbal acrobatics to perform). It could not industrialize locally in competition with subsidized central Canadian interests. Freight rates were part of the problem, as were economies of scale, but so were difficulties getting specialized supplies and investment capital. For central manufacturers, high freight rates and high duties cancelled one another out; for consumers and producers on the periphery, they were a double whammy. Still, the prosperity that marked the first decade of Laurier’s government quelled much resentment. Both political parties claimed to be accountable to public opinion. The Liberals styled themselves as pragmatic brokers of competing interests in the 1870s and again in the 1890s, and used public consultations to bolster that balance-of-power orientation. They repudiated Macdonald’s intervening turn towards knowl­edge-based justification that looked, to them, too much like the kind of special pleading from powerful economic interests that liberalism existed to debunk. But the Fielding Commission also owed much to Macdonald’s example of large, rotating public consultation exercises, which were never intended as more than a sop to public opinion. Macdonald unleashed them on troublesome questions of



Macdonald to Laurier: Revolt against Liberalism 181

economic morality but not directly on fiscal policies; that must remain within the realm of electoral campaigns, its facts irreducibly partisan. Laurier then applied the consultation model directly to fiscal policy. The process was designed to nudge economic reasoning back towards liberal agnosticism, making the state a neutral arbiter between competing economic interests, but it expanded the realm of liberal debate in the process. Alfred Jury was too radical for undergraduate ears but not too radical to shape tax policy. Of course, Fielding was no undergraduate; he could be trusted to discount radical opinions. The businessmen were understood to be privileged performers and actors, and consumer groups like the Grange were largely caught unawares. But they would not be so caught again; the next consultation would see a fairer fight. The public might be an incidental audience in a theatrical event staged largely by and for the manufacturers, but it attached its own importance to both arguments and event. But liberal principles of agnostic brokerage were eroding. Macdonald tapped into something when he made businessmen into expert advisers and called it science. New forms of economic knowl­edge were displacing Manchester liberalism, including the historical economics of an Ashley, the mathematical marginalism of a Jevons, and, further left, George’s neo-Ricardian theories of rentier capitalism and Marx’s labour theory of value. All of these theories tended to discredit liberal agnosticism and to demand new forms of economic managerialism. Thus, from both the right and left appeals for more political and economic intervention were on the ascendant. A shift was occurring from a politics that pitted different economic interests against one another to a politics that pitted different forms of economic knowl­edge against one another. The middle classes, pincered between right and left, capital and labour, dreamed of consilience and managerialism that would ease spiralling taxation. Tensions around taxation increased because the taxes themselves increased. As wealth and consumption grew during the Laurier boom, so did consumption taxes. Per capita federal taxes stood at $5.41 in 1891 and $5.20 in 1901; by 1911, they had risen to $9.97 per capita. For a family of five in a city like Montreal, where annual wages were $667 in 1911, that would amount to no small sum. The poor could not afford such sums, the well-to-do resented them as illiberal fiscal transfers. Whereas Blake and Cartwright struggled in vain to convince Canadians that they were heavy federal taxpayers, the next generation began to see itself in that light. Canada’s tired, old tariff problem began to turn into a

182

Constructing Fiscal Federalism

new kind of tax problem. Something would have to be done, and that something must reflect the debates about the basic principles of taxation emerging across the Atlantic world, which pitted the interests of the propertied against the new notions of economic justice. Property no longer sufficed to define economic justice, and Canadian politics would have to realign itself to reflect that change.

P art T wo Reconstructing Fiscal Federalism

5 Tax Revolt in Montreal in the 1880s: Fairness and Poverty

The Macdonaldian fiscal constitution was almost unimpeachable in its chosen sphere: federal governance of wealth. Questions of morality and culture had been pushed from the federal arena; there, liberal political economy would provide a national glue. Macdonald subscribed to enough British liberalism to uphold a small, demoralized state, but enough British conservatism to keep that state clientelist. It was a remarkable balancing act. The first quarter-century after Confederation saw the apotheosis of that fiscal constitution; the second quarter-century saw its unravelling. By the fiftieth anniversary of Confederation, the Macdonaldian project was in ruins. The state was transformed into a big, bureaucratic, interventionist entity formally committed to and practically engaged in the pursuit of economic justice. Fiscal reform was at the centre of the transition in Canada as everywhere else across the Atlantic world. In the United States, “the graduated income tax, based on the idea that everyone owes a debt to society proportional to his ability to pay, was perhaps the quintessential progressive reform.”1 Ajay Mehrotra’s recent study of federal income tax argues that that “great transformation in American public finance was led by a conceptual revolution.” It was led by progressive economists, above all Richard Ely at the University of ­Wisconsin, for whom the state was “an ethical agency,” and Edwin Seligman at Columbia University, who did more than anyone else to instantiate the principle that taxation should be proportional to one’s ability to pay.2 Those ideas filtered north: both Ely and Seligman were widely invoked in Canada. But in Canada, they were primarily invoked in reaction to a grassroots popular fiscal reform movement. There, the conceptual revolution was preceded by municipal tax revolts. Progressive tax

186

Reconstructing Fiscal Federalism

reform in Canada began as a popular movement and had a strained relationship with professional political economy. The story of fiscal reform in Canada, therefore, must begin with municipal reform. Municipal finance might sound to contemporary ears about as interesting as Lucky Jim’s “strangely neglected” thesis topic, “The Economic Influence on the Developments in Shipbuilding Techniques, 1450 to 1485.” But the municipal state was where the administrative action was. It was a privileged site for middle-class and, increasingly, working-class engagement.3 Daniel Rodgers’s history of progressive reform centres that story on the city: “It is little wonder that the great cities should have absorbed so much of the political energy and imagination of turn-of-thecentury progressives. Nowhere else was the clash between private property rights and public needs more tangibly and urgently displayed.” He instances Joseph Chamberlain, Birmingham mayor and pioneer of “municipal socialism,” who carried that campaign into the House of Commons. “The politics of the future are social politics,” he declared in 1883; in 1885, he argued that property must pay a “ransom” to preserve itself from radical dissolution.4 The London County Council, too, gave focus to liberal and radical reform efforts and translated them into national politics, as did North American urban governments.5 Direct taxation was supposed to keep municipal governments small, under the vigilant discipline of prudent ratepayers. But the ratepayers went on wild spending sprees. The new urban consumables – paved streets and sidewalks, sewers and drains, waterworks, gasworks, and street railways – were irresistible, and cities expanded on the strength of the demand. By the early twentieth century, Montreal, Toronto, and Vancouver were outspending their respective provincial governments by as much as 50 per cent. From 1898 to 1900, for example, Ontario spent $5.7 million annually on average and Toronto spent $7.7 million (about half of it on debt).6 This was a consequential change for the history of Canadian taxation. The fact that so much was now being raised through direct taxation made for vibrant debates about the uses and abuses of the local state. Tax revolts modernized the Canadian state from below, beginning in the city and percolating upwards to provincial and then federal jurisdictions. In this and the two following chapters, I provide three case studies that focus on Montreal, Toronto, and the single tax, respectively. These examples do not exhaust the story but do show three routes to progressive reform reflecting new conceptions of poverty, wealth, and property that would subsequently converge in the national arena.



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 187

Canadian fiscal reform began in Montreal, Canada’s empire city.7 It was a city of fabulous wealth and grim death: the financial and manufacturing metropolis of the country, and the first to develop poor, workingclass suburbs with high infant mortality rates. All this is well known from a variety of studies that have focused on the people’s poverty, the elite’s wealth, and the city’s notoriously corrupt management.8 These things interacted very intimately in fiery debates around municipal taxation that permit us to scrutinize the workings of popular political agency in the late-Victorian city.9 In the aftermath of the smallpox epidemic of 1885, lingering political tensions suddenly focused on the city’s predatory tax policies. Montrealers launched a defiant campaign for tax reform that inaugurated political modernity. There was much to reform in Montreal’s taxes, which weighed more heavily on the poor than the rich. Like other municipalities, it taxed property directly and went for what property it could most easily tax. Real estate was always the easiest property to tax: it was highly visible and immobile, and its value was relatively easy to assess, based on recent sales in the vicinity. But land in Montreal was uniquely valuable as early industrialization drove up prices and spawned new middle-class and working-class suburbs. The city’s early shift from artisanal to factory employment around the banks of the Lachine Canal created poor, crowded neighbourhoods where landlords could extract a great deal of rental income. Montreal’s elite invested in real estate early on, but as new economic opportunities in railways and finance presented themselves, an expansion-minded bourgeoisie turned to provincial and national politics, leaving the city largely in the hands of landed interests. Montreal landlords were highly represented on city council, and they worked to shift city taxes from real estate to other kinds of property. However, unlike most municipalities in North America, Montreal did not tax “general” property, i.e., personalty or business personalty. Instead, there were special licence taxes, beginning with dogs and rising to banks ($400) and gasworks ($800). There was also a generic “business rental tax” of 7½ per cent of the rent of any business establishment, imposed on top of the regular assessment on real property, reportedly an old Scottish way of divvying up the tax burden.10 Property taxes were low in Montreal, and the city was perpetually in hock and close to bankruptcy. The downturn of the 1870s reduced revenues while increasing demands for relief, and there was also expensive waterworks, drainage schemes, and a new park on Mount Royal to pay

188

Reconstructing Fiscal Federalism

for, as well as the $4-million debt. One solution was special assessments for particular undertakings – for example, a new drain in a particular street paid by residents in that street – so as to circumvent the general tax cap written into the charter (one shilling sixpence plus one-half cent on every pound).11 But the city began to impose special assessments worth millions of dollars for the big undertakings. When the city charter came up for renewal in 1874, there was serious debate about how to fix the problem: whether to raise the cap or shift the taxes. Landlords complained they were overtaxed; so did the businessmen. One wrote to the Daily Witness: “At present a business man pays 7½ cents in the dollar on his rental for general assessment – as much more again for his water rate, – and as much more again for his business tax.” Now they wanted a like sum for the debt. With school taxes another 5½ cents, plus that half-cent on the pound, one-third of total rental value was going to the city annually, plus special assessments – hadn’t Alfred Pardoneault just paid $7,000 for street widening on property worth £6,000?12 The businessmen persuaded city council that business taxes couldn’t be hiked for fear of driving capital away, and sustained that position against attacks from realtors and organized labour.13 Another obvious target was the financial sector, which was growing ever richer and was comparatively undertaxed. Unlike factories, banks did not expand their premises with their businesses. Somehow, the city must tax them proportionally to their revenues. It worked out a formula to do so in 1875 but faced an intense fight from those banking, insurance, street railway, and gas companies. Sir Francis Hincks, a former finance minister, presided over a meeting of bankers organized to oppose the bill and declared that municipal taxes on banks and insurance companies were foolish and unconstitutional. The insurers were particularly incensed that they had learned of the new tax through the newspapers, rather than more discreet channels. W.W. Ogilvie, an insurer as well as a miller, negotiated an out for all the insurance companies save the ones insuring against fire. Fire insurance cost the city $60,000 per year – plus an expensive firefighting apparatus on terms dictated by their assurers. The city was determined to recoup this amount directly from fire insurance companies with a 2 per cent tax on their capital holdings. Those companies fought back, albeit in the provincial arena rather than the municipal: corporate capital and landed capital each had their preferred sphere. When the bill went to the Quebec legislature in December 1875, the crowds of witnesses forced the Private Bills Committee to reconvene in a larger room. The provincial treasurer informed city officials that the



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 189

government would not let it pass the proposed new percentage taxes “since it gave tax-levying powers to the Corporation [city of Montreal] which the Government wished to keep in its own hands.”14 That night, the fire insurers gave a fancy dinner at the Stadacona Club, hosting “the leading Montrealers now in town, and prominent members of the House and Council,” as part of a scheme to persuade the city to accept a “gross sum of $400 or $500” rather than a tax on premiums. The next day, at the legislature, debates rose to fierce shouting. The proprietors laid out their position frankly: “Ald. Nelson said they could get $800,000 from real estate, but the Corporation desired to tax all legitimate institutions and interests before coming to real estate, in order to make the tax upon real estate as low as possible.” “Confiscation!” cried the insurers. Closed-door negotiations resulted in victory for the insurance companies: they would be charged $400 apiece and banks $400 to $600 depending on how many millions of paid-up capital they held.15 Fiscal relations were negotiated face to face, according to classic brokerage-clientelist patterns. Light taxes bought compliance and averted unseemly lawsuits and unseemlier public demonstrations. Businessmen were too disproportionately English not to feel themselves at a potential disadvantage. Gregory Levine observes that “working-class concern with the tax issue and working-class awareness of the class ramifications of tax issues” were greater in Montreal than in Toronto.16 Montreal was still recovering from recent popular violence (“The Guibord Case Has Produced a Riot at Montreal” declared the Spectator sanctimoniously) after Catholic crowds obstructed the burial of a liberal Catholic in September. Only a massed force of police and militia permitted the burial to proceed in November.17 Still, property must pay its ransom. The provincial politicians, in protecting Montreal businessmen, had an eye to their own revenues. They, too, were in dire financial straits and they, too, squared up against the insurance companies. The insurance companies won the first round but, as seen in 1882, a new and more general corporation tax was fought through the courts and ultimately upheld by the jcpc. Aggrieved business interests and mayors objected that the new tax forced the lion’s share of provincial taxation onto Montreal’s entrepreneurs. In 1892, Montreal proprietor, alderman, and mla G.W. Stephens complained that “Montreal was taxed at the rate of $93 a head, and the Province at large at $20 … Montreal objected to being made the poorhouse of the Province. Why was Quebec only taxed $42 to Montreal’s $80?” (“Quebec is poorer,” came the shouted response.)18 In 1905, economist John Davidson noted that Quebec derived more of its revenue from taxation than did other

190

Reconstructing Fiscal Federalism

provinces, “a fact of which Montreal justly and loudly complains.”19 But if corporations felt unduly targeted provincially, they were not so municipally. Montreal was one of the least taxed cities in Canada: rates were well below Toronto, where a population 70 per cent smaller than Montreal’s paid 120 per cent more taxes.20 The business tax of 7½ per cent was, the Montreal Gazette remarked, “a very uncertain measure of the revenue or profits which it is the only object of the tax to get at.”21 But it served the businessmen well in two respects: it was light and did not require them to open their books to inspectors. But no tax was an island, even on an island. Montreal’s fiscal accommodations provoked two big consequences. Elsewhere, businessmen demanded parity with their competitors in Montreal; at home, the lost revenue had to be made up somehow. Taxes on business and real estate were too well protected; the more regressive taxes – a statute labour exemption tax and water tax – did not call out the same defences. Businessmen in Montreal were more lightly taxed than those in Toronto, and Montreal’s poor were more heavily taxed (see table 5.1). After all, Montreal businessmen reasoned, “the poorer classes” contributed less to and benefitted more from public accounts, and “no part of a man’s income is better spent, or more usefully to his own real interests, especially if he be poor, than that which the government, state or city, spends for him.”22 Montreal taxed its poor and, in the process, provoked a grassroots tax revolt. This was not a particularly successful tax revolt; it wasn’t even a tax revolt by some criteria (Seligman defined taxes as general rather than specific, “not susceptible of direct measurement”). That said, Montreal’s corvée tax and water tax were genuinely taxes in practice if not in name: both were put towards the general revenues, and that made them a good basis for a popular tax revolt. Ordinary people were usually outgunned, but they were especially outgunned in Montreal because the propertied were disproportionally wealthy, powerful, and organized. Religious institutions, which were all of those things, were important interlocutors in civic conversations about taxes. Both Catholic and Protestant churches owned a lot of tax-exempt property. How exempt was open to debate: the churches and civic corporation did near-continual legal battle to shift that boundary a few inches one way or the other. In the mid-1870s, the value of exempted property of all sorts was over $12 million, a third of it in the hands of the Catholic Church. Protestants and Catholics both had about $2 million in church property, but Catholics also had many benevolent institutions worth as much again. The other half of exempted property, worth



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 191

Table 5.1  Water tax in Toronto and Montreal, 1881 and 1891

1881 1891

Water tax: Toronto

Population: Toronto

Per capita tax

Water rates: Montreal

Population: Montreal

Per capita tax

$128,809 $348,869

86,415 181,220

$1.49 $1.92

$364,797 $610,401

140,717 216,690

$2.59 $2.81

Source: Annual Reports of Toronto and Montreal, Census of Canada.

$6.6 million, was owned by the state.23 Battles grew fiercer as exemptedproperty values grew, rising above $40 million by the mid-1890s and encompassing one-quarter of all property in the city.24 Because the city could borrow against but not tax those properties, the city’s debt and its annual interest payments were particularly burdensome on rateable property. By the mid-1890s, the city was paying more than a million dollars a year in interest on its debt, that is, more than it spent on roads, water, fire, and police together. Annual reports reflected ebbs and flows of factions on the council. That of 1896 defended the exemptions on grounds of morality and benevolence, but two years later another report described the exemptions as an “injustice” to other taxpayers. The Catholic Church lost some skirmishes, but on the whole, it fought taxation fiercely and effectively. A recent study by Jack Little shows the Sisters of Providence sustaining a tax exemption on the sale of their sprucegum syrup, against vehement attack.25 Church spokespersons argued that the city should be rewarding, not taxing, them. They highlighted the Church’s services to the community in a running campaign against school taxes associated with compulsory education. In 1876, Dr Hubert Larue calculated the tax savings that charitable and educational orders brought to the city and the high water, special assessment, and personal taxes they paid.26 Again, in 1892, a sizzling piece by Oblate Zacharie Lacasse, one of the Church’s most intransigent critics of liberalism, observed that, because they lived frugally, “like sardines,” religious orders could educate a child for about $10, whereas American schools cost about $25. Go ahead and tax the churches, he baited liberals: they would simply charge more for their services and the resultant tax increases would bring parents to their knees.27 La Semaine Religieuse similarly calculated the substantial taxes paid by nuns doing good works throughout Montreal: those paid by the Soeurs de la Charité over the five years from 1887 to 1892 amounted to $62,479; those paid by the Soeurs Hospitalières at the Hotel-Dieu were nearly $72,000; and so on down to the $505 paid by the Petites Soeurs des

192

Reconstructing Fiscal Federalism

Pauvres – all sums taken from the relief of the poor.28 Into the twentieth century, the Catholic press denounced “socialists” who wanted to tax churches and impose income tax.29 Reformers fought back hard, and their campaigns to check the power and wealth of organized religion attracted national attention. Everybody knew that tax battles in Quebec, and especially in Montreal, had wider political ramifications – for the provincial rights movement that Mercier was spearheading, for the definition of a tax (when Regina sought to tax the cpr, it had to consider the precedent set by Les Écclesiastiques de St Sulpice de Montréal v. The City of Montreal), and for debates about school taxes outside Quebec. Lacasse cheerfully made many new enemies during the Manitoba schools controversy. When Montreal’s archbishop defended exemptions in a pastoral letter in 1887 or when the bishop of Three Rivers declared that the Church had “an equal right with the State to declare her property exempt from civil taxation,” liberal newspapers were outraged. The Toronto Daily Mail described exemptions as, like the tithe, “a survival from an age of privilege.”30 Taxes were a good place for liberals to fight back against clerical pronouncements: had not Christ said expressly, “Render unto Caesar”? The Liberal Reveil, which boasted of denouncing tax exemptions in every issue it published, believed (against all evidence to the contrary) that at any moment, “the religious communities crushing us with their opulence will vomit back their excesses [rendront gorge] and humbly pay their taxes.”31 The rouges lost that battle. They blamed defeat upon the power of the Church and the backwardness of the population. But the real obstacle to reform – the elephant in the room – was the fact that wealthy anglophone Protestants stood to benefit disproportionately from liberal reform. Their presence at the vanguard of the liberal reform movement made it relatively easy for populist politicians to discredit reform at the polls. Liberal reform in Montreal was designed to keep wealth in the pockets of the wealthy, out of the hands of the state and the poor. But poverty in Montreal was complicated by the fact that the poor were disproportionately Catholic. If liberal modernity was unresponsive to the poor, it must ipso facto be unresponsive to Catholics. The overlap of those two categories – poor and Catholic – everywhere fuelled tax politics in the city. The wealthy districts dominated by anglophones resented the transfer of wealth from rich to poor suburbs by populists. Their aldermen were mandated to restrict that flow of resources. But they faced a selfconscious, organized opposition. Montreal had the first industrial working class and the earliest widespread, urban poverty.32 Its inhabitants



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 193

were described as unsophisticated peasants, the antithesis of George Brown’s idealized, propertied ratepayer. But the industrial population of Montreal actually had much in common with that idealized ratepayer. Compared to other urban populations, Montrealers were disproportionately politicized and taxed. Their political agency and their taxes did not look exactly like Brown’s ideal processes of ratepaying and voting, but the basic features were in place. The franchise given to the Canadas in 1791, forty-shillings freehold, had enfranchised most households. The moderately well-to-do farmer and artisan in Lower Canada voted for a member of the legislative assembly. Lord Durham had concluded that such widespread enfranchisement was one cause of the rebellions: nowhere else in the world did such a broad social group exercise so much political influence. He sought mechanisms to discipline that group, the most important being the municipal franchise. Montreal benefitted, upon incorporation, from Durham’s belief that the civic franchise should teach political and fiscal disciplines to the modestly propertied. But Montreal’s civic fathers pushed the franchise upwards. From 1860, property – whether owned or merely inhabited – must be worth $300 or $30 annual value and must also have an exit onto the street.33 The requirements disenfranchised the working class but did not silence it. The Montreal public was notoriously given to popular, and often riotous, demonstrations – election riots, religious riots, and bread riots among them. Political bosses continually sought to stoke and channel popular expressions of support or outrage in rowdy demonstrations. Into the twentieth century, working-class districts of Montreal agitated and voted in solidarity, and they used that solidarity to fend off liberal modernization that would hand power to the Anglo-Protestant bourgeoisie. French and Irish workers made a rational choice when they voted for clientelist politicians. But to their critics, those choices seemed irrational, illiberal, and backward-looking. In theory, liberal reformers presumed that ordinary people were motivated by rational self-interest, but in practice they assumed mental and / or cultural incapacity in the objects of their solicitude. When they disagreed with Indigenous peoples as to how band councils should be run, they blamed a surfeit of Indian-ness.34 When they disagreed with French Canadians as to how city corporations should be run, they blamed a surfeit of French-Canadian-ness. Thus could wealthy reformers explain away political opposition as wrong-headed and illegitimate, and because they distrusted popular opinion, they did not offer many sops to it. They understood liberal reform as a cultural revolution and said so openly, with all the enthusiasm of a missionary. But the

194

Reconstructing Fiscal Federalism

consequence was a cultural overdetermination of Montreal politics that became a self-fulfilling prophecy. It read race and culture as determinative factors into even the most rationally self-interested fiscal disputes. For example, the Economist, the voice par excellence of liberal political economy, in 1891 lamented the prevalence of high-spending cronyism in Quebec and hoped to see a tax revolt as the road to reform and modernization.35 It failed to notice a tax revolt already underway, one that its own attacks on French-Canadian political and fiscal agency actually weakened. The Montreal public was a politicized, ratepaying public. It might prefer clientelist political bosses to liberal reformers, but it also sought to discipline those bosses with organized opposition to predatory taxation. However, such taxpayer revolts were weakened by all those jeremiads against deluded, backward French-Canadian voters, working to discredit them and arm their enemies. Thus did such self-styled champions of liberalism as the Globe or the Daily Mail or the Economist help the political bosses to beat back popular tax protests. But if, as a kind of thought experiment, we write “race” out of events in Montreal and disputes over resources back into them, then we see a city that was more self-consciously modern than other cities, because its politics were so openly and flagrantly about the confrontation between the propertied and the poor. Politics in Montreal often boiled down to disputes about the politics of redistribution. Successful political bosses in Montreal, before and after Confederation, were those who boasted of transferring English-Canadian wealth into French-Canadian pockets, at national, provincial, and municipal jurisdictions. But as Montreal grew both geographically and administratively to cover more territory and undertake more responsibilities, the terms of the confrontation changed. On the one hand, geographical expansion integrated French-Canadian suburbs that shifted the balance of power from English to French hands. On the other hand, bureaucratization played to liberal reformers who sought more impersonality and less clientelism in their state. But even as machine politicians and reformers grappled for control of the fiscal coffers, the stage was set for a revolt against both their houses. Across North America, cities were debating the costs and benefits of incorporating suburbs. Annexation tended to transfer high per-capita debts, mostly accumulated by developers, onto the city as a whole.36 In Montreal, those suburbs were disproportionately French Canadian. In the first such annexation, of Hochelaga in 1883, Alderman J.C. Wilson



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 195

objected to being outvoted: “The French Canadians might have a majority in Council but the English speaking people had the majority of value.”37 Peter Donovan, an Irish lumber merchant, argued that Hochelaga had almost no revenue because it had exempted manufacturers, leaving only a poor, working-class population. He continued, observing of Montreal municipal taxes: “The four western wards paid 69¼  percent, the four eastern 30¾. (Laughter.) The gentlemen could well laugh, they had the whip hand. They spent the money.” He suggested that Hochelaga be annexed to St Mary’s ward, without any additional votes – after all, “St Mary’s ward itself only paid $7,000 taxes, comparatively nothing … He warned them before sitting down that if the English speaking residents had no rights left that could be respected, they must leave, withdrawing their capital, leaving Montreal like a second Quebec, a poor miserable place, with only sufficient revenue to spend between eight and nine thousand dollars per annum on its roads.” Hochelaga would bear out his worst fears. It was dominated by the Rolland family, which provides a near-platonic example of unreformed, clientelist government. J.B. Rolland was a self-made man who arrived in Montreal in 1832 with only five cents in his pocket and began to work in the Minerve printing office. He developed a printing company, an import company, and real estate investments, with holdings around Saint-Denis, Berri, Saint-Dominique, and Ontario streets, including his own fine house, and a cottage at Longue Pointe, along with a hundred acres that he developed in Hochelaga, where he put rows of cottages and tenements. The French-Canadian business press touted him as an example to his compatriots. When his son and partner, Damien Rolland, became mayor of Hochelaga in 1876, Damien’s enemies found their taxes rising and courts of revision unresponsive. They complained to Montreal newspapers that the new assessments had been “made with the apparent object of crushing out those opposed to the family compact.” Between 1875 and 1876, Joseph Thompson saw his assessment increase from $5,500 to $14,000, James Lillie from $1,400 to $6,000, Joseph Leveillé from $4,345 to $45,000, and Henry Bulmer from $10,000 to $50,000. Meanwhile, assessments for Rolland’s friends dropped: those of P.A. Quinn, L.A. Jetté, and J.O. Vallée fell from $2,046 to $368, $2,193 to $500, and $864 to $300, respectively. The Daily Witness confronted Rolland with evidence that his riverfront estate, valued at $4,200, was assessed at the same price as another man’s small house that had cost him $42. Rolland replied that the two could not be compared, the small house being at the west end of

196

Reconstructing Fiscal Federalism

town and Rolland’s at the east. “Further enquiries as to particular assessments failed to reveal any further information of importance, Mr Rolland not being able to fix the particular lots from memory.”38 But, writ large, J.B. Rolland’s clientelism was ostentatiously a FrenchCanadian clientelism. As a long-serving Montreal alderman, he demanded better services for the poorer districts. In 1874, for example, he insisted that provision of a smallpox hospital should follow popular need, not taxes. The state was just one tool in that campaign and merged almost imperceptibly with the others: Rolland founded nationalist bookstores and banks (his Hochelaga bank survives as the Banque Nationale), and presided over the Saint-Jean-Baptiste Society. His son Damien carried on his many-fronted campaigns and urged the annexation of Hochelaga by Montreal, with the argument that “a man’s importance was generally estimated by the amount owed him, and on that principle Hochelaga was a very important place.”39 That effort failed, but four years later union was effected by the new mayor of Hochelaga, Damien’s brother-in-law Raymond Préfontaine, a future mayor of Montreal. Préfontaine was also a rouge politician, friendly with Laurier and the bane of the progressive wing of the Quebec Liberal Party.40 Anglophone wealth had its own platonic example in the Stephens family. Harrison Stephens, an importer and property speculator from Vermont (he named his son George Washington), was the city’s largest proprietor in the 1860s and 1870s, his tax bill equal to that of the Grand Trunk Railway.41 He fought tenaciously to reduce it. In 1869, he was among the ratepayers who petitioned for exemption from special assessments on St James Street to pay for street widening, in consideration of the annoyance and damage caused. When the city refused, Stephens sued, citing irregularities in the way the assessment had been written up. His complaint was upheld through various appeals to the jcpc, which declared the assessment roll “illegal, irregular, null and void, and of no effect.” The decision saddled Montreal with $80,000 in reimbursements.42 That lawsuit prompted others, including one by J.L. Beaudry, two-time mayor. In 1871, when Harrison Stephens, represented by his alderman son, demanded reimbursement for some footpaths and exemption from arrears and interest charges, the Finance Committee practically fell over itself to find suitable loopholes. While the father remained aloof from city politics, George Washington Stephens had a successful political career municipally and provincially from the 1860s to the 1890s. He styled himself as a fiscal “watchdog,” representing “Anglo-Protestant” and business interests, according to his



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 197

biographer, Jack Jedwab, and “he was especially critical of the clique surrounding alderman Raymond Préfontaine … a ‘board of speculators’ whose extravagance was largely borne by the more affluent western sections of the city.” No one could benefit from civic reform more than Stephens himself: as his father’s heir, he was the largest private proprietor in the city, his assessment running “considerably over a million.”43 In July 1871, G.W. Stephens denounced “extravagant” local improvements on Notre Dame Street and St James Street – where he, like Beaudry, owned property. He advocated tax cuts for businessmen; increases for everyone else, including the churches, which, he estimated, raised everyone else’s tax bill by 5 per cent; and the addition of poll taxes to make taxpayers of the poor.44 During a provincial election in 1889, the Quebec Daily Telegraph was unimpressed: “George Washington is eight times a millionaire. It is pertinent to ask how much he subscribes to the support of Protestant Churches. With his eight millions, he doesn’t pay more for the support of the Protestant religion than the humblest believer in Brome. But talk is cheap and George Washington talks. He never pays.”45 Yet reformers had to embrace him. In 1898, Le Reveil devoted several columns to praising Stephens’ public spiritedness.46 These tensions persisted into the new century. In 1914, party-machine politician Médéric Martin defeated the rouges, who had been focusing their efforts on Montreal city politics for the better part of a decade. Scholars have denounced Martin’s Tammany-Hall “demagogic tactics,” such as pointing out that whereas he, Martin, answered his own doorbell, his rival, George Washington Stephens Jr, had a butler. “If you are out of a job and hungry, what will happen to you? I will tell you. If my opponent is elected and you go to his house, you will see a butler in uniform who will ask for your card. You have no card, but tell the butler your name and why you want to see the Mayor. He tells you that the Mayor is dining with friends and cannot be bothered like this.”47 But Martin’s claim would have resonated with his audience. The Stephens’ mansion was a familiar and looming reminder of the power of wealth. It told a tale all its own of special exemption and political influence, as did the other residences of the Square Mile, and the Ritz-Carlton Hotel where Stephens Jr kept a suite. Martin’s insistence on personal discretion, negotiated face to face, would have reassured his supporters that discretion continued to operate in their favour and would shield them from liberal austerity projects aimed at driving up taxes and handing power to the anglophone bourgeoisie.48 Well might Stephens argue that “there was no nationality in a financial transaction.”49

198

Reconstructing Fiscal Federalism

Even as geographic expansion seemed to hand a trump card to the poor, the propertied found new weapons of retrenchment in the reform of the civic bureaucracy. Cities grew in scope as fast as in size, as they acquired new, large-scale technologies and a growing burden of social welfare spending. Finance was at the heart of that expansion. In Montreal at the turn of the century, the finance department had 140 employees, including 78 assessors, and a small army of collectors, clerks, and bailiffs that seconded their work, many of them labouring in the Long Room at City Hall, shifting the two tons of books that were in daily use and required four trucks to return them to shelves each night.50 The new bureaucratic forms threatened to distance the public from the politicians and to dampen informal traditions of responsiveness. Responsiveness was more than window dressing. Frank Trentmann, a historian of British taxation, sees in traditional political relationships “reciprocity, mutual recognition, openness and high degrees of contestation in elections and local government.”51 But bureaucratization came with a new philosophy of impartiality, and it muffled the contact between voters and aldermen. Civil service reforms introduced in Britain in the 1850s set new standards that Canadian reformers emulated. Montreal’s finance officers seemed particularly to fall short of those ideals. In the early 1880s, the city inaugurated an ambitious new investigation of arrears over the previous decade (amounting to more than a million dollars exclusive of water taxes). The $169 owed by “Widows (very poor)” was among the $53,836 written off while the assistant attorney, William de Courcy Harnett, was attached full-time to the Arrears Department. But in 1882, Harnett was reported as a “large defaulter” relocated to New York, and in 1884, Montreal city officials journeyed there to try to interview him and two other men guilty of the “defalcations which have tempted many officials” to the American metropolis. City Clerk Charles Glackmeyer insisted that the findings revealed only “irregular” and not openly dishonest behaviour from treasurer James Black and auditor William Robb, who had taken civic money to invest in real estate but had, after all, paid it back.52 Montrealers needed public reassurance of responsiveness in the emerging world of liberal modernity. When taxes pinched too heavily, people wanted to know they had some leeway. Tax authorities everywhere were barraged with pleas for remission of taxes on one ground or another: the assessors were mistaken; the business had only begun operations late in the fiscal year; the building had burnt down. But above all, they heard pleas of poverty that seemed to intensify as slums and rear tenements grew more crowded and taxation grew more effective. Montreal’s mayors



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 199

spoke often and dramatically to such perplexities. As mayors, they did not exercise much formal power on city council or in the all-powerful Finance Committee. But their informal influence was considerable, and from that perspective, they personified discretion. They owed that influence to their personal popularity. Mayors had the ear of the public, and they continually appealed to and ratcheted up public opinion. Indeed, part of their appeal was the shared, formal impotence in the face of the new civic bureaucracy. In many respects, the mayor’s predicament reflected the perplexities of a bureaucratizing state. What could a mayor do about burdensome taxes? At the very least he could fulminate with dramatic and public performances of outrage. Repeat mid-Victorian mayor J.L. Beaudry was a virtuoso performer of tax outrage. In 1877, he was so rude to the assessors that they complained. The mayor insisted he had gone to the assessors with the ordinary kind of query about his assessment that proprietors like himself posed, only to find himself accused of evasion: “Mr Allard, one of the assessors, said to him: ‘You needn’t think because you are Mayor that you are going to influence us to make a reduction on your property.’ To which he (the Mayor) replied that he did not come as Mayor, but as a private citizen, and wanted to know why they would not make a reduction for him as well as for one of his tenants. Mr Allard said: ‘I will put you out of the office,’ to which [Beaudry] replies, ‘You had better try it,’ and he thought by Mr Allard’s action that he was going to try it.” Mayors scored political points from such confrontations, though the assessors had a champion in Alderman Richard Holland who said “it had raised his estimation of the Assessors, who were a class of men for whom he would vote every time.” The scene is high politics as low comedy that recalls Much Ado about Nothing: “Dost thou not suspect my place?” Such performed outrage was standard fare for Montreal. Of course, wealthy proprietors were far from helpless. Beaudry repeatedly challenged assessments in the courts, as his father had once done. He bankrolled George-Étienne Cartier in 1867 and was named to the Legislative Council as a reward. But Beaudry was also a performer who particularly excelled at this sort of taking-on-city-hall theatre, such that his departure from city hall “was not much regretted by most of the officials,” according to one obituarist.53 Fulminating against tax assessors was something that Montreal mayors did. In 1890, Mayor Jacques Grenier announced that he had “made a compromise with the poor people who sold ice cream” by cutting the cost of a licence in half (from $40 to $20). When G.W. Stephens declared such an act illegal, and

200

Reconstructing Fiscal Federalism

the mayor no more able than “the man in the moon” to lower taxes, the mayor replied: “Well, I have done it anyway.”54 In 1892, another discussion of taxation began when Mayor James McShane, “the people’s Jimmy,” waved the report on Montreal assessments aloft and cried: “The poor people pay over $8,000,000 more taxes this year than last.” He shouted down critics who tried to correct the glaring inaccuracy ($8 million was the increased value of property, not taxation), while supporters, like a Greek chorus, intoned “Shame.” Uproar ensued, until McShane “ended up by a tirade against the assessors on behalf of the poor people whose assessments had been increased, instancing St James and Notre Dame Streets, where, by the way, his Worship has property.”55 Such confrontations were deeply ironic: they reflected the double reading that Montreal politics demanded of all its serious readers. The fulminations by mayors and ambitious aldermen against unaccountable, overpaid, grasping bureaucracies and vested interests that crushed the people were sham confrontations that let the crushing and boodling proceed unabated. Marshalling anti-state frustrations from within the state, they served as populist political spoilers that deflected rather than mobilized popular frustrations. But if tax outrage was channelled towards conservative purposes, it also tended to legitimate and normalize a language of class polarization around taxation that could, under different circumstances, serve as a ready-made tool to challenge fiscal hegemonies. In Montreal, tax revolt was a process of de-ironification of prevalent narratives. The poor were always implicated in populist platforms, and when elites protested their taxes, they claimed to represent the interests of the poor. That was a prominent theme at a public meeting on a rainy evening in July 1871, at the corner of Amherst and Sainte-Catherine streets, which drew over a thousand people to protest salary hikes amongst the top municipal officers. The meeting was orchestrated by an eclectic Montreal bourgeoisie including Beaudry, Senator J.O. Bureau, L.A. Jetté (soon to defeat Cartier at the polls), and “several real estate owners.” Speakers insisted that they were really there to defend the interests of the poor workingman. Alderman Bastian declared that “if the people were united and persistent they could still make their will respected in the City Council.” J.C. Doutre, QC, denounced the water tax that cost Montrealers $18 to $20 per year, about three times the rate charged in other cities: “Higher water taxes were simply a pretext to cover up expenditures for other purposes.”56 The rights of the taxpayer were the pre-eminent form of British rights – they were, after all, the key accomplishment of the Magna Carta. No



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 201

one, surely, would exert themselves in the same way for tax evaders. Disenfranchising people who did not pay taxes was a no-brainer in most late-Victorian jurisdictions. But Montreal used that power more extensively than most. The percentage of people actually disenfranchised varied, depending on whether times were hard or easy, but in times of crisis it could rise above half the electorate. In 1879, for example, the Daily Witness reported that only about 9,000 of 30,000 ratepayers in Montreal appeared on the voters list. The remainder, having failed to pay their taxes on time, evidently “don’t care for their votes.”57 In 1885, another hard year, 18,000 were stricken from the electoral list of 30,000. These were tenants; proprietors were not disenfranchised for failure to pay until 1900. The mass of disenfranchised people were workingmen who had failed to pay either their water taxes or a statute labour tax that functioned as a poll tax. The year 1885 was not just hard: it was bitterly hard and polarizing. Smallpox devastated the city, killing thousands of people, primarily poor French-Canadian children.58 To the west, the desperate uprising of the Métis portended badly for French Canada. French-Canadian Catholics looked to their leaders, clerical and secular, to protect them from liberal modernity, but those older mechanisms seemed to be failing. In western Canada, the Métis lost the political influence to have their property registration confirmed, and their violent protest was met with violent repression. The episode seemed to confirm a more general trend that saw political discretion, hitherto exercised to benefit French Canada, now levelled against it. In November 1885, with the epidemic in Montreal at its peak, the city and the country waited on tenterhooks to see whether Riel’s death sentence would be commuted or carried out, in yet another test of discretion. Le Monde, a bleu paper controlled by Sir Hector Langevin, tried to avert the imminent destruction of French-Canadian Toryism by rallying popular anger against the vaccination and isolation efforts of liberal mayor Honoré Beaugrand. It accused him of committing violent and cruel acts (acts that even its own reporters had to admit in court never happened) and branded him a worse “scourge” than smallpox: “Your injustices, your cruelties, your barbarisms already crush you and cover you with shame and dishonor.” Column after column denounced Montreal’s “Caligula.”59 La Minerve seconded the accusations and urged popular resistance. Beaugrand replied in his own newspaper, La Patrie, and many speeches, lawsuits, and public letters followed, widely reproduced. But the attempt, as many called it, to deflect popular anger manifestly failed. Riel’s execution in late November sparked violent public protests across the province, complete with hangings in effigy.

202

Reconstructing Fiscal Federalism

Montreal was a hotbed of political passion that wanted only leadership to give it focus. The failure by Tory political bosses to deliver discretion discredited the Conservatives. Quebecers were not quite disillusioned enough to prefer the Ontario-ratepayer party of Edward Blake in the federal election of 1887, but a seismic political shift was clearly underway. Laurier’s career took off with his expressions of open support for Riel, and provincially, a new Liberal hegemony was inaugurated by Honoré Mercier. Municipally, things were more complicated with both the rouges and the bleus discredited as champions of the people. Le Monde went to rash lengths to label Mayor Beaugrand a betrayer of the poor so that it could pose as their saviour. “Mr. Beaugrand, why are you a despot only to the poor? Because they are weak and without influence? Why don’t you force the rich to leave their houses as you do the poor? Only the latter suffer from your tyrannical solicitude. Why such distinctions?” But Le Monde’s claim to speak for the poor was not credible. The same day that it published its attack on Beaugrand, it also published an article on “The Working Classes,” which blamed the impoverished workingman for his poverty. After all, with foresight, by setting something aside in good times, the workingman could defy the worst of circumstances, even industry-wide unemployment: “How true it is that our destiny almost always depends on ourselves, and that we bring the worst evils upon ourselves by our improvidence!”60 The Montreal Gazette was also larding its columns with comparable arguments that blamed poverty on improvidence: “The industrious mechanic of this city has a clean and comfortable home, his table lacks nothing, and he has many of the luxuries of life.”61 The epidemic died down early in 1886, and civil disobedience gave way to widespread vaccination. Tax compliance, too, seemed to increase: disenfranchisements rose but so did the sum of water taxes paid compared to previous years. People were determined to keep the water flowing into their houses – hardly surprising given the prevalent association of disease with filth. The Witness was reassured by apparent quiescence, remarking in February 1886 (even as smallpox still smouldered on in the hospitals) that the municipal election campaign revealed “no great issues being urged upon the electors.”62 The Witness was wrong. The old accommodations were failing, but popular resentment was finding expression outside mainstream politics, and in 1886, it turned to the Knights of Labor. The movement reached Montreal in 1882 when an English-language branch was formed, followed in 1883 by a French-language branch. By 1885, a year commemorated as the “great disruption,” the Knights were at the height of their powers, with



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 203

successful strikes and political agitation that forced workers’ causes into the political mainstream. John A. Macdonald identified “rocks ahead” for his party in the agitation around Riel and the Knights. The organization was strongest in Ontario, but Montreal had more local assemblies than any other city: sixty-five to Toronto’s fifty-eight and Hamilton’s thirty.63 In 1886, Montreal Knights convened in a city-wide council that demanded, among other things, abolition of the statute labour tax or corvée. Once upon a time, citizens had been able to choose between performing statute labour and paying a small tax to escape the labour. Statute labour had long since been abolished in favour of professional contracts, but the statute labour exemption tax persisted because it functioned as a poll tax, targeting people who could not be got at through other kinds of taxes. More was at stake than the paltry few hundred dollars collected. The larger principle might be described as “no representation without taxation.” That principle was at the heart of ratepayer politics: enfranchising someone who paid no taxes was like handing that person your wallet. In practice, the tax existed to disenfranchise people. It was inconvenient to pay, payable in advance of elections, and represented a day’s wages for the poorest. The tax had long rankled and not just in Montreal: Jack Little charts tax-driven disenfranchisement of Irish Catholics in Lotbinière before and after Confederation.64 In 1878, the Catholic True Witness blamed it for muffling Catholic political agency and giving the Protestants an unwarranted control over Montreal’s city council. In 1879, Hormidas Jeannotte, a populist alderman, tried to have it repealed but was voted down twelve to ten.65 In 1886, conditions were ripe for a more forceful challenge as popular anger, provoked by horrifying mortality, rising taxes, diminishing accountability, and a rhetoric of class outrage, came to focus on this illegal exaction. Much of that focus was generated by Jules Helbronner, a member of the Knights of Labor and author of a weekly labour column for La Presse under the name “Jean-Baptiste Gagnepetit.”66 Civic exaction was only one of his many interests, but it threaded through all his activities. Repeated columns through the fall of 1885 and into 1886 denounced both the practice and the principle of the corvée. He insisted that men did not need property to have an interest in city government and decried arguments that “only proprietors and merchants have the right to occupy themselves with the city’s interests; that salaried employees like ourselves have nothing to do with civic administration.”67 Other labour publications picked up the campaign, including L’union ouvrière nationale and Le Trait d’union.68

204

Reconstructing Fiscal Federalism

The corvée was a weak point in the rule of property, and its defences were easily breached. In February 1886, the Daily Witness noted that the Trades and Labor Council (t l c ) had posed two questions to lawyers E. Barnard, QC and C.J. Doherty: was the statute labour tax of $1 valid and could those who did not pay it be disenfranchised? Their answer was a flat rejection of the tax. If it existed at all, it was according to an act of 1799 that exempted all paying a six-shilling property tax from their statute labour. That tax no longer existed, so how could the exemption still exist? Moreover, that bylaw explicitly enfranchised tenants. The two lawyers declared that disenfranchisement under that 1799 law would probably be actionable, but they were not ready to relinquish ratepayer politics. Even as they denounced the corvée as archaic and illegal, Barnard and Doherty defended it in principle: “It would, no doubt, be in the highest degree desirable and proper that all those who reside permanently in Montreal and enjoy the protection and advantages which the city government affords, and who nevertheless pay no taxes whatever, should be reached by means of a poll tax of some kind.” Over the next month, the tlc successfully forced the issue, making it top of the agenda for the first meeting of the new city council in March 1886. Presiding over the meeting was Jacques Grenier, chair of the Finance Committee: he was a self-made businessman, a large-scale dry goods merchant, and a moderate Liberal who enjoyed the confidence of the business community. He had been active in municipal politics since 1857 and would not abandon older traditions without a fight. That the statute labour tax must be abolished was evident, and Grenier recommended its abolition. But he also recommended a $2 poll tax to replace it. “I am quite aware that this poll tax will be unpopular in certain quarters,” he declared, but financial exigencies demanded the $50,000 it would bring in (along with the $100,000 that an extra ¼ per cent tax on property would also bring). Fierce debate followed. Defenders like Donovan and Grenier insisted that poll taxes were fair because universal: “We must have the increased revenue, and I think it the fairest way to tax every voter in the city, proprietor as well as tenant.” Alderman Henry R. Gray, a pharmacist and sanitarian, rejected as “demagogic humbug” the idea that men could not pay minimal taxes of this sort but wondered if the tax could be made to weigh more heavily on proprietors than tenants. Liberal Cléophas Beausoleil more strenuously “objected to the uniform poll tax on the ground that the citizens should be taxed in proportion to their means. The taxation should be equalized, and in his opinion, the real estate owner should pay a higher tax than the man who often, perhaps, found it difficult to support himself and his family. He believed that the assessment,



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 205

the water rate and the real estate tax, should be increased, it would suit the purpose.” Grenier flatly disagreed and defended flat-rate taxation. Préfontaine asked incredulously whether the city seriously planned to “seize and sell out a poor man for $2,” to which Grenier replied: “If we adopt the tax we must collect it.” After all, he continued, “there was a similar tax in Toronto, and it was a well known fact that the taxation [in] Montreal was 50 per cent less than any city on the continent.”69 As to its effect on propertied voters, Grenier reassured Donovan that those with multiple votes on property holdings in different wards (a power acquired in 1866) would only have to pay the poll tax once. City council passed the poll tax. Working people must pay a tax or lose their vote. But the poll tax was no more defensible than the statute labour tax. Public meetings held in east-end neighbourhoods attracted hundreds of people to hear politicians like Jeannotte, Préfontaine, and Beausoleil excoriate the poll tax. According to Beausoleil, “they had been governed by the other end of the town and by another nationality for years, till three years ago when they gained control in municipal affairs, which was their right, as they had the majority in numbers and intelligence. The poll tax would disqualify many voters. Suffrage should be and must become universal. The poll tax was not intended to meet a deficit, but to give the power and control of the city to the minority.” His resolution was carried unanimously: “That this public assembly protests against the imposition of the poll tax as being without principle, as weighing heavily upon the poor man, and there being no real necessity for its imposition.”70 This was no ironic performance but a genuine popular tax revolt that politicians tried to harness. The Daily Witness was unimpressed by either the arguments from “demagogues” or the “low” crowds they attracted, at a time when decent people were in church. “We know of no democratic community where there is no poll tax. A man who demands a vote to control a revenue to which he refuses to contribute is somewhat in the same position as the man who demands another man’s purse. Were taxation to be imposed, and the revenue spent by those who bore none of the burden, there would be no check whatever to extravagance, and nothing to save the city from the ruin that public swindlers would bring upon it.” But the tax failed, withdrawn at committee. George Washington Stephens tried again, proposing to tax anyone living by mechanics, arts, trades, labour, professions, or any other kind of work, occupation, or calling. Only three aldermen voted in favour of what was a poll tax in all but name.71 The benefits theory of taxation took a severe beating in Montreal in 1886. Its supporters could not win public debates played out before a quasi-democratic public. Montreal was particularly fertile ground for

206

Reconstructing Fiscal Federalism

such a confrontation, having listened to politicians and press debate the respective claims of property vs. people for many years. Poverty, too, claimed a public interest in governance, because it, too, was taxed. This was a direct challenge to classic ratepayer politics rooted in control of land and property. The argument drew upon the venerable language of British rights, but it also drew upon moral economies grounded in the needs of people without formal title to land. The people, too, had a material interest in fiscal policies. But if ratepayer interest did not undergird politics and property lost its natural right to rule, then some other principle of justice had to replace it. The corvée was the tip of a very big iceberg. The campaign led irresistibly to another. If the poor could not be disenfranchised for nonpayment of the statute labour tax, then they could be disenfranchised for nonpayment of the water tax. Indeed, the Knights had argued that because the water tax made taxpayers of everyone, no poll tax was needed. Clerics pricked up their ears at such arguments. If the water tax was a fee for service, religious communities must pay it. If it was a tax, they were exempt. The courts agreed with the clerics and exempted them from the water tax. So did the provincial legislature, at the same time that it rejected another request by the city to tax private schools.72 Proprietors were outraged, as were the Knights of Labor. A new tax revolt was inaugurated. But the water tax was very different from the corvée: its defences were far more formidable. The sums at stake were far greater, running to hundreds of thousands of dollars annually. From the city’s point of view, the water tax served the benefits principle of taxation better than the corvée because it was justified by the consumption of water rather than by ancien-régime legislation. From the popular perspective, stakes were even higher because the consequence of arrears went far beyond disenfranchisement. The water tax, like the religious exemptions, lay close to the heart of Montreal’s greatest ambitions and failings. Montreal was founded on the greatness and constraints of its waters – the mighty St Lawrence River that drew lyrical paroxysms from Donald Creighton, in his study of the continental dreams of the Montreal trading barons.73 But that empire was stopped short by the Lachine Rapids and needed expensive reconstruction to make traffic flow. Seen from the perspective of Montrealers, the river came to epitomize not liberal freedom but managed landscape and statism – an argument won soon after the mid-nineteenth century when the city’s waterworks were municipalized. In having natural provision of water, Montreal was far luckier than New York, which had to pump water in for many miles. Montreal had only to build local aqueducts,



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 207

reservoirs and drains to manage overflows. Properly governed, Montreal’s relationship with water promised to sustain its ambitions as empire city of the Dominion. It would be a modern city of flows, not a stopped-up museum piece like Quebec City. Dismantling the old city walls, widening the streets, and always building more water pipes, drains, sewers, and an aqueduct, all conduced to this grand, modernizing vision.74 This was a forced modernization project, one that had to be imposed on the people rather than merely offered to them. Immediately on municipalization of the waterworks, Montreal passed a bylaw to insist that any household with access to the water mains must pay water tax. But where most cities taxed proprietors for water, from 1860 Montreal exacted the compulsory water tax directly from tenants.75 Provision of water promised to infuse not just public but even private spaces with new standards of cleanliness, thereby fulfilling nature’s promise in the city. And by individualizing the progress, insinuating it into the very homes of the poor, and charging them a tax for it, city engineers and councillors could transform the public from an undisciplined mob into disciplined ratepayers. This happy vision fell far short of what the city could actually accomplish. Waterworks were so prohibitively expensive that the poor could not afford domestic water any more than they could afford schools or hospitals: there had to be some mechanism for collectivizing the burden. Poor municipalities were no more able than poor individuals to pay for water, so that the cost of local waterworks was powerful incentive for annexation: other municipalities could not afford either their own waterworks or the high prices Montreal charged non-Montrealers. In April 1879, the city council entertained a deputation from Hochelaga that complained of a recent hike in water rates, from 25 to 60 cents per 1,000 gallons: “It would be utterly impossible to collect the present high rates from poor people.” (Their own supply was spoiled by Montreal’s waste.) Mayor Beaudry was unsympathetic and described Hochelagans as tax evaders – people who “removed outside the city limits to escape the high taxation of Montreal, and then wanted their water supply for almost nothing.”76 Similar pressures for annexation in Saint-Gabriel arose around waterworks politics. A public meeting of “taxpayers” in SaintGabriel village in 1887 voted to join Montreal after long discussions as to whether they could afford a new waterworks in a town with much exempted religious, civic, and railway property. Compounding the problem was the Saint-Gabriel council’s intention to throw water taxes on landlords rather than tenants. Alderman Bernard Tansey, a prosperous tavern keeper, insisted the change would hit the poor tenant hardest:

208

Reconstructing Fiscal Federalism

“This scheme would also have the effect of preventing poor people from obtaining water gratuitously, as the very poor of Montreal were now able to do, as if the landlord paid the rates he would exact them back and would not make concessions as a corporation would.”77 Proprietors always had good reasons for taxing the poor. But Montreal had hardly solved the problem of water provision. Drains, hydrants, and pipes often failed or flooded or froze, but administrative failings were greater. Many aspects of city tax collection were inefficient – the lack of property registration, for example, meant that the value of each house had to be individually discussed between assessor and proprietor. But water tax collection was the most problematic for reasons repeatedly spelled out in the city’s annual reports. The city based its water tax on the rental value of properties, “a mode that involves an infinity of perplexing details,” and it charged tenants rather than proprietors. But as many as a third of tenants moved so often as to be untaxable. In 1866, the city calculated that it lost $45,000 on the nominal sum due of $220,000; other years, about 10 per cent loss was average.78 The Finance Committee wavered on how hard to press for the sums. In June 1864, on learning that there were 3,484 warrants for distress worth $26,436 in the hands of bailiffs, it vetoed a proposal to raise commissions to 12½ per cent and merely urged collectors on to better exertions. But in September 1870, it paid three men just to turn off water supplies.79 Severity was scant help. The annual report of 1872 still noted that “the loss occurs chiefly through the poorer class of tenants, from a great many of whom it is almost impossible to make collections.” Those figures ballooned by 1876 to over $90,000. City officers were under terrific pressure to increase water rates because the waterworks needed substantial new investment that could no longer be put off. The debates were culturally and politically freighted. On the one hand, there were looming fears of pauperization and public bankruptcy consequent on private improvidence. On the other, the city could not ignore public health. Officials fretted at new vital statistics that showed high death rates: thirty-seven per thousand in Montreal versus thirty-one in New York and twenty-two in London, according to the annual report of 1872. Water was a part of the package, along with vaccination, drainage, and fresh air in a new city park on Mount Royal – all reflecting a new sanitarian outlook under Mayor Hingston in the mid-1870s. The consequence was a rapid increase in the city’s debt from $3.5 million to $5.5 million. Hingston’s predecessor, Aldis Bernard, argued that the $600,000 needed for better drainage was but “a feather” in the balance



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 209

against the character and interests of the city and the health and lives of its people. Sanitarians justified the forced modernization project with barrages of statistics. There was no small debate on the facts: the Montreal Sanitary Association had to dissolve itself in 1871 after its early statistics were debunked, while ventilation schemes invariably pitted enthusiasts against one another. Nonetheless, the sanitarians did force spending upwards by invoking the threat of disease.80 Demand for sanitary investment that improved property values as well as reduced death rates prompted large expenditures on waterworks and sewers. But taxes did not increase commensurately. The state’s inability to collect the necessary taxes signified a failure comparable to those mortality statistics: a double indictment of Montreal’s governance. And yet to cut off the water supply of households in arrears threatened their health. Was it more important to provide water or to use water as a political educator? The two great modernizing projects directly collided. The bylaw imposing compulsory water taxes on any house with access to the mains provoked heart-wrenching pleas of poverty and inability to pay. The satirical journal Le Canard was still in its first month of publication, in October 1877, when it noted “sinister figures of men” cutting off water in houses of needy taxpayers, while ignoring arrears amongst the better off. “Suffer, poor people!” it sighed. Another cartoon in December showed the mayor with bags of money, the biggest among them labelled as water tax.81 The more effectively an expanding and improving administration of tax collection managed to tax the population, the more it intruded on standards of living and, consequently, the more the public sought reassurance of social solidarity. Any genuinely responsive government could not ignore such complaints, and no court of revision could provide what must be political discretion. Notwithstanding demands that there be no exemptions whatsoever and that the poor be supplied from public pumps, discretion was written into the bureaucracy in 1879 on the motion of Alderman Louis Allard, whose brother was a tax assessor for the city. Allard moved and the city resolved to “give water free to poor families in certain cases and under certain conditions,” namely, “in cases of extreme poverty and sickness.”82 But how to operate discretion bureaucratically? The Finance Department, from the lowly collector to the all-powerful chair of the Finance Committee, continually heard pleas for reductions and continually responded that no discretion was possible outside the courts. Only by saying “we have no discretion,” could a clientelist government tax the wealthy. Now that discretion was in play, how would it operate? Who would exercise it? Certainly not an assessor or

210

Reconstructing Fiscal Federalism

collector – that would haul the whole system into disrepute. How would poverty be identified? Would the city behave like a charity and reject the undeserving or would mere necessity trigger the intervention? Must poverty be excruciating or would it encompass the many modestly propertied people who had trouble with their tax bills from time to time? A new political logic was being elaborated around the interplay of law, discretion, and poverty. In the aftermath of the corvée victory, that logic began to be forced out of quiet negotiations and into the open. The water tax was graduated so as to put the burden of payment upon the propertied. But progressivity was nominal: Michèle Dagenais calculates that it represented 16.6 per cent of an annual rent of $30 and 5.4 per cent of an annual rent of $1,000 in 1860.83 Discounts for lump-sum payments increased the regression. Both incidence and administration worked against the poor. In 1886, stinging from the battles around the corvée, city councillors recognized that the water tax was indefensible and reformed it. The Water Committee and the Finance Committee met together to draw up a new scale of differential taxation: houses valued at less than $120 would be allowed to pay semi-annually rather than annually and earn a discount for themselves; rates would remain unchanged for those with rental values above $120. The old charitable relief was reaffirmed: “It is understood that the water is not to be turned off in cases of extreme poverty reported on favourably by the Health authorities.” Sanitarianism also yielded tax exemptions for water closets in all dwelling houses assessed below $150 on a yearly rental.84 Such concessions enabled the city treasurer, Charles Robb, to claim that the water tax was progressive, even benevolent. How to disprove him? How to prove that the water tax was regressive? In the face of the city’s arguments, the fiscal reformers had to do something quite new: formulate a working definition of poverty. They had taken a principled stand in favour of the poor during the poll tax debates. But to move from principles to practices of progressive taxation, they had to develop empirical criteria by which to define poverty. No such empirical criteria existed readily to hand. Liberals and radicals were far too polarized around the moral and economic causes and constituents of poverty. But by lowering their sights from an indictment of liberal political economy to an indictment of regressive taxation, it seemed possible to win the battle for public opinion, as done with the poll tax. Rather than define poverty in absolute terms, they needed only to measure its comparative incidence in relation to taxation. Fiscal records provided the necessary tools: taxes could be compared to property and rental values in conclusive ways that even the most liberal pundit must recognize.



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 211

The fiscal reformers carried out the struggle on a number of fronts. One was a Royal Commission on the Relations of Labour and Capital, created by John A. Macdonald in 1886 as a concession to that moment of ­working-class political disruption.85 Though intended to serve as a sop, it became an important moment in collective consciousness. Shocking revelations of dreadful working conditions in Montreal factories debunked claims of paternalism in the workplace. Other testimony debunked civic paternalism. Rents were rising in the 1880s, and the consequence was stress on working-class households, forcing overcrowding and eviction. Everywhere, people debated rising rents and pressures: was this a new Malthusian demographic threat or a problem of predatory landlords? Because Montreal indexed its taxes to rising rents, the two problems dovetailed. People were not really shocked to learn that landlords raised rents whenever they could, but they were shocked to learn that city assessors made things worse by increasing taxes on tenants but not landlords in such circumstances. For example, a house on de Salaberry Street in St Mary Ward was valued at $9,000 in 1882 and again in 1887, leaving property taxes stationary. But the rents increased by several hundred dollars during that time as did the water taxes, calculated as a percentage of the rents. The more predatory the landlord, the more the city stood to benefit. Jules Helbronner was on the Royal Commission and fully exposed the problem, closely interrogating city officials on these points. Why did the sumptuous Stephens mansion on Dorchester Street with an evaluation of $75,000 pay only $83.75 in water tax, when rear tenements on St Mathieu Street paid $23? (See figure 5.1.) No doubt, Harrison Stephens’s long history of legal intimidation shaped such an outcome, but this was discretion run amok. Helbronner forced the questioning repeatedly towards the inequities of the water tax. Didn’t Montreal workingmen complain in droves and collectively demand inquiry into the matter? Weren’t water rates rising as a matter of policy, and disproportionately to property values? The assessors insisted that they responded to complaints fulsomely and complaints were down, rather than up. Assessors were not biased but “perfectly independent of any other body, and they rather favor the working classes, and are disposed to be lenient with them than otherwise.” But they had no answer when Helbronner pointed out that collectors were collecting more than the maximum permissible rates from subtenants. Testimony from Arthur Short, the editor of The Canadian Workman, reiterated the evidence showing “great injustice” of the water tax’s upward redistribution, by taxing poor properties at a higher rate than expensive ones and by spending that money on improvements to benefit

212

Reconstructing Fiscal Federalism

Figure 5.1  “Homestead.” The sumptuous mansion and orchard on Dorchester Street in Montreal belonged to Harrison Stephens, and later George Washington Stephens. (Image courtesy of the McCord Museum, view-15338.0)

the expensive properties. He estimated the city had profited from its water tax by $1.3 million over the previous twenty years.86 Helbronner undermined lofty claims of fairness with concrete examples to prove that discretion in Montreal served the rich not the poor. This was not a surprise: millionaires, of course, had more to gain from discretion on the part of tax officers. Assessors often provided lowball assessments so as to limit legal challenges. Angus McIntyre, a reputed “Canadian Napoleon of finance” and one of the five richest men in Canada, offered to sell his mansion on Mount Royal for $300,000, well below its $400,000 assessed value – let alone the $1-million that the assessor confidentially declared it really worth at market values.87 Assessments were intrinsically subjective, resting on a host of complicated factors that left them open to endless challenge. There could be no objective measure of either wealth or poverty through the records and assessments of the tax office. But there could be relative measures. It was Helbronner who realized and insisted that a relative measure of poverty was more than adequate for political purposes. Once you accepted that lower standard of factuality, it became possible to get unassailable facts



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 213

before the public. Every descent to particularity hammered the lesson home, as in the following exchange, regarding that $9,000 house on de Salaberry Street, with its four homes on the street and another eleven in rear tenements. Q. – Did not the water rates rise from $91.00 to $109.50 during those six years, or equal to an increase of twenty per cent? A. – Yes; from $91.25 to $109.50 for water tax, if this statement is correct. Q. – Is [it] not a fact, that out of fifteen tenements, situated on this property, the water rates were increased in fourteen cases and not increased in two tenements, one of which was occupied by the proprietor himself? A. – The proprietor does not seem to have been increased here. Q. – But the tenants were? A. – Yes. Q. – Will you explain how that is? A. – No; I do not know.88 Another commissioner intervened at that point to redirect the questioning and to elicit the assessor’s opinion, at a vague and general level, that the rich man probably paid more water tax proportionally than the poor. Nonetheless, Helbronner had incontestably proved that the water tax was regressive and unfair. The testimony given before the Royal Commission was widely publicized. The Montreal Herald, the voice of liberal businessmen, carefully reproduced Helbronner’s table of annual water rates for the de Salaberry houses.89 Other testimony revealed just how brutally the tax was executed. A witness in the Water Department, during a long interrogation mostly carried out by Helbronner, admitted: yes, we do cut off water where the water tax is not paid; yes, we then seize and sell the effects of people for water they did not use. He thought that about 400 families had been deprived of water the previous autumn. Yes, there were considerable arrears each year, and when Helbronner asked whether “almost the total of this loss is due to poverty, is it not?” the answer was that “almost the whole of this loss is to be traced to the poverty of the parties.”90 Further questioning revealed that, yes, the policy did apply to indoor water closets, which were cut off along with the rest of the water. The policy forced poor tenants back to the outdoor privies that sanitary inspectors were trying to obliterate. Helbronner laid the groundwork when he questioned the city’s health officer, Louis Laberge, on the relationship between the sanitary condition of dwellings, mortality rates, and the water tax. Having established a high death rate in Montreal, Helbronner then asked:

214

Reconstructing Fiscal Federalism

Are you not of [the] opinion that this high death-rate is partly due to the bad hygienic condition of the houses? A. – It is very hard to answer that question – perhaps the hardest of all points to unravel. Experts are making researches into the causes of this mortality, but there is no doubt that the defective state of the dwellings should be reckoned for a percentage. I hold that the poverty of the working classes and their large number of children are perhaps the two leading causes of this death rate. Laberge had good reason to speak tentatively. The exchange recalled vociferous British arguments half a century earlier as to whether poverty or hygiene was to blame for high mortality rates.91 Those bruising debates had shattered professional pretensions to objectivity. Laberge also deflected the more direct question that followed: he refused to declare mortality higher “among those who get small wages” because he had no “special figures on the point.” But if he was reluctant to indict poverty, Laberge did not hesitate to indict the city’s policy of cutting off water to the poor. Yes, Laberge answered, the city had abolished its tax on water closets; yes, proximity of privies to houses might indeed be one of the principal causes of mortality among children. Yes, water was cut off when rates were not paid. Yes, it was carried out on a “pretty large scale, but this extreme measure is evaded by authority given the medical officer to remit the water in cases of poverty. I think we have remitted the water in twelve or fifteen hundred cases.” Asked the sanitary result of suppressing water, Laberge described it as “very disastrous.” Helbronner had an ally in Laberge, whose annual reports on the sanitary condition of Montreal through this period consistently recommended that water, far from being cut off for the poor, should be supplied cheaply and perhaps gratuitously. But Laberge fought tenaciously to focus his efforts on health rather than poverty. The Board of Health was the civic body tasked with investigating claims for relief of water tax on grounds of poverty. Laberge repeatedly tried to shift that responsibility to other civic bodies on grounds that the Board of Health was incompetent to recognize poverty. “It is a source of great labor and inconvenience to our Department; in fact, how competent soever we may be in cases of illness, we possesses [sic] no means of ascertaining with certainty the financial position of those who claim exemption from their water rates on the ground of poverty. The information obtainable by us has no importance whatever, for it is entirely derived from either the friends, relations or neighbors of the applicants.”92 Poverty was a huge no-go area for Laberge,



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 215

who knew all too well that it could endanger his professional credibility. There was no credible science of poverty and that absence was beginning to be felt. “Scientific” charity was beginning to emerge with the Charity Organization Society (cos), founded in London in 1869 (and coming to Montreal only in 1900),93 which recommended home visits and co-­ operation amongst charitable organizations, but the cos-style critique of unscientific relief as a cause of pauperism was already undermining the older traditions of civic provision for the poor. The 1880s were a liminal period as old ways of recognizing and administering poverty failed and new ways were just beginning to take shape. Where Laberge feared to straddle that divide, Helbronner sought to leap across it. In its conclusions, published in 1889, the Royal Commission was no more able than Laberge to identify poverty. But it could and did identify predatory municipal taxation: “In some cities, if not in all, the houses of the comparatively poor are, in proportion to their value, more highly taxed for municipal purposes than those of wealthy people. This is unjust. The poor man is justified in asking that he be no more highly taxed in proportion to his means than his more fortunate neighbor.” Statistical evidence for those conclusions was provided in full, drawn from Montreal’s tax records. Between 1876 and 1886, the value of real estate diminished but the value of rents increased; the revenue from business and real estate taxes declined but the revenue from water rates increased94 (see table 5.2). The city profited from and exacerbated the rise in rents and inflated taxes on the poor in the process. Helbronner’s tables created a new kind of evidence situated at the convergence of state and society. The state could disavow any control of the “iron law” of subsistence that caused poverty. But by taxing the poor disproportionately and by threatening their lives and property in the process, the state made itself an easier political target than vague and impersonal market forces. There was nothing vague about the evidence: inequality could, it appeared, be very precisely measured. Equality was a second-order concept, one that emerged from the empirical discovery of inequality, an inequality carefully identified, measured, and reinforced by the state. It is not easy to construct a fact; they exist only in social networks. Thomas Kuhn explained the process in terms of scholarly paradigms taught in textbooks and experiences. Doctors had social networks formed in medical schools, designed to ground those networks in shared facts and values – and still they disagreed intensely around basic principles and practices. A popular moral economy was a social network as well, with its own empirical content, its own commonly understood truths.

216

Reconstructing Fiscal Federalism

Table 5.2  Recapitulative table of assessments and taxes in Montreal, 1876 and 1886. Preceded by more detailed tables, this recapitulation of the findings is accompanied by textual remarks deploring the “remarkable” and “strange results.” Property and rents increased in value, but taxes on both property and business declined, while water taxes (which hit poor tenants disproportionately) rose. 1876 Real estate valuation Rental valuation Real estate taxes Business taxes Water tax

$81,208,215 $4,451,927 $974,498 $209,304 $355,139

1886 $74,309,637 $4,929,660* $891,715* $198,631 $404,146

Diminution

Increase

$6,898,578 $477,733 $82,783 $10,673 $49,007

Source: Report of the Royal Commission on the Relations of Labor and Capital in Canada (Ottawa: Queen’s Printer, 1889), 33. *Transposition errors corrected.

Helbronner was struggling to effect a convergence between print culture and popular culture, to construct a regime of facts as well established as anything the doctors could produce. These were not the kind of narrow facts beginning to emerge from highly artificial laboratory conditions for uncertain application in a complex and messy environment. They were, rather, social facts – observations that expressed real-world social and economic relationships and trends.95 If the state and the public could be made to agree that these particular examples were unfair and, as such, an indictment of fiscal policies, they could serve as the beginnings of a bottom-up reconstruction of the mandate of government. Modern, postliberal governance began in Canada not when people started to ask whether the state should redistribute wealth from rich to poor. It began when they started to ask whether the state should continue to redistribute wealth from poor to rich. In the late 1880s, Montrealers posed that question in rigorous, forthright, and fully politicized terms, and they brought it before the country as a whole. The new ideas upended traditional ratepayer politics but were also pitched as a logical extension of ratepayer politics. All those patrician and populist arguments that claimed to represent poor taxpayers now bore fruit. The poor began to make their own demands as taxpayers. The water tax, because it pressed harshly and intimately on ordinary people, worked to politicize them around this issue. In the process it redefined the politics of property. The water tax turned the poor into ratepayers and gave them the kind of vested interest in the security of their own property that had always driven liberal politics in Canada. Working families were always vulnerable during economic downturns, seasonal unemployment,



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 217

or family illness that threatened to drive even skilled artisans into desperate circumstances. Their property was vulnerable to seizure by bailiffs for unpaid water taxes. And warrants for seizure were issued in staggering numbers, into the tens of thousands in a bad year. Montreal, Helbronner observed, was a paradise for bailiffs. More than just the water tax kept them busy. Montreal employers enjoyed more rights to garnish wages, and did garnish more wages in absolute terms than in much larger cities like London and Paris. But there was something much more sinister about a municipal state – the authority that was supposed to protect the poor from starvation – using its powers to force an exorbitantly priced good on those poor, and then, when they couldn’t pay for it, depriving them of their scant possessions and their political agency. It was one thing for the supposed “iron law” of the marketplace to drive people to the wall; it was quite another for the state, that artifact par excellence of considered human agency, to do so. Helbronner’s facts were modest and local, but they sufficed to indict the existing regime of tax collection, whether you saw it as governed by impersonal bureaucracy or personal discretion. Both those classic choices were discredited; there was need of something else that could stand up to close scrutiny. Property and life were both threatened by the water tax regime, and Helbronner yoked the water tax revolt to the public health movement. But if doctors were occasional allies, they were not reliable ones. Some shared Laberge’s reticence; others took a more aggressively liberal view. In 1891, the Gazette Médicale urged that water should flow for the very poorest, while advocating small, regular payments to overcome the improvidence that was really to blame for accumulated arrears.96 A cosmopolitan intellectual, Helbronner rose to the task of browbeating the clearly reluctant city physician to prove that infant mortality indicted poverty and bad governance, not parents. Most people could not make political capital of infant mortality, of death and grief, in the same way. Moreover, public health officials, like tax officials, served the interests of proprietors rather than tenants. Sanitarianism in Montreal was encouraged when it improved property values and checked when it did not. Aldermen continually negotiated that fit. In July 1879, for example, the aldermen discussed whether or not to continue a program of vaccinations through the summer months. Alderman Donovan favoured cutbacks: “The only object of it was to find employment for young medical men who had nothing else to do.” He went on to raise another concern: the humid atmosphere arising from grates on the road between his home and his place of business that required some chemical or lime to be thrown

218

Reconstructing Fiscal Federalism

down. After all, he pointed out, children played nearby. Donovan’s version of public health was valuable when it improved property values; other kinds of public health expenditures were much less urgent. Another speaker that day, a “Doctor Godfrey,” commanded authority not as a medical expert but as a ratepayer when he denounced wrong-headed ventilation schemes: “I speak feelingly as a property owner. I would not object to the money being spent if we could get value for money.”97 Not content with cutbacks, Alderman Allard demanded complete abolition of the health department. He described an incident on Monique Street (a street now erased by Place Ville Marie), whereby a tenant who wanted to break a five-year lease called in the health inspector. The inspector identified a foul smell, which the tenant took as confirmation of his right to leave. The infuriated landlord “took Mr Lowe of the Road Committee, and a number of scientific men, and they s m e l l e d an d s melled as hard as they could and stated the house did not smell.” Allard expostulated: “We have two officers of the same Corporation giving contradictory opinions, and the result is the public will have to pay. I want to know whether this Committee has the power to condemn any building, and whether any official has a right to go into rented houses and scare away the tenants.” The aldermen called in the inspector, J.C. Radford, for questioning. His testimony showed clear understanding of the constraints of his office: “I never say anything if I can possibly avoid it. The tenant came to the office and asked for a certificate. I saw clearly what he wanted, and declined to give him anything of the kind. I did point out to Mr Fortin that the water in the cellar must be removed. The tenant has had no document whatever. It is not true that tenants are ever scared away by me.” Alderman Mooney defended the officer’s duty as to make correct report, damaging or not, but Allard was unmoved.98 Health-minded reformers might speak for the broader public, but they spoke through the rules dictated by property. The outcome of complaints about nuisances to health reflected the influence of the complainer rather than the merit of the case. Inspectors could not sustain charges against landlords for unhealthy premises because tenants said what landlords told them to say, according to one inspector: “If the Sanitary Inspector condemns the place as unwholesome, the landlord will bring the tenants down to court and they will testify that it has never been any nuisance to them so the case falls to the ground.”99 Death and disease were not a strong foundation for political demands in Montreal. The landlords on city council continually invoked the rule of



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 219

property to trump the faltering demands of sanitary science. An argument from the rights of the taxpayer offered a better foothold on municipal politics. The tax affected the poor people of the city universally and intimately, in ways that screamed unfairness. It offered a point of convergence between popular experience and political consciousness, one strategically aimed at the interface between municipal state and citizen. It reconstructed that interface by insisting on its socially constructed nature. The discovery of “the social” has been described as emerging from the cholera epidemics of the early nineteenth century, as a space of consequential interaction between the public and private spheres. In the eighteenth century, references to “social” influences reflected interest in representing interpersonal relations like courtship. It was during the 1830s that the word became linked, instead, with “social problems” such as cholera and pauperism, which were increasingly reconceived as problems of “poor families,” caused by inadequate socialization.100 The emergence of social reasoning and social sciences undermined classic liberal politics by insisting on the deeper constituents of political identities. The discovery of “the social” was, for activists like Helbronner, a program for the democratization of public life. It leaned on the emergence of statistics – state bookkeeping – for a rich exploration of social and economic relationships. Helbronner honed his sociological credentials by visiting the Paris International Exposition of 1889 and writing a report, commissioned by federal secretary of state J.-A. Chapleau, on its social economy section. The section reflected research by Frédéric Le Play, a professor at the École des Mines de Paris and mining inspector who investigated living conditions and budgets of working-class families around France and whose work was frequently featured in Helbronner’s columns. The Exposition became an important moment for French sociology. It led progressive businessmen and politicians to form a research institute, “Musée sociale,” to perpetuate the section’s success by investigating “the social question.” Helbronner’s report on the social economy section was a far-ranging investigation into the problems of industrialization, but he displayed particular interest in comparative urban mortality rates and insalubrity. The worst enemies of social peace, he concluded in his report, were crowded, unhealthy tenements and alcoholism.101 Accounts of the Exposition and its social economy section appeared in Canadian newspapers and were aired at the Société d’économie sociale, which met at the house of Alphonse Desjardins, the future founder of the caisses populaires, to discuss how to improve the condition of workingmen. In 1890,

220

Reconstructing Fiscal Federalism

it decided to undertake a statistical investigation into the condition and hygiene of working-class households in Montreal, but Pierre Trepanier observes that the study seems not to have gone ahead.102 Helbronner’s experiences in Paris strengthened his local campaign. Melanie Méthot counts fifty-one columns on the water tax over the ten years Helbronner published his column – twenty-two times in 1891 alone ­– and she argues that he provoked the Montreal Trades and Labor Council (mtlc) to take up his cause. Every year, the mtlc petitioned the city in protest against water rates.103 The Knights of Labor held their national congress in Montreal in 1889, lending impetus to the local associations’ struggles. At that congress, Montreal blacksmith William Darlington denounced religious tax exemptions: “There were nearly nineteen millions of property exempted in the city of Montreal. This was a burning shame because poor, honest labour, no matter how poor, had to pay the last cent.”104 (The congress also approved arguments in favour of Henry George’s single tax, but Helbronner rejected the single-tax movement from the start, and Montrealers generally shared in that rejection.105) In May 1890, the Finance Committee met the petitioners in an exchange of statistics. The city auditor insisted that water tax surpluses were much lower than the mtlc claimed: around $414,000 over the previous five years, a sum that began modestly in 1885 at $7,814, rising to $151,366 in 1889. Faced with Helbronner’s evidence of discrepancies, Mayor Grenier admitted mistakes by assessors and recommended a reduction for the poor (this was the same week he lowered taxes on ice-cream sellers), but he also defended the city’s right to generate a surplus from water taxes.106 Dissatisfied with this response, Helbronner and the mtlc took their complaints to the courts and the press. The mtlc complained to the courts that the water tax was unjust, unreasonable, oppressive, cruel, and inhuman. It taxed the rich at 7½ per cent and the poor at 9 per cent. By shutting off the water, the city caused disease and suffering. It cut off water indiscriminately for lack of special connections to individual households. And in paying what amounted to two-thirds of the water tax, the poor were not just paying for their own water supply but also subsidizing the use of water throughout the city, such as in cleaning streets, watering public squares, or putting out fires, most of it dispensed in quarters far removed from them. It was, according to the petition, “simply disgraceful” that the water accounts showed a $200,000 surplus extracted from the poor and spent on benefits to the rich and propertied classes. The courts refused to hear the complaint and dismissed a legal suit filed on behalf of mtlc president Urbain Lafontaine, but the public and press



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 221

were all ears. Accordingly, Helbronner fired off a series of letters to English and French papers reiterating the complaint that, quite apart from the hard-heartedness and brutality, the effect of the water tax was to transfer money from the poor to the rich. The city was making a surplus in its water accounts. Not only were the poor subsidizing the water use of rich households and businesses, they were actually subsidizing general city spending. Rising water rates were compensating for declining property taxes.107 Not so, exclaimed city treasurer Charles Robb in a published response: “A more unwarranted cry than that the Montreal water tariff discriminates against poor for rich was never made. Facts are opposite.” Only in Montreal, Robb argued, was the occupant of a thousand-dollar house made to pay seven times the amount as the tenant of a hundred-dollar house. He admitted that water rates were higher than elsewhere, but ratepayers benefitted from the low assessments. Yes, water taxes were transferred to general accounts, but the city was using general funds to pay off the waterworks. Robb closed his letter with a personal appeal to readers to pay their water taxes and ignore incitements to withhold. All citizens shared “identical” interests because “‘The City’ means yourselves and other citizens in your corporate capacity.” Helbronner’s response was so packed with evidence that it took up two long letters. First, he denounced the brutality of the tax, a brutality that contravened the city’s charter. This year, no less than previous years, Robb had “sent bailiffs to the poorer quarters, and as during the day time there are but women and children at their homes, they frightened these people, threatening to turn off their water if they did not make immediate payment.” Helbronner noted that, in cases where multiple households were supplied by a single water pipe, the city made proprietors liable – and yet it was tenants who were persecuted. “The tenants of these properties are the poorest in the city, and those who cause the greatest loss to the water revenue. Why does not Mr Robb, who recalls the Board of Health to the strict letter of the rules, call on the superintendent of the aqueduct to enforce these sections of the charter, and thus protect these people who, although poor, have rights deserving of consideration.” Perusing the records of the Water Committee, he found some heart-rending cases: 430. $7.75. Husband sick; asks delay. Report – Three on the same branch; nothing to be done in this case. Refused. 421. $7.25. Wishes to pay $2, and the balance by instalments. Report – Six on the same branch; nothing can be done. Refused.

222

Reconstructing Fiscal Federalism

561. Water shut off; sick child. Report – Eleven on the same branch; nothing can be done. Refused. 566. Sick and very poor. Report – Water shut off; four on the same branch: nothing can be done. Refused. 000. Said to be very poor, water shut off. Report – Six on the same branch; nothing can be done. Refused. Second, Helbronner insisted on the economic unfairness of the tax. He rejected the “actual financial system” that handed so much money to the banks to service debt, and with the mt l c, he demanded the “amelioration of the financial system,” which was to say “the imposition of taxes by just repartition.” In defending high water taxes, argued Helbronner, “Mr Robb maintains the city’s right to make an unlimited profit. I deny that right. If the city had such a right it would also have the right to collect from the householders, under the form of a water tax, all the revenue necessary for the city. That would be the theory of the ‘single tax’ applied another way.” The state had no right to impose taxes that yielded a profit, he argued, likening such a tax to the gabelle, the kind of ancien-régime tyranny that provoked the French Revolution. Taxes for services were self-limiting; they were tyranny when they seized effects in pursuit of profit. If the city did have a right to confiscatory, profit-driven taxes, why not apply them when taxing proprietors for special assessments? It was hard to imagine such a claim surviving appeal to the j cp c. All the while, through 1890 and into 1891, heart-rending letters, many of them in broken English or French, descended upon civic officials across the island of Montreal, begging relief from water rates. Those that survive from the industrial suburb of Ste-Cunégonde – among them, Goldstein’s cri de coeur included in the introduction of this book – testify to the terrible difficulties of bereaved families or those out of work. Dame Veuve Joseph Lajeunesse: “Je vous prie de vouloir bien avoir pitié d’une pauvre veuve qui a tant les troubles pour elevé ses enfants et epuisé de santé en voulant bien m’attendre au mois prochain pour payez mes taxe d’eau. Je vous serez très reconnaissante si vous voulez bien m’accorder cette faveur” [I beg you take pity on a poor widow struggling to raise her children and broken in health and give me a month’s grace for the water tax I would be very grateful for the favour]. Joseph Couture: “J’ai payé mon eau et je vous demand si vous voulez avoir le bonté de m’exempter de payé les frais. Je ne travaille pas et j’ai passé l’hiver sans travaille. Vous me renderiez un très grand service en m’exemptant de payé ces frais” [I paid my water tax and ask you kindly to exempt me from paying the legal costs. I am not working



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 223

and did not work all winter you would render me great service in exempting me from paying the fees]. Some correspondents, summoned to court to pay their arrears, then had to pay costs as well, and begged relief from those costs. Mrs Jos. Simard, on finding “that I have to pay $1 dollar for costs, which I am unable to do, it was with difficulty that I made the necessary sum for I had no money coming in all winter. I now ask you if you will kindly remit me the costs.” Jos Bernard: “Après avoir été poursuivis pour mon eau; j’ai été la payée, mais il y a encore des frais que je ne puis soldis et pour lesquels je prie instamment votre Honorable Conseil de vouloir bien m’exempter car vous savez tous que je ne suis pas riche” [I received a summons for my water tax and paid it, but there remain legal costs that I cannot pay and for which I beg the Honourable Council for exemption, because you know that I am not rich]. Edmond Paquin: “Je suis bien peiné de voir que je ne suis pas capable de cettlé avec vous à l’égard de’une piastre que je vous doit pour l’eau mais si vous voulez bien avoir la bonté de nous attendre à March prochain je vous paisez certain. Je vais vous dire la raison on est dans la mortellité ja ma soeur qui est morte hier et le démenagement va beaucoup nous déranger” [I am regretfully unable to settle with you for the one dollar I owe you for water but if you will kindly wait until next March I will certainly pay you. I will tell you why: we are in death, my sister died yesterday and moving house will cause disarray]. The letters continued through the year: Dame Veuve Villeneuve: “Je vous ecrit cest quelque mot pour vous demander si vous voules êtes assez bon pour me donner l’eau. Je suis seulle pour gagné ma vie avec mes deux enfant je me sent pas capables de payer” [I write to ask if you will kindly give me the water. I am raising two children alone and am incapable of paying]. Dame Veuve O. Desmarais: “Ne repoussez pas la prière de trois jeunes orphelins et d’une pauvre veuve leur mère qui gagne péniblement sa vie et celle de ses trois enfants ne peuvant subvenir à tous les besoins de ma famille avec mon travail. Je m’adresse à vous Messieurs avec l’espoir que vous me donnerez mon eau gratuitement l’eau m’étant fermé pour cause de non-paiement je manque d’eau depuis trois jours ce qui est bien dur car l’eau c’est la vie. Je n’ai aucun espoir pour vous payer mes enfants étant encore trop jeunes pour travailler mais je vous promets que s’il ya possibilité je ferai en sorte pour vous payer dans le cours de l’été prochain” [Do not reject the prayers of three young orphans and their widowed mother who painfully earns a living that cannot meet the demands of my family. I address myself to you, Sirs, hoping you will give me the water. It was turned off three days ago for nonpayment, which is very hard because water is life. I cannot hope to pay you, my children are too young to work,

224

Reconstructing Fiscal Federalism

but I promise that if I can I will pay you next summer]. Mme Veuve J Baptiste Caron, St Henri: “Je me recommende à vous pour avoir mon eau gratis. Je suis bien pauvre et je suis veuve. Je n’ai pas d’autre soutien que mes mains pour gagner un peu d’argent pour me nourir. Comme vous voyez que c’est presque impossible pour moi de payer l’eau” [I request free water from you. I am poor and a widow. I have only my hands to earn a little money to feed myself. As you see it is almost impossible for me to pay for water]. Dame Veuve Blais: “Mons les conseiller j’ai une grâce a vous demander si vous serez asser fin pour me donner la’lierage de mon eau. J’ai été malade et je me trouve sent ouvrage et mon peutie jarçon a manquer l’ouvrage et vus que le tem est bien dure a la vielle de prendre l’hiver je suis bien pauvre et jaies faire que vous auré pitier de moies” [Councillors, I beg a favour of you, to be kind enough to leave me my water. I was sick, and am without work, with a small boy, and the weather is hard on the eve of winter. I am very poor and ask you to have pity on me]. Dame Pierre Loiseau: “je soussignée veuve avec quatre petits enfants a de la peine à vivre, c’est la raison pour laquelle je desiererais que votre honorable Conseil me ferait la remise de l’eau que je doit à la ville Ste Cunégonde” [I, undersigned widow with four small children, find it difficult to subsist, and for that reason I hope your honourable Council will grant me the remission of water tax that I owe to the town Ste Cunégonde].108 The sums involved were tiny – too tiny to drive anyone into poverty, but for people already in poverty, they were bitterly painful exactions. Because the sums were so small, owing on such a vital commodity, civic officials must have been hard-hearted indeed to deny relief. But to accommodate such demands wholesale was to hollow out the foundations of ratepayer politics and the rule of property. In the public amplification of private suffering, in the conflation of the needs of the poor and the rights of the taxpayer, and in the evidence of statist unfairness, we can see the birth of a new social politics in Canada. Whatever the state’s mandate in regard to larger questions of political economy, it could not claim indifference to or ignorance of tax-induced suffering. It could not claim that such private intervention as charity could resolve the problem. If the local state wanted to tax the poor, as it assuredly did, it must undertake a calculus of that poverty so as to graduate its taxes appropriately. Its mechanisms of calculation and graduation remained laughably inadequate, but the principle of ability to pay was instantiated as policy. The dignity of the human being and the state demanded the change. The press kept the issue alive and politicians campaigned upon it into 1891. In late January, G.W. Stephens produced a long report to rebut the



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 225

claims of the mt l c . The surplus was smaller than they said, and the rich rather than the poor paid most of it. Still, he conceded, rates should and would be lowered for smaller households. The flurry of interest continued into the new administration, with resolutions to permit smaller, more frequent payments at distant wards rather than solely at city hall and with reforms to the rates following inquiry to discover exactly how much had been transferred in recent years. Committees were named, investigations were undertaken, numbers were crunched. But even as the city performed responsiveness, its officiate was, in usual ironic fashion, working hard in the opposite direction. The rate was adjusted but disqualification was upheld: arrears more than doubled, from $48,488 to $115,879, and the number of voters disenfranchised for unpaid water taxes rose from 10,646 to 15,708 out of a total electoral roll of 45,895. This was below the proportion disenfranchised in 1885 but still extraordinarily high. Arrears were undiminished a year later, when the city obtained over 19,000 writs of execution to distrain for arrears, “entailing all the horror of selling out the unfortunate debtors, of stopping their supply of water”109 (see figures 5.2 and 5.3). Stephens continued to agitate for a poll tax, businessmen to agitate against proposals to reform the property tax.110 The disenfranchised could fall back on their alternative mechanisms of political agency – the demonstration and the riot. But those mechanisms were waning. The Knights of Labor were on the decline across North America and so was popular violence, reflecting a new intolerance for non-state violence across the country. Indeed, popular violence in Montreal was so distinctively politicized that in 1893 the Montreal Daily Witness, hardly a supporter, complained even petty violence invariably prompted finger-wagging exclamations of “Riot in Montreal” and “It seems to be a fact that the uneducated among French-Canadians are as fanatical and excitable as they are unsophisticated.”111 Such culturally overdetermined claims played well in liberal reform circles. They were reinforced in 1891 when municipal misgovernance became small potatoes as all eyes were drawn to spectacular corruption scandals on the provincial and federal stage that brought down Honoré Mercier and Hector Langevin. The project of fiscal transfers to buy off Quebec’s political bosses was too openly displayed and the old tropes about primitive French Canadians resisting direct taxation and corrupting the nation were rehashed. The same tropes were put to work provincially to quell fiscal reforms that would increase taxes on Quebec corporations. In 1892, confronted with a new 1½ per cent tax on property transfers, real estate agents protested: “The unpopularity of this tax lies in the fact that the habitant has

$200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1880 1881 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900

Figure 5.2  Montreal water tax arrears, 1880–1900. Arrears increased in hard times, resulting in sheriff’s seizures and disenfranchisement. Source: Annual Reports of the Corporation of Montreal and William H. Atherton, Montreal, 1534–1914 (Montreal: S.H. Clarke, 1914). $2,500,000

2,000,000

1,500,000

1,000,000

500,000

0 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895

Water

Property

Business

Figure 5.3  Distribution of taxes in Montreal by sector, 1880–95. The water tax revolt did secure a modest reduction to the water tax and a corresponding increase in real estate taxes. Source: Annual Reports of the Corporation of Montreal and William H. Atherton, Montreal, 1534–1914 (Montreal: S.H. Clarke, 1914).



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 227

escaped scot free or nearly so. If the Government of Quebec had put even a very small tax on the man in the country we should not have felt so badly about it.” The same issue of the Witness not only noted the Real Estate Owners’ Association of Montreal’s criticisms of assessment practices but also had a letter from Robb to the Finance Committee urging against any reduction of the water tax, though he did recommend it be shifted to proprietors.112 In January 1894, the Toronto Daily Mail was sympathetic to complaints of excess provincial taxes by “the business men of the city” but saw the only solution as higher taxes on French Canadians that it hoped would turn clericalism into anticlericalism: “To tax the habitant is the only step left to save the provincial credit; and every intelligent man can see that that would be the signal for a general agitation in behalf of relief from the heavy material burdens of clericalism.”113 The Mail conflated anticlericalism with fiscal rationality and could not see the latter without evidence of the former. In the summer of 1894, even as the city successfully negotiated a new loan, it sought more tax revenue. Some – a “large body of citizens, principally real estate owners” – wanted to lift clerical exemptions; others wanted to raise water taxes to make the “poorer classes” pay their share. But, remarked the Toronto Star, whereas those groups could rebuff tax increases, the voteless and friendless Chinese population of Montreal could not, and so the city imposed a tax on Chinese laundries. Montreal, in short, responded to the racially charged fiscal crisis by taking a leaf from British Columbia’s book. The Star expressed “general disgust” at the manoeuvre, which the city fathers also extended to the equally “friendless” pawnbrokers, and predicted that the pawnbrokers would pass the tax on to their customers, while the Chinese laundrymen would shut up shop.114 At $50, the tax was severe enough that many, including the Chinese launderers, believed the aim was not revenue but exclusion, a belief confirmed when the city increased it to $100 in 1895. The laundrymen did not shut up shop; instead, they collectively refused to pay the tax. Montreal discovered what British Columbia had discovered: for all their vulnerability, the Chinese population was not easily bullied. The tax was lowered back to $50 and collection was not enforced; only twenty-five of about one hundred laundries paid up. But in 1896, the city officials renewed efforts to collect the higher tax. Ottawa passed a similar tax; Toronto debated the same amidst a rising anti-Chinese public sentiment as the Chinese were blamed for recent cases of smallpox in Montreal and Toronto. Montreal officials sued for the arrears, and in July 1897, 150 Chinese laundrymen were collectively sentenced to pay high fines or go to prison for one or two months. The prison could not accommodate

228

Reconstructing Fiscal Federalism

them, so a negotiated solution necessarily imposed itself.115 The to-andfro continued into the new century: the city archives contain a long, carefully argued petition, dated 1900 and bearing dozens of signatures in Chinese script and English, submitted against the $50 tax. The Chinese signatories argued that the laundry tax was unjust. They had already paid their head tax, thereby buying a right to work “peaceably and without impediment or molestation and upon a footing of equality with all other workmen, in every part of Canada,” a privilege that was “freely granted to every other foreigner, even to the African Negro.” It was also too high. The Chinese laundrymen were too poor to pay it and demanded reduction to $12. Instead, the city collected $20 per laundry, amounting to $5,723.15 for the two years 1899–1900.116 The sum hardly paid the city’s debts, but the racialized scapegoating deflected some small part of the broader fiscal tensions. Similar scapegoating was seen elsewhere, characterized by all the old accusations. In 1904, Saint John, New Brunswick, voted for a tax on Chinese laundries, on grounds that whereas the big, non-Chinese laundries “paid largely into the city in taxes and paid out big amounts to the people employed by them … with the Chinese it was different, for they took it home to China.”117 Across Canada, party-machine politicians and municipal reformers blamed one another for the sorry state of municipal finances. In ethnically diverse communities, those accusations took on ethnic overtones and, where they could, they scapegoated a racialized poor. Civic politicians and pundits blamed one another for either selfishness or corruption or both, and they interwove those arguments with wider debates about ethnicity, taxation, and citizenship. Montrealers drew upon such models, and the debates within Montreal took on transnational significance as evidence of hard-wired racialized characteristics said to reflect a population incompetent to govern itself in a fiscally disciplined way. In 1899, the Manitoba Free Press blamed Montreal’s “mammoth debt” on a surfeit of French-Canadian-ness: “The Anglo-Saxon desires solidity and caution; the Gallic mind is for grace and oratory and reckless expenditure. The majority are graceful but they do not understand civic economy.”118 Such arguments implied that sober political agency was exclusive to Anglo-Saxons. The work of historian Patrice Dutil debunks such notions.119 Focusing on the 1890s and afterwards, he identifies a progressive wing of French-Canadian liberals who fought Préfontaine and the other machine politicians, as well as the shady land deals and even shadier deals done with utilities companies. The “octopus of Montreal” and scourge of two generations of reformers, Montreal Light,



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 229

Heat and Power Company, received its infamously exploitative charter in 1901, under Mayor Préfontaine. In fact, there was a genuine fight for political accountability in Montreal, but the jeremiads against an infantilized French-Canadian public worked to weaken the reformers and to strengthen the hold of the corrupt bosses. Montrealers got only a small measure of fiscal reform. The more radical challenge was blocked by the alliance of propertied patricians and clerics that, Bruce Curtis and Jean-Marie Fecteau show more generally, checked popular statism in Quebec.120 The water tax continued to draw debate: in 1903, 31,270 households were in arrears on their water taxes. During the following election, the leading mayoral candidates were Hormidas Laporte and U.H. Dandurand, the former representing civic reform (Stephens campaigned beside him) and the latter representing party-machine politics. Well connected with Laurier Liberals, Dandurand also co-owned much of Rosemont, an industrial suburb, with Henry Holt of Montreal Light, Heat, and Power. Both men promised to reduce the water tax, Dandurand doing so on a populist platform that was unconvincing enough to lose him his deposit. In power, Laporte’s government decided the city could not afford fiscal reform after all. Still, the debates persisted. In 1907, when the aldermen debated a proposal to reduce the water tax on poor households from 7½ to 5 per cent, landed interests demanded universality of taxation. One alderman argued that “if reductions were to be made the factories should be included”; another, that all surplus came from the wealthy; another, that “hundreds of poor people paid nothing at all.” Corruption persisted, extensively unmasked in 1909 by the “Cannon Commission.”121 Of the annual revenues, which amounted to more than $5 million, it estimated 25 per cent was spent on bribes. Much of the remainder serviced the debt, leaving only scant sums for the actual running of the city. Under interrogation, Charles Robb admitted that the water tax was losing tens of thousands of dollars annually, and if it taxed proprietors rather than tenants, more money could be got and the one-third of citizens who lost their vote would get it back. The conclusion hardly squared with another of his observations: that special taxes levied on proprietors were more deeply in arrears. The report was seen to indict small fish and leave bigger, fatter ones alone. “The public has an innate sense of distributive justice and the public is astonished at so much respect being shown to the rapacious scoundrels who pocketed the largest graft and gulped the choicest morsels, while only the maws which fifty or one hundred dollars satisfied were compelled to disgorge.” That innate sense of justice remained frustrated as

230

Reconstructing Fiscal Federalism

the city slid towards receivership. By 1918, the city was in a crisis, one identified by New York’s Bureau of Municipal Research (invited to assess the situation) as due to its extraordinarily low taxes on real estate. The province suspended regular politics and put the city under administration, but that administration responded by raising water taxes considerably and property taxes only slightly, paving the way for the return of Médéric Martin’s party-machine politics. By contrast, just to the west of Montreal, McGill economist Stephen Leacock argued, Westmount was an honorary piece of Toronto: sober, honest, and well-governed, its financial reports as beautifully laid out as its gardens.122 But this was not simply a victory for the status quo and the corrupt elites. The common people of Montreal were at the forefront of a movement that took economic inequality seriously, enfranchised poverty as an interest, and forced the city to write social relations into property relations. Social questions were now irretrievably on the civic agenda and conservative hegemony must learn to incorporate them. The work of H.B. Ames exemplifies that change. Ames was a progressive businessman with leanings towards fiscal austerity and moral improvement. In 1889, he presided over a meeting of the Literary Society of the Montreal ymca and gave a paper entitled “Is the condition of the workingman improving?” that prompted the Society to conclude that it was indeed improving.123 But the water tax controversy seemed to contradict that conclusion. Sensing its importance, Ames clipped out and saved the exchange between Helbronner and Robb in an envelope in a scrapbook amidst other clippings devoted almost exclusively to provincial boodling. He realized that the fiscal question was a social question requiring empirical investigation. Ames was inspired to ask what poverty consisted of and how the poor lived. The result was his famous investigation into the conditions of the poor, The City Below the Hill, published in 1897. But Ames did not discover poverty; rather, a working-class anti-poverty movement forced the question upon him. His investigation was reactive and in many respects conservative: it looked for absolute rather than relative poverty. The more wretched the poverty, the more politically marginal it must be, and the more removed from ordinary ratepayer politics. There must be no such thing as respectable poverty, because there must be no alliance between respectability and poverty. Where Helbronner tried to direct social ­questions towards political radicalism, Ames tried to redirect them back to political liberalism, to the kind of ratepayer politics epitomized by G.W. Stephens, at whose side Ames campaigned. When Ames explained municipal governance in a public lecture to the ymca in 1895, he argued



Tax Revolt in Montreal in the 1880s: Fairness and Poverty 231

that Saint-Antoine Ward deserved extra votes, either on the basis of population (two-and-a-half times more than the average) or on the basis of its assessed property value (four times more).124 And when Ames entered city administration in 1898 and put his new-found expertise on poverty to work, he put it to the service of classically liberal ratepayer politics. Responsibility for adjudicating claims for relief from water taxes now fell upon the Water Committee, which Ames chaired. In one of his earliest decisions, he was asked by a Mrs King, of Renaud, King & Patterson (Montreal’s leading furniture vendors, with a five-storey emporium at Sainte-Catherine and Guy streets), to remit the water taxes of a family on Sainte-Catherine Street. Mrs King told Ames that the husband had been “only partially employed” over the winter and that the wife, despite suffering from defective eyesight, was “a very careful body and kept the house up by taking boarders” but found it “impossible to make both ends meet and pay the water tax.” The loss of water would drive out the lodgers, rendering her destitute. Ames responded that, because the family lived in a house worth $25 per month and their rent was fully paid up, “the city could not regard this as a case of extreme poverty, nor could the city be expected to protect the pride of persons who tried to keep up appearances and live beyond their station.” Four days later he did intervene to secure one month’s delay.125 Reformers like Ames and Stephens seemed to reflect the worst of both worlds: an unresponsive bureaucratic modernity built atop a wealthy, Anglo-Protestant ascendancy that Macdonald and Cartier were no longer around to restrain. Ames realized the importance of the new questions posed. The fact that the poor were disproportionately Catholic had always worked to turn the politics of wealth into a politics of identity. Now that process began to reverse. The interrogation of poverty forced an interrogation of property itself. Ames was trying to corral a radical movement to investigate the concrete and practical rather than the legal movement of property, this thing that ruled but remained as poorly known empirically as the movement of the heavens had once been. The parallel might be pushed slightly further. The scientific revolution occurred when practical, working forms of knowl­edge, traditionally too humble to interest university scholars, began to infuse academic science.126 Political liberalism was a lot like scholasticism: a system of abstract equivalences. Modernization, here too, required empirical content from the bottom up. The people of Montreal, led by the Knights of Labor, forced those experiences irrevocably into the public and political arena. They made poverty a national, political question. They reversed Macdonald’s banishment of it from federal politics,

232

Reconstructing Fiscal Federalism

and they used Macdonald’s favourite instrument of prevarication and obstruction, the royal commission, to do so. Above all, they demonstrated that unreformed tax regimes were upwardly redistributive. Montrealers faced entrenched institutional obstructions to tax reform. Rich, powerful, and lightly taxed patricians and clerics threw their weight behind municipal regimes that ruthlessly disenfranchised the poor – a broad and fluctuating swath of the population. Popular demands grounded in the traditions and politics of moral economy and discretion were easily aired in the liberal public sphere but less easily directed to its reconstruction. But these were consequential struggles. Admit “the fact of destitution,” the Spectator had said of the bread riots in the 1870s, and the state could not disregard them. Where the British state created a bureaucratic apparatus to identify and administer destitution, the Canadian state kept any such facts at bay until Helbronner began to force them into public recognition at the local and national level. Like many scientific constructs, poverty was better measured in its effects than in its identity. Those effects began to draw more attention and more response, especially in Montreal, where the public enjoyed a highly organized and visceral sense of the opposition between property and people, as well as powerful, longstanding traditions of direct political action that their political leaders dare not ignore. Montrealers learned to incorporate ideological elements of those powerful vested interests – that property should rule and that the poor had their claims upon the rich – and fused them with their own experiences into a powerful new platform amounting to a grassroots redefinition of the meaning of property and the rights of the poor. The labouring poor, too, had a direct, vested interest in and claim upon municipal government; they too suffered from abusive, corrupt governments. They could model their complaints on earlier liberal critiques of irresponsible, patrician government: neither their property nor their lives were adequately protected from unaccountable elites whose claims to represent their interests were growing less credible by the day. These new post-liberal politics found classic liberal politics a sturdy foundation for their claims, justified by a more searching, more empirically grounded understanding of how property worked. In the long run, this movement would transform Canadian politics by forcing it to address and redress poverty.

6 Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth

As the nineteenth century ended, the rule of property was everywhere under attack. Toronto did not lag behind Montreal in the construction of poverty as a social and political problem. But this was a very different fight, reflecting different relations of property and different tax laws. Toronto had more generalized prosperity that was more evenly distributed through the population. It had extremes of rich and poor, mansions and slums, and it, too, saw the rich get richer and the poor get poorer in the late Victorian era.1 Taxes on wealth should have risen proportionately with wealth, but they did not. The more that property turned itself into wealth, the harder it was to tax. Real estate could be taxed efficiently, but the “general property tax” (which included personal and business property – “personalty” and “business personalty” as well as income) was in free fall. But efforts to crack down on corporate wealth backfired when they prompted a corporate tax revolt. Corporations mounted legal challenges to the definition of property put forward by tax assessors and persuaded judges to side with them. Revenues tumbled, citizen protest mounted, and in 1898 Toronto found itself in a fiscal crisis. Amidst fierce debates about how to tax wealth, Ontarians replaced their municipal general property taxes with progressive income tax. The problems were not unique to Ontario. That province’s tax laws were modelled on American tax laws, alike designed for a context of abundant land and scarce money. They exempted money and taxed real and personal property, that is, physical and visible objects easily spotted by assessors. But from the 1870s and 1880s, core consensus eroded, and a stark paradox emerged: the more that a community prospered, the less it taxed that prosperity. In cities like New York, even as real estate taxes spiralled upwards, general property tax receipts plummeted, testifying to

234

Reconstructing Fiscal Federalism

massive evasion. And it does seem remarkably perverse that in a “gilded” age, given to gratuitously spectacular displays of wealth described by Thorstein Veblen as “conspicuous consumption,”2 those emblems of prosperity should be invisible to tax assessors. Authorities beefed up their coercive regimes but to remarkably little effect. So they began to contemplate far-reaching tax reforms. Some experts advocated abolishing the general property tax (largely eradicated in England two centuries earlier), but others warned that the American public would not relinquish the democratic demand for uniform taxation of all property. In fact, Robin Einhorn shows, the demand for uniformity was highly anti-democratic, originally a means for southern elites to ward off confiscatory taxation of slavery and subsequently used to quash new taxes on wealth.3 State legislatures, which in 1890 still took in 72 per cent of revenue from the general property tax, fought the battle to tax property in the United States.4 But in Canada, because provinces relied more on federal transfer payments and resource royalties for revenue, municipal governments waged the battle to tax property. All cities yearned for reliable and authoritative assessments, but Toronto seemed particularly to do so. In 1872, when the differences between individual assessors became too scandalously obvious, officials undertook an ambitious, one-off assessment by professional architects and engineers. “It being a general belief of a great number of our citizens that, after a few years under such system of assessment, no further assessment or valuation would be necessary, for the valuation and information would be so correct that it would last for years, and that the head of the Assessment Department could sit in his office, with two or three clerks, and annually assess the City.” They soon realized that such an outcome was “perfectly impossible” and that assessment must remain a costly and contested business.5 Tax exemptions, not just for churches but also for a substantial state presence, prompted fierce debate. County, provincial, and federal offices and salaries were all exempted from paying taxes. (See figure 6.1) Municipal governments – Ottawa’s above all – protested those exemptions but found few provincial or federal officials or judges disinterested enough to concur. Exemptions rose to the “almost incredible” sum of $8.6 million (7.5 per cent of all property) in 1876, a loss of $129,000 in revenue. By 1900, exemptions were at $25 million. But governments did not just exempt themselves; they created new kinds of quasi-public property that also garnered exemptions. Above all, railways, largely built under government guarantee in Canada, generated new kinds of public–private relations and new instruments of finance.

Figure 6.1  J.W. Bengough, “Sitting on the Poor Man; or, The Injustice of Exemptions” (Grip, 19 January 1878). The single tax was a producerist ideology: here the workingman is weighed down by exempt official and judicial “classes” as well as by the much weightier untaxed wealth of church properties. (Image courtesy of Thomas Fisher Rare Book Library, University of Toronto)

236

Reconstructing Fiscal Federalism

They were at the vanguard of a flight from taxation, seen in federal exemptions granted to the transcontinental railway builders and in local privileges for local railways. In Ontario, a key court ruling came in 1875, when the provincial Court of Appeal rejected Toronto’s attempts to tax the Toronto Street Railway Company’s easements, on grounds that they were not quite chattels and not quite real estate. The ruling applied broadly to comparable waterworks and gasworks laid over, on, or under public space. It took a huge bite from municipal tax bases, but the court argued that no “injustice” was done because authorities could tax the corporation’s capital stock instead. Indeed, the judges saw the danger of double taxation on both stock and material infrastructure as good grounds for the ruling: “A contrary decision would render the company liable to be taxed, not only upon its capital, but also upon the iron rails and other property in which that capital has been invested.”6 The Supreme Court of the United States had famously observed half a century earlier that “the power to tax involves the power to destroy,” and it was a power that courts in both Canada and the United States sought to restrain. That the danger was exaggerated was made clear in a report by the City of Toronto in 1876. The city could only tax corporate stock as income in the hands of individual stockholders, but the assessors had no power to access lists of stockholders, while the mobility of stocks and untaxable debt on those stocks together made such taxation “almost inoperative.”7 Petitions expressing a “deep and wide spread … sense of wrong” were brushed off federally but prompted a provincial legislative committee in 1878.8 It accomplished little but did show widespread tax evasion and avoidance. Toronto’s treasurer testified that the property tax reached only 10 per cent of property. Through the 1880s into the 1890s, general property tax paid a dwindling percentage of the total tax bill: from 18.5 per cent in 1872, it fell to 6 per cent in 1890. Taxes on real estate as a percentage of the whole rose from 67 per cent in 1872 to 78 per cent in 1890.9 The reallocation of the tax burden inflamed tempers across the city and called forth dramatic performances of responsiveness by mayors. But where Montreal’s mayors played up tax discretion, Toronto’s mayors and mayoral hopefuls played up full taxation. In January 1885, civic reformer J.J. Withrow denounced rival Alexander Manning’s suspiciously see-­ sawing tax assessments and insisted: “Everything that breathed had a right to be taxed.” Manning responded by reading aloud assessors’ reports on his properties and defending his reductions. He beat Withrow that year but was ousted the next by Howland, the protectionist manufacturer, who had a united workingmen’s movement behind him.10



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 237

That year, 1886, popular resentment around tax evasion exploded into fury. During the slow summer season, the Globe sent a reporter to the assessment office to look up the tax declarations of the city’s wealthiest citizens. Over several weeks, the newspaper printed column after column of occupations, names, and amounts declared for taxation. Everyone knew that the honour system was a leaky one, but suddenly they were confronted with proof of massive evasion. Here, for example, was a lawyer who had refused a judgeship for fear of losing an income that was, according to the tax records, well below a judge’s salary. There was the Massey Manufacturing Company declaring $8,000 of business property, for a company with a head office in Toronto and over $1 million in aggregate business. The scandal was reported across Ontario and beyond. The Globe interviewed smaller businessmen and ratepayers, soliciting expressions of resentment, such as that expressed by W.J. Randall, stationer: “The agitation instituted by the globe was now occupying everybody’s thoughts, and every person was talking about the taxation system. All were surprised at the disclosures made.” An editorial reflected that “the wealthy and well to do get off in many cases all but scot free, while the comparatively poor, with known fixed incomes, and with no means for ‘cooking’ and confusing, have to pay for themselves, and, to a very large extent, also for their astuter neighbours.”11 There were also many angry letters to the editors, including one from “Frequent Reader,” who decried the wealthy elite that hoarded and concealed its wealth. “O tempora, O mores! Is not such a revelation enough to arouse the spirit of socialism and communism amongst the masses?” The author, out of work due to ill health, was sinking slowly into debt, yet had paid $60 in taxes every year since he had bought his house, “although the house is mortgaged for two-thirds of its value – the owner of the mortgage probably paying no tax on it. If such be the case, what an injustice is here involved.” Such revelations threatened to “make me a Socialist and an Atheist, for if I cannot find in the Christian community in which I live the means of supporting myself and family, my conscience tells me that its laws have no right to compel me to the payment of taxes.”12 The Globe’s revelations aggravated social tensions at a sensitive moment. The Knights of Labor had taken the country by storm and were everywhere forcing labour issues into mainstream politics.13 When the Toronto Trades and Labor Council (founded in 1881) met in early August 1886, it reacted to the tax revelations, exclaiming that “great injustice has been and is being done to the laboring classes of this city.” It suspected either “fraud perpetuated on the part of the assessor or lying on

238

Reconstructing Fiscal Federalism

the part of the assessed.”14 Single taxers seconded the complaint. Political cartoonist and Georgeite J.W. Bengough affixed the labels “lies” and “liars at a premium” to a cartoon of a prosperous nose-thumbing businessman who watched a workingman struggle with the burden of income tax (see figure 6.2). It was possible to be both a Georgeite and a Knight, notwithstanding their differences on taxation of industry. In 1889, the national congress of Knights, meeting in Montreal, approved arguments in favour of land value taxation.15 Phillips Thompson, a Toronto-based labour journalist, was both a Knight and a single taxer. He met George in Ireland in 1881 (where Thompson was reporting on land issues for the Globe) and advocated the single tax in his 1887 book, The Politics of Labor. Thompson saw tax reform as a practical way to reconstruct the state from the inside. If the tariff could provide “incidental protection,” then land-value taxes could incidentally redistribute wealth. Revolutions were won by wooing people to radical ideas via intermediary ones, argued Thompson, and local improvements gained by land-value taxation could pave the way to a “general or comprehensive all-round scheme of vesting the ownership of the soil in the government.”16 Thompson’s balancing act was short lived: by 1891, the Knights had collapsed, and he wanted revolutionary socialism without any single-tax half measures.17 The single taxers, with and later without the Knights, mobilized a crossclass coalition in favour of progressive tax reform. They got a new language of consumer poverty into municipal fiscal reasoning, and they popularized an anti-poverty program grounded in systemic causes and practical solutions. Above all, they saw fiscal transfers whenever property moved in and out of landed forms, or private and public ownership – as in those railway easements. Identifying corporate property as land or not-land was complicated. The single taxers did not so much produce a workable formula as they persuaded people that a workable formula could be made to privilege public over private ownership. Where corporate lawyers lobbed tax questions into arcane and specialized legal negotiations, fiscal reformers lobbed them back into the public arena. They confronted the narrowly legal definitions of property being put forward by lawyers with stories that read social relationships into property. The single tax might not bring the socialist utopia, but it did mobilize the middling public (or “moderate taxpayer”) to confront leading social questions of the day with some useful new tools. Corporations and fiscal reformers were aggressively redefining property at both ends of the spectrum. Fiscal reformers declared the private to be public, while vested interests were erasing their property from public scrutiny. The two movements were in dialogue with one another: political

Figure 6.2  J.W. Bengough “Division of Labor” (Grip, 7 August 1886). Bengough responds to the Globe’s revelation of widespread tax evasion amongst the wellto-do in Toronto. (Image courtesy of Rare Books and Special Collections, McGill University)

240

Reconstructing Fiscal Federalism

or legal success on one side provoked heightened efforts on the other. The wealthy found new legal shields and exemptions from taxation that intensified the search for taxable wealth. Older liberal accommodations were undermined, and the resultant crisis was both fiscal and epistemological. Local authorities found themselves unable to formulate rigorous definitions of property that could survive the double onslaught of legal challenge and populist political attack. One measure of Ontario’s crisis is a proliferation of reports by commissions on taxation, of which there were seven in Ontario between 1888 and 1905. The first, the Commission on Municipal Institutions, delivered two reports in 1888 that devoted much attention to taxation. In 1889, the federal Royal Commission on the Relations of Labour and Capital produced its indictment of municipal taxation. In the early 1890s, an inflated assessment on real estate coupled with an economic downturn and falling values hit ratepayers hard and provoked a provincial Commission on Municipal Taxation that produced two reports in 1893: they identified the problem but not the solution. While the province hemmed and hawed, the cities themselves began to experiment with new bylaws on corporate property. Outraged corporate lawyers overturned those readings in the courts, with disastrous effects for municipal taxation. The result was an ambitious Ontario Assessment Commission, created in 1900, which reported twice, in 1901 and 1902. Finally, in 1905, an Ontario Commission on Railway Taxation confined itself to a single report. Having seven government reports – thousands of pages of evidence dissecting technical fiscal problems – at the kernel of one’s historical analysis is a mixed blessing. But amidst the belaboured technical questions, there were powerful animating principles at stake. The assessment office was, par excellence, the place for negotiating who “owned” the state: businessmen or a wider public. The four reports of 1888 and 1893 were largely the work of Timothy Anglin, whom we met as an anti-Confederation journalist from New Brunswick. Anglin became a Liberal federal politician, but years in Ottawa left him disconnected from Saint John. By the late 1880s, Anglin was out of office and out of work. He moved to Toronto, hoping for patronage plums from Oliver Mowat but was only able to get piecemeal work. As a tax commissioner, Anglin diligently accumulated mounds of information about the successes and failures of tax laws in Canada and beyond. The reports of 1888 drew cautious, measured conclusions that recorded the inadequacies of the general property tax but delivered no mandate for change.18 A new provincial assessment act in 1892 sustained the general property tax and insisted upon equal taxes for all forms of



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 241

property. Single taxers, represented by Liberal mla and baker Joseph Tait, demanded that municipalities be allowed to lower taxes on improvements, but Education Minister A.S. Hardy rejected the amendment as too radical. However, the continued decline of the general property tax and excessively high real estate taxes provoked renewed investigation in 1893. Evidence of failure was widespread. In the United States, although tax authorities, beginning with Wells at the New York State Tax Commission, had been denouncing the general property tax for decades, the public remained “for the most part wedded to the system of raising local taxation from every kind of property, real and personal.” But the Ontario commissioners found that “what is called ‘intangible’ property escapes taxation to a very large degree.” In an annexed report, Anglin reproduced the data from New York where, between 1875 and 1885, real property assessment increased by $800 million (from $1.9 to $2.7 billion) while general property assessment declined from $407 million to $332 million.19 These notorious figures became emblematic of the failure of the general property tax. Other evidence included radically different valuations across different municipalities. The commissioners provided a comparative table of valuations of real estate versus general property for seven American and three Canadian cities. Where Rochester, New York, had $16 in real estate for every $1 in general property, Toronto had $10.50 to $1, and Halifax had $3 to $1. Anglin had tracked taxation in Saint John for many decades (in 1868, for example, he had complained that income tax accounted for 20 per cent of revenue in one parish and none in another), and he inserted Saint John’s data into the table, where it stood out because high income tax revenues brought general property taxes up to the level of real estate taxes. Income taxes were disproportionately collected from the poorer districts and classes, and critics blamed them for the city’s outmigration of labour.20 Saint John had little to teach Ontario. Anglin showed evidence of relatively small personalty revenue in Ontario jurisdictions – less than 5 per cent in York, for example – and quoted Toronto’s treasurer and assessor to prove that personalty taxation was “absurdly small” and no more than “one eighth” of what it should be. But most witnesses clung to the general property tax and overwhelmingly (102 to 11) rejected shifting taxes to real estate.21 Income tax was part of the problem rather than the solution: it was much easier to extract from waged labourers whose incomes were declared by their employers than from the professional classes who were taxed on what they declared. Laws demanding full declaration were not enforced. “No one was ever fined,” observed a later assessment commissioner, James Forman.22

242

Reconstructing Fiscal Federalism

The Ontario commissioners read the economic literature, especially the work of Ely at Johns Hopkins University and Seligman at Columbia University, the most articulate and tireless advocates of replacing the general property tax – “the worst of all the taxes” – with income tax.23 A third progressive fiscal economist was Henry Carter Adams, a professor at the University of Michigan and statistician to the American Interstate Commerce Commission (icc). All three men were educated in Germany, and back in the United States, they injected American economics with a new progressive statism. According to Ajay Mehrotra, the three “began the American engagement with the ‘science of finance.’ They did so by applying the historicism of the new political economy to public finance issues,” beginning with Adams in 1884, and Ely and Seligman in 1888. Ely argued that the wealthy, in hiding their incomes and evading their taxes, were becoming “careless and indifferent about their public duties.” Where Ely highlighted elite disengagement from the state, Seligman emphasized popular engagement with it: “It is now generally agreed that we pay taxes not because the state protects us, or because we get any benefits from the state, but simply because the state is a part of us. The duty of supporting and protecting it is born with us. In a civilized society the state is as necessary to the individual as the air he breathes.” There was no autonomous civil society to protect from the state; no “benefit” to the taxpayer distinguishable from the air that he or she breathed. The right mechanism to regulate the citizen–state interface was not the exploded benefits theory of taxation but, rather, the measure of one’s ability to pay. For Seligman, that ability should be measured not by wealth but by its product: “Not the extent but the productivity of wealth constitutes the test,” he argued in 1890 in the journal he edited, Political Science Quarterly.24 Professional economists were insinuating themselves between the corporations, the state, and the public, suggesting a middle ground between extremes of unfair taxation that threatened to crush labour or capital. Like doctors, they professionalized on the strength of such claims, and like doctors, they denounced quacks. Seligman denounced the single tax because it taxed wealth rather than the productivity of wealth, discarded the all-important principle of ability to pay, and its labour theory of value erected a false distinction between earned and unearned wealth. Labour was no more autonomous for Seligman than the state: all “civilized” artifacts had social inputs. “No one has a right to say: This belongs absolutely and completely to me, because I alone have produced it. Society, from this point of view, holds a mortgage on everything that is produced.” In 1890, at a meeting of the American Social Science Association, Seligman



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 243

dramatically told an aging Henry George that no professional economist would embrace single-tax ideas.25 One critic of Seligman likened his dogged lifelong pursuit of Georgeism to “an obsession, like Jean Valjean to Inspector Javert.”26 The Ontario commissioners admired the American expertise but could not see how to apply it at home. The whole business was just too complicated, they decided, in what must rank as one of the more pathetic conclusions ever reached by a commission. They described Seligman’s thirteen possible bases for taxing corporations as “well nigh impossible” to choose between. Certainly corporations should be taxed “according to their ability. Some simple plan of accomplishing this result might perhaps be devised, although it must be confessed that the entire subject of taxation is one of much difficulty.”27 It hardly needed a commission to point that out. Anglin’s reports signal the bankruptcy of earlier fiscal paradigms. He could read a mid-Victorian budget to perfection but was perplexed by the new forms of wealth being read in and out of balance sheets. American expertise could provide only warnings, not constructive alternatives, for Canadian tax regimes, but Canadian economics lagged behind the Americans. Queen’s University in Kingston and the University of Toronto taught political economy. But at Queen’s, the teacher was a visiting “Reverend Campbell” from Montreal, who taught Progress and Poverty. In 1887, Adam Shortt took over and took George off the curriculum, but he was not yet the distinguished public scholar he would become. Shortt was from small-town Ontario, a graduate of Queen’s, who did advanced studies in Glasgow and Edinburgh, and then returned to Queen’s in 1886 as a tutor in philosophy, botany, and chemistry. He took on the political economy classes in 1887 when students rebelled against Campbell’s lectures. Mowat was not ready to trust him with tax commissions. Nor did the premier call on the political economist at the University of Toronto, whose appointment was still directly under the control of the provincial cabinet. William Ashley, a specialist in German economic history, held the chair from 1888 to 1892. His successor was James Mavor from Glasgow, considered one of the leading new economists in Britain, but Mavor associated with British socialists and had once run for office on a platform that included land value taxation.28 Small wonder that Mowat preferred a fellow mid-Victorian statesman, privileging party networks over expertise. But the result was stasis. In 1893, the Ontario commissioners addressed the single-tax question warily. They identified its aim as redistribution rather than revenue, and while noting preliminary legislation in Manitoba and British Columbia,

244

Reconstructing Fiscal Federalism

they saw no evidence of success: “It is therefore impossible to point to any facts of importance verified by experience in connection with this subject. Your Commissioners have done all they possibly could to obtain such facts, and that they have not succeeded is fairly good evidence that none exist.”29 Ontario should remain aloof from such experiments. Their views coincided with the views of the Toronto Ratepayers Association, which polled its members and recorded 644 votes in favour and 1,678 votes against the “seductive, unfair, and novel” proposition to shift the burden to land values.30 They also coincided with those of most mainstream newspapers and business papers, ranging from the Toronto Monetary Times, Montreal Journal of Commerce, and the Montreal Gazette to the Victoria Colonist, Manitoba Free Press and Toronto Globe, though there was sympathy for the single tax in some of the new popular dailies, including the Montreal Star, the Hamilton Herald, and the Toronto Star, which included a weekly single-tax column from 1894.31 But the status quo ante was too damaged to stand. Liberal newspapers troubled by the single-tax threat to property were also troubled by that posed by monopoly capitalism. The Toronto Monetary Times, a flourishing business newspaper, reflects that concern.32 Editor Edward Trout despised Georgeism, which he described in October 1886 as “Communistic Land Appropriation” incompatible with private property: “Once consecrate confiscation of one form of property, once cover the immoral process by the sanction of law, and the time will not be long in coming when other forms of property will share the same fate. If property can be got for the taking, and if the legislature once sanction the process, farewell to security to every form of property. The forms of property most easily realizeable would before long suffer most.”33 Another column accused the Knights of Labor of failing to distinguish legal and illegal business activities. But the next paragraph acknowl­edged there was something to the Knights’ complaints. Corporations were fraudulently appropriating property. “Stock-watering and similar devices are in fact a species of communistic appropriation of the property of others. And the example is sure not to be lost. If the railway millionaire may appropriate the property of others, without giving an equivalent, the professional communists will conclude that they have an equal right to apply their own doctrines.”34 Businessmen inflated the value of their stock, thus “watering” it, in order to sell it at a premium, so that material assets did not correspond to paper value. Trout followed American developments closely. Another article, also in October 1886, flagged the notorious “Wabash” decision that prohibited state-level authorities from legislating on interstate railways and



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 245

provoked the creation of the icc. Trout recognized the need for anticombines legislation in Canada, though he worried that the actual legislation obtained, in 1889, hindered businessmen’s ability to respond to falling prices by reducing output. He welcomed the Senate’s watering down of that legislation with vapid qualifiers against unreasonable and undue restraints on trade.35 The North American public was fascinated and repelled by the emergence of a monopoly capitalism that sociologists labelled “financial feudalism.” Complicated instruments of credit first developed to fund state debts and extended to railway corporations in the middle years of the century now began to infiltrate the industrial economy. The process was twofold: first came a movement towards price-setting combines in the 1880s that prompted anti-combines legislation (1889 in Canada, 1890 in the United States); the second wave took the form of corporate mergers. The turning point was that Wabash decision. Financier Jay Gould refused to cede control of one still-paying section of the railway to locals who wanted to keep it running. Gould persuaded the courts that the railway was either a complete whole or mere rusting iron in the desert. Because the unity of the railway gave it its value, it must be immune to state legislation and the decisions of managers must trump those of creditors. As historian William Roy argues, “the prevailing doctrine gave control to creditors and held managers responsible for bankruptcy. The Wabash decision set a precedent by which creditors were stripped of many rights in receivership, and the courts gave management the right to reorganize the business under the doctrine that the corporation itself was an entity to be preserved.”36 The decision signalled a transformation in corporate finance by beginning to divide the company’s ownership (its stockholders) from controlling interests of bondholders like Gould. Financiers would now be much freer to speculate upon the value of corporate capital and to build up holding firms or trusts that brought entire sectors into one firm. James Livingston observes that “in 1891–92 an industrial company with a capitalization in excess of $10 million was still extremely rare. In 1902, by contrast, nearly a hundred industrial corporations had attained that size.” He notes that the Sherman Anti-Trust Act “ultimately made the corporation the only unassailable legal form” for capitalist consolidation.37 Canadian corporations followed that trend of capitalization. Historians identify a “distinct surge” in stock and debt-financed mergers and acquisitions at the turn of the century.38 But Canadian corporations did not enjoy the same protections as American counterparts. Those had been sanctified by the United States Supreme Court’s Dartmouth College

246

Reconstructing Fiscal Federalism

decision of 1819 that made them immune to legislative tinkering.39 But where the United States had Dartmouth College rather than Dartmouth University (dissolved in that early decision), Canada had the University of Toronto, rather than John Strachan’s King’s College, nationalized in 1849. Corporations were not as sacred in Canada as in the United States. According to legal historian Richard Risk, “the legislature had power to amend the constitution of individual corporations. This power was a product of legislative supremacy; it was never questioned, and no attempt was made to impose limitations.”40 In fact, as Risk noted, the attempt was made politically rather than legally: John A. Macdonald used the federal veto to protect private property from provincial encroachments. But when those confrontations reached the j cp c, that body sided with the provinces and overturned federal vetoes. It did so because Ontario mounted a persuasive argument that equated property rights with provincial autonomy. Mowat believed that the whole history of Canadian struggles for self-government amounted to Upper Canada’s efforts to govern itself without outside interference, whether from Westminster or Ottawa. Confederation was designed, Mowat argued, to free Ontario from Quebec’s baneful influence. Macdonald’s veto in the name of property rights threatened to reverse that victory.41 Ontario businessmen were quick to understand the game that was being played, and they cannily pitted federal and provincial authorities against one another around this question of corporate integrity. The controversy grew much more heated after 1906, when Ontario built up public provision of hydroelectricity, but the foundations were laid in the debates around taxation. At stake was the flow of foreign capital to Canada. One prominent businessman warned Laurier that capital to develop Canada required “positive assurance” that investments in Canadian enterprises would have behind them “as solid as the rock of Gibraltar the whole force of our Government as protection.” But whereas Macdonald took such cases to the courts, Laurier would go no further than to express admiration for American security of property and to regret “that such a provision had not been thought of by the Fathers of our own Confederation. To, however, undo such an omission is a work which would require some serious consideration before we could plunge into it.”42 It is easy to ridicule as exaggerated the domino theory of threats to property. But corporate property was considerably less protected in Canada than in the United States. Capital’s allies were a collection of foreign judges and a hamstrung federal government, while its opposition was formidable: the Knights of Labor, the single-tax reformers, and other



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 247

organizations like the Grange were transnational movements vying for and finding middle-class support. The American Federation of Labor aggressively expanded into Canada at the turn of the century for fear of being undermined at home by more radical labour organizations to the north, as early successes of labour politics in western Canada “generated shock waves throughout North American labour circles.”43 American muckrakers were widely read, especially in western Canada.44 Liberals like Trout were being won over. In 1889, he published an American criticism of the trust movement as “wild and lawless revolution” by “blind and reckless” businessmen that was destroying all notion of a marketplace “under the indefeasible control of laws which are fundamental to human nature and to human society. If the trust principle be true, then one-half of the maxims of political economy are false.” French-language business papers shared the concern, including the Prix Courant, founded by Jules Helbronner in 1887 (though he left it in 1888), and, to a lesser degree, Le Moniteur du commerce.45 Martin Sklar argues that the trust question was the greatest question of the day, understood broadly as “in essence the corporation question, and, accordingly, as one that addressed an economic transformation with its implications for the law, the role of government in economic affairs, and the state-society relation in general.”46 Radical and liberal presses scrutinized every change to property and labour regimes on either side of the border. American interest in Canadian legal happenings took an uptick between 1880 and 1895.47 The chattering classes were highly North American in outlook: historian DamienClaude Bélanger sees a new, confident, transcontinental cosmopolitanism amongst the intelligentsia.48 Settlement workers, scholars, and other reformers moved back and forth across the border. Cornell University lost Goldwin Smith to private life in Toronto, where he supported businessfriendly, low-tax mayors Alexander Manning in 1885 and John Shaw in 1898,49 but it gained Jacob Schurman, a Kantian from Nova Scotia, who enjoyed close connections with reforming New York governor Charles Evans Hughes and president Theodore Roosevelt.50 At Harvard, the Ontario-born, Adam Shortt–trained William Bennett Munro taught municipal politics beginning in 1904 and reported on North American cities in a quarterly column in the American Political Science Review. Regional, national, and international organizations gathered speakers and auditors across the borders. In 1904, Shortt spoke on the tariff at the American Economic Association, which was presided over by Seligman; in 1913, that organization heard a paper by Austrian economist Joseph Schumpeter. The US-based National Tax Association (nta), formed in

248

Reconstructing Fiscal Federalism

1907, held its second meeting in Toronto in 1908 under the (short-lived) title International Tax Association, with representatives from twenty-four states, five provinces, and eighteen universities. For tax experts then as now, borders were problematic in ways that drove them to cultivate interstate and international “comity.” Decisions made in one state or province could affect all the others. Everyone knew that mass financialization of industrial capitalism through the 1890s was propelled by lax new corporate property laws in New Jersey during the early 1890s that permitted holding companies, insider valuation of stock, unlimited debts, and lower taxes. (In 1901, when Clifford Sifton tried to form a holding company, his lawyer advised him that what he wanted to do could only be done in New Jersey.51) At the Toronto nta conference of 1908, when a speaker from Washington State boasted of luring capitalists with corporate tax exemptions, Professor John Gray of Minnesota drew laughter by wondering if they had learned such tricks from New Jersey.52 Such innovations put a premium on stock watering. The waterers – corporate insiders – issued bonds and preferred shares secured by tangible material assets and actual earning power, but they also issued large quantities of common shares that represented more speculative “intangible assets and expected income.” The preferred shares, with their regular dividends, were sold to the general public; the common shares, representing actual control and speculative profits, remained in the hands of financial insiders. The complex mix of tangible and intangible assets made value subject to reputation, predicted performance, and a thousand other complex and subtle qualities beyond the ken of uninformed investors and tax assessors.53 The argument that only businessmen could determine value made them experts comparable to doctors or lawyers, two professions fighting hard for professional autonomy from legislative oversight on grounds of their specialized knowl­edge. The state, on this argument, could no more assess the value of a stock than the efficacy of a remedy. Stock watering and financialization proceeded together, as insiders constructed millions of fictitious dollars so as to extract millions more from uninformed investors. In 1904, an insider account, Frenzied Finance, shocked the world by recounting how a consortium led by J.P. Morgan created and sold a fictitious $36 million in a matter of minutes.54 Financialization underlay Ontario’s tax crisis. In 1886, ratepayers blamed the scandal upon false declarations or corrupt assessors. But already the Globe recognized in the headlines that preceded the lists of  names that debt was underwriting the evasion: “incomes and ­p ersonalty: The Assessment of Some of Our Leading Citizens,



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 249

merchants and storekeepers Showing that the Merchants Take Full Advantage of the Provision of the Law Which Allows Them to Deduct Their Debts.”55 Companies could deduct their debts but ratepayers could not: hence the frustration expressed by “Frequent Reader.” The exemption gave companies an incentive to acquire heavy debts, inflated by what Shortt called “aqueous addition.” Though Canadian stock watering never reached the heights of a J.P. Morgan, nonetheless, in 1897, it was already sufficient to infuriate J.S. Willison. In the pamphlet The Railway Question in Canada, he characterized the early railway builder as a crafty, Ulyssean character “skilled in the art of issuing watered stock and bonds” and denounced the “reckless inflation of railway capital by manipulation of contacts, trafficking in bonds, and introduction of wind and water,” in all of which Canada had “followed very closely at the heels of the United States. We are behind only in remedial measures.” The cpr, for example, had a bonded debt for $5 million on work that cost less than half that sum.56 Willison was addressing freight rates, but the indictment also spoke to the frustrations of tax assessors. A demand for full taxation of railway property was among the original planks of the American populist agrarian revolt: the Cleburne Demands of 1886.57 As financialization spread from railways to the private sector more generally, it worked to lower municipal tax revenues. Perversely, that change hit hard at railways and utilities. Manufacturers could threaten to pull up stakes in pursuit of tax exemptions. A late-Victorian bidding war reduced the tax base in many towns, though the legislature tried to stem the ruinous competition by prohibiting municipalities from bidding on corporations established elsewhere in the province. But railway, street railway, water, gas, lighting, and telephone companies could not make the same threat of departure. Their rails and cables and pipes were material hostages to fortune. Such companies had monopoly privileges written into their charters, so they need not fear price competition as other manufacturers did, but people invariably resented the prices charged. Municipal authorities were under continual pressure to wage fiscal or regulatory war on utilities. Unable to relocate when taxes rose, utilities rebelled – legally, of course. As seen, utilities in Ontario enjoyed a broad measure of tax relief on their rails, pipes, and cables following the decision of 1875. But the burden of proof was shifting from the assessors to the companies, as city assessors renewed their attempts at taxation. The companies claimed that their “franchises” (the word used to describe the charters that gave them their monopoly powers) should exempt them: Consumers’ Gas Company

250

Reconstructing Fiscal Federalism

pointed to its provincial charter and Bell Telephone Company to its Dominion charter.58 Toronto’s assessors protested federal and provincial “interference” and pressed on. In 1897, the utilities companies sustained defeat when the Supreme Court of Canada upheld a $500,000 assessment of pipes under Toronto streets owned by Consumers’ Gas (and also raised taxes on their undervalued buildings).59 The Supreme Court chief justice, Samuel Henry Strong, repudiated his own earlier ruling in the Ontario Court of Appeals. When the j cp c refused to hear the company’s appeal, suddenly utility companies across Ontario faced rising tax bills. But the Supreme Court ruling also rejected the existing method of assessment. Assessors were determining the overall value of the company and then apportioning it to wards according to the percentage of value found there. Each ward must have its own assessment, Strong insisted. That ruling made it legally possible but practically impossible to tax utilities at going rates. Had not Jay Gould, after all, proved that the value of a corporation was either unitary or rusting rail in a desert? Canadian utilities debunked both company- and ward-wide values as fictions. In 1898, the Bell Telephone Company overturned its assessment in Hamilton by having its telephone wires declared worth no more than scrap iron. The evaluators were taxing such infrastructure in terms of the amount of labour and capital put into it, as working equipment in a going concern. Bell argued that such a valuation was mere fantasy. There was no market for used cable wires apart from the scrap-iron market and no ward-level corporation to tax as a going concern. The Ontario Court of Appeal agreed with Bell and declared the business personalty of Bell – and by extension other utilities – worth no more than its value if it were torn up and carted away.60 Of course, the telephone wires had virtually no value as scrap iron. Municipal revenues plummeted. The Toronto Street Railway Company, for example, saw its assessment drop from $6,300 per mile to $900 per mile. The London Street Railway Company saw its appeal upheld and the assessment on its rails, poles, and wires reduced from $136,780 to $21,000 and on its bridges from $19,000 to $3,000. The city’s own witness had to admit that if the company had to sell its properties in one ward “to a person who has no right to use them in connection with any other ward in the city or operate a street railway,” then they had no other value than as scrap iron.61 There were many other challenges. One seemed to Hamilton assessor Frank Hutton particularly perverse: the Toronto, Hamilton, & Buffalo Railway built a right-of-way that required digging down thirty or forty feet. The work destroyed the value of the land “as ordinary land,”



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 251

whereupon the “very astute solicitor” of the company convinced the judge to assess it as ordinary land, so that its value dropped from $40,000 to $2,000.62 Hutton wanted equal taxation of individual and corporate personalty and had almost persuaded a local judge when “the celebrated scrap iron decision came in. Not only with us has the effect been to reduce the value of the rails, poles and wires in that way, but two years ago, on the appeal of the street railway, Mr Edward Martin, solicitor for the street railway, was enabled to have it applied to the buildings as well, and the buildings with us were reduced to a scrap iron and brick basis – a large number of them.” Ratepayers paid taxes on the resale value of their houses, utilities on the resale value of the material used in construction. Ontario corporations launched a tax revolt by persuading judges that existing taxes did not apply to the new forms of corporate property. In the scrap-iron case, Bell’s lawyer, B.B. Osler (who was president of the Hamilton Street Railway Company) pointed to “practical difficulties in applying the provisions of the Assessment Act to a specific kind of property which until a recent period was never supposed to be within their scope; and the assessment of which was probably never contemplated by the framers of the Act.” His brother, Justice Featherstone Osler who sat on the Court of Appeal, quoted that phrase in the London Street Railway decision, only changing the phrase “specific kind of property” to a more generalizeable “specific kinds.”63 Judges agreed with business that municipal tax innovations threatened property rights. Liberal pundits shared those concerns. For Goldwin Smith, who married into Toronto wealth, national income tax was odious and “unproductive; but its injustice was multiplied infinitely when imposed municipally because municipalities had no right to tax property invested outside that municipality.”64 Adam Shortt also worried for the security of wealth against its detractors. Millionaires, he argued, kept taxes low: “Wherever there is a country with few or no millionaires, there is a country with heavy taxation in proportion to means, of ill-developed industries, low wages, exorbitant profits, extortionate rates of interest, and quite generally, of little return for human effort.”65 Shortt’s students carried his arguments into many different arenas. For example, Edward Peacock, then a schoolteacher at Upper Canada College (alongside Stephen Leacock), advised the Queen’s Theological Alumni, gathered at their annual conference in 1898, that “‘trusts’ may be bad, and dangerous, but even if so, their condemnation should rest on something firmer than a mere appeal to passion” by the “shallow agitator or stump politician.”66 Peacock warned against municipalization of utilities and defended even Standard

252

Reconstructing Fiscal Federalism

Oil; irresponsible overbreeding amongst the poor was, he concluded, the real problem. Peacock soon quit teaching and joined the trusts, beginning in a new firm established in Toronto in 1901, Dominion Securities, and rising via New York and London to the very pinnacle of the banking world. Similarly, the political science students at the University of Toronto debated the pros and cons of “trusts” in December 1899; two months later they heard a lecture on taxation of department stores.67 Corporations simpered that corporate property was in peril from radical tax projects, and judges and scholars leapt gallantly to their defence. But suddenly railways in Ontario were paying a small fraction of what they paid south of the border. One railway’s tax bill supposedly dropped from $400 to $4 when it hit the Canadian border.68 Hardest hit by the tax revolt were municipalities, the jurisdiction least equipped to take on big business. Corporations were chartered in clientelist provincial and federal legislatures and were consolidating to exert a transnational, culturally cohesive hegemony. How could a backlash occur? In fact, the municipality was a good arena for the confrontation between big business and the public. Because they provided valuable services, municipalities were well situated to levy taxes. The constitution limited municipalities to direct taxation because the Fathers of Confederation had believed that direct taxation made for vigilant taxpayers and small, cheap governments. But that’s not what happened. Municipal officials and ratepayers engaged in face-toface conversations about how municipal revenues should be extracted and expended. Rather than delegitimizing the municipal state, the conversations gave it an unprecedented warrant to legitimacy. The emphasis on direct taxation did not produce narrow, self-interested ratepayer politics; rather, it prompted searching questions about how municipal taxation related to the big social and economic questions of the day. Reformers linked those debates to the historic quest for responsible government. As political creatures of a clientelist national government, companies like Bell were just the latest challenge to the self-taxing liberal polity. The tune, much played on Ontario fiddles, was also taken up across the country. Ontarians themselves took these fights seriously. Many were radicalized by Henry George, but even liberals had a fascination with ratepayer politics. Tax assessment was a kind of blood sport, waged by gladiators in dramatic confrontations before courts of revision, with newspapers awarding laurels to the victors. On 1 November 1890, the Toronto World described a downward revision of $120,000 in St Andrew’s Ward as the assessment department’s “Waterloo.”69 But the proprietors met their own Iron Duke in an extremely bright young man, “Assessor White,” a



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 253

farmer’s son working his way through law school in the assessor’s office under commissioner R.J. Fleming, a former mayor and White’s uncle, who revised business valuations significantly upward.70 Time and again, White sallied forth to “do battle” with aggrieved proprietors, while accusations “It’s injustice!” and “You are unreasonable!” glanced off him like misfired javelins. When William Croft appealed against an assessment of $275 per foot on his property at the corner of Colborne Street and Leader Lane, “Assessor White was able to prove that property in the neighbourhood earned 10 per cent on the money invested, and the assessment was confirmed.” Others were similarly rebuffed on evidence from Assessor White, and any reductions granted were small.71 The next year, when James Croker applied for lower taxes for his store on Queen Street West on grounds that department stores were taking all the business and lowering rents, “Assessor White produced evidence, however, to show that many of the storekeepers were paying fair rents and were not appealing.”72 On the other hand, White’s intervention fended off tax hikes on Timothy Eaton’s department store, after local retailers appealed his assessment on grounds of being too low.73 Professionalizing scholars saw in the average late-Victorian tax collector an uninformed, probably corrupt placeman. But many were thoughtful, capable men deeply committed to their role in sustaining basic institutions of collective and responsible governance. Their voices intermingled with those of the corporate lawyers, arguing point for point. Assessor White did not remain in assessment. In 1899, during a legal dispute over the taxation of trusts that brought directors into the court galleries to watch, Edward Rogers Wood exclaimed “that fellow beat the pants off us. We must get him for National Trust.”74 National Trust, along with Dominion Securities, the Canadian Bank of Commerce, and several insurance companies, was part of a network taken over or built up by George Albertus Cox, who began as an insurance agent in Peterborough and bought out his employer. Michael Bliss remarks that “the Cox companies formed an identifiable financial family, with intimately interlocking boards, routine and significant inter-firm transactions, and heavy reliance on a managerial / directorial group related to Cox by ties of blood, marriage, religion, or old home town.”75 An offer was duly made and accepted. The Star lamented the “severe blow to the Assessment Department; for several years he has been the brainest man in that branch of the civic service, and most of the original ideas which have characterized the administration of recent years can be traced back to the fertile mind of Mr White.”76 The Globe was more specific: “Fertility of resource

254

Reconstructing Fiscal Federalism

Figure 6.3  Toronto Assessment Department, 1898. The picture shows a serious cohort at work; other photos show it at play in organized sports. Assessor White is seated at the left. (Image courtesy of the City of Toronto Archives, Fonds 1617, File 6)

is one of Mr White’s numerous qualities, and he conceived the idea of assessing the funds in the hands of trust companies as well as those held by the courts in trust. The idea was commended by Mr Fleming, and Mr White made the assessment until the new revenue bill of the Ontario Legislature relieved those funds from municipal taxation.”77 Within a few years, Thomas White, later Sir Thomas White, was back in the public service, this time as the nation’s finance minister and architect of the Income War Tax Act of 1917. But White gave a final impetus to the backlash against the corporate tax revolt before leaving civic employment. Public agitation began in Brantford, where local officials drew up a petition to the provincial legislature protesting the heavier burden imposed on “the moderate taxpayer.” Brantford had good reason to lead a protest against rail companies: the Grand Trunk Railway had closed down its shops there the previous year, moving them to London. The



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 255

interests of small-town industry were well represented in companies like the Cockshutt Plow Company and in municipal officials like Alderman Henry Cockshutt. When he joined a deputation of municipal officers waiting on the provincial government in February 1899 (alongside the mayor he would replace a few months later) to protest the scrap-iron decision, they confronted a Brantford native in the premier’s office, Arthur Sturgis Hardy. A “large and influential deputation” met not a token minister but the entire cabinet. When the government warned that taxes must not undermine existing charters, Assessor White responded, as so often before, with a lucid, concise, and unassailable slew of facts and legal precedents to insist that corporations were paying a seventh or an eighth of what they should be paying: “All that was asked was that they should be assessed as other people.” Hardy promised to study the matter closely, blaming not bad laws but changed conditions for the problem. The municipal officers then repaired to another room and formed a committee, chaired by the mayor of Brantford and with White as secretary, to plan a convention of municipal officers for the autumn in Hamilton.78 Hardy’s response came even more quickly. He saw an opportunity to kill two birds with one stone: the indignant outcry against untaxed wealthy corporations and dipping provincial revenues, even as he remained opposed to anything that would result in “direct taxation upon the farmers … The whole country would rise up in arms against us.”79 Better the regulation and taxation of corporations. In March 1899, the legislature passed a new corporate tax, following the trend begun in Quebec. Previously, corporations were taxed municipally in Ontario with only one exception: a 1-per-cent tax on a bank’s circulating capital. (Whereas the American government used its taxing powers to strip American banks of their power to issue currency, Canadian banks retained that power and paid taxes on it.) Conservative opposition leader James Whitney regularly lambasted the government for its close ties with big business. Here was a way for Hardy to garner some populist credentials with a modest tax on finance capital.80 Unwilling to defend urban big business, Whitney could only denounce the new policy as the “direct taxation” that his party had long predicted would result from big-spending Liberal ways. Hardy retorted that it was not the sort of direct tax whereby “collectors would go round” and tax “windows, doors and hearthstones … This was a tax on wealthy corporations. It was not a tax on the workman, or on the farmer, or on the merchants, or on industry. It was not a tax on labor.”81 Although the provincial treasurer quoted Seligman to defend the new taxes, James Mavor did not see orthodox economic theory at work. The

256

Reconstructing Fiscal Federalism

provincial legislation was, he wrote in the Journal of the Canadian Bankers’ Association, a mere “congeries of suggestions and compromises … lacking any consistent principle.” Banks would be taxed on capital stock and local branches; insurance companies on their gross income (except foreign companies: taxed on local income when British, on total income when not); trust companies on capital and profits; railways per mile of line but electric ones were exempted; telephone, gas, and light companies on their capital, while natural gas companies paid a percentage of receipts. Taxes were also imposed on the capital and rolling stock of express companies and railway cars. There was no guiding principle, not even ability to pay, complained Mavor, but the taxes were small, easy to collect, and collected from sources “more or less monopolistic in their nature,” i.e., “fit subjects for special taxation.” He noted the popular pressure: “In all these movements one sees no doubt a current of popular feeling in favour of the taxation of capital.” Economic theory also had its part: the benefits theory had been refuted, and “we” must fall back on utilitarian taxes that caused the most happiness and the least pain. Utility was, of course, Jevons’ neo-Benthamism, but the tax implications had been more explicitly mapped out by Francis Y. Edgeworth, an Oxford economist, who explained how utility should be mathematized according to its marginal value. A dollar mattered more to a poor man than to a rich one, so the rich should be taxed proportionally higher. A tax should cause no more pain to an artisan earning $4 per week than to a Rockefeller with his $50,000 per week – at least “that is precisely the way the artisan looks upon it,” observed Mavor. (The new views filtered into the public sphere: for example, the Winnipeg-based Western Home Monthly argued, in December 1905, that the state and taxation maintained the “peace and tranquility at home and peaceful relations abroad” that made John D. Rockefeller’s $25-million income possible. “If he were taxed for that domestic peace in proportion as the average man with $1,200 salary is taxed, the question of his becoming the first billionaire might long be put off.”82) For most economists, marginal utility theory resolved the conundrum of progressive graduation, turning Gladstone’s class war into a simple question of math, so that it remained only to find a workable practical formula for determining the right rates. Mavor concluded his analysis of the new law by calling for a “comprehensive inquiry” and “remodelling” of the tax regime to overcome confusion and the “certainty of double taxation.”83 The new corporate tax worsened matters for cities because it squelched their attempts to assess total corporate assets in corporate head offices.



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 257

That had been White’s project in Toronto, the city with the most to gain from such a scheme. Now the new province-wide corporation taxes displaced the municipal ones. At a stroke, Toronto lost more than $1.3 million from its rolls as an income assessment on forty-nine insurance, loan, and trust companies fell from $1,885,508 to $568,325.84 Hamilton had begun to tax the Canada Life Assurance Company for its entire income, about $800,000, at its head office in Hamilton but now could only tax it on $100,000 income while the rest escaped municipal taxation altogether.85 Municipal ratepayers were incensed as tax rates shot up: between 1899 and 1900 Toronto’s rose from 17½ to 19½ mils on the dollar. Outraged lobby groups included the Toronto Ratepayers Association, the Citizens’ Tax Equalization Committee, the Retail Merchants’ Association, and the Ontario Tax Exemption Convention. The single taxers, not content with city-wide organization, were now forming ward-level societies as well and complaining vociferously. Newspapers filled their pages with irate columns and cartoons. In the Toronto Evening Telegram, “Rostap” (Owen Staples) began to caricature the city’s “weary,” “exhausted,” and “irate” taxpayers. Local businessmen, long incensed by the lower taxes imposed in Montreal and Winnipeg, demanded abolition of the general property tax. Mayors and would-be mayors campaigned on such concerns. Incumbent Toronto mayor John Shaw had survived challenges in 1898 and 1899 by insisting that “capital was very sensitive, and it would be a disastrous thing to do anything to weaken the confidence of investors in commercial enterprises” and because the city treasurer produced some fiscal nest eggs (rents owed by the cpr and better terms for bonds). His promises to protect Torontonians from “spoiliation by the imposition of  unnecessary taxes” won applause from Mavor.86 Now controller F.S. Spence challenged him on a scrap-iron platform that complained of $60,000 in foregone tax revenue per year: “It is utterly wrong that private citizens should be compelled to pay for the protection, opportunities, and other advantages that the city gives to wealthy corporations enjoying extensive privileges and earning large profits.”87 Both Shaw and Spence lost to outsider Ernest Macdonald, who had won workingmen’s support in an earlier, failed bid to muncipalize the street railway. Macdonald was a washout, already suffering from the neurodegenerative disorder that would kill him in 1903. But though erratic mayors might come and go, the municipal officers were building collective purpose and strength. In the fall of 1899, the planned convention of municipal officers went ahead in Hamilton, with twenty-two delegates from thirteen municipalities attending. They unanimously demanded full annual declarations of

258

Reconstructing Fiscal Federalism

general property and income; equal taxation of banks, businesses, and people; and that companies be assessed collectively rather than ward by ward.88 The delegates formally constituted themselves as an Ontario Municipal Association (on British and American models).89 Members pooled resources to pay lobbyists and lawyers to defend their rights in legislatures. In 1901, corresponding over their shared problems with Bell, Westmount mayor W.D. Lighthall and Toronto mayor O.A. Howland inaugurated a national municipal union. Fifty municipalities attended the first national convention in Toronto in 1901 and nearly double that number attended the next year in Montreal. Other mayors across Canada joined what seemed a new fight for responsible government. In Ottawa in 1903, Howland boasted that whereas the federal government was “drawn away” from the people and “more subject to … private and particular” interests, municipal power emanated directly from the people. At Winnipeg in 1905, Lighthall argued that cities protected Canadian pockets from rapacious speculators and Canadian liberties from domination “by lawless force.” Direct taxation put the city at the centre of that struggle, declared Toronto mayor Thomas Urquhart: “It is the only power that levies by direct taxation; the only organization that goes directly to the pockets of the people, and takes their money, for the purpose of carrying on local affairs, and I believe it is going to be infinitely more important that our municipalities should be well governed than our provinces, or even our Dominion.”90 In 1900, the Ontario government now led by George Ross, bowed to pressure and appointed an Ontario Assessment Commission to reformulate municipal taxation. No one doubted that practical reform must follow its work, but what form would it take? How to summon up a mandate from an impossibly divided population? The commissioners held public hearings and consulted scholarly expertise and official experience, but their activities were also designed to be ostentatiously reassuring to business interests. The choice of commissioners was vetted by corporate interests, according to the Toronto Daily Mail and Empire: “Capital Chose the Commission. Dictated to Ross who should investigate assessments.” Toronto’s nominees were rejected because they opposed the scrap-iron decision; the Commission’s chair would be Justice James Maclennan, who had voted to uphold the scrap-iron decision at the Ontario Court of Appeal.”91 Rostap produced a new cartoon, “A Friend Indeed,” that showed a fat and towering businessman, “The Corporations,” standing on “People’s Rights,” with “Scrap Iron Decision” rolled up under one arm and “Ontario Assessment Commission” rolled up under the other (see figure 6.4).

Figure 6.4  Rostap, “A Friend Indeed” (August 1900). The cartoonist at the Toronto Telegram captures public outrage at the provincial government’s unwillingness to tax corporate capital. (Image courtesy of the McCord Museum, 2001X.6.43.8.187)

260

Reconstructing Fiscal Federalism

The commission was no mere sop to opinion. The many public sessions were well attended and covered by the press. Single taxers were in full throat: scholar Gregory Levine singles out the “emphatic” claims of Julien Sale, president of the Single Tax Association, who equated rents with taxes: “Power to exact ground rent is power to levy private taxes for the enjoyment of public advantages.”92 Retailers demanded heavier taxes on department stores. Still, the key testimony addressed the public utilities corporations. They were represented collectively by Christopher Robinson, QC . The son of a former attorney general and lieutenant governor, Robinson had notoriously refused a judgeship that would have reduced his income.93 His client companies included the cp r, continuing through the Canada Southern Railway; Great North Western Telegraph; Bell Telephone; Consumers’ Gas of Toronto; Cataract Power of Hamilton; Kingston and Pembroke Railway; Kingston, Portsmouth & Cataraqui Electric Railway; Kingston Heat, Light and Power; Ottawa Gas; Sarnia Gas; Hamilton, Grimsby & Beamsville Electric Railway; St Catharines Gas; Berlin and Waterloo Street Railway; Berlin Gas; Chatham Gas; United Gas & Oil Company of Sarnia and Petrolia; Toronto, Hamilton and Buffalo Railway; Gas Company of Port Hope; and Toronto Electric Light. Speaking after Robinson, W.M. Douglas (not to be confused with W.A. Douglass, a dry-goods merchant and single taxer) represented a further seventy-four gas and light companies, smaller fry based in smaller towns and villages. Much of what Robinson had to say reflected common consensus: “It is mere platitude to say that these companies must pay what is fair; that they must pay their fair share of taxation like other people.” But the “crude” general property tax was neither fair nor effective, and opinion was growing “amongst most people who have had time to consider this subject at all, that a radical change in the assessment of most of the corporations will have to be adopted.”94 The general property tax was uncollectable in practice and indefensible in theory. The benefits theory of taxation did not apply to either finance capital or pipes and wires, while railways had their own police. Municipalities could not tax large corporations piecemeal without illegitimately imposing double taxation. Robinson recommended a provincial commission to collect taxes and divide them amongst municipalities. As for the method of valuation, he rejected arguments for taxing the corporation as a whole, in terms of its franchise or charter. Surely such a tax amounted to rewriting the value of the franchise. Railways should be taxed where they made money, but they mostly lost money in Ontario. Moreover, investors had invested in railways in the belief that rails and bridges were exempted, and so no



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 261

change should be introduced. The emergence of new kinds of corporate capital did not justify heavier taxes on railways. His clients only wanted to pay what was fair, but Robinson did not think corporations and individuals could or should be taxed in the same way. Some weeks later, Robinson returned to report that, having canvassed his companies, he could propose a fair and reasonable solution to the problem: a tax on 60 per cent of their gross earnings (as a proxy for net earnings but one they would be willing to declare). His proposal took assessors by surprise, and it took them several days to show that the result would be a tax cut. J.S. Fullerton, assessor for Toronto, explained that it would result in an enormous loss of revenue there: Consumers’ Gas, with property worth $1.2 million and annual earnings of $691,509 paid $24,866 in taxes; the reform would lower those taxes to $15,775; with the $5,850 lost on the scrap-iron decision, the total loss would amount to $21,625 per year. Hamilton’s assessor cited a comparable falling off. Well, Robinson exclaimed in reply, they could hardly expect him to propose tax increases! In defence of his arguments, Robinson cited Seligman: “One of the best, if not the best, authority on the subject.” Seligman’s tax on profits, he reiterated, was “undoubtedly the equitable and reasonable and right principle,” though Robinson wondered whether it was fair to tax the enterprising man more than the unenterprising one.95 Seligman featured prominently in the commissioners’ final report of 1902, and their assessment of the property tax largely recapitulated the economist’s withering critique: “It is as destitute of theoretical justification as it is defective in its practical application,” on grounds of lack of uniformity, lack of universality, incentive to dishonesty, regressivity, and double taxation.96 The commissioners recommended abolition of the general property tax. The new tax regime should rest on three sources: existing and confirmed taxes on real property; personal income taxes; and a business tax based on rental values. The latter was the Montreal model, but the taxes would have to be adjusted because Montreal’s 7½ per cent was too low. Private bankers and brokers were exempted from the business tax – they would be taxed on income from $1,000 (lesser income was exempted) to $4,000 and thereafter on rental value of their business premises. In short: big fish did not have to show their income; smaller fish did. Income from investments should be taxed as income. There would also be special deals for the railways, rather than the uniformity that the municipal assessors sought. The legislative committee that drew up the specifics of the new assessment law heard more evidence from businessmen and the public through 1903–04. One outspoken witness was Thomas White, who denounced

262

Reconstructing Fiscal Federalism

the initial project of the assessment bill on grounds that it imposed double taxation on finance. Trust companies, he explained, had two sources of income: their capital and the funds paid to them for investment. They should pay a business rental tax instead of a tax on invested capital, and the taxes on invested capital should be on shareholders rather than on the company.97 A fuller version of his thoughts was given as an address to the Canadian Club in Toronto on “The Difficulties of Assessment.” Whether a given $10,000 existed as cash, land, or income, all should be equally taxed. But too many anomalies cropped up. Saloon keepers were taxed on their stock and not their income from it, so they accumulated huge debts to brewers and distillers and escaped taxation. But for merchants, debts were only exempt if they were not mortgages. Personal property of utilities, White observed, was largely exempt as things stood, while railway companies were “shamefully under-assessed. They did not pay on track, cars or revenue. Legally they might be assessed on their track today, but probably only on a scrap-iron basis.” There were also problems in regard to real estate: vacant and quasi-vacant lands like sandpits as well as high-end residences were alike harder to tax than ordinary residences. White favoured a business rental tax and income tax, but with exemptions increased from $700 to $1,000.98 Another talk to the Canadian Club later that year urged special new taxes to support the University of Toronto. Surtaxes on wealth suggested themselves, as did taxes on franchised companies. “When not a railway passing through Ontario paid one dollar per annum to the municipalities by way of taxes upon its rolling stock or its rails, or its net earnings. When no bank paid municipal taxes upon its profits. What about a yearly tax upon every mile of electric railway in Ontario, reducing the value of its watered stock not more than a fraction? Or upon the franchise-holding corporations in cities over 50,000 inhabitants adding every year their hidden inside reserves. A tax for university education would not lower their stock half a point on the Exchange.”99 White’s was an unambiguous argument for an effectively taxing state. But that tax must not threaten the interests of investors who might be worried by encroachments on their investments. White’s arguments for taxes based on rental values rather than invested capital effectively guarded the privacy of finance capital. His testimony to the legislative committee seemed to suggest that he regretted, even repudiated, his early attempt to tax the funds in the hands of trust companies, an innovation that had provoked the corporate tax revolt. But he still gazed longingly at untaxed monopoly wealth, the “hidden inside reserves.” The Liberals largely followed White’s advice in regard to the



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 263

assessment bill; their Conservative successors took his advice on the university and, indeed, made White a university governor. The new tax regime rested on business rental and income taxes, but it adjusted Montreal’s flat-rate business tax to reflect the value of the business concerned. Some spaces were more lucrative per square foot than others (retailers versus warehouses, for example), so that their taxes could not be based on the same basis. Almos Tassonyi observes that “the ‘business occupancy tax’ system continued until 1998; the rates varied from 140 percent for distilleries to 30 percent for small business and were not amended until 1989. Apparently, the new business assessment percentages were chosen to generate the same level of income as the previous personal property tax.”100 The new law was not quite what Robinson had recommended but achieved the same effect. Capital taxes were firmly off the table for municipal purposes; negotiations of value would be over income and proxies for income. In replacing the property tax with taxes on income, Ontario adopted a progressive model of fiscal reform. The United States got an income tax in 1913, and Canada followed in 1917, using language copied from the Ontario legislation.101 Scholars have heralded the emergence of graduated income tax as one of the great accomplishments of American progressives, one that enthroned the democratic principle of ability to pay. And in Canada, too, income tax was adopted with a language of sacrifice and economic levelling.102 So why was there such close correspondence between the interests of capital and the progressive narrative of economic levelling? The Toronto Financial Post later observed that the business element, “which has always been strong in Ontario,” got what it wanted in the “Business Assessment Tax in 1904.” It found the new regime unscientific and arbitrary but, nonetheless, preferable to the general property tax.103 In fact, vested interests preferred the status quo – virtual tax exemption – to taxes on profits, but they accepted the new regime because it protected them from fiscal reformers. The fiscal crisis was a debate about the meaning of value. Value was a social construct, and the fight was over what “social” meant in such a construction. Fiscal reformers were making two claims: on the one hand, that popular priorities infused value; on the other, that the people themselves should control value through their political institutions. They saw themselves in a three-way conversation with vested interests and local state officials that was being unfairly umpired by courts and legislatures and unhelpfully heckled by liberal academics. They called for local and democratized assessment powers that the provincial government refused

264

Reconstructing Fiscal Federalism

to grant. Civic officials, by contrast, saw themselves as empowered by that public but also as a moderating force upon it. “Social” for them meant intersubjective but not wildly relative: assessment should follow carefully formulated rules, grounded in professional experience, that could depoliticize the process. They believed they wielded objectively fair criteria for assessment and that the real obstacle to fair taxation was political interference from clientelist civic and provincial politicians. Corporations, as the third element in the conversation, saw dangerous demagoguery at work in the new municipal taxes. Theirs was an oligarchic reading of “social,” one that gave them privileged powers to construct and read the meaning of value. They sought clientelist solutions quietly negotiated behind closed doors, and had many allies in the provincial state. Academics, initially marginal to the debate, gradually interposed themselves as mediators both between wealthy and moderate interests and between the two branches of the state. Their version of “social” resembled the disciplined intersubjectivity of tax assessors but with less accountability to public opinion. Ontario’s tax crisis was a political crisis. Whatever the failings of municipal officers, everyone knew that the deeper obstacle to fair taxation of business in Ontario was legislative protections for businessmen. As H.V. Nelles has argued, this was a regime deeply compromised by its deference to corporate interests where, Phillips Thompson declared: “Capital is king.”104 Ontario’s government did not just defer to the business community: it was virtually indistinguishable from it. Premier Ross had his own interests to consider in choosing the Ontario Assessment Commission commissioners in 1900: he was president of Manufacturers Life Insurance Company and, through that company, heavily invested in a new Electrical Development Company of Ontario created in Toronto in 1903 to draw power from the Niagara River. His biographer suggests that Ross fell too much under the influence of his attorney general, John Gibson, later Sir John, who had been Hamilton’s city solicitor until forced to resign in the early 1890s under suspicion of corruption. Soon afterwards, Gibson hooked up with a canny businessman, John Patterson, and together they founded Cataract Power Company in 1896 – the first Ontario company to harness Niagara Falls and one of Robinson’s client companies in 1900. Their success in Hamilton, argues Carolyn Gray, did not exhaust the ambitions of Gibson and Patterson: “Using cpc as a stepping-stone, they set out to create an integrated industrial, power, and transportation complex rooted in electricity which, though focused in Hamilton, would extend throughout southern Ontario.”105 As the officer responsible for steering the new assessment law through the legislature, Gibson was, surely, the fox set to guard the



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 265

henhouse. Indeed, Hamilton’s assessor, Frank Hutton, rejected Robinson’s 60 per cent profit tax on grounds that even the scrap-iron basis would yield more taxes from the Cataract Power Company. When the chairman, Judge Maclennan (another Hamiltonian), responded that the result might still “be fair – Mr Robinson says it is,” Hutton responded passionately: “Well, I respectfully submit that I do not think it is. I do not think these colossal companies that have their millions invested in real estate should be treated any different from what any gentleman would be who would have his millions invested in real estate. He would be quite willing, if he put a million dollars in houses and lands, for you to assess him only 60 per cent of what they brought in, their gross revenue.”106 It was Gibson who negotiated particular rates for particular industries with all the niceties of a backroom tariff deal. In 1904, during the legislative hearings, he broke the news to the brewers, interrupting their expostulations in favour of the property tax: “Oh, we are away past that months ago. We have long ago decided to do away with personalty.” The brewers complained that the new business taxes would ruin them, whereupon Gibson’s committee lowered the business assessment on malt houses to a 50 per cent basis on the spot. When Toronto complained of lost revenue thereby, Gibson exclaimed: “Oh, Toronto will be all right. You will get hundreds of thousands of dollars from the new income tax.” Next up were the private club owners who found Gibson less receptive to their demands. In the end, the tax reform probably made municipal assessment more rather than less clientelist – albeit at the provincial rather than the municipal level. It was hard to see progressive reform at work. Underlying the political problem was an epistemological problem. In order to tax property, you had to think hard about relationships between different kinds of property, crossing such big categorical cleavages as tangible versus intangible and personal versus corporate. That was hard to do, and it became harder as lawyers drilled holes in the arguments. For every argument that X property was really like or unlike Y, there was an argument for the reverse. Tax codes were a kind of encyclopedia of the world, and they were only as strong as their powers of description. They faltered at the same time as mimetic projects of representation were beginning to fail more generally, undone by the emergence of anti-realist representations in painting, literature, and philosophy – not to mention currency debates – that were provoking such parables of anti-realism as The Picture of Dorian Gray or The Wonderful Wizard of Oz. The legal arguments against existing tax laws were as much aesthetic as economic critiques of obsolete property regimes.

266

Reconstructing Fiscal Federalism

Finance capitalism played to this construction and dissolution of technologies of representation. The intricate web of finance capital existed to flummox the state: to hide stock watering and conflicts of interest.107 Monetization of the industrial economy let financiers construct a mirror image of the material world where they could control and determine its meaning and value. Two worlds, the one material and the other a tissue of money, credit, and reputation in perpetual motion, perplexed tax assessors, not only because the relationship between the two worlds was so complex and volatile but also because they could not tax one without letting the other go free and could not tax both without imposing double taxation. Either way, they failed to tax all property “equally.” Assessors stolidly fought back the attack with a sturdy, down-to-earth pragmatism. They had practical know-how where their critics had complex academic and legal arguments. There could be no academic formula to determine the value of property in East Gwillimbury any more than the much-disputed difference in values on the north and south sides of King Street West. Only tacit knowl­edge could settle that claim, not the formalized knowl­edge of economists. In all its banality, tax assessment reflected a basic premise of the emerging philosophy of pragmatism being put forward by such scholars as Henry James and John Dewey: truth does not create actions but follows from it. The American pragmatists rejected the classical view of philosophy as a representation of the world and inaugurated a new and democratic understanding of truth as the thing that results from action. Pragmatism asserted the priority of public over private values.108 No truth was more public and democratic than a market-value assessment: the worth of a property just was what people were willing to pay for it. Assessors were pragmatists avant la lettre. Taxation creates states as much as states create taxation. States need coercive powers to appropriate resources, and all understandings of the relationship between justice and power have to follow from that point of departure. It is not the right of governments to tax that has to be parsed but the way in which all other rights follow from it. All tax assessors worth their salt knew that fact instinctively. They knew that taxation was just and legitimate, so long as they could find a reasonable basis for performing it, and they said so repeatedly at the Assessment Commission in 1900. One of the most outspoken advocates taking the municipal point of view was Frank McKelcan, Q C , city solicitor for Hamilton and the spokesman for the Ontario Municipal Association. If there was a voice of “the ratepayer,” McKelcan personified it. He insisted that there was no



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 267

difficulty in taxing corporate or individual property. The only obstacle was the various tactics of evasion. “Our view is that a tangible property in the municipality should be taxed, whether it is land, buildings, or personal property of a tangible character.” Again: “We have then a simple basis of taxation upon property the value of which is easily ascertained.” When the chairman queried his method of evaluating rails at so many thousand dollars per mile, McKelcan insisted: Any man accustomed to building these railways can tell this is worth three, four, five or six thousand dollars per mile according to the nature of its structure. The Chairman: Do you mean the cost of putting it down? Mr McKelcan: Yes, the material and the cost of putting it where it is. It is very easily estimated, any practical man can tell you in an hour; and at any rate with the figures in possession of the company there is no difficulty at all in arriving at a mutual agreement in regard to that … The Chairman: How will you ascertain the value of the property where there are no buyers and there can be no competition, a property with a terminable franchise? Mr McKelcan: There is no practical difficulty in arriving at the value of that property … The Chairman: Suppose you were an arbitrator, how would [you] go about it? Mr McKelcan: Quite easily, I would ascertain what that property cost, and what it was worth there now as it lay … It will depend on the surrounding circumstances, and the condition of the property and the condition of the business and so on, but that can be arrived at by an assessor, or Court of Revision or the County Judge on appeal … There is no greater difficulty in ascertaining the value of the superstructure of a railway, that is, the ties and rails, or poles and wires of an electric light company, than there is in ascertaining the value of a building – not any more; one is bricks and mortar and timber – and you may say, well, you can’t value those bricks and timber and mortar, you can’t ascertain what those things are worth; but you can ascertain what the building is worth as a whole, and so you can tell what a mile of railway is worth. That is a practical difficulty that has to be worked out in the valuation of all properties both real and personal.109

268

Reconstructing Fiscal Federalism

McKelcan instructed the judge as to how expertise could replace freemarket competition as a mechanism to define value under monopoly capitalism. For McKelcan, value rested on technical or procedural details, so long as assessors had training, resources, autonomy, and accountability. The real problem, he knew, was political: politicians and judges who would not let tax collectors get on with the job but who sided with the big companies. McKelcan was all too acquainted with such men, having dissolved his partnership with John Gibson about the same time as he succeeded to Gibson’s position as Hamilton’s solicitor. Still, McKelcan’s approach was old-fashioned. His quarry was visible property; invisible property like bank credits and railway franchises he would exempt. “It not being tangible personal property but something in the abstract, a mere right or power to use the property which they own, I do not consider that that is a subject of taxation any more than a man’s brains, or ability or capacity for business combinations are subject for taxation.” His formula, with its emphasis on labour and materials, could not apply to intangible property. McKelcan’s criteria of value were giving way, in economics departments, to the marginal utility theory of value pioneered by Stanley Jevons and Alfred Marshall in England and by John Bates Clark in New York. Marginalism privileged popular demand: something was only as valuable as consumers decided it was, according to its perceived utility. American labour historian Rosanne Currarino finds in Clark’s writings between 1886 and 1899 that “the multiple meanings incorporated in utility meant that marginal utility theory was more than an explanation of the source of commodity value; it was also a description of the dynamics of consumer society, in which social relations were increasingly understood through abstracted value.”110 Clark learned from Henry George that value came from the products themselves, rather than from inputs, but whereas George’s version of value dwindled as the stock of the world fell into monopoly ownership, Clark saw consumer demand as a bottomless source of increasing value. But, Currarino goes on to argue, whereas Clark theorized marginalism in the abstract, it was his colleague at Columbia, Seligman, who historicized the concept in 1901 by grounding it in collective experience. Seligman and Clark worked closely together, and it was Seligman who insisted that value was socially constructed, rather than a reflection of individualized consumption by an autonomous agent, when he argued: “Value in society depends upon the fact not only that each individual measures the relative urgency of his own different wants, but that he compares them consciously or unconsciously with



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 269

those of his neighbors.” I might not want a locomotive, but because others do, it has a “social utility.”111 The new theories made personal and private valuations of goods subject to social psychology. Seligman’s reasoning reflected years of cogitating upon taxation. Social construction of value was a fact of everyday life for tax assessors. They knew that the value of a property was always relative, continually rising or falling. Their job was to find common ground between the value that people set on their property and the market’s valuation. Sometimes with objective formulae, sometimes with rule-of-thumb techniques, tax assessors put the stamp of state-sponsored truth upon consumer choices. They turned value into fact. The bigger the city, the more elaborate the formulae, and the more highly trained the assessors. Some, like White, became virtuoso. But fact was always at threat from value because people always made their own calculations as to worth. Tax authorities were continually besieged with correspondence from ratepayers outraged by tax increases. Nonetheless, the process of turning taste into truth, value into fact proceeded with remarkable smoothness until the legal and political challenges of the 1890s. As academics began to scrutinize the ways that consumer choices affected value, their analyses were used by corporations to undermine the practical know-how of assessors. The question of measuring what society brought to value permeated much of the debate. Corporate and populist voices alike denounced a McKelcan-style tax code for its neglect of social inputs. In many respects, Henry George’s “unearned increment” resembled the social value that stock-watering businessmen were attaching to their brand names. When businessmen insisted on the intangible value of a brand name or a sterling reputation, they monetized public opinion. It was hard to gainsay the argument that a name, whether up-and-coming like Max Aitken or venerable and stolid like the Bank of Montreal, enhanced values. Reputation, honour, and name recognition were not new, but they were now monetized in new ways. Of course, the businessmen privileged their own, insider opinion of corporate values. But could you really monetize public opinion without admitting that the larger public had a stake in it? Concede that point and the insistence on social construction of monetary value was a gift to tax reformers, who strove to hoist the corporations with their own petard. This was especially true of single taxers, whose point of departure was nationalization of social value. If you strayed from orthodox Georgeism and applied that unearned increment to other kinds of property, as liberals had fearfully predicted, then you had a mandate for nationalization of social value. Henry George might not have approved,

270

Reconstructing Fiscal Federalism

but his Toronto adherents freely voiced arguments to that effect at the Ontario Assessment Commission of 1900. There were many different kinds of “intangible” values. Eastern Americans used the term to refer to the credit economy, while westerners used it for corporate franchises or charters. American state governments were legally debarred from taxing profits of interstate corporations, so they began to tax franchises by describing them as licences that measured gross earnings in a state. Canadian provinces did not have the same legal straitjacket as the American states, but they confronted similar problems as corporate finance shifted away from stocks that could be taxed as property and into bonds that were exempt as debts. Bell Telephone launched its legal challenge to Hamilton’s assessment on grounds that the city was taxing the franchise – the total value of the company – rather than the material stock, i.e., reading the franchise value into the cables and poles. Bell insisted on a double standard whereby it could reason with its own market value but the state could not. Given that assessors routinely applied social calculations of value to assess private property – a homeowner’s house was worth rather more than the bricks and mortar – Bell and the other utilities had to insist on the radically different nature of their property. The franchise alone distinguished them: the legal power to use utility property that was subject to political oversight rather than free-market exchange. Bell’s point was that, once you introduced such political factors, you could no longer reason from the market and could no longer speak meaningfully of a market value. Franchises provoked the most heated exchanges before the Ontario Assessment Commission in 1900. Were they mere legal contracts or concentrated forms of social value? Tax reformers argued that the public supplied value to franchises and should reap any increase in value. Franchises were really just another form of unearned increment. No, replied the corporations, it was all earned. But the single taxers reasoned from the evidence to nationalization. In the words of Alan C. Thompson: “After listening to the arguments of the solicitor for the different corporations, especially those of Mr Robinson, I feel more strongly convinced than ever of the urgent necessity of public ownership of all these franchises. It would simplify the matter very materially.” He opposed Robinson’s tax on gross earnings as likely to injure smaller companies; invoked orthodox political economy to show that existing taxes were regressive; and argued for franchise taxes, calculated the same way McKelcan calculated ordinary value (invested wealth), to “relieve the municipalities from a great deal of figuring that Mr MacKelcan is so much afraid of.”112



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 271

Robinson and Douglas vehemently rejected a franchise tax on grounds that the franchise was mere abstraction, possessing no value. The material property of the companies (most of them financially beleaguered, they insisted) was unlike other property in its immobility. Because utilities could not pack up and leave, they were dangerously subject to “the caprices of local agitators and very often the caprices of local councils themselves.” This was Bell’s point – that political controls negated market value – carried one step further: the greater the public agitation, the lower the value of the property. In that sense, society controlled the value of their property, but the more that fact was known, debated, and calculated, the more value was impaired. This was social construction with a vengeance. Franchises were just the edge of the pragmatic wedge. They were more vulnerable to confiscatory taxation than mobile forms of capital, but all capital could find itself vulnerable if Ontario public opinion swung in favour of taxing consumer-added value. The arguments that name-brand recognition affected stock and bond values could serve as well as stymie tax assessors by applying to corporate financialization writ large. Finance capital might seem harder to tax because it was intangible compared to real property. But the logic behind monetization, debt financing, was to reify value and make it interchangeable at an abstract and objective level so that it could be freely exchanged on the market. Ultimately, all debt measures social value.113 Once concede that the state had a right to calculate an assessment upon that value, and a pragmatic formulation would surely follow. The workings of social capital – the coinage of political clientelism – might itself come under scrutiny as something calculable. The Assessment Commission of 1900 did not quite grasp the nettle of value but sought pragmatic solutions to avoid such searching questions. The same was true of the legislation that resulted in 1904. Rather than trying to come to terms with the real nature and consequences of having certain kinds of properties or revenues, Gibson’s select legislative committee simply decided how much it thought each sector of the economy should produce and told them to produce it, adjusting the tax ratio accordingly. The figures were worked out by statistical analysis of the pre-revolt taxes paid in seventy-two municipalities. Municipalities were promised no loss of revenue, while businesses need fear no increase. Municipal authorities chose to build on low but sturdy ground, as provincial political muscle was made to defend rather than assault capital. James Forman, Toronto’s assessment commissioner, liked the new system. The Ontario Assessment Commission reinvented the status quo ante but placed it on firmer ground by doing away with the debates

272

Reconstructing Fiscal Federalism

about “property.” Businessmen had largely co-operated with the earlier system because they knew they were under-reporting their property; they co-operated with the new regime because they no longer feared penal unmasking of under-reporting. Statistics showed that the new taxes tracked the city’s economic expansion better than the old ones had done. Indeed, the business taxes produced more than expected because a destructive fire in the business district resulted in construction of many fine new buildings with increased rents.114 Economists gave the new regime no more than two cheers. Solomon Vineberg, in a PhD thesis on Canadian taxation done under Seligman at Columbia, denounced the unfair and unscientific system of imposing full taxation on real property and fictitious values on business and professions. The only fair and practicable corporate tax, Vineberg argued, must be on gross income; the paramount principle and warned that all government tax schemes should aim to avoid “trenching on capital.”115 Vineberg said much the same of those corporate taxes introduced in 1899. They were imposed on paidup capital amongst industries required by law to declare paid-up capital to investors and customers – banks, insurance companies, trusts, and the like – so they were not fantastical, but they were inequitable and unscientific, as any capital tax must be. Vineberg was more approving of the work of the Ontario Commission on Railway Taxation, which published its report in 1905. The commission’s hearings in 1904 sounded as pragmatic as the contemporaneous assessment hearings. The commission’s chairman, H.J. Pettypiece, interrupted the long and technical arguments of the railway solicitors with the flat assertion: “We want $2,000,000 in taxes from the railways in Ontario.” (“Robbery,” came back the predictable reply.)116 But the final report, when it came in 1905, did not stop at pragmatic conclusions. It formulated decisive criteria for taxing the different kinds of railway properties according to a measure of their income and, in so doing, closed down the epistemological debate. Initially, it did not look so promising. The commission was provoked by Pettypiece, a newspaperman (proprietor and editor of the Forest Free Press, which boasted “Positively the largest circulation in East Lambton”) and Liberal mla with progressive leanings and constituents resentful of railway fares and profits. He demanded something be done or he would cross the floor. With a two-seat majority, Premier Ross could not ignore the complaint, so he offered Pettypiece the chairmanship of a commission to investigate railway taxation and then “started looking around to find who he could put on the job to hold down Pettypiece.” He chose a Kent county judge, Archibald Bell, and Adam



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 273

Shortt, who now held the Sir John A. Macdonald Chair of Political and Economic Science at Queen’s University. Shortt’s recollection was that “frankly I did not expect anything to come out of this except to find out how it was done and being a Prof. of Economics there were many points that I would like to get the opinion of practical men … connected with the railways and big corporations and discuss the various questions fully.”117 Shortt had no record of state service and no special knowl­edge of railway taxation, and the field, according to his biographer, “was a maze of technical detail but already he had turned some of his attention to problems of public finance and great masses of facts were simply challenges to him. The Commission made a very thorough investigation of practices not only in other provinces but in many of the states, and produced a report which still remains the basis of railway taxation in this province. His interest in problems of taxation persisted and for many years he was a familiar figure at the meetings of the National Tax Association of the United States.”118 Shortt inaugurated a new public career for himself and “solved” Ontario’s tax problem, producing a professional analysis calculated to defeat radicals and corporate resisters alike. The report prognosticated an emerging state–academic alliance in Canada. The three men set off on a whirlwind American tour in the spring of 1904. Thanks to letters of introduction from Peacock, now a prominent New York–based financier representing the Cox network of interests, they had access to some of the leading American railwaymen, who spoke very freely to them. They also fully canvassed the professoriate. Prestigious American economists who had given Shortt short shrift when he invited them to a scientific meeting in Toronto in 1897, now fulsomely responded to his queries. Seligman provided a useful list of the best reports produced by state railway boards and further itemized “the most typical and instructive states in this country with reference to railway taxation in their order, Pennsylvania, New York, Indiana, Michigan, Wisconsin, New Jersey, Minnesota, Massachusetts, and Connecticut. In several, the matter has now been laid to rest, but in some especially the States of the Middle West, the question is very acute. If I can help you in any other way pray command me.”119 At Harvard, Shortt met F.W. Taussig, chair of the American Economic Association and the leading expert on the tariff. At Ann Arbor, progressive tax economist and i cc statistician Henry Carter Adams proved, Shortt wrote to his wife, “a very genial man and most willing to give us information.” In Detroit, the head of the state railway company “invited me to go for a sail on his fine racing yacht and have lunch at a yachting resort on the Canadian side up near Lake St Clair.” In

274

Reconstructing Fiscal Federalism

Indianapolis, “the Governor of the state invited us all to lunch with him and we had a very pleasant time. As I sat on the Governor’s right I had a long clash with him and he was very genial and informative.” Back in Ontario, the three men agreed to write three separate reports and then knit them together. But only Shortt actually wrote anything, and his report became the formal submission. “Pettypiece said he was sorry it did not square more with his ideas but he would sign it all right.” By the time the report was submitted in 1905, Ross was out and Conservative James Whitney was in. One of Whitney’s legal advisers noted that “the Report has been prepared in toto by Professor Shortt.”120 Clear, practical, strategic, and voluminously referenced, the report became a classic in the field, as scholars and officials from across North America wrote to request copies. American experts were astonished at just how much information Shortt brandished. The report openly acknowl­edged that the question on the table was corporate taxation writ large. “On every hand we find corporate enterprise more and more extensively covering at once the older economic fields and the newer enterprises of production and service.” It was obvious that most capital would, in time, take corporate form. Therefore, taxes must be levied “in increasing measure upon a constantly expanding range of corporate property or income. For this reason, the problem of corporate taxation has come to represent, if not for the present, yet at least for the immediate future, the most important feature of direct taxation.” The commissioners thoroughly debunked what they described as the popular but fallacious argument that people and corporations could be taxed on the same basis. “Impossible,” they declared, for a long list of reasons culminating in the observation that where the attempt was made, gross inequality resulted. Personal property existed in discrete places; corporate property could be “scattered over the civilized world” and its ownership “continually shifting, according to the activity of the stock market.” Personal property was directly controlled and could be disposed of freely and completely; investors had no such control over corporate property. Further, “there is in no practical sense a market for the property of corporations. Hence their general property cannot be adequately estimated on any other ground than what it will earn.” Consolingly, whereas it was difficult to ascertain personal income, it was easier to ascertain gross earning power, because corporations had to keep reports for shareholders and bondholders. The commissioners asked whether railway corporations could be taxed like other kinds of corporations according to their capital stock or



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 275

occupation value and concluded they could not. Usually corporate wealth bore some relationship to revenue, but some of the most expensive railway lines over treacherous terrain had some of the smallest revenue. So property and profits could not be proxies for one another. Nor could market value determine railway value: even if sales did occur from time to time, in general, “there is no market for railroads, even as entities, much less in sections.” Nor could the value of stocks and bonds serve as the basis for taxation: stock watering devalued the former, and the bonds were largely in foreign hands. Corporate earnings were the only practical basis for railway taxation. In looking at the American situation, because the railways there could not be taxed on earnings, American state authorities had to pretend they were actually taxing something else, like franchises. “Where it is employed, it is under some disguise or legal fiction, and commonly with the tacit consent of taxpayer and taxing authority that the fiction shall not be called in question. Here in Canada, however, we are not subject to such artificial restrictions, and there is no reason why we should not avail ourselves fully and freely of a system of railroad taxation on the basis of earnings.” Ontario was well equipped to tax railways and should be doing so. (If Bell called the state’s bluff when it challenged Hamilton’s franchise assessment, the railway report replied that Bell was the one bluffing.) The commissioners went on to compare net versus gross earnings as the better basis and plumped for taxation at 3 per cent of gross corporate earnings. They followed the Seligmanian logic that ability to pay, as measured by income, was fairer than taxation on capital. It remained to advocate a province-wide board. It also remained to reject any notion of taxing franchise or social value: But to claim for the State the right to take by taxation or otherwise the franchise element of a business practically amounts to claiming for the State the right to take the intangible value which belongs to a bank note or any other form of bank credit, or the intangible value of a professional man’s reputation as embodied in his practice … It is perfectly true that none of these intangible values could have been developed apart from the general public. But to claim that on this account the general public is entitled to take these values to itself by some process of taxation, must apply to all such instances or to none. But it is perfectly demonstrable that practically all values, tangible or intangible, in the modern economic world, depend upon one section or another of the public. But if the public which contributes to these values may take them, through taxation, then a good part of

276

Reconstructing Fiscal Federalism

the taxes on the farms of the west and on the railways which carry their grain and cattle to the seaboard, should go, not to Canadian Provinces or the United States, but to Britain and other countries of Europe, whose people, by furnishing a market which pays for these products and their transport, give value to the farms and railroads. To such conclusions do these crude claims logically conduct us.121 This was a tendentious argument given that problems of international taxation had ruled out taxes on bonds and stocks. But it conveys Shortt’s opposition to taxing social inputs. He saw that to count social value as something the public owned was to turn “the market” into “the public” and to take the private out of any private property with market value. The report closed down that line of thought. Could the new tax precepts defy the kinds of legal challenges that had undermined the old? The railway commissioners exalted fairness, but they also reminded railway companies that, in practice, fairness meant what the public thought was fair. At hearings in Ontario, Judge Bell interrupted three hours of special pleading with a warning: “The comparisons that were being made all over the Province between the small taxes paid in Ontario and those paid in adjoining States was not unreasonable from the people’s standpoint, and if something was not done, the first thing the railways would know would be that they would have a Legislature elected that would be pledged to tax them, perhaps beyond all the bounds of reason.” International statistics of comparison could not provide a formula for legitimate taxation, but they could identity a broad range of what was average and what was, therefore, fair. Once you had that range in hand, you could use it as both an empirical and a political foundation, not to say threat, to wring concessions from the corporate sector. Shortt concurred with Judge Bell: “What we ought to do in Ontario is to find the equitable method of taxation, a method that would be fair to all and unfair to no one, that could be defended from all standpoints, before the question gets beyond control and becomes the football of demagogues.”122 The railway-tax commissioners recommended the province-level, revenue-based taxes that the corporations sought, but also reminded them that the alternative might be demagoguery and confiscatory taxation. If the courts could undermine legislation, legislation could make legal victories pyrrhic ones. This was a serious threat. The hearings occurred in the fall of 1904, just as Frenzied Finance’s insider account of J.P. Morgan’s scandalous consolidations gripped reading publics everywhere. In between teaching and report writing, Shortt was giving public lectures that urged



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 277

caution and moderation. At Knox College in October, he upheld the logic of stock markets and attacked individuals “blackguarding” it. Gullible public opinion was the real culprit and “sound and sane newspapers” the solution. Shortt’s remarks were reprinted in the mainstream press, including the Winnipeg Tribune and the Toronto News. The latter was an independent conservative newspaper recently started by Joseph Flavelle, a wealthy pork butcher and founding president of the National Trust, which now counted both White and Peacock as employees.123 Shortt provided a moderate and pragmatic solution to railway ­taxation. In many respects it was a classic liberal solution, dressed up in new progressive clothing. John A. Macdonald would probably have approved. The commissioners brandished the principle of an empowered public in order to write that public out of capital value. They recognized that where the political will to tax existed, taxes could be legitimately exacted; legitimating formulae could be concocted. They reminded capital that it must “stoop to conquer.” But in the process of brandishing that political will, the commissioners constrained it. With the shift in focus from property to income, the question as to who owned the value of capital simply disappeared. Income was more resistant to social construction than property. If property was irreducibly social, income seemed earned. Income taxes perpetuated an insistence on personal agency that shored up the conceptual defences of capital and reduced the scope for negotiation to an arbitrary percentage point. Economists like Seligman and Shortt understood the threat that a democratizing public posed to security of property. In a world where all values were irreducibly social, enforcing a general property tax meant asking the public: “How much is this transaction, this factory, this bank, worth to you?” No corporation could have welcomed that conversation; each must have valued its own services more than did the public. Property so easily reassessed by a fickle and misguided public (i.e., one attached to the fantasy of equal taxation) could not play the role of political and economic ballast that Burke had assigned it a century earlier. Far better a tax that merely asked people how much they had earned lately. Economists, legislators, and businessmen were fearful of the public’s taxing powers. The world was democratizing so that the unpropertied were taking control of the political reins in municipalities and provinces across Canada. The consequence was democratic tax regimes that bordered upon confiscation. The real problem with the general property tax was not that it could not tax property effectively; it was that the growing power of the state enabled it to tax property according to new democratic

278

Reconstructing Fiscal Federalism

standards of fairness. All those legal challenges leading to complicated debates about the nature and meaning of property were so many red flags in the face of an increasingly agitated public. If business persisted in using the courts to hamstring and undermine elected governments, then the public might well use the state to impose new restraints and redistributions upon business. Better, Ontario’s legislators decided, to turn to taxes that met popular agitation for tax reform while taking capital taxation off the table. Businessmen preferred negotiations over how much profit should be appropriated to negotiations over how much capital should be appropriated. Scholars bolstered that choice. Radical fiscal reformers were not silenced, but they suffered a major defeat in Ontario. James Whitney, elected premier in 1905, was a new breed of progressive Conservative. He won on a promise to reform government, and reform it he did. He made his civil service less overtly partisan, created a provincial hydroelectric commission chaired by Adam Beck, and made the University of Toronto independent of party politics. But he also preferred negotiation to legislation and so used the Commission on Railway Taxation report as leverage to push up railway taxes rather than rewrite the law. When he ran for re-election, Whitney boasted that his government had increased taxation on electric railways “more in accordance with the value of the franchises they enjoy” and had doubled taxes on steam railways between 1904 and 1906; and that municipalities received 20 per cent of the $400,092 in railway taxes.124 But the Pettypieces were far from assuaged. In February 1908, during a debate in the Ontario legislature, even Whitney supporters argued that more was needed. Michigan was extracting more from its railways, argued P.H Bowyer of East Kent. Yes, replied the provincial treasurer, but “at a convention of tax gatherers which he had attended across the line last summer he heard Michigan men denounced as thieves and robbers because of the exorbitant taxation.”125 Whitney ended the exchange with the remark that “the assessment act is not perfect, but neither is it very imperfect. I would advise against tinkering.”126 With regards to minerals, Whitney did bring in legislation to tax mines in 1907, but it largely reflected the railways arrangements: a 3 per cent tax on mining profits over $10,000, along with a modest two-cent tax on acreage, designed to discourage speculation. The mining interests protesting vigorously, predicting ruination, were read the riot act by mines minister Frank Cochrane and by Whitney (“We think public opinion demands it.”) and discovered that they “could live quite comfortably with the modest toll.”127



Corporate Tax Revolt in Toronto in the 1890s: Fairness and Wealth 279

Edwin Seligman was a crucial pivot for the shift towards income taxation because he united academic theories and banal local practices. He has been described as a “unique combination of outstanding scholar and influential public figure.”128 The connection to practical state making ensured that he was widely read by public men. And for all his progressive credentials, he remained the son of a fabulously wealthy private banker, convinced that trusts provided a useful, steadying counterweight to public opinion.129 Even Mavor, who wrote sponsored reports on utilities in which the sponsoring companies took an “unhealthy interest,” found Seligman’s strictures against double taxation too absolute.130 My own reading is that though the general property tax was harder to get at than income, it was not that much harder. Victorian liberals understood income tax as the fairest in principle but the most difficult in practice, requiring intrusive mechanisms of scrutiny and enforcement.131 In the 1890s, progressive economists made income tax seem more practical and fair. In 1905, Shortt translated the difficulties around railway taxation – admittedly considerable – into an authoritative political program against capital taxation, and in 1907, he upheld it at the National Tax Association. Still, opinion was far from unanimous. At the association meeting in Toronto in 1908, Charles Bullock of Harvard gave a lecture that has recently been invoked as evidence that younger economists were turning against the general property tax. But that was not the message of the lecture. Bullock argued that income tax was, in an ideal world, fairer than the general property tax, but they did not live in an ideal world. The general property tax was unworkable because it was unscientific and sometimes confiscatory (a point made by Shortt). A scientific personalty tax – more carefully calculated, administered by educated assessors responsible to a statewide board – was entirely workable and fair. New evidence showed such a tax working very well in Maryland and Pennsylvania. Their success should lead the candid student to revise his ideas of the impossibility of taxing intangible wealth, as should the success of European countries. Having proved a property tax was workable in practice, Bullock then defended it in theory against the accusation of double taxation: there was not much of it, no more than resulted from income tax, especially once reformed. Anyways, he concluded, in the absence of international or interstate agreements, taxing authorities must always fall back on compromise measures that were more or less inconsistent with the demands of strict theory, and in the end, the goal was to do as little injustice as possible in the hard and illogical but not altogether uneducable or evil world in which

280

Reconstructing Fiscal Federalism

they all lived.132 But the tide was against Bullock. He was speaking in the provincial legislature buildings in Toronto, at the heart of an exemplary government that had installed a municipal income tax. Ontario’s choices lent momentum to progressive tax reform that Seligman’s proteges successfully began to install in American states, beginning with Wisconsin in 1911.133 But even as Whitney boasted to the gathered tax officials of balanced provincial budgets, Ontario’s treasury was discovering debt financing and has never looked back.134 Ontario’s decision to abandon the general property tax reflected the interests of the most important players. Circumstances, including an engaged public, a minimally taxed corporate sector, academic lobbying, and a pragmatic government, shaped the outcome. That outcome gave a conservative slant to debates about wealth in Ontario even as it veiled them in progressivity. But the conservatism was a rearguard action in response to an underlying political trend of greater democratization. That process would pose new and growing challenges to long-standing political and legal frameworks. Ontario, as a region, was particularly well suited to transfer new ideas, momentum, and policies across local, provincial, and national jurisdictions. But even as Ontario moved to close down the attempts to tax capital, elsewhere the single taxers were achieving new electoral successes and beginning to put their program into effect.

7 Single-Tax Revolt in the 1900s: Fairness over the Land

Municipalities across Canada were formulating new ways of thinking about poverty, wealth, and taxation at the turn of the twentieth century. Every village, town, or city had its own debate about property versus income, business versus land taxes. Together, these debates reconstructed Canadian politics. This chapter shows how the new ideas caught on and became politically mobilized, with a focus on the single-tax movement. History has not been kind to the single taxers but the new political history, with its interest in popular agency and cultural formations, may be kinder to them than older versions that have focused on the movement’s intellectual origins or its later boosterism and depicted it as too socialistic or too liberal. The missing middle of that story is popular political engagement. Single-tax theories became a lingua franca for a broad-based, crossclass alliance of the working and middle classes as they confronted a predatory alliance between capital and the state. This chapter surveys land-value taxation as practical politics, beginning with its failures in eastern Canada where businessmen instead rallied around business rental taxes, moving on to its successes in western Canada, and culminating in its growing salience in central Canada on the eve of the First World War. I see in that trajectory a growing reform momentum that transcended local taxation. Canadians gradually learned how to turn local tax projects into a transnational progressive alliance aimed with increasing focus at the reconstruction of their highly regressive and unaccountable federal state. The single-tax movement was concentrated in western Canada, but it had supporters everywhere because it spoke to local concerns everywhere, albeit in diverse ways. Maritime Canada produced its own sui generis logic of land-value taxation as social theory in a series of letters on municipal taxation, by Halifax banker Thomas Fyshe in 1880, that later single

282

Reconstructing Fiscal Federalism

taxers identified as an important forerunner of Georgeism.1 Fyshe was a Scottish immigrant and banker who worked in Kingston, Montreal, Toronto, and New York before joining the Bank of Nova Scotia in the mid-1870s, first in Saint John and then in Halifax. He set both that bank and the Merchants Bank on solid footing by expanding beyond the region, a process that reflected the westward shift of banking towards Toronto.2 Writing about Halifax finance, Fyshe produced statistics dating back to Confederation to show that whereas taxes on real estate rose, from $8 million to $11.2 million, taxes on personalty dropped from $7.9 million to $3.8 million. Retailers were hit harder than other businessmen and tenants harder than landlords, but the landlords made the laws. Landlords owed all their wealth to non-land movements of people and property but seemed determined to kill the goose that laid the golden egg. “For the grand engine by which business is carried on, population employed, and the city built up and rendered prosperous is capital invested in what is called personal property, in which I include houses. Real estate owes nine-tenths of its value to it, and yet seems anxious to quarrel with it about the taxes and drive it away.” Fyshe urged Haligonians to see themselves collectively as consumers of the city’s wealth, benefitting together in rising land values and maximizing that benefit by exempting non-land property from taxation. Like Henry George, Fyshe included houses as property that should not be taxed rather than as real estate that should. Land alone should be taxed: “1st. Because the net result of all the advantages and disadvantages connected with the city and the city’s expenditure is exactly reflected in the price of land. 2nd. Because its market value is an exact criterion of the average benefits or advantages derivable by its owner from living, or doing business, or owning property, within the city.” Fyshe was liberal where Henry George was not liberal because Fyshe’s taxing state was checked by its own limitations. To the liberal dilemma of how the liberal state can govern wealth when active governance is a check upon wealth, Fyshe had a creative solution: as indirectly as possible. He provided a formula for wealth that was perfectly congruent with the liberal aim of limited government. It was very much a banker’s solution to the problem, insofar as it taxed only the “convenient standing room” for capital and none of the activities or wealth going on in that standing room, none of the turnover of that wealth, which was, in the case of banking, particularly concentrated. A later pamphlet made the argument more explicit: Halifax foolishly taxed the Bank of Nova Scotia “upwards of $4,000 a year,” while Montreal wisely taxed the Bank of



Single-Tax Revolt in the 1900s: Fairness over the Land 283

Montreal a mere $600 per year; thus, “in the eyes of our people Banks must really be pestilential institutions.”3 A calculus of “the social” was forcing its way into local governance through the conception of value, and everywhere people grappled with the way the state should identify with and think about social relationships, not simply as a problem requiring spending, but as a constituent of the state-property-citizen triad itself. Henry George used the discovery of social value to demand a popular takeover of the state, whereupon Seligman countered by urging taxes on income rather than wealth. Fyshe provided a formula that looked backward to a status quo ante: the social could be written out as quickly as it was written in. He rejected income tax, both in 1880 and later, as impracticable and robbery. A later reflection in 1907 showed Fyshe equally critical of the stock-watering trusts, the socialists, and the income tax “crank.” Surely, he argued, the “deplorable exhibition of municipal misgovernment now going on in the City of Montreal” should dampen the ardour of the statists. Fyshe preferred to see Canadians “abolish the custom houses and adopt the single tax” but thought the best hopes for economic justice lay in such reorganization of industrial corporations as would see the producing classes retain control of wealth but share it out more fairly amongst themselves.4 Fyshe’s early writings enjoyed lasting life in Halifax tax circles as businessmen continued to demand reform and landlords to obstruct it. In 1891, the Halifax Merchants’ Tax Reform Association pointed to the worsening ratios of real versus personal property and complained that merchants accounted for three-quarters of personalty taxes ($3.5 million of $4.6 million total).5 Because they faced “keen” competition from Montreal merchants, Haligonians demanded the Montreal system of business rental value and produced a document, signed by leading Montreal citizens, to show that Montreal taxes were “generally accepted” as equitable and “had not been complained of by any section of the citizens” except in regard to exemptions.6 Francis Hugh Bell, a graduate of Dalhousie and a barrister, who reproduced many of Fyshe’s points in a pamphlet in 1899, also looked to follow Montreal’s example: general property tax was absurdly low and business was overtaxed. But, pace Seligman and Ely (whom he cited), Bell described municipal income tax as “pure communism – Robin Hood’s doctrine, that it is right and justifiable to rob the rich and give to the poor.” If Cornelius Vanderbilt stayed in a Halifax hotel, should he be taxed on his income “merely for the pleasure of sojourning among us?” Real property was the only sound basis for taxation, the only sound measure of the value of human “aggregation”: “Any tax based on

284

Reconstructing Fiscal Federalism

real estate value is simply the city, as a sort of landlord, appropriating to itself a part of the value which its citizens have created.”7 It bears noting that Bell’s argument, like other land value arguments, was explicitly a settler-colonial argument that contrasted the worthlessness of unimproved lands with the value brought by settlement. According to Bell, “the land on which Halifax stands lay for millions of years without a value. It began to have a value on the day on which Lord Cornwallis landed. It has gone on increasing ever since, but it would diminish to nothing with the departure of human beings from this spot. The value of real estate is only the price which men are willing to pay for the privilege of occupying it, and therefore it is, represented in dollars and cents, (the only way in which such a thing can be measured), the exact measure of the sum total of the benefits and advantages which the people of any place derive from their own presence there.”8 The new fiscal sociology tended towards a racially specific conception of value. A dichotomy of settlercolonial value and Indigenous anti-value was common to both Georgeites and their liberal critics. It was observed that the Indigenous peoples of western Canada had always held property in common and discouraged private ownership according to something like proto-single-tax principles. Their failure to develop the land disproved the single tax according to the Toronto Daily Mail in 1887: “Our theories of property and of the relations between the State and the individual would have to be entirely recast. The land would revert to the community, though the Anti-Poverty men in this country are of course well aware that the Indians enjoyed the system, the soil being the property not of the individual cultivator, but of the clan. The history of our Indians and of other savages does not, however, bear out the assertion that human happiness would be increased by going back to first principles. On the contrary, we know that tribal cultivation was everywhere a failure. It was not until civilization came and provided a stimulus in the shape of private ownership that farming began to be followed as an occupation.”9 Georgeites were invested in a devalorized Indigenous past and a valorized future with a startling resemblance to that devalorized past. Such nostalgia was clearly in evidence in 1911 when the Lekwungen reserve in Esquimalt was removed from Victoria’s Inner Harbour. The Toronto Globe reflected that, because monetary compensation would be paid to heads of families directly, the change was considerable. “Under tribal conditions, the sins of the fathers are not, in regard to possessions, visited on the children. No child can be disinherited through a parent’s wastefulness, so preventable destitution is virtually unknown. The wealth that has



Single-Tax Revolt in the 1900s: Fairness over the Land 285

wings may be small, but the land, from which all wealth is taken and to which all wealth must return to be brought forth again and again is the common property of all.” But for all the attractions of a world without “preventable destitution,” still, the Globe preferred the “healthful stimulus of individual property.”10 The prospect that statist restraint upon private tenure of land might precipitate not just communism but something approximating Indian communism, appalled liberal-conservatives who believed they were already actively fighting that threat in a many-fronted war, always with a keen eye to its impact on property values and credit ratings. On the west coast, if you wanted to denounce government policy, you predicted a dystopian future where “the red man takes possession of the deserted homes of British Columbia.”11 (And if you really wanted to make the most offensive possible argument, as one expat did, that “the whole of Canada is governed under one gigantic system of graft and robbery, not alone confined to the Government, but also to every local corporation,” then you blamed it on “the undoubted infusion of Indian blood into so many families and generations.”12) Indigenous peoples were not the only enemies of value in progressiveera Canada; so, too, were other supposedly unprogressive races. Tax assessment ever provided an opportunity to measure the value of citizenship: if the right kind of neighbour pushed up your property values, the wrong kind pushed it down. In 1913, proprietors in the Annex area of Toronto persuaded the court of revision to reduce their taxes by $10 per square foot on grounds that Jews had moved into the neighbourhood.13 Taxes channelled and formalized not just social solidarity but also its antithesis. But Indigenous peoples were particularly threatening because their economic and social relations persisted as non-liberal ways of managing social and fiscal solidarity that seemed to question and undermine liberal ways. On the west coast, the potlatch conflated the kinds of private / public distinctions that liberal reformers sought to instantiate more generally. Indigenous voices defended the potlatch as an orthodox and economically sound fiscal transfer, grounded in reciprocity as well as in provision for the poor. Chief Henry J. Buler of Victoria made the case in the Victoria press in 1898, with reference to “fatherless children” and “old people”: “Seaweed the head man of the Fort Rupert he is stone blind firmly supported by the potlatch.”14 The potlatch was at some level like the bread riot, because it created expectations of solidarity, and the Spectator’s critique of the bread riot could be applied almost verbatim to the potlatch. Indeed, the modern discovery of social reciprocity in traditional political relationships, of the sort identified by Frank Trentmann,

286

Reconstructing Fiscal Federalism

emerged from scholarly analysis of the potlatch. That theoretical tradition began in 1897 with Franz Boas, who observed of the potlatch practised among the Kwakwaka’wakw peoples near Prince Rupert that “the underlying principle is that of the interest-bearing investment of property.”15 Boas’s argument pointed towards a broader reading of social solidarity emerging in comparative anthropology. It suggested that simple non-contractual exchanges function like contracts when they have consensus behind them. But where he saw parallel, policy-makers at the time saw parody. Boas’s arguments were slowly taken up by other social scientists, including Veblen who worked with Boas at Chicago and Marcel Mauss who wrote his famous book Le Don in 1925, and they helped to redefine social and economic reciprocity. Such insights trickled into Canadian political consciousness slowly from anthropology departments, but they owed something to progressive fiscal reformers struggling to identify and measure the values intrinsic to social interaction and to read the construction of the modern state into them. Debates about tax exemptions differed in degree, not kind, from debates about the potlatch. They were debates about the fiscal meanings of social solidarity: Could the moral benefits of organized religion be translated into economic and fiscal benefits or was it a separate calculus? How to enter such externalities into books that must be balanced? And what did a city like Halifax owe to the state, the churches, and the poor? The Halifax Board of Trade produced figures to show that Haligonians suffered more from taxation exemptions than any other city, by reason of the extensive federal infrastructure around the port. Alderman R.V. Harris calculated 31 per cent exemption in Halifax, 29 per cent in Ottawa, 27 per cent and 24 per cent in Fredericton and Saint John, about 20 per cent each in Montreal and Quebec, and Toronto down around 15 per cent.16 The board persuaded Halifax city council to name a special committee on civic taxation, which held public hearings through the autumn of 1901. October saw two debates about church exemptions, during which a Reverend J.W. Armitage “grew quite warm. He said that it would be far better if the City Fathers would rise up and Help the Church in its good work rather than to impose taxation on them. He himself pays large taxes, perhaps more than he should pay. There was no sidewalk in front of his residence, and the streets and sidewalks were a disgrace.” November meetings took up land-value taxation and income tax: speakers referenced the recent Ontario debates and endorsed rental-value taxation and ability to pay.17 The discussions were inconclusive, but they reveal a city council seeking greater legitimacy and revenues, believing it could make



Single-Tax Revolt in the 1900s: Fairness over the Land 287

those two ambitions coincide by encouraging debate about taxation. A frustrated Board of Trade demanded fiscal and institutional reform. Harris rode that wave of reform into a new Board of Control but was turned out in 1915 after he supported tax hikes. His protégé, John McKeen, a progressive banker, ably pushed through a new power plant and tax reforms that replaced property with income taxes.18 The Board of Control was abolished in 1917 but its reforms persisted. In 1921, when F.H. Bell republished his views on civic taxation, mixing recycled material with newer reflections, he praised the change but lamented the persistence of the property tax elsewhere as a sign of regional backwardness.19 Municipal tax debates in New Brunswick resembled those in Nova Scotia because businessmen across the region worried about regional economic well-being. But pressures were more acutely felt in New Brunswick, which failed to keep pace with either Canadian or Maritime rates of economic and demographic growth. From 1881 to 1901, as Canada acquired a million new souls, the province’s growth was close to nil. The tariff was an obvious culprit but so, too, were local tax arrangements. All businessmen felt overtaxed by rapacious municipal politicians but particularly in declining regions, where tax reform seemed a sine qua non of local prosperity and relief of poverty. Their confluence in progressive fiscal reform is visible in the arguments of W. Frank Hatheway and W.M. Jarvis, two Saint John businessmen who understood progress differently, the one with an emphasis on poverty, the other with an emphasis on wealth. Hatheway, a Conservative turned Fabian grocer, published articles in the Saint John Daily Sun in 1898 and a pamphlet in 1900 to denounce the system that exempted millionaires (all forty-seven of them), taxed the poor, and concentrated “the wealth of the nation into a few hands.” Detailed household budgets proved that even the lowest incomes were being taxed. “I have investigated and know that families in receipt of $300 to $400 a year can barely exist, and they cannot live on those incomes. The doctor and the corner grocery suffer at the end of the year. Every dollar taken from subsistence incomes engenders hatred to the state.”20 Where others argued that taxes took a “much larger proportion” from the wealthy than the poor, Hatheway argued for an absolute as well as proportional difference: thanks to poll taxes, low-wage workers paid 2 per cent of their salary to the city and high-salaried workers less than 2 per cent.21 Hatheway peppered his pamphlet with references to George and Seligman, but ultimately preferred progressive income tax to single tax. Jarvis, a lawyer and insurance underwriter from a prosperous merchant family, was more ­concerned that the tax system failed to nurture enough millionaires. As

288

Reconstructing Fiscal Federalism

president of the Maritime Board of Trade when it met in Saint John in 1899, he addressed regional economic decline at length, urging as remedies imperial trade, better transportation, and tax reform. Jarvis gave what the Daily Sun described as a full-fledged “treatise” on municipal taxation, which he estimated at $1 million regionally per year, with wide divergences from one city to the next. Maritimers imitated too much American personalty taxation rather than the Scottish / Montreal pattern of business rental taxes. Jarvis cited Anglin’s data to denounce the high income taxes in Saint John that hit workingmen disproportionately, drove away wealth, and drove down land values. Worse yet, the franchise was a tax-paying one and two-fifths of voters were annually disenfranchised. He recommended a move to the Montreal model of a business rental tax with some special licences on the financial sector.22 Jarvis and Hatheway demanded lower taxes on poor households but disagreed on other measures. During a two-hour debate at the local Board of Trade on base exemptions, Hatheway advocated for the poorest households while Jarvis worried that exemption for the poorest (earning below $400) might exacerbate difficulties among the respectable poor (earning below $1,200). The Board voted, finally, for minimal exemptions and more taxes on land, houses, and income.23 Hatheway pushed for higher exemptions there and in the Fabian Society and demanded enfranchisement for anyone who paid the poll tax. Other opinions ranged from Georgeism to demands for laxer enforcement: “There is not a city of its size on this continent where you can find thirty-five constables running all around the city after the people.”24 Businessmen pushed the demand for reform on the civic state, took charge of the civic commission named to study taxation in 1906, and dominated the hearings, where Hatheway spoke on behalf of the local Manufacturers’ Association. The final report quoted Ely, produced a table to illustrate Saint John’s heavy reliance on personalty and income taxes (they accounted for half of revenue; real estate the other half), and denounced the regime as regressive. The businessmen commissioners recommended heavier taxes on intangible property, tax exemptions for the poor, and a 50 per cent reduction on business personalty.25 Vineberg found the scheme overly complicated and theoretically unjustified but a good beginning.26 But the city’s financial receiver, Duncan G. Lingley, disagreed. In his report for 1907, he complained that the great difficulty in Saint John, as in other cities, was “the collection of the smaller income taxes.”27 Lingley’s views were out of step with a newer recognition, voiced by mayor Thomas Bullock in May 1909, that the local rates, amounting



Single-Tax Revolt in the 1900s: Fairness over the Land 289

to $47 per ratepayer, were “a burden to a large proportion of our people.28 Socialists who said the same, more pointedly, were had up on libel charges. Landed interests still obstructed reform in Saint John as in Halifax until the First World War. In rural districts, farmers were also airing tax grievances in new associations and in newspapers like Maritime Farmer. W.B. Fawcett, a Sackville farmer and Granger, who had recommended a purely revenue tariff to the Fielding Commission in 1896 (taxing only excise, cheap sugar, and tea), now urged both a lower tariff and taxation of rural incomes rather than property, to prevent rural outmigration.29 In the Maritimes, tax reform was largely a businessmen’s movement to shift taxes onto real estate and rents. Bell described that reform as first won in Quebec, lost in Nova Scotia, successfully spread via Ontario to the western provinces, and finally achieved on the east coast in 1917.30 Singletax reformers were less successful in the region, a fact that reflected the modest price of land. Landlords were not the bogeymen that they were in jurisdictions with rising rents. Taxing small or negative land-value increments would only result in proprietors abandoning vacant lands for the taxes, leaving city treasurers with a reduced tax base and masses of land that they could not sell in a depressed market. Westerners learned that lesson the hard way. Single-tax projects suited expanding economies with rising rents, and they particularly suited a western Canada agog at the unprecedented and shocking spectacle of mass privatization of land, hundreds of thousands of acres, occurring before their eyes. The single-tax movement has perplexed even sympathetic historians. What began as a radical idea fell prey to urban boosters. George aimed to transfer wealth from the private to the public sphere, but the speculators appropriated his arguments to increase the public-to-private fiscal transfers. They didn’t just get the land. They also got the benefits of civic spending on infrastructure for the land, and then left residents and city governments to shoulder unsustainable debts. When land prices were rocketing upwards during the Laurier boom, property could bear the burden of local taxation, but when the land boom ended, the price of land fell below assessed value and landholders abandoned their properties rather than pay taxes on them. Cities, left with huge debts and huge arrears, quickly returned to taxing improvements.31 The single tax came to seem a dead end economically and politically. Daniel Francis’s biography of radical Vancouver mayor L.D. Taylor captures the trajectory from theory of social justice to failed project of capitalist improvement. In 1914, the Saskatoon Phoenix remarked of Vancouver’s decision to tax improvements that the city “is discovering that the millennium cannot be

Figure 7.1  J.W. Bengough, “A Glorious Prospect” (Grip 10 June 1882). John A. Macdonald milks a heavily taxed “working class” that is tethered to the tariff as it watches “aristocratic landlordism” monopolize the earth and running waters, understood by single taxers to be the common property of all people. (Image courtesy of Thomas Fisher Rare Book Library, University of Toronto)



Single-Tax Revolt in the 1900s: Fairness over the Land 291

brought nearer by a special form of taxation.”32 By the end of that year, unpaid arrears in Vancouver amounted to $500,000; five years later they stood above $5 million, which could not be recouped through the sale of appropriated lands.33 Where Taylor once considered the single tax his greatest triumph, he later wrote it out of his autobiography.34 Peter Baskerville’s study of Victoria confirms the analysis. Taken more or less as directed, the single tax was disastrous for progressive-minded cities. But that should not be the end of the story. The single tax cannot alone account for the fiscal debacle. All cities spent beyond their means during the decade before the First World War, during what turned out to be a real estate bubble. They responded to economic downturn with more spending in pursuit of dwindling investment. Victoria upgraded its roadways and sidewalks, revamped the waterworks, and purchased the Lekwungen reserve. In 1917, the city’s debenture debt reached $18.9 million, nearly all of it borrowed and committed between 1910 and the First World War, at which point immigration and investment capital dried up.35 This was more a problem of civic spending than civic revenue; still, a comparison of tax arrears per capita in 1917 clearly reveals a pattern of failed taxation that tended to intensify along a westward trajectory: Toronto had $9.55 in arrears per capita; Winnipeg had $15.41; Regina stood at $31.29; Saskatoon, $34.36; Medicine Hat, $52.26; Edmonton topped the charts at $97.50 and Calgary came second at $63.33; Vancouver and Victoria came in at $43.98 and $44.42, respectively.36 The new western cities of the Laurier boom suffered most. Toronto and Winnipeg, having learned their lesson from previous bubbles, were more cautious; they also had more diversified economies. Still, where land speculators dominated municipal councils, they wrought comparable damage, even in non-single-tax jurisdictions, according to a pattern that historian Paul-André Linteau has analyzed for Maisonneuve, an industrial suburb of Montreal.37 The problem was speculative flipping, unchecked by any tax on either transactions or capital gains. Properly applied as a tax on capital, the single tax might have restrained the housing bubble, but urban authorities did not impose confiscatory taxation because they feared popping the bubble. The cities were in the hands of boosters, a point made by the foremost historian of western urbanization, Alan Artibise, who used the category of booster to explain the process of civic decision-making. He argued that during their early years, the western cities were “dominated at all stages by a small elite … the elites neither bothered about nor were seriously bothered by significant opposition.”38 But the notion of a unilaterally ruling class reflects an older, narrower view of political agency that

292

Reconstructing Fiscal Federalism

newer approaches would tend to moderate.39 Municipal governance was always in dialogue with a self-aware public opinion capable of asserting itself practically by such mechanisms as mass demonstration, violence, and tax resistance. The single tax aimed to shift the tax burden from the poor; that it did not solve the problems of debt and evasion is no more an indictment of the single tax than it is of liberal economics. Both required more political accountability. Throughout the period under review, the single tax remained an important focus for popular political agency. It helped ordinary people, taxpayers all, to argue with political, economic, and academic authorities who believed, as seen, that “all taxes … are usually paid by the last and poorest person.” Economists singled out the single tax for special opprobrium, but they had to slant the evidence to make it uniquely culpable. Their campaign tells us more about contemporary economics than it does about the single tax.40 When Robert M. Haig, commissioned to analyze Saskatchewan’s municipal fiscal woes, concluded in 1918 that the province should tax land more lightly and tenants more heavily, W.W. Swanson, recently transferred from Queen’s University in Kingston to the University of ­Saskatchewan (he had originally studied with Shortt and done a PhD in political economy at the University of Chicago), remarked that tenants were already finding it hard to make ends meet.41 The principle of “ability to pay” emerged in Canada from such arguments and became, albeit in no simple linear fashion, a nationwide movement. The fact that local elites now took up the single tax as municipal policy did not dissolve the dangers that single-tax principles – above all the principle of capital taxation – seemed, to academics and highly propertied corporations, to pose to property in an age of democratization. The defenders of liberal property relations came out in force against a single-tax movement beginning to build up national political capital and momentum. The single-tax movement reflected gilded-age popular enlightenment, and it shows us a public extraordinarily engaged with political economy. It had widespread popular support amongst ordinary people. Audiences for popular works of political economy were enormous, a trend that Henry George’s Progress and Poverty expanded. It sold over 100,000 copies in its first three years and more than 3 million copies in the longer term. It was serialized in publications like the Saturday Evening Post and attracted thousands to lecture tours. Legions of single taxers in Canada formed organizations, filled thousands of newspaper columns, and produced some of the period’s most enduring political cartoons. Their doggedness and ubiquity is captured in “the joke about the funeral at which



Single-Tax Revolt in the 1900s: Fairness over the Land 293

the minister failed to appear. The undertaker requested an eloquent-­ looking fellow to speak, and the latter, confessing he did not know the deceased, added that he thought it was his duty to use the occasion to defend the single tax.”42 The single tax conjoined personal experiences with the state, money, and social solidarity and did so in ways that helped new political agents express themselves with vigour and confidence. With widening popular consumption and home ownership, the generally improved material conditions of life invited such confidence at the turn of the century. The figures are heavily contested but the evidence tends to suggest steady or rising levels of home ownership between 1871 and 1911 across most but not all social classes, and rising above 50 per cent of homes in many communities by 1911.43 For the first time, most people could own their own homes. But heavy taxes could threaten that aspiration. To put some flesh on the numbers: a workingman of modest income who owned a small house and lot in Regina could expect to pay about $50 per year in taxes; in Edmonton or Calgary the amount was closer to but still above $40. Census data for 1911 set average yearly wages for a male worker in Regina at $822, so the municipal tax appropriated around 6 per cent of his annual wages. In communities where people felt that home ownership was or should be within their economic grasp, were it not for political obstacles, the single tax flourished. The single tax spoke to people’s ambitions and concerns in regard to land. If you lived in a growing city, then rents were certain to be outpacing wages and the long-term lesson was relative impoverishment. Rising rents in eastern Canada factored into a larger story of wage-labour oppression. Labourers who could not afford high rents were as likely to blame their employers as their landlords. Often those landlords were themselves working class: widows who took in boarders to help pay the rent, for example. In western Canada, land ownership was much more directly implicated in political and economic struggles. People came to western Canada for the land, and anything that stood between them and the land was immediately and irreducibly political. Henry George wrote from the experience of watching the American frontier disappear into private hands, and the story he told resonated powerfully in western Canada. Whereas eastern Canadians worried about the close ties between business and the state, western Canadians worried about the way land figured into those close ties. Farmers resented watching profits disappear to protected eastern manufacturers, but when those same companies set up shop in western Canada, they usually appropriated large tracts of the western landscape. Privatization and

294

Reconstructing Fiscal Federalism

concentration of land were much more systemically visible and worrying in western Canada. The single tax forcefully denounced that process while neatly eliding the messy question of prior Indigenous ownership of that land because it attributed all value to settlement. Cries of “landlordism” resonated throughout Canada, as through Ireland, in the 1880s. Many of Canada’s leading journalists and politicians were Irish, as were audiences who flocked to Henry George’s earliest Canadian lectures, in 1881, on the Irish land question. From 1883 to 1888, the governor general in Canada was Lord Lansdowne, one of Ireland’s biggest landlords, and the land reformers followed him overseas. In Montreal, William O’Brien, an Irish MP, agitator, and fugitive, addressed a “large crowd” in Montreal, according to the Irish Canadian (and a small one according to the New York Times). In Toronto, his presence provoked a riot.44 Newspapers recounted recent callous evictions and earlier ones: the Mainland Guardian serialized the notorious memoir, Realities of Irish Life, by William Steuart Trench (earlier a Lansdowne agent, and whose son was the new Lansdowne agent), with its harrowing descriptions of the Great Misery. “‘Will you reduce our rents?’ Trench replied that he could not. The same voice from the crowd shouted, ‘Down on your knees boys, we will ask him on our knees.’ Ten thousand tenant farmers dropped to their knees.”45 Both eastern and western single taxers fought hard on behalf of impoverished tenants. In the east, the battle focused on base income tax exemptions. This was a hard-fought battle waged against recalcitrant landowners. In 1884, Toronto MP Robert Hay frankly defended his “large” property holdings by launching an anti-exemption association.46 Western single taxers also sought base tax exemptions but were more worried by the way large landlords were dominating local state institutions. Even Frank Oliver’s centrist Edmonton Bulletin voiced the complaint: “It is strange that with the example of Russia and Ireland, and the experience of the older provinces of Canada before them our rulers should be so blind as to attempt to perpetrate a system of landlordism and land monopoly upon this great country.” Land monopolies were everywhere “doomed to destruction.”47 Western Canada was never going to look like Ireland, but this was an important battle against large landed interests that political theorists describe as “authoritarian opponents of democracy.”48 The scale of the rising tensions around rents was captured in an apocalyptic future by H.G. Wells’s 1898 classic The Time Machine, when distinctions between propertied and unpropertied became geographically and biologically



Single-Tax Revolt in the 1900s: Fairness over the Land 295

absolute: “The exclusive tendency of richer people – due, no doubt, to the increasing refinement of their education, and the widening gulf between them and the rude violence of the poor – is already leading to the closing, in their interest, of considerable portions of the surface of the land. About London, for instance, perhaps half the prettier country is shut in against intrusion.” Above ground, the “Haves” pursued pleasure, comfort, and beauty; below ground the “Have-nots, the Workers,” had “to pay rent, and not a little of it, for the ventilation of their caverns; and if they refused, they would starve or be suffocated for arrears.” They retaliated by preying violently upon the Haves. Where liberal political economy encouraged people to pursue selfbetterment in the private rather than the public sphere, left-wing critics urged people to turn back to the public sphere to overturn political obstacles to private self-betterment. The popular enlightenment debunked both capitalism and the state. These were not just debates about mortgages and water supply; they were strategic interventions into the changing politics of property and political agency. If early-Victorian politics in Canada focused on whether or not legislators should be responsible to the colonial public, late-Victorian politics focused on the property qualifications of that public. The great question of the day became how to triangulate the relationship between the state, the citizen, and property. You really had to squint not to notice a sustained attack on popular political agency. And this was not just a Canadian debate: New York historian Sven Beckert sees a concerted movement towards a taxpayers’ coalition in the years after the American Civil War, one that allied southern elites with northern ones in a struggle between property and the “tyranny of the majority.” Even anti-slavery voices like Horace Greeley’s New York Daily Tribune fretted at the submission of “the intelligent people of the State … to the rule of a class just released from slavery” and urged taxpayers’ leagues to restrict the franchise. The Nation argued that municipal democracy was a “ridiculous anachronism.”49 Anti-democratic notions persisted far longer in Canada and seemed particularly anachronistic on a western frontier increasingly populated by cross-border migrants. The Métis, themselves cross-border migrants seeking private self betterment through home ownership, were like other westerners in that respect, albeit driven to more extreme action in 1885 by the state’s unresponsiveness to their requests for secure title to the lands they settled. Westerners as a species resented that they must “pay their share of taxes and must obey the laws, yet they have no say in spending the taxes

296

Reconstructing Fiscal Federalism

or making the laws.”50 They were “clamoring for representation” and seeking alternative ways to voice their concerns, while John A. Macdonald boasted of defeating democracy in his new federal franchise of 1885. In eastern Canada, the franchise tended to be based on payment of taxes; in western Canada, on ownership of land. But in east and west alike, many urban elites fought hard against democratization either as a general rule or for money bills. In December 1876, disappointed by the outcome of a mayoral election, the Manitoba Free Press advocated raising the property qualifications for municipal elections from $100 to at least $500. The Liberal editors favoured generous federal and provincial suffrage but “in municipal matters, in which every vote means money out of the ratepayers pockets, the case is entirely different; and we hold that there is neither justice nor expediency in giving the man that pays only 75 cents taxes (the amount paid on $100 assessment this year) the power to neutralize that of the man who pays a hundred times that amount.” Money votes were even more exclusionary: in 1887, of a total 25,000 inhabitants, only 2,170 residents could vote on a money by-law.51 In Edmonton in 1884, the Liberal Bulletin championed a property franchise on grounds that democracy, by enfranchising the “irresponsible and mercenary millions,” actually increased the power of millionaires to the detriment of the “solid men.”52 In New Westminster, alderman W.J. Walker defended the property franchise ($200 to vote, $300 to vote on a money bill) in 1891: “But, considering the commercial works which all modern political and social economists more or less agree should be in the hands of municipalities (i.e., gas works, water works, electric lighting, street railways, etc.), the executive councils should also be, if those works are to be successfully carried on, as much as possible of the nature of boards of directors of incorporated business companies.” No one would democratize their business. Walker observed that money bills that provided for loans and debentures were mortgages on civic property.53 No one would democratize their mortgage. The arguments were not just western ones. In 1885, the Toronto Globe similarly defended a high franchise on money bills in reference to ambitious plans for a new city hall that workingmen would, “in the hope of employment to come,” force upon those who paid “four or five thousand dollars a year taxes” but had “no more share in the administration of the revenue to which he so largely contributes, than he who contributes next to nothing at all.”54 Other ways of short-­circuiting democracy included commission-style governments that insulated a handful of super-councillors from direct election by making them accountable to directly elected councillors.55



Single-Tax Revolt in the 1900s: Fairness over the Land 297

Academics concurred. Goldwin Smith argued in 1878 that universal suffrage might do nationally but not municipally: “A municipal government has to deal mainly with the collection and expenditure of local taxes, and as these are in proportion to property, so in some measure ought the suffrage to be. A municipality seems more akin to a joint stock company than to a nation. The poor have not gained, though the rich have lost, by municipal waste and corruption.”56 Samuel Morley Wickett, from a wealthy Toronto family (in the tanning industry), studied under Mavor and, after obtaining a PhD in Liepzig, returned to teach in Toronto, write a textbook on municipal government, and then join the family firm, thereby wedding academic and business orientations. In 1902, he observed that “throughout Canada, the Municipality is regarded more as a species of joint stock company, only those contributing to the capital being allowed to share in the direction of its benefits.” Wickett argued that taxpaying corporations deserved municipal votes.57 In 1912, Mavor himself “compared Toronto to a large financial house with big capital which required to be managed by competent men.” He saw no contradiction in securing tax exemption for himself (he lived on academic property).58 In 1914, Stuart Cameron McLeod defended a PhD dissertation on Canadian municipal government, done under Munro at Harvard, that approved of widespread property qualifications. “The Canadian municipal franchise is essentially a property owning franchise,” as evidenced by the enfranchisement of corporations and the prevalence of plural voting where property was held in multiple districts. Such enfranchisement of property “has created a potential class of non-resident and plural voters of considerable proportions if not of great activity.”59 McLeod approved of the check upon extravagance. But even as judges, legislators, and scholars handed down elite-driven reformulations of property and agency, the public was remaking the politics of property from the bottom up. It exploded narrowly legal categories of citizenship with social and economic analyses and extended the ratepayer language of ownership to include the modestly propertied. It is here that the single-tax movement made its most important contribution. It was not just a project of municipal finance but also always aimed at the broader project of democratizing political economy and governance. Tax reformers demanded local direct democracy as an avenue to land-value taxation and land-value taxation as an avenue to democratization and free trade. Westerners were collectively more hostile to the tariff than were other regions, but were too few to outweigh central and eastern support for the tariff. The tariff was not just one policy among others; it was

298

Reconstructing Fiscal Federalism

a symbol of eastern Canada’s political and economic oppression of the west. Every vote for the single tax was a vote against the tariff and against the partisan centrism that kept tariff reform out of national politics. The single tax appealed because it was both a local and a national project: when you voted for a single-tax mayor, you were reinforcing anti-tariff platforms. In such a vote, you were also pursuing and enhancing the freedom that western migration, a frontier, was seen to bring to society and civilization. Where some saw a big-state nationalization project at odds with Frederick Turner’s frontier thesis, others saw a libertarian argument that denied the state any right to tax the fruits of one’s labour. Coerced work was slavery, according to Henry George. For westerners, single taxes would make them autonomous, self-governing agents rather than slaves of eastern despots. The point was made most fully by the Grain Growers’ Guide, a widely popular, left-wing farmers’ magazine founded in Winnipeg in 1908, published under the auspices of the Manitoba Grain Growers’ Association and edited by E.A. Partridge and George Chipman. Convinced that farmers were not fairly represented in the mainstream press, they built a platform for western farmers to advocate their local, regional, and national interests. The Guide advocated the single tax early and often. Arguments covered a broad spectrum. Some writers wanted radical reforms, others a practical means to remake Canadian national politics from the bottom up: The single tax, or the taxation of land values, is a reform which can be adopted gradually, and without revolutionary changes. A single town or city may prove the value of the system before it is adopted in the province or the Dominion. A city may begin by exempting a portion of the improvements from taxation before adopting land values as the only basis of taxation, and it will be found much easier to secure the adoption of the principle in the cities than in the wider national sphere, because its adoption as a means of raising national revenues would involve the overthrow of protection and would be made a question of party politics, whereas in the city neither of those considerations would enter into the question. And after proving its practical worth in a few cities, the plan will be adopted in others, and when the people throughout the Dominion become familiar with its workings and its results in their own cities, the time will be ripe to apply it to the wider sphere of national affairs.60 Historians have invested more energy in denouncing single-tax heresies than in explaining how and why they appealed. As a theory, the



Single-Tax Revolt in the 1900s: Fairness over the Land 299

single tax fell somewhere between liberal and leftist theories. Because the single taxers focused on property and taxation, they were too liberal for the socialists and Marxists; because they advocated confiscatory taxation, they were too radical for liberals. But if we set aside overdetermined ideological frames of reference and situate the single tax in its local and practical context, the appeal becomes more apparent as a weapon against predatory taxation. Eviction was and remains one of the worst calamities that can befall a household. People fearing eviction – a wide swath of the population at a time of extraordinary economic instability – needed a fiscal program that spoke directly and strategically to liberal property relations, without either confirming or refusing them wholesale. To dismiss tax battles as mere “bread and butter” politics requires an extraordinary Olympian theoretical perspective, given the propensity for selling out working families for a few pennies owed on their mortgage or on their water. For some, the problem was subsistence; for many more, it was dignity – arguably the most important motor of political and economic modernity.61 Robert D. Johnson, a historian of progressive-era Oregon, sees the single-tax movement there as “a genuine class struggle as well as a battle for the political soul of middling folks.”62 The liberal individualism of the single tax made it anathema to doctrinal socialists, but the fact that it spoke to the isolated struggles of individual taxpayers, connecting their experiences to wider social and economic trends, seemed to amplify their voices. We might liken the single-tax movement to a religious awakening – there is the same sense of inner voice newly translated into the public sphere. Nancy Christie has remarked of the impact of evangelical religion in Canada a century earlier that “Christianity was totally reconstructed by unlettered popular preachers who explicitly voiced the concerns of the poor and marginal” and exalted individual choice and egalitarianism.63 A widespread social reform movement that was “reasoning otherwise” in late nineteenth- and early twentieth-century Canada had a comparable effect on Canadian political institutions, and the urgent, unsilenceable single taxers were amongst the most vocal advocates of the change. Experts flocked to western Canada to study the single-tax experiment, listened fascinated to public opinion, and transmitted it at length. Robert Murray Haig of Columbia, a “protege” of Seligman, was commissioned by the New York Committee on Taxation to study exemptions in Canada and the United States (but mostly Canada), according to instructions drawn up by Seligman. He wrote two further reports on municipal taxation, one for the Saskatchewan government in 1917 and another for BC in 1919.64 Haig quoted examples from Calgary of a city official who

300

Reconstructing Fiscal Federalism

denied any confiscationism, a dentist who complained that “the single tax is Hell in hard times,” and a farmer who complained it “hurt a lot of poor beggars who were induced by real estate operators to buy outlying property at a crazy price.” Public hearings always attracted scores of single taxers. One can almost hear the quiet sighs of commissioners as they realize they are in for yet another harangue by yet another single-tax witness. In New Westminister in 1911, for example, a provincial commission heard from two Georgeite carpenters: Walter Dodd, a recent immigrant who had invested in a lot four years earlier only to see its value fall from $200 to $100, and Thomas Turnbull, a union man and long-time resident who denounced poll taxes and income taxes as unjust and ill-advised.65 This was more than boosterism. Denigrating such views and voices as mere self-interest or self-dupery amounts to denigrating popular political agency and negates any possibility of broad-based political alliances for tax reform. But for people interested in understanding the mechanics of popular tax reform movements, the Canadian single-tax movement has some interesting lessons. The fight over land taxes began before Henry George put pen to paper. Newspapers in British Columbia demanded wild-land taxes in the mid1860s to prevent the toil of settlers on the frontier from keeping absentee owners “luxuriating in England or elsewhere.”66 The province introduced a 1 per cent tax on wild or vacant land in 1873 amidst debate about how effectively it would target the Hudson’s Bay Company.67 Thus, from the beginning, B C targeted large concentrations of undeveloped land as a drag on development and encouraged municipal authorities to do the same. Nanaimo, chartered in 1874, was permitted to exempt improvements from the outset and did so. Nanaimo was a company town, initially owned by the Hudson’s Bay Company (h bc), then sold (land and coal works) to the Vancouver Island Coal Mining and Land Company in 1862 for $200,000. The company soon began to sell off residential lots, but it long blocked incorporation for fear of such taxes.68 Across western Canada, similar confrontations played out between residents trying to tax vacant lands and landowners trying to hold on to their lands until prices rose. Again, confrontations of this sort were not unknown in eastern Canada, but western Canadian publics largely emerged as conscious communities around such fights.69 Land taxes were mother’s milk to westerners long before they were theorized and counter-theorized as part of a war for and against private property, and they continued to appeal on pragmatic and local grounds long after they accreted economic and political freighting.



Single-Tax Revolt in the 1900s: Fairness over the Land 301

In the early years, the hbc was at the heart of most of the disputes. The hbc had kept thousands of acres after it sold Rupert’s Land to Canada in 1869 and managed them with an eye to speculative price increases. Accordingly, it fought incorporation in cities like Calgary, Edmonton, and Winnipeg where it held large tracts. In Winnipeg, where it owned onethird of taxable land, it joined the four other large landowners who possessed another quarter, but they were unable to block incorporation in 1873. Incorporation called for new tactics of subversion, according to the Manitoba Free Press, namely, the “manufacture” of bogus votes, whereby “some forty or fifty individuals were made voters in different wards upon property of the whereabouts they had not the slightest idea. The game worked like a charm and an election was won.”70 The next scandal addressed not bogus voters but bogus disenfranchisement: assessors were said to be assessing below the minimum required for enfranchisement.71 But no amount of manoeuvring could prevent the city from taxing nonresidents, and the province followed suit in 1878 with taxes of one cent per acre on occupied land and five cents on unoccupied land.72 The hbc could not stop its assessment from quintupling, and its legal protests also failed in the courts.73 In Edmonton, the hbc resisted incorporation more successfully until it sold off much of its holdings in the boom of 1881 for a reputed $2 million. In the mid-1880s, the Canadian Pacific Railway rode in as reinforcement so that, at a public meeting in 1891, the two corporations formed a tag-team opposition to incorporation: “Mr Hamilton of the C.P.R.” declared talk of incorporation to be nonsense, while Thomas Anderson, a Crown timber agent connected to the hbc, with “several large property holders,” warned that “if incorporation were forced upon the town now, some poor settlers who had large claims but very little money would have their land eaten up in taxes.”74 The advent of the c p r raised both stakes and tempers. Wherever the railway went, land prices rocketed upwards. The cp r was given twentyfive million acres of land exempted from taxation for twenty years (plus perpetual tax exemption for the c p r ’s capital stock and infrastructure). c pr lands would be alternating blocks alongside the main line; the Dominion government “temporarily” claimed the other set of alternating blocks so as to keep it from speculators and open it up to bona fide settlers. In 1882, short of cash, the c p r “sold” much of its central holdings to the Canada North-West Land Company (cn w l c), which united land speculators and c p r officers and functioned as “practically a branch of the Land Department of the C.P.R.” The federal government joined with the c pr and the c nwl c jointly to develop a series of townsites across

302

Reconstructing Fiscal Federalism

western Canada, including Regina, Moose Jaw, Qu’Appelle, and Virden. In practice, federal officials largely left things up to four trustees representing the c p r and the c nwl c , all cronies of John A. Macdonald. The trustees soon fell out with local boosters over the slow pace of development and taxation. Local authorities tried to tax trustee-held lands, but trustees insisted that the lands were exempt as either cp r or federal holdings. Had they paid taxes in Regina, for example, city revenues would have tripled. At the end of the 1880s, the cn w l c began doing deals with local authorities to pay taxes on at least part of the lands, but resentment at the paucity of its payments and arrears lingered.75 Western grievances and single-tax theory converged in the late 1880s. The Manitoba Free Press filled columns arguing for higher taxes on vacant lands and lower taxes on farmers’ improvements, as in March 1889: “Vacant lands, held by speculators in the midst of thriving settlements for a rise in price, should be forced into the market by some system of taxation.” But Henry George only began to inform those remarks six months later when he toured Canada. The Free Press argued that Georgeism was a Toronto phenomenon with little to offer western farmers: “If Henry George’s theory had been acted upon when Canada was beginning to be settled, it would remain a wilderness to this day.” Outraged readers defended the single tax, and within a few months, Winnipeg’s merchantmayor Alfred Pearson was openly advocating it.76 Single-tax talk spoke to serious fiscal tensions in Winnipeg: in 1892, cpr shop workers could be overheard arguing about its merits “during their spare moments,” while the new mayor, Alexander Macdonald, publisher of the Free Press, attacked the city assessors for undertaxing the wealthy central section of the city and overtaxing the poorer northern section. Following intense agitation from the merchants as to their unfair burden of taxation, the city council voted 8 to 2 to introduce modest land-value taxation and to replace the personalty tax with a business rental tax (on Montreal’s model but set at 12½ per cent) that would hit the “lawyers, insurance and other agents, banks, etc., heretofore exempt,” and avoid occupation-specific taxes that were as unfair as taxes on “random” nationalities. The New York Times marvelled that the city was becoming a single-tax town.77 Tax tensions continued to fuel Winnipeg politics through the 1890s. In 1895, Richard Willis Jameson (a lawyer, land speculator, and mathematics professor) rode such an attack into the mayoralty. He accused the “rich men” who supported his rival of tax evasion. Speaking to railway workers, he read aloud tax assessments to show that merchants were paying less and wanting to impose a poll tax, an “iniquitous piece of class legislation,” to



Single-Tax Revolt in the 1900s: Fairness over the Land 303

make up the loss.78 Again in 1898, businesses were accused of wholesale evasion. Assessments were never uncontested, but complaints were most frequent when values were rising or falling. British Columbia was the province most held back by railway policies and the expenses of clearing and developing land. Its many resourcebased company towns like Nanaimo nurtured a radical working class, deeply committed to socialist or labourist political platforms and the reform of politics from within as well as through unions and strikes. BC taxpayers had a garrison mentality: they felt squeezed between tax-­ evading corporations and a tax-evading racialized poor. No surprise, therefore, that the single-tax movement made big gains early in the Pacific province. The key start-up figure was Byron H. West, who advocated the single tax at a meeting of the Nanaimo Knights of Labor in January 1889.79 Land, he argued, was concentrating in the hands of what was becoming “an aristocracy as grievous as ever existed.” A few months later, the Nanaimo Reform League was formed at a meeting where West again spoke; he spoke yet again at a single-tax meeting in New Westminster in 1890 and another in Victoria. A Single Tax Club had already formed in Vancouver the previous autumn, and in 1891, one candidate for mayor ran on a single-tax platform. That year, the provincial legislature amended the city’s charter to permit the exemption of improvements.80 By 1892, single taxers were publishing a journal in Victoria and organizing concerted political agitation, resulting in a new Progressive party. Mainstream politicians joined the movement, including Robert Beaven, head of the provincial opposition, and the incumbent mayor of Victoria, John Grant. They argued that the single tax aimed only to “cinch” the speculators. Gordon Hak also identifies federal Liberals who advocated the single tax – Walter Roos and Thomas Turnbull – and he attributes the widespread interest in the single tax to the large grants given to coal and railway interests. Byron West’s attack on Robert Dunsmuir as the “Uncrowned King of Vancouver’s Island” – he owned about a third of Vancouver Island – played well amongst the Dunsmuir colliers in Nanaimo, who elected a single taxer, Thomas Forster, to the provincial legislature in 1890.81 Across western Canada, debates about land tenure, development, and the concentration of property became remarkably focused on the single tax. Concentration was the great attraction to James Mallett, a correspondent in the Victoria British Colonist in 1889, for whom unjust laws of land tenure were the only important cause of poverty. “As a matter of fact, the planet is fast passing into the hands of private individuals, and ‘the struggle for existence, which is becoming more and more difficult as

304

Reconstructing Fiscal Federalism

the years roll on,’ is the inevitable result of our bad laws, and so long as those laws remain operative our efforts to effect reforms in the matter are utterly futile.” The British Colonist demurred: laziness and drink, waste and extravagance were the true cases of poverty, not laws, and public robbery à la Henry George was not going to improve matters. The single taxers would rest only when “the State is the owner of every foot of land in the country.”82 Advertisers monetized the dispute: “The single tax may relieve poverty but as a remedy for painful ailments it cannot compare with Hagyard’s Yellow Oil.”83 Hard times in 1891 played to single-tax strengths. The federal election pitted direct versus indirect taxation openly against one another; that the tariff won that round only exacerbated the frustrations of fiscal reformers. In Montreal, water taxes soaked the poor; in Toronto, sky-high property assessments hit middle-class savers hard; in western Canada, newspapers printed long lists of properties being sold for unpaid taxes. In Prince Albert, more than 600 lots went on the tax sales block in 1891, nearly all sold for a few pennies apiece.84 All the more frustrating for municipal councils were the c p r exemptions. The cp r owned 25 million acres in western Canada and was exempted from taxation “for 20 years from the Grant thereof,” according to its contract. But the cp r evaded taxation by refusing to patent its lands, that is, to draw up formal contracts in regard to ownership and rights thereof. Moreover, when the company sold land and purchasers failed to fulfil requirements of ownership, the lands reverted back to the c p r and to tax-free status, according to a Supreme Court ruling in regards to Cornwallis, Manitoba, in 1891.85 Such frustrations drove legislators and city officials towards single-tax policies that seemed particularly well suited to taking on large corporate landholders. By 1892, even the territorial council in Regina was debating the single tax, albeit inconclusively, amidst “considerable opposition;”86 a vacant land tax was also voted down in 1894. By contrast, British Columbia passed laws that let municipalities shift the burden of taxation onto land values by lowering those on buildings and other “improvements.” Vancouver swiftly capped taxes on improvements at 50 per cent of their value, and other municipalities followed. In hard times, the single tax was supposed to draw wealth to underdeveloped areas; in good times, it was supposed to spread rather than concentrate wealth. From the mid-1890s, economic and demographic growth fuelled land values. Canadian historians have seen a “wheat boom,” but James Belich argues that “it was the boom, not the wheat, that generated high growth.” Everyone who could buy land did so: “In



Single-Tax Revolt in the 1900s: Fairness over the Land 305

the Canadian west more or less everybody speculates in land,” remarked one early inhabitant.87 The consequence was soaring city assessments. Between incorporation in 1893 and the end of the boom in 1912, Calgary’s assessment increased 4,000 per cent, according to one contemporary tally; Regina’s, from incorporation in 1903 to 1911, rose by 2,000 per cent. Winnipeg’s assessment rose tenfold from $28 million in 1902 to $218 million in 1912.88 Boosters boasted that their rapid development belied all known laws of historical growth and public finance in such pushing pamphlets as Regina, The Queen City of the Middle West: The Undisputed Business Centre of the Wheat Fields of Canada (1911) or Winnipeg the Wonderful: Pages in the History of a City of Great Possibilities, Where People from Many Lands Gather (1911). The New York Commercial exclaimed: “The demands upon Winnipeg’s commercial resources will create a population of a million in less than ten years. It is one of the cosmic facts of our time.”89 Boosters marshalled statistics, not as economists did to show “normal” economic behaviour, but rather to boast that normal rules of growth were vanquished. The strong sense of western exceptionalism encouraged fiscal experimentation and justified huge debts. Low taxes were part of the pitch. In Oregon, which had several referenda on the single tax, eastern single taxers poured thousands of dollars into the campaign, ascribed prosperity in rival Canadian towns “almost wholly to the tax on unimproved value,” and warned that only the single tax could check emigration from the United States into Canada.90 One Oregon single-tax barrister, pointing at the single tax’s success in “Edmondton,” argued that “the commercial competition of Alberta and the western Canadian provinces is helping to spread the idea in the coast states. Within ten years the general property tax will be ancient history on the Pacific coast.”91 But a decade of land boom began to point towards land bust. The “rush for spoils” or “great potlatch” gave way to scarcity and rising rents and prices. In 1907, the Fernie Ledger published an argument that “the most anomalous condition of all here is the scarcity of land.” The shortage was fabricated by large conveyances to the railways, h bc, and land companies, which the writer described as “a permanent incubus on the land.”92 The game of Monopoly, a single-tax piece of propaganda designed at the turn of the twentieth century, explains that perspective: if you come to the game after other people have been playing for a while, then all the good properties are bought up and your measly $200 income won’t match growing rents on developed properties. Ergo, no one in their right mind would join in a game already underway. Newer immigrants

306

Reconstructing Fiscal Federalism

began to feel shortchanged. They also began to realize how much existing political structures were slanted towards the landed and to agitate for greater democratization. In western Canada, large landlords didn’t just charge high rents. They actively subverted local self-government. They blocked incorporation, voted down taxes, and pushed up property franchises. McLeod calculated that municipal elections enfranchised slightly more voters per ­capita than Dominion elections (one in 3.6 persons was enfranchised municipally as opposed to one in 3.9 federally), but plural enfranchisement of property went a long way to reversing that order.93 In Halifax and British Columbia, corporations could vote. Edmonton enfranchised all owners or occupiers, but the more property you had, the more votes you could exercise, up to a limit of four votes for $2,000 of assessed property. Thus, in Edmonton in 1913, there were 9,750 voters with one vote, 4,550 with two, 1,950 with three, and 4,550 with four votes. The single-tax editor of the Edmonton Capital denounced plans to enfranchise corporations and accused the Edmonton Bulletin of defending rotten boroughs and branding critics as “anarchists.” Single-tax politics ran high in Edmonton, though liberals insisted that any single-tax overtones to the city’s tax structures were purely coincidental. According to one editor, “the single tax in Edmonton is an accident. In 1904 practically all the improved real estate belonged to the people in the town and practically all the unimproved to non-residents. The citizens, meeting together to decide what to tax, decided to tax the other fellow. They had no idea that they were creating a single-tax city. None of them was a single taxer theoretically.”94 Single taxers told that story differently: “The lawyer who drew up the Charter of the City of Edmonton in 1904, by which that city was allowed to exempt buildings and improvements entirely from taxation, was a single taxer, converted in Ontario.”95 The single tax did well in Edmonton because the hbc still owned much of the city centre. The West End Improvement Association denounced the company as a land speculator.96 Attorney General C.W. Cross praised the single tax for having increased the hbc’s assessment from $49,785 on 1,672 lots in Edmonton and another $51,660 on unsubdivided land in 1898 to $13,204,860 (all “unearned”) in 1913.97 The company’s lawyers fought back with legal challenges. In June 1910, company and city lawyers spent the better part of four hours arguing about the value of the hbc’s holdings. When hbc agent John Anderson claimed that the hbc paid nearly one-fifth of city taxes, a city commissioner replied that it actually owned more than one-fifth of the city’s land. When the mayor advised him



Single-Tax Revolt in the 1900s: Fairness over the Land 307

to sell some holdings, Anderson’s reply that “it would be bad for the city” was met with skepticism.98 The high taxes on land hit many hard: in 1911, the hbc’s complaint that taxes were “too high” on “all their lands” was one of 130 challenges. In most cases, the assessment was sustained, perhaps because the attending and “belligerent” assessor protested reductions: “‘You can’t do that,’ he said, rising from his seat and shaking his fist at them.”99 Civic reformers contested the h b c ’s perception of itself as the paramount ratepayer and interest in Edmonton. They identified fiscal transfers across a broad range of activities with corresponding political rights. The single-tax Edmonton Capital made the case in 1910: “The utilities, being community enterprises operated for the benefit of the patrons, every patron of the utilities becomes an owner. The man who pays a street car fare becomes by that act a patron, a contributor, and a part owner in the same … Consequently the resident who lives in a shack down on the flats is more entitled to a vote on the question of how these utilities should be conducted than the Hudson’s Bay Company which owns three million dollars’ worth of land.”100 In such claims, taxation, enfranchisement, and public services dovetailed to put the state at the service of a politicized, grassroots public. They had their result in 1912 when the h bc finally abandoned the attempt to reduce its assessments and sold off its downtown holdings. This was a victory for local fiscal reformers, but it raised red flags for vested corporate and landed interests everywhere. In Vancouver, Mayor L.D. Taylor recounted the history of the single tax as a victory for the people. When the city cut taxes on improvements or buildings in half, huge buildings immediately rose where shacks had once stood. In 1906, these taxes were halved again, and in 1910, improvements were entirely exempted. The consequence, argued Taylor, was an upswing in population, capital per person, and bigger and better buildings. In Vancouver, 75 per cent of workers owned their own home.101 Land monopolies and rising rents threatened that model of citizenownership. Without a single tax, the “last, best west” seemed threatened by a modern financial feudalism that could turn the progressive and empowered farmer into the kind of serf that the anti-Chinese lobby had been vividly conjuring up for years. The same fears that drove the Chinese head tax were marshalled in favour of the single tax. Provincial and municipal governments across western Canada drank the Kool-Aid. They began to encourage and, in some cases, even impose land-value taxation. In British Columbia, municipalities were prohibited from taxing improvements above 50 per cent, and they could exempt

308

Reconstructing Fiscal Federalism

entirely, which fifteen of thirty-three urban municipalities and all but four district municipalities did in 1914. When T.D. Pattullo introduced Prince Rupert’s first budget in 1910, it was on a single-tax basis.102 In Manitoba in 1892, farm improvements were exempted. In Saskatchewan, enabling legislation was widely taken up by villages, where taxes on buildings ranged from nil to a cap at 60 per cent; towns tended to tax buildings between 25 per cent and 60 per cent, and cities from 15 per cent to 45 per cent. That is to say, Saskatchewan municipal authorities tended to reduce but not to exempt taxes on improvements. Alberta passed a provincial “increment tax” in 1913 to take 5 per cent of all increases in land values, along with a wild-land tax of 1 per cent in 1914; it also imposed partial and encouraged complete exemption of buildings in incorporated communities. A 1914 survey by the Grain Growers’ Guide had nearly 7,000 respondents and revealed a readership across the Prairie provinces, male and female, roughly 90 per cent in favour of putting taxes on land values (understanding land “in its economic sense to include all natural resources”); even higher numbers supported surtaxes on vacant lands and “complete abolition” of the tariff.103 The single tax at its height can be measured statistically, but the statistics don’t convey the full picture. Sometimes high taxes on land were mitigated by low assessments. In 1915, Robert Murray Haig could find no clear consensus on this trend – not surprising given the extraordinary instability of land values at the time. Low assessments seriously compromised efforts to squeeze the speculator. City councillors, often land speculators themselves, soft-pedalled enforcement by putting off seizures of land for unpaid taxes, year after year. Communities found ways to work around assessment laws that didn’t suit them. In Leduc, Alberta, provincial law set low limits upon school taxes and permitted school officials to set their own budgets, forcing town officials to supply the requisite sum without any obvious means of obtaining it. Therefore, Leduc’s businessmen (who ran the town council and could, Haig remarked, easily be summoned to a “fairly full council meeting upon a moment’s notice [by] a shout from the aldermanic proprietor of the livery stable”) doubled the basic tax rate upon land that they evaluated at about double its value. Such policies dampened resale potential but did not impair business. The businessmen of Leduc agreed to share out the burden amongst themselves rather than protest inflated assessments. By contrast, in Ponoka, another Alberta town that Haig investigated, legal protests and threats of violence or tax boycott proliferated. “Both the Hudson’s Bay Company and the Canadian Pacific Railway told the town officials that they would allow



Single-Tax Revolt in the 1900s: Fairness over the Land 309

the town to take their lands before they would submit to taxation on the inflated basis. At the last moment, however, both companies sent in their cheques for their taxes, much to the relief of the officials. As one of them expressed it, ‘We wouldn’t know what to do with the lots after we got them. There was no market for the property.’”104 Lloydminster fascinated Haig because it straddled provincial boundaries, and each side denounced the other. In Saskatchewan, the land was undervalued by assessors; in Alberta, it was overvalued; per capita tax rates, however, remained comparable. While it is hard to pinpoint exactly when and how the single tax was applied, the basic pattern is of widespread reductions or exemptions for improvements and a widespread sense of rewriting the liberal-conservative fiscal constitution. The public had the bit between its teeth. The single tax offered a statist program at a level of government that the serious powers had thought too insignificant to count. They had downloaded direct taxation to the governments least able to muster a political mandate for confiscatory taxation; to their horror, they discovered that confiscatory taxation was taking hold of the people. The single tax was unmistakeably a tax on capital. It defied classic liberal and progressive economic truths when it taxed capital in the name of a strong western exceptionalism that, by postdating the American land boom by a crucial few years, coincided with the pinnacle of populism. Heady with its western Canadian successes, the single-tax movement began to inch back eastward. By the second decade of the twentieth century, it was reanimating debates in capitalism’s heartland: fortress Ontario. That province also experienced staggering growth that fuelled single-tax demands. The northern settlement frontier was particularly fertile ground for the movement, but so was Toronto as rising land values and rents priced people out of ownership and even tenancy. The vogue for northern wilderness paintings reflected those pressures: Group of Seven painter J.E.H. MacDonald was driven from Toronto by high rents in 1911. Assessment officer James Forman annually recorded his puzzlement at the prices. In 1908, the assessment increased by $16 million or 8.15 per cent but these were fantastical prices, far beyond what a landlord could recoup in rents, and “we have not the right to put figures down which imply values not of to-day, but of the future.” Forman recalled too well the previous land bubble – the $26-million bust had lasted six years – so he kept formal assessments well below market prices. The next year, the increase was $34.7 million, and because so many businesses had changed hands at inflated prices, the city “had no alternative” than to increase assessments,

310

Reconstructing Fiscal Federalism

but it also raised the basic income exemption to $1,200. There were many appeals but few successful ones, with the city’s valuations still well below market value. The next year, 1910, Forman described the $39-million increase as the largest in history, most of it in the congested business section. He assigned two officers full-time to re-evaluate the whole city and expressed relief that such increases could not continue. He said the same thing when the assessment increased by $38 million in 1911, and again when it increased by $82 million in 1912, and by $80 million in 1913. Inevitably, appeals against the assessment soared alongside property values (by 40 per cent on that $80-million increase). No less inevitably, “tax reform is now before the public.”105 As in western Canada, businessmen and radicals found common cause in the exemption of improvements. In November 1912, when the Toronto Board of Trade blamed the high rents on taxation of improvements, the socialist Winnipeg Voice exclaimed: “The remedy – Single Tax. Did you hear the bell ring?”106 When the question of reducing taxes on improvements went to a referendum in 1912, by a vote of 25,773 to 6,440 the city gave a resounding yes, to which Premier James Whitney responded with a resounding no.107 Whitney was the first and best progressive-conservative statesman. His roots were small-town and partisan Ontario: the son of a blacksmithfarmer in Williamsburg, he articled with John Sandfield Macdonald and practised law in Morrisburg. Entering politics in 1888, party leader in 1896, Whitney ground away at the Liberal fiction of “honest” graft. In 1901, he won a slight plurality of votes, and in 1905, his victory on a platform of civil-service reform and cheap power signalled a tectonic shift in Ontario politics. Once in power, Whitney delivered on his promises. He made his state less partisan and more fair and then used that perception of fairness to expand its range, above all by creating a provincial hydroelectric commission to wrest control of power from monopoly capitalism and sell it cheaply – manufacturers had been complaining for many years of high prices that held back development. Whitney largely dismissed complaints from financiers and railwaymen that he was putting property into peril, and so did Laurier when asked by such bankers as Edward Clouston of the Bank of Montreal and B.E. Walker of the Bank of Commerce to override the provincial legislation.108 But if his hydro policies alienated the tycoons, reform of the University of Toronto engaged them: the first board of governors included Walker, Flavelle, and White, alongside B.B. Osler and Whitney’s brother.109 Businessmen applauded Whitney’s social conservatism (he opposed prohibition and women’s suffrage) and the attack on patronage, by which



Single-Tax Revolt in the 1900s: Fairness over the Land 311

they considered themselves overcharged. Whitney used party networks to fill openings (anyone seeking a government position would look to “get it through the clubs” of the party110) but did not create openings specially, and he rebuked the battalions of party workers who importuned him for positions: “Now what would happen were the Members of the Government obliged to spend their time watching for places for this army of applicants? The result would be that we could do nothing else. We would have no time to do our ordinary daily work.” On one occasion, as Whitney was riding his bike, another cyclist drew up beside him. “The Sheriff of Manitoulin had died; could the petitioner have his place? ‘It’s all right with me,’ grunted the Premier, ‘if the undertaker doesn’t mind.’”111 Whereas for John A. Macdonald, patronage probably was the most important function of government, for Whitney it impeded higher functions. J.S. Willison observed to Whitney in 1912, “whatever you may do on tax reform, I never was more certain than now that you and your government have affected a revolution in political standards in Ontario.”112 Writing party entitlements out required writing state entitlements in. Whitney inched (too slowly for workers, too quickly for employers) towards workers’ compensation, passed in 1914. Two years later, on the recommendation of a commission chaired by Willison, unemployment relief transferred another claim to support from party to state. Both acts were passed by Whitney’s successor, William Hearst, but they continued a trajectory that he had begun. Whereas John A. Macdonald had regarded poverty as local and accidental, Ontario Conservatives were identifying systemic avenues to poverty – workplace injury, economic downturn – that required systemic redress. Progressive reformers, especially organized labour, forced the new calculus upon their politicians. But if poverty imbricated state spending choices, it must also imbricate revenue choices. The same constituents who demanded impartial bureaucracy and socialwelfare legislation also demanded fair taxation. One letter from an Anglican priest (and future bishop) J.C. Farthing, praised Whitney’s “bold stand against the spoils system” as a prelude to his main point: a plea on behalf of an impoverished workingman, no longer able to work and living off his savings, but hard hit by property taxes: “I hear a great deal about this assessment among the poor. It presses very hard upon widows & the thrifty poor, who have saved for their declining years. I would bring it before you, for I am sure you are not willing that the burdens should be put upon the poor.”113 In pursuit of the new standards of fairness, the Ontario government must be seen to tax fairly and to empower municipalities to do the same.

312

Reconstructing Fiscal Federalism

Could such a premier be brought around to confiscatory taxation of capital? Single-tax reformers, numerous and vocal, believed so, and they bombarded him with letters and petitions. The Southam brothers, who published the Conservative Ottawa Citizen, led the campaign. They pointed to petitions from over 325 municipalities and 200 labour unions, as well as 168 editorial endorsements in Liberal and Conservative newspapers.114 Their tone ranged from withering scorn to studied friendliness; Whitney found the latter more tiresome than the former because they invited reasonable debate but ignored the arguments that Whitney voiced repeatedly in letters and speeches. He believed the single tax was unjust, unfair, and cruel. During one exchange in 1912, when the Southams argued that taxes on buildings always hit the poor harder than the wealthy, Whitney replied that land-value taxes would increase the struggles of the poor workingman. One often saw people put up shacks near factories that were worth a fraction of the land’s value. “I have seen these people living in shacks or sheds built in a few days themselves looking something like large packing-cases, and the taxes upon these buildings are practically nil.” Land taxes would hit shackers hard and exempt the factory.115 By early 1911, single taxers thought they were on the verge of victory. Even progressive Conservative newspapers advocated lower taxes on improvements. The Toronto World, published by MP W.F. “Billy” Maclean, declared that the single tax would make Whitney “the friend of all, even as he is now regarded as the friend of most,” and he should grasp it “before the slow-moving opposition arrive at it and make it an issue.”116 Ontario Liberal leader Newton Rowell did indeed embrace the single tax as one plank in a progressive platform.117 Taxation, he argued in the legislature, was “much more than a method of collecting revenue. It has a vital relation to the progress of the community.” When Whitney demanded evidence not exposition, Rowell launched into a two-hour speech that referenced rising rents in Toronto and pitted northern against western competition. In reply, Whitney denounced Rowell as the most extreme of Georgeites and Georgeism itself as “socialism of the advanced kind.” It would lead to “the taking away of property from everybody, to be used in common,” and the abolition of the home, marriage, and religion. Regarding the single tax, Whitney “stood as a stone wall.”118 By the end of 1911, tax reform was in tatters as Conservatives won elections on conservative tax policies both provincially and federally. But the dramatic leaps in land values continued to create strong demand for tax relief in municipalities across Ontario, led by the Globe, the Star, and other mainstream and radical papers. Torontonians in and out of city



Single-Tax Revolt in the 1900s: Fairness over the Land 313

council agitated for land-value taxation, and the city’s tax reform committee collaborated with single-tax deputations to put pressure on the provincial legislature. Rowell went north to speak in New Liskeard in the summer of 1912 and deployed the language of western boosterism: “The improvements made by settlers, Mr Rowell urged, would not be taxed.”119 According to one west-coast newspaper, the Victoria Colonist, “the Granges have fallen into line for the change, and in fact it seems difficult to say who in Ontario except the Premier is actively in opposition to it. But Sir James is not a man who can be driven.” He opposed popular ideas on the very grounds of their popularity, for fear of encouraging “revolutionary tendencies in the multitude.” But in the single tax and its energetic exponent Rowell, Whitney was “face to face with a proposition which may lead to his overthrow [and] might readily sweep the province.”120 New farmers’ organizations in Ontario shared the single-tax leanings of western counterparts: in 1912, Ernest Drury was “engrossed” in Henry George, as well as Smith, Ricardo, and Mill,121 and in 1914, Drury and three colleagues founded a new United Farmers of Ontario movement that advocated taxation of the unearned increment. Whitney fought off fiscal reform with an assessment committee that heard evidence late in 1912 about taxes and tax reforms across Canada and beyond.122 Drury spoke at length, as did James McEwing, m l a for Wentworth North. A.W. Roebuck, a journalist in New Liskeard, described that town as a hotbed of single-tax reform agitation, with public meetings and petitions in 1905, 1907, and 1910, always as an attack on speculators who owned much of northern Ontario but lived in southern Ontario: “You can stand in the town of New Liskeard and look in every direction and see bush farms held for fifteen and twenty years and still they are bush.” When he asked farmers why they did not clear, he was told: “A man was a fool to clear and then pay other people’s taxes.” Together, tax-evading non-resident owners and tax-exempt railways were holding back schools. Rowell, another witness, fully concurred. Other speakers included retailers who wanted the business rental tax lowered, and manufacturers who wanted land taxes increased and wealth protected. Spokesmen for the District Labor Council demanded landvalue taxes and warned that workingmen were being squeezed out of land ownership: three out of five in Toronto now lived in two or three rooms, especially the recent arrivals. Single-tax witnesses included W.A. Douglass, Alan Thompson, J.W. Bengough, Stewart Lyon of the Globe, and A.B.  Farmer who, startlingly, advocated Northern Nigeria as a model. There, the values from social growth were safeguarded for the public,

314

Reconstructing Fiscal Federalism

according to the customs of a people “whom we with our cosy Caucasian prejudices regard as only semi-civilized.” Municipal tax assessors and overseers described experiences in Hamilton, Toronto, and Ottawa. Forman toured western municipalities and, in that report as in his annual reports, defended “ability to pay” against speculative theories of taxation. He recommended a pragmatic middle ground that would see taxes on improvements lowered but not abolished. People were not suffering, this was no time to engage in academic experiments, and city revenues demanded some form of taxation on improvements. Forman was an enemy of the single taxers and that made him an ally of Sir James Whitney, who, in his own testimony, quoted Forman’s admonition not to “drop the substance for the shadow” of taxable wealth. Whitney also wanted to see better “elaborate explanations and illustrations in pamphlet form for the assessors of the province” that would make it “practically impossible for any intelligent man to mistake his duty.” The recommendation reflected evidence that, in practice, local assessors were taxing buildings at widely varying rates. American experts were also brought in to testify, including Lawson Purdy, a single-tax sympathizer who made himself the leading expert on tax assessment in New York, first as a critic of the system and then as its overseer. New York had largely dismantled taxation under Tammany Hall, which preferred to borrow, and the legacy was lasting distrust – amongst citizens and investors – and a “remarkable degree of fiscal discipline.”123 At the turn of the century, debts were increasing and bankers demanded “scientific” taxation to secure those debts. The city improved its accounting to make costs transparent and to demonstrate a proper return to taxpayers and investors alike. With these new techniques of cost accounting, New York “became the proving ground for cutting-edge fiscal reform” and a model for expert administration. In 1906, a new Bureau of Municipal Research inspired imitators elsewhere, including Toronto, and provided resources for other cities, including the study of Montreal finance in 1918. Seligman and Lawson collaborated in pushing reforms to get personalty taxes off the books and income tax on.124 Lawson replaced tacit, rule-of-thumb assessments with formal knowl­edge: he insisted on collecting all known transactions and publishing them in annual maps of the city. New York’s lesson, he explained to the Ontario legislative committee, was that assessors always overvalued buildings in comparison to real estate because they projected rising land values onto buildings that were always decreasing in value. Assessors should write depreciation into their assessments. The Ontario committee was flummoxed to hear a



Single-Tax Revolt in the 1900s: Fairness over the Land 315

scientific recommendation for lower rates on improvements. It concluded (predictably, according to reformers) that no mandate existed for the single tax. A royal commission, remarked the Toronto World, might be independent enough to bring in a proper report but this committee was not.125 But Whitney also received many letters of congratulations for his anti-single-tax stance. Whitney’s solution, in the spring of 1914, was to increase taxes on insurance companies. The big companies, especially Confederation Life Insurance Company and Canada Life Assurance Company, spearheaded a revolt against the tax hikes on grounds, they argued, of both propertied and popular interests. Property was imperilled again, and the province, “by reason of its wealth, population, and importance, should be an example and guide” by following conservative and British ideals, rather than the “bad example” of southern and western American states. They also insisted this was the people’s money, not some supposed “money trust.” Thrifty, hard-working, and provident insurance policyholders would bear the new tax. Within two days of being rebuffed by the provincial treasurer, the insurance companies obtained 15,000 signatures on a petition that denounced the wrong-headed and excessive taxes on “the dependent and helpless.” Even corporate tax revolt now spoke the language of fiscal populism. The movement failed in the courts (the judge ruled the tax a direct one), and when Canada Life finally paid its arrears, in April 1915, the company president expressed his regret that the lawsuit had coincided with the First World War. By that time, Whitney was dead, after winning one last election in June 1914, and the government was in Hearst’s hands. Hearst’s government marshalled further evidence against the single tax: Forman was sent west again, as was J.T. White, a provincial treasury employee, and both warned Hearst of the fiscal calamity there.126 The single-tax movement never won political victories in Ontario, but for a time, many believed it was on the cusp of victory that only steely conservatism averted. By the outbreak of the First World War, the tide was turning against the single tax as a practical scheme of finance. The gap between taxes levied and taxes collected grew, especially after 1910. When land values were rocketing upwards, cities found that they could keep a low tax rate (say 10 mils) despite exempting all improvements from taxation, but the growing arrears wiped out gains. Cities that presumed full or near-full collection, and borrowed on the strength of those estimates, accrued debts and stocks of land that would hound them for many years. Even cities like Calgary, that never fully exempted improvements, suffered

316

Reconstructing Fiscal Federalism

from the arrears and forfeitures for decades.127 The war years worsened the problem, but a whole series of experts had long since predicted the crisis and now revelled in their prescience. But historians have been too quick to concur with the experts, whose evidence and arguments should be carefully scrutinized. Established economists overwhelmingly came down against the “western experiment.” The condemnation was not unanimous: some graduate students, if they were not sent west by Seligman, drew moderate conclusions. S.M. McLeod’s 1914 thesis on municipal government, defended at Harvard under Munro, saw a “wide difference” between a single tax and exemption of improvements and predicted an eventual compromise between “the radical demands of the extreme single taxer and the conservative policy of the legislature” that probably reflected “the true average of public sentiment.”128 A similar conclusion was drawn by Archibald Stalker, who wrote an MA thesis on the subject at McGill University in 1913 supervised by J.C. Hemmeon, a left-leaning economist from Harvard who joined McGill in 1912 and later was a figure in the League for Social Reconstruction.129 According to Stalker, western Canadian municipal taxes were so far from a true single tax that “the facts alone” could neither uphold nor debunk the theory.130 But established Canadian economists, whether liberals or progressives, saw the single tax as conclusively disproved. Adam Shortt, now a federal civil servant, couldn’t denounce the policy in print, but privately, he told Sir James Whitney in December 1912 that he did all he could: Considering the noise which is being made throughout the country by the advocates of the policy of land taxation, looking, of course, to the ultimate introduction of the fallacious Single Tax System, and the amount of spurious argument which is current, including references to the wave of single tax sentiment passing over certain cities in western Canada, I cannot refrain from sending you a line to express my personal admiration for the firm & reasonable stand which you have taken in this matter. The position which I at present occupy prevents me from taking any part in the discussion which might be construed as having a political bias, but I have had opportunities, at the special request of Canadian Clubs and similar organizations in such cities as Winnipeg, Edmonton, Fort William and Ottawa, of discussing the tax question from the point of view of practical economics as well as on the basis of equity and justice.



Single-Tax Revolt in the 1900s: Fairness over the Land 317

In Hamilton, in November 1913, for example, Shortt explained that singletax theory had both good and bad elements but the bad outweighed the good.131 He spoke more frankly in 1915 in a paper to the National Tax Association that denounced the single tax as “a curious medley of half-truths and more largely proportioned misconceptions in the sphere of economics.” Pointing to depleted western municipal coffers, Shortt recommended instead a tax on the capital gains from land purchase.132 Once again, thus, he delicately steered the tax reform movement away from capital towards profits. His successor at Queen’s University, Oscar Skelton, did likewise in a talk at the Canadian Club in Berlin, Ontario, in January 1914, that denounced the single tax but demanded effective taxation of corporations and railways.133 In 1920, A.B. Clark, an Edinburgh-trained economist who joined the University of Manitoba in 1909, blamed the hidden costs of cheap taxes. Taxes on land speculation were painless during a boom because “the annual increment in land value made even heavy taxes seem a trifle. But light come light go. A revenue so easily obtained was as readily squandered in expensive undertakings, entered on in many cases at the instigation of those – sometimes members of the municipal councils – who desired a further inflation of real estate values in order to enable them to unload at a profit.” But then, like Prospero’s magic, municipal revenues melted “into thin air.” Clark denounced all “penal taxation of unoccupied land,” including wild-land taxes, as an immoral and economically unsound breach of faith that destroyed “that sense of security on which modern industrial and commercial life is founded.” It was, he concluded, a policy “made in Germany,” i.e., tyrannous.134 James Mavor, too, decried the single tax in an overview of Canadian taxation in 1914: “It is evident that a tax upon non-revenue-yielding land is not a land-tax, but is a tax upon capital.”135 For all his early single-tax leanings, in Toronto Mavor denounced public ownership and the single tax. Where economist Harold Innis blamed Mavor’s “stern background of Scottish individualism,” historian S.E.D. Shortt blamed Mavor’s “growing friendships with leading financiers and utilities purveyors as Sir Edmund Walker, Zebulon Lash, and Sir William Mackenzie.”136 Anti-George leanings had, as seen, been hard-wired into the establishment of economics as a sober, scholarly discipline. The campaign had begun with Seligman’s attack in 1890, and he remained a model and resource for ambitious, professionalizing economists.137 His writings were standard textbooks in Canada.138 Seligman decisively steered the United Sates away from capital taxes and towards a federal income tax

318

Reconstructing Fiscal Federalism

passed in 1913. But Canada seemed in some danger of going in the other direction. With Borden replacing Laurier as prime minister on a protectionist campaign in 1911, Canada’s federal government seemed less responsive to fiscal reform than its American counterpart, but local Canadian governments seemed considerably more responsive. What was going on? Seligman turned his attention very directly to the question. He asked Mavor for information about Canadian single taxers and sent a Canadian student, undergraduate Solomon Vineberg from McGill, to do a PhD on local taxation in Canada (“the subject was suggested by Professor Seligman”). Vineberg agreed with Stalker that the western Canadian experiment was not the single tax proper because the high land prices kept the tax too low to restrain speculation – but people accepted the policy only because the taxes were so low. When the boom ended, people would have to choose between a high tax on land and a moderate one on land and improvements. Vineberg vehemently denounced the high / single-tax option – a finding reprinted in the mainstream press – and, as seen, insisted taxes must be on income not capital: “The aim of all governments, in devising schemes of taxation, should be to avoid trenching on capital. The contributions for the support of the state should be made from income if capital needed for further production is to be kept intact.”139 In February 1914, Seligman himself came out strongly against the workings of the single tax in western Canada, as the New York Times recorded in a headline: “Prof Seligman Refutes Benefits of the Single Tax Policy.” Seligman observed that building starts had declined in Vancouver in 1913.140 In truth, the downturn was widespread, but Seligman singled out the single-tax towns. In 1915, Haig gave voice to similar public attacks.141 On the other hand, in early July 1914, Charles Bullock of Harvard gave a more measured, “unemotional” analysis of Vancouver. The city had not expanded faster than other western towns and now faced out-migration and vacant houses. But Vancouver’s land taxes, far from confiscatory, were below those in American towns and some improvements were taxed; none of this specially indicted the single tax. Bullock did see danger in the city’s accumulation of tax arrears. It had avoided tax sales that might be a “bad advertisement for the city” but could hardly postpone them any longer.142 The economists’ verdicts fuelled other attacks: an article in the Annals of the American Academy of Political and Social Science in March 1915, by the president of “Allied Real Estate Interests of the State of New York (Inc.),” declared the Canadian single-tax experiment a failure.143 Economic orthodoxy was to some degree on trial in the confrontation. When economists built up academic programs, they needed disciplinary



Single-Tax Revolt in the 1900s: Fairness over the Land 319

orthodoxies around which to build professional consensus. They could not be and train experts unless expertise was in some way distinguishable from ordinary knowl­edge, with facts that other economists recognized as rigorous.144 Such claims also underwrote their employment by the state. If the single tax was or became true, the academic discipline of economics lost standing. No wonder Canadian and American economists lined up to denounce the single tax. This was also a question about whether businessmen or economists were the better economic experts. Economics, like any discipline, requires an account of what is a “normal” range of behaviour in the thing being studied – in this case, the economy. Economists like Clark and Mavor struggled to wrestle all the facts and figures of western exceptionalism into narratives of proper economic development to explain western cities’ experiences in terms that debunked the single tax. In eastern Canada, as in the United States, academic economists were sufficiently thick on the ground to rally opinion against the single tax.145 (American sociologists were not so hostile: the American Journal of Sociology published several favourable references to the single-tax experiment in Canada.146) By contrast, economists were almost completely absent in western Canada, so their anti-democratic, anti-single-tax arguments had less impact. Economic theory was more squarely in the public sphere, and corporations had to fire their own torpedoes, albeit with eastern reinforcement. F.C. Wade, a Liberal Party associate in the pay of the cpr, cited economists when he went from denouncing “the single tax humbug” in 1912 to denouncing the “single tax failure” in 1914.147 Westerners saw “salaried scholastics” as part of the opposition: that was the claim of a letter-writer who preferred Marx’s more “scientific” and “levelling” explanation arguments for the alienation of land and resources to the marginalism of Jevons and Marshall.148 Above all, where westerners saw a land tax, easterners saw a capital tax. Mavor insisted on that point, as did others. At the annual convention of the Union of Canadian Municipalities in 1911, Commissioner Butchart of Edmonton remarked: “It seems to me the further west we go the further advanced we are in this matter,” to which Alderman Whitham of Halifax replied: “If you assess capital you confiscate it.” Land taxes were only supposed to pay local expenses directly related to their self-protection: fire services and the like; to write them into provincial finance was akin to confiscation of capital for speculative purposes. But the provinces were “nibbling with growing confidence at the taxation of land.”149 Did the municipal experiments in western Canada really threaten vested economic interests? In a word, yes. I identify three important

320

Reconstructing Fiscal Federalism

contributions made by the single-tax movement: first, the buildup of broad-based political alliances that ruptured classic liberal distinctions between the propertied and the unpropertied; second, an expanded definition of taxation and the range of identifiable fiscal transfers; and third, it began to get the job of tax reform done, beginning in western municipalities but slowly inching both eastwards and upwards. The success of the single-tax movement in the west made Canadians see themselves as a nation of fiscal reformers and reoriented their historical narratives away from a perceived conservative heritage and towards a progressive future. The first accomplishment of the single tax was to build up alliances between working and middling people, the scantly and the modestly propertied, around the political function of property. The liberal polity rested on a theory of betterment by private self-enrichment and the political rewards that followed such betterment. But rising rents threatened that self-betterment. Static wages and high rents forced tenants into smaller homes and subdivided tenements, and whole neighbourhoods were disenfranchised in the process. The political and economic agency of the lower and middling classes seemed to be shrinking rather than expanding. The wealthy were getting wealthier, but home ownership and the vote became more elusive for ordinary working people. The changes threatened a polarization of wealth and poverty that many of them had fled in the old world. The notion of “the taxpayer” was being redefined all through this period to reflect those social and economic changes. I am not referring to the fact that in prairie towns a “taxpayer” was a cheap building thrown up to avoid vacant-land taxes (though that’s interesting!) but to the political redefinition of the concept as a program of anti-democracy. Writers who appealed to the public as a “concerned taxpayer” were not simply making a narrowly self-interested demand. They were using the broadest possible umbrella category to create a “haves” party to confront and repel the “have-not” party. The construction of that alliance has always been at the heart of conservative liberalism. The most famous such plea was Burke’s argument that the large proprietors functioned as political ballast because, in protecting their own property, they protected everybody’s property. That sort of alliance building was on the upswing in Laurier’s Canada, as the economic “winners” of industrial capitalism and speculation fought to ward off legal and political challenges by those who owned very little. In their confrontation with the landless, large proprietors sought the alliance of small holders, including farmers, white-collar workers, and wage labourers. These were “swing” voters: they might conceive of themselves as petty proprietors who had pulled themselves up from



Single-Tax Revolt in the 1900s: Fairness over the Land 321

landlessness by their own bootstraps or, quite differently, as sharing the outlook of the landless. A debate in the Victoria British Colonist in 1890 illustrates the point. The editor argued that the modestly propertied workingman would be the first to suffer under a single-tax regime: “But it is for [Georgeites] to decide whether it is exactly fair to make the mechanic pay for his modest cottage and his little garden as heavy a tax as his rich neighbor, who has on the same space a costly villa and ornamental grounds worth, perhaps, ten times as much.” A thoughtful, studiedly nonpartisan reply came a few days later from J.A.C., who began his letter with “I am a workingman and take much interest in the controversy at present so extensively carried on in the papers in this city” around the single tax. He owned a city lot, where he lived with his family and so he had “some consideration for those land owners, whose possessions represent their savings.” But concern for his children nudged him towards the single tax. If Victoria prospered and developed, then economic polarization must follow, as had happened in New York. There, idle millionaires abounded, but the workingmen earned wages so small that “men with families, although able, industrious and sober, have to look to the labor of their wives and children to make ends meet. I think you will agree with me that there must be something wrong where it becomes consistent for one class (the land owners) to wish that the country may prosper, and for a much larger class (the workers) if they understand their interest, that it may remain stationary and not increase.”150 The many variations on this exchange reveal the extent to which both sides, for and against the single tax, understood that they were playing for the loyalties of modest proprietors including workingmen. Would the small proprietors join up with the larger proprietors or would they understand their stake in the world of property, and therefore of dignified independence, to be fragile and under threat? The single tax tended to persuade the small proprietors to ally themselves with the landless. Middle and working-class progressives wanted to own their homes and to build up local institutions. The major obstacle to such objectives in western Canada was landed interests that fought hard to resist taxation. The larger the landholder, the harder it fought. Corporations like the cpr waged epic battles all the way to the jcpc, and their victories were devastating for local communities. In March 1911, when Alberta’s case against the cpr for millions in arrears failed at the jcpc (it declared that cpr lands were tax-free for twenty years after patents were issued, which was generally very recently), E.J. Fream explained in the Grain Growers’ Guide just how badly the decision would hit small communities that were losing

322

Reconstructing Fiscal Federalism

as much as $300 to $400 per year by the decision. They would have to tax settlers “to the limit in order to procure a school, and then possibly they will have to arrange for the school to be open only a few months in the year.”151 The Guide called for higher taxes on land and especially on vacant land that prevented many families “from having any school at all.”152 In western company towns, employees were particularly motivated to pursue such tax reforms that would put civic screws on employers. Making cross-class alliances work was perplexing. At Winnipeg in 1899, a “large number” of citizens gathered to hear W.A. Douglass from Toronto address the single tax. Some advocated the Labor Party as the focus for reform efforts; others, especially businessmen, showed a “strong desire” for some other form of organization.153 Some early socialists espoused the single tax; some denounced such palliative measures; some, like Phillips Thompson, moved from the first to the second position. Such attraction and repulsion was seen across the country. In Fernie, a socialist editor sought not single but “double” taxation of land and capital; the single tax served only “the small business element.”154 In Winnipeg, Arthur Puttee was a printer, founder of the local branch of the tlc and the Labor Party, and editor of the socialist newspaper The People’s Voice, published from 1894. That paper was still in its first month of publication when it declared that “Henry George had solved the labor problem” and that “involuntary poverty is a crime and unnatural.”155 Puttee won a federal by-election in 1899 and re-election in 1900 on a platform that included the single tax. But a new branch of radical socialists turned against such practical or “sewer socialism” and in 1910 ran a spoiler candidate who won just enough votes to deprive the single-tax labourite, F.J. Dixon, a seat. Bitterly disappointed, Puttee denounced the socialists as in league with the Conservative Party. Dixon and his close associate, S.J. Farmer, were committed single taxers who acquired their Georgeite leanings from Dr R.M. Mobius, a German immigrant professor and freethinker with a book shop in Winnipeg. The two men spent the next few years addressing “hundreds of meetings of farmers, workers, and middle class reformers” as well as writing copiously for the Grain Growers’ Guide and other papers. In 1914, Dixon won a provincial seat on a platform that even Puttee found overly liberal.156 Dixon and Farmer were both pacifists, which limited their influence during the First World War but ensured them a role in postwar politics as co-founders of the Independent Labour Party of Manitoba. Similar quarrels and reconciliations occurred in the Maritime provinces. There, too, rents were increasing and labour was actively organizing to



Single-Tax Revolt in the 1900s: Fairness over the Land 323

confront rapid industrialization. Historians identify 411 strikes from 1901–14 and nearly 2 million striker days, along with a “small but vigorous socialist movement” that accounted for about 10 per cent of Canadian socialists, as measured by participation in the Socialist Party of Canada.157 On the eve of the Great War, Nova Scotia’s socialists were contesting local elections and winning double-digit electoral support. Socialists, of course, demanded more than just tax reform but they did demand tax reform. Henry Harvey Stuart, a teacher, helped to found the Fredericton Socialist League in 1902. From 1907–10, he edited the Newcastle Union Advocate, which advocated socialism and Georgeism, and agitated for the single tax while serving on Newcastle’s municipal council. Stuart was a local anchor for the Tax Reform League of Eastern Canada and the Canadian League for Taxation of Land Values. His biographer identifies few concrete changes beyond getting the municipal poll tax cut from $10 to $5 in 1913.158 Some socialists repudiated liberal reform: Roscoe Fillmore firmly oriented the Cumberland County Labor Party away from “pseudo-Labor-Socialistsentimentalists,” including vegetarians and single taxers, after 1911.159 On the other hand, the intellectually rigorous Colin McKay was willing to fellow-travel with the single taxers. George’s “system in its entirety is incipient socialism with a strong tendency to full socialism,” even if the bourgeois reformers in Saint John did not intend for it to go quite so far, he remarked in 1913. McKay recognized that the single taxers aimed to confiscate not just land but monopoly capital: “An essential part of the Henry George philosophy is the socialization of industries of a monopolistic character. So long as private parties control the public utility and monopolistic industries, they can absorb any benefits arising from the single tax.” Eliminating the landlord would, at the very least, make this a more straightforward fight “between capital in its most modern and powerful form and the working class.”160 Where the left looked for broad alliances, the single tax was a useful instrument of alliance building. It got bread-and-butter concerns more squarely into mainstream liberal politics, even as it forged consensus around the view that the concentration of wealth was robbing Canadians of their birthright. The single tax did not make a new Jerusalem of Canada, but it did build mainstream support for new principles of social solidarity and economic justice. It helped to turn public debates vested in the language of “rights” into debates vested in the language of “justice,” using the liberal logic of property and consent. A British subject paid taxes voluntarily, not as tribute, and every such payment was understood to reflect the consent of the governed and the legitimacy and hegemony

324

Reconstructing Fiscal Federalism

of the governing regime. The spread of property and the growing capacity of the state both to provide consumers, tenants, and homeowners with services and to exact taxes for those services made even the poorest Canadians taxpayers. The great Victorian binary between propertied and unpropertied, with the former governing the latter, was breaking down in favour of a more unitary view of a public composed of consensual and autonomous agents. The great cry from large proprietors for protection from purported internal enemies of property lost intellectual coherence and political punch as the single taxers read “taxes” into the whole fabric of common life and insisted that the political agency of the whole people must be recognized and wooed. The second contribution of the single-tax movement was to insist on the ubiquity of fiscal transfers in everyday politics. Working people were heavy taxpayers, insisted the single taxers. When Tories insisted that loyalty was at issue, one single taxer, published in the Moose Jaw Herald in 1891, insisted that “a superstition miscalled ‘loyalty’” was limiting productive energies and driving up prices. This writer saw in the single tax a path between Tory protectionism and “the canker of socialist paternalism.”161 Single-tax cartoons in such papers as the Grain Growers’ Guide hammered home the argument for a fiscal reading of Canadian regionalism, showing taxes transferred from west to east and from farmers to businessmen. The simple visual language insisted on the irreducibly fiscal nature of complicated relationships. Racialization complicated matters. Henry George was openly Sino‑ phobic. Single-tax cartoonist Bengough filled his paper, Grip, with grotesque racial and religious stereotypes.162 But many single taxers recognized and denounced the regressive effects of racial appeals, as in their testimony before the British Columbia Royal Commission on Taxation of 1911. Whereas once the province had been desperately short of revenue, by 1911 it was flush enough (thanks to the “great potlatch”) to stage public hearings on how to reduce taxes. A Rossland miner was told: “You will be very good if you will inform your Union that it is not our object to increase the taxes at all. We are trying to decrease taxation, and to get the public’s opinion as to which should be decreased.” In other provinces, the flat-rate poll tax would have been the first casualty: it was everywhere known to be expensive, regressive, and fiscally insignificant. But in BC, the poll tax was designed to prop up white rule and produced more than the income tax in 1911 ($313,338 versus $192,924).163 Dare the province abolish it? Some Georgeite witnesses advocated that provincial taxation be deracialized. They maintained the point staunchly when pressed by the



Single-Tax Revolt in the 1900s: Fairness over the Land 325

commissioners with such questions as: “You would not put the Oriental on any different plane from the white man?” No, replied the single taxers, they would not. The ordinary taxes overburdened immigrants already, and anyway, they were assimilating to North American consumption patterns.164 For these men, taxation was about money, not identity. By contrast, advocates of the poll tax had to defend taxing the poor. In 1901, Liberal leader Joseph Martin advocated an increase to the poll tax that would “reach the Chinese and Japs” and asked: “Why should not the poor man contribute to the general revenue?”165 He was quickly repudiated. Such tensions are also evident in debates over school taxes. You could blame land speculators for holding back schools or you could blame religious and racialized minorities. The two attacks were not incompatible, but in practice, they often diverged to inculpate the rich and the poor respectively. Where school tax debates were the most heavily racialized, there the single-tax movement tended to falter. In Manitoba, Sifton was an ostentatious apologist for wealth who channelled taxpayer outrage towards ethnic nationalism. In Edmonton, Frank Oliver channelled taxpayer outrage in Siftonian directions when he warned that tax-evading Galicians threatened to prove better assimilators than assimilatees: “Do you know what assimilation means? It is a nice sounding word. Do you know that it means that if you settle on a farm on the prairies amongst them or in their neighbourhood you must depend for the schooling of your children on the tax-paying willingness and power of people who neither know nor care anything about schools?”166 School taxes were again polarizing Canadians as the law that created Alberta and Saskatchewan provinces also reconstructed their schools. Before 1905, their schools were dual like those in Quebec; after 1905, they had Ontario’s separate-schools system, a compromise that pleased nobody.167 Sifton and Willison broke with Laurier, the former resigning as minister of immigration (succeeded by Oliver) and the latter quitting the Globe for the conservative Toronto News. In 1911 and 1917, Willison and Sifton would be among the most fatally effective public critics of Laurier. They complained that the Liberals were mistakenly viewing Canadian politics through a fiscal-economic lens rather than through that of ethnic nationalism and applauded Robert Borden’s more frankly nativist program. The single taxers tended to resist that shift from an economic to an ethnic reading and often forced their critics to meet them at least halfway. When single taxers claimed to speak for the poor workingman, defenders of the existing tax regime could not let such claims go unanswered; they, too, couched their arguments as defending the poor. F.C. Wade went to

326

Reconstructing Fiscal Federalism

the trouble of correlating the value of buildings with the taxes paid on them in Vancouver in 1914. He obtained information from the city building inspector who casually divided the 16.3 per cent of building permits that were for private residences into those for “wealthy men” and those for “the poor man,” roughly on a basis of two-thirds to one-third. Wade then calculated that, on the total improvements exempted for Vancouver since 1910 of $267 million, the “poor man’s share” worked out to $1 and the rich man’s $17.32. “This system of taxation is called the ‘Poor Man’s Boom’; we hear nothing about the ‘Rich Man’s Boom.’”168 The numbers, though far from rigorous, are striking as an attempt to measure tax transfers empirically. Here was a classic Liberal Party insider proving that “the poor” paid more taxes than “the rich.” Wade’s findings might stave off the single tax as practical policy but conceded much to the single-tax point of departure. The poor paid their taxes; they too owned the city; and the state was systematically transferring wealth from the poor to the rich. It was impossible to concede so much and not concede Henry George’s argument that poverty had institutional-political causes and must have institutional-political fixes. Once again, we see the beginnings of a new social politics now voiced from the conservative flank of the Liberal Party establishment. By tracing the fiscal transfers from poor and middling to rich, from periphery to centre, fiscal reformers unmasked the classic mid-Victorian models that made ratepayers the only interested citizens. Taxpayers believed that their taxes bought them political consideration. In Winnipeg in 1898, a leading hotelier doubted whether “the assessment of all the active temperance workers in the city combined would amount to that of the Hotel Manitoba alone. Many of them did not pay a cent of taxes.”169 But single taxers believed, as S.L. Farmer remarked in 1912, that “all tenants and roomers pay their full share of the taxes in their rents.”170 The point was a priori for single taxers: landlords always passed their taxes on to working people. When they debated the single tax, reformers and conservatives were not just arguing about city finance but about the public / private distinction. Single taxers redefined property so that even the landless were propertied and redefined the state as something owned and controlled by the whole people. They defended popular political agency against a coalition gathering against it and helped to steer Canada towards rather than away from democratization. The third great accomplishment of the single-tax movement was to formulate the above arguments from a position of strength rather than weakness. It carried that cross-class alliance and that dogged focus on fiscal



Single-Tax Revolt in the 1900s: Fairness over the Land 327

transfers into all the political institutions of the day and gave them a fiscally progressive tilt. Early single-tax arguments were welcomed by socialists and denounced by liberals as proto-socialism; later arguments were more commonly denounced by socialists and welcomed by moderate liberals. Single taxers were more radical than mainstream reform movements of the 1880s and less radical than those of the 1910s, but they helped to engineer the new norm. They insisted on the inviolability of earned property and eminent violability of unearned property. Such a distinction between unearned and earned wealth had wide resonance, as evidenced by an international movement towards succession taxes. Once the principle of unearned wealth was conceded, then distinctions between kinds of unearned wealth became technical ones. Edward Blake, it turned out, was not so far ahead of the public. Single taxers defined themselves as the heirs to the fight over responsible government, and they made opponents who rejected their categories seem as reactionary as the old Family Compact, the pre-Macdonald Tories who had refused to entertain arguments for responsible government. Opponents slowly realized they could not ignore but must debate the single taxers; by the mere fact of debate, they found themselves dignifying that which they opposed.171 The fight for responsible government threatened to repeat itself in another respect. The single taxers were beginning to get the job done by winning elections. The single tax could never quite be shoehorned into party platforms, but nor could it ever be banished from them. There were just too many single taxers, ranging from retailers and manufacturers – the Canadian Manufacturers Association approved a single-tax resolution in 1912 – to labour and agrarian radicals. Time and again, those widely varied interests and concerns coalesced into a victory for a singletax mayor. Every such vote was a reprimand to the empty political centrism of both the Liberal and Conservative parties. The fact that single taxers managed to grab and hold low-level governments gave them unprecedented institutional clout. Municipalities were leading a new attack on big business, by means of regulation, taxation, and nationalization – they were engineering “municipal socialism.” Utilities were an anomalous form of capital – a “natural” monopoly that required special accommodations with liberalism. Rather than self-limiting, that campaign became the thin edge of the wedge. Single-tax governments were unambiguously organized around the principle of confiscating capital. How could any capital be safe? Statesmen who had downgraded the most “inquisitorial” taxes to municipalities, the weakest of all the governments, now faced the prospect of watching capital burnt at the stake in

328

Reconstructing Fiscal Federalism

municipal squares. To eastern banking interests, such encroachments on large, highly capitalized corporations like the hbc and the railways must affect the confidence of the international money market. The courts and the higher branches of government often vetoed such projects or restricted local governing powers. But the great lesson of responsible government had been that a government cannot repeatedly overrule local legislation without rousing against it the public that supports the local legislation. Governments that did not tax directly were less engaged with and responsive to popular public opinion on taxation, and this was not a battle they could join with temerity. On the eve of the First World War, transnational political alliances were forming. The single tax lined up alongside the campaigns for greater regulation of capital by more democratically controlled local governments. Western Canada had voted for it; now Ontario seemed likely to follow. Neither Ontario nor western Canada alone could rewrite national taxation policies – the one lacked the mandate and the other lacked the influence. But together, backed by fiscal reformers elsewhere in the country, they might prove more powerful. In the hands of a master strategist like John A. Macdonald, a strong minority in Ontario combined with broader support elsewhere, could control Parliament. The more successes the ­single tax racked up in one region, the more allies it would find in other regions. Such alliances reinforced the regionalized demands for more equitable fiscal relationships and mobilized resources not only across public-private thresholds but also across municipal, provincial, and federal jurisdictions. The notion that the single tax played a serious role in national politics seems laughable only because scholarly biases have made it so. There is no more than the fleetest of references to the single tax or Henry George in the early, important books about progressive politics in Canada: W.L. Morton’s The Progressive Party in Canada (1950) or C.B. Macpherson’s Democracy in Alberta: Social Credit and the Party System (1953).172 Both books focus on the period after 1920, but each begins with a lengthy discussion of the farmers’ political movement in the 1910s. For Morton, the story of western Canada was almost exclusively a story about the staples theory and the tariff, with important secondary factors being women’s suffrage and prohibition. For Macpherson, the key question was the relationship between political party and democracy. As a source for the farmers’ ideas in the 1910s, both Morton and Macpherson relied heavily on the Grain Growers’ Guide – where arguments for progressive taxation of land values and / or income were to be found in every issue,



Single-Tax Revolt in the 1900s: Fairness over the Land 329

if not on every page. Neither wanted to think about municipal taxation and each focused on patterns seen as irreducibly western rather than potentially transcontinental. Fiscal reform slipped from historiographical visibility, and with it, the national resonances of local debates about land and capital, politics and poverty. In regard to progressive taxation, the Canadian public had the wind in its sails. The dangers to capital seen in Ontario in the 1890s were playing themselves out anew. A modified single-tax theory had underwritten public agitation then and did so again now, at a time of widespread frustration against reactionary national politics. Avenues of redress and correction were too attenuated and distant, and lacked the legitimacy that direct-tax negotiations had apparently secured. Local politicians were rewriting the meaning of property and giving the lie to classic liberal economics and economists in the process, their successes celebrated in progressive newspapers nationally and internationally. Following philosophical pragmatism, the thing studied by economists – the economy – was more malleable and more subject to bottom-up (or top-down) political reconstructions than the things studied by physics or chemistry. Given enough institutional and political power, tax radicals could rewrite economics, forcing it to embrace unpalatable new facts and truths. Economists who had warned that capital taxation in any form was a serious threat to capitalism everywhere, now saw the argument begin to turn against them. They saw the public waking up to capital taxation as a viable option in progressive and thriving cities. The professoriate began to man the ramparts of capital against western Canadian single taxers. Income tax might not, after all, prove rampart enough. The economists preferred income tax to land-value taxation, but popular fiscal reformers did not feel the same need to choose. Moderate and radical fiscal reformers demanded income tax and land-value taxation. The American adoption of income tax in 1913 was a powerful factor in that conversion. Success with income taxation in Ontario and British Columbia lent momentum to the change: cities in Ontario were getting between 3 per cent and 6 per cent of their revenues from income taxes, according to Vineberg, while B C ’s income taxes reached $191,000 in 1910. The two programs should have cancelled one another out. Instead, by conflating the two demands, fiscal reformers in Canada transferred the momentum behind tax reforms backed by progressive economists towards tax reforms denounced by those same economists. John A. Macdonald had constructed a fiscal federalism that protected the rich and taxed the poor and that forced direct challenges to the rule of

330

Reconstructing Fiscal Federalism

property out of the national political arena. The Liberals, long the obvious channel for popular resentment of regressive federal taxation, had relinquished that function, leaving the resentment largely disenfranchised federally. Provincial governments, flush with subsidies and royalties, could also eschew responsiveness to taxpayer frustration. In that arena, H.V. Nelles observes, the result sometimes approached the abnegation of responsible government.173 Everywhere, authorities taxed the poor with growing administrative capacity, while blithely disenfranchising the poor and insisting that the state should be more securely vested in wealthy and landed interests, on grounds that those interests bore the incidence of taxation. The hypocrisy was and is shocking. But where authorities had to tax directly, they had to engage in direct and intimate conversations with the people that they taxed. In those jurisdictions, popular tax resentments could become something less inchoate and more organized. Fiscal reformers guided those resentments towards philosophically charged reflections on the relationship between wealth and poverty. Organized fiscal reformers, above all those fervently and ideologically committed single taxers who rained their arguments down on politicians and newspapers wholesale, demanded more fairness and more responsiveness. The people formulated strong notions of a public good and fought hard for them. If property was the language and weapon of choice of the monopolizers, why, here was an instrument that would make property the language and weapon of choice of the people. If the language of taxation was suffrage, why, here was the reply again. Fiscal reform movements helped to introduce a new and more searching language of “fairness” into the process of taxation across Canada. They precipitated the creation of a Canadian national imaginary rooted in reciprocity of rights and needs. Taxes provoke people to expressions of outrage and demands for justice. Those expressions can lead people towards shallow, self-interested demands for special consideration; they can lead to tax evasion, which is a particularly self-interested form of resistance. The great accomplishment of ordinary people in Canada during the first half-century after Confederation was to turn fiscal resentments into a widespread popular movement for social and economic reform. The fiscal reform movement cannot simply be reduced to selfinterest. Evasion or special pleading would have served that goal better. Progressive fiscal reformers managed to combine self-interest with social solidarity and to reconstruct popular expectations of the local and, increasingly, the federal state.



Single-Tax Revolt in the 1900s: Fairness over the Land 331

Above all, the reformers inscribed wealth and poverty into taxation. They whittled away the mid-Victorian arguments for formal, legal equality in taxation and exploded tendentious liberal distinctions between private and public. They didn’t just demand fiscal redistribution between haves and have-nots but made existing definitions of property unworkable. The fiscal reformers forced liberals to concede that legal definitions of property, devoid of moral and social considerations, could not undergird tax regimes. There must be some sense of a public interest with social relationships inscribed in that public interest. The new ways of thinking about direct taxation made the relationship of wealth and poverty a political and administrative problem. Unlike Marx, George created a space for thinking about what a coercive people’s state might look like in practice, reasoning aloud with concrete exemplars drawn from everyday experience of an expanding administrative state that largely postdated Marx. Its simple precepts mediated fruitfully between that banal experience and the shortcomings of classical liberalism. Local government provided a good space to debate first principles of taxation. But you could only go so far towards implementing them before you ran headfirst into what remained an extraordinarily unresponsive and regressive federal state. While local jurisdictions were being reconstructed by grassroots fiscal reform movements, the federal government went about its usual business, nurturing prosperity and largely disengaged from the economic struggles of ordinary people. If radical principles of reform found their early successes at the local level, they were never going to be content with local action alone. Every significant local tax reform had federal tax implications. It remains to turn back to the federal arena to see how the new ideas of wealth and poverty became the business of the federal state.

8 Laurier to Borden: Failed Revolt against the Tariff

The new fiscal sociology was making its way municipally and even provincially in conversations about the nature of property and its governance. Canadians arguing about their local tax state looked a lot like Americans or Britons arguing about their local tax state. But nationally, the story was different. In 1896, Laurier’s big-tent centrism replaced Macdonald’s big-tent centrism and the change was underwhelming. Laurier staged more public consultation, but such exercises did little more than pay lip service to public opinion. Canada looked reactionary compared to other North Atlantic countries, especially to immigrants arriving from those countries, many of whom joined reform movements. In Britain, where earlier criticism of taxation focused on its oppressive and inquisitorial aspects, Edwardians now complained that taxes were neither inquisitorial nor imposing enough and demanded closer scrutiny and stricter administration. According to Martin Daunton, “centralized bureaucratic and local lay control” legitimated not just the national income tax but the national state itself: “The legitimacy of the tax system and a high degree of consent were major factors in determining the boundaries of the state.”1 Macdonald had rejected British liberalism for a more regressive North American nationalism, but Americans, too, were reconstructing themselves amidst progressive reform campaigns. In both countries, local reform movements were successful enough to attract national politicians who openly championed graduated income tax.2 Canada’s federal government could only delay, not resist, the change. The grassroots tax revolt was one pressure for reform; another was a rising cost of living that politicized consumption taxes; a third was the reorientation of economics towards marginal utility theory. These factors meshed in complicated ways, and in the process, the concept of poverty



Laurier to Borden: Failed Revolt against the Tariff 333

acquired new empirical content and new political importance. As the new ideas and public pressures integrated local and national fiscal discourses, the Conservative Party took up the new progressive platform, to which the Liberals responded with a new American free-trade deal. The election of 1911 was fought on competing progressive platforms: one sought to check the political power of businessmen, the other to uncheck the political power of “progressive” businessmen. The businessmen found a winning combination in the language of a managed economic modernity: they would revamp Macdonald’s federal prosperity project in the image of monopoly capitalism. Where industrial wealth had once seemed an unbound Prometheus, now finance capital stepped forward with its own promises to reorganize and rebuild wealth. Bankers and bond dealers, side by side with the captains of industry, claimed new and better knowledge that would overcome the old economic rivalries and consummate a new partnership between business and the state. In 1911, Canadian financiers and industrialists successfully discredited the existing political establishment, men like Laurier and Fielding, and vaunted their own identities as apolitical wealth experts who would shake up an overly venal and partisan political system. Even as they advocated and engineered a new economic managerialism, the millionaires also perpetuated Macdonald’s distrust of state capacity and insisted on privacy for wealth. But if the election of 1911 was a victory for capital, it was not wholly a defeat for progressive reform. Both sides championed the needs and rights of the poor in ways that reflected a broadening public sphere. Increasingly, when ordinary people urged the rights of the poor, they spoke not for some other group but for themselves and their own narrowing choices as political and economic agents. The interests of the middling and working classes, white- and blue-collar, converged, and so did their civic identities as beleaguered taxpayers. They spoke from within poverty and demanded protection from rapacious monopoly capitalism. There might or might not be spending implications attached to that outlook, but there were always taxing implications: a demand that the state protect the poor and tax the rich, rather than the other way around. The tariff was becoming more obviously a tax, the politics of federal taxation becoming more obviously a direct fight about the politics of property and equity. Once again, reform would require a de-ironification of prevalent discourses. In 1911, politicians mouthed progressive slogans that were immediately refuted by political enemies with equally meaningless slogans. The ironic distance between vehement partisan rhetoric and a

334

Reconstructing Fiscal Federalism

virtual interchangeability of political platforms fuelled witty, debunking narratives across the emerging literary and academic field, provoking some of Canada’s most enduring literature. Stephen Leacock’s stories of small-town and urban Canada (Orillia where he grew up and Montreal where he taught economics), published in 1912 and 1914, both culminated in elections that pitted high-minded political ideals against sordid self-interest and handed the laurels to self-interest. In the small town, “here and there you might see Edward Drone, the Independent candidate, wandering round from farm to farm in the dust of the political buggies. To each of the farmers he explained that he pledged himself to give no bribes, to spend no money and to offer no jobs, and each one of them gripped him warmly by the hand and showed him the way to the next farm.”3 In Plutoria, as the great victory for clean government was celebrated, “the good news spread from group to group that it was already known that the new franchise of the Citizens’ Light was to be made for two centuries so as to give the company a fair chance to see what it could do. At the word of it, the grave faces of manly bondholders flushed with pride, and the soft eyes of listening shareholders laughed back in joy. For they had no doubt or fear, now that clean government had come.”4 But if Leacock’s widely read fiction relished the parallels between clientelism in Ontario and Quebec, his histories insisted on the differences between clientelist French Canada and clean government in Westmount and Toronto. For Leacock, as for fellow McGill professor Andrew Macphail, imperialism was an idealistic counterweight to American fiscal feudalism. Similarly, Sara Jeannette Duncan’s The Imperialist, published in 1904, told the tale of an idealistic young reformer who failed to win a seat because Six Nations voters at Brantford – archetypal dependent clients of the corrupt federal government – were bribed to oppose him.5 André Siegfried also mused upon the North American comparisons when he undertook a sociological study of Canada in 1904. Siegfried was the son of a French Protestant industrialist, Jules Siegfried, who had helped inaugurate the social economy movement in France. The son completed a doctorate – focusing on New Zealand – and then turned his comparative sociology to Canada. But Siegfried was as surprised as Durham had been to discover that politics hinged on race and party, not wealth and poverty, and he concluded that Canadian politicians strategically supplanted race questions with party, thereby making politics an alternation of otherwise indistinguishable ins vs. outs. Whereas American clientelism hinged upon class, Canadian clientelism hinged upon race. But Siegfried’s all-too-enduring analysis of Canada was a caricature.



Laurier to Borden: Failed Revolt against the Tariff 335

Siegfried was pandering to a French audience that wanted to hear about a lasting cultural Frenchness in its former colony. A sociology of culture as race sounded original to audiences who expected to hear class analysis. Reviews of Siegfried’s book focused almost exclusively on his remarks about race and religion, especially in Quebec where Catholic journalists denounced his scathing analysis of the Church. Their reaction confirmed Siegfried’s reading of Quebec. Appointed to Sciences Po in Paris, he began to investigate comparable culturally conservative pockets around France. On the eve of the First World War, he returned to North America with a series of newspaper columns that again exaggerated the binary of class animosities in the United States and racial animosities in Canada.6 Canada was indeed highly clientelist, but it was not Siegfried’s empty clientelism. That point was perfectly demonstrated by Gustavus Myers, an American muckraker who had already published books on Tammany Hall and American wealth when he began to write History of Canadian Wealth. Published in 1914, the book revealed a crony capitalism comparable to the American variety. Canada was saturated with corruption, and the problem was fully known and aired in parliamentary debate, Myers argued, albeit with minimal effect because both parties had too much to lose. When, for example, Macdonald’s Tories pocketed tens of thousands of dollars from a timber grant on reserve lands (the inhabitants receiving a kingly thirty-one cents each from the transaction), Liberals muffled their critique because they had similar schemes afoot and were personally beholden to the interior minister, Macdonald himself, for their countenance.7 But crony capitalism was hidden behind ethnic and party rivalries because the latter were more susceptible to patronage fixes than class tensions: you could buy off the one, but not the other, by throwing economic favours to political bosses. But class tensions were irresistibly writing themselves into federal politics. New theories of poverty were one avenue of change. For John A. Macdonald, as we have seen, poverty was accidental and insignificant, but for a new generation of economists it was anything but. They debunked older economic theories that owed too much to Jean-Jacques Rousseau’s eighteenth-century distinction between “amour propre,” comparative self-love driven by opinion, and “amour de soi,” self-love that rose above opinion to real needs. I may want a brioche but I need a loaf of bread. By contrast, according to the marginalists, as seen, all consumer wants must be understood as socially as well as biologically generated. To say that consumption was driven by a critical storm of individually and socially constructed desire, psychology, and opinion was to make it the business of

336

Reconstructing Fiscal Federalism

professional economics rather than amateur sermonizing. Distinctions between kinds of needs and purchases were not qualitative but quantitative. That was the logic behind Jevons’s argument that you could mathematize consumer choices and, therefore, the economy as a whole. Economics took an empirical turn in Jevons and in the German and British historical economists, including William Ashley, who taught at Toronto between 1887 and 1892. Ashley was trained by the leading economic historians of the day, Arnold Toynbee at Oxford and Gustav von Schmoller in Germany, and he was described by Joseph Schumpeter as the economist who most closely resembled “the Germany professional type of that time.”8 When he left Toronto, Ashley recommended James Mavor as his successor, describing him as one of the leading progressive economists of the day, at the forefront of the new empirical turn. The contrast between old and new can be seen in two lectures in 1893, one by Adam Shortt in Kingston and the other by Mavor in Toronto. Shortt’s generalist roots were clearly on display in his lecture, which identified economics as “concerned entirely with the question as to the greatest possible increase of wealth.” Economics had emerged in tax treatises in efforts to “reduce taxation to some sort of system and to place it upon a sound basis.” But as economists realized that revenue was best extracted from prospering peoples, “tracts began to be written on the best means for increasing the general prosperity with an eye to the ultimate increase of the revenues.” Political science broadened the scope to include civilization, but Shortt’s definition of civilization largely amounted to wealth. Political economy had gradually learned to write popular economic wellbeing into the equation and to understand governments as instruments of the people, rather than the other way around, but the focus remained on wealth.9 Shortt’s understanding of economics was close to that animating the b n a Act. Another of his lectures denounced the “vain attempt” of marginalists “to give their study the exactness of the physical sciences … Purpose and pleasure or satisfaction, while indispensable to economic value, can be no standard for it. The standard is still relative difficulty of attainment, and must be sought not through physical psychology or the hedonistic calculus, but through the actual experiments of the world’s commercial life.”10 In his inaugural lecture in 1893, Mavor defended the new mathematical economics. An earlier paper, given at the British Association for the Advancement of Sciences, had invoked Jevons and Marshall to urge the importance of economic data that the economist could not obtain but that the “public department” must “at considerable cost. Yet thoroughly



Laurier to Borden: Failed Revolt against the Tariff 337

to understand the actual conditions is a necessary preliminary to effective social progress.”11 That was in 1888; in 1893, Mavor likened economists to doctors. Just as they now combined physiology and pathology, economists must study wealth and poverty. “We must, therefore, look upon the study of poverty as being part of a large whole. This is the central idea of the modern study of poverty. It is a part of the study of the economic life of the people as a whole.” Mavor pointed to the work of Charles Booth in London whose empirical studies of wealth and poverty in London, done by field researchers walking door to door, showed that one-third of the local population was “poor.” Another inspiration was Frédéric Le Play’s comparable research into household budgets in France. Poverty had its inventories after all. The poor must be understood as would-be consumers, rather than as failed producers; the job of economists and states was to facilitate their consumption according to a managerial rather than a liberal model and to assume “social responsibility” for poverty where “personal responsibility” failed.12 For all the differences in outlook, in practice Mavor and Shortt both put the brakes on progressive reform. Mavor investigated working-class budgets, but he became as ideologically opposed to statism as he had once been favourable. He threw his professional authority behind the autonomy of businessmen. The state and the market could check capitalists who behaved tyrannically, but nothing could check a tyrannical state.13 Shortt was more interested than Mavor in Canadian economics and politics, but he, too, privileged business knowl­edge with its “actual experiments” of economic life over academic abstractions. In 1901, McGill University acquired an outstanding marginalist in its first economist, William Flux, author of the first “Marshallian” textbook in 1904, but when he left for state service as a statistician in Britain, his successor in the economics chair, Stephen Leacock, gave a Tory tilt to that department.14 Early Canadian economists, unlike their American counterparts, tugged economics away from progressive reconstruction of the state towards either classical liberalism or an anti-democratic Tory paternalism. But their students, including Wickett and Skelton, did their PhDs outside Canada and proved more frankly statist. Canada was also dilatory in acquiring the sort of statistical bureaucracy that Mavor had recommended. Nineteenth-century statistics in Canada were mostly organized around the census – a decennial tally of national assets, originally done on British demand and then, from 1871, organized around the partisan political question of comparative FrenchCanadian and English-Canadian demographies. Here, too, the “race

338

Reconstructing Fiscal Federalism

question” seemed to trump the socio-economic. John A. Macdonald took pains to keep his civil service partisan rather than expert and to keep the new political arithmetic largely out of Canadian politics. Specific branches of the Canadian government acquired specialized statistics, but there was no central coordination or expertise. The Department of Agriculture acquired a statistician,George Johnson,in the mid-1880s.Notwithstanding academic connections, he mostly produced statistics that inventoried Canadian assets in puffing pamphlets designed to appeal to prospective immigrants: a handbook distributed at the Canadian court of the Colonial and Indian Exhibition held in London in 1886 and an annual Statistical Yearbook of Canada with more inventories and rehashed census data.15 Labour statistics came in by another route. They began with the Bureau of Industries in 1882, under Archibald Blue, but that line of work declined when he moved to Ottawa to replace Johnson in 1905. When Wickett surveyed “political and social arithmetic” in a lecture to the Political Science Club of Toronto University in February 1898, he signalled Blue’s work as the best available, with BC and Manitoba not far behind, but still producing data “more descriptive than statistical.” The decennial federal census he denounced as hobbled by its definition of an industrial establishment as little more than a place where stuff happened – where one or more persons manufactured, altered, made up, or changed the shape of goods for sale, use, or consumption. The period would be remembered for its statistics, Wickett predicted, with marked successes in Germany, England, and even the United States (where Seligman, he noted, was statisticizing public finance); Canada had a long way to go. Wickett also urged students in political economy to spend their summers collecting statistics.16 Events did not fulfill his hope. In Ottawa, Laurier created a Department of Labour in 1900, with his postmaster, millionaire-reformer William Mulock, at its head. Mulock hired a dynamic young universitytrained expert in industrial relations, William Lyon Mackenzie King, to publish a Labour Gazette with information on wages, cost of living, and other statistics, as a belated fulfillment of a recommendation made by the Royal Commission on the Relations of Labour and Capital in 1889. King quickly moved up to become deputy minister and hired an editor to replace him in running the Gazette. The first editor drowned; the second, named in 1902, was Robert Coats, an immensely talented statistician, who soon began to write a long-running series of memos, largely neglected, “on the need for a more systematic approach to the collection and publication of statistics of wages and the cost of living.”17 Coats’s lobbying only began to pay off in 1910, when a new deputy minister,



Laurier to Borden: Failed Revolt against the Tariff 339

F.A. Acland, began to scale up the collection and publication of statistics in response to growing outrage at the rising cost of living. The Labour Gazette itself noted early that year: “It is safe to say that no public question at the present moment equals in general interest that of the abnormal cost of living.”18 Through these early years, according to Timothy Krywulak, the collection of statistics “contributed to generating the economic norms around which ‘reasonable’ parties could either gravitate towards or be propelled towards consensual resolutions to labour disputes.”19 The notion that there might be quantitative answers to economic questions in a median that could be designated “normal” gradually gained ground. Profits or wages or taxes that fell too far above or below that median became abnormal, which was to say unfair, and the recent upward shift fuelled concern and indignation. Political economy ceded to mathematized economics languidly in Canada and amidst much debate over the tax implications. If you wanted to argue that the poor were overtaxed, you had to show that they bore the ultimate “incidence” of taxation and could not shift them on to someone else. But the incidence of taxation was heavily controverted in the courts, universities, and the press. Seligman had first launched his career with an argument that consumers ordinarily bore the final burden of taxation, but because monopolists always charged as much as they could, under monopoly capitalism they must bear the final incidence of any new tax. Seligman was wrong, and leading marginalists – Alfred Marshall, F.Y. Edgeworth – made that point.20 But Seligman’s less mathematical, more deductive methods retained many supporters. For E.A. Ross at Stanford, the dispute showed that tax knowl­edge could never be wholly empirical: “The path of a tax is so difficult to follow with the eye that it is doubtful if ever the actual shiftings will be observed, recorded, and, by the statistical or the historical method, made to reveal the laws they obey. It is true we may rectify or verify a deduction by consulting admitted facts of common observation or history. But in general we must trust to our knowl­edge of economic laws.”21 Populists also attacked the new empirical economics, which were, after all, designed to create specialized professional knowl­edge monopolized by academics. Deductive economics were more accessible to non-­ academics. Whereas single-tax economics made knowl­edge claims and rallied popular opinion, the new marginalism divorced politics and knowl­ edge: that was the conclusion drawn by Canadian single-taxer S.T. Wood, a journalist and a founder of the Anti-Poverty Society in Toronto. In an article in the Canadian Magazine in 1898, Wood railed against

340

Reconstructing Fiscal Federalism

empirical studies of tax incidence. If Ricardo’s brilliant deductive attack on the corn laws – which argued that surplus value systematically transferred to rentier capitalism – had been subjected to the inductive investigations of a Booth, it would have been swamped by the data: “Tabulated statements of the weekly supplies of a farm labourer, his wife and children, at different economic epochs would have confronted the assailants of the tax on corn, and the recitation of ‘half a pound of candles, three pence, one pound of rice, four pence,’ would have exploded all their theories. The proportion of taxation in the five shillings and eight pence half-penny paid for eight quarter loaves would have been figured out to many places of decimals, and no doubt to the conclusion that the corn laws had no bearing on the case.”22 Wood spoke from years of exasperation with the economists’ attack on Ricardo and George, and preferred to think that land, as the paradigmatic limited consumable, determined the price of everything else. There were also searching debates about whether the new consumer identity being constructed by marginalism tended towards social solidarity or social dissolution. The economists understood consumption as a social construct: the value that any one person attached to something reflected their needs, interests, and identities, but it also reflected wider currents of opinion. Value was irreducibly social, and the market value of any one consumer good was only calculable in reference to popular demand. Rousseau’s fantasy of autonomous desires was no more than a fantasy. But there was much political promise in the discovery. People with shared consumer ambitions, whether for land or the latest fashion in the Eaton’s catalogue, could build alliances around making them accessible. Shared demand for water or gas or tramways underwrote municipal alliances; shared demand for markets and transportation underwrote regional ones. J.A. Hobson believed that “production divides, consumption unites,” and he urged passive shoppers to become active “citizen-consumers” with socially oriented co-operative purchasing.23 The idea of co-operative purchasing was also an inspiration for the Grange, which was at its strength between the 1870s and the 1910s. Its rhetoric of co-operation amongst farmers both attracted and repelled liberal commentators.24 But there were many obstacles to consumer alliances. The Grange movement had collapsed by the time Oscar Skelton remarked, on the eve of the First World War, that “the consumers, scattered in residence and scattered in interest, could not compete in organization with the manufacturers, concentrated in residence and in interest.”25 Skelton studied economics at the University of Chicago under a different theorist of



Laurier to Borden: Failed Revolt against the Tariff 341

consumption, Thorstein Veblen, whose dark vision won him over. When you consumed, Veblen argued in The Theory of the Leisure Class in 1899, either you were driven by direst necessity or you spent your disposable income in ways calculated to demonstrate your distance from direst necessity. Such consumption was “conspicuous,” imbued with a symbolic language of choice and agency. All economic classes pursued conspicuous consumption, nowhere more visibly than in the leisure of middle-class women. Their leisure was strategically designed to prove that household choices were dictated by a high degree of economic agency and the concomitant cultivation of taste, not by the weakness and necessity of impoverishment. “The housewife’s efforts are under the guidance of traditions that have been shaped by the law of conspicuously wasteful expenditure of time and substance. If beauty or comfort is achieved, – and it is a more or less fortuitous circumstance if they are, – they must be achieved by means and methods that commend themselves to the great economic law of wasted effort.”26 Veblen’s theories began to trickle into Canadian public opinion by means of British, American, and Canadian economic writings, including Hobson, but Canadians also learned economics from Veblen himself. Stephen Leacock and Mackenzie King studied under Veblen, as did three former Queen’s students.27 J.A. Donnell and W.W. Swanson were slow to warm to Veblen’s erudition, but Skelton was more immediately impressed and described Veblen’s departure from Chicago in 1906 as an “irreparable loss.” Leacock wrote Veblen’s theories into his fictionalized account of the Montreal bourgeoisie, especially its women, who carried the pursuit of wastefully conspicuous consumption to hilarious extremes. Mrs Rasselyer-Brown, for example, is mortified by the fact that her husband actually works instead of spending his days collecting such recherché items as “the back of a violin in Dresden (actually discovered in a violin shop) and the lid of an Etruscan kettle.”28 Mackenzie King, by contrast, preferred the teachings of Taussig at Harvard, where he did his PhD. Students listened to quarrelling scholarly paradigms and took different messages home with them, but collectively they pushed Canadian political economy away from a producerist, liberal political economy towards a more quantitative, consumer-focused, managerial economics. Veblen’s Theory of the Leisure Class was to marginalism as Rousseau’s Emile was to the Enlightenment: a lone-wolf critical account that saw irreducible psychological competition that could never resolve into harmony. If consumption was intrinsically competitive, it must flatter the consumer’s agency at the expense of anybody with less money. The consumer

342

Reconstructing Fiscal Federalism

was always lording it over the non-consumer, and there was always a political element in that lording. Veblen’s ideas undermined the old trickledown, emulation theories of wealth and, in the process, debunked liberal conceptions of a rational, deliberative public sphere. You could not write domination out of the public sphere as, Habermas argued, the bourgeoisie tried and failed to do, the failure coinciding with marginalism’s triumph. The rising economic tide might float all boats, but would never overcome mutual resentment. Even if competition could fuel increased consumption of unlimited commodities, it could not do the same for land. Inequality in land ownership caused rising rents, and rising rents further reduced and restrained the element of choice for the poor. This was no mere academic observation: rising rents stripped the poor of political and economic agency in ways that made conspicuous consumption feel more like open class warfare. People were as poor as they felt themselves to be when they coveted their neighbour’s possessions. Poverty was no longer equivalent to absolute, direst necessity; it became a continual barrage of pinched and diminished choices. It became practically indistinguishable from resentment and began to demand economic levelling. If classic Macdonaldian politics had a background hum of ratepayer resentment, post-Macdonaldian politics had a background hum of consumer resentment. You didn’t need to be a Veblen to notice that resentment. At the University of New Brunswick, John Davidson published a scholarly reflection on luxury in 1899 that saw political dangers to excessive ostentation: “The distribution of wealth in the world is not so just that the rich can afford to flaunt social inequalities in the face of the poor … in the present temper of the body politic it is well that luxury and extravagance and all that emphasizes the distinction between the haves and the have-nots should at least keep itself as modestly as may be in the background. To attempt to justify it is madness.”29 Davidson rebuked both ostentation and its liberal apologists. Goldwin Smith exemplified that apologism. He noticed the rising popular resentments (“in the imperfect and twilight state of popular education, social chimeras have power, especially when hunger and envy second the delusion”) that made inequality indefensible in principle: “Inequality, however inevitable, is an imperfection in the social frame, not a perfection, or at least a perfection only so far as it may be conducive to human progress and civilization.”30 But Smith also believed that because inequality was “the fiat, not of man, but of a power upon man, it is idle for any practical purpose to assail it.” Single taxers denounced Smith’s position as “Malthusian darkness,” in contrast to a Georgeite outlook “flooded with the harmoniously blinding light of economic, social, and moral law.”31



Laurier to Borden: Failed Revolt against the Tariff 343

Goldwin Smith and John Davidson obviated such problems personally by marrying into the mercantile bourgeoisie. But many other professors experienced the Laurier boom differently as their salaries failed to keep pace with price increases. White-collar workers began to share a sense of consumer deprivation with waged labourers: anti-poverty work by progressive-era petty bourgeois was never wholly disinterested. Politically, the change was considerable. During the 1860s, the best defenders of the impoverished, the Antis in Nova Scotia, put up franchise barriers to emphasize their distance from the poor. But the new generation of poverty activists spoke with something closer to insider knowl­edge of poverty. The experience drove some to the left and others to the right. McGill University, with its ringside view of extreme wealth and poverty, produced both sorts: philosopher John Clark Murray and botanist Carrie Derick were fiscal radicals; Stephen Leacock and Andrew Macphail were conservatives. In some respects, classic Tory ways of thinking adapted to the new consumerism better than the classic Liberal ways of thinking. Tories had always seen resentment as hard-wired, something to be fended off and their job as fending it off. Liberals thought they could harness it but it ran away with them. The change came gradually to federal politics. Laurier easily dominated Canadian federal politics in the early twentieth century amidst economic buoyancy and Tory confusion.32 In 1900, Sir Charles Tupper lost his seat and resigned the leadership, replaced by Robert Borden, a Halifaxbased law partner of the Tuppers who had only entered politics in 1896.33 Borden’s maiden speech had hinted at a new Tory ratepayer politics on the horizon, with the ringing claim “I am a taxpayer,” and repudiation of the notorious American “spoils system.”34 In 1904, Borden, too, lost his seat in a third Liberal victory. The party’s success during that first decade rested on prosperity and rigid internal discipline. Laurier told Israël Tarte, a protectionist member of his cabinet, “the question of the tariff is in good shape if no one seeks to force the issue.” When Tarte gave some protectionist speeches in 1902, Laurier dismissed him.35 According to J.W. Dafoe, “with Tarte’s ejection there followed nearly eight years during which real tariff discussion was taboo.”36 Only slight changes occurred between 1897 and 1904, though Fielding did introduce a new anti-­dumping clause.37 Underdeveloped regional economies to the east, west, and north, excluding protected mining interests, resented Laurier’s protection for central Canadian manufacturers, but they knew that the Tory party was not their champion. Globe journalist E.W. Thomson remarked in 1904 that Borden “cannot gain one vote by prolonged tariff talk,

344

Reconstructing Fiscal Federalism

because the protectionist out-and-outers will all vote against Laurier anyway”; hence, the endless “blathering” about the tariff to keep Borden wrong-footed and substantive issues under wraps. Borden would prefer to move discussion to the railway question which had “the enormous merit of being interesting to a public that has been wearied of tariff discussion by the continuous chatter of twenty-six years.”38 The “railway question” referred to Laurier’s decision in 1903 to charter a new transcontinental railway, the Grand Trunk Pacific, to the northern prairies. It was a white elephant from the beginning and a gift to Tory party propagandists. Meanwhile, Toronto financiers developed a third transcontinental project. Donald Mann and William Mackenzie, both originally cpr men with other investments in hydroelectricity and street railways in Ontario and elsewhere, put forward a Canadian Northern Railway, atop local railways bought from the Bank of Commerce. That railway, too, received backing from Laurier, to open up the west and sap the influence of the cpr-Bank of Montreal nexus that remained, under Lord Strathcona, close to the Tories. But the railway building far outpaced western growth, and the overcapitalized ventures wilted when the boom turned to bust. Laurier’s policy was largely to defuse economic and political tensions with nominally progressive changes that barely dented the classic Macdonaldian mechanisms of mediation. There was a new Canadian Board of Railway Commissioners in 1903 to reconcile competing interests around railway prices, a new Industrial Disputes Investigation Act in 1907 to help capital and labour find common ground, and a new Civil Service Commission in 1908 that slightly raised the criteria for employment. But all these initiatives were designed to mediate more than to impose or administer expert solutions. Adam Shortt served on the Civil Service Commission and as an arbiter in industrial disputes, but he understood both his and the state’s role as insulating such processes of mediation from direct public scrutiny, which threatened, in the hands of the partisan press, to escalate tensions with inflammatory remarks. His economic training was useful, Shortt argued, in identifying “the one-sided or impracticable character of many of the generalizations made by people who have given little or no attention to economics.”39 This view was closer to liberal suspiciousness than progressive statism. For Shortt, for his boss Mackenzie King, and for King’s boss Laurier, public opinion and knowl­edge remained things to be consulted and brokered. And the job of the state was political brokerage. If it was not merely mediating, then it was spending money in ways that privileged one interest over another. A.C. DeCelles, who had obtained the contested Dominion librarianship



Laurier to Borden: Failed Revolt against the Tariff 345

in 1885, nicely caught the problem in his testimony to an earlier Civil Service Commission: impartial expertise was “impracticable” in Canada, given “our seven provinces and our differences of races and religion, each claiming its share of the patronage.”40 Laurier, like Macdonald, saw fairness in a balance of fiscal transfers that were representative of and responsive to pressures of region, religion, and class. But no one was happy with the status quo, and mediation became harder as economic opinions and interests polarized. The tariff question, quiescent for the early years of Laurier’s government, slowly returned to the centre of politics. The Canadian Manufacturers Association (cma), politically neutralized by Laurier and Fielding’s strategic deployment of public opinion, had become less partisan: its much-expanded membership was divided into partisan factions that petitioned the government individually rather than as an organized lobby. But with strategic internal reorganization led by Conservatives, the manufacturers coalesced again around the pursuit of higher tariffs. In 1903, when cma spokesmen pressed Fielding for increased protection, he advised them to first “‘educate the people.’ He intimated that if the manufacturers would educate the people to believe in higher protection they might get what they wanted from the Government. The manufacturers adopted his suggestion.”41 In 1905, a new test of strength was held by a new Tariff Commission that made an even more transcontinental tour of the country. Over a period of five months, Fielding, Paterson, and Cartwright, accompanied by minister of inland revenue L.P. Brodeur, visited forty-seven cities, rather than the fifteen of the last tour. The goal was not to generate facts but to stage another dialogical performance between an aggressive manufacturing sector, a self-conscious consuming public, and a responsive state. Demands for both higher and lower tariffs were widely aired. Boards of trade and manufacturers expressed their opinions, as did organized farmers and labour, the latter usually through Trades and Labor councils. Fielding and Paterson used the opportunity to correct popular misreadings of the tariff and to emphasize the state’s role as an impartial umpire. At Barrington Passage, the southernmost tip of Nova Scotia, for example, “Mr Fielding pointed out that there was always the other side of the question, and it was agreed that no undue favors were shown the farmer as against the fishermen.” At Sackville, speaking to farmers, Fielding argued that Liberal tariff reductions amounted to a tax cut of $5,867,121. “In the face of this explanation Mr Fawcett admitted that the Liberals had done something to fulfill their promises.” (This was A.C. Fawcett, brother of the Patron-farmer.) In BC, Fielding debunked complaints that that

346

Reconstructing Fiscal Federalism

province was comparatively overtaxed.42 Fielding and Cartwright again challenged businessmen on their claims about prices, competition, and combination. But the state was also being educated about how to meet changing business needs. Tariff categories always lagged far behind ingenuity and taste. New categories were needed for “expanded metal” fences, for example, or olives, which were entering as pickles. Manufacturers complained that the customs officials remained incompetent to distinguish dumping from ordinary shipments, while only chemical analysis could distinguish palm oil from palm kernel oil. Retailer G.B. Ryan complained that the tariff made him “a tax collector without a salary.” Manufacturers responded with complaints that merchants removed “Canada-made” labels to suit a public that preferred to buy American goods. How could the tariff “educate up” the Canadian public to consumer nationalism under such circumstances?43 Newspapers, especially western newspapers, eagerly followed the commission’s progress, and Canadian Annual Review remarked that the farmers in Ontario, Quebec, and the West surprised the public and the politicians by their organized advocacy of stationary or lower duties.44 Hobson, who visited Canada during the commission’s tour, remarked that the farmers had “exhibited a strong Free Trade feeling,” and evidence of abuses by trusts and combines had “brought some temporary discredit upon the Protective scheme of the Manufacturers Association.” But he still predicted that “the superior organisation of the protected manufactures will secure for them a predominance in fiscal policy similar to that held by the great manufacturing interests in the United States.”45 “Industrial greed and political cowardice” threatened to carry the day. Many Canadians concurred. Skelton saw a recognition among manufacturers that there was no vigilant opposition to higher tariffs in Ottawa.46 Free-trade journalist Edward Porritt, who had described Fielding’s first budget as “the great betrayal,” remarked of the Canadian Manufacturers Association, convened in September 1907, that it was “determined that there shall be no finality about the Dominion tariff” and “no rest for the Dominion Government as regards tariff agitations and tariff legislation.”47 Ontario manufacturers complained that they had no influence over policy: “Fielding in the Maritime Provinces and Sifton in the West apparently control all tariff legislation.”48 Ontario felt beleaguered by eastern and western continentalists, as its liberal-imperial project threatened to unravel into disaffected peripheries. The Fielding commission showed that opinions about the tariff were polarizing, much like opinions on separate schools and imperial commitments.



Laurier to Borden: Failed Revolt against the Tariff 347

Once again, there was no formal conclusion. Fielding simply digested the findings and rewrote the tariff. In terms of general consumables, the “breakfast table” that was exercising British public opinion at the time, change was scant. Robert Craig Brown remarks that, “given the inevitable contradictions in the representations made to the Tariff Commission, and the apparent health of both the economy and the Liberal party, the government concluded that it was best to leave well enough alone.”49 There was a new “intermediate” category of foreign trading partners. But there was also increased protection for iron and steel that reflected the needs of the renewed transcontinental railway building. The exercise was also seen as a pledge that, at least, protection would not be reduced. If the railways did not attract foreign capital, the industrial and consumer economy did, as seen in a new wave of mergers. But the more that capital and labour flooded into Canada to build infrastructure, the more pressure there was on land and food prices. Resentment intensified amongst consumers and western farmers who wanted cheaper foodstuffs and manufactured goods, and Laurier’s mediations became increasingly threadbare. The Laurier Liberals saw public opinion as a caged tiger that they could threaten to uncage whenever the manufacturers became too importunate. The Fielding’s first commission had bared its teeth, so too would the second. That was a wrong view to take. Progressive businessman James J. Harpell saw three changes that occurred during the Laurier years: big business consolidated; banking consolidated; and the Liberal Party relinquished its role as a “well organized and exceedingly active Free Trade party in the country” exposing the machinations of businessmen: the “old educate campaigns, which were carried on throughout the country almost continually from parliament to parliament, have been abandoned,” leaving the public uninformed.50 Whereas the manufacturers took Fielding’s advice and began a sustained propaganda program in favour of protection, the Liberals wrongly assumed that restraint not education was the only technique of opinion management that they needed. They would prove unprepared to fight a campaign on the tariff. As for the second Fielding commission, Conservative propagandists would invoke it as evidence that “exhaustive” enquiry had proved that there was no need to reduce the tariff. Both easterners and westerners grew disaffected. Maritimers were experiencing economic deflation and diminishing per capita income, along with demographic decline. An expanding western Canada was resentful that its new-found strength did not translate into political or fiscal clout. The region accounted for a quarter of the population in 1911

348

Reconstructing Fiscal Federalism

but only 16 per cent of parliamentary seats, and the tariff remained in place. Even Conservatives in western Canada, such as Hugh John Macdonald, son of Sir John A., now living in Winnipeg and presiding over the local party association, agitated to put agricultural implements on the free list.51 In Calgary, R.B. Bennett, a railway lawyer, was making headway by denouncing corporate profiteering, even as he fought off local efforts to tax the cpr. Borden had to side with Laurier to squelch a resolution to lower the tariff on agricultural implements. Laurier’s victory in 1908 was precarious: he lost BC and Manitoba to the Conservatives, and lost the plurality of seats and votes in Ontario. The Liberal Party was no longer the party of Ontario ratepayers. Laurier blamed nativism for the growing disaffection in 1908. There was truth in the observation, but it wasn’t the whole truth. The Liberal Party had remade itself in the image of Macdonald’s Conservatives and now paid the price. Intimate ties with big business could be defended in good times but not when people struggled to make ends meet. Real wages were declining, and the household budgets that everyone now brandished in debates over the cost of living showed that taxes made things worse.52 The kind of household data generated by Tory manufacturer H.B. Ames in 1896 was, in 1900, put to work by Georges-Albini Lacombe, a provincial Liberal representing a working-class district in Montreal, to demand restraints on seizures by bailiffs. He calculated average working salaries at $30 per month, of which one-third went to rent, heat, light, transport, and taxes.53 Country people drew up their own household budgets. Robert Hill provides an example from the small town of Huntingdon, south of Montreal and north of the American border, where the National Policy had depressed local markets and encouraged smuggling. The Liberal Huntingdon Gleaner, published by Robert Sellar, denounced the tariff and welcomed Laurier with editorials, rallies, and doggerel. But Laurier did not do enough for the farmers. Sellar reinforced his new criticisms with accounts that showed the precariousness of farmers’ incomes, which he took to the second Fielding commission. The average farm, with about a hundred acres (some of it bush), was worth between $3,500 and $4,500 but cleared about $80 after paying expenses that included $15 in local taxes and $35 in consumption taxes. In other words, the average farmer (or at least the average Gleaner-reading farmer) made about 1.5 per cent return on his investment. French-Canadian farmers were doing no better, but French-Canadian farmers were, Sellar argued, slowly taking over the neighbourhood because their taxes, going to separate schools, made the old English ones unsustainable.54 Drury, another



Laurier to Borden: Failed Revolt against the Tariff 349

witness, suggested a sum closer to $112 as after-tax earnings in rural Ontario, which was still less than the $200 that he estimated the tariff drew from every farmer annually.55 The public demanded policies that reflected the data. For example, in 1909, the Western Home Monthly blamed disputes over grain elevators on the ignorance of legislators, most of whom acquired most of what they knew from “newspapers and random conversations,” or from officials chosen for party service. Legislatures needed expert advice. “Suppose it is proposed to tax railways. It is not enough that a minister should give a little second-hand information on the subject and that he should be met by arguments based on a little more second-hand information. The experts in the state on such matters should appear in committee and freely give their knowl­edge, and this knowl­edge should be the ground of legislation.” That was the “Wisconsin Idea,” whereby the state university provided and the state applied expertise. No less important, university students studied “the conditions of life in the state” and would prove “capable of directing affairs when their turn shall come to rule.” Government in Canada must reform itself in the image of Wisconsin.56 Laurier’s liberalism looked oldfashioned by such new standards. Laurier blamed nativism again when he sustained a stunning electoral defeat to Borden’s Conservatives in 1911. Scholars agree that, rather than costing him the election, reciprocity came close to averting a defeat attributable to other grounds. The Liberals were old, tired, and scandal-ridden, due for a trouncing, but they were also weakened by a rising anti-French sentiment west of Quebec that formed an “unholy alliance” with FrenchCanadian nationalists in Borden’s government.57 There is a danger in exaggerating a binary of “sentiment” versus “interest” because ethnicity and fiscality were intertwined. Fiscal radicals and reactionaries, the people and the propertied, both wanted more power and influence than Laurier could or would provide. Borden managed to convince both camps that he was their champion. In fact, Borden benefitted from not one but two unholy alliances: that of English and French nationalists and that of progressives and big business. Just how those poles came together in Borden’s victory is a story worth the telling. As seen, the campaign for progressive fiscal reform began at the local level and seeped upwards. Local victories in western Canada whetted reform ambitions in eastern and central Canada and began to infiltrate party platforms there. The provinces were crucial intermediaries between municipalities and the federal sphere. Premiers Sir Rodmond Roblin in Manitoba and Sir James Whitney in Ontario took the lead, winning

350

Reconstructing Fiscal Federalism

successive elections on progressive platforms and following up with measures of provincialization: telephones in Manitoba and hydroelectricity in Ontario. Both men, with Premier Richard McBride in British Columbia, campaigned hard for Borden and helped him win majorities in their respective provinces.58 Borden, too, styled himself as a progressive Conservative. He was originally a Liberal (some said he remained one at heart) and close to his cousin Sir Frederick Borden, who was, in opposition, a hard-hitting critic of the National Policy and, in power, Laurier’s minister of militia and defence.59 But Fielding’s repeal movement repelled young Robert and an offer of partnership from the Tuppers pulled him into Tory networks. At the time of his election in 1896, Borden was a corporate lawyer earning $18,000 a year. Such wealth required outlets, and Borden began to invest speculatively. He sat as a director on the boards of Nova Scotia Telephone Company Ltd, Eastern Trust Company, and Bank of Nova Scotia, and with Sir Charles Tupper, he founded the Crown Life Insurance Company. His biographer remarks that Borden’s “business connections, his directorships, and his legal practice all linked him to the same National-Policyinspired enterprises that his [retiring] predecessor, Stairs, had represented.”60 But Borden and J.F. Stairs were also at the centre of the new networks of finance capital reconstructing the industrial economy. Stairs launched Royal Securities Corporation in 1903 with Max Aitken as manager; Stairs’s death the following year gave Aitken full control and launched his financial career. Borden and Aitken would be long-standing allies in politics, finance, and imperialism. Robert Borden followed Whitney’s policies with very great interest, seeing in the older man a mentor and in his politics a new Conservative paradigm. Many people thought Whitney had rewritten the rules of politics, and Borden looked to him as a model for balancing progressive and conservative impulses and reorienting the state to make it fairer and less partisan. Borden needed something flashier than his dismal slogan of 1904, “Adequate protection,” and in 1907 that something congealed into the “Halifax platform,” described by its author as “the most advanced and progressive policy ever put forward in Federal affairs.” There would be Senate and civil-service reform; immigration controls; non-partisan management of government railways, ports, and coal storage; and an imperial preference and protection for manufacturing and resources, albeit with “due regard to the interests of the consumer as well to the just claims of our wage-earning population.” Borden also promised “the management and development of the public domain (in



Laurier to Borden: Failed Revolt against the Tariff 351

which are to be included great national franchises) for the public benefit and under such conditions that a reasonable proportion of the value rising thereof shall inure to the people.”61 There was no reference to “unearned” value, but apparently it was no longer needed to justify “reasonable” appropriation of value.62 Governments no longer expropriated wealth to sustain themselves; they now appropriated because it was actually good to appropriate wealth that was understood to be, at least in part, a public resource. But Borden’s progressivism was far from Whitney’s progressivism. The new managerialism would be a business managerialism, overseen by the men who ran the trusts and combines. Jurisdictions riveted by debates about property knew that financiers were at the heart of the disputes; installing finance capital as the governing oligarchy was only politically plausible at the federal level. Moreover, there was not much that was socially progressive here because the scope of the federal government was so narrow. Borden promised to revamp the institutions of government so as to make them more transparent and accountable, but the goal was to keep the flow of resources in the public realm. The private household would have to look after itself. Borden’s progressiveness was a great deal shallower than Whitney’s cautious forays. Borden could talk the talk without having to walk the walk: he could still focus on those aspects of progressive reform that governed wealth rather than poverty. By the terms of the bna Act, the federal government could not spend money progressively, according to social or moral considerations. Constitutional reform would first be required. Federal spending was constitutionally propelled towards crony capitalism. On the other hand, the federal government could tax as progressively as it liked. Borden’s Halifax Platform was the first hint (at least since Blake’s faux pas) that it might consider doing so. Borden campaigned on the Halifax Platform in 1908. In September, at Halifax, Roblin stood beside him, as did one of Whitney’s most progressive ministers, W.J. Hanna, while McBride’s telegram of support was read aloud. Borden excoriated Laurier’s big-spending and patronage-ridden ways, advocated land “for the people” rather than the speculators, and denounced economic inequality: “It should be the task of good statesmanship to remove any unnecessary inequalities and anomalies which oppress the producer and which to future generations will seem not only unjust but absurd.” A modicum of comfort must be within the reach of all. The following week, the same message was delivered over the shouts of striking cpr workers in Montreal. The National Policy, Borden exclaimed, “was not designed by Sir John Macdonald to make manufacturers or any

352

Reconstructing Fiscal Federalism

one else wealthy at the expense of the rest of the people,” and nor would it once he took it “out of politics.”63 Poverty had new relevance that year. In 1906, Mackenzie King boasted to J.A. Hobson that in Canada, “we have no poor,” a statement that Hobson judged “probably correct if poverty means failure to get a living according to the customary standard of subsistence.” Hobson similarly saw “mean streets” in Montreal but “no signs of a slum population.”64 But suddenly, in 1907, Canada had a poverty problem as a financial panic caused many job cuts amidst the rising prices. Poverty was only supposed to strike the improvident, but the high cost of living and the taxes indexed to it seemed to threaten in new ways the “thrifty poor” who accumulated small savings – a house or an annuity – to cushion them from poverty. Among those hardest hits were recent immigrants, and their struggles were dramatically on display as moral and economic theatre for the city of Toronto, which had a ringside seat. New immigrants to Toronto tended to buy tiny plots of land outside the city limits where they could erect tarpaper shacks and avoid heavy municipal taxes. In 1907, conditions suddenly became acute at Earlscourt, or “Shacktown,” where recent English immigrants had congregated. The Globe, which took up their cause, explained: “These people crowded into the district last year, many of them newcomers from England. They remained in the township in order to escape the civic assessments. They live in the township. Their taxes go to the township. But the township has proved unable to cope with the problem created by their sudden and extreme distress.” The Globe began a subscription fund and graphically described their struggles: the plucky English widow with three children who pawned her wedding ring and split her wooden bedstead for kindling; the newborn baby wrapped in her father’s coat, while the family slept under one blanket with clothing piled atop and dined only on bread and tea. There was “no disposition to pauperize,” insisted the Globe; these were genteel and self-respecting folks. It capped the fund at $18,500 just to be safe.65 Torontonians responded sympathetically to the “wolf at the door” that threatened a shack in a Bengough cartoon. Conditions soon improved, and by 1908, local experts could reassure Torontonians that the “shackers” were solvent. Two Peter Bryces said as much: Reverend Peter Bryce of the Earlscourt Methodist Church, a district visitor for the House of Industry, and Dr Peter H. Bryce, the chief medical officer of the interior and an expert on Indigenous poverty. By 1910, the shacks had become the kitchens of sturdy houses where rosy-cheeked children were growing up as robust little Canadians.66



Laurier to Borden: Failed Revolt against the Tariff 353

But the campaign of 1908 was waged in the shadow of sudden shock and amidst bitter labour strife. Workers who could not buy food or pay rent went on strike for better terms. In Nova Scotia, Ian McKay counts forty-four strikes and 190,418 days lost to strikes in 1907, falling to twenty and 47,501 in 1908, the most spectacular being in the coal mines of Springhill, Nova Scotia. Montreal had a cp r strike and Toronto had a Bell Telephone strike. White-collar workers suffered as well. Andrew Macphail, who abandoned a medical practice to teach the history of medicine at McGill University and to edit a quasi-patrician magazine, the McGill Magazine, chafed at the price increases. Like consumers everywhere, but more learnedly, Macphail reasoned from those increases to the state of the nation. He leaned heavily on household budget data accumulated by his friend James Mavor, whose study of the cost of living in Toronto from 1897 to 1907, based on statistics from the Labour Gazette and field research done by Ella M. Keys, Mackenzie Fellow at the University of Toronto, was published in Goldwin Smith’s Weekly’ Sun and in a federal investigation into wages in the civil service.67 The Sun observed that the cost of living had gone up 28 per cent over the decade: “For the few there are luxuries and riches in the cities; for the mass there is nothing but a constant struggle with poverty.” Other sources saw higher increases reflecting geographical variation. Rents in central Canada had almost doubled; in western Canada they had more than doubled.68 Macphail drew on these sources to show that prices were rising and wages were stagnant, and nowhere more stagnant than in whitecollar work. Since 1882, wages in general had gone up 18.5 per cent, but for white-collar workers, they had risen only 5.55 per cent. The people were being skinned like eels by protected manufacturers, but the act of persuasion was wearing thin. “Once the eel is convinced of his food-value estimated in calories, he might the more readily assent to the process of being skinned. But he must be well convinced.”69 The economic crisis should have dislodged Laurier in 1908. It failed to do so, Macphail explained, because Borden focused on picayune issues. “In reality there are only two questions which could vitally interest the country: whether it shall be handed over entirely to manufacturers for exploitation, and what arrangements shall be made by which Canada shall take her proper place in the Empire.” Macphail wanted low prices and an expanding empire, and blamed selfish manufacturers and politicians for high prices and a disbanding empire. They worked the tariff into a political “machine,” but their excesses, including murder, harlotry, and “legislators bought as one would buy a drove of swine,” so outraged public morality

354

Reconstructing Fiscal Federalism

that a reversal must come. “Corruption of public life, and the degradation of society to a condition of savagery, is – so runs the feeling – too high a price for the people to pay for the enrichment of an interested class.”70 Macphail tried to define as morality a grievance that others framed in socialist terms but he, too, could not avoid the language of class conflict. Like George Brown, Macphail turned the complaint of the local ratepayer into something nobler. Not just taxes but man’s soul was at stake in the fight for tariff reform. But where Brown spoke from a position of economic strength that demanded commensurate political clout, Macphail spoke from a position of economic weakness that threatened to transform his Olympian utterances into special pleading and beggary. Here was the ancient and humiliating plea of poverty and impotence, now enveloping the middle classes. Rising prices threatened all that they held dear: their quality of life, their respectability, even their vote. Their sense of justice was outraged. How could the law protect everyone but the consumer? The Toronto Star railed against that double standard. If any hint of customs fraud brought down the full force of the state, why didn’t high prices have the same effect? “The consumer who is overcharged by a combine, the merchant or jobber who is coerced by a combine, ought to have the same remedy. He ought to be able to bring down the whole force at the command of the Government upon the transgressor simply by making his complaint known without expense to himself, and without exposing himself to the revenge of the combine and its allies.”71 The demand was incoherent but no more so than the cma’s demand a few months later that “the interests of the customs department and of the Canadian Manufacturers’ Association should be identical.”72 Edward Porritt saw the public blustering of the cma as done to hide its private self-congratulations at just how neatly it had captured Laurier’s government. Both manufacturers and consumers felt they were neglected by an insufficiently responsive state. But where the Victorian press had largely sided with the businessman’s outlook, the Edwardian press tended to side with the rising popular outrage against a liberal regime that protected property far more zealously than it protected the people from what was coming to seem despoliation. The discovery tended to unite middling and workingclass voters over bread-and-butter issues, as tenants and householders of all sorts struggled to buy bread and to pay rent and taxes. Skelton’s assessment was that “the gap between what the world wanted, its standards of living, and what it could procure in the shape of goods and services, always a wide one, grew wider.”73 It might yet create common cause across the old fissures of race, religion, and region.



Laurier to Borden: Failed Revolt against the Tariff 355

The rising prices and resentments gave new impetus to fiscal reformers determined to reduce the tariff and tax the “unearned increment.” Laurier had to be seen to do something. The Industrial Disputes Investigation Act of 1907 was one such gesture, as was the Combines Investigation Act that Mackenzie King introduced in 1910 in a speech that showed prices had increased by 70 to 80 per cent since 1896. King distinguished between “natural” causes, such as extravagance, rising standards, cheap gold, and public works, and “artificial” causes, which were tariffs and combines.74 The evidence was assembled for him by Skelton, using data collected by Coats. But the Act was as toothless as most other reforms that Laurier had brought in. The National Policy did not just drive up prices; it also indexed taxes to those prices and made the state a client of business. The tariff was almost embarrassingly lucrative: customs and excise revenues fell from $60 million in 1906 to $51 million in 1907, but in 1908 they rose to $73 million, nearly three times what they had been when the Liberals came to power (see figures 8.1 and 8.2). Popular organizations, deputations, and publications continually complained of class-based governance and popular hardship. Westerners were particularly affected and insistent through such organs and associations as the Winnipeg Voice and the Grain Growers’ Guide, which recognized the menace in such boasting statements as the cma’s self-description as “like a young giant ignorant of its own power. By the exercise of these powers it could, if it chose, bring several millions of people to the verge of starvation, or paralyze the industry of the whole Dominion.” A power was a right, and in Canada it was unchecked by countervailing institutions. In such a world, the Guide observed, the “power to tax” was “the power to destroy one class to build up and enrich other classes.” Jeffrey M. Taylor sees a growing radicalization amongst Manitoba farmers.75 There were big, public deputations to Ottawa representing farmers from across the west. Unable to lure Borden away from protectionism, which he frankly defended in a western tour in 1910, a Farmers’ Platform determined to force tariff reform upon the Liberals. Laurier, who also toured the west that year, heard not just farmers but also boards of trade insist that “the West is more concerned over policy than party, and the dominant policy at the present time is tariff reduction.”76 Laurier’s early speeches were quoted back at him, especially a free-trade harangue delivered in Winnipeg in 1894. The prime minister expressed surprise to hear farmers so discontented, boasted of the “freer trade” already achieved, and pledged further improvement.

Figure 8.1  Federal sources of revenue as a percentage of gnp, 1870–1917.

Figure 8.2  Federal sources of revenue as a percentage of total financial requirements, 1868–1917. After sliding slightly downward after Laurier’s election, customs revenue rose gently and then, after the downturn of 1907, quite sharply, provoking new attacks on the inflationary tariff. Source: W. Irwin Gillespie, Tax, Borrow and Spend: Financing Federal Spending in Canada, 1867–1990 (Ottawa: Carleton University Press, 1995).



Laurier to Borden: Failed Revolt against the Tariff 357

The farmers wanted more. In November 1910, 800 of them converged in a “siege of Ottawa” to demand tax reform. Speakers included Drury, Fream, and Partridge, who denounced protection as upward redistri­ bution: “We do not wish to give protection to the strong at the expense of the weak.” Land-value taxation, Partridge observed, would make Winnipeg pay half the taxes in the province, a ratio he considered fair to farmers.77 Ontario farmers were well represented, while Robert Sellar, speaking for Quebec stockbreeders and dairymen, declared that the $100 to $300 that every farmer paid in federal taxes every year “may not seem much in the eyes of the monopolists, but $100 to a farmer is worth a thousand to any other class.” Roderick McKenzie of the Manitoba Grain Growers’ Association gave a statistics-studded talk that showed the farmers were making such small profits on their money and capital that they were selling up and investing the profits in the cities. W.B. Fawcett of the New Brunswick Farmers’ Association described rural outmigration and falling land values in that region. Laurier responded warily to the demand for nationalization of utilities but enthusiastically to the demand for tariff reform. Fielding was not on hand to hear the delegation because he was in Washington negotiating reciprocity. Laurier had declared in 1897, after his overtures were rebuffed, that there would be no more begging deputations to Washington. But rising prices were causing fiscal revolutions across the Atlantic world and beyond. In Britain, the Liberals elected in 1906 quickly introduced three big tax changes between 1907 and 1909: a distinction between earned and unearned income, a tax on land values, and graduated income tax. The land-value tax, according to Daunton, was more symbolic than consequential, but graduated income tax repudiated the Gladstonian formula. Wealth would now be asked searching questions about its social usefulness and individual holdings more fully mapped with intrusive new techniques of data collection. Georgeites and Fabians worked hard for the reform but so did the economic empiricists: “Data collected during the debate over Irish home rule showed that the poor were taxed heavily in relation to their income; and studies on the distribution of income by Chiozza Money [in 1905] showed just how much of the nation’s income went to the rich.”78 Now American progressives targeted anew a tariff that was raking in far too much money, too much of it from the poor. As prices rose, people attacked the tariff as the fountainhead of national impoverishment and corruption. Fiscal analysis, widely quoted, showed that the American tariff appropriated 3 per cent of savings among the wealthy and 75 to 90 per cent of savings among the poor. For the first time in half a century, the Americans were ready to do a deal with Canada.

358

Reconstructing Fiscal Federalism

Fielding and Paterson went south at President Taft’s invitation, and in January 1911, it was announced in Parliament that they had a deal for reciprocity in natural products. The Conservatives were crestfallen. Such a deal would open up the American market for Canadian agricultural products and ease resentments to the east and west, while leaving central manufacturing interests largely untouched. As Borden later recalled, “nearly forty percent of our party were either stampeded or terrified by the reciprocity proposals of the late government.”79 But the dismay was shortlived as Conservative politicians and businessmen across the country rallied to denounce the scheme. Borden demanded that the question be put to the Canadian public, and Laurier finally agreed to a general election. Ontario led the anti-reciprocity forces. Its legislature voted 74 to 17 against reciprocity, and Whitney’s “vigorous and forthright denunciations of reciprocity were heard at meetings all over the province.”80 Some farmers, above all fruit growers of Niagara and British Columbia, opposed the deal, while manufacturers saw a slippery slope towards unrestricted free trade. Even more worried were transportation and financial interests. Railwaymen feared disruption to east-west trading patterns, and the bankers were too deeply invested in railways to take any other point of view; moreover, they feared American financial interests would swamp them. Most worried were the millers, the meat packers, and the dairy handlers, all of whom would suffer under the deal, according to the approving prediction of agriculture minister Sydney Fisher – himself a free trader.81 These anti-reciprocity forces soon found themselves led by and leading a reinvigorated Conservative Party. Laurier and Fielding’s spectacular gambit proved a decisive failure. The country chose Borden over Laurier by 132 seats to 86. The election marked a political turning point: freer trade would not be on the books again for many decades. The election was not just about tax policy, but it was, nonetheless, an extraordinary moment for debate about tax policy. The arguments made on both sides can help us to understand the trajectory of tax talk more generally. The politicians and the business interests, farmers, labourers, single taxers, suffragists, and all the other interlocutors were making sense of their changing world. I do not mean to suggest that rational debate determined the outcome. Canadian business had never been so wealthy, and protected interests pledged fabulous sums in support of protection. The Canadian National League, a quickly formed protective association representing businessmen, supposedly had a war chest of $500,000, and Toronto railway baron Sir William Mackenzie was said to have written, literally, a blank cheque that was eventually redeemed for $2,000,000.82



Laurier to Borden: Failed Revolt against the Tariff 359

The Acadian Recorder described Laurier’s defeat as a “financial assassination.” Its verdict was widely confirmed, not least by Fielding himself, who lost his seat: “It was an association along these lines, supported by lavish expenditure, rather than any real discussion of the reciprocity issue, which brought about the defeat of the Government.”83 Such evidence warns against attributing too much rational agency to reasoned debate, especially when property, gender, and racial restrictions operated on the electorate. The census of Canada recorded 7,206,643 inhabitants of Canada; the election recorded 625,697 votes for Borden’s party and 596,871 for Laurier’s. Only 17 per cent of the total Canadian population voted, and Borden won 3 per cent more of their votes than Laurier. But even if the election was bought, it was not just bought. Tories and Liberals, manufacturers, farmers, labourers, and pundits of all classes fought a massive battle for public opinion. Above all, we can see monopoly capitalism turning itself into an effective political party. This was not just a Canadian phenomenon. Historian James Livingston sees American businessmen doing the same thing at the same time in their campaign for the Federal Reserve, created in 1913.84 Big business took centre stage in the political arena, agitating as business, seeking to turn that claim to authority into something quasi-transcendental. Wealthy men used to working behind the scenes, negotiating with other wealthy men, suddenly began to appeal directly and personally to the public. They waged war not just for political influence but also for the hearts and minds of the people themselves, with the newly discovered sciences and languages of public relations and advertising. “It was in fact the business community, not the ineffectual Conservative opposition, that led the campaign against Laurier.”85 They sold themselves as the rightful governing class; nationalism was only one part of the pitch. The logic of political brokerage and marketplace managerialism were carefully and strategically intertwined in new ways. Let us govern, the businessmen said, and we will give you efficient and informed governance. They promised the closest approximation to economic and fiscal justice possible: not the agnostic brokerage of a classic liberal, but new forms of business accounting and expertise that transcended partyism. The argument did not decide the election – nationalism and nativism remained trump cards – but nor was it trivial. The Borden coalition’s campaign for new standards of principled and efficient political economy both responded to and amplified widespread yearnings. But by amplifying those yearnings, it created new expectations that would be intensified rather than dissipated by the backward-looking Tory paternalism that Borden’s cabinet imposed.

360

Reconstructing Fiscal Federalism

Prominent Liberal statesmen, including Mackenzie King and Senator (formerly premier) Sir George Ross, had misgivings about the deal from the beginning, but Liberal businessmen had even more misgivings.86 Laurier expected bitter partisan attack, but the early complaints from Liberal businessmen took him by surprise. Zebulon Lash wrote to Laurier in early February, warning of widespread apprehension in business circles. This was an ominous turn of events. Lash, who had articled with Edward Blake, was one of the country’s top corporate lawyers, counsel to the Canadian Bankers Association, vice-president at the Bank of Commerce and the Canadian Northern Railway, and author of much of the monopoly legislation that defeated the municipalities in the courts.87 Lash advised Laurier to hold off taking a position until business and American opinion had spoken, which it would do against the deal. When Laurier rejected that advice, Lash wrote again with more specific demands that, he said, he needed only itemize because Borden had already stated them publicly. Trade was in the balance, Lash warned, at a time when changing Canadian demographics – the influx of non-British immigrants – threatened annexationism. Laurier replied only curtly and dismissively, that “reciprocity in natural products cannot injure any vested interests and cannot be a bar to our national development.”88 For Laurier as for Fielding, the deal was so manifestly good for Canada that public opinion must naturally swing against such specious protests. As more Liberals lined up against the deal, Laurier was perplexed: “I am at a loss to understand why our friends in Toronto should be driven from their moorings on a question which has been the policy of the party for forty years.” Laurier had built up an alliance with the Toronto-based Bank of Commerce and Canadian Northern Railway. Now that alliance turned against him and joined with Borden, who largely monopolized the support of Canadian finance capital. The railways and the banks were deeply invested in transcontinental linkages and privileged access to the British financial market that might suffer from the closer ties to the United States.89 But there was also a concern for property itself. Municipal and provincial governments seemed everywhere to be waging war on corporate capital and gaining new strengths in the process. For example, in March 1911, Saskatchewan set its sights on the cp r’s perpetual tax exemption, declaring that it was “flagrantly unjust to Canada as a whole and unjust and unfair to Western Canada in particular; and should not have been enacted by the Parliament of Canada; and these provisions should be speedily abrogated and forever abolished.”90 Laurier’s newfound western sympathies, as expressed in the reciprocity deal, made



Laurier to Borden: Failed Revolt against the Tariff 361

such local resolutions seem more threatening to vested railway and financial interests than they could possibly be under a Conservative federal government, even one that had previously toyed with notions of nationalizing utilities. Capital holdings were at stake, as were financial interests: all that talk of confiscatory taxation was in danger of discouraging international investors. They needed real federal champions, and who better than the Conservatives, now looking electable again for the first time in more than a decade? If big business could not stop the war on capital in local legislatures and municipal councils, then it must carry the struggle to the federal arena. A Conservative government restored to its usual sheltering alliance with big business could be trusted to put in place the right judges and lieutenant governors or to exercise the federal veto, even in the kind of Hail Mary cases that John A. Macdonald had been willing take to and lose at the j c p c . In short, the federal arena was the best place for fiscal conservatives to make a stand against progressive reform, and the election of 1911 offered the best possible conditions for making it. But they must make the stand themselves, directly, rather than leaving the job to professional politicians, even banker-politicians like Borden, who had displayed a certain yeastiness in his last platform. On 31 January, the independent conservative Toronto News, founded by Joseph Flavelle and edited by J.S. Willison, came out with a mammoth editorial against reciprocity as “national suicide.” Willison’s connections with both Liberals and Conservatives made the News an important mechanism for turning Liberal ambivalence into Conservative support, while Toronto manufacturer and defeated MP for Toronto A.E. Kemp served as a go-between.91 This was very much a Toronto movement. Montreal’s Board of Trade voted against reciprocity in late January, but opinion was mixed and the vote was 61 to 47. The Toronto Board of Trade, voting in mid-February, was almost to a man opposed: three hundred-odd votes against reciprocity swamped the dozen in favour. The Toronto World described it as a “tremendously impressive meeting [with] the strong men of Toronto of both sides of politics, in fact, utterly irrespective of politics.” Liberal businessmen dominated the floor, beginning with a ringing address by B.E., now Sir Edmund, Walker, the acknowl­edged “pope” of Canadian bankers, who had replaced Cox as president of the Bank of Commerce in 1907. Canadians had never been more prosperous, farmers no less than bankers. “‘Never before have the returns from capital invested been so large as now,’ declared the speaker emphatically. ‘If there is any class who are prosperous, it is our Ontario farmers.’” Businessmen had built that prosperity and politicians should not unbuild it: “Sir Edmund was sure

362

Reconstructing Fiscal Federalism

that the government of Canada believed it was doing the best it could for Canada, but gentlemen engaged in business knew how extremely technical and complicated business was. They must wonder that any two men could imagine that no matter how highly endowed they might be, they could make a tariff of a wide, sweeping nature suitable for the people of Canada.” The agreement was so completely wrong from beginning to end that Walker could not speak to it item by item, he regretfully told the audience to “deafening” applause. But he could predict that the deal would not play out “the way the gentlemen at Ottawa seem to think it will.” Walker had risen to authority on the strength of his annual reviews of Canadian banking; it was impossible to be more authoritative.92 Walker ran through the major interests concerned: the coastal halibut and salmon industries would be hard hit by big US fish-packing interests; BC’s low-grade lumber would lose out to cheaper American lumber; Alberta cattle would all go to Chicago for processing; the fruit industry would be destroyed; wheat would be “diverted south to be ground into flour,” effectively ending boom years in towns like Winnipeg and Port Arthur. Above all, a flood of immigrants, lacking a Loyalist heritage, would precipitate annexation. Canada was in peril, he concluded. Joseph Flavelle, who followed Walker, briefly spoke to the hard-won, east-west economy; he also spoke through Willison at the News and led a delegation to Ottawa. Most of the other speakers were Liberals who justified their stance by denouncing party politics. Cries of “Party Men” punctuated any mention of politicians. Joseph Atkinson, editor of the Toronto Star, who spoke last, ridiculed such claims: “The whole question was in politics. To take it out of politics was to get out of the question itself, he said, in reply to suggestions that he was making it political.” He was accused of making the question a party one. The president pointedly observed that neither politicians nor the press were “more infallible than we who are in trade.”93 The Toronto Board of Trade was too unwieldy to wage the kind of campaign that Walker and Lash sought. Lash put together a list of Liberal names for a non-partisan business alliance and together the cream of Toronto business, the “Toronto Eighteen,” published a manifesto. Signatories included Walker, Lash, John Blaikie (Consumers’ Gas and North American Life); W.D. Matthews (Canadian Pacific Railway, Dominion Bank, Canada Permanent Mortgage Company); W.K. George (Standard Silver, Sterling Bank, and the Toronto Industrial Exhibition); H.S. Strathy (Traders Bank); L. Goodman (North American Life); G.A. Somerville (Manufacturers Life); W. Francis (Standard Bank, Consumers’ Gas); James D. Allen (Union Stock



Laurier to Borden: Failed Revolt against the Tariff 363

Yards); E.R. Wood (National Trust); John C. Eaton (Eaton’s); G.T. Somers (Sterling Bank and grain milling), Robert S. Gourlay (piano company; current president of the Board of Trade); Sir Mortimer Clark (former lieutenant-governor); R.J. Christie (biscuit-maker); H. Plain (Toronto ­ Globe); and our old friend W.T. White (National Trust). Five of the eighteen were directly connected with the Canadian Northern Railway or the Cox banking network that financed it. Tory papers emblazoned their headlines with tributes to the “Spontaneous, Impressive and Patriotic Expression.”94 Kemp and Borden engineered comparable movements elsewhere to make Toronto seem less conspicuously “aggressive.”95 Soon afterwards, on 1 March, Lash met with Willison, Lloyd Harris (MP for Brantford, scion of the Massey-Harris agricultural equipment company, and a power in the c ma ), and Clifford Sifton, who had just denounced the deal in a resounding and widely republished speech that even the London Times requested in advance. The four men drew up a list of demands that Borden must meet in order to get their support, including civil service reform, more aggressive pursuit of export sales, a tariff commission, and resistance to Catholic influence “in public policy or in the administration of patronage.” The men also insisted that Borden consult Walker, Lash, and Willison when he formed his cabinet. Sifton carried the offer to Borden, who quickly agreed to the terms.96 Sifton had remained a backbencher since his resignation from cabinet in 1905 and his defection was damaging. The next week at the York Club, Lash and Walker instigated – and bankrolled – the Canadian National League to flood the country with anti-reciprocity propaganda. The League’s secretary was Arthur Hawkes, a freelance journalist, and the Canadian Northern Railway’s director of publicity. He was an expert in public relations who wrote, spoke, and campaigned in opposition to reciprocity.97 Addresses aimed at the Britishborn population were masterful pieces of alarmism. Britons, Hawkes argued, should think of the American president as of the German kaiser: a dangerous enemy out to undermine British / Canadian sovereignty and well-being. And just as the United States was really Germany, so the Canadian Conservative Party was really the British Liberal Party, the natural party for a Liberal emigrant.98 Lash insisted that the National League was not a political organization, but in practice, Hawkes blurred that line. When he needed political cover for his work, he turned to Clifford Sifton, who campaigned tirelessly, warning that the interests of Winnipeg could not survive competition from Chicago. One westerner, Henry J.

364

Reconstructing Fiscal Federalism

Woodside, repudiated a lifetime’s agitation for reciprocity because he could not imagine Sifton being wrong: Manitoba was loyal, whatever “Saskatchewan and Alberta, with their large foreign population,” might think or vote.99 Big business and the Conservative Party waged two separate but overlapping campaigns. On the one hand, they drew upon all the resources and authority of party machinery and political heft; on the other hand, they denounced party machinery and the ignorance of mere politicians in favour of business methods and expertise. Once the formal election campaign was launched, Walker, Flavelle, and Lash stepped away for the summer. Thomas White, however, discovered unknown strengths as a public speaker. He had been running the National Trust since Wood had encountered him in the assessment court and was now one of the best-connected members of the Cox financial network, alongside bankers Edward Peacock, E.R. Wood, and J.H. Gundy (the latter two formed Wood Gundy, a high-end bond firm targeting municipal debt, in 1905) as well as Flavelle, who presided over the William Davies meat-processing and -packing company and the National Trust and sat alongside Cox on the board of Canada Life and Imperial Life.100 White’s business interests drew him into practical politics. According to John Bone of the Toronto Star, “when a policy of public ownership of Niagara Power was being pressed it was ‘Tom’ White who presented the case for the private interests, which he did skillfully – and then came reciprocity with its ominous look to the same interests. Again ‘Tom’ White was called upon to step into the breach.” White was unpopular amongst Toronto manufacturers who, resentful of their high electricity bills, supported Whitney’s hydroelectricity policies. Industrial and finance capital were unstable allies, but in 1911, they found a champion in White. At an early packed meeting at Massey Hall, White was merely one speaker on a long roster – a nervous one who tried to persuade his wife to stay at home. But he gave what the Toronto Star called “the speech of the evening,” subsequently “repeated scores of times.”101 A new statesman was born. White’s speeches convey the voice of high finance at its most authoritative, persuasive, and effective. The progressive Toronto World described a later appearance at Massey Hall in biblical terms: “Mr White’s speech was a gospel, spoken for Canadians of the present and future. In simple terse language he made his case and drove home his points and not content with that he clinched every one. His open avowal, ‘in my opinion this is not a question of party politics,’ produced a round of cheers. ‘It is a great economic and national issue in which all minor political differences are



Laurier to Borden: Failed Revolt against the Tariff 365

absorbed and merged, it is a question above parties and above individuals.’”102 The World provided a handy bullet-point list of major points: there was no conflict between farmers and manufacturers; all had the right protection; the economics were complicated; Canada was prospering but would follow America’s downturn if the pact were ratified, with annexation following. Refusal would be “a new Declaration of Independence that will ring around the British-speaking world.” All this was mere prelude to a speech by Borden, but it was White’s that captured the headlines. Kemp, a political veteran, was another crucial voice for the business interests. He kept Borden supplied with business information on demand and himself drew heavily on evidence from Wood to itemize and extol the $600 million that Canadians had borrowed in Britain in the previous three years at better-than-market rate by virtue of the sentimental attachment between the two countries.103 American statements suggesting annexation as the strategic goal of reciprocity – President Taft described the deal as “a parting of the ways” for Canada – added fuel to the argument (see figure 8.3). In September, White and Sifton undertook a speaking tour through southern Ontario. At Cobourg, White told the farmers that they were better off as things stood, pointing to bank deposits, minerals, barley, horse trade, and apples. “The Liberal candidates were frightened of their lives on the apple question. If the farmers were not getting as good prices as they would under reciprocity, he would still advise them to hold the home market and the British market. The United States prices in all things, he said, were more fluctuating than anywhere else in the world.” Above all, White, now the vice-president of the National Trust, blamed the troubles of American consumers on American trusts that must be kept out of Canada. “The trusts, he said, were squeezing the people in the United States. The farmer gets low prices and the consumer pays high prices. Do we want this condition of affairs here? He referred to the detriment to vegetable growers from early stuff being sent from the United States. Your prices, he said, to the consumers, will be set by the American trusts. Do you think this will make you any better off?”104 Sifton reiterated those arguments. Prices would always be “fixed by the United States, because they are the wealthier and their conditions would prevail.” He added a disingenuous disclaimer: “Somebody has said that the trusts exist in Canada to-day, but if such was the case, it would be an easy thing for the government to combat them, and it is their duty to do so.” White doubtless nodded sagely at those words of wisdom. In Montreal, Sifton again argued that “the great beneficiaries of the agreement would be the

366

Reconstructing Fiscal Federalism

Figure 8.3  Arch Dale, “The Parting of the Ways” (13 September 1911). The cartoonist at Grain Growers’ Guide tries to reclaim President Taft’s phrase for the Reciprocity campaign and to ridicule the scaremongering tactics of “plutocracy.” (Image courtesy of Peel’s Prairie Provinces (peel.library.ualberta.ca), a digital initiative of the University of Alberta Libraries)

American Newspaper Association, and Chicago Beef Trust, the U.S. Steel Company, the Minneapolis Milling Company, and the Hill railway interests. It will mean that these vast aggregations of American capital will be invited to come in and dictate to our country and to take from us the business we have built up by the past 25 years of hard work.”105 When they spoke to farmers, Sifton and White emphasized farmers’ agency. By contrast, when they spoke in Ottawa, Sifton warned of a farmer-spawned, domino-attack on protection. “He predicted that in three or four years the farmers of the West, should reciprocity be passed, would demand of the Government free trade in all manufactured products we produce. ‘Where would the Government be then?’ he asked, ‘what stand would they take?’”106 The two men always read aloud letters from local businessmen denouncing the deal. Their performances drew turn-away audiences of thousands and were widely referenced. Sifton, White, and the others appropriated progressive suspicions. The reforming momentum generated by a Bengough or a Thompson was now



Laurier to Borden: Failed Revolt against the Tariff 367

deployed to defend rather than attack big business in Canada. Canadian trusts, according to this view, barely existed, and if they did exist, it was only in a modest, Canadian sort of a way, always serving the national interest more than their own. Ironically, the more trustified the speaker, the more knowl­edgeable and sincere he seemed to audiences. Who knew better the insidious workings of American trusts than a Canadian financier? Who else could lead the people out of Egypt? White, still as handy with facts as when he had been a tax assessor, was the trustiest of them all and the best poised to advance the interests of his industry and himself, apparently rising above petty partisanship and mere profits. Criticisms were dismissed as merely partisan. The arguments against American trusts and Canadian politicians played well across Canada but especially in French Canada. Protectionism had a great deal of popular support in Quebec, and Tory MP Albert Sévigny spoke of it as much as of the naval issue. The business-oriented Prix Courant had been warning of the “white peril” of American capital for years.107 In 1911, Montreal businessmen formed an Anti-Reciprocity League headed by Charles Chaput, a prosperous wholesale grocer who sat on the boards of such companies as Ogilvie Flour Mills and the Banque d’Hochelaga, and Thomas Chase-Casgrain, a professor of law at Laval University, newspaperman, and soon to be Borden’s postmaster.108 The Montreal newspaper La Patrie had followed Tarte into and then out of the Liberal Party, but it also harboured Jules Helbronner (who had left La Presse in 1908), so the paper was both protectionist and progressive, like the Toronto World or the Montreal Star. The high cost of living, the potential loss of European investment, Liberal corruption, and an invasion of American capital were invoked as reasons against reciprocity, and the Canadian consumer was urged to remain master of his destiny: “Let him beware the snares of American trusts trying to impose their odious exactions upon our prosperity.” American money, it charged, was flooding into the Canadian election campaign.109 In September, one editorial page juxtaposed an attack on the rising cost of living – which it attributed to business associations and syndicates controlling the price of necessities and forming “veritable trusts” – with another piece praising the leading Montreal businessmen who had come out against the reciprocity, including Van Horne of the cpr and H.R. Drummond of the Canada Sugar Refinery. The accord, declared La Patrie, was a business matter, and who better able than “our most enlightened businessmen to judge exactly its value? Rationally, our wisest traders and industrialists should guide our rulers.”110 The Catholic press in Quebec also defended Canadian banks,

368

Reconstructing Fiscal Federalism

manufactures, and “the big interests in general,” and insisted on the threat to farmers: how, asked L’Action sociale, could free trade pay farmers more and charge consumers less?111 Fielding laboriously responded in long, verbose texts that tax reduction would permit that win–win outcome. But his argument that on every cross-border sale of food the government currently pocketed $25 or more may have roused more resentment than approval.112 English and French Conservatives reminded audiences of the hard times that had preceded the National Policy, necessitating soup kitchens in Montreal. For Henri Bourassa, the leader of the Quebec Nationalists, the real enemy was not American capitalism but British imperialism. Bourassa actually favoured reciprocity: economic continentalism made a great check to imperialism, a point also made in the left-liberal organ Le Pays. The Nationalists were more progressive than conservative: they had a long tradition of denouncing big business as harmful not just to the poor but to French Canada. Because French Canadians were disproportionately represented amongst the poor, class legislation must hit French Canada harder than English Canada.113 But in 1911, Henri Bourassa buried those leanings behind an attack on Laurier’s imperialism. Denouncing Laurier’s plans for a “blood tax” to pay for an imperial navy, Bourassa’s slogan was “Not a dollar, not a ship, not a man, to England.” At Labelle, in early September, Bourassa argued that every cannon shot cost $20 to $80, every big ship-piercing cannon shot cost $120 to $200.114 The argument against imperial taxation as class taxation was made even more explicit by a Nationalist candidate in Arthabaska, Arthur Gilbert, who had shocked the Liberals and overjoyed the Conservatives a few months earlier by winning a by-election. “This naval taxation is wanted by the lords of England who will not pay taxes at home, and who are striving to get it out of the colonies.”115 Conservatives delighted to see the French-Canadian vote split into liberal and nationalist factions. Indeed, immediately upon that Arthabaska by-election in 1910, M.E. Nichols, a newspaper publisher with papers in Winnipeg and Montreal and a half-brother to Thomas White, grasped the implications: “It seems to me that this election changed the whole complexion of the political situation in a single day. The cards are now in our favor if we play them right. To my mind we should let Laurier and Bourassa fight it out in Quebec.”116 With a triumphal imperialism that strategically avoided direct criticism of French Canada, Conservatives did not stint in further embarrassing Laurier. In empurpled prose, the Montreal Star invoked the blood-“empurpled” and free soil of England: was this



Laurier to Borden: Failed Revolt against the Tariff 369

“priceless heritage” to be “torn from our grasp by the greedy magnates and the designing demagogues of the United States?”117 H.B. Ames, now a Conservative MP, denounced the reciprocity deal as exactly the kind of secret pact that civic reformers spent their lives opposing: “Two men, in secret, make, on behalf of 8,000,000 people, a hard and fast agreement affecting many and varied interests, jeopardizing the fiscal independence, if not the national existence of an entire people, and, so strong is the discipline of party, a majority of this House feel bound to ratify that pact, whether or no they in their hearts believe that it will work well or ill.” In vain did Liberals point out that diplomatic relations are always negotiated behind closed doors or that the deal was before the sovereign people. Ames argued that only a Conservative Party vote could reconcile patriotism, integrity, and prosperity. His speeches were fact-studded, conversant with the price of agricultural products in Chicago, Argentina, and New Zealand. (When Liberals produced statistics, as Sydney Fisher did in Farnham, Quebec, he was said to have “wearied the crowd by a deluge of figures, which he rolled off in mournful cadences.”118) Again, the domino argument figured prominently: “If the outworks of protection are thrown down how long will the citadel withstand attack?”119 Liberals deployed classic liberal tropes of suspicion to debunk their adversaries. According to Le Pays, “You won’t get reciprocity because the  manufacturers don’t want it.”120 Even Bourassa, they argued, had been bought. Ernest Lapointe, deputy for Kamouraska, remarked that “M. Bourassa has opposed reciprocity since the capital of his paper has increased by $200,000. I should say that M. Bourassa has been bought.”121 In the final days of the campaign, Laurier denounced big business openly. At Victoriaville, his old riding, he declared: “This is the cause of the workers against the cause of the trusts and combinations, the cause of the people against the interests” – Canadian trusts, that is. Laurier attacked Flavelle’s William Davies Company in particular, accusing it of making 120 per cent annual profits.122 The Liberal Party stuck to its message: as laissez-faire as possible was the avenue to cheap, clean, efficient government. Le Canada ran long arguments under such headings as “Reciprocity and Bread,” “Reciprocity and Vegetables,” “Reciprocity and Fruits”; it also denounced Toronto-based combines, including William Davies, and a few closer to home.123 In Toronto, too, the Star hammered at the costof-living question as an indictment of Canadian combines: “Every housewife should welcome reciprocity. It will mean cheaper food for her family.” The week before the election, Atkinson turned the Star’s window into a refrigerated-meat display to show that William Davies stores

370

Reconstructing Fiscal Federalism

charged more than stores in Buffalo. The company replied with its own display in the Toronto News building.124 Many liberals denounced the double standard that let a Walker, but not a farmer, grow rich on American trade without relinquishing his nation or his soul, or let a Sifton proclaim himself “Grafter no more! Noble, noble soul!” Such “unmitigated bosh” would not fool the “multitudes of common men and women” who sought honourable trade with the United States. Thomson of the Globe urged a “smart Federal Tax on the large incomes and large corporations” and dismissed self-serving business, culture, or academe as trivial, “save when they accord with and utter the profound thoughts and instincts of the almost inarticulate masses.”125 Atkinson in the Star urged the businessmen to be “reasonable … Protection in Canada owes its existence to the consent of the masses of the people.” Andrew Macphail likewise contrasted specious and real public interest: “The Manufacturers’ Association affirm that they have taken the tariff out of politics,” but “the people are very likely to bring it in again when they get the chance.”126 Western farmers and workers had done much to get reciprocity onto the table, and they basked in the campaign. George Brown had always looked to western settlers to fulfill his austerity project – he had just expected fulfillment to come sooner. Western farmers upheld the “country” view for small, autonomous government and direct taxation with vibrant, eloquent, and trenchant arguments. The Grain Growers’ Guide greeted the deal as “a partial fulfilment” of earlier promises and a historic realignment.127 It advocated the single tax to replace lost revenues, admitting that not all farmers agreed, but insisting “those who have studied the question know that a tax upon land values is the most equitable system of raising public revenues.” The Guide maintained a blizzard of single-tax and free-trade columns through the campaign. A column on “The Rights of Man” insisted that the kinds of rights upheld in the French and American revolutions were no more than nominal unless poverty were addressed and access to land made a right. Frederick Dixon’s writings figured prominently, as did George’s utterances, in attacks on such self-interested business arguments as the cma’s claim that it had always opposed class legislation and trusts and Robert Meighen’s supposedly “impartial” voice for western farmers. Meighen presided over the largest milling operation in western Canada, Lake of the Woods Milling Company; sat on the board of the cpr’s Canada North-West Land Company amongst other interests; and resided in one of the most magnificent houses in Montreal. The Western Home Monthly was another widely read periodical that insisted



Laurier to Borden: Failed Revolt against the Tariff 371

the low-tax “interests are now of such vast proportions that any political party that refuses to observe the demands of those interests will not hold power against them.”128 The tariff reformers argued from a position of strength rather than weakness. The manufacturers were economically and demographically weaker than the producing and consuming public, which was in full control of the historical moment and would prove its superiority in the vote. Women actively joined in the debates over reciprocity versus protection across the discursive field and formed associations for and against the deal, so that women’s issues were marginalized in this election, the last held without female voters.129 But it may be that women chose to argue from class and region rather than gender because they wanted to assert from a position of strength, not plead from a position of weakness. At a time when the world was moving away from diplomacy and towards a brutal show of imperial force, in Canada, too, the election was understood to be about power rather than rights. In 1911, a socio-economic reading of politics did battle with an identities reading of politics. Liberals and radicals who argued that the tariff redistributed wealth upwards were accused of falling short of a higher, nobler standard of disinterested British citizenship. The businessmen’s revolt against the Liberal Party was everywhere invoked as setting the standard for that disinterest. There was no shortage of evidence of Liberal corruption. Didn’t all the Laurier cabinet ministers have private cars? Were Raymond Préfontaine still alive, it was argued, such blatant corruption would drive him into the Conservative camp.130 The attack could not fail to score points, even in such hardy reaches as the Grain Growers’ Guide. Many saw real progress in the reciprocity deal, but others saw the ironic partyism that Siegfried and Leacock had identified. Both political camps felt the contradiction, but the Conservatives played it better than the Liberals. Free traders, by definition, were suspicious of claims by vested interests to uphold the public good. But, Conservatives pointed out, it followed logically that the advocates of reciprocity must be either hypocrites or bamboozled. If the economy could be managed, the Conservatives were the more convincing managers. The most prominent bankers and manufacturers, by dint of their prominence and their enormous wealth, their brand, could claim a particular authority. Liberal suspiciousness discredited itself, while Conservative facts, everywhere unreeled in their amplitude, disproved liberal agnosticism and proved Conservative authority. Intellectual objectivity and authority in Canada did not come from the universities; it came directly from big business,

372

Reconstructing Fiscal Federalism

with a few intellectuals, here and there, piping up to insist that it was all true. Stephen Leacock put his irony directly to work stumping for the new, supposedly non-partisan Tory alliance. The Liberals claimed to speak for the consuming public, but that public was still inchoate and somewhat disreputable in its taste for branded and sensationalist American popular culture. Conservatives had, after all, always preferred a led public over an inchoate Americanizing one. That credulity had its limits can be seen in the comparison of White’s ascension to Max Aitken’s more mixed record. Originally from New Brunswick, Aitken had risen through the ranks of the Union Bank of Halifax, and Royal Securities and cooked up some spectacular mergers. In 1910, he moved to England and won election to the British parliament in what was seen as a victory for protectionism.131 Borden tried to persuade him to come back to Canada as a candidate and “take charge of New Brunswick and Nova Scotia on behalf of the Conservative Party.” Aitken was tempted but events decided him against a Canadian run. The Canada Cement Company merger that netted him a cool million (the deal as a whole generated $7 million in profits) and ruined Sir Sandford Fleming, suddenly drew widespread negative attention when Aitken was knighted in June 1910. Conservative, Liberal, and independent newspapers alike attacked him as a “mergerer, a wholesale stock waterer,” while politicians of both parties averted their eyes, aware that Conservatives and Liberals were not uninvolved.132 His Canadian reputation shattered, Aitkin, the future Lord Beaverbrook, remained in Britain, but he published protectionist screeds in his Canadian Century magazine and channelled donations towards the successful campaign of lawyer-financier R.B. Bennett in Calgary, who had also made his fortune in that cement merger. Aitken had once served as Bennett’s office boy and had managed Bennett’s early political campaigns in New Brunswick and Alberta.133 In Britain, Aitken and Joseph Chamberlain stiffened protectionist sinews, as did the economist William Ashley, in what Simon Potter describes as a significant new alignment of British and Canadian imperialism. Classic liberal verities were crumbling even in their stronghold. The minimal Gladstonian state could not meet growing demands for public infrastructure and social welfare, nor for renewed military spending, beginning with the South African War in 1899.134 The Conservative alliance had a reforming, non-partisan, pro-­enterprise rhetoric, but it also had the full backing of the vested interests to turn the crank of the electoral machine. The Montreal Witness claimed that threequarters of a million dollars was subscribed in that city alone for the



Laurier to Borden: Failed Revolt against the Tariff 373

Conservative campaign fund, the subscribers expecting to recoup their contribution through the tariff.135 You needed both money and crowds to  win in Montreal, and candidates continually boasted of their own vast audiences and their opponents’ depleted and mercenary ones. Tory P.E. Blondin told a Montreal audience that Liberals were spending huge sums to amass a crowd for Laurier but “were having a hard time to secure the big noise they hoped for.” H.B. Ames told the same audience: “I thank you for your applause, but what I want is 600 canvassers to work from the drop of the hat tomorrow until the close of the fight.”136 cpr resources were fully deployed as Sir William Van Horne cast aside any pretence of impartiality and appeared on campaign platforms alongside Borden. He described the deal as one to lie on and die on, a phrase widely repeated across the English- and French-language press. In St Andrews, New Brunswick, Van Horne declared: “Our trade is about $97 per capita, and theirs $33 per capita. In other words the water in our mill-pond stands at 97 and theirs at 33; and they want us to take away our dam. Shall we say ‘Not by a dam sight!”137 The company threw not just money but also “the full army of 75,000 employees” into the fray. Such men did not just pack out audiences; they went around rural districts, dressed in military attire, asking how many young men each household contained and “saying that they were wanted as Laurier’s contribution to imperial demands.”138 Liberals had their own corps of supporters – up to the old violent tricks, as in March 1911, when a near-riot disrupted Clifford Sifton’s attempt to speak before a meeting at McGill University organized by Stephen Leacock. The ballroom was packed with Conservative supporters, so Liberal students barricaded themselves in the musician’s gallery – the barricades being female students from Royal Victoria College whom the Sifton supporters couldn’t manhandle – and drowned out Sifton’s words. When Sifton gave up and removed to Windsor Hall, the students waged a pitched battle for control of a triumphal chariot that Laurier had once ridden. It was seized, piled with tinder, drenched in oil, set ablaze, and then dragged through the streets. Firemen were fended off with barrages of snowballs and even with a firehose on the corner of the campus, where the students finally took refuge from the police.139 Borden rode in to victory on a rhetoric of progressive reform and expert administration. A plurality of less than half of one percent of Canada’s population gave Borden decisive control of Parliament. Laurier sustained an impressive proportion of the popular vote in Quebec, the Maritimes, and the Prairies, but Ontario and British Columbia voted solidly for Borden. In Ontario, 56.2 per cent of voters preferred Borden to

374

Reconstructing Fiscal Federalism

Laurier. E.W. Thomson declared the results the biggest rout in Canadian political history and blamed farmers for saying one thing and voting another.140 The election marked the end of reciprocity as a political movement. In fact, most of the benefits of the failed treaty were soon acquired just the same. Taft unilaterally reduced the American tariff against Canadian goods and Canadians quietly reciprocated. Canada got reciprocity in natural products by Order-in-Council rather than by popular mandate. The real defeat was to a certain kind of popular political alliance for tariff reform. No one was going to win an election on it, that much was clear. Historians have argued that the liberal, laissez-faire ideal died during the First World War, when the government rose to new levels of efficient economic managerialism. But September 1911 marks a better date of death – the post-election hand-wringing, a better obituary. Big business openly showed itself and apparently won over the electorate. The fact that the “people” had voted against reciprocity and for Canadian capitalism meant that the world was safe for democracy. Ontario and Manitoba led the dismantling of the property franchise, while BC had white manhood suffrage, and these were the most firmly Conservative provinces. Popular moral economy was not defeated, but there could be no doubt that it was being substantially reconstructed in the image of bourgeois hegemony. The financial and manufacturing interests launched an innovative, ambitious, and remarkably successful publicrelations campaign that testified to the new promise of managed public opinion. An enfranchised public apparently preferred government by the moneyed to despoliation of the moneyed. In the west, the people had voted for land-value taxation – but in a format that privileged speculation. In Ontario, they had voted for income tax – but in a format that encouraged further consolidation of the most highly propertied. Nationally, they had voted to discipline and restrain the trusts – but only the American ones. The Canadian ones they would protect, welcoming and following the advice of their scions. The property franchise could safely be dismantled; the construction of Casa Loma, Toronto’s temple to monopoly capitalism, could go ahead. The public opted for staying the course economically and fiscally, while convincing itself that a vote for such men as White and Sifton constituted a blow against classic partisan politics and for disinterested, expert managerialism. Reformers’ arguments that cities could be depoliticized were being transferred upwards. Perhaps Canada, too, was like a joint-stock company. That was Andrew Macphail’s conclusion. Democracy, he remarked, “is an appearance rather than a reality, and we have not yet witnessed its full



Laurier to Borden: Failed Revolt against the Tariff 375

operation.” The sovereign people had decided to vest their powers in rich vested interests that would do the governing. We have been deprived of, or saved from, [democracy] by an imperium in imperio which we have created for ourselves. This instrument of government came into being as a result of our fiscal policy whereby the taxing power of the government is placed in the hands of a comparatively few persons who are at once the richest and, therefore, the most honoured and influential members of the community … The government of Canada is “practical.” It has some affinity with the principles by which a joint-stock company is controlled. The premier is the president. He is elected by the directors, who are the principal shareholders and are in possession of the proxies. The provinces are the subsidiary corporations. Their dividends are subsidies. The taxpayer is the minority shareholder, and he receives the polite consideration which is accorded to the owner of one share of bank stock who asks a question at the annual meeting. The excellent government of Canada, then, is not a justification of the principles of democracy but rather a triumph for the methods and ethics of business.141 Where the generation that established Confederation saw trade-offs between economic and political clout, the propertied and the people, Macphail saw only economic as political clout and the hollowing out of political life. Macphail’s assessment was seconded by the new American-trained economists. Taught to read class politics into the anti-political posturings of American capitalism, they saw the same forces and processes at work in Canada. Oscar Skelton, who had replaced Shortt at Queen’s University, saw in the outcome an admirable idealism and national spirit, but also grounds for concern. He was “not reassured for the future of democracy by the ease with which interests with unlimited funds for organization, advertising, and newspaper campaigning can pervert national sentiment to serve their own ends.” Canadians were not ready for radical change, but they were also “uneasy at the growth of combines and mergers.”142 Munro of Harvard, in a paper published in Queen’s Quarterly and given at the first meeting of the Canadian Political Science Association (founded in 1913 with Shortt as president and Skelton as secretary-treasurer), debunked the whole project of insulating politics from public opinion by means of commission governments: “Power linked with responsibility is never dangerous, power divorced from responsibility is always dangerous.”143 Macphail,

376

Reconstructing Fiscal Federalism

also present, agreed that government must be by party, but he took new hope from the election of Woodrow Wilson in the United States and the new successes of tariff reform: “No one in Canada need now be discouraged … Democracy is quite capable of looking after itself.”144 Borden attended that pioneer meeting of the political scientists, but the lessons were lost on him. He continued to seek mechanisms that would take federal taxation out of politics. The spectacular failure of those early efforts, the rising pressure for real rather than nominal reforms to govern wealth and poverty more symmetrically, and their terrible political cost is the final story to be told here.

9 Income Tax: Progressivism Triumphant

Borden won election by promising nationalist taxation and better governance. With the tariff question closed down, tax debates would now focus on domestic questions. But, as ever, some legitimation was needed. Borden in 1911, like Laurier in 1896, had to convince business that Canada was open for business as usual, but not quite as usual. Laurier had staged public hearings that played radical and conservative voices against one another, but Borden could not afford a political theatre that would recapitulate the free-trade arguments and translate the long, long disquisitions of single taxers to the federal arena. Instead, he vested legitimacy in his expert-millionaire statesmen. It was a brilliant short-term tactic, but it turned the business elite into an identifiable political party and subjected financialization itself to electoral scrutiny. Finance capital had forced a reconstitution of the Canadian state in the 1860s; in the 1910s, it did the same again, as new instruments were applied from within to financialize the state, generating unprecedented levels of credit and liquidity. But state monetization, unlike industrial monetization, was accountable to the public opinion that it was monetizing. At the same time as war-driven debts reached unprecedented heights, so did war-driven demands for a more fair and democratic accounting: for progressive income tax. In 1917, the people and the bankers faced off in what became the bitterest election in Canadian history. Borden’s first step after the 1911 election was to form a cabinet that would provide expert governance of and by wealth. He put together the most moneyed cabinet ever seen in Canada, with what the Witness described as “seven reputed millionaires,” including Borden himself. (The others were Thomas White, A.E. Kemp, George Perley, Robert Rogers, Frank Cochrane, and James Alexander Lougheed – R.B. Bennett’s law

378

Reconstructing Fiscal Federalism

partner in Calgary.) This was cronyism rebranded as expert, apolitical rule, so that businessmen would no longer have to skulk around in back rooms. Partyism was supposedly defeated because these men described themselves as anti-party. The position of finance minister was all-important. George Foster, now aged sixty-four, wanted his old job back, but lacked the new credentials that Borden sought. Far better one of the new millionaires, their credentials implicit in their millions. And who better, Borden mused, than Thomas White, who had taken such a “commanding position” in the campaign? The appointment reflected Borden’s debt to Toronto, to its premier and its financiers, both of whom pressed for White’s appointment. Whitney described him to Borden as “the keystone of the arch.” As for the financiers, Sir E.B. Osler advised Foster that the “financial interests were unitedly opposed” to him, while Edward Clouston at the Bank of Montreal singled out particular opposition from “one source – Banks recently established in London.” The reference could be to Max Aitken, who moved there in 1910, or to Dominion Securities, which had established a London branch under Peacock in 1907. The link to Dominion Securities was probably the more salient one: in Mackenzie King’s opinion, penned in his journal, “it is well known that White is Flavelle’s creature.”1 One admirer remarked that, within the Cox network, White was “particularly intimate” with and had a “tremendous admiration for” Flavelle.2 Historian John Turley-Ewart describes White as “a savvy politician who mirrored an ambitious Toronto grown wealthy.”3 Whitney, Flavelle, and White together illustrate the conjunction of progressivism and business. Whitney urged both men to take a more prominent role in politics and enlisted them in his reform of the University of Toronto. He persuaded White to accept Borden’s invitation into the cabinet when White tried to refuse.4 Flavelle refused all such invitations, but he was already a polarizing figure where White was not – finance capital was more shadowy than pork butchery. In the campaign of 1911, Flavelle drew more criticism than White because his William Davies Company was paying high dividends according to published reports and because its meat products were a concrete exemplar of the reach of big business into the ordinary household.5 Financiers didn’t come so closely into contact with unions as did manufacturers; they didn’t sell ordinary objects of daily consumption; and their relationships were designed for maximum complexity and invisibility. Nonetheless, where finance capital crossed into such more tangible realms, it soon met popular resentment, as in regard to taxation and railway rates. Growing middle-class consumption



Income Tax: Progressivism Triumphant 379

of insurance products also fuelled widespread discontent. In 1906, a federal royal commission on life insurance laid out the industry’s “occasional illegalities, huge doses of nepotism, and ostensible conflicts of interest at every turn … Cox and the other capitalists failed to understand the growing popular suspicion that no matter how loudly these men proclaimed their personal integrity, they simply could not be trusted. Their tight rings of companies and waves of self-dealing, whatever the outcome, were being condemned as irresponsible techniques of personal manipulation.”6 Business networks were coming to seem conspiratorial, an attack on transparent, egalitarian middle-class ideals. Thomas White was an extremely discreet figure, a reluctant public speaker and writer, who remains almost invisible to history. But his appointment was recognized at the time as a dangerous innovation – and not just by Foster’s supporters (who, canvassed by Foster, rained letters down on Borden). Long-time Conservatives resented the Liberal interloper; industrialists, progressives, and everybody outside Toronto resented the enthronement of Toronto finance capital. One Ontario businessman, watchmaker, and ML A , W.K. McNaught, predicted that White’s appointment would “arouse a bitter feeling and one of distrust in the Borden government amongst those who favour public ownership should he be appointed to any position in the cabinet let alone that of finance.”7 The Toronto Telegram and the Montreal Star similarly described White’s appointment as a “great betrayal”: “The creed of Mr White is hopeless from the standpoint of every Canadian who wishes to see this country governed at Ottawa in harmony with the spirit of progressive ideas and in freedom from trucking to the trusts and corporations that have this country by the throat.”8 “But what else could they expect?” asked the Montreal Witness. “The Big Interests filled the war chest, and the Big Interests must have the best that is going … the Big Interests are well represented inside the very citadel of power and there will be no lack of sympathy with those outside of it.”9 When White introduced a new banking act in 1913, the Toronto Telegram denounced the “complete surrender” to the “plutocrats” and described him as an able financier but completely out of touch with progressive public opinion.10 Montrealers were particularly alert to the concentration and westward shift of Canadian finance capital. Bankers had formed the Canadian Bankers Association in 1901, where, Walker boasted, a small handful of bankers on the executive council could intimately and easily formulate the “consensus of opinion of the bankers of Canada upon any public question.” Bankers from the periphery resented the association: in Nova Scotia, it

380

Reconstructing Fiscal Federalism

was described as an instrument in the hands of one man; in Quebec, as “a tool in the hands of three or four men who today control the whole of the finance of the country.”11 The election campaign of 1911 didn’t just push an organized investing lobby more centrally into the Canadian political arena; it also enhanced the industry’s internal organization. In December 1911, Toronto bond dealers pledged to form an association under the auspices of the Toronto Board of Trade; in 1916, with dealers in Montreal, they formed the Bond Dealers’ Association of Canada. Cox proteges presided over both branches – Gundy in Toronto and Wood nationally – while the Bankers Association, in weaker hands, declined.12 Montreal retained a greater share of the bond market, but Toronto was moving to overtake it, as it had already done with bank shares.13 Some expected to see R.B. Bennett, a Maritime businessman transplanted to Calgary, in the cabinet. Bennett was a progressive Tory who financed his own anti-corruption campaign in Calgary and won an overwhelming victory there, the only successful Conservative in the province.14 He did give the inaugural speech for the government that promised to bring “scientific” methods to the two great social questions: the tariff and the trusts. The first would be run by a “a band of trained experts capable of gathering at first hand full and accurate information,” aided by the “many young men” who had learned political economy in the universities; the second would also cede to knowl­edge in the form of a “tribunal that will limit the issue of securities by corporations, and will protect the public by enacting some measure by which they can know the real value of those securities.” Decades later, when Prime Minister Bennett needed reform credentials, he invoked those promises.15 Borden’s government could not sit on its laurels because Canada had two big problems. Western Canada was still alienated and the cost of living was still rising. Western radicals were bloodied but unbowed: “The protected and financial interests of Canada, in effect, declared war on us during the last Dominion election campaign and undoubtedly drew first blood.”16 They began to talk openly of western secession. Agrarian leadership disavowed secession: erecting new borders was not an obvious way to lower tariffs. But at conventions in the spring of 1912, secessionist talk spread like wildfire amongst audiences if not on podiums. Secessionists threatened a repetition of the 1885 uprising – itself seen as a congeries of bad eastern governance and western hardship – and they looked to sympathy from the people if not the propertied of eastern Canada.17 Eastern interests dismissed such poverty talk as unmanly. The Canadian farmer was sturdy and self-reliant, not “a poor creature, grovelling close to the



Income Tax: Progressivism Triumphant 381

soil, destitute of comforts.” Emulate the businessmen, urged Industrial Canada proudly. Businessmen failed all the time, losing bigger sums than farmers, “yet there is no outcry, no veiled talk of secession and no attempts at arousing class dissension. Business men usually take chances and lose or win like sportsmen.” The Grain Growers’ Guide replied that those were watered, speculative failures, easily spared because trivial when compared to the massive “tribute” extracted by the “protective robbery system” from the people.18 Where the Guide focused on fiscal transfers, the cma tried to insist that this was really a story of moral fibre. But it also stepped up the propaganda campaign with a “Made in Canada” train that set out from Montreal in May 1912 to advertise Canadian goods, and was successful enough to be repeated.19 The rising cost of living was also blamed on lack of moral fibre. People were buying above their station, and if men were guilty, women were guiltier, as Eve ever tempted Adam to covetous misdeeds.20 As in the 1890s, women were seen to take jobs from men and fritter away their earnings, and on both counts they depressed wages. “She would spend bigger pay on dress instead of saving it if she had it,” was one man’s view of the woman worker in 1912. The Toronto Star journalist who recorded that opinion, Maud Petit or Videre (her pen name), drew on her own experience as an undercover factory worker when she responded that “because a few girls spend unwisely is no sufficient reason for underpaying girls in general.” Her own first purchase was a revamped wardrobe that she starved herself to buy, humiliated by the drab clothes she had thought would pass for working class. But her larger message was that young women could not get by on existing wages. Take the average girl in a boarding room without cooking facilities: “When a girl on $5 a week tells you she gets her meals at restaurants, I have found that what she means generally is not that she gets twenty-one meals a week in a restaurant, but that she has from seven to fourteen. For the rest she buys a banana or some buns. In other words, to use the expression current among these girls, she ‘just takes something.’” Asked, “What do you consider a living wage?” Videre had no final answer. One worker must dress neatly; another with a more strenuous job spent more on food. “One firm in this city has within the past year fixed its living wage at $6.00 a week. Personally, I found I could E X I ST on $6.00 a week. I could not save on it, either for the proverbial rainy day or sickness, or for the future, when the worker should be unable to work.”21 Similar arguments animated the Halifax press in December 1912, after a letter argued that poorly paid factory women lived extravagantly and immorally. Letters signed

382

Reconstructing Fiscal Federalism

“A Working Girl” or “Unemployed Working Girl” rebuffed the complaints and spelled out just how hard it was to live respectably and independently on $3.50 to $4.00 per week.22 Middle- and working-class women painstakingly insisted on their worth as “the spending power and the home educator” and “natural free traders.”23 But they also produced irreproachable bodies of factual testimony wherein penny-pinching consumers saw themselves well described. They argued that poverty overpowered moral fibre in the “racked and poverty burdened woman dwelling in a city tenement” where there was “no fresh air to be had and barely a blink of the sun, not a mouthful of unpolluted water to drink, nor sufficient bread to eat because taxes are too high, wages too low and liquor too near for her husband’s temptation.”24 Women, like westerners, complained that lack of political representation worked to impoverish them. They found many allies, such as John Clark Murray, a philosopher at McGill University, who declared that women needed the vote because they, too, suffered from poverty.25 Some highprofile activists were single taxers: Nellie McClung and Rose Henderson advocated its claims.26 In 1914, the Single Tax Association of Canada supported the Canadian Suffrage Association.27 In Hamilton, in December 1913, the Equal Franchise League unanimously expressed its “vital” concern with the cost of living and resolved to co-operate with the Canadian Household Economic Association to promote better market conditions. Hamilton Labor mla Allan Studholme advocated both the single tax and women’s suffrage and introduced bills to that effect. During the ensuing public debate, one “rural woman” letter-writer advocated enfranchisement because women were being forced into commerce and industry, so that “the question of taxation has therefore become a very real one with hundreds of women.”28 In Toronto, a women’s “crusade” against high prices had “come into the field to stay.”29 Women advocated statistics as well as suffrage and tax reform. Elizabeth B. Mitchell, who wrote up her tour of western Canada on the eve of the First World War, reprinted several pages of findings from a committee on wages and the cost of living generated by Manitoba Methodists and presented at a conference in Brandon in 1913; she also noted the pioneering slum investigations by J.S. Woodsworth (who became director of the Bureau of Social Research set up in 1916 by the prairie provinces collaboratively, but was terminated in 1917 when he objected to military registration).30 Women pushed direct engagement with poverty more squarely into the federal political sphere in such groups as the National Council of Women of Canada (n c w c ). On the eve of the First World War, Carrie Derick of McGill



Income Tax: Progressivism Triumphant 383

University, Canada’s first tenured female academic, gave a ringing address on the need for social politics: “A few years ago it was only foreign questions that were discussed, but now social matters were to the fore. The question of housing the poor, for instance, was essentially connected with the home, as was the question of sweated labour, which involved thousands of women and children. The power of woman’s vote in politics would be to glorify the value of human life – the real property of the women who had brought them into the world – as opposed to inanimate property, which men from the earliest times sought to acquire and thought about. It was a question of property versus human life and honour, championed by women.”31 In 1917, Derick broke up a fierce debate at the n c w c on the relative merits of federal income versus federal single tax. That was also the year that Cape Breton coal miner and unionist J.B. McLachlan invited the “Wives, Mothers, Sisters and Sweethearts of Workmen” to send him details of how they maintained a family of seven on a daily wage of $3.50, and he published the responses in the Sydney Canadian Labor Leader. The results showed a heavy reliance on potatoes, flour, and oats, and a lack of fruit and meat, let alone such pantry items as onions, seasoning, and molasses. Based on the evidence, McLachlan described workingmen’s wives as “the best financiers in the world.”32 Agitation around the rising cost of living, or “R.C. of L.,” bridged class, regional, and ethnic divides. The economy might be blamed for the rising costs and shrinking real wages, but taxes clearly exacerbated the problem. Organized labour, which insisted on the connection, was on the increase, especially in western Canada, which accounted for one-third of union membership in 1911.33 Such grievances were well aired before the British Columbia Royal Commission on Taxation that held hearings that year. James H. McVitty, a machinist and member of the Vancouver tlc, argued that the high cost of living made the poll tax a hardship. One fellow workingman had received for his first paycheque a nickel and a poll tax receipt. McVitty also criticized the income tax as hitting employees too hard and employers not hard enough. In Rossland, the Miners Union documented the “actual cost of living” for a family of five so as to convey the impact of the tariff: wages were $84.50 and expenses were $83.50 each month. One miner set it at $72 to $78 for the average family, “a bare existence,” and urged abolition of the poll tax. Employers concurred. A land company accountant in Penticton and a merchant in Cranbrook urged the exemption be raised to $1,500; a timber merchant in Revelstoke urged $3,000, with further deductions for children. But other witnesses insisted that no man was too poor to pay an annual $3 poll tax.34

384

Reconstructing Fiscal Federalism

Where Fielding still looked to tariff reform for political salvation, Laurier made the cost of living the focus of his attack on Borden.35 Everywhere, a sea of data confirmed the testimony of struggling consumers. The Ontario Bureau of Industries showed long-term increase, as did the Canada Year Book, published from 1867. American information, much marshalled during their tariff debate, further fuelled Canadian findings. Borden and Bennett had both argued that whereas Americans had good price data, Canada did not.36 Canadian interests set about finding their own data. In 1912, the Toronto Board of Trade produced its report blaming the high cost of living on abnormally high rents.37 All eyes were on Borden to resolve this new, acute, and national problem. All the boasting of efficient business methods that would replace mediation with managerialism worked to create new expectations of the state. According to Tocqueville’s analysis of ancien-régime France, the monarchy had created a centralized, bureaucratized state that raised hopes of “fair” taxation but failed to deliver it. That frustration had not been the only avenue to bloody revolution, but anyone who had read their Tocqueville knew that it had been an important one. Accusations of “fiscal feudalism” began to stretch beyond metaphor towards ominous historical allegory. Borden and his tycoons needed to find some ostentatious way to respond to the mounting grievances. Even if moral character were to blame, what could businesslike administration do about that? There had to be a scientific intervention. Thus did protectionists begin to advise consumers to shop scientifically: for example, they should buy in bulk or directly from producers. In November 1912, the president of the Ontario Vegetable Growers’ Association blamed middlemen – grocers and butchers – for the high cost of living and urged everyone to lay in their full winter stock of vegetable purchases in advance.38 The poor could not afford to follow this advice; the middling classes, many of them retailers, could hardly welcome the vision of a public too poor to afford butchers and bakers. In 1912, Borden named a tariff commission – an expert rather than a public one, designed to administer and / or advise rather than to listen to public opinion. This fulfillment of his promise to take the tariff out of partisan politics quickly fell prey to party politics. When the House of Commons reversed Laurier’s naval policy, the Liberal-dominated Senate overturned the tariff commission legislation. It went further early in 1913, holding some limited public hearings on the cost of living, and began to threaten more far-reaching public consultations. By the late autumn of 1913, Borden’s government was severely on the defensive.



Income Tax: Progressivism Triumphant 385

Apparently impotent to resolve the downturn and with revenues in full decline as imports tapered off (revenues fell by $5 million in the year ending March 1914), it was beginning to look like a train wreck. Railway woes compounded White’s problems: the Grand Trunk Pacific and the Canadian Northern were staggering towards insolvency and begging for multi-million-dollar infusions to keep both themselves and their financiers solvent, while labour and farmers denounced any prospect of a bailout. According to Tim Cook, “with the nation in a recession from early 1913, the Conservatives seemed stumbling hopelessly towards their defeat. There could be few in Canada, save the die-hard or delusional, who believed that Laurier would not return from the electorate’s light spanking, and again right the ship of state.”39 In November, Stephen Leacock leapt to the defence of the Borden government with an address to the Canadian Club that began with a joke: “Why even the cost of speaking has gone up. I remember the time when you could hear the best politicians in Canada talk for two and a half hours for fifteen cents and now you have to pay 75 cents to hear me talk for half an hour.” Leacock insisted that neither extravagance, nor protection, nor monopolists should be blamed for the rising cost of living. It was the fault of the gold standard. Gold was being overproduced and “cheap gold means dear bread.” But “the advancing cost of living was becoming a serious matter for the ordinary people, and the Canadian government, thought Prof. Leacock, might at least appoint a commission of inquiry, an honest commission, with full power to investigate and to recommend.” He pointed to the American Industrial Commission of 1902, which had given Woodrow Wilson “the driving power in his policy of reducing the tariff in the States.” Even if the tariff wasn’t to blame for high prices, a lower tariff might lower food prices. But Leacock wanted administrative reforms rather than a partisan drubbing that promised to reinstall Laurier. “Prof. Leacock said he hoped the question would not be made a political issue. There was recent evidence that one party had intention to make the slogan ‘reduce the cost of living.’” Canada, according to Leacock, needed fewer slogans and more facts.40 Leacock’s remarks fanned rather than quelled the flames of a debate felt as powerfully in Montreal as in the west. Local headlines on 2 December, “High Cost of Living Overshadows Every Question of the Day,” underscored demands for federal investigation by local, federal, and imperial politicians, and the Trades and Labor Congress of Canada (tlcc).41 Montreal newspapers were in ferment: Fielding became editor of the Montreal Daily Telegraph in October, only to quit when he discovered Hugh Graham

386

Reconstructing Fiscal Federalism

secretly owned it along with the Herald; the new Montreal Mail, owned by M.E. Nichols, also revealed its Conservative leanings slowly over time. French-Canadian papers and pundits, Liberal and Nationalist alike, enthusiastically joined the attack on the cost of living, or “la cherte de la vie,” always with the language of big business and controlling trusts. In September 1913, Le Pays, where Godfroy Langlois was writing with a new, overt appeal to class, attacked a business-controlled government for pushing prices higher than even American trusts dared.42 In December, Rodolphe Lemieux, minister of labour under Laurier, gave an address to the Young Liberal Association in Montreal that blamed the high cost of living on trusts and Borden’s inaction, while Le Devoir published fifteen articles by journalist Georges Pelletier under the heading “Why the cost of living is high,” that blamed immigration, exports, taxes, land speculation, economic intermediaries, and extravagance, and denounced Leacock’s gold theory. Henri Bourassa broadcast the findings.43 Le Canada remarked that all Borden’s promises of better fiscal management had failed: White had done no more than lower duties on dried and evaporated bananas from British possessions.44 At a banquet in Montreal in December 1913, Fielding declared that if he were still running finance, there would be a commission touring around Canada to find out “from the producers, the consumers, working men, the manufacturers and the citizens generally what could be done to reduce the high cost of living. We have done that before and we would do it again.” The tax could not be administered apolitically. “The tariff was a tax and the taxation of the people could not be turned over to any irresponsible commission.” Laurier also promised to send cabinet ministers “to go from one end of Canada to the other” and asked: “Are we to be the spectators of want and hunger in this country?”45 George Foster replied in a speech at Smiths Falls, Ontario, where a byelection was under way. Everyone knew, he declared, that investigations were futile, serving only to postpone problems better addressed directly. Foster (disingenuously praised by the Gazette because he “refrained from touching on political matters, devoting most of his attention to the cost of living question”) had a different federal solution to the problem: farmers could use the new parcel post to mail butter directly to city customers in 10- to 20-pound packages, “thus saving the grocer’s profit, to which is added an apportionment of the grocer’s high rent made high by the speculative land values.”46 Liberal papers ridiculed Foster with front-page headlines – “Government refuses to probe high cost of living” – and observed that, even with such investigators as Leacock and Short [sic] at its disposal, the government feared what it might discover.47



Income Tax: Progressivism Triumphant 387

Foster perfectly channelled mid-Victorian suspicions but was out of step with new political expectations. The movement was away from the kind of fiscal rigour wielded by an Anglin or an Annand in 1865 – dry balance sheets devoid of any sociological rigour – and towards statistics that conveyed sociological facts and relationships. Municipal reforms in that direction had made huge gains by the eve of the First World War. Statistical analysis was a staple of the meetings and journals of municipal unions and of the Toronto Bureau of Municipal Research, established in 1913 on the model of the New York bureau, which fought hard for fiscal facts and literacy. A key founder of the bureau was S.M. Wickett, Mavor’s protege, who had campaigned for cost accounting for years, in recognition that the extraordinary growth of municipal debt – 50 per cent higher than provincial debt – was “one of the great industrial facts of our national life. Municipalities are a series of great joint stock companies.” But they were practically “going it blind, leaving both themselves and the public in the dark.”48 Wickett channelled advice on accounting from Walker, effectively parlaying the authority of finance capital into municipal reform in Toronto. Old-fashioned, glad-handing politicians fought hard to retain their powers. In 1913, controller Tommy Church opposed a New York– style civic survey of spending: “The American bureau is made up of theorists. We want to rid our town of Yankee experts. They have caused us considerable cost already.”49 Wickett died in 1916; Church became a long-serving mayor.50 Nonetheless, in 1916, Toronto acquired a financial controller: a “well known authority on securities and investments,” Thomas Bradshaw. Bradshaw was another Cox-network insider and his career reflected the growing relationships between the financial sector and the state. He had risen through the ranks of, first, North American Life and, then, Imperial Life, one of the Cox companies. He was also a partner at Wood Gundy, and at another eponymous firm founded by A.E. Ames, Cox’s son-in-law. Bond dealers had a vested interest in reliable municipal accounting. To wit, Wood Gundy published a review of municipal statistics that, in 1917, reached 361 pages.51 As financial controller, Bradshaw modernized Toronto’s financial bureaucracy and obstructed Church’s schemes to increase its debt. In January 1918, he was put to do that work nationally, when Thomas White placed Bradshaw in charge of scrutinizing provincial, municipal, and large corporate loans, to ensure they could not weaken federal issues. Wood congratulated White on the appointment.52 Finance – its methods and its men – was taking hold of important elected and appointed offices in the different Canadian political jurisdictions. It

388

Reconstructing Fiscal Federalism

was also taking charge of reform. The Bureau of Municipal Research, under Horace L. Brittain’s energetic direction, eschewed the adversarial tone of muckraking journalism and instead built up collaborative relations with fiscal officials like Bradshaw, whose reports he praised. Brittain produced scores of short pamphlets that turned indigestible municipal balance sheets into short, readable tables, with short, boldfaced texts to explain them. Some showed changing tax burdens over time; others compared different tax regimes. One such gave population, debt, and tax statistics, overall and per capita, for sixteen cities on the eve of the war. It showed per capita annual taxes at $14.56 for Montreal, $22.14 for Toronto, $23.15 for Winnipeg, $14.85 for Hamilton, and $11.52 for Saint John; per capita debt was, respectively, $103.36, $108.43, $177.11, $77.90, and $65.78. From such data, often represented with tables, pie charts, and bar charts, could be claimed objective knowl­edge as to the normal versus the abnormal, the fair versus the unfair. There were also catechism-like questions and answers: “Is there any essential difference between Private and Public Budget-Making?” When is a tax rate not a tax rate?” “Are you an average citizen? Is your family an average family [i.e., one that took forty-one days to “work out” its civic taxes]?”53 The project aimed to professionalize accounting and to get the new standards squarely before the public so as to “educate it up.” Financialization and public education marched hand in hand. It is possible to see democratic outreach in that project of public education, as one American scholar does: “the urban experts of the Progressive Era sought to share their knowl­edge with the average citizen … Critics who see experts as elitists seeking to create a passive and deferential mass public miss the democratic quality of this emphasis on civic education.”54 But it is also possible to see hegemonic management of public opinion that would tend to keep the loans sound and the interest payments flowing. Toronto became a model and resource for reformers elsewhere. When the Vancouver Board of Trade pushed for municipal and provincial fiscal reforms in 1918, it looked to comparative cost accounting and an investigation by Horace Brittain.55 Uniform accounting generated statistical and social facts. The new accounting of debt, taxes, and cost of living reconfigured understandings of social and economic relationships. By comparing past and present, east and west, and rich and poor, a huge range of stakeholders – public, private, and academic – could formulate new, empirically backed definitions of fairness. Liberal agnosticism was withering on the vine. Because Macdonald and then Borden had claimed expertise, their critics had to do the same. They formulated autonomous criteria of knowl­edge and



Income Tax: Progressivism Triumphant 389

targeted identifiable state ignorance. As the Moose Jaw News remarked in December 1912, “the phenomena of high prices is of so striking and complex a nature that any new information likely to lead to a better understanding of it cannot but be of great benefit. There is an abundance of general opinion; but positive knowl­edge is required by those whose business it is to provide a remedy.”56 Thus, the rising cost of living played to a statistical outlook upon public life that was reshaping governance paradigms. It translated civic reforms into federal politics and lent the tariff the visibility of a direct tax. Social-statistical facts did not exist in nature; they had to be generated and authenticated by mechanisms of legitimation. They had to look like scientific facts according to new standards of science gaining ground in and out of government in the early twentieth century. The Geological Survey was still going strong, so were experimental farms, and fisheries and forestry conservation, largely decentralized within different government departments and in university campuses more broadly. But a countervailing centralization would soon be underway with the creation of the National Research Council in recognition of the new claims of science to state support. Scientific knowl­edge was a useful ally to the state, especially in regard to food, munitions, and public health. Doctors were on the cusp of a transformation in medical knowl­edge that, while not very good at actually curing illness, was more successfully producing new programs for insuring and administrating disease, nutrition, sanitation, and death itself. Paul Starr argues that gatekeeping, not science, was the more important factor in political support for medical professionalization at the turn of the twentieth century, but the claims of ­scientific underpinning were strategically useful and widely emulated in other knowl­edge-based fields.57 Some of the new scientific-statist orientation did not easily transfer to political economy but some did. Academic economists, with their objective and mathematical measures of prices and regression, were parlaying science into legitimacy. They used their sophisticated networks to generate and authenticate scientific facts and fend off rivals. But in the pre-war era, their hold on the public was far from overwhelming. The federal state was also at a disadvantage in the jockeying for intellectual and political control of the new sociological knowl­edge. It had remarkably little apparatus for generating or authenticating facts, so beginning with Mackenzie King and Adam Shortt, the state set about acquiring it. The political party was even weaker by the new standards. Its us-versus-them binaries could not be translated into sociology because party memberships were

390

Reconstructing Fiscal Federalism

socially heterogeneous. Its mechanisms of social knowl­edge – the poor man in need of a sack of flour; the rich man who would pay for it – were too rooted in personal connections that could not be formally translated into the sort of textual knowl­edge that civic reformers generated. Anything that could not be turned into statistical tables or other kinds of inscriptions did not meet the test of objective science and could not usefully defend policies.58 Businessmen and reformers had the most to win or lose in the cost-ofliving debate. They could quantify their contributions as producers and consumers and draw on extensive social networks to create political momentum for their facts. Business efficiency was at a premium, but so, too, was labour (including farm labour) and consumption. Ironically, the demands for scientific economic knowl­edge initially empowered not the knowl­edge-producers but the public. New facts tend to follow accusations of ignorance, and the public, however unable to produce uncontested facts, could prove the fact and culpability of government ignorance. Borden must create mechanisms to study the rising cost of living or he was “ignorant” of it. Westerners doubled up on the accusation: eastern ignorance of western poverty was politically motivated, carefully cultivated by a government for whom, the Toronto Star argued, knowl­edge was “inconvenient.” Businessmen quickly discovered the limitations of their ability to reply. Early in 1914, the Toronto financiers, like Montreal’s elite two decades earlier, offered y mc a lectures where “such authorities as Messrs J.W. Flavelle, J.H. Gundy, D.B. Hanna, John Mackay, James Mavor and Sir Edmund Walker” offered a “finance forum … for the benefit of young men and others who wish to learn from specialists and experts.” An example of the practical knowl­edge on offer was given in a story of an eminent capitalist who extinguished candles during long conversations.59 With E.R. Wood as president, the Toronto ym ca was chockablock with Cox men, including Cox himself, Flavelle, Walker, Gundy, Bradshaw, and A.E. Ames.60 But Samuel Smiles–style homilies could not debunk the convergence of political grievance, statistical confirmation, and government drift. The accusation of drift was not new (“Whither are we drifting?” political cartoonist Bengough had asked in 1873), but it newly captured the studied ignorance that persisted even in the academically staffed Department of Labour.61 The rising cost of living could not be gainsaid; it must be governed. Because rents rose fastest of all, especially in the cities, the single taxers looked prescient. Notwithstanding the negative data from western Canada or the debunking efforts of academic economists, the single tax



Income Tax: Progressivism Triumphant 391

had irreversibly politicized rents. Even an old-school Tory like George Foster could not but recognize that basic logic in speaking to the cost of living. The attack on “unearned,” accumulated capital was morphing to strengthen the left-wing critique of inequality through the economy as a whole. The labourer on strike, the farmer who couldn’t make ends meet, the white-collar worker forced out by the expenses of the city – such men and women were everywhere pushing against the political centrism that had so long defined Canada. Wealth must pay a ransom to preserve itself, lest it be swept away. Victorian political economies foundered on the growing consensus that if the state did not tax wealth, using the new techniques of fiscal sociology to identify that wealth, then it was surely taxing poverty. Ignorance was no longer an acceptable excuse. The frustrations of the west and east were now converging with frustrations in central Canada, the fortress of protectionist political economy and big-tent political centrism, as Newton Rowell and E.C. Drury brandished the single tax to demand broader reforms. And where Whitney stood “like a rock” against the single tax, he was deeply invested in responding to the agitation around the cost of living. In 1910, he called for a Dominion-wide investigation into the cost of living, and in the spring of 1913, he wrote to Frank Cochrane demanding that some action be urgently taken.62 Borden was withering under the attack. Government revenues were in free fall and government debts looked unsustainable. The capitalists running the state seemed to be making a botch of it. But Borden dared not consult the public for fear of stoking popular demands for reform – of such things were cahiers de doléances made. The response must be less demotic, which left only expertise. In mid-December 1913, just days after Foster had pooh-poohed an investigation, Borden announced there would be an investigation within the government, staffed by the minister of customs and two civil servants, the Department of Labour statistician R.H. Coats and C.C. James from Agriculture. The commissioners would take instructions from and report to Cabinet members, and there would be no public sittings. Critics saw a “farce.” The Toronto Star predicted a whitewash with “a couple of clippings” from pro-tariff American newspapers. The Quebec Telegraph saw a cover-up rather than an investigation. The commission was under “direct government control”; therefore, if it indicted the tariff, as surely it must, it would be censured. Moreover, the report would probably not appear until 1915, after the next general election, with bulky blue books following a few years later.63 The Telegraph was prescient. The commission did indeed report in 1915. By that time, of course, everything had changed. Canada was at

392

Reconstructing Fiscal Federalism

war. The First World War amplified all the pre-war fiscal pressures and precipitated Canada towards progressive income tax. The government suddenly needed much more money and a more sharply defined conception of the public good. Before the war, property was the ultimate justification for most policies; during the war, it became more means than end, desacralized by comparison with the human life being lost in horrifying quantities. Many people saw the old binary of the people versus the propertied in newly salient form, as an opposition between the healthy bodies of the younger generation and the accumulated wealth of the older generation. Once young men began to die, people began to demand some comparable sacrifice from the well-to-do. The Canadian government continually needed more revenue to run the war effort, but pragmatic demands for revenue were not what gave momentum to a growing public demand to conscript wealth alongside manpower. A highly organized, articulate, and focused public demanded to see wealth taxed redistributively, on grounds of economic justice, emulating new fiscal orthodoxies in Britain and the United States. But Canadian fiscal conservatives resisted redistribution not just at the outbreak of war but almost till its end. Thomas White opposed income tax right up until the summer of 1917, when he did a sudden about-face and introduced an Income War Tax Act that has never been repealed. From 1917, the Canadian government would be invested in fiscal sociology, committed to identifying and discriminating between different kinds of property and governing the relationship between wealth and poverty. Robert Bryce, long a federal deputy minister of finance and historian of Canadian finance, described the Act of 1917 as “probably the most important financial innovation in the history of the country.”64 The story of income tax in Canada has been very well told as reflecting a new, wartime spirit of patriotism and sacrifice, as a rupture with the corruptions of the past.65 But if patriotism was a necessary factor, it was not a sufficient factor. There were also underlying continuities with old resentments. In some important respects, 1917 formed a bookend with the original project of Confederation: on both occasions, a fiscal crisis reflected a deeper social crisis. In 1914, British rearmament and provisioning, largely paid for by British loans, eased the immediate Canadian fiscal crisis.66 But the cost of living and problems of relief only intensified. Much ordinary production dropped, resulting in spiralling relief bills in cities across the country – and a bad harvest that fall made things worse. When the Union of Canadian Municipalities met, Morley Wickett, now an alderman, signalled Toronto’s critical overdraft problem, while Montreal alderman Abraham Blumenthal



Income Tax: Progressivism Triumphant 393

described serious food shortages.67 The next spring, the mayors met in Ottawa and, accompanied by H.M. Tory, president of the new University of Alberta, pressed Borden for aid. Authorities were bedevilled by the need for aid among families of soldiers or other war workers, as governments and employers fought to keep wage bills down. But families suffered, and the federal state was at a loss as to how to measure want and provide relief, having left such things to cities, charities, and political parties. Borden turned to one of his expert businessmen – and who better than H.B. Ames, with his experience of business, municipal politics, and poverty. Reviving an earlier relief program of the South African War, Ames established the Canadian Patriotic Fund, which ran a national publicity campaign urging relief contributions for those soldiers’ families suffering from want. The experience was often a painful one for those families, who resented inquiries into how deserving or undeserving they were. The Canadian government was slow to shed Victorian moralities.68 This was a new kind of poverty. Classic, mid-Victorian poverty, the kind that worried politicians at the time of Confederation, was closely connected to pauperism – a moral category used to describe poor people unwilling to acquire work disciplines. Wartime poverty, by contrast, reflected shortcomings in state economic managerialism. If poverty before the war had a particular connection to rents, poverty during the war had a particular connection to food. The danger was food shortages, which Canadian governments everywhere stoked with a slew of campaigns that urged: “Food will win the War.” That terrible harvest of 1914 created widespread concern in Britain and Canada as to whether British food needs could be met. A recent study by Mourad Djebabla-Brun shows that provincial and federal governments in Canada, especially in Ontario, Quebec, and Saskatchewan, seized the opportunity to expand and celebrate agriculture, insisting that patriotism and profit could thereby be combined.69 They warned of shortages, not to say famine, and amongst other initiatives, urged allotment gardening and enlisted urban workers to help with harvests. But food prices continued to rise, well beyond the rate of wage inflation. Hard-working people, including munitions workers and soldiers’ families, found it difficult to keep food on the table. Moral accusations could only go so far as a response to the problem of food shortage, given the ubiquitous government propaganda that proclaimed it a consequence of the war and susceptible to management. If people could not eat, the state was doing a bad job running the wartime economy. If people could not eat because the state was systematically enriching big business and impoverishing the poor, whether by regulation

394

Reconstructing Fiscal Federalism

or taxation, discredit was the more complete. The federal government could no longer claim that taxation and poverty were distinct realms. Poverty was no longer accidental, and the state must henceforth identify and govern it. The change occurred in 1915 when the report on the cost of living finally came in. There were actually two reports: one, the predicted anodyne version, and the other, a monumental treatise by Coats, who refused to sign the first. Coats, it will be recalled, had been agitating for better economic statistics for more than a decade. He seized the opportunity to put Canadian statistics on a firm foundation, and his landmark report irreversibly conjoined socio-economic reasoning and the federal state. Coats understood his mandate as: to generate facts about and an explanation for the cost of living. The facts must be social facts: “From a broad point of view, the ‘cost of living’ involves the whole gamut of relationships between incomes and spending.” Investigation could not list isolated factors but must scrutinize “their relations and influences inter se; for they are not separate and isolated phenomena, but are bound up inextricably with each other, and constitute little less than the entire economic activity of the community.”70 One thousand pages of carefully tabulated statistics later, Coats ventured a few careful conclusions. He confirmed that real prices had increased, especially food prices, and Canadian food prices more than British or French. That seemed so counterintuitive that it required careful unpacking. Was this a story about monopolies, trusts, and speculation? The answer was yes and no. Prices, Coats explained, reflect the amount of money available: the more money, the higher the prices. No country had absorbed so much outside capital in recent years as Canada with its “last, best west,” rising immigration, and rising exports. There was also a rising standard of living to consider. Coats reframed the classic binary between luxuries and necessities to make it empirical rather than moral, using a distinction by Alfred Marshall between a “standard of life” and a “standard of comfort.” He found that per capita consumption of common food had increased (beef was up 10 per cent, wheat and flour 50 per cent, dairy 30 per cent, coffee 100 per cent, sugar over 40 per cent), while per capita consumption of luxuries (including tobacco, silk, jewellery, and perfumes) had gone up much more. But not all luxuries were bad: spending on such “higher” goods as education, church, and insurance had skyrocketed. Taxes had risen by 21 per cent in real terms, but with corresponding gains in state infrastructure that benefitted distribution. Here was the answer to moralizers nostalgic for mid-Victorian austerity, like the Canadian Grocer, which called for “a recurrence of cabbage soup and the frequent appearance of corn-meal mush and the total absence of



Income Tax: Progressivism Triumphant 395

such aristocratic items as butter and eggs.”71 Public and private luxuries became necessities according to a logic of progress rather than decline. But the progress was not equally distributed. Coats identified a twotiered economy, where the rich improved their condition much more than did the poor. Rising rents were at the centre of the divergence. The well-todo were better housed than they had ever been, and the poor worse housed: “The unskilled and immigrant classes in the larger cities are crowded together to a degree that is new in the history of the country.” Some workers were making better wages, but labour as a whole was taking home a smaller slice of the economic pie and spending more on rent. Meanwhile, the expanding financial economy was soaking up investment capital and redistributing it unevenly. Coats produced a table to show what happened to investments between 1900 and 1913. Bondholders were worse off than they had been and preferred-stock holders had improved marginally. But common-stock holders – financial insiders – were getting rich, as their rate of return increased from 5 to nearly 9 per cent. “In this margin of great profits in the operations of the financial and commercial classes – including real estate dealers, promoters, brokers, agents, and all who are in essence if not actually holders of stocks as opposed to bonds – is to be found the root of the ‘extravagance of the age.’”72 Coats concluded that business and land speculation required more regulation and transparency. But the big picture was increasing consumer demand that needed state intervention in order to be met. Coats depicted an economy that systematically precipitated people in and out of poverty according to large-scale causes that generally developed the country but could not protect working people from economic downturns, falling real wages, and prohibitive prices on necessities. The state must protect them, using modern tools of statistical analysis to identify and respond. Coats wrote moral fibre out of the story, replacing it with measurable causes and effects. His was a mechanistic economic universe, rather like the mechanistic physical universe about which Pierre-Simon Laplace, when asked by Napoleon where God fitted in, could say: “I have no need of that hypothesis.” Philanthropy was a variable, not a solution: Coats’s was a wholly statist account. If he could “know” the problem of poverty, no state could claim either ignorance of or indifference to it. The science of government was no longer the science of wealth. It had become reconciliation of wealth and poverty, production and consumption. Tax policy could not long remain outside this expanded scope of governance. Far from censoring Coats’s findings, Borden was highly motivated to publicize them. He could absolve himself of any responsibility for economic problems: “It is useless to say that the Government could control

396

Reconstructing Fiscal Federalism

the cost of living, because the present conditions were totally due to the war.” But where economic deprivation occurred, Borden must know and respond with mechanisms to regulate and redistribute “excess” profits.73 Because statesmen and businessmen were working together to set prices, the consuming public had to be convinced that it was paying fair prices. But real wages dropped as much as 80 per cent during the war.74 Workers wanted better pay, but they also wanted concrete reassurance that low pay and high prices served the war effort, not the business interests. Cost accounting was one solution that was immediately grasped by Allied governments, and by academics eager to be useful. The London School of Economics began to teach cost accounting in 1918.75 Cost accounting suggested technical, businesslike solutions that manufacturers had long insisted would quell labour’s demands: “If the workmen of our factories were only given an opportunity to examine the cost sheets, and to see the number and size of the amounts therein recorded, their views as to the importance of productive labor relative to other items of expense would receive a rude shock.”76 Now cost accounting would be put to use to bring some measure of rigour to the ubiquitous debt crises seen at all levels of government. Cost accounting propelled the wartime tax debate towards income tax. All the old arguments against income tax – that it was fair in theory but inquisitorial in practice – became arguments in its favour. The inquisition, as pseudo-knowl­edge and unchecked power, was the antithesis of the modern state’s informed and consensual power. Taxes had always signified both consent and knowl­edge in principle because they were voluntary transfers of property and the possession of property was the only practical test of knowl­edge. Now, intrusive taxation promised to reconstruct both knowl­edge and consent by piling up data and bureaucratic reach. The war significantly expanded both reach and data, and the two mutually legitimated one another. Empirical knowl­edge finally began to enter the federal government more centrally, not as a side branch of scientific commodity management but as a way of organizing the state itself. The new university-trained middle classes and their teachers could scarcely imagine a state being too inquisitorial, so desirable were the new standards of informed policy – not to mention the new job opportunities in upholding them. Academic economists had much to say about wartime finance. As the war stretched on, rising taxes became, they observed, more regressive. A.C. Pigou, who had succeeded to Marshall’s Cambridge chair in 1908, argued the case in a popular pamphlet in 1916: even if the pre-war tax



Income Tax: Progressivism Triumphant 397

burden was fair, new demands must be proportionally adjusted. A “quadrupling of the objective burden on a poor man will increase the subjective burden of sacrifice laid on him in a proportion higher than that in which the quadrupling of the objective burden on a rich man raises his subjective burden.” The higher the burden, the higher must be the upper rates, according to marginalist precepts. Edgeworth praised the pamphlet as much for its attempt at popular outreach as its arguments for steeply graduated taxes.77 Canada’s budget almost exactly quadrupled during the war, noted one Pigovian scholar at the University of British Columbia in the early 1920s: a pre-war budget of $185 million peaked at $740 million in 1917, and debt quadrupled to $1.2 billion.78 Pigou’s arguments hearkened back to Adam Smith, who had argued that because war debts benefitted bondholders, wars should always be funded on a pay-as-yougo basis, both to spread the burden equitably between propertied and poor, and to imbue the propertied classes with an interest in peace. Fair taxation was a useful check to militarism.79 Pigou revived those arguments when he denounced loans for benefitting the investing classes and driving up prices, and he urged taxes rather than loans. All the major combatants had recourse to loans, but Canada anomalously so. Britain and the United States were run by fiscal progressives who had already introduced graduated national income tax before the war and who drove up the higher brackets during the war to cover about a third of costs. Britain began in 1914 to put supertaxes on “unearned” incomes, and by 1917, British delegates boasted that taxation had become a “great leveller.”80 Once the United States entered the war in April 1917, Woodrow Wilson immediately recommended dramatic increases to the federal income tax. In 1913, he had introduced it with a top rate of 7 per cent; in 1917, determined to make the “current generation” pay for the war, he raised it to 67 per cent, and in 1918 to 77 per cent.81 Income tax accounted for 10 per cent of American federal revenues before the war and 80 per cent in 1917. In making taxation pay the costs of the war, Wilson was defying the advice of the progressive economists: Borrow! advised Seligman in April, Bullock in May, and Adams several months later.82 Wilson, a former president of Princeton with a PhD in political science, had his own ideas. Canadian taxation was uniquely regressive before the war. Oscar Skelton argued in 1912 that “there is probably no civilized country to-day in which the rich man pays a smaller proportion of taxation than in Canada.”83 Canadian customs provided, according to one estimate, twice as large a percentage of revenues as in the United States and three times as

398

Reconstructing Fiscal Federalism

large a percentage as in Great Britain.84 Even Tsarist Russia was considerably less regressive than Canada: there, progressive-minded officials had gradually been creating apparatus to measure individual and corporate income and to tax it directly. According to Yanni Kotsonis: “Any estimate will show the ratio of direct to indirect taxes in Russia to be extraordinarily low compared with that of other Great Powers, with Russia occupying the one extreme of a continental gradient and Britain the other.” Where Britain taxed at a ratio of 1:1, Russia in 1913 recorded “15 per cent direct taxes to 81 per cent indirect taxes.” In Canada, by contrast, the “direct taxes” column of J.H. Perry’s retrospective tables remains obstinately blank until 1917.85 Thomas White tenaciously upheld John A. Macdonald’s principled stance against direct scrutiny or calculation of the wealth or poverty of individual citizens or corporations. He protected the privacy of the citizen against the growing expert knowl­edge and administrative capacity of the modern state. The state remained liberal, the merchants of wealth unscrutinized, and expert capacity remained private not public. But a state that could not “know” wealth must, when in shortfall, necessarily borrow it and repay with interest. Canada was uniquely under the influence of bond dealers, men on an intimate footing with the minister of finance who continually reminded him of the needs and interests of their sector (though their advice was sometimes countermanded by Sir Frederick Williams-Taylor of the Bank of Montreal, the government’s banker, who frankly distinguished between his interest as a banker and the country’s interest as a borrower). Canada’s fiscal conservatives had successfully held out against progressive income taxation, but they were increasingly besieged as war costs rose and reformers demanded “heavy” taxes on wealth. White obliged with a tax on business profits in 1916 and a tax on incomes in 1917. But in comparison with Britain or the United States, Canada’s wartime taxes were so modestly progressive as to ward off more than they conceded. Federal spending and the federal deficit, expressed as a percentage of gross domestic product, were stable after Confederation (with brief upturns in 1885 and 1907) until the First World War increased them dramatically, to about 15 per cent and 5 per cent respectively. By contrast, federal tax revenues, also understood as a percentage of gdp, remained close to 5 per cent for the whole half-century after Confederation.86 Writing in 1940, economist J.J. Deutsch remarked that in the final year of the First World War, the wartime taxes yielded “less than the total interest requirements on the war loans. In each of the fiscal years 1917–18 and 1918–19 nearly the entire costs of the war, amounting to $344 and $447



Income Tax: Progressivism Triumphant 399

million respectively, had to be borrowed.” The consequence was inflationary and “more expedient than equitable.”87 Any analysis of the federal income tax has to explain both how it was introduced and how it made so few concessions to demands for fairness. The answer to both questions lies in the social history of Canada – its particular combination of economic, social, and fiscal tensions, and above all, its great founding perplexity: how to find a fair balance of fiscal and political power between the French and English Canadians, within a state that could never quite sublimate the fiscal impact of cultural tensions (or the cultural impact of fiscal tensions). Arthur Silver argues that Confederation, seen in 1867 as a merger of two founding provinces, had become by 1917 a story of two founding races.88 Taxes did much to effect the change. Protestants accused Catholics of transferring too much public wealth to the Catholic Church. Nativists framed their grievances as tax grabs because injury to property was easier to uphold in the courts than outraged sensibilities. On the eve of the First World War, those long-simmering tensions broke out anew. When Borden annexed Keewatin to Manitoba in 1912, existing separate schools were abolished, despite desperate attempts by French-Canadian Nationalists to save them. When Borden cracked the whip, his caucus fell into line, and the Nationalists began to realize how poorly protected were FrenchCanadian interests.89 Soon afterwards, in April 1912, the Ontario government passed Regulation 17, which placed formal limits on French-language instruction. In 1914, separate schools in Ottawa, which refused to enforce it, ran out of money and were put under trusteeship. Francophone outrage spiked and Liberal senator Napoléon Belcourt urged Ottawa taxpayers not to pay their school taxes. The Liberal Party was split on the issue: Newton Rowell voted with Whitney, while the Liberal government in Quebec rallied support for the French-language schools.90 Federally, a motion by Ernest Lapointe defending French-language schooling was defeated by 107 votes to 60. Elizabeth H. Armstrong’s 1937 analysis of the “crisis of Quebec 1914–18” saw an unheeded warning for Borden in the widespread, unified sense of grievance: “Wherever in Canada the French tongue was spoken, wherever there was a French newspaper or magazine, there the wrongs of the Ontario minority were aired.”91 But if a sense of grievance was unified, the practical response was not. Liberals and some Nationalists, notably Olivar Asselin, urged French Canadians to enlist, while Henri Bourassa and Armand Lavergne demanded justice at home first. In 1916, Lavergne declared that French Canada should send not a man or a cent or a gun.92 English Canadians responded by attacking

400

Reconstructing Fiscal Federalism

French-Canadian selfishness and insularity, seeing a renewal of the ageold, French-Canadian drag on English-Canadian modernization projects. In fact, Chad Gaffield’s analysis of the Ontario schools controversy shows the reverse was true: its “realistic” basis was growing competition by an expansive French-Canadian leadership for the business and offices previously held disproportionately by anglophones.93 The same pattern can be seen nationally in the growing disputes about who paid and who spent the unprecedentedly large sums that the First World War put into the hands of the Canadian state. As the First World War stretched out with its horrific human and financial costs, the tensions of the pre-war period intensified. Prices rose 163 per cent during the war, taxes rose with them, reformers agitated, and the millionaires running the country stonewalled. How could the reformers organize themselves as a federal force for change? Would the fiscal reform movement be swallowed up by partisan politics, as in the past, or would partisan politics be swallowed up by fiscal reform? The crucial variable was Laurier’s Liberal Party and, indeed, Laurier himself. Was he going to prove a progressive or a regressive force in the coming confrontation? Laurier swiftly positioned himself as lending leadership to the movement for progressive taxation. When White introduced his second wartime budget in 1915, Laurier declared: “It is not fair that the same degree of taxation should be placed upon the poorer classes as upon the wealthy classes.” In reply, White voiced a “bitter partisan attack” that blamed Laurier’s financial mismanagement for the beleaguered state of Canada’s finance. Any semblance of truce ended at that moment.94 But could Laurier persuade the Liberal Party and the fiscal reformers to line up behind him? Beginning in December 1915, Laurier convened new committees within the party to formulate policy.95 Fielding chaired a subcommittee on financial policy, while Joseph Atkinson chaired a social reform subcommittee, with much cross-communication between them. Fielding wrote to the other Liberals on the subcommittee as well as MPs and organizers across the country, soliciting their advice on how to shift the incidence of taxation away from inflationary consumption taxes – and whether to land value, income, or financial institutions. The replies showed that many Liberals were reliving the tariff battles of yore, but they also showed widespread support for direct taxation of wealth and income, and some support for land-value taxation. The lone exception was George H. Watson, a Toronto lawyer who opposed direct taxation and advocated raising the tariff. Watson was a founding director of the National Trust, his offices housed in the National Trust bulding.96



Income Tax: Progressivism Triumphant 401

Laurier could also lean on friendly economists. Skelton, who was close to Laurier and published an admiring biography in 1916, helped him to marshal evidence and arguments.97 Like A.T. Galt (subject of another admiring biography), Skelton believed that direct taxation made for political accountability. He had advocated income tax before the war and continued to do so. In 1915, in a piece published in the Queen’s Quarterly and the Monetary Times, Skelton pointed out that the war had increased the regressivity of the tariff and the need for an income tax. “Under a system of taxation which takes expenditure as the basis, the poor man, as has been said above, is compelled to pay more heavily than the rich. His expenditure swallows up practically all his income, while the millionaire, even with lavish personal and household outlay, usually spends only a minor fraction of his income.” Britain and the United States set the example, and local machinery for direct taxation was already widely in place. “Anyone who fears to adopt an income tax solely because of the risk of evasion must believe either that Canadian citizens are liars beyond all other men or that Canadian statesmen and officials are incompetent beyond all others.”98 His arguments were seconded by a colleague at Queen’s University, W.C. Clark, a Harvard-trained economist who taught courses on banking under Skelton’s direction and published articles on war finance between 1916 and 1918 that called for “taxation far more drastic and pervasive than we have yet determined.”99 What of the diverse, quarrelsome, left-wing arguments for fiscal reform? Demand for tax reform of one sort or another was ubiquitous in the public press and popular political organizations, including unions, socialists, labourites, social gospellers, suffragists, nationalist groups, trade and business groups – the list was endless and expanding almost daily. The single taxers remained important players, for all that they were under attack by economists and discredited by western municipal bankruptcies. B.J. Rennie notes that the Alberta farmers rapidly shed support for the single tax, which the United Farmers of Alberta refused to endorse at their 1915 meeting.100 But diehard single taxers persisted in many regions, and their argument that steep taxes on unimproved lands would force it into productive use, thereby easing food shortages, won much support. They formed a new national organization, the Canadian Committee for Taxation of Land Values, presided over by W.M. Southam of the Ottawa Citizen (which kept up its own lively single-tax campaign) with Manitoban Thomas Crerar, president of the United Grain Growers, as vice-president and Nellie McClung in Alberta heading the list of local members. Another signatory, W.D. Lamb, also sent his own scrawling missives. While a

402

Reconstructing Fiscal Federalism

farmer in Plumas, Manitoba, he had appeared before Fielding’s commission in 1906. In January 1917, now writing from Pincher Creek, Alberta, he informed Borden: “If Canada is going to be owned by a few for the purpose of robbing the many, then it makes no difference to the people at large whether the Robber be a Canadian or a German.” Another letter told Borden that his crimes and cruelty were worse than the kaiser’s. “Do you realise that your name, in years to come, will always be accompanied by a curse, on account of the way you have bled people during a war period? You have taxed everything except the holdings of the rich.”101 Many fiscal reformers intermingled single-tax and income tax demands. The Grain Growers’ Guide kept up the pressure with articles and cartoons like that of February 1915, “How Canada Becomes Rich by Taxation.” On a set of scales, Thomas White sat atop a heavy weight labelled “Taxes,” which weighed down one side and pushed up the other side, which contained foods, high above the head of “the public”(see figure 9.1). In October 1916, the cost of living was a fairground test-your-strength machine being pushed up towards 100 per cent by the tariff and the war.102 The Calgary tlc told Borden in December 1916 that it would not object to national registration of labour, if accompanied by “conscription of wealth.”103 A single-tax, No-Party League based in Saskatchewan fizzled out in 1913 but beginning in July 1916 a new Nonpartisan League spread rapidly across western Canada, with support from such social-gospellers as Salem Bland and J.S. Woodsworth. It demanded fiscal reform (graduated income tax and inheritance taxes), as did the Socialists, who had won their first provincial seat in Alberta in 1909.104 A Chautauqua movement featured travelling tent meetings across western Canada through 1917, largely under the auspices of the United Farmers and United Farm Workers associations, and aired left-wing fiscal analysis.105 Radicals in British Columbia gained momentum from 1916 as middle-class distress widened the conversation. A pamphlet published in 1915 by the Protestant Ministerial Union of the Lower Mainland that denounced the failures of provincial taxation with such headings as “How the Speculator Bleeds the Settler” and “Fabulous Wealth Alienated to Syndicats,” testified that boosters and mainstream politicians had fallen into “sudden disrepute.”106 The collapse of land prices and municipal revenues across western Canada helped to fuel and focus national grievances. Calgary’s plight is illustrative. In the summer and fall of 1917, the city had inadequate revenues and a lot of forfeited land on its hands.107 It was facing withering tax protests from powerful proprietors who were unwilling either to relinquish their virtually worthless land or to pay taxes on it. Two had



Income Tax: Progressivism Triumphant 403

Figure 9.1  Arch Dale, “How Canada Becomes Rich by Taxation” (Grain Growers’ Guide, 24 February 1915). Economic causes (low wages, unemployment, and poor crops) render prices beyond the reach of “the people” but Thomas White’s heavy consumer taxes seem even more directly and obnoxiously to blame. (Image courtesy of Peel’s Prairie Provinces (peel.library.ualberta.ca), a digital initiative of the University of Alberta Libraries)

challenged their taxes all the way to the Supreme Court of Canada and the Grand Trunk Pacific Railway was threatening to do the same. Less threatening but more piteous petitions from the poor for relief from unpaid taxes flowed in. By way of relief, the city offered a 25 per cent reduction on taxes where people cultivated the land. The poor benefitted, but so did landowners submitting specious claims – for example, by claiming they foraged their horses on vacant, barren, and stony turf. The city was owed well over a million dollars in unpaid taxes and dared not institute legal proceedings. It did not want the land and could not be seen to evict soldiers’ families or widows. Lawyers and bond salesmen circled like financial vultures, continually advising the city to monetize that mountain of debt and unpaid taxes. The city determined, on the one hand, to borrow three-quarters of a million dollars against those unpaid taxes and, on the other, to create “tax certificates” that gave the buyer title to those unpaid taxes. The certificates were designed to press less hard on

404

Reconstructing Fiscal Federalism

homeowners by delaying tax sales till the end of the war, but they also monetized the taxes by letting the financiers and their bailiffs do that work. This was harsh, but the city was in the hands of the financiers and so had to send ostentatious signals that its debts would be repaid. Similar conditions were experienced elsewhere. The Revelstoke Board of Trade asked in October 1917: “Are our boys to find their homes sacrificed upon their return from France?”108 Financialization intertwined the market and the state in new ways and helped to turn economic concerns into political grievances; the war made such grievances federal ones. Western Canadian radicalism had deep roots and widespread institutional strength; now it began to organize as a force in federal politics. Reform was enjoying unprecedented success in central and eastern Canada. Unionization and political reform movements were up across the Maritime provinces. In Ontario, the United Farmers, formed in 1914 under E.C. Drury, demanded tariff reduction and land-value taxation. At a picnic in March 1917, while Pettypiece complained about the railways, Gordon Waldron argued that “we are approaching a period when the study of taxation will be almost as important as the study of the alphabet.”109 The Ontario group helped to formulate the Farmers’ Platform produced by the Canadian Council of Agriculture in 1916 and approved by local United Farmers branches in 1917. Tax reform, notes Paul Sharp, occupied 750 words of the 950-word platform and demanded redistribution rather than revenue.110 Socialists, too, were unmistakeably garnering mainstream support in erstwhile Liberal and Conservative strongholds. According to historian Martin Robin, “by 1917 the centre of gravity of independent labour and socialist politics had shifted from the coast province to Ontario.”111 Quebec also experienced similar pressures and responses. In 1915, for example, there was outrage when Montreal’s city council resolved to seize and sell properties for one year’s tax arrears.112 The region saw growing left-wing and labour organization and militancy. James Thwaites counts 169 strikes for the period 1851 to 1896 and 391 for the period 1896 to 1915.113 Unions often had more mixed membership than political organizations, which were fractured by language and religion. However, there, too, Quebec saw new organizations proliferate, from labourite to socialist and social democratic clubs. The FrenchCanadian socialist section, led by Albert Saint-Martin, was particularly small because the Church actively denounced its godless creed. The Catholic Church organized its own unions and other kinds of social-oriented clubs and organizations. In 1907, the archbishop of Quebec inaugurated l’Action sociale catholique to organize lectures and publications as



Income Tax: Progressivism Triumphant 405

well as co-ops and unions. In 1911, l’École sociale populaire replaced the older Société canadienne d’économie sociale de Montréal and served as an important hub for Catholic discussion of social questions.114 Catholic social institutions tended to oppose violence and strikes, but they nurtured cross-class reform movements with practical aims, such as La Fédération des clubs ouvriers municipaux, which had an important influence on municipal elections.115 Meanwhile, there were demonstrations against the high food prices and the war effort: in Montreal in May 1917, a price riot evolved into an anti-conscription riot and a violent clash with soldiers. Across Canada, organization, agitation, and popular violence reached new heights.116 Union membership was at an all-time high, as were strike victories – 1917 marked the highest number between 1890 and 1950. Workplace action was being strategically aligned with political action, not as deflection away from strikes but, as Bryan Palmer remarks, “to turn that struggle to the direction of broader, more unified class initiatives.”117 Labourites and socialists could not agree on such tactics as the general strike, but they could agree that the federal state was taxing regressively and should be denounced on those grounds. Ian McKay observes of that burgeoning first wave of Canadian socialism that it “focused on cultural struggle – on the changing of minds, on building alternative sources of authority, and on connecting socialist insights into the economy with an ethical critique of capitalism. Measuring first-wave socialism strictly by the yardsticks of electoral success or trade-union influence downgrades this cultural struggle.” He sees in that early socialism an “intellectual challenge to liberalism [that] worried some of its stalwarts a good deal.”118 Craig Heron charts the change both in heavily industrialized Hamilton and more generally: “Until the middle of 1919 a rare ideological openness, fluidity, and tolerance prevailed among the labourists, single-taxers, socialists, and sundry freethinkers who joined the [labour] parties. Each local branch tended to have a slightly different ideological emphasis that fell somewhere between the old pre-war liberalism known as ‘labourism’ and unadulterated Marxist socialism.”119 Peter Campbell’s biography of Rose Henderson, a Montreal social worker, shows that orientation in fine grain. In 1912, Henderson looked to religion and the government to effect such progressive reforms as child-­ saving and women’s suffrage; in 1916, now writing regularly for Montreal tlc, she urged collaboration between middle-class and labour activism. In 1917, she expressed disgust for the “men in Parliament today [whom] I wouldn’t give a pound a week … You not only want to organize industrially but politically. You should send your own men to Parliament.”120

406

Reconstructing Fiscal Federalism

According to Elizabeth Mitchell, a British tourist writing in 1915, the coalition of urban workers, municipal populists, and academic expertise rewriting American politics threatened a similar reconstruction of “the old secure social and political Idea of Canada.”121 The broad-based, radically tinged coalition was a new and worrying feature of the political landscape. Borden owed his victory of 1911 to Ontario: nearly half his votes had come from there, but he had outpolled Laurier by only 62,852 there. To hold his majority, he must hold those votes. Localized radical movements had never previously threatened federal politics, but when Ontario producers joined their counterparts to the east and west, the result was a transnational alliance newly orienting itself towards federal electoral politics. By aiming at the tariff, they put the government as a whole in their sights. War had so hugely expanded the regressive features of the tariff that wartime government itself looked like a tariff ­– “the mother of all combines” – powerfully expanded. A tariff on steroids so to speak. Taxpayer protest provided a practical way to build a broad-based political alliance, well-grounded in local institutions of reform that were well justified by British political traditions. Small wonder radicals rallied to it as a political cause. Still, White (now Sir Thomas White) barely blinked, at least outwardly. Initially, he planned to finance the Canadian war effort using loans on the British money market and some limited bond issues to wealthy Canadian investors. But the British were running out of funds to send to Canada, either as loans or for badly-needed munitions and other purchases. Already by 1915, White had to borrow huge sums of money to lend to Britain, thereby enabling Britain to purchase Canadian goods, rather than see war production diminish. The Canadian government was borrowing hundreds of millions of dollars to sustain its overseas sales and keep the economy afloat.122 By 1916, loans and the tariff could no longer foot the bill. Moreover, as White explained in postwar recollections, war manufacturers’ profits were seen to be “in many instances abnormal and such as to invite public criticism.” So he imposed a retroactive tax that took 25 per cent of all taxes over 7 per cent on the “actual capital of corporations” and over 10 per cent on the capital of individuals and partners. All munitions companies paid it; others only if their capital was over $50,000. Even so, White thought the tax a terrible idea because it was a “tax upon business success” that discouraged enterprise and, passed on to consumers, drove up the cost of living.123 He expected the tax to meet resistance in the Cabinet, but to his surprise, the other ministers “urged him to go further.” Businessmen, on the other hand, were



Income Tax: Progressivism Triumphant 407

Figure 9.2  “Landed at Last” (2 May 1917). Canada’s war taxes seem, to Grain Growers’ Guide, to let most forms of wealth escape taxation. The merriment of untaxed wealth would have particularly grated on readers after the Battle of Vimy Ridge. (Image courtesy of Peel’s Prairie Provinces (peel.library.ualberta.ca), a digital initiative of the University of Alberta Libraries)

more hostile than he had anticipated, he noted in correspondence with Borden and Walker.124 Their complaints dovetailed with the fiscal reformers and the Liberal Party: why tax industry and leave “unearned” wealth, including land and finance capital, untaxed? (See figure 9.2) In the House of Commons, Liberal MPs harried White over his failure to tax wealth. J.G. Turriff, a merchant from Assiniboine and director of the Western Trust Company, had pressed for higher taxes for years, but the death of his son at Courcelles, as part of the terrible Somme offensive in the autumn of 1916, lent vehemence to the attack. In January 1917, Turriff denounced the war profits tax on grounds that it failed to catch the “multi-millionaires sitting on the treasury benches,” and cited examples of businesses that slipped under the $50,000 minimum while paying dividends of 900 per cent. There was no investigation either of reported declarations of profits or the inflationary effects of existing taxes.125 There was, in short, no data on the pattern of fiscal transfers. But everyone knew

408

Reconstructing Fiscal Federalism

that the heroic levels of borrowing and taxing were transferring wealth to the investing classes and driving up the prices of necessities. Conservative propaganda urged more popular thrift so that more popular wealth could be directed towards loans and taxes to pay for the war. In February and March, the government and the Conservative Party circulated an address by Stephen Leacock on “National Organization for War,” which included the complaint: “Our present taxes are, for war-time, ridiculously low as far as all people of comfortable, or even of decent, means are concerned. And they are made with one eye on the supposed benefit to industry. We need a blast of taxation – real taxation, income tax and all, that should strike us like a wave of German gas.” People should stop buying such luxuries as cars, theatre tickets, pictures, furniture, carpets, toys, Victrolas, and books, and every cent so saved should be “absorbed by national taxes and national loans,” to be advertised by the kind of advertising more usually directed towards “healing oils and fit-right boots.”126 Mere weeks later, that spirit of patriotism and pride was intensified by news of the great Canadian victory at Vimy Ridge. April 1917 has been heralded as an important moment in Canadian national identity – a moment when “all the nine provinces walked up the hill as one, all with the same ideal before them and the same goal in mind.”127 Surely vested interests could no longer remain outside this great national campaign. When Sir Thomas White introduced his fourth wartime budget, in April 1917, everything seemed to point towards new taxes to “equalize” the burden. Even the Conservative Montreal Gazette expressed “great surprise” that the tariff was unaltered.128 But White had repeatedly declared against an income tax since the beginning of the war, and the new budget reiterated that stance. The war would be paid for with loans and taxes on “excess” manufacturing profits, not on unearned increments or investment income. Like Macdonald in 1880, White in 1917 argued that Canada could not afford to tax income: “We are not a country of large accumulated wealth and of incomes derived from investments.” This was the White / Sifton message of 1911 all over again. White also rejected the bureaucracy that direct taxation would require, “almost a second civil service sufficient in number to cover every municipality, rural and urban, throughout the Dominion.” Costs of collection would be much higher in Canada than in Britain or the United States because the country was so big, sparse, and poor. The sums obtained when the Americans began to tax income suggested that no more than $2 million could be got in Canada. Finally, the federal government dared not encroach on badly needed provincial and municipal income tax revenues. White recapitulated the arguments and



Income Tax: Progressivism Triumphant 409

principles of bygone political economies. His crisis-management techniques were essentially those of Galt.129 In April 1917, he turned from the British to the American money market, securing American permission to borrow $100 million there to meet urgent expenses (Le Canada noted that the victors of 1911 apparently recanted their anti-Americanism130). The fact that White had massively expanded Canada’s credit, well beyond what many bankers viewed as wise,131 made him profoundly conservative, for fear of injuring the confidence that sustained the credit. The Canadian Bankers Association worried that such overextension could damage public and private finance in Canada. White was still funding British purchases, though in May he warned the British Chancellor of the Exchequer (since December, Canadian-born Andrew Bonar Law) that the borrowing process had been tapped out. He could borrow no more in either London or New York, while Canada lacked the necessary liquidity. White would change his mind about Canadian liquidity but not about taxes. He modernized Macdonald and Cartier’s alliance between state and business by filtering it through finance capital. Like the municipal reformers, he ostentatiously wrote patronage out of the equation in order to legitimate his cost accounting. White despised patronage as incompatible with cost accounting. In Cabinet, White’s hostility to “corruptionist” colleagues – especially Sir Sam Hughes, the minister of militia and defence – was unyielding. Hughes’s cronyism with its consequences of rotten supplies for soldiers at the front made White’s life as finance minister harder. White updated classic Tory clientelism so that, like science, it became not a local matter for loose-cannon ministers but, rather, a mechanism for organizing the state as a whole. The clientelism would be written out of petty contracts negotiated in taverns and written more squarely into the books in the form of interest payments to the financiers and investors who traded and held the country’s debt according to formula made rigorous by the imposition of cost accounting. This, too, was cronyism, as White had a tendency to defer to his old colleagues of the Cox network when he negotiated loans and their terms. But the more prominently those men organized finance capital in Canada, the more easily was that deference defended – especially by a government visibly eradicating the more old-fashioned departmental cronyism. This was a straight-up competition between two kinds of clientelism, and there could be no doubt as to the winner. In 1916, when Borden dismissed Hughes, the disgraced ex-minister knew whom to blame. White’s expert financial knowl­edge was the new trump card, and tax policy was his to determine. White remained very much the fiscal virtuoso

410

Reconstructing Fiscal Federalism

of the Toronto assessment office, the man with the unbeatable list of facts at his disposal. The Toronto World declared: “To Ottawa, Sir Thomas is little short of a miracle.” Such men could be found in “every reputable financial institution of any size in the country,” and it was only in Ottawa that he stood out as a businessman and expert surrounded by placeholders. Canada, with its massive debts, was like an assignee in a roomful of creditors, and only White could answer their probing questions.132 Borden shared White’s concerns about the threats to private and public finance. Letters dated July show Borden worrying that talk of the conscription of wealth threatened “under the conditions of excited public opinion to start a run upon our banks which would produce appalling disaster.” Robert Alain sees in such concerns White’s influence over Borden.133 Late in 1916, people began to talk of White replacing Borden as prime minister. The Globe argued that Joseph Flavelle, who had been White’s boss at the National Trust and now ran the Imperial Munitions Board, was intriguing to that end. In fact, Flavelle wanted to see taxes on investments and income as well as genuine union government so as to avoid an election.134 White, by contrast, bitterly opposed income tax and union.135 But in 1917, White was out on a limb, his position weak and his evidence tendentious. People wanted more democracy and more democratic taxation. Borden was making extraordinary demands on the unpropertied that rendered universal suffrage inevitable. People believed that they deserved political influence commensurate with their contribution to the war effort, and they demanded a fairer fiscal accounting. For example, White claimed the American income tax yielded only small sums. True, early receipts had been small but not any longer, argued the Monetary Times, so that if Canadians taxed income as the Americans were now doing in 1917, Canada could expect about $120 million in new income. The bureaucracy was in place thanks to the profits tax of 1916. F.B. Carvell, a businessman from New Brunswick tipped as a possible successor to Laurier, made that argument in the Commons through the spring of 1917. Toronto didn’t get much from its income tax, but it levied only 2 per cent: “My hon. friend knows that if he went after the big incomes of this country as is done in Great Britain, France, and many other countries, he would be taxing the rich man, not 2 per cent of his income, but from 30 to 40 per cent of his income, and he knows that in Great Britain there are people who are paying as high as 40 per cent of their incomes.” Toronto alone, properly taxed on big incomes, could produce several times what White projected for the whole country. Income tax was inevit­ able, Carvell insisted, and no longer experimental as White seemed to



Income Tax: Progressivism Triumphant 411

think. “It is not something that has not been worked out. It has been worked out to perfection in many countries in the world.”136 Frank Oliver declared that “the burden of taxation is absolutely inequitably distributed” and should be redistributed according to “ability to pay.” George P. Graham from Renfrew, another newspaperman, urged taxation of vacant land and financial securities.137 White continued to hold the line as the budget debate stretched into May, insisting that income tax would drive prices higher. Borden’s government seemed ready to defend its old tariff policy to the bitter end. And the end looked nigh: twenty seats in the House were vacant because the Conservatives feared to run federal by-elections after losing several provincial by-elections. Robert Bothwell and Susan Colbourn note that “Conservative governments were defeated in province after province, leaving the federal party increasingly isolated” and Laurier confident of victory.138 J.W. Dafoe of the Manitoba Free Press remarked, six months before Parliament was to expire, that Conservative defeat “appears inevitable, unless some new factor enters into the contest and gives them a good battle cry.”139 In June, the paper complained that “no Federal tax places a burden, heavy or light, on the wealthy. Until incomes are made the basis of financial contribution to the war chest, no sacrifice will be required of the wealthy. Until a supertax is placed on the largest incomes there will be no approach to equality of financial burdens.”140 Rather than tax investments and incomes, in April 1917, White increased the wartime excess profits tax. Manufacturers were furious and warned that such taxes crippled their production and threatened capital investment. The complaint was widely levelled by manufacturers and boards of trades in private complaints to White and Borden and in public petitions and columns, such as the cma’s Industrial Canada and the Montreal Financial Times.141 In late May, Borden heard from Percy Cowans of McDougall & Cowans, a big brokerage company, in a letter forwarded by his minister of public works, Robert Rogers, that exclaimed: “Cannot you do something to stop this proposed increased tax that White is going to try and put through? I have never seen men worked up so much over anything as this. It is going to stop any new industries starting.” Cowans urged blanket income taxes on “every company or partnership.”142 Even bankers were joining the chorus in favour of income tax. The general manager of the Bank of Hamilton, J.P. Bell, publicly urged income tax in January 1917 as promising “most valuable social and economic results.”143 In May, together with fellow banker and Brantford city treasurer Arthur K. Bunnell, Bell printed and circulated arguments that

412

Reconstructing Fiscal Federalism

identified White’s obstinacy as the greatest threat to both the war effort and the stability of property in Canada. The business tax, bad enough in 1916, was now made “confiscatory,” and as such, it threatened to undermine the security of property and investments. “Capital is and always has been extremely sensitive to legislative tendencies, and however reasonable the intentions of your Government may be, capital will place its own construction upon Acts that tend in the direction of excessive taxation.” Canadian businesses needed to fortify themselves against American competition as if against a siege, but could not do so with such taxes operating against them.144 This was an extraordinary rebuke to White, who had spent years fortifying capital as if for a siege. Perhaps most telling, Joseph Flavelle hated the new budget. Flavelle thought the country far from overextended: Canada was wealthy enough to afford the existing war effort and much more, if only its resources were properly extracted, processed, and deployed. But that wasn’t happening. At first Flavelle, too, blamed Sam Hughes and cronyism, but when the problems persisted after Hughes’s departure, he concluded that the rot went deeper. By the spring of 1917, he was almost disconsolate when he couldn’t get 250 carloads of steel from Sydney to Montreal. It was stranded on the Intercolonial – “crippled crippled crippled.” Flavelle confided to Willison that he wanted a national, union government to reinvigorate the war effort and thought Laurier looked far more convincing as a leader than Borden, who was doing everything to partisan purpose. In April, two long letters to White, never sent, drew parallels between White’s financial wizardry and his benighted tax policies. Brought up “purely on the financial side,” White skilfully extracted wealth from the industrial economy but at the expense of production. Steel makers, long handicapped by an overcapitalized merger (i.e., stock watering by bond dealers), were only just paying off their debts and building up their infrastructure, and here was White’s profits tax pushing them back into the red.145 Vested interests had no better champion than White, no man better able and determined to uphold the sanctity of liberal property relations. But he was sacrificing industrial property for finance capital, and that unswerving protection of finance capital was a terrible liability in the face of the economic and political pressures. A crucial new factor was conscription. Borden had spent April overseas, attending imperial Cabinet meetings and visiting soldiers at the front, while White served as acting prime minister. Back in Canada in mid-May, Borden was determined to support the troops with conscription. This was, Tim Cook argues, Borden’s decision alone: “It was not the



Income Tax: Progressivism Triumphant 413

Figure 9.3  Borden and ministers. From left, Lord Beaverbrook, George Foster, Robert Borden standing, and A.E. Kemp reading. Image taken from Lord Beaverbrook, Men and Power 1917–1918 (London: Hutchinson, 1956, 272).

cabinet, not the party, not the constituents, but the warlord who decided to follow the path to conscription.”146 Borden was now relying on a small circle of Ontario tycoons to run things, above all White and Kemp, while Perley and Max Aitken represented Canadian interests in Britain (see figure 9.3). Kemp, a Toronto manufacturer and a director of the National Trust, brought in “business methods” when he replaced Hughes as minister of militia and defence, to no small acclaim.147 Hughes had been steeped in francophobia as well as corruption: in 1910, he had warned Kemp that ignorant and armed French Canadians (Canadian arms were stored in Quebec, he noted) wanted to install a “French republic under Papal direction.” Kemp did not fall for the neo-Fenian rhetoric, but he, too, came to believe that, for party purposes, Laurier had

414

Reconstructing Fiscal Federalism

organized the Quebec vote around the “racial cry.”148 In the spring of 1917, he advised Borden that “voluntary enlistment has about reached its limit,” and during the Parliamentary debates, he argued that the voluntary system was riddled with “injustice” and “inequalities.” Conscription transformed the political debate. It united a Conservative Party beginning to splinter over fiscal reform and split the Liberals into conscriptionist and anti-conscriptionist factions. It also gave Conservatives new grounds to attack the patriotism of their critics, especially in view of widespread violence in Quebec, where crowds shouted “Tuons (Kill) Borden” and conspirators were arrested. But the price of conscription was income tax. It was impossible to conscript manpower without conscripting wealth. Combatant nations everywhere came to that conclusion.149 No doubt White knew that. In 1916, he warned Borden that conscription would drive up labour costs beyond their already unsustainable heights and threaten national unity.150 Berated by Sam Hughes that year for his anti-conscription views, White’s reply admitted much truth to the accusation. But in the spring of 1917, White was forced to come out in favour of both conscription and income tax. He did so reluctantly. When Borden asked for letters of resignation from Cabinet members so that he had a free hand to juggle their portfolios, most sent formulaic offers. In his letter of 8 June, White begged Borden to dismiss him: “I really feel that the interest of the country would be better served by a change which would bring a fresh mind and a robust vigour to the duties of the important office of Minister of Finance.”151 John English and Robert Craig Brown see White stumbling, where Borden’s leadership remained firm.152 But for all that White did not relish the coming fight, Borden needed him to keep the investment income flowing and engineer the transition towards the now-inevitable income tax. White soldiered on haplessly. The turning point came in June. On 6 June, Laurier refused an invitation to join a union government. That meant an election must soon be held, and Borden went immediately into campaign mode. If he couldn’t win over Laurier, he would play for the progressive Liberals – the Turriffs and Carvells, who made it clear they would not cross the floor without income tax. At a pro-conscription rally at Massey Hall in Toronto on 10 June, Michael Clark, a Liberal MP from Red Deer, Alberta, made the case for conscription but added: “They could not, however, take the poor man and ask him to give up his life, his all, and leave others at home to pile up millions of blood money.”153 On 21 June, Liberal whip F.F. Pardee, from Lambton, Ontario, broke ranks and agreed to support conscription if wealth were also conscripted. A week later, Carvell joined him. The Grain



Income Tax: Progressivism Triumphant 415

Figure 9.4  Arch Dale, “Nothing But His Life,” (Grain Growers’ Guide, 18 July 1917). A bloody and leering god of war winks as Wealth derides Conscript for having so little to give to the war effort. The classic language of ratepayer politics – “I’m paying for …” – has lost all dignity and integrity. (Image courtesy of Peel’s Prairie Provinces (peel.library. ualberta.ca), a digital initiative of the University of Alberta Libraries)

Growers’ Guide let it be known in June that a “heavily graduated income tax” would do much to disarm hostility to conscription in that constituency.154 Its leading articles and cartoons were largely given over to demands for tax reform. In one cartoon in June, Canada watched enviously as Uncle Sam took on the profiteers with his guns: “taxation” and “food control.” In a July cartoon, a conscript demanded that money, too, should be conscripted, while an obese businessman sitting on huge piles of cash, handed a tiny bag of taxes to “Mars God of War” and exclaimed, “What’s that young fellow kicking about? He’s got nothing! – I’m paying for the war” (see figure 9.4). The National Service Board of Canada seconded the argument with an advertisement that juxtaposed a workingman at work on shell casings with a portly, champagne-swilling tycoon, and asked, “Are You an Asset to Canada – or Are you a Liability?”155 The single-tax Ottawa Citizen argued that “only the wilfully blind could fail to see that the people of this country are not willing to submit to conscription of life unless at least equal measures of conscription are applied to the material

416

Reconstructing Fiscal Federalism

resources and the wealth of Canada.” It quoted the Great War Veterans’ Association as a supporter; it also quoted Sir Joseph Flavelle, newly knighted for his work on the Imperial Munitions Board, on the need “to send profits to hell.”156 On 13 June, the Toronto World announced that when Parliament met the next Monday, Borden would move the second reading of the conscription bill, Laurier would “define his position,” and George Graham would move for conscription of wealth as an amendment to the bill. The World also announced the other major Conservative planks, including a food controller (emulating British and American appointments), and a tax on large incomes to come in “next year.”157 Conscription plus income tax would guarantee a Borden victory in any election. Across the country, the effect was immediate: progressive newspapers complained that “next year” was too late; bond salesmen began to wonder about the impact that the income tax would have on the market; savers began to worry that their savings would be taxed. On 22 June, in response to demands in the press that tax rates be “drastic,” “stiff,” and “heavy enough to hurt,” White declared that the government would impose whatever taxes were necessary – whether on income, succession, real estate, or otherwise – to win the war, but the taxes “should not be imposed for the purpose of punishing anybody. Taxation should be wisely imposed and only to the extent necessary.” Liberals and Conservatives immediately recognized the remarks as a promise of income tax.158 Again, in early July, White promised that the coming tax would be only on incomes, not on “accumulated wealth,” and only “in accordance with legitimate and established forms of taxation sanctioned by the traditions and experience of British self-governing communities.”159 Translation: there would be no capital tax and certainly no seizure of bank deposits, as some were scurrilously suggesting. Income tax would come in but the devil was in the details, and Tom White would write those details. July saw two significant new developments, both threats to White’s fiscal conservatism. On the one hand, first Bonar Law and then David Lloyd George himself sent urgent cables reporting that Britain had so completely run out of money that it could not afford to buy Canadian cheese, hay, oats, or flour. Unless Canada stepped up its contribution to the British war effort, the Canadian economy would nosedive. Substantial new taxes must be imposed. “Next year” had arrived more quickly than White anticipated. The news came as a shock, and White resisted it. He demanded the British sell securities held in Canada or use US money to buy Canadian goods. He demanded several months’ notice for any changes in orders – notice followed by return cable. White warned that Canadian credit



Income Tax: Progressivism Triumphant 417

would be damaged if he either printed more money or borrowed too much too quickly. Whitehall held firm: Canada must buy its own goods and would need a lot more money for its war effort. White quickly printed some of that money but nowhere near enough. Britain was in a crisis, but the ultimatum may also reflect tax politics. From the beginning of the war, the British Exchequer had been flooded with complaints of poverty from its allies, especially France, and had greeted them with suspicion. Fiscal negotiations were always a high-stakes poker game. In late June, just before the British Exchequer sent its cables warning that Britain was broke, it began to tax Canadian companies doing business in Britain. When White expostulated that the new taxes were “unfair to the Dominion government,” which wanted to tax Canadian companies on their profits, the answer came back that Canada’s business taxes were too low so Canadians doing business in Britain were unfairly advantaged. White insisted in reply that there was no comparison. “The British tax is an excess profits tax whereas our tax is a war tax having regard to the whole profits stop In the last Budget we greatly increased our war tax upon profits and it is now in excess of British excess profits tax stop We understand that British authorities do not attempt to tax European or American pork packers stop It cannot therefore be competition that the British authorities are concerned about stop.”160 White’s words were lifted almost verbatim from the William Davies Company, which was, it believed, unfairly singled out by the new tax. From late June to late July, White made himself the go-between for William Davies and the British Treasury, the former insisting that its profits were all made in Canada, the latter responding that they were made in the United Kingdom and that the Treasury was “having trouble with their own people who alleged Dominions competitors were placed in more favourable position owing to lower taxation.” The response of the general manager of William Davies Company, E.C. Fox, to the British observation that the law did tax American and European importers as well as Canadian, was, effectively, “But clientelism!”: “As a layman with respect to legal matters, I have always looked upon the law as one thing and the working out of it in its interpretations all over the country as another thing.” William Davies, Fox insisted, was more taxed than its competitors in or out of Canada. The deflating British reply admitted the charge. The real concern in Britain was the American pork packers, but Britain could get credit for fairness by cracking down on Canada. Canadian businessmen, all-powerful in Canada, were impotent scapegoats in Britain, much as the Chinese had been in British Columbia. But the British did agree to

418

Reconstructing Fiscal Federalism

rewrite the rules to acknowl­edge Canadian war profits taxation: if the Canadians seriously taxed their companies, the British need not; but if Canada did not, then Britain would.161 The Exchequer was not so much competing with Canada for the revenue as it was determined to see the revenue extracted somewhere. White’s perplexity registers the gap between clientelist and progressive projects of war finance. The British Exchequer deputed Sir Hardman Lever, a chartered accountant and financial secretary to the Treasury, to negotiate the larger funding questions. Cables and negotiations flew back and forth across the Atlantic through July and into August, at which time Lever advised the members of the Imperial War Cabinet – including prime ministers from other colonies – that he expected Canada “would accept the British Government’s proposal if pressed.” White was outraged at the insinuation and the betrayal of confidence.162 Bonar Law put the screws to Canada and may have done so on grounds that White was taxing wealth too lightly. Borden’s government dared not let any resentment leak out because it was too deeply invested in imperial loyalty. White would have to find more money. That fall, White launched an unprecedented public relations blitz in favour of Canadian “Victory Bonds.” Income tax was enacted before the campaign – the former in September and the latter in November – but White promised that the 5½ per cent return on those bonds would be tax exempt (as were all his wartime loans). There had been some earlier bond sales in Canada, but this new Victory Bonds campaign was on an unprecedented scale. It quickly netted unexpectedly high takings of $400 million in what was everywhere felt to be a triumph of Canadian patriotism. The second development was in reference to the pork packing mentioned in White’s cable. In mid-July, scandal enveloped Joseph Flavelle. In June, he received a baronetcy for his successes in running the Imperial Munitions Board – the London Times considered it one of the few genuinely earned awards.163 But Flavelle was not so well loved at home where labour unions complained that profiteering munitions companies underpaid their workers. There had been complaints of unseemly profits for years, but in July the state itself, in the form of a “cost of living commissioner,” confirmed the analysis. The commissioner was Halifax lawyer W.F. O’Connor, named by the minister of labour in December 1916 (following British precedent again) to investigate costs in some particularly pricy industries: sugar, coal, and cold storage. Agitation around the cost of living had become intense. In Montreal, for example, the Star ran a daily column under that heading and published a cartoon showing a princess decked out not in gold and diamonds but in eggs and bacon. L’Action



Income Tax: Progressivism Triumphant 419

Catholique shared widespread demand for state intervention and applause for organized female boycotts of expensive goods. In Rimouski, in December 1916, there were dark hints of “Jewish financiers” to blame. The high price of potatoes, a staple of the poor, was a focus for particular concern in the late winter and spring of 1917. Rumours of collusion and fraud were ubiquitous.164 Farmers, promised help that never materialized, watched their crops rot in the fields and seconded the complaints.165 On 9 July, O’Connor handed his report to the minister of labour, Thomas Crothers, who leaked it to the press before the Cabinet saw it. Headlines read: “Huge Margins Shown on Bacon Trade.” The report, sensationalized by the press, accused the William Davies Company of profiteering, with earnings of over $1 million the previous year alone. Domestically, the company was said to be earning a modest 13 per cent annual return, but on export sales, profits were reported as 72½ per cent. Such a gap helps to explain the British decision to tax Canadian corporations. Flavelle had distanced himself from the company’s management so he had done nothing wrong personally, and he published advertisements that explained the profits as a natural consequence of increased demand and diminished supply. Only his friends were persuaded.166 Others saw an indictment of business as usual and the state’s collusion. The Flavelle scandal created a terrible optics for Borden and White. Borden was provoked to more investigation of and strict limits on profits in that industry for the rest of the war. White abruptly stopped serving as go-between for the William Davies Company and British Inland Revenue, as the liberal transmission of information with a scribbled “private” and “confidential” at its top became dry reference to the relevant law.167 But White was not just too close to Flavelle but also too similar to him: a virtuoso businessman, in but not really of progressive government, out of step with demands for a greater sacrifice of wealth. Certainly, Sam Hughes did all he could to tarnish them with the same brush with arguments that “Sir Thomas White, Sir Joseph Flavelle, Sir George Perley, Baron Shaughnessy” were the real obstacles to the war effort.168 Conscription had already galvanized the burgeoning labour movement and reoriented it towards electoral politics. The new revelations added momentum to that change. New political organizations were being formed almost daily across the country. When the Calgary Trades and Labor Council met in May, it formed a new Labour Representation League that demanded land-value taxation and a steeply graduated income tax, as well as death duties and corporate income taxes. William Irvine, who had done Bible studies under Woodsworth and Bland, was one of the instigators.169

420

Reconstructing Fiscal Federalism

Lethbridge delegates and public speakers called for conscription of “commodities” as well as men and a new Independent Farmers and Labor Association. An anti-Unionist candidate, grain grower L. Lambert Pack, reiterated the demands for taxation and nationalization and denounced the “moneyed interests.”170 In Ontario, the Independent Labour Party of Ontario, tentatively founded at a convention on 1 July 1917, called for the “gradual elimination of unearned increment through increased taxation.”171 Craig Heron observes that in 1917, the independent labour parties, backed by broad coalitions of workers, farmers, and middle classes, began their “first major foray” into electoral politics. Workplace militancy also grew: 1917 saw 218 strikes involving more than 50,000 workers.172 The militancy reflected an alliance between skilled and unskilled not seen since the heyday of the Knights of Labor, as marked in the east as in the west. “As a whole the miners of Nova Scotia are organized today to the last man,” declared J.B. McLachlan in August 1917. Across that autumn, Indigenous labourers vital to the harvest resisted the poll tax; in November, Ottawa forced the province to abandon collection from them.173 The Borden government had few allies willing or able to defend it against the complaints that its fiscal policies were causing deprivation and undermining the war effort. Two Liberal-turned-Conservative bankers of 1911, Lash and Walker, published reflections on the state of Canada in 1917, the former in a collection of essays to mark the half century since Confederation and the latter in another collection to signal the dawn of a “New Era in Canada.” Lash’s encomium of Canadian prosperity barely hinted that there was a war, let alone a fiscal crisis. Walker addressed fiscal and social relations more frontally: he urged better understanding between east and west and a tariff commission, and ridiculed the “extremists” who demanded “direct taxation” of the “unusually rich.”174 Where tariffs pitted regions against each other, the income tax pitted the rich against the poor and was the more dangerous on that account. For social historians, the Winnipeg General Strike of 1919 has largely eclipsed the events of 1917, but the state “trembled” in both years.175 The millionaire the events faced an unprecedented challenge. They knew that many of their critics espoused the language of tax reform as a means to a more radical end. White tried to take his stand in the distinction between “excessive” and “normal” profits in his wartime profits taxes, but the high cost of living eroded that distinction. White’s profits tax wrote fiscal sociology out of the tax equation. It chose an arbitrary percentage and taxed anything above it, ignoring the price of the thing being taxed. In other words, it was like previous federal taxes: it governed wealth and ignored



Income Tax: Progressivism Triumphant 421

poverty, with an abstract formalism removed from real-world debates about the meaning of “excessive.” Carvell asked White how many hundreds of millions of dollars in profits the millers must make before White did something other than merely “wink” at the taking of them. By indexing his excess profits tax to those hundreds of millions, White was enriching the state without relieving the consumers; indeed, he was heaping up the burdens upon them and beginning to endanger the very principle of profits.176 White knew that most middle-class folk did not want to abolish capital, but he worried that they might become well-meaning but wrongheaded pawns in the class struggle. Robert Alain observes: “It is quite clear that in White’s mind, as well as in those of other financiers, ‘conscription of wealth’ appeared as something clearly diabolical, some sort of Bolshevik confiscation of private property.”177 Canada was “exceptionally repressive” of dissent during the war, in comparison with Britain and the United States, and when Bolshevism was seen to threaten infiltration of Canada via the labour movement, rcmp agents extensively infiltrated those movements during the spring of 1917.178 But even middle-class ratepayer movements, the bedrock of classic liberal politics, seemed to threaten capitalism by mingling radical and liberal readings of property and taxation. Where the Manitoba Free Press demanded taxation of income, the Winnipeg Voice had something different in mind: “What is meant by conscription of wealth is something much different from general taxation. There are so many people who have great hoards of cash or liquid assets, hoards so large that they can never spend them all except by insane prodigality. If the state is in danger these hoards are in danger of being lost. If the danger is so great and so impending as to call for conscription of men’s living bodies in order to save the country then these hoards of cash and liquid securities should be utilized to pay the cost of the war.”179 White knew how easy it would be for tax radicals to tax accumulated wealth and “liquid assets,” if on no other grounds than their social inputs. After all, he had once done it himself, imposing fantastical company-wide assessments on monopoly corporations that the courts had overturned as dangerous fictions, thereby inaugurating Ontario’s turn-of-the-century tax crisis. White knew better than anyone just how conceptually unstable “capital” really was; hence, the policy distinction, so incomprehensible to everyone else, between the taxed manufacturers and the untaxed financiers. White had come to realize (as Seligman had known all along) that “fair” taxation of finance capital would leave precious little of it behind. The vested interests had won the earlier fight in Ontario but only by submitting to a new bureaucratic framework with the capacity to impose progressive taxation. Victory was

422

Reconstructing Fiscal Federalism

dependent upon having the right kind of men running the country to keep tax rates low. In 1917, the wrong men seemed increasingly likely to win the federal election. Property was again in danger. The pressures for income tax, the debate over the income tax bill that White introduced on 25 July 1917, have to be understood in that wider context. In May, Ontario had begun construction of a power plant on the Niagara River. Whitney had promised to do no such thing, but in April 1916, Hearst introduced legislation to that effect. William Mackenzie, the “railway king” of Canada, who supplied his Toronto utilities with power from his Niagara plant, urged Borden to disallow the Act and forwarded a series of splenetic articles by James Mavor, published in the Financial Post between July and December 1916, that denounced financial miscalculation, political meddling, and dictatorial state overreach. Borden did not intervene, and Mackenzie had to sell out to the state power corporation. Also in 1916, Mavor had published an equally splenetic attack on Government Telephones, the Experience of Manitoba that amounted to “evidence of the most positive character against Government ownership.”180 Mavor argued that government ownership must always be partisan. The Toronto World laughed off the attack, joking that Mavor “has not yet traced the high price of eggs and potatoes to Sir Adam Beck, but he is only in his twelfth article, and the subject should be good for another thirty-nine.”181 Progressive nationalization projects were steadily advancing, notwithstanding the attacks of orthodox political economy. The wartime economy was creating demand for economic managerialism across the board. People wanted to see federal conscription of wealth and commodities alongside conscription of manpower – not municipalization, not provincialization, but nationalization of utilities and banks. The nationalization of Canadian Northern Railway that went forward in August 1917 yanked the federal government into the same kind of arguments about the nature and value of property as direct taxation had done for lower levels of government. Even Borden’s critics welcomed the nationalization but not the price paid for “worthless” shares to a bankrupt line. They saw a belated payback for support in 1911, not just to owners Sir William Mackenzie and Sir Donald Mann but also to the Northern’s bankers, primarily represented by White’s old employer, the National Trust and the Bank of Commerce. Back in July 1914, Borden and White hadn’t just enacted a $45-million bailout for the Northern – they had named the National Trust as trustees, despite the overlap in directors on their boards (including Mackenzie and Lash) and despite widespread opposition voiced



Income Tax: Progressivism Triumphant 423

even in caucus. Arthur Meighen thought it a terrible idea; R.B. Bennett was outraged by the arrant cronyism; and even Kemp declared “enough” in a speech that was widely reported in the press, but in the Toronto News was scrubbed of any mention of the Northern.182 Western brokers waged an all-out campaign for the contract, and they rallied many politicians to their cause. However, a note from Flavelle to Thomas White and another from Lash to Borden recalled the personal debts. Flavelle invoked “the National and the men in it” who would suffer “injustice” were they to be passed over, while Lash argued that only “party politics” and “bitter partizans” would oppose the appointment and flatly declared, “I want the National the Trustee on all grounds public and personal.” Borden forwarded Lash’s letter to White without comment. None was needed.183 July 1914 was a terrible time to recapitalize the Northern. The subsequent outbreak of war in August caused immigration and financial flows to shrivel to nothing, bankrupting the railway. By 1915, Flavelle was already advising White to institute a national railway system, but White demurred, in part because Canada was already overstretched, in part because “it is problematical what kind of business success could be achieved by a commission,” and in part because, although the Northern wanted to sell, “the question at once arises as to what it has to sell.” By July 1917, Sir Henry Drayton (White’s successor as finance minister in 1919), commissioned to study the nationalization of the Northern, observed that, while “on paper a large surplus can be shown,” in fact there was “no realizable equity in the property at the present time.”184 But the Northern owed the Bank of Commerce $10 million. White, a once and future vice-president of the bank, threatened to resign as minister if the bankers were not adequately compensated. A cap of $10 million was written into the bill and ultimately paid.185 The nationalization fulfilled long-standing promises to westerners to weaken the close ties between the Tories and the Bank of Montreal, but it did so by strengthening the Toronto financiers.186 Historian R.B. Fleming remarks that a “most unlikely combination of opponents to the bill took shape. Laurier, Shaughnessy [of the cpr], the Bank of Montreal, La Presse (no longer owned by Mackenzie and Mann), the Gazette, and even Laurier’s old enemy, Sir Hugh Graham of the Montreal Star, joined to fight the bill.”187 George Graham describes the debate over the Canadian Northern Railway bill as “hardly less protracted and highly charged with emotion than the one on conscription, just ended.” White’s great fear in 1917 was that the Northern might be a synechdoche of Canada. The country as a whole, too, was massively extended, possibly overextended, with a host of quasi-bankrupt lower-level securities

424

Reconstructing Fiscal Federalism

– railways, provinces, and municipalities above all – threatening to drag the national credit down with them. The one great difference between Canada and the Northern – the fact of democratic oversight – was erased when the former took control of the latter, something the commission named to study the problem observed had already been in practical effect since the bailout of 1914. White opposed in principle any such intermingling of state and business, but in practice he found himself enacting it and under serious pressure to extend things to full nationalization of all railways, including even the lucrative cpr. As Sir Thomas Shaughnessy remarked in a letter to White in 1914, that railway had benefitted from the “enormous asset” of lands grown “valuable because of the growth of the population and the progress of the country.”188 cpr annual profits never fell below $40 million during the war. Some of the most important business interests in the country were now directly accountable to the growing demands for public accountability and economic “justice.” White performed miracles of financialization to keep the wartime economy afloat. But the result was open competition between two kinds of opinion: that of the financiers and that of the general public. In practice, businessmen were responsible to financial opinion and politicians to public opinion. Financialization of the state tended to shift the balance of power more openly towards the financial market. For the financiers, Canadian public opinion in 1917 was dangerously influenced by “foreign” and “socialist” elements and by a French-Canadian opinion that shared in the opposition to higher British morality and threatened to play kingmaker to those elements. If White wanted to keep the good opinion of the financial market – the locus of Canada’s credit rating – he must send out signals that the moneyed interests remained firmly in control of the Canadian state. He must stoke financial exuberance and patriotism, because if they faltered, then his magnificent successes of wartime finance might yet become catastrophic failures. White, too, had learned the pragmatic lesson that truth was made, not discovered, and he was determined that the opinions of financiers, not the hoi polloi, would be its maker. Not “stoop to conquer” but “resist popular feeling” best describes White’s philosophy. Even as the political pressure mounted, White ostentatiously refused to recognize any problem. He dismissed widespread outrage at his April budget, telling George Foster (then in Washington) that his budget was “well received both by our followers in the House and by the country.”189 During the debate over the Northern, he urbanely fended off accusation after accusation after accusation of cronyism with detailed fact- and figureridden correctives that disclaimed any cronyist or “partisan interference.”



Income Tax: Progressivism Triumphant 425

Indeed, the same kinds of arguments about the necessary inscrutability of finance capital were advanced in both those parliamentary debates as an intrinsic restraint on the state: “It would be impossible,” declared White, “for us to obtain the names of the bondholders of the Canadian Northern Railway company as those bonds pass from hand to hand and a holder to-day might not be a holder to-morrow.”190 With a progressive income tax, White could hope to disconnect the two debates, keeping the one focused on income and the other on capital. Once again, progressive income tax could serve as a bulwark against confiscation of capital. White insisted that the Northern episode reflected well upon the government, because to admit anything else was to admit democratic checks upon the choices of the millionaire-statesmen. This was where the logic of finance capital drew him, but it was a logic too extreme for other Conservative statesmen, even such manufacturer-statesmen as Flavelle or John Stewart McLennan, a director (and former manager) of Dominion Iron and Steel Company and Dominion Coal Company. Newly named to the Senate and the measure’s defender there, McLennan told White in September: “I cannot agree with you that public interest in this matter is dead. It seems to me that it would be one of the Opposition’s strongest scented red herrings in the next election.”191 Manufacturers were necessarily more responsive to public opinion than was finance capital. They must please the public with their wares and must meet the demands for higher pay from workers, provoked by runaway inflation. But finance capital would not have everything its own way. Larger political calculations necessitated the income tax, and White would have to find a way to reconcile finance capital. On 25 July 1917, White formally proposed a graduated national income tax and on 20 September, the bill was passed. It exempted incomes below $1,500 ($3,000 for families), and the tax rate rose, fairly gradually, from 4 per cent for incomes below $10,000 to 25 per cent for those over $100,000. Had there been no war, there would have been no income tax under Borden and White. But if the war was a necessary cause of income tax, it was never a sufficient cause. Progressive tax reform could not have come without the vibrant, eclectic tax reform movement that took shape across Canada, and the Atlantic world more generally. When the crucial moment of decision came, the arguments for progressive taxation were irresistible. By introducing the income tax, Borden made it much harder for the most progressive Liberals to stand against him. By October, he had put together a “Union” government that included most of them: Carvell, Rowell, Crerar, Graham, Clark, and Turriff. These were painful defections for Laurier.

426

Reconstructing Fiscal Federalism

Conscription was not the only price that they demanded. Borden also had to dismiss some of his most notorious patronage wielders, including Robert Rogers. Thus reinvigorated, Borden campaigned on conscription and a whole program of progressive managerialism. His party manifesto, issued on 10 November, promised “to devise measures of taxation which will regard social justice”; more specifically, “in order to meet the everincreasing expenditure for war purposes and also to insure that all share in common service and sacrifice, wealth will be conscripted by adequate taxation of war profits and increased taxation of income.” But that was as specific as it got – occupying a mere 2 per cent of the 2,633-word manifesto.192 Other planks got more attention, including the Northern nationalization; civil service reform to make appointments based on merit; extension of the franchise; “effective measures to prevent excess profits, to prohibit hoarding, and to prevent combination for the increase of prices and thus reduce the cost of living”; and “adequate consideration of the needs of the industrial population” including “such conditions of employment as will ensure suitable standards of living among the labouring classes.”193 These promises would outlast the war. A permanent Dominion Bureau of Statistics was created in 1918, headed by Coats. There was also a new National Research Council, initially conceived in 1916 as a bureau of “industrial and scientific research” that would marshal university expertise and government sponsorship as “instruments for solving manufacturers’ problems.” Foster and White opposed the initiative, seeing it as a check upon ministerial responsibility. According to White, not knowl­ edge and bureaucracy but “good men” in a position of leadership were most needed to lend “driving force” to government departments.194 The federal state in Canada was far from formally redistributive and far from competent in its calculations. (Historian David Monod mocks a bungled tax on “luxury” shoes at the end of the war: “Evidently conceived by someone in the Department of Finance who never went shopping, the tax pinned a 15 per cent surcharge on everything costing more than a pair of summer sandals.”195) But for all the bungling, this was manifestly a very different state from that of the bn a Act. The needs of the weakest, which fiscal austerity had written out of federal politics, had written themselves back in again. In 1867, wealth was visible and tangible, while poverty was uninventoried and invisible; in 1917, wealth had become intangible and invisible, while poverty was made visible in an expanding popular and statistical print world that elicited the shock of self-recognition from ordinary readers. Taxation was the tip of the iceberg. The market was doing what it usually did – concentrating wealth



Income Tax: Progressivism Triumphant 427

– but because the state now managed the process, it could not claim indifference. The data, the war, and a new sense of shared, popular political agency worked to amplify demand for a new right – not for mere subsistence or welfare but for economic justice. Mid-Victorian liberals believed the marketplace was the best purveyor of economic justice. The next generation sought to impose that justice on monopoly companies. Now, progressive reformers extended that project to basic necessities. The realm of the “taxpayer” expanded from “the propertied” to a broader range of citizenry. As organized protest joined the fiscal debate, poverty became less a demonic enemy and more a demotic friend of Canada’s imagined community. That realignment permitted new ways of knowing and shifted Canada’s political centre of gravity. Macdonald’s lodestars were Britishness and prosperity. They would both remain important tropes, but in the spring of 1917, they ceded place to two rising challengers. On the one hand, the experience of Vimy Ridge precipitated a proud new Canadian nationalism that would gradually distance itself from Britishness. On the other hand, the poor would rank alongside the prosperous as the object of Canadian federal solicitude. The scantly propertied were bearing a heavier burden of the war, a fact so manifest as to propel their needs and concerns more squarely into the national imaginary. Before 1917, poverty meant weakness and absence of choice, and accepting the will of the strong. But the sight of legions of young men marching off to war forced a rethinking of strength and weakness. The cartoon businessman dismissing the conscript’s demand to conscript wealth with the exclamation, “He’s got nothing!” revealed the poverty of that claim. Property could no longer measure citizenship, and the state must remake itself in the image of that newly discovered public will and agency. The transition was only beginning, emerging initially around families and initially rejected by many soldiers themselves. In Regina, in May 1917, when organized labour met to discuss conscription, their meeting was taken over by 150 members of the Great War Veterans’ Association. According to historian James Pitsula, “when an elderly gentleman hazarded the opinion that many men in the first contingent had joined the army because they were hungry and starving, he was hooted down with cries of ‘That’s a slur,’ ‘Sit down,’ ‘Get off the floor,’ and ‘You insult us.’”196 That fissure remained very much in evidence in 1919, but hard times after the war would put the veterans – “we who have wallowed in the mud of Flanders” – at the vanguard of demand for social welfare in Canada.197 Poverty was not far behind Vimy Ridge as a constituent of the new imagined community of modern Canada.

428

Reconstructing Fiscal Federalism

Canada needed a new state and a new tax policy to reflect the changes. The tariff was no longer lucrative or legitimate enough. Macdonald had insisted on state incapacity and voluntary self-taxation, but the watchwords in 1917 were state capacity and involuntary conscription. The Canadian people wanted a better, higher-minded government. The more the state could do, the more it must do well and honourably. It was hard to believe that either the Liberals or the Conservatives could provide any such thing, but it was harder to believe it of the Liberals. They had never run big government, they were still arguing about the tariff, and they had had plenty of scandals in recent memory. They were, moreover, according to Conservative propagandists, unpatriotic shirkers. The Liberal Party was made to seem both too partisan and too FrenchCanadian. The two objections were insidiously intertwined, as the Conservatives aligned malignant attacks on French Canada with progressive fiscal reform. To the dismay of many people, including many Conservatives, the attack on French Canada grew in intensity and fervour over the course of the election campaign. French Canadians accounted for around 5 per cent of the Canadian fighting force, and patriots began to complain that the burden was not shared equitably. The French-Canadian response to the outbreak of war was always more nuanced than the English-Canadian response. Laurier, Bourassa, and even Médéric Martin pledged initial support for the war, and French-Canadian enlistment began promisingly. But the Conservative Party was weak in Quebec. Political and militia networks (the two were closely intertwined) had shrunk because federal and provincial Conservatives were fissured, not just on the schools crises but also on patronage, which the old party leadership defended and younger idealists repudiated. Réal Bélanger’s poignant account of the political career of Albert Sévigny, who rose with Borden and fell with conscription, describes a disarray so serious that Borden had to send Rogers to manage campaigns.198 Enlistment dropped further as the schools problem intensified during the war. In 1916, Manitoba suppressed non-English educational rights and Saskatchewan began to gather materials to do the same (passing legislation in 1918).199 Catholic, Nationalist, and Liberal associations and papers followed events closely. They often collaborated in institutions aimed at upholding the French language, including the Société du parler français, founded in 1902, and l’Association catholique de la jeunesse canadienne-française, founded in 1903, that led, in 1912, to La Ligue des droits du français. In Le Devoir and in the House of Commons, Henri Bourassa invoked Macdonald’s promises of perfect equality before law, in language and also (improbably)



Income Tax: Progressivism Triumphant 429

in terms of “the political rights, social rights, and moral rights of the two races.”200 The ferment of activity, with debts simultaneously to progressivism and Catholicism, nationalism and liberalism, was largely incomprehensible to Borden who saw only partyism and insularity. In the fall of 1916, patriotic English Canadians did reach out to French Canadians in a project worked up by two Torontonians: lawyer J.M. Godfrey and journalist Arthur Hawkes. The latter now aimed his persuasive powers at the French-Canadian “peasant,” who lacked the “broad vision which the more energetic and restless Anglo-Saxon has” but could be brought around to support if not Britain then at least “our industries.”201 The project of selling patriotism as self-interest appealed to Liberals and businessmen in both provinces and netted support from the Chambre de Commerce de Montréal and the Sherbrooke Board of Trade, as well as leading figures in the cma and the Toronto Board of Trade, including J.H. Gundy. In October 1916, some fifty-odd delegates from Ontario, mostly businessmen but including Oscar Skelton, toured Quebec cities, with many speeches and banquets, all well covered in the French and English press. Historian Robert Rumilly remarked that, at the least, the visitors saw “not incorrigible illiterates but an industrious people, as eager to learn as any other.”202 In January 1917, the hospitality was reciprocated in Toronto, the guests including Quebec premier Sir Lomer Gouin. In February, a Patriotic Fund campaign raised $4.3 million in Quebec.203 Tensions seemed to ease, and a big “Win the War” national convention was planned for Montreal in the springtime. But the convention began three days after Borden announced conscription. It divided into hostile factions and petered out. The next such campaign, held in Toronto in August, was unambiguously partisan. Quebecers felt betrayed, and Borden lost French-Canadian MPs to resignation.204 Enlistment faltered in French Canada because it was badly managed and because French Canadians resented the growing tide of francophobia west of Quebec. Of course, the lower rates of enlistment were seen to prove French-Canadian ignorance, insularity, corruption, and selfishness. In fact, the problem in Quebec was the opposite. Francophone coverage of the war was more critical than anglophone coverage because the francophone press reprinted critical analysis of the war’s conduct not found elsewhere in Canada but widely published further afield.205 French Canadians were probably better informed than English Canadians. Where English Canadians embraced the war as Rupert Brooke embraced it in 1914, “as swimmers into cleanness leaping,” French Canadians saw darker processes at work: opportunism and autocracy facilitated by

430

Reconstructing Fiscal Federalism

nativism. Le Canada complained throughout October 1917 of the spiralling prices, taxes, and debts that it blamed upon the “nefarious influence of profiteers and high finance.” Where England and the United States aimed “as much as possible, to make the current generation pay for the war,” White “distinctly separated himself from the exemplary policy of those two great nations,” by clinging to loans and consumption taxes.206 French Canada’s war was less Brooke, more Wilfred Owen. Such criticisms of the Canadian war effort as regressive were widely voiced across Canada. But when French Canadians said such things, they were accused of a backward, selfish, peasant-like view. In fact, Borden’s problem was not insularity and conservatism but a threatened embrace of progressive economics in Quebec. The province had largely turned from the Conservative Party to the Liberal, federally, provincially, and municipally. Quebec also had an unusually powerful Catholic faction that perpetuated an anti-statist streak, to the frustration of progressives. But in the heat of the war, in 1917, the question under debate was not state or non-state, but rather, what kind of state? What kind of economic managerialism would be put in place and how French-Canadian would that managerial state be? Laurier, backed by Skelton and King, was openly espousing progressive fiscal reforms. But French Canada was producing and disseminating its own progressive academic analysis. Although most French-language higher education was overseen by the Church, an exception was the Hautes Études Commerciales (hec), founded in 1910 by the Société Saint-Jean-Baptiste (ssjb) and the Chambre de Commerce, where Édouard Montpetit taught economics. Originally trained as a lawyer, Montpetit had studied politics and social science in Paris, on a new provincial scholarship. In January 1917, he spoke at a conference organized by the ssjb in Montreal that recommended modern economic methods and education. Look at Germany’s economy, declared Montpetit, invoking French authorities to insist that a Germany able to overpower France economically had taught the world the new meaning of strength. State-sponsored science, including industrial engineering and business education, had turned a poor, agricultural country into an industrial powerhouse. Science now ruled as “official science,” based in laboratories that functioned as “genuine ministries,” and continually poured out books, reviews, catalogues, and periodicals. “The scientist is respected as the equal of a prince. The title of doctor is prized above all. The professor is an authority. The chemist is the king of the factory.” This was what French Canada needed: economic conquest must, he argued, be our reality. The goal was to get better businessmen and to give



Income Tax: Progressivism Triumphant 431

them more influence in “public life. School leads to the threshold of parliament.” As Quebec had formed liberal professionals, now it must form industrialists, financiers, and the like, with, as well as the hec, a “School of Political Sciences” to nurture educated statesmen.207 Thus, like the early American progressives, Montpetit drew on German example to advocate progressive, managerial statism. In February, Montpetit electrified a crowd with a speech in favour of the Patriotic Fund that celebrated English and French majesty together.208 In March, speaking fluent English and French at the Laval Reform Club, he reiterated the arguments for higher education and called for an apolitical tariff commission.209 Also in March, Montpetit wrote a short preface to a pamphlet by journalist Georges Pelletier: “Everything is expensive … Why?” Pelletier expanded his earlier articles with more evidence, including Coats’s report, and denounced combines and excessive taxation that he estimated at $100 million. But where Pelletier recommended agrarian solutions, Montpetit’s preface recommended a new political economy that would be “a science of action, a preaching science, a true national discipline.”210 The new fiscal sociology was not restricted to academe. In the late autumn of 1917, the supposedly anti-direct-tax inhabitants of Quebec City’s suburbs petitioned for municipal income tax, prompting a strongly worded counterpetition from the Quebec Board of Trade that denounced income taxes as inquisitorial and easily evaded and recommended instead taxing business rental values and religious and ecclesiastical corporations.211 Montpetit voiced a post-liberal progressivism that had discovered it need not discard its nationalism. Fiscal conservatives saw two threats in this new French-Canadian progressive turn: on one hand, the dangers of transnational alliance were amplified; on the other, progressive fiscal reforms threatened to perpetuate the evils of fiscal transfer. French Canadians were poorer than English Canadians, so any fiscal redistribution grounded on calculations of prosperity and poverty must transfer wealth from English to French Canada. Even if corruption and patronage could be abolished, the new fiscal sociology would enable French Canadians to keep tapping into Ontario’s wealth and power. The real problem for Ontario, it turned out, was not corruption but the persistence of French-Canadian political combination and influence. Not backwardness and insularity but a growing openness and forwardness posed a greater threat to Ontario purses. But thanks to that overdetermined cultural reading of Quebec, such arguments were best attacked as selfishness, corruption, and insularity, the “wartime retreat into a narrow provincialism” that became historiographical orthodoxy.212

432

Reconstructing Fiscal Federalism

Those tensions were on display in the Parliamentary debate over conscription. Laurier attacked conscription with the same language that he attacked regressive taxation: it hit the poor man harder than it hit the rich. Why, he asked, did workingmen oppose conscription? Not because they were unpatriotic, but because “there are no classes of the community upon which the sacrifices, which are involved in war, fall so heavily as upon the labouring classes.” Both wealthy and poor men were equally heroic in going off to fight the war. But “If he loses his limbs, or is crippled in any way, the wealthy man comes to a home in which he will find every comfort, but the poor man has to go to a home where he cannot have comforts, since because of his physical infirmity, he can no longer earn his living.” No wonder, Laurier continued, that such men demanded equalization: “They ask that if they are to be called upon to give their blood, the wealthy class should, at least, give their wealth in support of the cause.”213 Ernest Lapointe argued that the poor conscripts would be sent to the front, while the rich ones would appeal and escape. The Liberals had mastered the trick of reading fiscal sociology into politics. Sir George Foster, who responded to Laurier, read politics back into culture: workingmen were patriotic fighters, as would be the French Canadians were they not so distant from “the sphere of information and of knowl­edge,” i.e., so ignorant, a fault that Foster blamed upon the “deplorable failure” of their political leadership. Borden voiced the same thoughts in private correspondence. Another Conservative, H.H. Stevens, who had made his name as a civic reformer in Vancouver, followed Foster with arguments that, where White was already conscripting and protecting wealth, French Canadians like Montpetit were taking a self-interested view that would see a sullied Canada emerge from the war with “hundreds of millions of dollars, reaped from the war.”214 For Stevens and other municipal reformers, including Lighthall and Ames, the attack on French Canada was a logical extension of their fights against Tammany Hall. A letter to the Montreal Daily Mail by “Canadian” in mid-June asked whether the “English speaking tax-payers of Montreal,” businessmen who paid most of the taxes, deserved more than “the paltry 20 per cent which they now enjoy in the City council and which is almost nil in the Provincial Legislature.” Conservatives cherry-picked progressive statements, conflated self-interest with corruption, and blamed French Canada for its hegemony. It is no small irony that the most progressive arguments when voiced by French Canadians were branded anti-progressive corruption. Laurier and Borden fought to attract and hold the progressive lobbies and their leadership at a moment when progressive statism was suddenly



Income Tax: Progressivism Triumphant 433

at a premium. In 1917, John Stuart Mill’s fiscal truth, that the state always sought to raise taxes and the people to lower them, was defiantly rejected; instead, Canadians demanded “stiff” taxation. The burning question became which party was most likely to relinquish the balance of power to its progressive wing: the party of reactionary millionaires or the party of reactionary French Canadians. Conscription and income tax tipped the balance in favour of the millionaires for independent progressives like Crerar.215 In the 1850s, French Canada was seen as the obstacle to low taxes that English Canada ardently sought. In 1917, it was the obstacle to high taxes no less ardently sought. Laurier was accused of holding back the war effort, especially after he refused to join Borden in June, and Conservatives blamed a culture of ignorance and selfishness. Their views hardened in a national historiography shaped by Donald Creighton, professor at the University of Toronto, and self-consciously a product of World-War-I era Toronto, which was inveterately hostile to FrenchCanadian culture and language.216 Junior colleague Robert Craig Brown criticized a “‘politics as usual’ atmosphere” in Laurier’s attack on White’s first budget, while Ramsay Cook accused Laurier and Mackenzie King of preferring the mere trappings of nationhood to Borden’s more responsible shouldering of national duty.217 But the accusation is wrong on two counts. French Canadians were not insular critics, and the criticisms better reflected new transatlantic norms of fairness than did White’s budgets. A government that did not effectively tax wealth was, ipso facto, exempting it. That discovery, coupled with revelations of terrible poverty amongst those who did bear the burden of taxation, had shattered traditional political accommodations in Montreal in the 1880s, and the conscription crisis was, to no small degree, a national replay of those revelations. The country as a whole was now organized around the question that Helbronner had first put before it: not whether the state should redistribute wealth from rich to poor, but whether it should continue to redistribute wealth from poor to rich. Small wonder that Quebecers led the attack. Agitation around regressive taxation and the cost of living escalated in the later months of 1917. One by one, Borden’s progressive planks proved hollow, for reasons widely attributed to the influence of vested interests, represented by Clifford Sifton and Toronto bankers.218 Railway nationalization in August 1917 looked more like dirty dealings than progressive reform, as did franchise reform in September that enfranchised selected women, those with soldier-relations, while disenfranchising tens of thousands of “enemy aliens” who had settled in Canada since 1902. Borden’s food controller proved to be “a bluff” and a “farce,” according to the

434

Reconstructing Fiscal Federalism

Riverdale Conservative Association and Montreal’s La Presse (quoting Médéric Martin). By way of response, controller W.J. Hanna explained in Maclean’s magazine, in December 1917, that he had no power over prices and his job was to persuade housewives to economize.219 November saw a fuller study of the William Davies Company that registered enormous profits and defended them as legitimate. So, too, the new income tax was a sop to progressive reform, more a performance of Plunkett-style responsiveness than a redistribution. It rallied moderate liberal reformers but did not appease Borden’s more partisan and radical critics and did not dampen the widening gyre of radical criticism and action: strikes, boycotts, and demonstrations. The income tax enabled Borden’s Unionists to claim that they were now taxing progressively, but the claim was too empirically weak and too widely understood as such to carry the population. Liberals made sure of that in their own campaign. A 200-page booklet entitled Who Shall Rule: The People or the Big Interests? that defended Laurier’s record and attacked Borden’s differed little from comparable attacks from the Calgary t l c and the Independent Labour Party.220 Farmers across the country took the same position.221 An editorial in the Globe, “The Big Interests,” accused the Borden government of excess solicitude for big business, reserving particular suspicion for William Davies: “There would have been no necessity to investigate the profits made on bacon had the taxation of war profiteers been sufficiently high to secure the return to the war chest of all profits above a normal limit.”222 Making the Liberals fiscally progressive was largely Skelton’s doing, according to Norman Hillmer. “Skelton advised Laurier to hit hard at Borden’s failure to bring economic policies in line with social justice. The government had piled up debt for future generations to pay and allowed the cost of living to soar, while a few businesses and their proprietors reaped obscene war profits. A tax on income had been introduced earlier in 1917, but it had come late and was too easy on the rich. The farmers, who were getting a raw deal both in the east and in the west, needed relief in the form of lower tariffs. When Laurier issued his election letter to Canadians in early November 1917, Skelton’s ideas were all there, if only a few of his words. Laurier wrote his own prose.”223 Conscription of wealth was only one concern for Skelton; voluntary enlistment of wealth was another. The Victory Bonds campaign was an important new factor in the election, he argued. The tax exemptions made it a magnet for finance capital and facilitated Borden’s pursuit of closer ties between the state and the propertied: “A Victory Loan campaign in November provided organization, enthusiasm, advertising, which were



Income Tax: Progressivism Triumphant 435

diverted to the government’s aid in December. Practically every citydweller in Ontario and the Western provinces who admitted he was in the leading citizen class backed the Union.”224 Wood and Gundy negotiated special concessions for bond dealers in regards to the Victory Bonds that aligned western bond dealers, still smarting at their defeat in regards to the Canadian Northern Railway refinancialization in 1914, enthusiastically on side. Bond dealers like Wood and Gundy who headed the bond dealers associations and patriotic loan committees also took a prominent part in the pro-Union election committees. Skelton observed that the Union seemed to have things “their own way” in the cities but “not so in the country, where many of the leaders in the farmers organizations condemned the campaign as arrogant and hysterical. They were, moreover, gathering momentum: the United Farmers of Ontario boasted of acquiring 4,000 new members in the ten months before the election.” Two weeks before the election, panic about rural Ontario set in at Unionist headquarters. Clifford Sifton discovered “a decided reaction … amongst the poorer class of voters in favor of Laurier. It is hard to say how far it will extend, but I am very uneasy about it.” That unease reflected a heavy weighting of rural over urban votes. On 30 November, Borden met with Sifton, Rowell, and Cochrane to discuss the problem, and they decided to exempt farmers’ sons from conscription and to reorganize the Ontario campaign under Sifton – the malevolent architect of the Manitoba schools crisis.225 Even with conscription and income tax, even with a last-minute pledge to match soaring American tax rates, the Unionists were vulnerable. Borden headed a deeply regressive, clientelist government, its progressive patina discredited as too little too late. Rural Ontario was yeasty and Quebec was solidly against them, while the Maritime provinces remained, as always, worryingly immunized against central Canadian patriotism, and those Westerners who could vote were torn between patriotism and hostility. Transcontinental electoral revolt seemed imminent. Montreal saw violent demonstrations; a country house belonging to Hugh Graham was dynamited, and a servant killed. But for most of Borden’s critics, the election would suffice to repudiate Borden and the regressive pattern of Canadian history. Progressive income tax was on the books in toothless form. But it was unlikely to remain toothless as the transnational campaign of liberals and radicals demanded that capital must pay its share of expenses and suffer its share of loss. The coalition might not be capable of much in the long run, but it was blindingly obvious that it would be quite capable of imposing heavy taxation as a point of departure. Progressive tax reform had spiralled well beyond the control or approval of its

436

Reconstructing Fiscal Federalism

authors in the United States and could be expected to do so in Canada. The fact that the Liberal Party was in thrall to such progressive economists as Skelton and Mackenzie King was hardly reassuring. The millionaires vastly preferred their own version of progressive fiscal managerialism. Above all, if those single taxers, who enjoyed unparalleled institutional power in western Canada and widespread public support elsewhere, had anything to say about it, those painful taxes would be aimed not just at income but also at capital, whether of land value, franchise value, or investment. The United Farmers of Ontario were scheduled to meet in convention less than a week after the election and to entertain single-tax delegates from western grain growers’ associations, notably John Kennedy of Winnipeg, who saw the new wartime taxes as a first step towards “a federal land tax” that would be heavily pushed at the other “farmers’ parliaments’ this winter.”226 The notion that the single tax was a factor in the federal election of 1917 may seem absurd now but did not seem so then. Take William Irvine, a key advocate of the United Farmers movement and the single tax. In 1917, in the Grain Growers’ Guide, he still sought to work through existing political parties in order to “influence the men who do make the laws so that our mobilized voters will have an equal influence with the superior organization and money of the special interests.”227 Elsewhere, he described the path to power as “through an unorganized mass of middle-class stupidity.” Among the desired reforms, as voiced in his 1920 book The Farmers in Politics, but also expressing the concerns of the wartime years, was a concern with the gap between the poverty in Winnipeg that compelled 46,154 families to live in single rooms in 1901 – rising to 80,702 in 1910 – and the huge landholdings of the railway companies: the cpr’s Canada North-West Land Compay with its 373,165 acres and Canadian Northern Railway with its 6.5 million acres plus more in its Canadian Northern Prairie Lands Company. In addition, hbc held 4 million acres, and there were the many millions of acres sold that left farmers “under the gentle care of mortgage companies.”228 One did not have to believe that the single tax was a panacea to see that it had a certain political usefulness in such a situation to justify confiscatory taxation. The single-tax threat was not directed against manufacturers, earning it the neglect of historians of industrialization. But it deserves attention from historians of capitalism for the threat it posed to finance capital, with its transcontinental networks and ambitions: the big franchised companies and, above all, the big banks whose strength was in mergers and monopolies. It was, again, blindingly obvious that the election came at a highly sensitive moment, with the Northern



Income Tax: Progressivism Triumphant 437

nationalized but compensation to its creditors still under negotiation. The Northern was one heck of a potential first domino. Capital was not safe in such a world. Its enemies must be discredited, and, as ever, racialization lay close to hand as a weapon for that battle. In the final weeks of the election campaign, Conservative attacks on their political enemies became more virulent than anything seen before or since. It’s not easy to look past the conscription crisis and consider the role of fiscality in the election of 1917. But that, surely, is the point. Borden confronted an emerging transnational alliance between progressives in Quebec and outside Quebec – above all the rapidly radicalizing farmers and workers of Ontario, who were organizing against the millionaire financiers of Toronto in a way they had never organized against Montreal. No such alliance had existed since John A. Macdonald had laboriously deconstructed it in the 1850s. That earlier alliance was built by men determined to organize around political and fiscal accountability rather than ethnicity. A counterfactual example may convey the point. Imagine Laurier, in 1917, running for election in central Toronto as LouisHippolyte Lafontaine was invited to do by Robert Baldwin in 1841, on the promise of shared reform objectives negotiated in 1839 by Francis Hincks: “Lord Durham ascribes to you national objects. If he is right, union would be ruin to you; if he is wrong, and that you are really desirous of liberal institutions and economical government, the union would, in my opinion, give you all you could desire, as a united Parliament would have an immense Reform majority.”229 Borden’s offer of union, coming after the conscription bill had been drafted, was more threat than invitation: Laurier must support conscription or attack it in a campaign that he could not win. He resisted Borden’s offer but many other Liberals did not dare, especially outside Quebec. The language of unity was widely used, but it was used to justify and inflame nativism. I don’t mean to romanticize the situation: progressive alliance might well have been negligible in its practical effects. But the counterfactual example helps us to understand that racialization of adversaries remains a choice, especially in moments of crisis. Before 1917, Borden denounced gratuitous appeals to nationality, but in 1917, he licensed them. He did so on the advice of the party elite, including his finance minister. Borden’s diary for November 1917 records that Sir Thomas White thought “we should make a strong campaign against Quebec.”230 White and Borden obviously postponed that decision as long as they could, but no longer. The immediate threat posed by a progressive alliance was to the Conservative Party, but it might be argued that that threat was negligible

438

Reconstructing Fiscal Federalism

to the men running the party at the time. Borden made a principled decision to win the war “at any cost,” including the party’s future.231 For the others, the deeper threat was to capital. White’s loyalty to the Conservative Party was shallow: he was a long-time Liberal, drawn to Borden’s Conservatives in 1911 along with the rest of the Toronto Eighteen only because Borden seemed the best protector of capital. But now the Liberal Party of Canada threatened to lurch to the left. No matter that White had driven it there – the danger had to be confronted and the progressive coalition blocked. Polarizing the Canadian public around conscription would win the election at the expense of later elections because it would reunite French Canada. Sévigny warned Borden that the Conservative Party would be killed off in Quebec for twenty-five years. But racializing the debate would also drive a wedge between English and French Canada and disrupt the emerging alliance. Even if the Liberal Party could reunite French Canada, it would do so at the expense of English Canada. It might win electoral victories, but only as a contrived alliance with scant unity of purpose. It might decimate the Conservative Party but could not, surely, decimate capital. White was no francophobe. But he had put his government in a situation whereby electoral defeat might shock market confidence at a time when the Canadian government was so massively overextended that that shock might not only precipitate the collapse of the nation’s and the millionaires’ credit but also damage the larger war effort. A fortune was at stake even without tax reform. The Conservatives campaigned on moral principles at a time when, thanks to the soaring Canadian debt and the growing consolidation of finance capitalism in Toronto, public wealth began to flow into Toronto faster than it had ever flowed out. Both conscripted and voluntarily enrolled wealth – taxes and war bonds – came disproportionately from Ontario. That province subscribed far more heavily to the Victory Bonds campaign than did other provinces: $220 per capita in Ontario, $180 in Manitoba, and below $120 elsewhere, noted the organizers. Toronto financiers headed the campaign – J.H. Gundy chaired the special subscriptions committee that administered all subscriptions over $5,000 in Toronto while E.R. Wood took the same role nationally – and they accounted for much of it. Canada Life alone subscribed over $6 million. Other Cox men on the Toronto branch of the Victory loans committee included Bradshaw and National Trust manager W.E. Rundle. Precisely because so much Ontario money was involved, bold action was needed to keep it in Ontario hands. “Our Victory Loan must not be handed over to Quebec to spend,” declared the Toronto Citizens’ Union Committee, a “Non-Partisan War-Time Organization to Support Union



Income Tax: Progressivism Triumphant 439

Government,” whose executive chair, G.A. Warburton (long-time secretary and fundraiser of the Toronto ymca), took a prominent part in advocating and organizing the Victory loan campaign.”232 Canada, it exclaimed, had subscribed $410,000,000 to the Victory loan, “of which Quebec outside of Montreal only subscribed $17,000,000 – shall we hand the whole sum over to Quebec to spend?” The same committee broadcast full-page advertisements that baldly proclaimed “Quebec Must Not Rule All Canada,” and paired that slogan with a cartoon showing Henri Bourassa enthroned as “Minister of Justice, Finance, Public Works, etc.” with his feet on a vault labelled “Victory Loan” and imperiously instructing Old Man Ontario that he must “Parlez-vous français!!”233 (See figure 9.5.) Another cartoon, “Too Late,” showed Quebec atop a huge stone block atop a squashed Ontario, the Victory loans flung from his squashed hand. One text-heavy advertisement focused not on conscription but on the larger lessons of Canadian political history: “Is a United Quebec to Rule All Canada? This, the most tremendous question in Canada’s history, is to be answered within ten days.” It conceded French Canada’s right to organize: “This is a free country.” But given the sixty solid seats in Quebec and sympathy further afield, the time had come for “English-speaking Canadians to get together and present to Quebec a united front in the defence of our rights … The Citizens’ Union Committee, anxious for the maintenance of British ideals and raditions, views with alarm the menace of French-Canadian domination with its inevitable influence upon the home, the school and the state.” Quebec had “failed” the Red Cross, the Patriotic Fund, recruitment, and the Victory loan: “Dare we trust our soldiers, their wives, their children, their pensions and their allowances to Quebec, that will neither give, enlist nor invest, and which will resist taxation for the support of our men and their dependents?”234 In such advertisements, conscription was subsumed within the larger question of English-Canadian rights, wealth, and power. There was also a Unionist Party Publicity Committee, chaired by Willison, that asked whether the Loan was “to be handed over to Laurier and Bourassa and their adherents, who proposed deferring Canada’s further participation in the War?” Ontario was back where it had been in 1864, determined to keep its wealth in its pockets, but now more determined and better armed. It would smash the political power of the French-Canadian public and the fiscal power of the Montreal financial elite, transferring both further west. The lesson that Macdonald and Cartier had tried to teach minorities in Canada – that an aroused public opinion generally got what it wanted – had been learned too well by the nativists. No political or bureaucratic reform could rein in

440

Reconstructing Fiscal Federalism

Figure 9.5  E.N. McConnell, “Quebec Must Not Rule All Canada / Bourassa’s Dream” (December 1917). Toronto Unionists made no secret of the fact that power and money were the real issues of the election. (Image courtesy of the Archives of Ontario, I0016372)

French Canada politically: that required a frontal fight. But such an ambitious rupture with the pre-war balance of power required an extraordinarily virulent campaign. The Conservative Party rose to the task. Nativism was a common way to discredit political and economic agitators – as when a Saint John nail maker blamed a strike on American influences in 1912 or a Montreal employer described striking garment workers in January 1917 as “GermanJewish” traitors obstructing uniform making.235 Now the accusations of unpatriotic classes and ethnicities became wholesale. When socialists won election in Calgary in June, the Winnipeg Telegram blamed the “AustroGerman influence” and claimed that “here alien enemies were seen by scores literally driving their women to the polls and making the occasion a holiday and an orgy.” (The Crescent Heights Mothers Club vehemently disputed that account.)236 Workers and farmers who opposed conscription were denounced as disloyal parasites; Skelton was “astounded … by the violence of the anti-farmer sentiment.” For Stephen Leacock, the farmer seeking to prosper from the war was gorging himself on his produce and burning everything else in a huge bonfire; his idiot son, basking in the surfeit of food and warmth, was the “war theorist talking of the boom of trade.” The attacks provoked a new self-consciousness that propelled farmers’ parties to postwar victories.237



Income Tax: Progressivism Triumphant 441

The attack on French Canada was much worse. To win the election of 1917, Borden and his party needed an ethics and rhetoric of rupture. Compromise was rejected as the inglorious brokerage of the past. It must be repudiated, and the best evidence of that repudiation was a crushing and humiliating defeat to Quebec. Conservatives had to drive a wedge between English and French progressives and prove that party politics retained its strength in the Liberal Party but lost it in the Conservative. Conscription seemed the best possible evidence that French Canada was repudiated and that a new and principled day was dawning in Canadian politics. Even long-time and informed Liberals like Dafoe concluded that French Canada was the great obstacle to a higher morality and Laurier too fatally compromised by his identity and base support.238 Any solution to the wartime crisis, declared the Free Press in June 1917, must be “without the assistance of Laurier or Quebec.” Dafoe privately wrote to a friend in Quebec that “you shall do precisely as you please, and we shall do whatever may be necessary. When we demonstrate that a solid Quebec is without power, there may be a return to reason along the banks of the St Lawrence.”239 The Toronto News, which was heavily subsidized by the Conservative Party, asked: “Is Quebec to rule Canada? Is the one FrenchCanadian province to lord it over the eight English-speaking Provinces?” Willison proclaimed that a union of “Eastern Conservatives with Western Liberals” would “destroy the ascendancy of Quebec in Canadian affairs. That has been done but Quebec will be well treated.”240 He wrote Borden’s election address; he also published a piece in The New Era in Canada that argued not only immigrants but “the whole people should speak the English language” so as to build up the proper “common national and imperial spirit.”241 Willison’s son, like Turriff’s, had died at Courcelles in 1916; Dafoe’s son was still overseas. Such men voiced a profound desire for a new political patriotism and dignity, one felt wherever young men had gone to war. But they spoke from and exacerbated the overdetermined cultural reading of French Canada. The Toronto-led Union government denounced its critics as too selfish or ignorant to be genuinely political agents in a reformed public sphere. Many English Canadians in Montreal joined the attack. Westmount mayor W.D. Lighthall claimed to overhear “excited French-Canadians” ignorantly claiming that “all the English speaking Liberals were bought by the money of Flavelle et al, and that this was the cause of the whole Unionist movement.” Lighthall’s imperialism trumped his nationalism. He saw the bna Act as quasi-municipal “present machinery for local purposes”; the real constitution and racial identity was British and the growth

442

Reconstructing Fiscal Federalism

of Canada was “the natural right of management of this territory by the people of the British race.”242 The war and the split in the French-Canadian vote turned that right into a power. Likewise, the McGill Daily recorded Stephen Leacock’s arguments for Borden: “‘True, we have large numbers against us, but we have the best and bravest on our side – even if the French,’ were his words, ‘all the Bulgarians, all the Turks, all the Germans are against the Union Government.’” Leacock carefully aligned the attack on French Canada with the language of statist progressive reform: “What we need now is a government of compulsion; a government that can command – that is what Union Government means. That same force and compulsion which is necessary to send men overseas, is also necessary at home. If we are going to have conscription of men, we must, as an essential accompaniment, have conscription of wealth.”243 Leacock put economics to partisan purpose. At the University of Toronto, George Wrong did the same with history. Wrong was well connected in Toronto high society: he frequented the Toronto History Club alongside Walker and Flavelle, both university governors as well as personal friends and, for Wrong, idealized examples of leadership.244 In March, when the University of Toronto organized a series of lectures to mark the anniversary of Confederation, Wrong explained the terrible threats to Canada in the 1860s according to terms obviously designed to speak to 1917. Deadlock paralyzed the government and no government survived more than six months. Bad crops drove down the country’s credit and an alarming demographic exodus began, while bellicose Americans contemplated conquest of Canada. “Torn by petty strife, the Canadian people seemed ill fitted to confront a great issue. Party had become faction and there was a deadly apathy. If one more bridge was built in Upper Canada than happened to be built in the same year in Lower Canada the public mind was more disturbed than by any great question of national destiny.” Wrong’s was a tendentious reading of Union-era politics: Macdonald and Cartier ran things during most of the decade before Confederation, relegated to the opposition only from 1862–64. Wrong glorified Cabinet shuffles as six-month ministries. There was a crisis in 1864, but Wrong exaggerated it to justify bold, autocratic leadership – of the sort that overrode resistance in Nova Scotia where “the plan was carried through without reference to the people. A high-handed proceeding, no doubt, but the few are sometimes wiser than the many.” Other lessons included that French was protected only in the federal Parliament and Quebec, and that Canada needed British-style leadership of class, wealth, and taste to provide a “sympathetic lead” to ignorant farmers and



Income Tax: Progressivism Triumphant 443

labourers. In his private notebooks, Wrong had remarked of the inhabitants of the Île d’Orléans during a visit in 1906: “Progress they do not know.”245 Wrong made Canadian history point towards majoritarian overrule of French Canada, all the while expressing deep regret for the growing racial strife. He had lost a son at the Somme in 1916; his other son, Hume Wrong, another historian, privately relished the prospect of open strife: “I would welcome a little military activity in Quebec.”246 Historical lessons of racial superiority and its fiscal reinforcement were written into the Toronto campaign at every level. At a meeting to support Kemp, held in mid-December at the Parliament Street Methodist Church, Toronto MP Edmund Bristol denounced Quebec as the spoiled girlchild of Confederation and celebrated Canada’s emancipation from its influence: no more would Canadians be considered “North American Chinamen.” Simultaneously, at the Masonic Hall, Sir George Foster called for a “special tax on all foreigners making large pay” to be spent on free land for veterans.247 Western and central Canada came together in the attack on French Canada. The attack on French Canada played well in western Canada. The Free Press’s attacks were seconded by the Winnipeg Telegram, edited by M.E. Nichols, which declared: “A vote for a Laurier, Bourassa and Lavergne candidate is a vote to establish tyranny, lawlessness and terror in the place of law, order, and decency such as we have long enjoyed.”248 Sir Charles Hibbert Tupper, son of Sir Charles Tupper (whose moderating voice was finally silenced in 1915), sent four sons to the front. One returned badly wounded in 1915, another died at Vimy Ridge, and two others were still deployed when he declared in Vancouver in October of 1917: “It seems inconceivable, under present needs, that Canada, as a whole, will submit to Quebec rule, and if Laurier wins now it means Quebec rules with a vengeance.”249 But the real political strength of the anti-French-Canadian movement was in Ontario. Capturing the Ontario electorate, persuading it that the Union government represented both the patriotic and the progressive option, was the point of the campaign. Premier Hearst, speaking on 12 December, argued that “Ontario must stand by the Union of the Eight Provinces, and must do so in a manner so emphatic and conclusive that Quebec domination will never again be attempted.”250 Newton Rowell gave a “vitriolic” speech in North Bay: “We may as well frankly face the issue. There is a Nationalist, clerical, and reactionary movement at work in the Province of Quebec which today dominates the political situation in that Province, and is using this hour of grave national peril to dominate the political situation throughout the

444

Reconstructing Fiscal Federalism

Dominion of Canada.” A map in the Toronto News represented Quebec shaded in black and labelled “The Foul Blot on Canada.”251 Even the Toronto Globe said of the speeches at North Bay: “Quebec cannot rule over all Canada. That will be demonstrated at the polls,” and printed the Citizens’ Union Committee advertisement with the same slogan.252 Indeed, Canadian newspapers showed an uncharacteristic consensus that may have owed something to the recent formation of a national news association, reflecting the government’s need to coordinate censorship. The new Canadian Press came into being in September 1917, supported by Borden with a grant of $50,000. Nichols, who had begun the process of consolidation a few years earlier when he founded the Western Associated Press, was a linchpin in the new national organization. Within two months, in November 1917, Nichols was also zealously running a federal propaganda campaign on behalf of the war effort and Victory Bonds in the newly created Department of Public Information.253 Between them the brothers, nativist M.E. Nichols and crony capitalist Thomas White, brokered and aligned a remarkable congruence of public voice, private wealth, bureaucratic capacity, and raw political power in Winnipeg, Toronto, Ottawa, and Montreal, with impressive tentacles in national organizations that further extended their reach. Borden’s victory was greeted jubilantly across the country in such circles. The London Free Press editorialized: “The Flag will not come down. Canada’s Allies will not be betrayed. The Canadian soldiers at the front will not be deserted. Quebec shall not rule Canada.”254 The patriots called their outlook “majoritarianism,” but it could as easily be described with the words that launched political history: “Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.” French Canadians were fully aware that classical realpolitik was at work. Le Canada remarked: “Here is the theory, squarely stated, that ‘might is right’ (‘la théorie du pouvoir donnant le droit’) which in the current war passes for barbaric and Boche.” Describing French Canadians as the “pivot” of Confederation, it asked whether they had the rights of the British subject.255 Joseph Howe could have answered that question. At a moment when the Canadian public desperately sought a fairer public order, the Conservative Party and its allies racialized that fairness. Many people were aghast. Le Canada registered the dismay voiced by the Manchester Guardian at the flagrant defiance of French-Canadian opinion. Opposition to conscription was unfortunate but politically legitimate, according to the Guardian; recruitment was a practical problem, not



Income Tax: Progressivism Triumphant 445

an ideological one, and the politicization of that recruitment, in the attack on French-Canadian agency, would bring scant practical benefit and much lasting injury to Canadian and imperial politics.256 Canadians had been promised fair, effective, business-like government, but the more that the businessmen-financiers running the country reneged on that promise, the more they had to intensify their racialized discourse of internal enemies. As J.L. Granatstein and J.M. Hitsman remark in their history of the conscription crisis: Borden’s government in 1917 “deliberately set out to create an English-Canadian nationalism, separate from and opposed to both French Canada and naturalized Canadians. No other conclusion can be drawn from this election campaign, one of the few in Canadian history deliberately conducted on racist grounds.” It was, they add, “heavily dependent on corporate contributions from Toronto and Montreal.”257 Laurier himself saw the hand of “certain railway interests,” i.e., the MannMackenzie ring and their backers, worried that he might undo some part of that deal, which so favoured Toronto capitalists.258 Corporate influence and regressive taxation do not alone explain the anti-French campaign but their connection was not incidental. Both sides politicized their adversary with an ad hominem argument. Rowell, the most vitriolic of the campaigners, later had to fend off accusations that he personally and the Union government were controlled by big business, and especially by the packing industry and one packer in particular. When that accusation was aired in Parliament in 1919, Rowell retorted: “There has never been a Government as little influenced by the big interests or powerful corporations as the present Government.”259 The claim was absurd: Borden had campaigned in 1911 on power to big business and his administration fulfilled that promise. To note that fact is not to accuse Borden’s government of corruption. But Rowell’s argument measures the distance Canada had travelled since 1911. It was hard not to notice that the millionaire-statesmen were thriving on war taxes from which they exempted themselves. Far better to deflect a debate about tycoons as statesmen to a debate about race. Laurier complained that his opponents focused their attacks on his identity rather than his politics, but the millionaires were in the same position. Every attack on their policies became an attack on their identities as millionaires. The choice was not a fiscal versus an identity argument but one fiscal / identity argument against another. White’s argument that Quebec should be hit hard was a response to the Liberal strategy of hitting the millionaires hard. That was the advice given to Laurier in a few weeks previously, in October 1917, by Quebec lieutenant Ernest Lapointe: “I think that the most formidable weapon we have is

446

Reconstructing Fiscal Federalism

to portray the struggle as against the sharks of high finance, conflating Unionism with Flavellism, Siftonism, MaxAitkenism … All these war profiteers are on the side of the government and we must show the evidence for that fact.”260 Rodolphe Lemieux levelled deeply personal attacks during the summer’s debates: “From the day he became Finance Minister, my hon. Friend has thought of nothing else but giving slices of Canada’s fortune” and replenishing the Treasury with taxes on “every man, woman and child.”261 This was not just the voice of Quebec. J. Castell Hopkins, who wrote a triumphal pro-Unionist souvenir booklet about the events of 1917, yawned at the argument’s unvarying ubiquity: Frank Oliver in Edmonton and W.W.B. McInnes in Calgary delivered “characteristic orations in denunciation of the Borden Government, the ‘big interests,’ the profiteers, the ‘purchased, venal press of Canada’ and the evils of Conscription and the War-time Franchise Act while also eulogizing Laurier and Liberalism. This was the text of practically all the Western Liberal speeches in the campaign.”262 The attack was ubiquitous but it was led by Quebec, which must, therefore, be specially discredited. There could only be one winner in this confrontation, leaving the other to walk away discredited as a selfish faction. But at the least, fiscal reform handed Borden’s adversaries a knife for what turned out to be a knife fight. But perhaps a better metaphor is a takeover, with the same insider manipulation of opinion and the same deference to money markets as defining the value and vitality of the nation. A loss would have been bad for business. No doubt the businessmen would have preferred to avoid both election and crisis. But Borden did something almost unprecedented in Canadian political history when he introduced conscription: he made a principled decision to back the troops. He consciously repudiated a decision-making steeped in brokerage of power and money. And many, perhaps most, Canadians voted for Borden because they believed he would back the troops and help to win the war. But no political decision could be so principled as to be neutral in terms of power and money. Conscription shattered half a century’s worth of political accommodations and immediately that it became settled policy, everyone had to reason with its implications and the new political rules in play. And in 1917, because the old restraints were down, the reasoning was unusually unreserved, which is to say vitriolic. We cannot claim to identify motive in these operations, designating one person as lofty and another as selfish. Motives mingled in ways that remain inscrutable; people’s thoughts remain private. But we can identify how particular choices became popular. People desperately sought high-minded choices, and when those



Income Tax: Progressivism Triumphant 447

choices, too, were subjected to accusations of self-interested calculation, they responded by escalating the high-mindedness to the point of self-righteous intolerance. But there is something jarring about a high-­ mindedness that accused the other side of reasoning with its head not its heart while it machinated for control of the purse. The Unionists in December 1917 insisted that the election both was and was not about the money, and anyone who pointed out the incongruity was the worst kind of traitor. The need to paper over the two progressive factions within the government – high principle and business principles – coupled with the impossibility of doing so, accounted for much of the immoderation. Borden’s Unionists won a sweeping victory in 1917: 153 of 235 seats. More than half of those seats came from Ontario: 74 of 82, with 62.3 per cent of the popular vote. The campaign had been aimed primarily at Ontario, and the results fully justified the effort there. In the Maritime provinces, Borden won only modest victories. Prince Edward Island gave more votes to the Liberals than the Conservatives, while in Nova Scotia, the popular vote went 48.4 per cent Conservative and 45.5 per cent Liberal. This was very close to being a defeat for the Conservatives that was saved, according to political scientist J. Murray Beck, by the votes of soldiers overseas, which were 90 per cent in favour of the Union government and were used to swing close elections.263 This was an astonishing outcome, given that Borden came from Nova Scotia, as did Fielding who stood as a Unionist in 1917. He did so in muted agony, refusing either to campaign for or to serve in Borden’s government. No man, other than Laurier, better personified Canadian political history or better understood the stakes. Both had been writing, speaking and agitating, strategizing and governing from the centre of the maelstrom for half a century. No province was closer to Quebec than Nova Scotia, Fielding declared in October in his one public statement: “In Nova Scotia, perhaps, more than in any other of the English provinces, there has usually been very hearty co-operation with the Liberals of Quebec. The broadminded people of Nova Scotia refused to be influenced by the cries which were too often raised against Quebec liberals.” But the difference was real and the choice must be made: Nova Scotia liberals would not “isolate themselves from the liberalism of the rest of the Dominion excepting the Province of Quebec.” He hoped for a speedy return to the usual co-operation.264 Elsewhere, the Unionist victory was stronger. New Brunswick voted solidly for Borden at 59.4 per cent, but the Liberals won the four ridings that had a strong Acadian presence.265 In western Canada, popular vote counts were much higher in favour of Borden: 79.7 per cent in Manitoba,

448

Reconstructing Fiscal Federalism

74.1 per cent in Saskatchewan, 61 per cent in Alberta, 68.4 per cent in British Columbia, and 54.3 per cent in the Yukon. Quebec, by contrast, gave Laurier’s party 62 of the 82 seats and 73.4 per cent of the popular vote. The country was divided, the province of Quebec repudiated, the progressives in western Canada aligned with those of Ontario but against those of Quebec. In the words of Arthur Meighen: “The result is an indication that French-Canadian domination in political affairs in Canada is a back number.”266 Rowell celebrated the victory with a stroll around Tory strongholds in Toronto, including a visit to Willison at the News and another to the offices of the Citizens’ Union Committee, where he found many businessmen including Wood, Gundy, and Rundle.267 Violent riots in the spring of 1918 in Quebec City entrenched the national divide. They began when federal police arrested a French Canadian who failed to show papers of exemption from conscription and ended only after soldiers recruited in Ontario fired at demonstrating crowds, resulting in five deaths, many injuries, and heavy military and police presence in the province until the end of the war. Historians see this moment as “the birth of the sovereigntist movement in Quebec.”268 The strategic goal of the conscription crisis was not just conscription but also crisis: a painful rupture with the brokerage politics that had shaped Canadian politics since the 1840s. Conscription’s practical contribution to the war was slight; the new taxes, ditto (the profits tax produced $21 million in 1918, less than 10 per cent of revenue; the income tax produced nothing until 1919, when it yielded $9.3 million). But the objective of relegating French Canada to the margins of power and influence was accomplished. Somewhere, George Brown’s ghost was smiling. French Canadians complained that the attack was “unconstitutional,” but of course, there was nothing unconstitutional about it. These were the old Macdonaldian tricks, now turned against French Canada. A flurry of French-Canadian constitutional reflections followed, including a series of lectures by Lionel Groulx at Laval University. There was also a declaration early in 1918, by Quebec mla Joseph-Napoléon Francoeur, in favour of leaving Confederation, but Gouin convinced Francoeur to withdraw it.269 When the Liberal Party convened in 1919 to choose a successor to Laurier, it rejected Fielding for Mackenzie King, who had remained loyal to Laurier and held a PhD in industrial relations. Repudiated by electors in 1911 and 1917, King spent the early war years as a labour commissioner in the United States and the later war years tending to his ailing mother and writing Industry and Humanity, published in 1918. His book denounced the modern convergence of wealth and force as guilty of such



Income Tax: Progressivism Triumphant 449

“vast injustice” as to provoke labour towards violence. This brutal confrontation of might against might could, he argued, be mitigated only by academic knowl­edge: “Were Force the only power to be relied upon for the adoption of a course of conduct obviously in the interests of all the parties to a dispute, there would be a dilemma indeed. Fortunately in human relations there is a power superior even to Force, and that is Reason.”270 The prose was murky, but one thing was clear: King stood alone as an anti-conscription progressive, whose complicated theory of and belief in “the power of an intelligently formed Public Opinion to remove any injustice and to redress any wrong” belied the bleak postwar mood. Practical policies endorsed at the convention included social welfare and industrial relations, freer trade, and the perpetuation of income tax. Lapointe, who largely manipulated the proceedings, was an antistatist, but he was also a canny strategist who made sure that the Liberal Party would wear fiscal sociology like a banner.271 Meighen led the Conservative Party to defeat in the election of 1921. The Union party reverted to a Tory party and the Liberals to a Quebec-centred Grit one, neither particularly attractive to western and eastern progressives. Progressives, including such former Unionists as Crerar, won almost as many votes as the Conservative Party itself, effectively splitting the 59 per cent of voters that did not vote for the Liberal Party. Quebec, its flirtation with Nationalism ended in favour of a return to kingmaking, elected Liberals in every riding. But progressive politicians were sidelined as a consequence of the political polarization seen in December 1917. Before the war, the Quebec left was militant and French-Canadian nationalism was progressive, well organized, and integrated at the municipal and provincial level. After the war, labour was more deeply split into more radical English and less radical French wings, laborism declined, and nationalism became more conservative. Camillien Houde was elected to the provincial legislature in 1923 and began to attract support from erstwhile labourites like Albert Saint-Martin.272 Quebec’s reorientation weakened progressive politics across the country. Progressives marshalled a new national presence but proved ineffective in the federal Parliament. Thomas Crerar predicted in 1917 that the Liberal Party would discard its “present reactionary influences” and become a more progressive and more western-based party. He was driven from the Conservative Party by White’s first postwar budget, in 1919, which kept up the old tariff. But the Liberal Party was no stronger, suffering from a “festering wound for years to come” and perennial weakness in the west.273 Toronto finance capital had fortified itself well against progressive assault. It knew it was safer in an ethnically polarized country.

450

Reconstructing Fiscal Federalism

Borden disbanded the usual mechanisms of fiscal brokerage in Canada. He reined in patronage with civil service reforms, promised in 1917 and passed in 1918, that would cut federal French-Canadian employment by roughly half (from around a third in 1900 to 22 per cent in 1918 and 13 per cent three decades later).274 Such reform, advanced on grounds of repudiating ethnic nationalism,275 came closer to modernizing it. Timothy Anglin had stated as much: Catholics had “long ago learned” that indifference to religion “means that they shall be systematically excluded from position, place, dignities, and emoluments.”276 Another body blow to Macdonaldian brokerage came with the reorganization of the Intercolonial Railway. Borden pushed up the rates (increases in the Maritimes between 1916 and 1920 were double those in central Canada) and moved the Intercolonial’s headquarters to Toronto.277 The 1920s would see fiercer fights over inequality, as the economies to the east and west of Ontario experienced relative decline. Macdonald’s partisan-and-patronage responsiveness had also been regressive, of course, but the change was not necessarily for the better. Borden also dismantled the property franchise. Macdonald had always distrusted democratic public opinion, perhaps because deference to an insistent public opinion was one of his few governing principles. He preferred quiet buyouts to formal legal concessions, interests to passions, class to ethnic politics. But when Laurier made himself the heir of Macdonald, Borden made himself the heir of George Brown, conjoining class and ethnic politics. In fact Macdonald’s willingness to tolerate, and more than tolerate, nativism that commanded consensus had laid the foundation for Borden’s program. Stephen Leacock sketched out the political project in a 1920 pamphlet called The Unsolved Riddle of Social Justice. He observed that the wartime state had fashioned a “terrific engine of taxation” that should be perpetuated in postwar Canada to provide for the poor. Malthus, Leacock argued, was wrong to fear poverty. “Because it was difficult for a poor man to bring up a family, the hasty conclusion was reached that a family ought not to be brought up. But the war has entirely inverted and corrected this point of view. The father and mother who were able to send six sturdy, native-born sons to the conflict were regarded as benefactors of the nation.” But growth must not come from immigration: “Those who really count in a nation and those who govern its destinies for good or ill are those who are born in it.”278 Leacock wanted a bigger, wealthier state spending more money to precipitate native-born Canadians out of poverty and blocking immigrants who might threaten a patrician, nativist, BritishCanadian hegemony.



Income Tax: Progressivism Triumphant 451

Nonetheless, the fiscal landscape was changed. Canadians had determined that conscription would not be of life and limb alone; wealth, too, must be conscripted. Capital had demanded to govern the country directly, now it must be taxed directly. In any confrontation between the public and the propertied, the public would henceforth find itself better armed for the combat. The federal state had championed wealth, making appeals to prosperity trump other interests, and leaving checks on wealth to lower levels of government. But the first half-century of national politics had seen those lower levels reconstructed around the project and problems of direct taxation. Claims of professional expertise and measurable return on investment had reworked the interface of state and society and enabled civic officials to boast that they were the champions of the people. The federal government had too obviously backed a different horse. It was locked into an endless waltz in the arms of big business, while the tariff became more visibly regressive day by day. Now the Canadian federal government would also scrutinize and negotiate property directly and pose as the champion of the people. But Thomas White had sustained the promise implicit in his appointment to Borden’s Cabinet. High finance trusted him to minimize any ransom to be paid in defence of property, and it did not trust in vain. The new income tax was simultaneously progressive and regressive, as much a bulwark as a ransom for capital. The federal government would scrutinize and tax income, but “accumulated wealth” would remain inviolate. White sought the same kind of pragmatic outcomes that permitted business to thrive under Ontario’s new tax regime. He also hoped to see the new tax, which had “wartime” written into its title to emphasize that it was an emergency measure, repealed. The federal government could disavow fiscal sociology if and when circumstances permitted, though King and his finance minister, Fielding, made sure that they did not permit. That said, a huge loophole in the new law exempted finance capital from taxation. If there was, as Coats asserted in his report, a two-tiered economy, White catered to it and applied two-tiered taxation. Income tax and the Victory Bonds were launched simultaneously, and the latter were exempt from the former. Shirley Tillotson remarks that “making the income of those loans tax-free helped sell the bonds and helped ‘sell’ the income tax to Canada’s very richest citizens.”279 As the international money market turned downwards in the spring of 1917, on the advice of the newly formed Bond Dealers’ Association of Canada (strategically formed in time to negotiate the loan), White turned to the Canadian public.280 In the United States, where government bonds had been sold domestically since

452

Reconstructing Fiscal Federalism

the Civil War, the attack on tax-free patriotic bonds as regressive was as old as the fiscal reform movement itself, dating back to a jeremiad by Henry Carter Adams written in 1887, soon after his attack on the general property tax. Adams argued that government bonds were usually concentrated in the hands of a “bondholding class” that controlled the state and drove up taxes so as to pay itself interest.281 Government debt has always been a crucial mechanism for concentrating wealth in the hands of an investing elite.282 Now that government finance was being sold in Canada, the exemption for bonds had a new political salience. It generated a new answer to the question of who owned the state. Izaak Walton Killam, a wealthy Maritime financier, tried to make the mud stick. Killam was, with Borden and Aitken, another product of John Stairs’s Halifax offices. He followed Aitken first to Montreal then to London, then becoming president of Aitken’s Royal Securities in 1915. Unlike Borden and Aitken, Killam eschewed electoral politics, but he saw in White’s budgets a brewing disaster that required public venting. Killam wanted to see finance capital play its part in the war, and he was dismayed that White and Borden delayed introducing income tax as long as they did and that they exempted finance capital. He said so in an open letter to Borden in September 1918: after years of inflationary indirect taxes and pressure from “an enlightened public opinion,” White had finally, albeit reluctantly, agreed to introduce “a graduated income tax which has yet to become an effective source of revenue.” The new taxes were in place but so unenthusiastically collected that “this tax has not been collected except where the willingness and anxiety of the citizen to pay has been greater than the zeal and industry of the Finance Department to collect.” The patriotic paid their taxes; the rest did not. And that was the problem with the income tax. Ideally, all would be taxed alike on their bond subscriptions. But the more wealth that could be invested in Victory Bonds, the more wealth that could be exempted. “If the present issue of Victory Bonds is exempt from all income taxation, the result will be that Sixty-Seven and One-half Millions of Dollars, representing the annual income from Canadian tax-free securities, will make absolutely no contribution to the revenues of the State.” A more detailed financial breakdown of the effects of the exemption followed in an open letter to White. Canada was borrowing too much on bad terms that would draw capital from other kinds of investment. The financial hangover would stretch long after the war. But worse were the exemptions that had “an unequal value in the hands of different purchasers” and took “unfair advantage of the limited financial knowl­edge of the great majority of the



Income Tax: Progressivism Triumphant 453

people of Canada.”283 White replied that the money could only flow into the treasury on terms agreeable to finance capital. To reason with Killam’s real-world analysis of how capital behaved would put that capital within the state’s grasp. White’s political career did not that way tend. It was easier to dismiss Killam’s objections as self-interested, arising from the injury done to his own company bonds.284 For Killam as for Flavelle, White gave finance capital a bad name. Many others agreed. Adam Shortt considered the tax “disgraceful” but kept his opinion private.285 Michael Clark, the Unionist Liberal from Red Deer who had demanded income tax, was disappointed by the results: “The income tax ought to be much higher. If the soldier’s wife who bought tea had to pay a 20 per cent. tax on every pound she bought, the rich man should give up 20 per cent. of his income.”286 The Toronto Star demanded a tax that better taxed wealth and better exempted workingmen: “The easier the money comes, the easier it should go.”287 Again, a speaker at a United Farmers of Ontario picnic complained that the wealthy were allowed to “tie up” $1.4 billion “in war securities exempted of taxation.”288 Skelton, in an article for the Monetary Times in January 1919, bid an enthusiastic farewell to the “antiquated and unfair” reliance on consumption taxes, but demanded the new taxes be shifted from fixed incomes and wages to “easily expansible” incomes. He recommended stiffer taxation of individual rather than corporation incomes and more luxury taxes. As well, he made a strong case for a “genuine unearned increment tax,” but one that was properly local, and predicted that “the tax gatherer will be very much with us in future.”289 The Canadian government could not “do” high finance without remaking itself in the image of high finance. Finance capitalism was originally organized as a way of financing the state. In the mid-nineteenth century, as seen, those complicated instruments of credit were extended to railways. Government growth in Canada was intimately tied to railway building. Galt’s tariff of 1859 and Confederation itself were both intended to prop up railway investments. But liberal ratepayers resented watching the flow of public money to the investing classes in Britain and Montreal, the centre of finance capital in Canada. The shift under Borden was twofold. First, investments now came from Canada and were, increasingly, rerouted through Toronto. Borden’s Cabinet was the crucial pivot in the shift. Second, debt financing enabled the government to reroute patronage spending to pass through the state rather than the party. It would modernize out of existence the close ties between state and business that had regularly embarrassed Macdonald and Laurier.

454

Reconstructing Fiscal Federalism

The Canadian state still systematically transferred wealth from the public to the business elite, but interest payments allowed it to do so in ways that could now be publicly scrutinized as above board. The First World War carried the monetization of the federal state to new heights. In 1921, the federal government paid $132 million in interest payments, $14 million more than the entire federal current budget in 1913.290 In so doing, it hoovered up money that was crowded out from other kinds of capital investments. The loans had to be renewed in 1922, and as a consequence, it remained difficult to attract investors to other types of securities.291 Postwar government spending fell only moderately, remaining close to $1 million per day, but much of the money went to the financial sector rather than to other goods and services. Canadian income inequality (newly measurable) soared above American rates in the early 1920s and Canada had a much bumpier reconstruction than the United States.292 New measures of regressivity, gathering weight since the 1880s and 1890s, were part of what was innovative. Indeed, in their earliest expression, they identify another conservative element latent within the income tax. Tax was “progressive” when it was graduated according to ability to pay, but closer inspection could reveal, as it did in Montreal in 1889, that progressivity looked more like regressivity. That was the case in one jurisdiction that did a serious fiscal analysis in 1916: Saint John. It was a notorious fact in fiscal circles, because Timothy Anglin had made it so, that Saint John’s income tax was unusually lucrative. As seen, there had been serious disputes about the extent to which the poor were over- or under-taxed in Saint John, with evidence piled up on both sides and accusations ringing out in scholarly and popular periodicals alike.293 But no one had examined the actual fiscal transfers. Precisely that sort of analysis was undertaken in 1916 when the city undertook to reconsider its tax policies. Loose claims about small taxpayers evading their taxes gave way to detailed calculations as to who paid what. The tax commissioners discovered that, at the top end, 72 people in the city were assessed on incomes over $3,000, with 32 of them on incomes over $4,500. At the bottom end of the income scale, 7,406 people were assessed on incomes of $1,000 or less, with 6,424 of them on incomes of $500 or less. The elaborate tables led to the conclusion that, of the roughly $100,000 in tax revenue, people earning $1,500 or less paid 70 per cent of all income tax and 77 per cent of all income and poll taxes. “This means that the present income tax in this city is raised very largely from wage earners and men with small and fixed salaries such as clerks and other officials, many of whom find it difficult on the stipend they receive to maintain their efficiency and reasonable standard of living.”



Income Tax: Progressivism Triumphant 455

A very basic review of taxation in Saint John screamed unfairness. Whereas the assessment of professional or businessmen was obtained “by guess,” waged workers were precisely taxed, quite apart from direct property taxes that businessmen passed on to customers. The report concluded that the city must find some method to get at “the full valuation of the larger incomes. While other cities have employed income taxation to relieve persons of small means and to secure revenue from the large incomes the earnings tax as it has been administered in this city has worked in the opposite direction; it has pressed lightly upon those with ability to pay and has been burdensome to the wage earner and small salaried man.”294 The findings from Saint John tend to confirm a built-in conservativism in income tax as it took shape in Canada during the First World War. Income tax has been described as progressive and difficult to obtain. In fact, the evidence from Saint John revealed that it was regressive and relatively easy to obtain. Regressive taxes usually are. It is almost always easier to tax the poor than the rich. The apparent problem of income tax was not that the state could not get at income, but, rather, that it could get at it all too effectively, to such a degree as to harm households. Progressive taxation reflected new relations of state power and knowl­edge, but power constituted knowl­edge in its image rather than the other way around. Knowl­edge trailed around after power, seeking to harness and legitimate an administrative capacity that the state already exercised.295 Still, there can be no doubt that the ship of state now had the power and the mandate to govern wealth and poverty more symmetrically. MidVictorian suspiciousness of government gave way to new expectations of informed administration. The model of balanced bookkeeping was replaced by cost accounting that went beyond balancing decontextualized credits and debits, instead evaluating the real-world workings of property and its real-world impact on human beings. That report on finances in Saint John in 1916 exemplified the change better than the new federal income tax because federal politics lagged behind local trends. It inaugurated the kind of data that Skelton sought to enthrone in Canadian policy-making. In fact, the intellectual author of the Saint John report had his own academic credentials. Wilfred Currier Keirstead reflected both small-town Maritime Baptism and the new social philosophies. Born in 1871 in Cornhill, New Brunswick, Keirstead paid his way through the University of New Brunswick by preaching in local churches. He came under the influence of political economist John Davidson, described by Keirstead’s biographer, Daniel Goodwin, as “one of the first scholars to draw on empirical sources to systematically diagnose the economic history and

456

Reconstructing Fiscal Federalism

fortunes of the region.” Goodwin argues that Keirstead saw in Davidson’s political economy a path towards “the social goals of his Baptist religion.”296 The young man won scholarships to Cobbes Divinity School and to Harvard where he learned social anthropology from J.H. Mead and American pragmatic philosophy from John Dewey, who “left a profound impression on him.”297 Keirstead wrote his doctoral dissertation on Albrecht Ritschl, a German theologian and social-gospel inspiration.298 After several years preaching and teaching, Keirstead began to lecture at the University of New Brunswick, where he became professor of philosophy and economics in 1908. Students of Keirstead who went on to advanced studies, like students of Shortt, earned scholarships, professionalized, and remembered their first teacher as their best teacher. He built up a respected body of work grounded in two axes: regional identity and social justice, both of them continually filtered through questions of taxation. In 1911, Keirstead gave a wide-ranging survey on taxation to the Union of New Brunswick Municipalities. He was skeptical about the single tax but admired the attempt to tax the “increase in values created by the growth of society and appropriated by individuals in the form of land rents or by means of the joint stock corporations,” and to steer it towards “public channels to be used for social ends.” He advised locals against land-value taxation: moderate taxes on industry and income did no harm and improved prosperity as a whole. He also opposed tax exemptions and poll taxes and demanded a better-administered and graduated income tax. “We need to perfect our methods of tax administration to secure a full appraisement of property and income. We need equity and justice to all and the abolition of privilege. We want fearless, honest, efficient, well-paid permanent officials as administrators.”299 Keirstead continued to build his careful and precise analysis in subsequent years and continually interwove it with advanced social theory and essential Christian principles. In 1912, a paper entitled “Some Essential Facts of Social Progress” (published in The Biblical World) began with the remark: “The old doctrine of individualism has been pretty thoroughly discredited by historical and psychological investigation. We no longer believe that the savage life is one of unrestricted freedom or that society arose out of a mutual contract by which well-developed individuals surrendered certain ‘natural’ rights. The groupless man is a rightless man.” Social customs changed as economies changed, and at every step, custom and individual initiative effectively competed against and completed one another to make a complex larger picture. “Change and permanency, as Kant pointed out, are relative to each other. Society is not an absolutely



Income Tax: Progressivism Triumphant 457

fixed entity, it is not an eternal unchangeable order; its institutions and customs are not brute, bare, ‘given’ facts or unchangeable laws to which each individual must absolutely conform; they are rather data for reconstruction by his creative intelligence into means for the adequate realization of his purposes.”300 Science and democracy were among the new factors shaping the modern world, but they must be carefully rather than blindly endorsed (Keirstead condemned eugenics). There was a powerful, modern vision at work in favour of a new kind of social justice. Above all, Keirstead never forgot the fact that social justice could not occur without resources – only taxes could enable poorer regions and peoples, as well as the wealthy, to benefit from modernity. Keirstead served the new statist orientation in a variety of ways – as local administrator for the federal food board, as provincial commissioner in regard to mothers’ allowances and minimum wages, and with arguments for increased subsidies to the province. But he never lost sight of local taxation. In 1926, he published an article, “Rural Taxation in the Province of New Brunswick,” that encapsulated many of the themes and quarrels reviewed in this study. One could easily laugh at such a parochial topic. But Keirstead understood well that the battle for fiscal fairness, for a modern state, must be won or lost in such places. For Keirstead as for John Dewey, building the “Great Community” required grassroots, local action, but it also required allies in higher jurisdictions to overrule moneyed lobby groups conspiring to evade their burden of local taxation. Evasion by debt figured prominently in Keirstead’s analysis. He described a bank that insisted it had no profits at all, only debts, because it shipped all its money to the head office, but owed all its debts locally. He objected to the regressive personalty and poll taxes, and to an income tax that was both regressive and unable to bear the burden of local health, education, and welfare spending unless it could better tax people and capital moving continually in and out of range. He saw, in rural New Brunswick, an attack on state capacity.301 Keirstead’s attack on tax evasion was a model of sophisticated theory and careful practical analysis. I see in his article a synecdoche of tax history in Canada. Like many a fiscal reformer, Keirstead recognized that propertied interests were hollowing out the state by casting off their tax burdens. His problem remains our problem: tax evasion in the financial sector. The portrayal is a dispiriting one, but he did not yield. Nor should we. Keirstead’s analysis may be far too local and liberal, not to say conservative, for high-minded historians who have sneered at bread-and-butter politics. But that leftist academic analysis is somewhat discredited by Piketty’s pendulum, which began to reverse around 1980. Once again,

458

Reconstructing Fiscal Federalism

wealth began to concentrate amongst the investing classes. The contemporary critique of capitalism, however intellectually sophisticated and rigorous, looks somewhat toothless compared to the modest standards of reform achieved in progressive-era Canada. Keirstead knew that social theory had no greater calling than the construction and administration of social solidarity. He knew that taxation was not simply a self-interested, petty-bourgeois concern. A community that scorns the kind of work exemplified by Keirstead’s analysis of rural taxation in New Brunswick is a community that will be fleeced by its financiers.

C o n c l u s i on

The Politics of Fairness

My account of Canada’s first half-century is not the stuff of romantic nationalism. If historians of Confederation were to be categorized as debunkers or bunkers, mine is clearly a debunking account, in contradistinction to heroic, celebratory accounts by historians such as George Wrong and Donald Creighton or political scientist Janet Ajzenstat. Where Ajzenstat’s well-respected account of Confederation sees a repudiation of corruption, bullying, and partyism in the lofty speeches and calculations that led to the deal,1 I see all three substantially undimmed both in speech and in practice. Where she models her account on Thomas Pangle’s reading of John Locke’s influence over American Revolutionary thought, the “P” in what used to be called “P&O” in my grad student days at the University of Toronto, my version owes more to the “O”: Clifford Orwin’s readings of Thucydides, seen as a foundation for ancient and modern political philosophy, and of Jean-Jacques Rousseau.2 Rousseau argued we can never quite get over the painful discovery that other people do not love us as much as we think they should – that is, as much as we love ourselves. There’s a tax corollary to that observation: other people never pay as much tax as we think they should. Humans harbour irreconcilable jealousies and tensions, and they continually translate the moral into the material and vice versa. The political project is always to mediate and diffuse those jealousies at least enough to enable peaceable coexistence with a modicum of civility. Pleasing falsehoods may sometimes help us get along, but we should never mistake them for truthful history, and a historian must aim first and foremost for factual accuracy. The facts matter. The devil of Confederation was in the details, not in the classical analogies with which those details were defended. We get a better understanding of what was at stake when we write material

460 Conclusion

resources into the equation. Confederation was not just about taxes, but it was never not about taxes. Canada, like the United States, wrote its own constitution because it needed a new tax deal. It got a more centralizing one than did the Americans because the authors of Confederation reasoned creatively from that experience (and because John A. Macdonald admired Alexander Hamilton). In the bna Act and its working out over time, we can see a distinctly Canadian political logic. To no small degree, it was a Macdonaldian logic because Macdonald was the face of the state for close to half a century. Viewed through a fiscal lens, the early history of Confederation reveals a pattern of systematic consolidation and centralization of power. Macdonald remained a liberal conservative at the head of a party bearing that label. He actively refrained from grasping more power and wealth than he thought he needed to keep his country together, and he insisted on the principle of electoral accountability. But his accountability was a quasi-patrician one, studiously ignorant of and callous towards the scantly propertied. The poor had their mechanisms of public agency but must build alliances with the propertied if they wished for political consideration. Similar alliance building was effectively enjoined upon anyone else seeking such consideration. Rich or poor alike must “stoop to conquer” through the agency of public opinion. Public opinion and property mutually defined and balanced one another in important respects, but there was also a continual tussle over whether a propertied or democratic weighting of public opinion would predominate. Around the turn of the century, finance capital tried to turn the balance by constructing a parallel realm of intangible opinion where, it insisted, the real work of prospering and, ultimately, of governing Canada must occur, and where accountability should be to the market, not to the public. Thomas White was, in many respects, an heir to Macdonald who adapted the logic and mechanisms of patrician rule to the new demographic and economic exigencies. If there was a distinctly Canadian political logic to Confederation, there was also a universal one. We see in operation not just Thucydides’s observation that “might makes right” but also the Roman proverb, derived from Plautus, that “homo homini lupus est,” or “man is wolf to man,” an observation regularly renewed by political philosophers. Like Plautus, Thomas Hobbes (a reader of Thucydides) distinguished between the relationships among fellow citizens, where, in shared institutions of charity, welfare, and governance, “Man to Man is a kind of God”; and the relationships between cities themselves, or other kinds of strangers and adversaries, where “Man to Man is an arrant Wolfe.” That tension between



The Politics of Fairness 461

solidarity and belligerent predation has continually informed Canadian political and fiscal history. On the one hand, taxation has built up mechanisms of social solidarity; on the other hand, it has appropriated surplus value that was often easier to exact from the poor than the rich. An important variable was the extent to which particular individuals or groups were defined as a friend or a stranger to the wider voting and tax-paying public. Canada was constructed in 1867 as an alliance between mutually suspicious communities that found common cause with one another around the principles and practices of liberal political economy. Shared self-interest was supposed to ease identity politics. That never happened: instead, economic interests were translated into identity politics, laden with religious, regional, racial, and class overtones. Successive chapters in this book have outlined that process of translation according to local circumstances in the Canadas, Nova Scotia, British Columbia, Montreal, Toronto, and transnationally, and have shown how those confrontations generated a new federal politics around wealth and poverty. Class was particularly problematic. Liberalism was designed to restrict the political influence of the very rich and the very poor, seeing both as a threat to a liberal public sphere, but it met increasing pushback from capital and labour as those began to organize on a transcontinental basis. In the tussle over a propertied versus a popular weighting of public opinion, middle-class voters had to decide whether the wealthy or the poor should be trusted as god-like friends or distrusted as wolf-like adversaries. Political brokerage in Canada reflected the complex interplay of powers and rights amidst such concerns. The key strategists understood that a right was either a power or a check on power. A historic legal right like habeus corpus might protect a particular individual against a tyrannical state but rights in general could not protect communities that, if they failed to rally supporters or broker alliances, lacked political power. Because the Canadian constitution lacked the checks and balances written into the American constitution, Canadian prime ministers had the discretion either to protect particular communities or to leave them unprotected and subject to the tyranny of the majority, whatever that majority of power and influence happened to be at the time. Macdonald was a virtuoso broker of those competing claims, according to a formula that saw the centre of balance gradually drift from Quebec to Ontario. But his virtuosity died with him. “What shepherd is there who knows the sheep or whose voice the sheep know? Who else could make Orangemen vote for Papists, or induce half the members for Ontario to help in levying on their own Province the necessary blackmail for Quebec?”3 As

462 Conclusion

Ontario began to test its growing political clout, long-standing tensions resurfaced alongside some new ones, always with the language of outraged taxpayers deployed to fuel the flames. The constitutional sparseness and plasticity that had strengthened Macdonald would weaken his successors, who were besieged by gathering forces of extreme wealth and widespread poverty, both seeking to reconstruct the state in their own image. As Christopher Moore has observed, the British North America Act reflected a “liberal and sophisticated constitutional settlement, one that left Canada open to substantial social and political evolution even without mega-constitutional reform, a living tree more than a dead hand.”4 Thus could ordinary Canadians revise an outworn liberal constitution without a formal amendment process; thus could the sheep organize against shepherds who had become all too obviously wolves. In 1917, the Income War Tax Act and the “Khaki Election” marked both a breakdown and a new beginning. The Canadian conversation about wealth, poverty, and taxation shows us the state continually doling out and scooping back wealth and power in concrete and sometimes measurable ways. It shows evolving debates about how best to structure and inform those concrete mechanisms – whether to subject them more thoroughly to personal and partisan networks or to impersonal ones grounded in facts and calculations. It shows one of the greatest statesmen of his age consciously propelling his state and his country towards the first and an empowered public consciously propelling it towards the second. It shows us precisely how and why liberal-conservative politics became social politics, amidst new calculations of the debt that the individuals owed to society and the dangers that organized capital posed to electoral accountability. Above all, it shows that cultural, economic, and political history intersect in ways that, if not strategically directed to progressive ends, will be strategically directed to regressive ones. The construction of social solidarity is the foremost political problem. It is always under debate, and those debates are always shot through with complex philosophical questions as well as material questions of access to resources and power. Too often, those material questions have been written out of national narratives. But if scholars are not continually translating the language of economic justice into the rhetorical construction of identity, carefully explaining their connections, they may be lending political shelter to regressive tax policies. Identity politics, when not built on a material substratum, are too apt to turn into distorted, romanticized narratives of personal identity-fulfillment exploited by predatory



The Politics of Fairness 463

millionaires. The terrible and ironic lesson of tax history is that, unchecked, the rich will tax the poor and stigmatize them as tax evaders, and wherever possible increase both indignation and taxation by racializing that stigma. It’s important to debunk ad hominem slurs, but it’s no less important to follow the money in any given policy outcome. Fiscal transfers must be interrogated broadly, with an eye to connections between formal and informal “taxes” and to the complicated ways that wealth comes to be defined as invisible or visible, private or public, autonomous or socially constructed. The discovery of “the social” that empowered the progressives has sometimes veered towards social control as a political project and as a prism for understanding political history more generally. But social-control theories cannot do justice to the social history of taxation. This account reflects the more tempered approach of the new political history that sees both a top-down state and a bottom-up one that people continually constructed for themselves. Macdonald lobbed one political project at the public; the public lobbed a very different one back at his successors. Political history has rediscovered that great progressive-era insight of popular agency, but it has yet to reclaim the other great insight of that age: knowl­edge, too, being socially constructed, remains accountable to the people. Conservatives debunked and still debunk “elitist” knowl­edge for regressive purposes. But they lean too heavily on old-fashioned socialcontrol models of knowl­edge, not the better, more philosophical versions that carefully tease apart subjectivity and objectivity, uncertainty and certainty. Facts and democracy came to the Canadian public sphere around about the same time and through the same channels. Progressives realized that sometimes, suddenly, something new can be known and understood by a sovereign public. Doctors dismayed to see smallpox vaccination publicly discredited in the late nineteenth century took no chances with the typhoid vaccine in the early twentieth. With Sir William Osler at their head, they carefully marshalled state capacity to squelch every supposed counterclaim with irreproachable evidence, and so won the campaign for and then with mass vaccination.5 Facts and fairness are not easy bedfellows. Fairness is not a scientific concept, and there will never be complete agreement on it. But at particular times and places, evidence of unfairness could become so overwhelming as to rise to the level of undeniable fact, requiring new policies for redress. Applied to taxation, the new comparative and increasingly statistical knowl­edge debunked liberal notions of fairness and forced a painful and painstaking process of constructing new ones. Helbronner’s empirical

464 Conclusion

proof of unfairness was a transformational event, a harbinger of a new kind of Canadian public sphere where facts and democracy would gradually become hard-wired. There could be no important new fact, generally acknowl­edged as such, that did not reflect important social and political changes. Facts require social networks to exist. They transform those social networks as they make their way in the world, and the most important facts require the broadest networks. Expertise, like identity, must seek allies among the unpersuaded if it wishes its facts to have more than trivial import. It, too, must “stoop to conquer.” In the modern world, all communities are always already immersed in  debates about wealth, poverty, and taxation. They are continually bedevilled by tax resistance and evasion that sometimes becomes open revolt. Taxes nurture political engagement, and modern liberties were constructed through taxpayer agency. Taxpayer revolts can be petty or principled, self-interested or communitarian; only careful contextual analysis and moral weighting can teach us to make such distinctions. One person’s tax revolt is another person’s tax coup. Final consensus is impossible, but the very things that sometimes make people feel frustratingly unrepresented by their governments – delay, compromise, expertise, impersonality, bureaucracy, and statistics – can be some of the most ­useful mechanisms to mediate and defuse our primordial jealousies.

Glossary

Business rental tax Traditionally, businesses paid taxes on their real estate and their property or “business personalty,” a term that could include business income. Real estate was relatively easy to calculate, but it was often very difficult to calculate property and income. In the 1870s, Montreal, followed by many other jurisdictions, began instead to replace the business personalty taxes with a flat-rate tax on the rental value of the business’s premises. These taxes did not replace ordinary real estate taxes: businesses were taxed on both their premises and their rental income, the latter as a proxy for non-landed property. Often there were adjustments to reflect inequities, for example, with lower taxes for large-scale properties, such as warehouses. Ontario replaced its honour-system income taxes on liberal professionals with a tax on the rental values of their offices in 1904. C or por at io n ta x e s Businesses were usually taxed locally, i.e., municipally, like private citizens, according to their real estate and their property or “business personalty.” Many jurisdictions also imposed licence fees on a wide range of businesses, such as auctioneering, butchering, and banking. There were also “business rental taxes,” introduced from the 1870s as a proxy for business property. Beginning in the 1880s, provincial governments began to impose special corporation taxes aimed at highly capitalized sectors, such as banking and insurance, often based on their reported earnings or some proxy for that figure. C orv ée  See Statute labour tax Dir ec t v e rsu s i ndi r e c t ta x e s John Stuart Mill provided the classic distinction between these two forms of taxation: direct taxes could not be shifted to someone else; indirect taxes could be so shifted. A tariff was an indirect tax because the state was taxing the flow of products, and

466 Glossary

the producing company passed on the costs of the tax to consumers. Direct taxes were supposed to levied against the end user or owner. The distinction was highly contentious: law companies, for example, challenged provincial taxes by insisting that they shifted the incidence of taxation to their fee-paying clients. The courts rejected that argument in the 1880s. The Canadian constitution of 1867 restricted local governments – that is, provincial governments and the county-, municipal-, or villagelevel governments that they created – to direct taxation. The federal government had the right to tax directly or indirectly. It began to tax directly only in 1917. Fr a n c hise a n d f r a nc h i se ta x e s   Franchise referred to suffrage, that is, to the ordinary ratepayer’s or citizen’s right to vote. Many municipalities had a “taxpayer’s franchise” that accorded the vote to anyone who had paid their taxes. Franchise also had a very different meaning: it referred to the charter of a utilities corporation, such as a street railway or gas company or telephone company. Because those companies generally had a monopoly status, they demanded special tax accommodations. Like all the other tax disputes, this one, too, was fought in part about what, precisely, the tax was taxing: whether a tax on a utility company was a tax on its franchise or on its property. On the one hand, the companies argued that the usual mode of calculating taxation – market value – couldn’t apply because things like railway tracks or gas pipes or telephone wires had no open market. On the other hand, they often argued that the charter was a financial contract and that taxes were an illegitimate infringement on or change to the contract. Improv eme nt s  Followers of Henry George distinguished between the value of land and the value of “improvements” upon land, and they demanded exemption for improvements. All buildings counted as improvements, as did other kinds of investment, such as agricultural production. Buildings reflected labour, and George believed that the government had no right to tax labour. In c ome ta x   Taxes on income were understood to be direct taxes, and in the nineteenth century were generally treated as a subcategory of personalty taxes, including business personalty. Because governments did not have much ability to scrutinize personal income, income taxes generally reflected transactions that it could identify and measure, including wages or salaries. Again in the nineteenth century, liberal professionals with clients were generally taxed according to an honour system on what

Glossary 467

they declared; churchmen and government officials were exempt from income taxes. The system was widely understood to be unfair and regressive. Modern income taxes, grounded in close scrutiny of personal incomes, required much more bureaucratic oversight and began to take shape in the twentieth century. In dir ec t ta x e s  See direct versus indirect taxes In her ita nc e ta x o r suc c e ssi o n du t i e s   The original confederating provinces, led by Ontario, all introduced succession duties in 1892, followed in quick succession by the other provinces. Succession duties were the direct taxes most easily squared with orthodox liberal theory because they got at what many saw as an “unearned” transfer, but they generated complicated new questions about cross-jurisdictional coordination that would avoid double taxation. They followed both recent American example and British precedent. Person a lt y ta x e s, i nc l ud i ng bu si n e s s p e rs o n alt y These phrases referred to possessions and property that were not in the form of real estate. Personalty was personal property owned by private individuals; business personalty was property used in a business, such as a retailer’s stock. The range was enormous, from jewellery to financial assets to buildings; it also included a farmer’s livestock and his growing stock. Such property was supposed to be taxed at the going market value. Personalty taxes were usually imposed municipally in early Canada; they were also imposed by provincial governments where municipal government was lacking, particularly in British Columbia and Prince Edward Island. Poll ta x   This was a flat-rate tax imposed more or less uniformly upon members of a given community. It was imposed at either the local or the provincial level. The poll tax could go by many different names: in British Columbia, the terms “school tax” or “road tax” were widely used. Poll taxes were generally imposed so as to extend the tax base to people too poor to pay taxes on property or real estate; often people who had paid those other kinds of taxes were exempted from the poll tax. In general, the historical trend was away from poll taxes and towards taxes on property or income. Prog r essiv e ta x at i o n  Taxation was progressive when it taxed in proportion to wealth or income. A progressive income tax, for example, impose a higher rate of taxation at upper levels of income.

468 Glossary

R ates The word was used interchangeably with taxes in reference to municipal services, such as water. Rates were always levied at the municipal level. Municipal governments in Victorian Canada tended to impose direct taxes that were justified by the principle of “benefit for services” and the word “rates” reminded users of that relationship to service: ratepayers were being charged for services. The word had a long history in Britain in reference to municipal taxation. Tax theorists like E.R.A. Seligman argued that taxes were never fees for service, and Seligman rejected the “benefit for services” theory of taxation. In practice, the line between rates or fees for service and taxes was indistinct (as in Montreal, for example, where water rates were put to general public purposes and were, therefore, more like an orthodox tax than a fee for service), and it was contested in courts of law. Here, I use the terms “rates” and “ratepayers” to refer to municipal taxes and taxpayers. R eg r essiv e ta x at i on   Taxation is regressive when an increase is felt more heavily by the poor than the rich. Taxes on consumption were regressive because they appropriated a greater portion of a poor person’s income than a rich person’s. Poll taxes were regressive for the same reason: a day labourer hit by a $3 poll tax felt it more acutely than a millionaire. Accusations of regressive taxation were widespread in Canada during the period studied, but there was not a great deal of statistical evidence to measure regression. S in g le ta x  This phrase was used to describe Henry George’s argument for concentration of all taxes on one “single” object: land values. George argued that taxes on the fruits of industry – including tariffs and excise taxes, as well as taxes on general property or income – were illegitimate. Taxes on land value, by contrast, returned to the public the value that population density brought to property. Pressed, George admitted that land-value taxation was more like a rent than a tax. See also Unearned increment. S tatu te l a b o ur e x e mp t i o n tax   In communities that imposed statute labour, well-to-do people could often escape doing the work themselves: they could pay someone to serve in their stead, or they could pay a special tax to the taxing authority. In most instances, the statute labour exemption tax disappeared when statute labour was abolished, but in Montreal, it outlasted statute labour and became the object of a tax revolt in the mid-1880s.

Glossary 469

S tatu te l a b o ur ta x  Many communities before Confederation imposed statute labour: they required a day’s or a few days’ labour on the roads, and often enfranchised on that basis. The statute labour tax was particularly important in rural communities and persisted into the twentieth century in those places; it was also an important tax in Prince Edward Island. Most urban communities switched to property taxes and professional contractors in the years before or after Confederation. In French, the statute labour tax was called a “corvée.” Ta r iff  The tariff was a tax on imported goods. Most colonial governments before Confederation relied primarily on the tariff for their revenues; the federal government relied primarily on the tariff for its revenues after 1867. When a government strategically chose to levy the tax in a way that protected Canadian manufactures, it was a protective tariff: such was Galt’s tariff of 1859 and the National Policy of tariff protection that John A. Macdonald’s government introduced in 1879. The word “customs” also referred to the tariff; excise was a tariff on particular kinds of goods that seemed to require special warrant or licence, particularly alcohol and tobacco. These were also referred to as taxes on consumption or consumer goods because they targeted consumption as a transaction or transfer (unlike direct taxation, which taxed ownership). U n ea r n e d in c r e me nt  Henry George used this phrase to refer to rising land values. When the value of land increased because population density increased around it, the result was an incremental increase in the wealth of landlords who, George argued, had done nothing to earn it. George wanted to appropriate that unearned increment for the public by taxing it. Some tax reformers also applied the notion of an unearned increment to other kinds of economic gains, such as inheritance; others used it to denounce capitalism more broadly as chockablock with unearned increments. V ac a n t la nd ta x  Long before Henry George’s arguments for landvalue taxation became popular, many communities imposed special taxes on vacant land. The goal was to prevent speculation on large landholdings that let landowners reap the benefits of settlement and development done by their neighbours. Vacant land taxes were particularly popular along settlement frontiers in western Canada where vacant lands held back the organization and funding of such services as schools.

Note s

Note: When quotations are not indicated with an endnote number, it is because the same source will be quoted shortly following the first quotation. The last quotation from the same source will be marked with a note number.

A b b r e v i ati on s a n s ao avm b c a cta dcb lac pa n b qua r b sc rhaf

Archives of Nova Scotia Archives of Ontario Archives de la ville de Montréal British Columbia Archives City of Toronto Archives Dictionary of Canadian Biography Library and Archives Canada Provincial Archives of New Brunswick Queen’s University Archives Rare Books and Special Collections Revue d’histoire de l’Amérique française I nt roduct i on

 1 avm , c u m 3, Fonds de la Municipalité du comité de Jacques-Cartier. s c s s 2 d2, p 1/c2, 7 Ventes pour taxes 1892.  2 b c a, gr 1755, British Columbia Treasury Department, Records of the Provincial Assessor, box 4, file 9, George Morrow, 2 December 1905; box 2, file 4, Charles Ryan, 2 May 1903.  3 b c a, gr 1755, 3, 12, David Parsell, 26 December 1904.

472

Notes to pages 4–9

 4 pa nb , rs 153, Northumberland County Council Records, c 1 b1, Taxation General Correspondence, 1817–1929, Joseph Hill, 29 October 1914; Paul Craven, Petty Justice: Low Law and the Sessions System in Charlotte County, New Brunswick, 1785–1867 (Toronto: University of Toronto Press, 2014), 274–5.  5 av m, p 27 s d , s s 1, Fonds de la cité de Sainte-Cunégonde, d 1, 2, #1875, 10 April 1890.   6 Ibid., for Augustin Cantin’s Canada Marine Works: files: 272 (1880), 1425 (1886), 1482, 1489, 1530, 1539 (1887), 1700, 1733 (1889), 2026 (1890), 2317t (1892), 2715 (1894 – by his executors); Montreal Rolling Mills: 1056 (1884), 1321 (1885 – agreeing to a commutation deal), 1372 (1886), 1475, 1499 (1887), 1580 (1888).   7 W. Irwin Gillespie, Tax, Borrow & Spend: Financing Federal Spending in Canada, 1867–1990 (Ottawa: Carleton University Press, 1995).   8 J. Harvey Perry, Taxes, Tariffs and Subsidies: A History of Canadian Fiscal Development (Toronto: University of Toronto Press, 1955), 2 vols.   9 Andrew Wender Cohen, Contraband: Smuggling and the Birth of the American Century (New York: W.W. Norton, 2015), 168; New London Day, 29 September 1881; Toronto Daily Mail and Empire, 23 March 1899; l ac, r g 16-A-3, vol. 839, 624648, has “Proceeds of Seizures and Fines,” for Windsor between 1855 and 1870. 10 l ac , r g16, vol. 796, Department of Inland Revenue, Orders in Council, 9 and 10, 1 October 1867. 11 Toronto Daily Mail and Empire, 18–19 November 1895; Ottawa Citizen, 12 December 1895. 12 J.I. Little, State and Society in Transition: The Politics of Institutional Reform in the Eastern Townships 1838–1852 (Montreal and Kingston: McGill-Queen’s University Press, 1997), 6 and passim. 13 Sven Steinmo, Taxation and Democracy: Swedish, British, and American Approaches to Financing the Modern State (New Haven: Yale University Press, 1993), 7. 14 Avner Offer, Property and Politics 1870–1914: Landownership, Law, Ideology and Urban Development in England (Cambridge: Cambridge University Press, 1981), 162. 15 Steinmo, Taxation and Democracy; Martin Daunton, Trusting Leviathan: The Politics of Taxation in Britain, 1799–1914 (Cambridge: Cambridge University Press, 2007) and Just Taxes: The Politics of Taxation in Britain, 1914–1979 (Cambridge: Cambridge University Press, 2002); Frank Trentmann, Free Trade Nation: Consumption, Civil Society and Commerce (Oxford: Oxford University Press, 2008); Ajay Mehrotra, Making the



Notes to pages 9–13

473

Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877–1929 (Cambridge: Cambridge University Press, 2014); Robin Einhorn, American Taxation, American Slavery (Chicago: University of Chicago Press, 2006) and Property Rules: Political Economy at Chicago, 1833–1872 (Chicago: University of Chicago Press, 1991); Michael Kwass, Privilege and the Politics of Taxation in Eighteenth-Century France: Liberté, Egalité, Fiscalité (Cambridge: Cambridge University Press, 2000); Romain Huret, American Tax Resisters (Cambridge: Harvard University Press, 2014); Nicolas Delalande, Les Batailles de l’impôt: Consentement et résistances de 1789 à nos jours (Paris: Seiuil, 2011); Nicolas Barreyre, Gold and Freedom: The Political Economy of Reconstruction, trans. Arthur Goldhammer (Charlottesville: University of Virginia Press, 2015). 16 Isaac William Martin, Ajay K. Mehrotra, and Monica Prasad, eds., The New Fiscal Sociology: Taxation in Comparative and Historical Perspective (Cambridge: Cambridge University Press, 2009). 17 Carman Miller, Review, in American Historical Review 82, 3 (June 1977): 777. 18 Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge: Harvard University Press, 2014). 19 Robert D. Johnston, The Radical Middle Class: Populist Democracy and the Question of Capitalism in Progressive Era Portland (Princeton: Princeton University Press, 2003), 12. 20 See Margaret Levi, Of Rule and Revenue (Berkeley: University of California Press, 1988). 21 William Brown, Is Rent Just? What Political Economy Teaches Regarding It (Montreal: John Lovell & Son, 1881), 18. 22 Colin Grittner, “Privilege at the Polls: Culture, Citizenship, and the Electoral Franchise in Mid-Nineteenth-Century British North America” (PhD Dissertation, McGill University, 2015). 23 Toronto Daily Mail, 13 April 1887. 24 Early Dominion tax history serves as a case study for economic analysis in Stanley L. Winer and Walter Hettich, “Debt and Tariffs: An Empirical Investigation of the Evolution of Revenue Systems,” Journal of Public Economics 45 (1991): 215–42; Gillespie, Tax, Borrow, Spend. 25 Bruce Smardon, “At issue in the rise of American progressivism were conflicting notions of democratic citizenship and the demands of various reform movements for a new democracy less defined by the ‘corrupt bargain’ between big business and government … There was no counterpart in Canada to the broad-based movements in the United States that put forward a different conception of democracy …” Asleep at the Switch: The

474

Notes to pages 15–24

Political Economy of Federal Research and Development Policy since 1960 (Montreal & Kingston: McGill-Queen’s University Press, 2014), 71. 26 Ian Hacking, The Taming of Chance (Cambridge: Cambridge University Press, 1990), 2–3 and Rewriting the Soul: Multiple Personality and the Sciences of Memory (Princeton: Princeton University Press, 1998). W.H. Dray, “Concepts of Causation in A.J.P. Taylor’s Account of the Origins of the Second World War,” History and Theory 17, 2 (May 1978): 149–74. 27 Ian Hacking, The Social Construction of What? (Harvard: Harvard University Press, 2000).

C ha p t e r on e  1 British Spectator 15, 740 (3 September 1842), 842–3; in Ursilla N. Macdonnell, “Gibbon Wakefield and Canada Subsequent to the Durham Mission (1839–1842),” Queen’s Quarterly 32 (1 August 1924), 296; Jacques Monet, The Last Cannon Shot: A Study of French-Canadian Nationalism, 1837–1850 (Toronto: University of Toronto Press, 1969); J.M.S. Careless, Brown of the Globe, Statesman of Confederation 1860– 1880 (Toronto: Dundurn, 1996).   2 J.J. Ben Forster, “First Spikes: Railways in Macdonald’s Early Political Career,” in Patrice Dutil and Roger Hall, eds., Macdonald at 200: New Reflections and Legacies (Toronto: Dundurn, 2014): 173–92; Charles W. Calomiris and Larry Schweikart, “The Panic of 1857: Origins, Transmission, and Containment,” Journal of Economic History 51, 4 (December 1991): 807–34.   3 Michael J. Piva, The Borrowing Process: Public Finance in the Province of Canada, 1840–1867 (Ottawa: University of Ottawa Press, 1992), 151 and passim; Marc Vallières, Le Québec emprunte: Syndicats financiers et finances gouvernementales 1867–1987 (Quebec: Septentrion, 2015); J.J.B. Forster, A Conjunction of Interests: Business, Politics, and Tariffs, 1825–1879 (Toronto: University of Toronto Press, 1986); R.T. Naylor, The History of Canadian Business, 1867–1914 (Montreal & Kingston: McGill-Queen’s University Press, 2006; reprint), 28; Marc-William Palen, The ‘Conspiracy’ of Free Trade: The Anglo-American Struggle over Empire and Economic Globalisation, 1846–1896 (Cambridge: Cambridge University Press, 2016).   4 Martin Daunton, Wealth and Welfare: An Economic and Social History of Britain 1851–1951 (Oxford: Oxford University Press, 2007), 207; Forster, Conjunction of Interests; Daunton, Trusting Leviathan, 74–5; Andrew Smith, British Businessmen and Canadian Confederation: Constitution



Notes to pages 24–8

475

Making in an Era of Anglo-Globalization (Montreal & Kingston: McGillQueen’s University Press, 2008), 148; see also Isabela Mares and Didac Queralt, “The Non-Democratic Origins of Income Taxation,” Comparative Political Studies 48, 14 (2015): 1974–2009.  5 Smith, British Businessmen and Confederation; Piva, Borrowing Process.   6 Serge Courville, “La crise agricole du Bas-Canada: Éléments d’une réflexion géographique,” Cahiers de geographie du Quebec 24 (1980): 193–224, 385–428; Frank D. Lewis and Marvin McInnis, “Agricultural Output and Efficiency in Lower Canada, 1851,” Research in Economic History 9 (1984): 45–88; J.I. Little, “Agricultural Progress in Canada East / Quebec: Problems in Measuring Relative Productivity during the Grain-Dairy Transition,” Histoire sociale-Social History 18 (1985): 425–32; Robert Armstrong, “The Efficiency of Quebec Farmers in 1851,” Histoire socialeSocial History 17 (1984): 149–65; Peter A. Russell, How Agriculture Made Canada: Farming in the Nineteenth Century (Montreal & Kingston: McGill-Queen’s University Press, 2012).   7 Sir John Willison, “Some Political Leaders in the Canadian Federation,” in George M. Wrong, et al., The Federation of Canada (Toronto: University of Toronto Press, 1917), 54.  8 Toronto Globe, 22 February, 11 and 31 May 1860.  9 Toronto Globe, 11 April 1859. 10 Margaret Evans, Sir Oliver Mowat (Toronto: University of Toronto Press, 1992), 34; Sarnia Observer, 6 May 1859. A careful analysis of the larger Upper Canada / Ontario perspective in 1859 and subsequently is in Daniel H. Heidt, “‘First Among Equals’: The Development of Preponderant Federalisms in Upper Canada and Ontario to 1896” (PhD Dissertation, University of Western Ontario, 2014). 11 Halifax Morning Chronicle, 29 September 1864, in P.B. Waite, The Life and Times of Confederation 1864–1867: Politics, Newspapers and the Union of British North America (Toronto: University of Toronto Press, 1962), 41. 12 Roberto Perin, Ignace de Montréal: Artisan d’une identité nationale (Montreal: Boreal, 2008). 13 Mark G. McGowan, The Waning of the Green: Catholics, the Irish, and Identity in Toronto, 1887–1922 (Montreal & Kingston: McGill-Queen’s University Press, 1999), 17. McGowan debunks the Globe’s association between poverty and Irish Catholics in Toronto. 14 Toronto Globe, 23 January 1854. 15 Toronto Globe, 5 January 1863. 16 Duncan K. Foley, Adam’s Fallacy: A Guide to Economic Theology (Harvard: Belknap, 2006), 85.

476

Notes to pages 28–31

17 Canada Railway Loan. Return to an Order of the House of Commons, 26 March 1867 (London: 1867), ci hm 45273, 18. 18 Montreal La Minerve, 1 September 1859. 19 Gerald Tulchinsky, The River Barons: Montreal Businessmen and the Growth of Industry and Transportation, 1837–53 (Toronto: University of Toronto Press, 1977); Robert C.H. Sweeny, Why Did We Choose to Industrialize? Montreal 1819–1849 (Montreal & Kingston: McGill-Queen’s University Press, 2015); Robert Lewis, Manufacturing Montreal: The Making of an Industrial Landscape, 1850–1930 (Baltimore: Johns Hopkins University Press, 2000); Bettina Bradbury, Working Families: Age, Gender, and Daily Survival in Industrializing Montreal (Toronto: McClelland & Stewart, 1993). 20 Brian J. Young, In Its Corporate Capacity: The Seminary of Montreal as a Business Institution, 1816–1876 (Montreal & Kingston: McGill-Queen’s University Press, 1986); Michael B. Percy and Rick Szostak, “The Political Economy of the Abolition of Seigneurial Tenure in Canada East,” Explorations in Economic History 29, 1 (January 1992): 51–68; J.P. Wallot, “Le Régime seigneurial et son abolition au Canada,” Canadian Historical Review 50, 4 (December 1969): 367–93. 21 Naylor, History of Canadian Business, 24. 22 Frank Underhill, In Search of Canadian Liberalism (Toronto: Macmillan, 1960), 31. 23 Andrew C. Holman, A Sense of Their Duty: Middle-Class Formation in Victorian Ontario Towns (Montreal & Kingston: McGill-Queen’s University Press, 2000), 16, 109 and passim. 24 Dror Wahrman, Imagining the Middle Class: The Political Representation of Class in Britain, c. 1780–1840 (Cambridge: Cambridge University Press, 1995). 25 Toronto Globe, 2 May 1863. 26 Wendie Nelson, “‘Rage against the Dying of the Light’: Interpreting the Guerre des Éteignoirs,” Canadian Historical Review 81, 4 (December 2000): 551–89; Peter Gossage and J.I. Little, An Illustrated History of Quebec: Tradition and Modernity (Oxford: Oxford University Press, 2012); Little, State and Society in Transition. 27 Donald Creighton, “The Struggle for Financial Control in Lower Canada, 1818–1831,” Canadian Historical Review 12, 2 (1931): 120–44. 28 Little, State and Society in Transition. 29 Toronto Globe, 26 November 1862. 30 J.I. Little, “Colonization and Municipal Reform in Canada East,” Histoire sociale – Social History 14, 27 (May 1981): 93–121. 31 Toronto Globe, 21 July 1859.



Notes to pages 32–8

477

32 Brian J. Young, George-Etienne Cartier, Montreal Bourgeois (Montreal & Kingston: McGill-Queen’s University Press, 1981), 74. 33 Bruce W. Hodgins, “Democracy and the Fathers of Confederation,” in Ontario Historical Society, Profiles of a Province: Studies in the History of Ontario (Toronto: Ontario Historical Society, 1967), 83–91; Grittner, “Privilege at the Polls”; Joseph Schull, Ontario since 1867 (Toronto: McClelland & Stewart, 1978), 46; Roman Wasyl Frank, “Towards Liberal Democracy in Ontario: The Franchise and Policy-Making 1868–1888 (PhD Dissertation, Queen’s University, 1992). 34 Macdonald to Brown Chamberlin, 20 January 1856, in J.K. Johnson, ed., The Papers of the Prime Ministers: The Letters of Sir John A. Macdonald 1836–1857 (Ottawa: Public Archives of Canada, 1969), vol. 1, 339. 35 Grittner, “Privilege at the Polls.” 36 Montreal Witness, 12 May 1874, 14 May 1878. 37 Patricia Thornton and Sherry Olson, “A Deadly Discrimination among Montreal Infants, 1860–1900,” Continuity and Change 16, 1 (2001): 95–135; Martin Tétrault, “Les maladies de la misère: Aspects de la santé publique à Montréal, 1880–1914,” Revue d’histoire de l’Amérique ­française 36, 4 (1983): 507–26; Denyse Baillargeon, Babies for the Nation: The Medicalization of Motherhood in Quebec 1910–1970, trans. W. Donald Wilson (Waterloo: Wilfrid Laurier University Press, 2009); Michael Bliss, Plague: A Story of Smallpox in Montreal (Toronto: HarperCollins, 1991). 38 Douglass C. North, John Joseph Wallis, and Barry R. Weingast, Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History (Cambridge: Cambridge University Press, 2012); Francis Fukuyama, Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy (New York: Farrar, Straus and Giroux, 2015). 39 Quoted in Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States (Harvard: Belknap Press, 1992), 97–8, 82–3. 40 William Bennett Munro, “Current Municipal Affairs,” American Political Science Review 3, 4 (November 1909), 586. 41 Jean-François Constant and Michel Ducharme, eds., Liberalism and Hegemony: Debating the Canadian Liberal Revolution (Toronto: University of Toronto Press, 2009). 42 Underhill, In Search of Canadian Liberalism, 26. 43 British North American Association: Confederation of the British NorthAmerican Provinces, Being Extracts from Speeches Recently Delivered on

478

Notes to pages 38–44

this Subject by Canada, Nova Scotia, & New Brunswick. (London: F Algar, 1865), 20–1. 44 David A. Wilson, Thomas D’Arcy McGee: The Extreme Moderate, 1857– 1868 (Montreal & Kingston: McGill-Queen’s University Press, 2011). 45 J.E. Hodgetts describes it as the least professional department at the end of the First World War: The Canadian Public Service: A Physiology of Government, 1867–1970 (Toronto: University of Toronto Press, 1973). See also Gordon T. Stewart, The Origins of Canadian Politics: A Comparative Approach (Vancouver: ubc Press, 1986); Robert B. Bryce, Maturing in Hard Times: Canada’s Department of Finance through the Great Depression (Montreal & Kingston: McGill-Queen’s University Press, 1986). Staff in Finance ballooned from 141 in September 1912 to 640 during the First World War: Richard Pomfret, The Economic Development of Canada (Toronto: Nelson Canada, 1993; 2nd ed.), 63–89. 46 Quoted in Underhill, In Search of Canadian Liberalism, 16. 47 Johnson, Papers of the Prime Ministers, 339. 48 Richard Gwyn, John A. Macdonald: The Man Who Made Us and His Life, Our Times (Toronto: Random House, 2007–11). 49 Toronto Globe, 24 January 1862, 2 May 1863; F.H. Underhill, “Canada’s Relations with the Empire as Seen by the Toronto Globe, 1857–1867,” Canadian Historical Review 10, 2 (1929): 106–28. 50 J.H. Gray, Confederation, or, The Political and Parliamentary History of Canada (Toronto: Copp, Clark, 1872), vol. 1, 34; Le Courrier du Canada, 30 September 1864, Courrier de St Hyacinthe, 4 October 1864; Montreal La Minerve, 29 September 1864. 51 Jean-Pierre Kesteman, “Sir Alexander Tilloch Galt,” dcb ; O.D. Skelton, The Life and Times of Sir Alexander Tilloch Galt (Toronto: Oxford University Press, 1920); Underhill, In Search of Canadian Liberalism, 27. 52 Quoted in Perry, Taxes, Tariffs and Subsidies, vol. 1, 29. 53 Quoted in J.A. Maxwell, Federal Subsidies to the Provincial Governments in Canada (Cambridge: Harvard University Press, 1937), 6; Christopher Moore, Three Weeks in Quebec City: The Meeting that Made Canada (Toronto: Allen Lane, 2015). 54 A.H.U. Colquhoun, The Fathers of Confederation: A Chronicle of the Birth of the Dominion (Toronto: Glasgow, Brook, 1916); Maxwell, Federal Subsidies, 7. 55 Gray, Confederation, vol. 1, 62. 56 Parliamentary Debates on the Subject of the Confederation of the British North American Provinces (Quebec: Hunter, Rose & Co., 1865), 43. 57 Maxwell, Federal Subsidies, 14–15.



Notes to pages 45–50

479

58 Christopher Armstrong, The Politics of Federalism: Ontario’s Relations with the Federal Governent, 1867–1942 (Toronto: University of Toronto Press, 1981), 12. 59 The classic wording in Careless, Brown of the Globe, Statesman, 171, has been corrected by Moore, Three Weeks in Quebec, 205. 60 Toronto Globe, 11 November 1864. 61 Contre-poison: La confederation, c’est le salut du Bas-Canada (Montreal: Senécal, 1867), 44–5. 62 Arthur Silver, The French-Canadian Idea of Confederation (Toronto: University of Toronto Press, 1982), 41. 63 Parliamentary Debates, 26, 60. See Silver, French-Canadian Idea. 64 A.T. Galt, Speech on the Proposed Union of the British North American Provinces, Delivered at Sherbrooke, C.E. (Montreal: Gazette, 1864), 20. 65 Forster, Conjunction of Interests and “Common Knowl­edge: Theory, Concept, and the Prosaic in Making the Tariff of 1859,” in E.A. Heaman, Alison Li, and Shelley McKellar, eds., Essays in Honour of Michael Bliss: Figuring the Social (Toronto: University of Toronto Press, 2008): 119–45. 66 Parliamentary Debates, 68. 67 Jan de Vries, The Industrious Revolution: Consumer Behaviour and the Household Economy 1650 to the Present (Cambridge: Cambridge University Press, 2008); John Brewer, The Sinews of Power: War, Money and the English State, 1688–783 (London: Unwin Hyman, 1989); Philip T. Hoffman, Growth in a Traditional Society: The French Countryside, 1450–1815 (Princeton: Princeton University Press, 1996), 185. 68 Albert O. Hirschman, The Passions and the Interests: Political Arguments for Capitalism before Its Triumph (Princeton: Princeton University Press, 1977). 69 Parliamentary Debates, 31. 70 Jürgen Habermas, The Structural Transformation of the Public Sphere: An Inquiry into a Category of Bourgeois Society, trans. Thomas Burger (Cambridge: m i t Press, 1991). 71 Parliamentary Debates, 19. 72 Galt, Speech on the Proposed Union of the British North American Provinces, 15. 73 Martin Daunton, “Creating Legitimacy: Administering Taxation in Britain, 1815–1914,” in José Luis Cardoso and Pedro Lains, Paying for the Liberal State: The Rise of Public Finance in 19th-Century Europe (Cambridge: Cambridge University Press, 2010), 29, 45; Daunton, Trusting Leviathan, 256. 74 Offer, Property and Politics, 179 (quoting Liberal mp George Joachim Goschen, 1868), 173.

480

Notes to pages 50–5

75 Garth Stevenson, Ex Uno Plures: Federal-Provincial Relations in Canada, 1867–1896 (Montreal & Kingston: McGill-Queen’s University Press, 1993) and Unfulfilled Union: Canadian Federalism and National Unity (Montreal & Kingston: McGill-Queen’s University Press, 2009; rev. ed.). 76 a ns , r g34-312, Quarter Sessions of the Peace, Halifax Grand Jury Books, p 18, 1852–62; p1: Quarter sessions of the Peace, 1863–75. 77 Jeffrey L. McNairn, “The Malthusian Moment: British Travellers and the Vindication of Economic Liberalism in the Maritime Countryside,” in Nancy Christie, ed., Transatlantic Subjects: Ideas, Institutions, and Social Experience in Post-Revolutionary British North America (Montreal & Kingston: McGill-Queen’s University Press, 2008): 329–68. 78 E.A. Heaman, The Inglorious Arts of Peace: Exhibitions in Canadian Society during the Nineteenth Century (Toronto: University of Toronto Press, 1999); Darren Ferry, Uniting in Measures of Common Good: The Construction of Liberal Identities in Central Canada (Montreal & Kingston: McGill-Queen’s University Press, 2008). 79 Jean-Marie Fecteau, La Liberté du pauvre: Sur la régulation du crime et de pauvreté au xix e siècle québécois (Montreal: v lb , 2004); Mariana Valverde, “The Mixed Social Economy as a Canadian Tradition,” Studies in Political Economy 47 (Summer 1995): 39. 80 Brian Gettler, “En espèce ou en nature? Les présents, l’imprévoyance et l’évolution idéologique de la politique indienne pendant la première moitié du x i x e siècle,” Revue d’histoire de l’Amérique française 65, no. 4 (2012), 409–37. 81 “Bread Riot in Montreal,” The Spectator, 18 December 1875. 82 Bradbury, Working Families, 102. 83 Adam Smith, An Enquiry into the Nature and Causes of the Wealth of Nations (1776; Electronic Classics Series Publication), 422; https://archive. org/details/WealthOfNationsAdamSmith (accessed on 12 November 2016). 84 E.P. Thompson, “The Moral Economy of the English Crowd in the Eighteenth Century” and “The Moral Economy Reviewed,” in Thompson, Customs in Common (London: Merlin Press, 1991): 185–351. 85 “The Bread-Riots at Montreal,” The Spectator, 8 January 1876. 86 Willison, “Some Political Leaders,” 50. 87 Waite, Life and Times, 130. 88 Parliamentary Debates, 517–18. 89 Waite, Life and Times, 303; Halifax Morning Chronicle, 22 June 1869. 90 Toronto Daily Mail, 13 April 1887. 91 Economist 50, 1 (1892), 220. 92 Toronto Daily Mail, 20 June 1891.



Notes to pages 56–61

481

C h a p t e r t wo   1 Cole Harris, The Reluctant Land: Society, Space, and Environment in Canada before Confederation (Vancouver: u b c Press, 2008).   2 Andrew Smith, “Toryism, Classical Liberalism, and Capitalism: The Politics of Taxation and the Struggle for Canadian Confederation,” Canadian Historical Review 89, 1 (March 2008): 1–25. See also Phillip Buckner, “chr Dialogue: The Maritimes and Confederation: A Reassessment,” Canadian Historical Review 71, 1 (1990): 1–45.   3 Phillip A. Buckner, “The 1860s: An End and a Beginning,” in Phillip A. Buckner and John G. Reid, eds., The Atlantic Region in Confederation: A History (Toronto: University of Toronto Press, 1994), 376.   4 J.A. Maxwell, A Financial History of Nova Scotia, 1848–1899 (PhD Dissertation, Harvard University, 1926), 84–5.  5 Perry, Taxes, Tariffs and Subsidies, vol. 1, 26.   6 David A. Wilson, Thomas D’Arcy McGee: Passion, Reason, and Politics 1825–1857 (Montreal & Kingston: McGill-Queen’s University Press, 2006), vol. 1, 259–60; e.g., Toronto Irish Canadian, 10 August 1864.  7 Halifax Morning Chronicle, 25 January 1865.   8 P.B. Waite, ed., The Confederation Debates in the Province of Canada, 1865 (Montreal & Kingston: McGill-Queen’s University Press, 2006), xli.   9 Sean Cadigan, Newfoundland and Labrador: A History (Toronto: University of Toronto Press, 2009); Rusty Bitterman, Rural Protest on Prince Edward Island: From British Colonization to the Escheat Movement (Toronto: University of Toronto Press, 2006); Ian Ross Robertson, The Tenant League of Prince Edward Island, 1864–1867: Leasehold Tenure in the New World (Toronto: University of Toronto Press, 1996); Colin Grittner, “Working at the Crossroads: Statute Labour, Manliness, and the Electoral Franchise on Victorian Prince Edward Island,” Journal of the Canadian Historical Association 23, 1 (2012): 101–30. 10 Grittner, “Privilege at the Polls.” Information in the dc b , 22 vols. (Toronto: University of Toronto Press, 1959–), available online: www. biographi.ca/en/index.php (accessed on 12 November 2016). 11 Toronto Globe, 8 October 1866, quoted in Naylor, History of Canadian Business, vol. 1, 31; Moore, Three Weeks in Quebec City, 221. 12 Waite, Life and Times, 236. 13 William M. Baker, Timothy Warren Anglin 1822–96: Irish Catholic Canadian (Toronto: University of Toronto Press, 1977), 68. 14 Nova Scotia, Debates and Proceedings of the House of Assembly (Halifax: Joseph C. Crosskill, 1867), 85, 96–7.

482

Notes to pages 61–8

15 Delphin Andrew Muise, “Elections and Constituencies: Federal Politics in Nova Scotia, 1867–1878” (PhD Dissertation, University of Western Ontario, 1971), 39; Kenneth G. Pryke, Nova Scotia and Confederation (Toronto: University of Toronto Press, 1979). 16 Halifax Morning Chronicle, 11 and 14 January 1865. 17 Halifax Morning Sun, 13 January 1865. 18 Halifax Morning Chronicle, 14 January 1865. 19 Halifax Morning Chronicle, 27 January 1865. 20 T.E. Cliffe Leslie, Land Systems and Industrial Economy of Ireland, England, and Continental Countries (London: Longman’s, 1870), beginning with “The State of Ireland,” published in Macmillan’s Magazine, February 1867; G.M. Koot, “T.E. Cliffe Leslie, Irish Social Reform, and the Origins of the English School of Historical Economics,” History of Political Economy 7, 3 (Fall 1975): 312–36. 21 Saint John Morning Freeman, 24 and 26 January, 14 February 1865. 22 Halifax Morning Chronicle, 20, 24, and 26 January 1865. 23 Yarmouth Herald, 12 January 1865. 24 Saint John Morning Freeman, 19 November 1864. 25 Nova Scotia, Debates and Proceedings, 19 March 1867, 35. 26 Saint John Morning Freeman, 28 January 1865. 27 William M. Baker, “Squelching the Disloyal, Fenian-Sympathizing Brood: T.W. Anglin and Confederation in New Brunswick, 1865–6,” Canadian Historical Review 55, 2 (June 1974): 142. 28 Nova Scotia, Debates and Proceedings, 10 April 1865, 208–14. 29 Ibid., 11 April 1865, 235 and 17 April 1865, 256. 30 Nova Scotia, Debates and Proceedings, 9 March 1866, 63 and 18 March 1867, 15; this is also J.A. Maxwell’s assessment of Tupper, Financial History of Nova Scotia, 38. On Cartier, see Young, George-Etienne Cartier, 90–1. 31 Nova Scotia, Debates and Proceedings, 1865, 183–4, 194, 206–8. 32 Nova Scotia, Debates and Proceedings, 1867, 70–2. 33 Judith Fingard, “The Relief of the Unemployed Poor in Saint John, Halifax, and St John’s, 1815–1860,” Acadiensis 5, 1 (Autumn 1975): 32–53; Daniel Samson, The Spirit of Industry and Improvement: Liberal Government and Rural-Industrial Society in Nova Scotia, 1790–1862 (Montreal & Kingston: McGill-Queen’s University Press, 2008). 34 Thompson, “The Moral Economy of the English Crowd.” 35 Halifax Morning Chronicle, 29 May 1867; Speech at Dartmouth, 22 May 1867, Joseph Andrew Chisholm, ed., The Speeches and Public Letters of Joseph Howe (Halifax: Chronicle, 1909), vol. 2, 514.

Notes to pages 69–78

483

36 Howe to Marquis of Normandy, 22 November 1866, in Burpee, “Joseph Howe and the Anti-Confederation League,” Transactions of the Royal Society of Canada 3, 10 (1917), 440–1. Burpee calls the argument an obvious fallacy. 37 Baker, Timothy Warren Anglin. 38 In Gray, Confederation, vol. 1, 385–7. 39 Nova Scotia, Debates and Proceedings, 19 March 1867, 36 and 51. 40 Ibid., 12 April 1867, 126. 41 Halifax Morning Chronicle, 31 August 1868. 42 Martin A. Wilkins, Confederation Examined in the Light of Reason and Common Sense: And the British N.A. Act Shewn to be Unconstitutional (Halifax: Z.S. Hall, 1867); Speeches delivered by Hon. Martin I. Wilkins (Attorney General) in the House of Assembly of Nova Scotia, Session 1868 (Halifax: Morning Chronicle, 1868), 4 and passim. 43 Muise, “Elections and Constituencies,” 110. 44 House of Commons Debates, 20 December 1867, 337. 45 Halifax Morning Chronicle, 21 January 1868. 46 l ac, Macdonald fonds, 116, 47045–6, P.C. Hill to Macdonald, 31 December 1867. 47 Ibid., 47041–3, McCully to Macdonald, 28 December 1867. 48 Ibid., Letterbook, vol. 11, 333–4, Macdonald to McCully, 2 January 1868. 49 Ibid., 47077–92: McCully to Macdonald, 3 February 1868. 50 Christopher Moore, 1867: How the Fathers Made a Deal (Toronto: McClelland & Stewart, 1997), 109–12. 51 Canada, Senate, Debates, 9 May 1870, 172–9 and passim. 52 Saint John Morning Freeman, 4 February 1868, reproducing the work of a “clever writer” at the Telegraph. 53 Saint John Morning Freeman, 15 and 18 February, 5 March 1868 54 l ac, Macdonald fonds, 47093–102, Connolly to Macdonald, 19 February 1868. 55 Ibid., 47107–9, Hamilton to Macdonald, 24 February 1868. 56 Ibid., Letterbook, vol. 11, 549–50, Macdonald to McCully, 29 February 1868; 455, Macdonald to Connolly, 4 February 1868. 57 Morning Chronicle, 19 February 1869. 58 John Andrew Chisholm, The Speeches and Public Letters of the Hon. Joseph Howe (Halifax: Chronicle, 1909), vol. 2, 534. 59 In Burpee, “Joseph Howe and the Anti-Confederation League,” 414. 60 Sir Charles Tupper, Recollections of Sixty Years in Canada (London: Cassell, 1914), 59. 61 l ac, Macdonald fonds, 46667–77, Archibald to Macdonald, 17 July 1868.

484

Notes to pages 78–82

62 Ibid., 46636–66, Tilley to Macdonald, 17 July 1868; Phillip Buckner, “c hr Dialogue: The Maritimes and Confederation,” 31; Waite, Life and Times, 303. 63 l ac , Macdonald fonds, 46761, Howe to Macdonald, 8 October 1868. 64 Kwass, Privilege and the Politics of Taxation, 232–8. 65 Halifax Chronicle, 25 September 1868. 66 “One of the People,” Annexation to the United States: Is it Desirable? Is it possible? (Halifax: James Bowes, 1868), 23–4. Howe had also spoken in favour of annexation to Sir John C.D. Hay, Lord of the Admiralty, 12 November 1866, in Burpee, “Joseph Howe and the Anti-Confederation League,” 438. 67 Halifax Morning Chronicle, 21 January 1868. 68 J. Murray Beck, Joseph Howe: The Briton Becomes Canadian 1848–1873 (Montreal & Kingston: McGill-Queen’s University Press, 1984), 250. 69 a ns , r g31-114, Board of Revenue, Correspondence, 4, 4: Vincent Wallace, 15 April 1867; 4, 8: W.J. Bigelow, 15 August 1867. On demoralization, Gordon Blake, “The Customs Administration in Canadian Historical Development,” Canadian Journal of Economics and Political Science 22, 4 (November 1956), 506–7. He remarks, “It appears that the hard-won provincial control of the customs was surrendered without regret; it is probable that the predominant sentiment was relief.” 70 On the 1860s, Greg Marquis, “The Ports of Halifax and Saint John and the American Civil War,” Northern Mariner/Le Marin du nord 8, 1 (January 1998): 1–19; 1890s, David J. McDougall, “The Origins and Growth of the Canadian Customs Preventive Service Fleet in the Maritime Provinces and Eastern Quebec,” Northern Mariner/Le Marin du nord 5, 4 (October 1995): 37–57; Edward Butts, “The Smugglers of Nova Scotia,” Wrong Side of the Law: True Stories of Crime (Toronto: Dundurn, 2013): 44–51. See also the evidence given at the Royal Commission on the Liquor Traffic, Minutes of Evidence 4 vols. (1893–95), especially vol. 1, Provinces of Nova Scotia, New Brunswick, and Prince Edward Island (Ottawa: Queen’s Printer, 1893). There is much vague and impressionistic evidence, with merchants tending to identify a “very large quantity of liquor being smuggled from St Pierre” (432); and customs agents tended to downplay the amounts (502, Henry Graham collector of St Stephen). There were also conversations as to whether the smugglers were a distinct class of criminals or a demoralized population more generally. See also Peter Andreas, Smuggler Nation: How Illicit Trade Made America (New York: Oxford University Press, 2013); Cohen, Contraband; Lissa Wadewitz, “Pirates of



Notes to pages 83–8

485

the Salish Sea: Labor, Mobility, and Environment in the Transnational West,” Pacific Historical Review 75, 4 (2006): 587–627; lac , r g16-a-3/ r 192-31-8-e, vol. 1058, W.J.C. Wright, “Customs and Excise in Canada: A History,” unpublished manuscript. 71 a ns , r g 34-313, General Sessions of the Peace, Hants County, Assessment Papers a 12: Petitions and Appeals for Tax Relief, 1864–79. 72 a ns , r g 34-313, General Session of the Peace, Hants County, a18, Miscellaneous papers relating to Assessment, Michael Burgess letters, 12 April, 8 August, 6 and 7 September 1870. 73 Halifax Morning Chronicle, 29 May 1867. 74 Tupper, Recollections, 48. 75 T.W. Acheson, “The National Policy and the Industrialization of the Maritimes, 1880–1910,” Acadiensis 1, 2 (Spring 1972): 3–4. 76 Kris Inwood and Jim Irwin, “Land, Income and Regional Inequality: New Estimates of Provincial Incomes and Growth in Canada, 1871–1891,” Acadiensis 31, 2 (Spring 2002): 161. 77 Schull, Ontario since 1867, 46. 78 “The French Canadian peasants have exhibited enough intelligence to save the country even at the expense of an augmentation of their taxation.” Canada, House of Commons Debates, 29 May 1876, 598. 79 Schull, Ontario since 1867, 67; Armstrong, Politics of Federalism; J.E. Hodgetts, From Arm’s Length to Hands-On: The Formative Years of Ontario’s Public Service, 1867–1940 (Toronto: University of Toronto Press, 1995), 27. 80 Muise, “Elections and Constituencies.” 81 Sir Richard Cartwright, Reminiscences (Toronto: William Briggs, 1912), 92; Lorne A. Brown, “The Macdonald-Cartwright Struggle in Lennox, November, 1873,” Ontario History 61, 1 (March 1969): 42, 48. 82 Stevenson, Ex Uno Plures, 88–90; Armstrong, Politics of Federalism. 83 James Thompson, “To the Electors of the County of Halifax” (Halifax, 1878), in Nova Scotia Archives, rg 34-312, a109. 84 Maxwell, Financial History of Nova Scotia. 85 Halifax Morning Chronicle, 21 April and 25 June 1870.

C h a p t e r thre e   1 Jack Jedwab, “The Politics of Finance: A Comparative Analysis of Public Finance in the Provinces of Quebec and Ontario from 1867 to 1896” (PhD Dissertation, Concordia University, 1992), 58.

486

Notes to pages 88–91

 2 Stevenson, Unfulfilled Union, 33.   3 Patricia Roy, A White Man’s Province: British Columbia Politicians and Chinese and Japanese Immigrants, 1858–1914 (Vancouver: u b c Press, 1989) and David Goutor, “Constructing the ‘Great Menace’: Canadian Labour’s Opposition to Asian Immigration, 1880–1914,” Canadian Historical Review 88, 4 (2007): 549–76; also David Goutor, Guarding the Gates: The Canadian Labour Movement and Immigration, 1872– 1934 (Vancouver: u b c Press, 2007); John S. Lutz, Makuk: A New History of Aboriginal-White Relations (Vancouver: u b c Press, 2008); Adele Perry, On the Edge of Empire: Gender, Race, and the Making of British Columbia (Toronto: University of Toronto Press, 2001); Tina Loo, Making Law, Order, and Authority in British Columbia, 1821–1871 (Toronto: University of Toronto Press, 1994); Robin Fisher, Contact and Conflict: Indian-European Relations in British Columbia (Vancouver: u b c Press, 1977); R. Cole Harris, Making Native Space: Colonialism, Resistance and Reserves in British Columbia (Vancouver: u b c Press, 2002); Renisa Mawani, Colonial Proximities: Crossracial Encounters and Juridical Truths in British Columbia, 1871–1921 (Vancouver: u b c Press, 2009).  4 Stevenson, Unfulfilled Union, 224.  5 Stevenson, Ex Pluro Unes, 290; Robert C. Vipond, Liberty and Community: Canadian Federalism and the Failure of the Constitution (New York: suny Press, 1991).  6 a ns , r g31-113, Miscellaneous Dominion-Provincial Relations, file 1 (1871–78), Memo Alexander Mackenzie, 29 January 1877; Memo R.J. Cartwright, 12 February 1877.   7 P.B. Waite, The Man from Halifax: Sir John Thompson Prime Minister (Toronto: University of Toronto Press, 1985), 113–14.   8 Colin D. Howell, “W.S. Fielding and the Repeal Elections of 1886 and 1887 in Nova Scotia,” Acadiensis 8, 2 (Spring 1979): 28–46.  9 Maxwell, Financial History of Nova Scotia, 179. 10 Sir Joseph Pope, ed., Correspondence of Sir John Macdonald (New York: Doubleday, 1921), 382–90. 11 Monetary Times, 29 April 1887, 1281. 12 Monetary Times, 29 July 1887, 134–5. 13 Montreal Patrie, 28 May 1886; H.V. Nelles, The Politics of Development: Forests, Mines, and Hydro-Electric Power in Ontario, 1849–1941 (Montreal & Kingston: McGill-Queen’s University Press, 2005; reprint), 46. 14 Vallières, Le Québec emprunte, fig. 1.5. 15 Perry, Tariffs, Taxes and Subsidies, vol. 1, 76–8; Canada Law Journal, 1 January 1888, 1–5. New Brunswick followed in 1892, Prince Edward



Notes to pages 91–6

487

Island in 1894, Manitoba in 1900, British Columbia in 1901, Saskatchewan and Alberta in 1907, and Nova Scotia in 1912. Joe Ruggeri, “The Evolution of Provincial Responsibility,” in Harvey Lazar, ed., Canadian Fiscal Arrangements: What Works, What Might Work Better (Montreal & Kingston: McGill-Queen’s University Press, 2005), 94. 16 Montreal Witness, 5 July 1887; Montreal Herald, 3 June 1889; Monetary Times, 29 July 1887, 134–5. 17 Courrier du Canada, 19 April 1888; P.B. Waite, “Thomas White,” dcb ; Montreal Patrie, 22 July 1887. 18 John Davidson, “The Financial Relations of the Dominion of Canada and the Provinces,” The Economic Journal 15, 58 (June 1905): 173. 19 Richard Starr, Equal as Citizens: The Tumultuous and Troubled History of a Great Canadian Idea (Halifax: Formac, 2014), 39. 20 Francis William Pius Bolger, “Prince Edward Island and Confederation 1863–1873,” Canadian Catholic Historical Association Report 28 (1961): 28–9. 21 Grittner, “Privilege at the Polls,” 200–2. 22 Joseph Schull, Edward Blake: The Man of the Other Way, 1833–1881 (Toronto: Macmillan, 1975), 159–65; Heidt, “‘First Among Equals,’” 181. 23 New Westminster British Columbian, 3 October 1861. 24 Jiwu Wang, ‘His Dominion’ and the ‘Yellow Peril’: Protestant Missions to Chinese Immigrants in Canada, 1859–1867 (Waterloo: Wilfrid Laurier University Press, 2006), 10–11. 25 Robert Galois and Cole Harris, “Recalibrating Society: The Population Geography of British Columbia in 1881,” Canadian Geographer 38, 1 (1994): 37–53. 26 Victoria, British Colonist, 12 March 1859. 27 Goutor, “Constructing the ‘Great Menace’”; David Roediger, The Wages of Whiteness: Race and the Making of the American Working Class (London: Verso, 2007; rev. ed.). 28 Robert A. Huttenback, Racism and Empire: White Settlers and Colored Immigrants in the British Self-Governing Colonies 1830–1910 (Ithaca: Cornell University Press, 1976), 60. 29 See Daniel P. Marshall, “An Early Rural Revolt: The Introduction of the Canadian System of Tariffs,” in Ruth Sandwell, ed., Beyond the City Limits (Vancouver: u bc Press, 2007): 47–61. 30 Richard H. Bartlett, “Indians and Taxation in Canada,” American Indian Law Review 7, 2 (1979): 185–243. 31 Harper’s New Monthly Magazine, 83, 498 (November 1891): 883. 32 Lynn Pan, Sons of the Yellow Emperor: A History of the Chinese Diaspora (Boston: Little Brown, 1990), 33.

488

Notes to pages 97–106

33 Huttenback, Racism and Empire, 14. 34 See Robert A.J. McDonald, “The Quest for ‘Modern Administration’: British Columbia’s Civil Service, 1870s to 1940s,” B.C. Studies 161 (2009): 9–34. 35 Greg Dening, Mr Bligh’s Bad Language: Passion, Power, and Theatre on the Bounty (Cambridge: Cambridge University Press, 1992), 269. 36 Kwass, Privilege and the Politics of Taxation. 37 Donald J. Hauka, McGowan’s War: The Birth of Modern British Columbia on the Fraser River Gold Fields (Vancouver: New Star Books, 2003), 206–7; British Columbian, 25 February 1865. 38 Barkerville Cariboo Sentinel, 24 July 1875 and Victoria British Colonist, 27 January 1871. 39 Victoria British Colonist, 16 January 1872. 40 For example, Victoria British Colonist, 19 April 1860, 13 October 1864. 41 Victoria Daily Standard, 20 February 1872; Victoria British Colonist, 27 February 1872. 42 Roy, White Man’s Province, 46–7. 43 Victoria British Colonist, 27 February 1872. 44 Victoria British Colonist, 28 February and 10 March 1872, 13 January 1874. 45 Victoria British Colonist, 29 April, 2 and 4 May 1876 46 Victoria British Colonist, 6 May 1876. 47 Victoria British Colonist, 10 May 1878. 48 b c a , g r 526, (ps ), 643 and 662 of 1876. 49 b c a , g r 1741 (Treasury) 64/1878, 545/1879, 72/1879. 50 b c a , g r 1741 (Treasury), 480/1878, 756/1879, 801/1879; Victoria British Colonist, 8 November 1881. 51 b c a , g r 526 (ps ), 603/1876; 8 and 66/1877. 52 b c a , g r 1741 (Treasury) 156/1878. 53 See Lisa Rose Mar, Brokering Belonging: Chinese in Canada’s Exclusion Era, 1885–1945 (Toronto: Oxford University Press, 2010). 54 b c a , g r 526, 567/1876. 55 Victoria British Colonist, 17 October 1880. 56 Victoria British Colonist, 22 and 30 April 1880. 57 b c a , g r 526 (ps ), 449/1881 and 924/1883. 58 b c a , g r 216, British Columbia, Government Agent, Cariboo, 194/1882 and 244/1883; g r526, 273/1881. 59 b c a , g r 526, 594/1883. 60 Roy, White Man’s Province, 44–5. 61 b c a , g r 526 (ps ), 351/1879, 97/1880, 55/1880, 73/1880, 323/1879.



Notes to pages 106–12

489

62 b c a, gr 1741 (Treasury), 170/1874 enclosure by G. Walkem, 5 May 1873. 63 Philip Resnick, The Politics of Resentment: British Columbia Regionalism and Canadian Unity (Vancouver: u bc Press, 2001). 64 The Nation, 24 April 1879; Bruce Ryder, “Racism and the Constitution: The Constitutional Fate of British Columbia Anti-Asian Immigration Legislation, 1884–1909,” Osgoode Hall Law Journal 29 (1991): 619–76. 65 Lily Chow, Sojourners in the North (Vancouver: Harbour, 1996), 26. 66 b c a, gr 1741 (Treasury), 648/1881. 67 b c a, gr 429 (Attorney General’s Records), 764/1881. 68 b c a, gr 1741 (Treasury), 805/1881 and 1186/1881. 69 b c a, gr 526 (ps ), 541/1884. 70 Loo, Making Law. 71 Canada, Sessional Papers 16 (1883), No. 93, 14. 72 Victoria British Colonist, 7 February 1879 and 13 April 1882. 73 Canada, House of Commons Debates, 15 April 1881. 74 Victoria British Colonist, 11 March 1881. 75 British Columbia. Papers Connected with the Indian Land Question, 1850–1875 (Victoria: Queen’s Printer, 1875); British Columbia Sessional Papers (1876): 175. 76 George T.B. Davis, Metlakahtla: A True Narrative of the Red Man (Chicago: Ram’s Horn, 1904), 55; bca, g r 526 37/1880; Jean Usher, William Duncan of Metlakatla: A Victorian Missionary in British Columbia (Ottawa: National Museum, 1974). 77 b c a, gr 526, 564/1876. See Rolf Knight, Indians at Work: An Informal History of Native Indian Labour in British Columbia, 1858–1930 (Vancouver: New Star Books, 1978). 78 L A C , R G10, vol. 2338, 68387 (Caradoc Reserve, 1885), vol. 2463, 90263 and R G13-A -2, vol. 2255, 1888–95 (Alnwick Reserve, 1888). 79 b c a, gr 526, 279 and 290 of 1872; g r 1459, Attorney General opinions, box 1, file 8, no. 21, 26 May 1871. 80 b c a, gr 1741/1879. 81 l ac, r g 10, vol. 3656, 9059, Campbell to Macdonald, 26 September 1883. 82 Ibid., Powell to Vankoughnet, 30 January 1884. 83 “But perhaps the most important point was simply the maintenance of governmental authority. The Department of the Interior had to administer a system that depended on compliance with rules. It was one thing to work out solutions for pre-survey squatters; it was quite another to accommodate those who had flouted rules. But the Metis, thinking of themselves as aboriginal people with special rights, showed little sympathy for this problem of rule enforcement. To the extent that the North-West Rebellion grew

490

Notes to pages 113–21

out of disputes over river lots, it stemmed from this collision of perspectives.” By contrast, when similar problems arose in Edmonton, Qu’Appelle, and Battleford, where settlement had also preceded survey, “Sir John A. Macdonald wrote to the minister of the interior in July 1882 that something had to be done about the claims of these settlers, ‘lest they all become Grits.’” Thomas Flanagan, Riel and the Rebellion: 1885 Reconsidered (Toronto: University of Toronto Press, 2000): 35–42. 84 l ac, r g10 Black Series, vol. 3949, 127592, passim. 85 Ibid., J.D. Maclean to Vowell, 28 December 1909. 86 Royal Commission on Chinese Immigration, Report and Evidence (Ottawa: Queen’s Printer, 1885), 60, 62, 68. 87 b c a , gr 216, [unnumbered 191a], W Stephenson to John Bowron, 28 January 1879: “I have not got in any School Tax for 79 yet think if I can wait until the Chinamen come to the office to pay I will have a good time of it in waiting. There will be more of them delinquent than there will be to come and pay.” In 1881, he explained that his accounts were late because he was “going through” the Chinese to find delinquents for the poll tax on the Fraser River: g r1741 1577/1881. 88 b c a , gr 1741 233/1885; 313/1885; 246/1885; 821/1885; 264/1885; 260/1885. 89 b c a , gr 1741 768/1885 and 613/1887; g r 526 (ps) 325/1885. 90 Victoria British Colonist, 8 November 1881. 91 b c a , gr 441, Premier’s Papers, 6, 1 85/97, J.H. Turner corresponding with Rev. E.D. McLaren. 92 James Mavor, My Windows on the Street of the World (Toronto: J.M. Dent & Sons, 1923), vol. 1, 321; bca, g r786, British Columbia Royal Commission on Taxation (1911), Evidence, vol. 1, 26. See George Richard, “Price Ellison, A Gilded Man in British Columbia’s Gilded Age,” British Columbia Historical News 31, 3 (Summer 1998): 8–14. 93 Peter B. Evans, Dietrich Rueschemeyer, and Theda Skocpol, eds., Bringing the State Back In (Cambridge: Cambridge University Press, 1985). 94 Canada, House of Commons Debates, 5 April 1883, 446.

C ha p t e r f ou r  1 Daunton, Wealth and Welfare, 207.  2 Montreal Patrie 5 March 1880; Canadian Manufacturer, 6 May 1892.   3 Patrick Karl O’Brien and Armand Clesse, eds., Two Hegemonies: Britain 1846–1914 and the United States 1941–2001 (Aldershot: Ashgate, 2002), 31.  4 Palen, ‘Conspiracy’ of Free Trade.



Notes to pages 121–5

491

 5 Forster, Conjunction of Interests, 109.   6 Ibid, 82; see also Keiko Sueuchi, “Tariff Out of Politics: Political Economy of Tariff Policy in Canada, 1875–1935” (PhD Dissertation, Carleton University, 1992); Glen Williams, “The National Policy Tariffs: Industrial Underdevelopment through Import Substitution,” Canadian Journal of Political Science 12, 2 (June 1979): 333–68; J.H. Dales, The Protective Tariff in Canada’s Development (Toronto: University of Toronto Press, 1966).   7 Canada, House of Commons Debates, 22 July 1891, 2297.   8 Michael Bliss, Right Honourable Men: The Descent of Canadian Politics from Macdonald to Mulroney (Toronto: HarperCollins, 1994), 22–9. See also Gwyn, Sir John A. Macdonald and Gustavus Myers, History of Canadian Wealth (Chicago: Charles H. Kerr, 1914).   9 Robert Bothwell, Ian Drummond, and John English, Canada 1900–1945 (Toronto: University of Toronto Press, 1987), 52. 10 S.J.R. Noel, Patrons, Clients, Brokers: Ontario Society and Politics, 1791– 1896 (Toronto: University of Toronto Press, 1990), 291; Evans, Mowat, 289. 11 Quebec Daily Telegraph, 5 June 1882. 12 John Richard Edwards, Hugh M. Coombs, and Hugh T Greener, “British Central Government and ‘the Mercantile System of Double Entry’ Bookkeeping: A Study of Ideological Conflict,” Accounting Organizations and Society 27 (2002): 637–58. 13 John English, The Decline of Politics: The Conservatives and the Party System, 1901–20 (Toronto: University of Toronto Press, 1977), 17. 14 Robert Laird Borden, His Memoirs (Toronto: Macmillan, 1938), vol. 1, 71–2; see also Albert Schrauwers, Union Is Strength: W.L. Mackenzie, the Children of Peace and the Emergence of Joint Stock Democracy in Upper Canada (Toronto: University of Toronto Press, 2009), 16, on votes, poverty, and debt. 15 W.F. Maclean, quoted in Willison, “Some Political Leaders,” 62. 16 Young, George-Etienne Cartier, 69; Waite, Life and Times, 274. 17 Robert Hill, Voice of the Vanishing Minority: Robert Sellar and the Huntingdon Gleaner 1863–1919 (Montreal & Kingston: McGill-Queen’s University Press, 1998), 57–8; Andrée Désilets, Hector-Louis Langevin, Un père de la Conféderation canadienne (1826–1906) (Ste-Foy: Presses de l’Université Laval, 1969), 288. 18 Quoted in Myers, History of Canadian Wealth, 329. 19 Christopher Pennington, The Destiny of Canada: Macdonald, Laurier, and the Election of 1891 (Toronto: Allan Lane, 2011), 241. 20 D.J. Hall, Clifford Sifton: A Lonely Eminence, 1901–1929 (Vancouver: ub c Press, 1985), 230; Jean-Philippe Warren, Honoré Beaugrand: La

492

Notes to pages 126–30

plume et l’epée (1848–1906) (Montreal: Boréal, 2015), 291–2, English, Decline of Politics, 21; Montreal Le Canada, 26 October 1917. 21 Fukuyama, Political Order and Political Decay; North et al., Violence and Social Orders. The quotation is from Joanne Reitano, The Tariff Question in the Gilded Age: The Great Debate of 1888 (Pennsylvania: Penn State University Press, 1994), 60. 22 E.A. Heaman, A Short History of the State in Canada (Toronto: University of Toronto Press, 2015), 99. 23 Perry, Taxes, Tariffs, and Subsidies; Gillespie, Tax, Borrow, & Spend; Historical Statistics of Canada, available online: www.statcan.gc.ca/ pub/11-516-x/3000140-eng.htm (accessed 10 August 2016). 24 Borden, Memoirs, vol. 1, 227. 25 Adam Shortt and S.E. Dawson accused Borden of unprecedented use of patronage, with more than ten thousand firings and hirings, but some scholars are unconvinced: J.E. Hodgetts, William McCloskey, Reginald Whitaker, and V. Seymour Wilson, The Biography of an Institution: The Civil Service Commission of Canada, 1908–1967 (Montreal & Kingston: McGill-Queen’s University Press, 1972), 13 and 38. 26 Daunton, Trusting Leviathan, 8; see also Kenneth Scheve and David Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe (Princeton: Princeton University Press, 2016), 29–30; and Yanni Kotsonis, States of Obligation: Taxes and Citizenship in the Russian Empire and Early Soviet Republic (Toronto: University of Toronto Press, 2014), 151–2 on the differences between liberal income tax and the personal income tax of the early twentieth century. 27 Daunton, Trusting Leviathan, 246. 28 New York Times, 27 March 1866; letter dated 1863. 29 Toronto Globe, 7 March 1862 and 22 September 1876. 30 Robert Stanley, Dimensions of Law in the Service of Order: Origins of the Federal Income Tax, 1861–1913 (New York: Oxford University Press, 1993), 64–5. 31 Huret, American Tax Resisters, 42; Barreyre, Gold and Freedom; Christopher Shephard, The Civil War Income Tax and the Republican Party 1861–1872 (New York: Algora, 2010); Reitano, The Tariff Question, 74, 80. 32 Canada, House of Commons Debates, 18 March 1870, 508–9, and 29 March 1870, 747. 33 Canada, House of Commons Debates, 7 March 1876, 491, and London Times, 9 August 1880. 34 Jules Michelet, The People, trans. C. Cocks, (London: Longman Brown, Green & Longmans, 1846; 3rd ed.), 33; Peter N. Stearns, Consumerism in World History: The Global Transformation of Desire (New York: Routledge,



Notes to pages 130–2

493

2006; rev. ed.); Frank Trentmann, Empire of Things: How We Became a World of Consumers, Fifteenth Century to the Twenty-First (London: Allen Lane / Penguin, 2016); Frank Trentmann, The Oxford Handbook of the History of Consumption (Oxford: Oxford University Press, 2012); Larry Neal and Jeffrey G. Williamson, eds., The Cambridge History of Capitalism (Cambridge: Cambridge University Press, 2015), vols. 1–2. 35 Jeffrey A. Auerbach, The Great Exhibition of 1851: A Nation on Display (New Haven: Yale University Press, 1999), 128. 36 Heaman, Inglorious Arts of Peace. 37 Russell Johnston, Selling Themselves: The Emergence of Canadian Advertising (Toronto: University of Toronto Press, 2011). 38 John McDonough and Karen Egolf, The Advertising Age Encyclopedia of Advertising (New York: Routledge, 2002), 753–5. 39 Beatrice Craig, Backwoods Consumers and Homespun Capitalists: The Rise of a Market Culture in Eastern Canada (Toronto: University of Toronto Press, 2009). 40 David Monod, Store Wars: Shopkeepers and the Culture of Mass Marketing, 1899–1939 (Toronto: University of Toronto Press, 1996), table ii, 360. 41 Donica Belisle, Retail Nation: Department Stores and the Making of Modern Canada (Vancouver: u bc Press, 2011). 42 Canada Farmer ns 4 (1872): 132–3. 43 Minko Sotiron, From Politics to Profit: The Commercialization of Canadian Daily Newspapers, 1890–1920 (Montreal & Kingston: McGillQueen’s University Press, 2005). 44 Gazette des campagnes January 1880: 223; Farmer’s Advocate 2 (1867): 82–3; Sylvie Taschereau, “Plutôt ‘s’endetter sur l’honneur’: Le débat sur la loi Lacombe (1900–1903) et les origins de la société de consommation au Québec,” Histoire sociale / Social History 42, 84 (November 2009), 413– 14; Farmer’s Advocate 26 (1893): 394; Keith Walden, Becoming Modern in Toronto: The Industrial Exhibition and the Shaping of a Late Victorian Culture (Toronto: University of Toronto Press, 1997). 45 Eli MacLaren, Dominion and Agency: Copyright and the Structuring of the Canadian Book Trade, 1867–1918 (Toronto: University of Toronto Press, 2011); J.A. Hobson, Canada To-day (London: T. Fisher Unwin, 1906). 46 Forster, Conjunction of Interests and “Common Knowl­edge.” 47 Smith, “Toryism, Classical Liberalism, and Capitalism,” 9–10. 48 Sir John Willison, Reminiscences Political and Personal (Toronto: McClelland & Stewart, 1919), 38 and 198; Canada, House of Commons Debates, 5 March 1876, 590.

494

Notes to pages 132–8

49 Michael Bliss, Northern Enterprise: Five Centuries of Canadian Business (Toronto: McClelland & Stewart, 1987), 249; Forster, Conjunction of Interests; R. Craig Brown, Canada’s National Policy 1883–1900: A Study in Canadian-American Relations (Princeton: Princeton University Press, 1964); Naylor, History of Canadian Business. 50 Quoted in K.W. Taylor, “Economic Scholarship in Canada,” Canadian Journal of Political and Economic Science 26 (February 1960): 7. See also Craufurd D.W. Goodwin, Canadian Economic Thought: The Political Economy of a Developing Nation 1814–1914 (Durham, nc: Duke University Press, 1961); Robin Neill, A History of Canadian Economic Thought (London: Routledge, 1991). 51 I owe this observation to a conversation with Rob Iliffe and Larry Stewart about the laboratory revolution in science as reflecting a form of Protestantstyle suspiciousness. 52 Report of the Select Committee on the Causes of the Present Depression of the Manufacturing, Mining, Commercial, Shipping, Lumber, and Fishing Interests (Ottawa: Maclean, 1876; also appears as Appendix 3 of the Journals of the House of Commons). 53 Canada, House of Commons Debates, 16 February 1876, 69. 54 On parliamentary sovereignty, Janet Ajzenstat, The Canadian Founding: John Locke and Parliament (Montreal & Kingston: McGill-Queen’s University Press, 2007). 55 Report of the Select Committee, iii. 56 Stephen Thorning, “Valuing Our History,” Wellington Advertiser, 47, 45; available online: http://wellingtonadvertiser.com/comments/columns. cfm?articleID=1000001581 (accessed on 12 November 2016); L. Anders Sandberg, “James William Carmichael,” dcb . 57 Report of the Select Committee, 214–18. See also Michael Bliss, “John Macdonald,” dcb and John Macdonald, Elements Necessary to the Formation of Business Character (Toronto: Briggs, 1886); Forster, Conjunction of Interests, 153. 58 Dale C. Thomson, Alexander Mackenzie Clear Grit (Toronto: Macmillan, 1960), 274; Forster, Conjunction of Interests, 162–3, 175; The Nation, 15 November, 30 August, 22 September 1877. 59 Montreal Gazette, 2 October 1878; Ottawa Times, 15 October 1875. 60 Canadian Manufacturers’ Association, The Canadian Manufacturers Association (n.p., 1890), 11. 61 Sueuchi, “Tariff Out of Politics,” 78. 62 Canada, House of Commons Debates, 2 March 1877, 404; 22 March 1878, 1370.



Notes to pages 138–41

495

63 Suzanne Zeller, Inventing Canada: Early Victorian Science and the Idea of a Transcontinental Nation (Toronto: University of Toronto Press, 1987); Morris Zaslow, Reading the Rocks: The Story of the Geological Survey of Canada (New York: New York University Press, 1975). 64 Canada, House of Commons Debates, 9 May 1883, 7 and 5 April 1884, 1452. 65 A.V. Dicey, Lectures on the Relation between Law & Public Opinion in England (London: Macmillan, 1905), 429. 66 John Rae, Statement of Some New Principles on the Subject of Political Economy (1834); R.W. James, John Rae, Political Economist (Toronto: University of Toronto Press, 1965). 67 London Times, 9 August 1880; Andrew Smith and Dimitry Anaskatis, eds., Smart Globalization: The Canadian Business Economic History Experience (Toronto: University of Toronto Press, 2014), especially Michael N.A. Hinton, “Infant Industry Protection and the Growth of Canada’s Cotton Mills: A Test of the Chang Hypothesis,” 133–51. 68 Canada, House of Commons Debates, 18 March 1879, 517–19. 69 Canada, House of Commons Debates, 21 March 1879, 645; quoting J.E. Cairnes, The Character and Logical Method of Political Economy (1861; republished 1875). Patterson’s authority, John Elliott Carnes, believed that historical economics was less scientific than political economy, but his authority was here used to support historical and geographical specificity. 70 Steven Shapin and Simon Schaffer, Leviathan and the Air Pump: Hobbes, Boyle, and the Experimental Life (Princeton: Princeton University Press, 1985). 71 Michèle Brassard and Jean Hamelin, “Sir George Alexander Drummond,” dcb . 72 Reitano, Tariff Question in the Gilded Age, 103. 73 Paul Craven, “An Impartial Umpire”: Industrial Relations and the Canadian State 1900–1911 (Toronto: University of Toronto Press, 1980), 40. 74 Canada, House of Commons Debates, 20 March 1884, 1010–12. 75 Canada, House of Commons Debates, 13 March 1884, 839; 20 March 1884, 1003; 12 July 1885; 27 April 1886, 883. 76 Canadian Manufacturer 5, 21 (5 November 1886): 376; 5, 24 (17 December 1886): 737; 6, 2 (21 January 1887): 34. 77 Sarah Katherine Gibson and Arthur Milnes, eds., Canada Transformed: The Speeches of Sir John A. Macdonald: A Bicentennial Celebration (Toronto: McClelland & Stewart, 2014), 382–3. 78 W. Stanley Jevons, The Theory of Political Economy (London: Macmillan, 1871), 8; Donald Winch, “The Problematic Status of the Consumer in

496

Notes to pages 142–6

Orthodox Economic Thought,” in Frank Trentman, ed., The Making of the Consumer: Knowl­edge, Power and Identity in the Modern World (Oxford: Berg, 2005), 31–51; Harro Maas, William Stanley Jevons and the Making of Modern Economics (Cambridge: Cambridge University Press, 2010); Mary S. Morgan, “Making Measuring Instruments,” History of Political Economy 33 (2001): 235–50. 79 Toronto Globe, 25 November 1879. 80 Canada, House of Commons Debates, 27 April 1885, 1395–6; Colin Grittner, “Macdonald and Women’s Enfranchisement,” in Dutil and Hall, Macdonald at 200, 27–57; Veronica Strong-Boag, “The Citizenship Debates: The 1885 Franchise Act,” in R. Adamsoki, D. Chunn, and R. Menzies, eds., Contesting Canadian Citizenship: Historical Readings (Peterborough: Broadview, 2002): 69–94. 81 Montreal Patrie, 20 March 1879; Canada, House of Commons Debates, 9 and 7 April 1879, 1186, 1050; Montreal Witness, 26 March 1879. 82 See Carmen J. Nielson, “Erotic Attachment, Identity Formation and the Body Politic: The Woman-as-Nation in Canadian Graphic Satire, 1867– 1914,” Gender & History 28, 1 (April 2016): 102–26. 83 Thomson, Alexander Mackenzie, 281. 84 See David R. Spencer, Drawing Borders: The American-Canadian Relationship during the Gilded Age (London: Bloomsbury, 2013); G. Bruce Retallack, “Drawing the Lines: Gender, Class, Race and Nation in Canadian Editorial Cartoons, 1840–1926” (PhD Dissertation, University of Toronto, 2006); Dominic Hardy, “Henri Julien, ‘ce diable d’homme,’” in Micheline Cambron, ed., La vie culturelle à Montréal vers 1900: Autour de l’École littéraire de Montréal (Montreal: Fides, 2005): 157–73. 85 Stephen J. Cole, “Commissioning Consent: An investigation of the Royal Commission on the Relations of Labour and Capital, 1886–1889” (PhD Dissertation, Queen’s University, 2007), 165; see Susan Trofimenkoff, “One Hundred and Two Muffled Voices: Canada’s Industrial Women in the 1880s,” Atlantis: A Women’s Studies Journal 3, 1 (Fall 1977): 66–82. 86 Thomas A. Stapleford, The Cost of Living in America: A Political History of Economic Statistics, 1880–2000 (Cambridge: Cambridge University Press, 2009), 29. 87 Warren, Honoré Beaugrand, 102, 138. 88 Montreal Patrie, 28 May and 20 July 1880; 28 January, 8 April, and 27 July 1881; 19 June 1882. 89 Charlottetown Patriot, 22 June 1878. 90 Winnipeg Commercial, 10 April 1883. 91 In W.F. Bynum, Science and the Practice of Medicine in the Nineteenth Century (Cambridge: Cambridge University Press, 1994), 105. Thomas S.



Notes to pages 147–52

497

Kuhn, The Structure of Scientific Revolutions (Chicago: University of Chicago Press, 1962). 92 Macdonald to Sir John Rose, 5 March 1872, in Correspondence, 165. 93 Underhill, “The Development of National Political Parties in Canada,” Canadian Historical Review 16, 4 (December 1935), 381–2. A similar remark was made by a British assessment of the Canadian militia under Macdonald in 1891: “He looked upon money voted for militia purposes as a means of gaining political ends, but he was honest enough to keep the use of it within strict limits, and consequently cut down the militia estimates to the lowest possible figure.” Quoted in Desmond Morton, “Defending the Indefensible: Some Historical Perspectives on Canadian Defence 1867–1987,” International Journal 42, 4 (Autumn 1987): 632. 94 See W.S. Wallace, “The Journalist in Canadian Politics: A Retrospect,” Canadian Historical Review (1941): 21–2. 95 Ben Forster and Jonathan Swainger, “Sir Edward Blake,” dcb . 96 Gillespie, Tax, Borrow & Spend, 48. 97 Reitano, Tariff Question in the Gilded Age, 44. 98 Toronto World, 23 September 1881. 99 Toronto World, 25 May 1881. 100 Henry George, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth. The Remedy (New York: D Appleton, 1879); Henry George Jr, The Life of Henry George (Garden City: Doubleday, Doran & Company, 1900), 350. On Georgeism in Canada, see especially Allen Mills, “Single Tax, Socialism and the Independent Labour Party of Manitoba: The Political Ideas of F.J. Dixon and S.J. Farmer,” Labour / Le Travail 5 (spring 1980): 33–56; Ramsay Cook, The Regenerators: Social Criticism in Late Victorian English Canada (Toronto: University of Toronto Press, 1985); Gregory J. Levine, “The Single Tax in Montreal and Toronto, 1880–1920: Successes, Failures and the Transformation of an Idea,” American Journal of Economics and Sociology 52, 4 (October 1993). 101 John Dewey, “Introduction,” in George Raymond Geiger, The Philosophy of Henry George (New York: Macmillan, 1933). Geiger was Dewey’s graduate student, the book Geiger’s PhD dissertation. 102 Cook, Regenerators, 106–7. 103 Ibid.; Robert E. Weir, “A Fragile Alliance: Henry George and the Knights of Labor,” American Journal of Economics and Sociology 56, 4 (1997): 421–39. 104 Mariana Valverde, The Age of Light, Soap, and Water: Moral Reform in English Canada, 1885–1925 (Toronto: McClelland & Stewart, 1991), 129–54.

498

Notes to pages 152–8

105 Single Tax Year Book 1917, 82–3; resolution is in Toronto Daily Mail, 9 July 1887. 106 Toronto Daily Mail, 13 June 1887. 107 Quoted in Richard Allen, The Social Passion: Religion and Social Reform in Canada 1914–1928 (Toronto: University of Toronto Press, 1973), 8. 108 Pilot, St Andrew’s Bay, n b, 2 June 1887. 109 Mehrotra, Making the Modern American Fiscal State. 110 Toronto Daily Mail, 18 February 1888. 111 Toronto Daily Mail, 8 December 1888. 112 Toronto Daily Mail, 8 August 1889. 113 E.g., Toronto Daily Mail, 10 February and 10 August 1889. 114 Toronto Daily Mail, 11 January 1889. 115 Toronto Daily Mail, 5 April 1890. 116 Toronto Daily Mail, 14 February 1891. 117 Grip, 31 January 1891. 118 Speech of Sir John Macdonald to the Workingmen’s Liberal Association of Ottawa and Le Cercle Lafontaine, Delivered in Ottawa on the 8th of October, 1886. (n.p.), 7–8. 119 Provincial Reform Association, Toronto, Dominion Election. Campaign of 1887. Speeches by Hon. Edward Blake on the Political Questions of the Day (Toronto: Hunter, Rose & Co., 1887), 338–41; Saint John Daily Sun, 10 November 1886. 120 Speeches by Hon. Edward Blake, 203. 121 Timothy Stanley, Contesting White Supremacy: School Segregation, AntiRacism, and the Making of Chinese Canadians (Vancouver: ubc Press, 2011) and “‘The Aryan Character of the Future of British North America’: John A. Macdonald, Chinese Exclusion and the Invention of Canadian White Supremacy,” in Dutil and Hall, Macdonald at 200, 92–110. 122 Monetary Times, November 1886, 552. 123 Speeches by Hon. Edward Blake, 355–6. 124 Toronto Daily Mail, 11 February 1887. 125 Brown, Canada’s National Policy, 146–52. 126 Laurier to Willison, 26 June 1890, in A.H.U. Colquhoun, Press, Politics and People: The Life and Letters of Sir John Willison, Journalist and Correspondent of the Times (Toronto: Macmillan, 1935), 27. See also Richard Clippingdale, The Power of the Pen: The Politics, Nationalism, and Influence of Sir John Willison (Toronto: Dundurn, 2012). 127 C.R.W. Biggar, Sir Oliver Mowat (Toronto: Warwick Bro’s & Rutter, 1905), vol. 2, 572–3; Joseph Schull, Laurier (Toronto: Macmillan, 1965), 259. 128 Matthew Simon, “The United States Balance of Payments 1861–1900,” in Conference on Research in Income and Wealth, Trends in the American



Notes to pages 158–64

499

Economy in the Nineteenth Century (Princeton: Princeton University Press, 1960): 629–716; Palen, ‘Conspiracy’ of Free Trade. 129 Palen, ‘Conspiracy’ of Free Trade, chapters 6–7. 130 Edmonton Bulletin, 24 December 1887. 131 Letter of the Hon. Edward Blake to the West Durham Reform Convention (Toronto: Budget, 1891). 132 Manitoba Free Press, 27 November 1889 and 21 December 1890. 133 E.g., Edmonton Bulletin, 14 April 1888; 31 January and 7 February 1891. 134 Cook, Regenerators, 114. 135 Ruth Compton Brower, “Agnes Maulle Machar,” dcb ; also Brian Osborne, “The world of Agnes Maule Machar (1837–1927): Social Reform, Nation, Empire, Nature,” Kingston Historical Society, online article: www.kingstonhistoricalsociety.ca/machar.html (accessed on 12 November 2016). 136 Toronto Daily Mail, 24 January 1891. 137 Manitoba Free Press, 7 February 1891. 138 Toronto Daily Mail, 10 February 1891; in Gibson and Milnes, 440–2. 139 Kotsonis, States of Obligation, 87. 140 Documents in the Metropolitan Toronto Reference Library: c ihm 03695, 03696, and 03680. 141 Qu’Appelle Progress, 5 March 1891; Brandon Mail, 2 July 1891. 142 Gillespie, Tax, Borrow & Spend, 63–6, has him repeating the argument in 1889 and 1893. 143 Montreal Patrie, 17 and 26 February 1891. 144 R. Rudy Higgens-Evenson, The Price of Progress: Public Services, Taxation, and the American Corporate State, 1877–1929 (Baltimore: Johns Hopkins University Press, 2003), 18. 145 Brown, Canada’s National Policy, 141. 146 Canadian Manufacturer, 27 February 1891, 154. 147 Pennington, The Destiny of Canada, 253; Willison, Reminiscences, 340–1. 148 Toronto Globe, 3 February 1894. 149 Farmer’s Advocate (1893), 266. 150 Waterloo Advertiser, 8 December 1893. 151 Carman Miller, A Knight in Politics: A Biography of Sir Frederick Borden (Montreal & Kingston: McGill-Queen’s University Press, 2010), 70. 152 Brown, Canada’s National Policy, 213. 153 Ferry, Uniting in Measures of Common Good; L.A. Wood, A History of Farmers’ Movements in Canada: The Origins and Development of Agrarian Protest (Toronto: Ryerson Press, 1924). 154 Perry, Taxes, Tariffs and Subsidies, vol. 1, 96.

500

Notes to pages 164–72

155 New York Times, 18 April 1895. 156 John Davidson, “Canada and the Silver Question,” Quarterly Journal of Economics, 12, 2 (January 1898): 139–52; B.E. Walker, “Why Canada is against Bimetallism,” Journal of the Canadian Bankers’ Association 5, 1 (October 1897): 39–50. 157 Bruce Fergusson, Hon. W.S. Fielding, The Mantle of Howe (Windsor, ns: Lancelot Press, 1970), 139–45; Brown, Canada’s National Policy, 264–5; Evans, Mowat, 330–2. 158 Toronto Globe, 3 March and 3 June 1896. 159 Toronto Globe, 2 March 1896. 160 Edmonton Bulletin, 25 May 1896, 1 June 1896, 4 June 1896, 30 July 1896, etc. 161 Leaders, Waterloo Advertiser, 3 January 1896; Boston Evening Transcript, 30 March 1896. 162 Lethbridge News, 3 June 1896; Canadian Manufacturer, 15 May 1896, 605; “Address of Mr A.E. Kemp” (Toronto: c ma , 1896), 7; Qu’Appelle Progress, 28 May and 4 June 1896. 163 Edmonton Bulletin, 25 May 1896, quoting the Dundas Banner. 164 Statutes of Canada, 33 Victoria Cap 3, 22. 165 J.R. Miller, “D’Alton McCarthy, Equal Rights, and the Origins of the Manitoba School Question,” Canadian Historical Review 54, 4 (December 1973), 384–5; Heidt, “First Among Equals,” 322–65; Kenneth McLauchlin, “‘Riding the Protestant Horse’: The Manitoba School Question and Canadian Politics, 1890–1896,” ccha Historical Studies 53 (1986): 39–52; Paul Crunican, Priests and Politicians: Manitoba Schools and the Election of 1896 (Toronto: University of Toronto Press, 1974). 166 Réal Bélanger, Henri Bourassa: Le fascinant destin d’un homme libre (1868–1914) (Ste-Foy: Presses de l’Université Laval, 2013), 144. 167 D.J. Hall, Clifford Sifton, The Young Napoleon 1861–1900 (Vancouver: ub c Press, 1981), vol. 1, chapter 4 and passim. 168 W.T.R. Preston, The Life and Times of Lord Strathcona (Toronto: McClelland, Goodchild & Stewart, 1914), 206; Brown, Canada’s National Policy, 269; Fergusson, Fielding, Mantle of Howe, 157. 169 Edmonton Bulletin, 10 and 20 August 1896. 170 O.D. Skelton, Life and Letters of Sir Wilfrid Laurier (Toronto: Oxford University Press, 1921), vol. 2, 52. 171 Toronto Daily Mail and Empire, 26 June 1897. 172 l ac , r g 36-8, Tariff Commission, 1896–97. 173 Calgary Herald, 21 January 1897. 174 l ac , r g 36-8, 1901–2, 1910. 175 Ibid., 2127–41; Toronto Globe, 5 January 1897.



Notes to pages 172–85

501

176 Ibid., 3262–9. 177 Ibid., 2274, 44, 55. Such complaints were not new but the public airing was new. lac, rg 16-a-3/r, 192-32-x-e, Box 1821, has the letterbook of the Board of Revenue, 1892–96, responding to many requests for changes or refunds. 178 l ac, r g 36-8, 852–5, 854, 4060–1. 179 Ibid., 3954–5. 180 Jean-Christophe Agnew, Worlds Apart: The Market and the Theatre in Anglo-American Thought 1550–1750 (Cambridge: Cambridge University Press, 1988) and Maxine Berg, Luxury and Pleasure in EighteenthCentury Britain (Oxford: Oxford University Press, 2005). 181 J.L. Payne, “The Displacement of Young Men,” Canadian Magazine 1 (1893): 467–70. 182 Saint John Daily Telegraph, 12 April 1894. 183 l ac, r g 36-8, 1895. 184 Sarnia Observer, 1 November 1890. 185 l ac, r g 36-8, 456–7, 3237; Peter Hanlon, “William Eli Sanford,” dcb . Hanlon notes that Sanford was annoyed enough by new succession taxes to write philanthropy out of his will. 186 lac , r g 36-8, 460–1, 3351. 187 Ibid., 521, 976, 1102–4, 673–4, 1122, 3126, 3976. 188 Ibid., 3286. 189 Ibid., 1873, 1142–4. 190 Ibid., 1207–9. See Ian M. Drummond, Political Economy at the University of Toronto: A History of the Department, 1888–1982 (Toronto: Faculty of Arts and Sciences, University of Toronto, 1983). 191 lac , r g 36-8, 2870, 2942–9, 3135, 3054, 3064–5. 192 Ibid., 3615, 4209. 193 Ibid., 3889, 3674, 3824, 3736. 194 Ibid., 3956–68, 3981–4001. 195 Ibid., 370. 196 Ibid., 1205. 197 Quoted in Perry, Tariffs, Taxes, and Subsidies, vol. 1, 103. 198 Skelton, Laurier, 2, 54. 199 Hobson, Canada To-day, 38.

C ha p t e r f i ve   1 James T. Kloppenberg, Uncertain Victory: Social Democracy and Progressivism in European and American Thought, 1870–1920 (Oxford: Oxford University Press, 1986), 355.

502

Notes to pages 185–9

 2 Mehrotra, Making the Modern American Fiscal State.  3 Holman, A Sense of Their Duty, 100; Gregory Kealey, Toronto Workers Respond to Industrial Capitalism, 1867–1892 (Toronto: University of Toronto Press, 1980).   4 Daniel T. Rodgers, Transatlantic Crossings: Social Politics in a Progressive Age (Cambridge: Harvard University Press, 1998), 48, 54.   5 Ibid.; Daunton, Trusting Leviathan, 241; Offer, Property and Politics.  6 Canadian Municipal Journal 4, 10 (October 1908): 453; S. Morley Wickett, “Municipal Government of Toronto,” in S. Morley Wickett, ed., Municipal Government in Canada (archive.org: “Being vol. 2. University of Toronto Studies History & Economics,” https://archive.org/details/ cihm_78335), 50. See for example Toronto Star, 29 October 1894.   7 David Scobey, Empire City: The Making and Meaning of the New York City Landscape (Philadelphia: Temple University Press, 2002); Sweeny, Why Did We Choose To Industrialize?; Lewis, Manufacturing Montreal; Paul-André Linteau Histoire de Montréal depuis la Confédération (Montreal: Boréal, 2000, 2nd ed.); Dany Fougères, ed., Histoire de Montréal et de sa region (Ste-Foy: Presses de l’Université Laval, 2012).   8 Terry Copp, The Anatomy of Poverty: The Condition of the Working Class in Montreal 1897–1929 (Toronto: McClelland & Stewart, 1974); Bradbury, Working Families; Michèle Dagenais, Des pouvoirs et des hommes: L’Administration municipale de Montréal, 1900–1950 (Montreal & Kingston: McGill-Queen’s University Press, 2000); Paul-André Linteau, Maisonneuve ou comment des promoteurs fabriquent une ville, 1883–1918 (Montreal: Boréal, 1981); Magaly Brodeur, Vice et corruption à Montreal (Montreal: Presses de l’Université de Quebec, 2011); Michel Gauvin, “The Reformer and the Machine: Montreal Civic Politics from Raymond Préfontaine to Médéric Martin,” Journal of Canadian Studies 13, 2 (Summer 1978): 16–26; Mélanie Méthot, “Social Thinkers, Social Actors in Winnipeg and Montreal at the Turn of the Century” (PhD Dissertation, University of Calgary, 2001) and her articles.  9 Financial Post, 10 October 1912; Montreal Gazette, 9 February 1880. 10 The Charter and By-Laws of the City of Montreal (Montreal: John Lovell, 1865). 11 On civic taxation, Einhorn, Property Rules. 12 Montreal Witness, 23 January 1874. 13 G.J. Levine, “To Tax or Not to Tax? Political Struggle over Personal Property Taxation in Montreal and Toronto, 1870–1920,” International Journal of Urban and Regional Research 11, 4 (December 1987): 543–66. 14 Montreal Witness, 3 December 1875 and Journal of Commerce 1, 16 (3 December 1875): 371; 2, 10 (21 April 1876): 262, 295.



Notes to pages 189–92

503

15 Montreal Witness, 4 and 6 December 1875. 16 Levine, “To Tax or Not to Tax,” 549. 17 Spectator, 25 September 1875; Sherry Olson and Patricia Thornton, Peopling the North American City: Montreal 1840–1900 (Montreal & Kingston: McGill-Queen’s University Press, 2011), 331–2. 18 Montreal Daily Herald, 24 November 1892. 19 The Official Report of the Fourth Annual Convention of the Union of Canadian Municipalities (1904), 75; Davidson, “Financial Relations,” 182. 20 Suzanne Morton, Wisdom, Justice, and Charity: Canadian Social Welfare through the Life of Jane B. Wisdom, 1884–1975 (Toronto: University of Toronto Press, 2014), 167; citing Desmond Morton, “Entente Cordiale? La section montréalaise du fonds patriotique canadien, 1914–1923 le bénévolat de guerre à Montréal,” rhaf 53, 2 (automne 1999): 207–46. 21 Montreal Gazette, 9 February 1880. 22 Journal of Commerce 3, 7 (29 September 1876): 178. 23 Report on the Accounts of the Corporation of the City of Montreal and Reports of City Officials for the Year 1876 (Montreal: Louis Perrault and Co., 1877), 16–26. 24 Corporation Accounts of the City of Montreal and Reports of the Chiefs of Departments for the Year 1898. (Montreal: Perrault, 1900). 25 Jack Little, “Charities, Manufactures, and Taxes: The Montreal Sisters of Providence Spruce Gum Syrup Case, 1876–78,” Canadian Historical Review 95, 1 (2014): 54–77; Gregory J. Levine, “Tax Exemptions in Montreal and Toronto, 1870–1920,” Cahiers de géographie du Québec 35, 94 (1991): 117–34. 26 Hubert LaRue, Les Corporations religieuses Catholiques de Québec et les Nouvelles taxes qu’on veut leur imposer (Quebec: Aug. Coté et Cie, 1876); Jules-Paul Tardivel, articles reprinted in Mélanges ou récueil d’études religieuses, sociales, politiques, et littéraires (Quebec: La Verité, 1887): 57–76; Young, In Its Corporate Capacity. 27 Revue Canadienne 3rd series, 5 (November–December 1892): 604–13; Gilles Lesage, “Zacharie Lacasse,” dcb ; Esdras Minville calculated in 1939 that Quebec’s religious orders had saved the province $10 million in social welfare costs: Little, “Charities, Manufactures, and Taxes,” 28. 28 La Semaine Religieuse, 20, 25, and 17 December 1892, 387–9; 12 and 26 November 1892, 309, 343. 29 L’Action sociale, 2 June 1908. 30 Toronto Daily Mail, 20 December 1887 and 26 May 1890. 31 Le Reveil, 3, 53 (September 1895), 3 and passim; Remi Tremblay, Aux Chevaliers du Noeud coulant: Poemes et chansons, Jean Levasseur, ed. (SteFoy: Presses de l’Université Laval, 2007), 131; Yvan Lamonde, Histoire

504

Notes to pages 192–7

sociale des idées au Québec, 1760–1896 (Montreal: Fides, 2000), vol. 1, 436–8. Patrice Dutil, Devil’s Advocate: Godfroy Langlois and the Politics of Liberal Progressivism in Laurier’s Quebec (Montreal: Robert Davies, 1994). 32 Thornton and Olson, “A Deadly Discrimination.” 33 Stuart Cameron McLeod, “The Government of Canadian Cities” (PhD Dissertation, Harvard University, 1914), 58; Warren, Honoré Beaugrand, 347; Grittner, “Privilege at the Polls.” 34 Duncan Campbell Scott explained why a mid-century experimental village at Manitowaning failed: “The formal village, with its automatic subsidized labour and its regular and monotonous tasks, had been repellent to the Indian, who was invited to freedom by the open lake.” “Indian Affairs, 1840–1867,” Adam Shortt and Arthur G. Doughty, eds., Canada and Its Provinces (Toronto: Glasgow, Brook & Co., 1914), 5, 350. 35 Economist 49, 2 (1891): 1647–8. 36 See G.K.R. Stott, “Suburban Dilemmas: The Development and Amalgamation of Ontario Suburban Municipalities, 1853–1897” (PhD Dissertation, McMaster University, 2004) and Greg Stott, “Enhancing Status through Incorporation: Suburban Municipalities in NineteenthCentury Ontario,” Journal of Urban History 33, 6 (September 2007): 885–910. See also Carolyn Whitzman, Suburb, Slum, Urban Village: Transformations in Toronto’s Parkdale Neighbourhood, 1875–2002 (Vancouver: u bc Press, 2009). 37 Montreal Witness, 30 October 1883, 2. 38 Montreal Witness, 18 and 20 January 1879; The Canadian Biographical Dictionary and Portrait Gallery, vol. 2, 101–2; Fernande Roy, Progrès, harmonie, liberté: Le libéralisme des milieux d’affairs francophones à Montréal au tournant du siècle (Montreal: Boréal, 1988), 121–3. 39 Montreal Witness, 22 October 1879, 2. Linteau, Maisonneuve. 40 Dutil, Devil’s Advocate, 135–47; Michel Lévesque, Histoire du parti libéral du Québec: La nébuleuse politique 1867–1960 (Montreal: Septentrion, 2013). 41 Gerald Tulchinsky, “Harrison Stephens,” dcb . 42 The Law Journal Reports for the Year 1878: Cases Decided by the Judicial Committee and the Lords of Her Majesty’s Privy Council (Michaelmas 1877 to Michaelmas 1878), 70–1; avm , v m 038 s1 ss1, Commission des Finances, 10, 86 (23 July 1878). 43 Saint John Daily Sun, 22 June 1904; Jack Jedwab, “George Washington Stephens,” dcb .



Notes to pages 197–203

505

44 Montreal Witness, 27 July 1871; Montreal Gazette, 23 November 1892; Montreal Herald, 25 October 1888 and 24 November 1892. 45 Quebec Daily Telegraph, 25 November 1889, quoting the Waterloo Advertiser. 46 Le Reveil, November 19 1898. 47 Gauvin, “The Reformer and the Machine,” 22. See also Alan Gordon, “Ward Heelers and Honest Men: Urban Québécois Political Culture and the Montreal Reform of 1909,” Urban History Review 23, 2 (March 1995): 20–32; Paul Rutherford, “Tomorrow’s Metropolis: The Urban Reform Movement in Canada, 1880–1920,” Historical Papers / Communications historiques 6, 1 (1971): 203–24. 48 This argument is made more fully by Annick Germain, “L’émergence d’une scène politique: mouvement ouvrier et mouvements de réforme à Montréal au tournant du siècle – essai d’interprétation,” rhaf 37, 2 (1983): 185–99. 49 Montreal Witness, 13 January 1891. 50 Dagenais, Des pouvoirs et des hommes, 33–4. 51 Frank Trentmann, “The ‘British’ Sources of Social Power: Reflections on History, Sociology, and Intellectual Biography,” in John A. Hall and Ralph Schroeder, eds., An Anatomy of Power: The Social Theory of Michael Mann (Cambridge: Cambridge University Press, 2006), 290. 52 avm, v m 038 s1 s s 1, Commission des Finances, Report of the Special Committee on Arrears; Prairie Farmer, 14 October 1882; New York Times, 16 December 1884. 53 Montreal Witness, 25 June 1886. 54 Montreal Herald, 3 May 1890. 55 Montreal Gazette, 4 October 1890. 56 Montreal Witness, 27 July 1871. 57 Montreal Witness, 23 June 1879. 58 Bliss, Plague. 59 Le Monde, 5–7 November 1885; Montreal Witness, 6 November 1885. 60 Le Monde, 7 November 1885. 61 Montreal Gazette, October 1886. 62 Montreal Witness, 2 February 1886. 63 Bryan Palmer, “Labour Protest and Organization in Nineteenth-Century Canada, 1820–1890,” Labour / Le Travail 20 (Fall 1987): 61–83; Gregory S. Kealey and Bryan D. Palmer, Dreaming of What Might Be: The Knights of Labor in Ontario, 1880–1900 (Cambridge: University Press, 1982); Fernand Harvey, “Les Chevaliers du travail, les États-Unis, et la sociéte québécoise, 1882–1902,” in Fernand Harvey, ed., Le mouvement ouvrier

506

Notes to pages 203–7

au Québec (Montreal: Boréal Express, 1980): 69–130; Peter Bischoff, “Un chaînon incontournable au Québec: Les Chevaliers du travail 1882–1902,” Labour / Le Travail 70 (Fall 2012): 13–59. 64 J.I. Little, Patrician Liberal: The Public and Private Life of Sir HenriGustave Joly de Lotibière, 1829–1908 (Toronto: University of Toronto Press, 2013), 101–2. 65 True Witness and Catholic Chronicle, 23 January 1878; Montreal Gazette, 4 April and 19 May 1879. 66 Jean de Bonville, Jean-Baptiste Gagnepetit: Les Travailleurs Montréalais à la fin du xixe siècle (Montreal: L’aurore, 1975). Olson and Thornton, Peopling the North American City, 343, 358, 447. 67 Montreal La Presse, 31 October 1885. 68 Germain, “L’émergence d’une scène politique”; Marc-André Gagnon, “Harmoniser le Travail et le Capital: Les Chevaliers du Travail et l’action politique ouvrière à Montréal (1883–1896)” (MA thesis, University of Ottawa, 2011). Le Trait d’union began to appear early in 1887, but its first issue likened open voting to the corvée and demanded a secret ballot: 1 February 1887, 2. 69 Montreal Gazette, 13 March 1886. 70 Montreal Witness, 17 May 1886. 71 Quebec Saturday Budget, 22 May 1886. 72 Montreal Gazette, 17 May 1887, 73 D.G. Creighton, Commercial Empire of the St Lawrence 1760–1850 (Toronto: Macmillan, 1937). 74 There is considerable literature: Dany Fougères, L’approvisionnement en eau à Montréal. Du privé au public (1796–1865) (Sillery, Septentrion, 2004); Michèle Dagenais, Montréal et l’eau: Une histoire environmentale (Montreal: Boréal, 2011); Robert Gagnon, Questions d’égouts: Santé publique, infrastructures et urbanisation à Montréal au xix e siècle (Montreal: Boréal, 2006); Stéphane Castonguay and Michèle Dagenais, Metropolitan Natures: Environmental Histories of Montreal (Pittsburgh: University of Pittsburgh Press, 2011); Jason Gilliland, “The Creative Destruction of Montreal: Street Widenings and Urban (Re)Development in the Nineteenth Century,” Urban History Review 31, 1 (Fall 2002): 37–51; Frank Trentmann and Vanessa Taylor, “From Users to Consumers: Water Politics in Nineteenth-Century London,” in Frank Trentmann, ed., The Making of the Consumer: Knowl­edge, Power and Identity in the Modern World (London: Bloomsbury, 2005), 53–79. 75 A full and fine-grained analysis of the genesis and execution of the water tax, its regressive formula, and political logic is in Michèle Dagenais,



Notes to pages 207–14

507

“Gouverner Montréal, gouverner les Montréalais: Taxation de l’eau et qualification électorale, 1860–1920,” Paper presented at “Pouvoir et territoire au Québec: Acteurs, enjeux et processus, de 1850 à nos jours,” University of Sherbrooke, 3 November 2016. I am grateful to the author for sharing her unpublished work. 76 Montreal Gazette, 4 April 1879, 4. 77 Montreal Gazette, 4 April 1887. On Tansey, John Mathew Barlow, “‘The House of the Irish’: Irishness, History and Memory in Griffintown, Montreal, 1868–2009” (PhD Dissertation, Concordia University, 2009), 63. 78 Annual Report of the Corporation of Montreal, for the years 1876, 1866, and passim; Dagenais, “Gouverner Montréal.” 79 av m, v m 038 s1 s s 1, Commission des Finances, 7, 22 (8 June 1864) and 8, 146 (30 September 1870). 80 Bruce Curtis, “Social Investment in Medical Forms: The 1866 Cholera Scare and Beyond,” Canadian Historical Review 81, 3 (September 2000): 347–79; David R. Bellhouse and Christian Genest, “A Public Health Controversy in 19th-century Canada,” Statistical Science, 20 (2005): 178–92; Gagnon, Questions d’égouts. 81 Le Canard, 27 October 1877 and 15 December 1877. 82 Journal of Commerce 3, 21 (5 January 1877): 571; Montreal Witness, 4 April 1879. The letters received by the corporation of Montreal do not seem to have survived, but evidence of such letters does survive. 83 Dagenais, “Gouverner Montreal.” 84 av m, v m 038 Commission des finances, 11, 363–4 (23 December 1886). 85 Report of the Royal Commission on the Relations of Labor and Capital in Canada (Ottawa: Queen’s Printer, 1889); Stephen Cole, “Commissioning Consent: An Investigation of the Royal Commission on the Relations of Labour and Capital 1886–1889” (PhD Dissertation, Queen’s University, 2007); Fernand Harvey, Révolution industrielle et travailleurs: Une enquête sur les rapports entre le capital et le travail au Québec à la fin du 19e siècle (Montreal: Boréal Express, 1978). 86 Report of the Royal Commission on the Relations of Capital and Labor in Canada. Evidence – Quebec, Part I (Ottawa: Queen’s Printer, 1889), 551– 2; 545–7. 87 Montreal Herald, 23 September 1893. 88 Report, Evidence – Quebec, 262. 89 Montreal Herald, 16 February 1888. 90 Report, Evidence – Quebec, 264–5. 91 Christopher Hamlin, Public Health and Social Justice in the Age of Chadwick: Britain, 1800–1854 (Cambridge: Cambridge University Press,

508



Notes to pages 214–20

1998); Tom Crook, Governing Systems: Modernity and the Making of Public Health in England 1830–1910 (Oakland: University of California Press, 2016); William Coleman, Death Is a Social Disease: Public Health and Political Economy in Early Industrial France (Madison: Wisconsin University Press, 1982); A.F. Laberge, Mission and Method: The Early Nineteenth-Century French Public Health Movement (Cambridge: Cambridge University Press, 2002). 92 Louis Laberge, Report on the Sanitary State of the City of Montreal for the Year 1886 (Montreal: Perrault, 1887), 14–15. 93 Morton, Wisdom, Justice, and Charity, 66. 94 Report of the Royal Commission, 31–2. 95 Kuhn, Structure of Scientific Revolutions; I also draw on E.A. Heaman, St Mary’s: The History of a London Teaching Hospital (Montreal & Kingston: McGill-Queen’s University Press, 2003). On moral economy: Thompson, “The Moral Economy of the English Crowd;” on the laboratory: Bruno Latour, The Pasteurization of France, trans. Alan Sheridan (Cambridge: Harvard University Press, 1993). Timothy Mitchell applies Latour’s work on laboratory facts to the organization of economic facts: “Rethinking Economy,” Geoforum 39 (2008): 1116–21; Rule of Experts: Egypt, Techno-Politics, Modernity (Berkeley: University of California Press, 2002), 299. 96 La Gazette Médicale 5, 12 (December 1891): 565–6. 97 Montreal Witness, 26 July 1879. See Benoit Gaumer, Georges Desrosiers, and Othmar Keel, Histoire du service de santé de la ville de Montréal 1865–1975 (Ste-Foy: Presses de l’Université Laval, 2002); Robert C.H. Sweeny identifies doctors as significant property owners in Montreal: Why Did We Choose to Industrialize?, 220–1. 98 Montreal Witness, 26 July 1879. 99 McGill University, rbs c, Herbert Brown Ames Papers, City Council Diaries, 1 (February to June 1898), 48. 100 Pamela K. Gilbert, Cholera and Nation: Doctoring the Social Body in Victorian England (Albany: State University of New York Press, 2008), 78 and passim. 101 Report on the Social Economy Section of the Universal International Exhibition of 1889 at Paris, prepared by Jules Helbronner (Ottawa: Queen’s Printer, 1890). 102 Pierre Trépanier, “La Société canadienne d’économie sociale de Montréal, 1888–1891: Sa foundation, ses buts et ses activités,” Canadian Historical Review 67, 3 (1986): 343–67. Roy, Progrès, harmonie, liberté.



Notes to pages 220–30

509

103 Méthot, “Jules Helbronner (1844–1921): Père de la conscience ouvrière montréalaise et intellectuel engagé,” Mens: Revue d’histoire intellectuelle de l’Amérique française 2, 1 (2001): 67–104; Jacques Rouillard and Judith Burt, “Le Monde Ouvrier,” in Noël Bélanger et al., Les Travailleurs Québécois 1851–1896 (Montreal: Presses de l’Université du Québec, 1975), 96. 104 Montreal Herald and Toronto Daily Mail, 7 September 1889. 105 Levine, “Single Tax in Montreal and Toronto,” 421–2. 106 Montreal Herald, 9 May 1890. 107 r b s c, Ames Papers, book of clippings, 41, for Helbronner versus Robb correspondence. 108 av m, p27 sd ss1, Sainte-Cunégonde, general correspondence for 1890, passim; see E.Z. Massicotte, La cite de Sainte-Cunégonde de Montreal: Notes et Souvenirs (Montreal: J. Stanley Houle, 1893) and Kathleen Lord, “Days and Nights: Class, Gender and Society on Notre-Dame Street in Saint-Henri, 1875–1905” (PhD Dissertation, McGill University, 2000). 109 Corporation Accounts of the City of Montreal, 1891, 5. 110 Montreal Herald, 30 November 1892; Montreal Gazette, 23 November 1892. 111 Montreal Witness, 11 July 1893, responding to a Chicago paper and the Toronto Mail. 112 Montreal Witness, 13 July 1892; Montreal Presse, 7 January 1895. 113 Toronto Daily Mail, 9 and 12 January 1894. 114 Toronto Star, 21 July and 11 August 1894. 115 Boston Evening Transcript, 26 July 1897; Ottawa Citizen, 14 November 1895. 116 av m, v m 038-1-3-2, Commission des finances, petition 24 February 1900. 117 Saint John Daily Sun, 12 March 1904. 118 Manitoba Free Press, April 3 1899. 119 Dutil, Devil’s Advocate, 144. 120 Bruce Curtis, Ruling by Schooling Quebec: Conquest to Liberal Governmentality – A Historical Sociology (Toronto: University of Toronto Press, 2012); Fecteau, La Liberté du pauvre. 121 Lawrence John Cannon, Rapport sur L’administration de la ville de Montreal, December 1909; volumes of testimony in av m, c a m001 v m095-3-d01. 122 See Harold Bérubé, Des Sociétés distinctes: Gouverner les banlieues bourgeoises de Montréal, 1880–1939 (Montreal & Kingston: McGill-Queen’s University Press, 2015). 123 McGill University, rbs c, Ames Papers, clippings, 31, l.

510

Notes to pages 231–6

124 H.B. Ames, Abstract of a Course of Ten Lectures on Municipal Administration in Montreal (Montreal: n.p., 1896), 13. 125 McGill r b s c , Ames papers, City council diaries, 1, 28 (5 March 1898). 126 Pamela O. Long, Artisan / Practitioners and the Rise of the New Sciences 1400–1600 (Corvallis : Oregon State University Press, 2011); Peter Dear, Discipline and Experience: The Mathematical Way in the Scientific Revolution (Chicago: University of Chicago Press, 1995); Paolo Rossi, The Birth of Modern Science, trans. Cynthia De Nardi Ipsen (Oxford: Blackwell, 2000).

C h a p t e r si x 1 Peter Goheen, Victorian Toronto, 1850–1900: Pattern and Process of Growth (Chicago: University of Chicago, 1970); Michael J. Piva, The Condition of the Working Class in Toronto, 1900–1921 (Ottawa: Ottawa University Press, 1979); but see A. Gordon Darroch, “Early Industrialization and Inequality in Toronto, 1861–1899,” Labour / Le Travail 11 (Spring 1983): 31–61. 2 John Patrick Diggins, Thorstein Veblen: Theorist of the Leisure Class (Princeton: Princeton University Press, 1999). 3 Einhorn, American Taxation, 204. 4 Stanley, Dimensions of Law in the Service of Order, 81. 5 c ta, Minutes of Proceedings of the Council of the Corporation of the City of Toronto for the Year 1875 (Toronto: City of Toronto, 1876), Report #7, Report of the Standing Committee on Finance and Assessment, 23. 6 c ta, Minutes of Proceedings of the Council of the Corporation of the City of Toronto for the Year 1875 (Toronto: City of Toronto, 1876), Report #170, Copy of Judgment of the Court of Error and Appeal in the Case of the Toronto Street Railway Company v Fleming. 7 c ta, Minutes of Proceedings of the Council of the Corporation of the City of Toronto for the Year 1876 (Toronto: City of Toronto, 1877), Report #208, of the Special Committee on Amendments to Municipal and Other Acts. 8 Correspondence is in lac , rg 6-a-1, 40, 1245. Minutes of Proceedings of the Council of the Corporation of the City of Toronto for the Year 1876 (Toronto: City of Toronto, 1877), facing p. 540; also published as Exemptions, Special Committee of the Council of the Corporation of Toronto, Printed letter (n.p., 18 December 1876), 5. 9 Report of the Select Committee on Exemptions from Taxation (Toronto: Hunter, Rose & Co., 1878); Levine, “To Tax or Not to Tax,” 55 has a





Notes to pages 236–42

511

table showing total and comparative rates. Real estate was overvalued in Toronto in the early 1890s, levelling out over subsequent years, while general property tax revenue dipped down to nearly 5 per cent in 1898 but began to increase thereafter. 10 Toronto Daily Mail, 3 January 1885; Desmond Morton, Mayor Howland: The Citizens’ Candidate (Toronto: Hakkert, 1973). 11 Toronto Globe, 27 July 1886. 12 Toronto Globe, 29 July 1886. 13 Kealey and Palmer, Dreaming; Bonville, Jean-Baptiste Gagnepetit; Martin Petitclerc, ‘Nous protégeons l’infortune’: Les origines populaires de l’économie sociale au Québec (Montréal, vlb , 2007); Palmer, “Labour Protest”; Kealey, Toronto Workers, 198. 14 Toronto Globe, 7 August 1886. 15 Montreal Herald and Toronto Daily Mail, 7 September 1889. 16 Phillips Thompson, The Politics of Labor (New York: Belford Clarke, 1887), 138–9 and “Thoughts and Suggestions on the Social Problem and Things in General (1888–1889),” in Deborah L. Coombs and Gregory S. Kealey, eds., Labour / Le Travail 35 (Spring 1995): 237–72. 17 Bryan D. Palmer, A Culture in Conflict: Skilled Workers and Industrial Capitalism in Hamilton, Ontario, 1860–1914 (Montreal & Kingston: McGill-Queen’s University Press, 1979), 117–22. 18 Baker, Timothy Warren Anglin. 19 Ontario, First Report of the Commission on Municipal Institutions Appointed by the Government of the Province of Ontario (Toronto: Warwick, 1888) and [bound with it] Second Report of the Commission on Municipal Institutions (Toronto: Warwick, 1889), 7, 9, 73. 20 “St. John’s City Government,” New Brunswick Magazine 5, 3 (April 1905): 186–92. See E.A. Heaman, “The Politics of Fairness: Income Tax in Canada before 1917,” in Kim Brooks, ed., The Quest for Tax Reform Continues: The Royal Commission on Taxation Fifty Years Later (Toronto: Carswell, 2013): 15–30. 21 Second Report of the Commission on Municipal Institutions (Toronto: Warwick, 1889), 191–2. 22 James C. Forman, “Business Assessments as a Substitute for Personal Property Tax,” State and Local Taxation 2 (1908): 274. 23 Edwin R.A. Seligman, Review of Richard T. Ely, Taxation in American States and Cities in Political Science Quarterly 3, 4 (December 1888): 691–2. 24 Mehrotra, Making the Modern American Fiscal State, 73 and 97–121; Huret, American Tax Resisters, 74–5; E.R.A. Seligman, Essays in Taxation (New York: Macmillan, 1895), 69, 72.

512

Notes to pages 243–5

25 Mary O. Furner, Advocacy and Objectivity: A Crisis in the Professionalization of American Social Science, 1865–1905 (Lexington: University of Kentucky Press, 1975); W. Elliot Brownlee, “Social Investigation and Political Learning in the Financing of World War I,” in Michael J. Lacey and Mary O. Furner, eds., The State and Social Investigation in Britain and the United States (Cambridge: Cambridge University Press, 2004): 323–64; Glenn W. Fisher, The Worst Tax? A History of the Property Tax in America (Lawrence: University of Kansas Press, 1996); Jeffrey P. Sklansky, The Soul’s Economy: Market Society and Selfhood in American Thought, 1820–1920 (Chapel Hill: North Carolina University Press, 2002). 26 Mason Gaffney and Fred Harrison, The Corruption of Economics (London: Shepheard-Walwyn, 1994). 27 Report of the Commission on Municipal Taxation (1893), 55. 28 E. Lisa Panayotidis, “James Mavor,” dcb ; “Economic Pamphlets – No. 1. By James Mavor,” (ci hm 34062): Mavor, My Windows. 29 Report of the Commission on Municipal Taxation (1893), 51. 30 Ratepayers’ Association of Toronto, Copy of a Letter Sent by Request to the Secretary of the Commission on Taxation and Exemptions Recently Appointed by the Ontario Government (Toronto: Hill & Weir, 1893), 9. 31 Paul Rutherford, “The People’s Press: The Emergence of the New Journalism in Canada, 1869–99,” Canadian Historical Review 56, 2 (June 1975): 169–91. 32 Peter E. Paul Dembski, “Jenny Kidd Gowenlock (Trout), dcb . Information on the Trout family also taken from W.H. Trout, Trout Family History (Milwaukee, w i : W.H. Trout, 1916). 33 Monetary Times, 15 October 1886, 440; 5 November 1886, 523; 12 November 1886, 552; 10 December 1886, 663. 34 Ibid. 35 Charles Paul Hoffman, “A Reappraisal of the Canadian Anti-Combines Act of 1889,” Queen’s Law Journal 39, 127 (Fall 2013): 127–74; Michael Bliss, “The Protective Impulse: An Approach to the Social History of Oliver Mowat’s Ontario,” in Donald Swainson, ed., Oliver Mowat’s Ontario (Toronto: Macmillan, 1972): 174–88 and “Another Anti-Trust Tradition: Canadian Anti-Combines Policy, 1889–1910,” Business History Review 47, 2 (Summer 1973): 177–88; also Carman D. Baggaley, “Tariffs, Combines, and Politics: The Beginning of Canadian Competition Policy, 1888–1900,” in R.S. Khemani and W.T. Stanbury, eds., Historical Perspectives on Canadian Competition Policy (Halifax: Institute for Research on Public Policy, 1991): 1–52. 36 William Roy, Socializing Capital: The Rise of the Large Industrial Corporation in America (Princeton: Princeton University Press, 1997), 108;



Notes to pages 245–6

513

but see also Bradley Hansen, “The People’s Welfare and the Origins of Corporate Reorganization: The Wabash Receivership Reconsidered,” Business History Review 74, 3 (Autumn 2000): 377–405. On Britain, P.L. Cotrell, Industrial Finance 1830–1914: The Finance and Organization of English Manufacturing Industry (London: Methuen, 1980). 37 James Livingston, Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890–1913 (Ithaca: Cornell University Press, 1986), 56, 50. See also Alan Trachtenberg, The Incorporation of America: Culture and Society in the Gilded Age (New York: Farrar, Straus, and Giroux, 2007). 38 See table in Randall K. Morck, Michael Percy, Gloria Y. Tian, and Bernard Yeung, “The Rise and Fall of the Widely Held Firm: A History of Corporate Ownership in Canada,” in Randall K. Morck, ed., A History of Corporate Governance around the World: Family Business Groups to Professional Managers, (Chicago: University of Chicago Press, 2005), 93–4; Graham D. Taylor, The Rise of Canadian Business (Toronto: Oxford University Press, 2009); Bliss, Northern Enterprise; Graham D. Taylor and Peter A. Baskerville, A Concise History of Business in Canada (Toronto: Oxford University Press, 1994); Naylor, History of Canadian Business. 39 Brian Balogh, A Government Out of Sight: The Mystery of National Authority in Nineteenth-Century America (Cambridge: Cambridge University Press, 2009), 257–60. Balogh remarks: “It took an assertively nationalist perspective to carve out protection for the private sphere.” 40 R.C.B. Risk, “The Nineteenth-Century Foundations of the Business Corporation in Ontario,” University of Toronto Law Journal 26 (1976): 280. 41 Paul Romney, Getting it Wrong: How Canadians Forgot their Past and Imperilled Confederation (Toronto: University of Toronto Press, 1999); Vipond, Liberty and Community; Richard Risk and Robert Vipond, “Rights Talk in Canada in the Late Nineteenth Century: ‘The Good Sense and Right Feeling of the People,’” Law and History Review 14 (1996): 1–32; E.A. Heaman, “Rights Talk and the Liberal Order Framework,” in Constant and Ducharme, eds., Liberalism and Hegemony, 147–75. 42 Christopher Armstrong and H.V. Nelles, “Private Property in Peril: Ontario Businessmen and the Federal System, 1898–1911,” Business History Review 47, 2 (Summer 1973): 158–76; also their Monopoly’s Moment: The Organization and Regulation of Canadian Utilities, 1830– 1930 (Philadelphia: Temple University Press, 1986); Nelles, Politics of Development; Andrew Dilley, “Politics, Power, and the First Age of Globalization: Ontario’s Hydroelectric Policy, Canada, and the City of

514

Notes to pages 247–8

London, 1905–1910,” in Andrew Smith and Dimitry Anastakis, eds., Smart Globalization: The Canadian Business and Economic History Experience (Toronto: University of Toronto Press, 2014), 31–58; Naylor, History of Canadian Business, vol. 1, 233. 43 Robert H. Babcock, Gompers in America: A Study in American Continentalism before the First World War (Toronto: University of Toronto Press, 1974), 70; A. Ross McCormack, Reformers, Rebels, and Revolutionaries: The Western Canadian Radical Movement 1899–1919 (Toronto: University of Toronto Press, 1977). 44 John Herd Thompson, “American Muckrakers and Western Canadian Reform,” Journal of Popular Culture 4, 4 (Spring 1971): 1060–70. 45 Roy, Progès, harmonie, liberté, 93, 137–8. 46 Martin J. Sklar, The Corporate Reconstruction of American Capitalism, 1890–1916: The Market, the Law, and Politics (Cambridge: Cambridge University Press, 1988), 3 and passim. 47 Bernard J. Hibbitts, “‘Our Arctic Brethren’: Canadian Law and Lawyers as Portrayed in American Legal Periodicals, 1829–1911,” in G. Blaine Baker and Jim Phillips, eds., Essays in the History of Canadian Law in Honour of R.C.B. Risk (Toronto: University of Toronto Press, 1999), 252; but see G. Blaine Baker, “‘The Reconstitution of Upper Canadian Legal Thought in the Late Victorian Empire,”’ Law and History Review, 3 (1985): 219–92. 48 Damien-Claude Bélanger, Prejudice and Pride: Canadian Intellectuals Confront the United States, 1891–1945 (Toronto: University of Toronto Press, 2011). 49 Toronto Daily Mail, 3 January 1885; Daily Mail and Empire, 27 December 1898; Elisabeth Wallace, Goldwin Smith, Victorian Liberal (Toronto: University of Toronto Press, 1957). 50 Robert F. Wesser, Charles Evans Hughes: Politics and Reform in New York, 1905–1910 (Ithaca: Cornell University Press, 1967), 62; Michael Wolraich, Unreasonable Men: Theodore Roosevelt and the Republican Rebels Who Created Progressive Politics (New York: Palgrave Macmillan, 2014). 51 Hall, Clifford Sifton: Lonely Eminence, 26. 52 National Tax Association, State and Local Taxation: International Conference under the Auspices of the International Tax Association: Addresses and Proceedings, 2 (1909), 161. 53 See Lawrence E. Mitchell, The Speculation Economy: How Finance Triumphed over Industry (San Francisco: Berrett Koehler, 2007); Jonathan J. Baskin and Paul Miranti Jr, A History of Corporate Finance (Cambridge: Cambridge University Press, 1997), 150–6.



Notes to pages 248–53

515

54 Louis Filler, The Muckrakers (Redwood City: Stanford University Press, 1993; first pub. 1939), 178–83. 55 Toronto Globe, 26 July 1886. 56 J.S. Willison, The Railway Question in Canada with an Examination of the Railway Law of Iowa (Toronto: Warwick, 1897); Ken Cruikshank, Close Ties: Railways, Government, and the Board of Railway Commissioners 1851–1933 (Montreal & Kingston: McGill-Queen’s University Press, 1991). 57 Lawrence Goodwyn, Democratic Promise: The Populist Movement in America (New York: Oxford University Press, 1976), 79–80. 58 Toronto Star, 22 March and 12 June 1894. 59 Consumers’ Gas Co. of Toronto v. Toronto (City), 27 S.C.R 453, 1 May 1897. 60 In re Bell Telephone Co. and the City of Hamilton, 25 O.A.R. 351, 30 June 1898. 61 In re London Street Railway Co. Assessment [1900], O.J. No. 7, 27 O.A.R. 83, 16 January 1900, J.F. Smith and R.S. Cassels, Reports of Cases Decided in the Court of Appeal during the Year 1900 (Toronto: Canada Law Book Company, 1901): 83–91. 62 Report of the Ontario Assessment Commission, Being the Interim or First Report and Record of Proceedings (Toronto: Cameron, 1901), 147. 63 Featherstone Osler Jr., Smith and Cassels, Reports of Cases, 85, in re London Street Railway Co. Assessment. See Christopher Moore, The Court of Appeal for Ontario: Defining the Right of Appeal, 1792–2013 (Toronto: University of Toronto Press, 2014). 64 Bystander, 1 (April 1890): 239–40. 65 Adam Shortt, “In Defence of Millionaires,” Canadian Magazine 13 (1899): 496–8; Montreal Gazette, 30 September 1899. 66 E.R. Peacock, “Trusts, Combines and Monopolies,” Queen’s Quarterly 4, 1 (July 1898): offprint, 2. 67 University of Toronto Archives, b72-1063, The Programmes of Departmental Societies, 1899–1900. 68 Toronto Star, 16 September 1904. 69 Toronto World, 1 November 1890. 70 Anon. “The Hon. W.T. White: A Character Sketch of the Canadian Minister of Finance,” Maclean’s, 23, 8 (March 1912), 527–9. 71 Toronto Daily Mail and Empire, 30 October 1895. 72 Toronto Star, 15 December 1896. 73 Toronto Star, 21 July 1897. 74 Toronto Star, 15 May 1976, g19; John P.M. Court, “Out of the Wood Work: The Wood Family’s Benefactions to Victoria College,” Papers of the

516

Notes to pages 253–62

Canadian Methodist Historical Society 11 (1997): 26–51; Michael Bliss, A Canadian Millionaire: The Life and Business Times of Sir Joseph Flavelle, Bart. 1858–1939 (Toronto: University of Toronto Press, 1978; 1992); Alain Thomas, “Sir Thomas White and Canada’s Participation in the Great War” (M A Thesis, Queen’s University, 1975). 75 Michael Bliss, “George Albertus Cox,” dcb . 76 Toronto Star, 29 July 1899. 77 Toronto Globe, 31 July 1899. 78 Toronto Daily Mail and Empire, 16 February 1899. 79 Nelles, Politics of Development, 46. 80 The tax brought in $229,774 in its first year. Public Accounts of the Province of Ontario for the Year ended 31st December 1900 (Toronto: Cameron, 1901). Schull, Ontario since 1867, says it was aimed at rural appeasement, 135. 81 Toronto Daily Mail and Empire, 31 March 1899. 82 Western Home Monthly 6, 12 (December 1905): 50–1; on proportionality, Scheve and Stasavage, Taxing the Rich, 31. 83 James Mavor, “The Taxation of Corporations in Ontario,” Journal of the Canadian Bankers’ Association 7, 4 (July 1900): 333–50. 84 Toronto Daily Mail and Empire, 25 December 1900. 85 Report of the Ontario Assessment Commission (first report 1901), 148. 86 Toronto Daily Mail and Empire, 27 December 1898 and 10 January 1899. 87 Toronto Daily Mail and Empire, 25 December 1900. 88 Toronto Star, 6 September 1899. 89 Donald Higgins, “The Processes of Reorganizing Local Government in Canada,” Canadian Journal of Political Science 19, 2 (June 1986): 219–42; Offer, Property and Politics, 229–30; 90 Official Report of the Third Annual Convention of the ucm held at Ottawa (Montreal: Daily Witness, 1901); Canadian Municipal Journal 1, 11 (November 1905): 352–3. 91 Toronto Daily Mail and Empire, 23 August 1900. 92 Levine, “Single Tax in Montreal and Toronto,” 424. 93 Patrick Brode, “Christopher Robinson,” dcb . 94 Ontario, Report of the Ontario Assessment Commission, 150. 95 Report of the Ontario Assessment Commission (1901), 160, 392. 96 Report of the Ontario Assessment Commission (Toronto, 1902), 8. 97 Toronto Globe, 23 May 1903. 98 Toronto Globe, 3 February 1903.



Notes to pages 262–6

517

99 Toronto Globe, 22 December 1903. 100 Almos Tassonyi, “Tax, Borrow and Spend: Municipal Finance in Ontario, 1886–1941,” Paper presented to the Canadian Network for Economic History, Peterborough, October 2014; available online: www. economichistory.ca/pdfs/2014/tassonyi.pdf (accessed on 12 November 2016); Almos Thomas Tassonyi, “Essays on Municipal Finance in Ontario from a Historical Perspective” (PhD Dissertation, University of Calgary, 2010); see also Darren Ferry, “Local Governance, Negotiation, and the Search for Order in the Townships of Canada West / Ontario, 1849–1870,” Workshop on Unrest, Violence, and the Search for Social Order in British North America and Canada, 1749–1876,” St Mary’s University, Halifax, June 2016. 101 Robert Raizanne and Colin Campbell, “The Income War Tax Act, 1917– 1948,” book manuscript. 102 Mehrotra, Making the Modern American Fiscal State; David Tough, “‘The rich … should give to such an extent that it will hurt’: ‘Conscription of Wealth’ and Political Modernism in the Parliamentary Debate on the 1917 Income War Tax,” Canadian Historical Review 93, 3 (September 2012): 382–407. But see Levine, “To Tax or Not to Tax,” who sees the Ontario income tax as class legislation. 103 Toronto Financial Post, 12 October 1912. 104 Nelles, Politics of Development, but see Mark Kuhlberg, In the Power of the Government: The Rise and Fall of Newsprint in Ontario, 1894–1932 (Toronto: University of Toronto Press, 2015); Thompson, Politics of Labor; Christina Burr, Spreading the Light: Work and Labour Reform in Late Nineteenth-Century Toronto (Toronto: University of Toronto Press, 1999), 43. 105 Carolyn Gray, “Business Structures and Records: The Dominion Power and Transmission Company, 1896–1930,” Archivaria 19 (Winter 1984– 5): 152–61. See also Carolyn E. Gray, “Sir John Morison Gibson,” dcb (1921–30). On Ross and Gibson, David G. Burley, “Sir George William Ross,” dcb (1911–20). 106 Report of the Ontario Assessment Commission, 446. 107 Gregory P. Marchildon, Profits & Politics: Beaverbrook and the Gilded Age of Canadian Finance (Toronto: University of Toronto Press, 1996), 115. 108 Louis Menaud, The Metaphysical Club (New York: Farrar, Straus and Giroux, 2001); Leslie Armour and Elizabeth Trott, The Faces of Reason: An Essay on Philosophy and Culture in English Canada (Waterloo: Wilfrid Laurier University Press, 1981), 14.

518

Notes to pages 267–80

109 Ontario Assessment Commission Report (1901), 417–19. 110 Rosanne Currarino, The Labor Question in America: Economic Democracy in the Gilded Age (Champaign: University of Illinois Press, 2011), 76. 111 Ibid., 80; Huret, American Tax Resisters, 75. 112 Ontario Assessment Commission Report, 423–6. 113 David Graeber, Debt: The First Five Thousand Years (New York: Melville House, 2011). 114 Forman, “Business Assessments,” and Reports. 115 Solomon Vineberg, Provincial and Local Taxation in Canada (New York: Columbia University / Longman’s Green & Co., 1912), 135, 55, 57. 116 Toronto Star, 1 February and 16 September 1904. 117 q ua, Adam Shortt fonds, file 46, pencil note, “Re Rly Tax Commission” (Pettypiece’s name is misspelled as Pettapiece – I have silently corrected it). 118 W.A. Mackintosh, “Adam Shortt, 1859–1931,” Canadian Journal of Economics and Political Science 4, 2 (May 1938): 164–76. 119 q ua, Shortt fonds, Seligman to Shortt, 3 June 1904. 120 ao, F 5, Sir James Whitney fonds, Wilkinson memo for Whitney, 5 April 1905. 121 Report of the Ontario Commission on Railway Taxation (Ontario, 1905), 27–8 and passim the first 32 pages. 122 Toronto Star, 16 September 1904. 123 Toronto News, 4 October 1904; in the Shortt fonds. 124 Sir James Whitney’s Great Work for Ontario: Record and Policy of the Whitney Government (Toronto, 1914), 7. The figures remained largely stationary between 1908 and 1914, when they rose to $733,770. 125 Ottawa Citizen, 26 February 1908. 126 Toronto Sunday World, 10 October 1913. 127 Nelles, Politics of Development, 176–9. 128 Stanley, Dimensions of Law in the Service of Order, 126. 129 Sklar, Corporate Reconstruction of Corporate Capitalism, 61. 130 Mavor, “The Taxation of Corporations in Ontario,” in S.E.D. Shortt, The Search for an Ideal: Six Canadian Intellectuals and Their Convictions in an Age of Transition, 1890–1930 (Toronto: University of Toronto Press, 1976), 123; Drummond, Political Economy at the University of Toronto. 131 Goldwin Smith, New York Times, 27 March 1866; letter dated 1863; J.S. Mill, Principles of Political Economy (London: Longman’s, 1848): v, 3, 16–17. 132 State and Local Taxation 2 (1909): 127–37.



Notes to pages 280–6

519

133 Mehrotra, Making the Modern American Fiscal State, 185–241. 134 Ian Drummond, Progress without Planning: The Economic History of Ontario from Confederation to the Second World War (Toronto: University of Toronto Press, 1986).

C h a p t e r se ve n 1 Thomas Fyshe, Letters on Municipal Taxation (Halifax, 1880); Single Tax Review, 1917. 2 James D. Frost, “Thomas Fyshe,” dcb . 3 Thomas Fyshe, Proposed Amendments to the Local Assessment Law: Argument Before the Committee on Bills on Behalf of the Banks (Halifax: n.p., 1895), 8–11. 4 Thomas Fyshe, “The Organization of Labour,” Queen’s Quarterly 15, 1 (July–September 1907): 1–19; Eric W. Sager, “The Problem of Inequality in English-Canadian Political Economy.” Paper presented to the Canadian Historical Association annual meeting, St Catharine’s, 2014. 5 Report of Committee Appointed by Halifax Merchants’ Tax Reform Association in Re Assessment (Halifax: William Macnab, 1891). 6 Discussion by the Halifax Board of Trade on the Tax Reform Proposed by the Halifax Reform Association (Halifax: William MacNab, 1892), 25. 7 F.H. Bell, Principles of Civic Taxation (Saint John: Sun Printing Company, 1899). 8 Bell, Principles of Civic Taxation, 21–2. 9 Toronto Daily Mail, 13 June 1887. 10 Toronto Globe, 13 April 1911. 11 New Westminster Mainland Guardian, 12 August 1876. 12 lac , mg 27 11 d 18, Fonds Sir Thomas White, 1, 353. 13 Toronto World, 2 October 1913. 14 Victoria Daily Colonist, 22 March 1898. 15 Christopher Bracken, The Potlatch Papers: A Colonial Case History (Chicago: University of Chicago Press, 1997); Douglas Cole and Ira Chaikin, An Iron Hand upon the People: The Law against the Potlatch on the Northwest Coast (Vancouver: Douglas & McIntyre, 1990). 16 Canadian Municipal Journal 8, 10 (October 1912): 405–6; Montreal Gazette, 12 August 1912; Henry Roper, “The Halifax Board of Control: The Failure of Municipal Reform, 1906–1919,” Acadiensis 14, 2 (Spring 1985): 46–65. 17 Halifax Archives, 102-1g, 1 Special committee on civic taxation, passim.

520

Notes to pages 287–91

18 Roper, “The Halifax Board of Control,” Judith Fingard, Janet Guildford, and David Sutherland, Halifax: The First 250 Years (Halifax: Formac, 1999), 122–3. 19 F.H. Bell, “Municipal Taxation in Nova Scotia,” Dalhousie Review (1921): 272. 20 Saint John Daily Sun, 19 December 1898; W. Frank Hatheway, Poorhouse and Palace ([Saint John], 1900), 29; Morton, Wisdom, Justice and Charity. 21 Saint John Daily Sun, 23 March 1899; “St John’s City Government,” New Brunswick Magazine 5, 3 (April 1905): 186–92. 22 Saint John Daily Sun, 17 August 1899. 23 Saint John Daily Sun, 21 November 1900, 7 June 1905, and 9 and 11 October 1905. 24 Saint John Daily Sun, 18 January 1905. 25 Saint John Daily Sun, 6 November 1906. 26 Vineberg, Provincial and Local Taxation, 46. 27 Saint John, Reports on the Accounts of the Corporation of the City of Saint, John for the Year Ending December 31, 1907 (Saint John, 1908), 10. 28 Saint John, Reports and Accounts of the Corporation of the City of Saint John, Year Ending December 31, 1909 (Saint John: 1910), 16. 29 Timothy D. Lewis, “Agrarian Idealism and Progressive Agriculture in Maritime Canada: Agricultural Leadership in New Brunswick, 1895– 1929,” (PhD Dissertation, University of New Brunswick, 2003), 187–8. 30 Bell, “Municipal Taxation in Nova Scotia,” 273–4. 31 Perry, Taxes, Tariffs and Subsidies; Alan F. Artibise, “Continuity and Change: Elites and Prairie Urban Development, 1914–1950,” in Alan F.J. Artibise and Gilbert A. Stelter, eds., The Usable Urban Past: Planning and Politics in the Modern Canadian City (Toronto: Macmillan, 1979), 134–5. 32 Saskatoon Phoenix, 20 March 1914, 6. 33 City of Vancouver Archives, Report of Joint Committee on Broadening of Municipal Taxation (Vancouver, February 1920); Horace L. Brittain, Report to the City of Vancouver on Methods of Municipal Taxation (December 1920); F.A. McDiarmid, Vancouver’s Taxation Problem (reprint from Vancouver Daily Sun, 30 June–9 July 1920). On Victoria’s ruinous experience: Peter A. Baskerville, “Financial Capital and the Municipal State: The Case of Victoria, British Columbia, 1910–1936,” Studies in Political Economy 21 (Autumn 1986): 83–106. 34 Daniel Francis, L.D.L Mayor Louis Taylor and the Rise of Vancouver (Vancouver: Arsenal Pulp Press, 2004). 35 Baskerville, “Finance Capital and the Municipal State,” 88.



Notes to pages 291–4

521

36 Edmonton Bulletin, 17 October 1917. These figures accord with other sources consulted, including Artibise “Continuity and Change.” 37 Linteau, Maisonneuve. See also Léon Robichaud, Harold Bérubé, and Donald Fyson, La Gouvernance Montréalaise: De la ville-frontière à la métropole (Montreal: Multimondes, 2014). 38 Artibise, “Continuity and Change,” 151. 39 Bypassing the extensive American literature, for Canadian history the best argument for and example of popular state-making is Donald Fyson, Magistrates, Police, and People: Everyday Criminal Justice in Quebec and Lower Canada (1764–1837) (Toronto: University of Toronto Press, 2007). 40 Harold M. Groves, “The Property Tax in Canada and the United States,” Land Economics 24, 1 (February 1948): 23–30; Robert V. Andelson, ed. “Critics of Henry George: An Appraisal of their Strictures on Progress and Poverty,” American Journal of Economics and Sociology 62, 5 (November 2003): passim. 41 W.W. Swanson, Review of “Taxation in the Urban Municipalities of Saskatchewan,” American Economic Review 8, 4 (December 1918): 836; Shirley Spafford, No Ordinary Academics: Economics and Political Science at the University of Saskatchewan, 1910–1960 (Toronto: University of Toronto Press, 2000). 42 Gene Howard Homen, “‘Fading Beams of the Nineteenth Century’: Radicalism and Early Socialism in Canada’s 1890s,” Labour / Le Travail 5 (Spring 1980): 25. For some typical cartoons, The Land Question Illustrated, with Quotations and Opinions of Leading Thinkers (Toronto: G.J. Bryan, 1895) and J.W. Bengough, The Up-To-Date Primer: A First Book of Lessons for Little Political Economists (New York: Funk & Wagnalls, 1896). 43 Michael Doucet and John Weaver, Housing the North American City (Montreal & Kingston: McGill-Queen’s University Press, 1991); Richard Harris, “The Unremarked Homeownership Boom in Toronto,” Histoire sociale-Social History 18, 36 (November 1985): 433–7; John C. Weaver, “Capitalism, Land Development and Housing in a New Society: The Case of Urban Canada, 1800–1980,” in Chiranji S. Yadav, Cities and Housing (New Delhi: Concept Publishing, 1987), 205; Gregory J. Levine “Criticizing the Assessment: Views of the Property Evaluation Process in Montreal 1870–1920 and Their Implications for Historical Geography,” Canadian Geographer 28, 3 (September 1984): 276–84; Marc H. Choko, “Ethnicity and Home Ownership in Montreal, 1921–51,” Urban History Review 26, 2 (1998): 32–41. 44 Toronto Irish Canadian, 19 May 1887; New York Times, 12 May 1887; Jamie Bradburn, “The Trouble with O’Brien,” The Historicist, 16 February

522

Notes to pages 294–9

2013; Elwood P. Lawrence, “Henry George’s British Mission,” American Quarterly 3, 3 (Autumn 1951): 232–43. 45 Toronto Irish Canadian 2 June 1887, 19 January 1888; New Westminster Mainland Guardian 26 December 1889. 46 Toronto Daily Mail, 22 October 1884; Toronto Daily Mail and Empire, 25 December 1897. 47 Edmonton Bulletin, 9 June 1883; see also July 1 1882. 48 Fukuyama, Political Order and Political Decay, 407. 49 Sven Beckert, The Monied Metropolis: New York City and the Consolidation of the American Bourgeoisie, 1850–1896 (Cambridge: Cambridge University Press, 1993), 227, 189, 257 passim. 50 Huron Expositor, 20 March 1885. 51 Manitoba Free Press, 20 August 1887. 52 Edmonton Bulletin, 29 November 1884. 53 W.J. Walker, Some Thoughts and Suggestions on Municipal Reform in British Columbia (New Westminster: Lewis & Greig, 1891). 54 Toronto Globe, 7 February 1885. 55 On the new science of management and its transfer to the state, see Timothy Bruce Krywulak, “An Archaeology of Keynesianism: The MacroPolitical Foundations of the Modern Welfare State in Canada, 1896–1948” (PhD Dissertation, Carleton University, 2005), 86–131. 56 Charlottetown Patriot, 26 October 1878. 57 Quoted in James D. Anderson, “The Municipal Government Reform Movement in Western Canada, 1880–1920,” in Artibise and Stelter, Usable Urban Past, 76; John C. Weaver, “The Modern City Realized: Toronto Civic Affairs, 1880–1915,” in Artibise and Stelter, Usable Urban Past, 53–4. See also Wickett, ed., Municipal Government in Canada; Michael B. Moir, “Samuel Morley Wickett,” dcb ; Kevin Plummer, “The Greater Scheme of Things,” The Historicist, 16 November 2013. 58 Toronto World, 29 February 1912 and 2 October 1913. 59 Stuart Cameron McLeod, “Women Voters in Canadian Cities,” National Municipal Review 5, 3 (July 1916): 457; McLeod, “Government of Canadian Cities.” 60 Grain Growers’ Guide, 4 October 1911. 61 Deirdre N. McCloskey, Bourgeois Dignity: Why Economics Can’t Explain the Modern World (Chicago: University of Chicago Press, 2010). 62 Johnston, Radical Middle Class, 158. 63 Nancy Christie, “‘In These Times of Democratic Rage and Delusion’: Popular Religion and the Challenge to the Established Order, 1760–1815,” in George A. Rawlyk, ed., The Canadian Protestant Experience, 1760– 1990 (Montreal & Kingston: McGill-Queen’s University Press, 1990), 20.



Notes to pages 299–302

523

64 Robert Murray Haig, The Exemption of Improvements from Taxation in Canada and the United States: A Report Prepared for the Committee on Taxation of the City of New York (New York, 1915) (American exemptions occupies pp. 241–60); Taxation in the Urban Municipalities of Saskatchewan (Saskatchewan, 1917); Reports of the Board of Taxation (b c : W.H. Cullen, 1919). Haig is described as Seligman’s protégé in Keith D. Revell, Building Gotham: Civic Culture and Public Policy in New York City (Baltimore: Johns Hopkins University Press, 2002), 178. 65 British Columbia, Royal Commission on Taxation (1911). 66 New Westminster British Columbian, 24 March 1866. 67 Victoria Daily Standard, 13 February 1873. 68 Walter J. Meyer Zu Erpen, “Towards an Understanding of the Municipal Archives of Nineteenth-Century British Columbia: A Case Study of the Archives of the Corporation of the City of Nanaimo, 1875–1904,” (MA Thesis, u b c , 1985). 69 See, for example, Michelle Vosburgh, “The Crown Lands Department, the Government, and the Settlers of McNab Township, Canada West,” Ontario History 100, 1 (Spring 2008): 80­–99. Another later, eastern example: when the annexation of Earlscourt was under debate in 1908, when two electricity companies claiming to represent one eighth of all taxation in the region opposed annexation and a petition signed by 825 of 1,200 residents supported it, lawyers turned to the courts to determine the meaning of the word “ratepayer.” Toronto Star, 23 August 1908. 70 Manitoba Free Press, 31 July 1874. 71 Manitoba Free Press, 24 December 1875. 72 H. John Selwood and Evelyn Baril, “The Hudson’s Bay Company and Prairie Town Development, 1870–1888,” in Alan F.J. Artibise, ed., Town and City: Aspects of Western Canadian Urban Development (Regina: Canadian Plains Research Center, 1981): 61–94; Ruben Bellan, Winnipeg First Century: An Economic History (Winnipeg: Queenston House, 1978), 13. 73 Manitoba Free Press, 16 August 1878. 74 Edmonton Bulletin, 25 July 1891. 75 J. William Brennan, “Business-Government Cooperation in Townsite Promotion in Regina and Moose Jaw, 1882–1903,” in Artibise, Town and City: 95–120. 76 Manitoba Free Press, 27 March, 27 November, 6 December, and 6 December 1889. 77 Manitoba Free Press, 15 January, 7 February, and 14 July 1890, and 24 September 1892; Winnipeg Commercial, 18 April, and 3 and 17 October 1892; Toronto Daily Mail, 2 February 1893; New York Times, 22 September 1892.

524

Notes to pages 303–7

78 Manitoba Free Press, 10 December 1895. R.R. Rostecki, “Richard Willis Jameson,” dcb . 79 Gordon Hak, The Left in British Columbia: A History of Struggle (Vancouver: Ronsdale Press, 2013), 24–6 for what follows; also in The Tyee, 3 January 2014. 80 54. Victoria, chap 72, “An Act to Amend ‘Vancouver Incorporation Act,’” Statutes of the Province of British Columbia, passed in the Session held in the Fifty-fourth Year of the Reign of Her Majesty Queen Victoria (Victoria: Queen’s Printer, 1891) 549–59. 81 Hak, The Left in British Columbia, 25. 82 British Colonist, 6 and 13 October 1889, and 4 and 12 June 1890. 83 Minnedosa Tribune, 28 May 1891, 4. 84 Prince Albert Times, 21 October 1891. 85 Brandon Mail, 9 November 1891. 86 Manitoba Free Press, 18 August 1892. 87 James Belich, Replenishing the Earth: The Settler Revolution and the Rise of the Anglo-World, 1783–1939 (Oxford: Oxford University Press, 2009), 413–15; Alan F.J. Artibise, Winnipeg, A Social History of Urban Growth, 1874–1914 (Montreal & Kingston: McGill-Queen’s University Press, 1975) and Gateway City: Documents on the City of Winnipeg 1873–1913 (Winnipeg: Manitoba Record Society, 1979). 88 Cameron, “Government of Canadian Cities,” 347. 89 Bellan, Winnipeg First Century, 108. 90 James H. Gilbert, “Single-Tax Movement in Oregon,” Political Science Quarterly 31, 1 (March 1916): 43–4. 91 W.S. U’Ren, “Single Tax,” Annals of the American Academy of Political and Social Science 58 (March 1915), 227. 92 Fernie Ledger, 27 July 1907. 93 McLeod, “The Government of Canadian Cities,” 182–3. 94 Haig, Exemption of Improvements, 106–7. 95 A.B. Farmer, “The Single Tax in Canada,” The Public, 2 June 1911: 512. William Short was the mayor of Edmonton at the time and described the city’s tax laws as “a prosaic matter of business”: John Orr, Taxation of Land Values as It Affects Landowners and Others (1912), 23. 96 Edmonton Capital, 31 May and 3, 7, and 11 June 1910 97 Edmonton Capital, 21 October 1913. 98 Edmonton Bulletin, 3 June 1910; see also 7 June 1910. 99 Edmonton Bulletin, 14 June 1911. 100 Edmonton Capital, 12 December 1910 and 16 December 1911. 101 Grain Growers’ Guide, 26 December 1910.



Notes to pages 308–15

525

102 Prince Rupert Optimist, 13 July 1910. 103 Grain Growers’ Guide, 4 February 1914. 104 Haig, Exemption of Improvements. 105 c ta , fonds 200, series 768, subseries 1, file 1, Annual Reports of the Assessment Commissioner, 1905–34. 106 Winnipeg Voice, 29 November 1912. 107 Levine, “Single Tax in Montreal and Toronto,” 428. 108 Armstrong and Nelles, “Private Property in Peril”; Michael Bliss, A Living Profit: Studies in the Social History of Canadian Business, 1883–1911 (Toronto: McClelland & Stewart, 1974). 109 University of Toronto Archives, University of Toronto, Board of Governors, Minutes, 1, 1906–09, 1–2, archive.org/ details/1906bogminutes01uoft (accessed on 12 November 2016). 110 Craig Heron, Lunch-Bucket Lives: Remaking the Workers’ City (Toronto: Between the Lines, 2015), 472 and passim. 111 Schull, Ontario since 1867, 157; Charles W. Humphries, ‘Honest Enough to be Bold’: The Life and Times of Sir James Pliny Whitney (Toronto: University of Toronto Press, 1985). 112 ao, Whitney fonds, Willison to Whitney, 24 December 1912. 113 Ibid., J.C. Farthing to Whitney, 29 August 1905. 114 Ibid., Wilson M. Southam to Whitney, 13 October 1911. 115 Ibid., Wilson M. Southam to Whitney, 26 March 1912. 116 Toronto World, 4 January 1911. 117 Margaret Prang, N.W. Rowell, Ontario Nationalist (Toronto: University of Toronto Press, 1975), 101. 118 Single Tax Yearbook, 1917, 81–3. 119 Toronto World, 1 August 1912. 120 ao, Whitney fonds, clippings attached to John Dean to Whitney, 2 February 1913; Whitney to John Dean, 14 February 1913. 121 Charles M. Johnston, E.C. Drury, Agrarian Idealist (Toronto: University of Toronto Press, 1999), 38. 122 ao, Premier’s office, Whitney rg 3, series 0302–0004, Assessment Committee, 1912. 123 Revell, Building Gotham, 146; see also Kenneth Finegold, Experts and Politicians: Reform Challenges to Machine Politics in New York, Cleveland, and Chicago (Princeton: Princeton University Press, 1995). 124 Philip H. Cornick, “Lawson Purdy’s Career in Property Tax Reform,” American Journal of Economics and Sociology 9, 1 (October 1949): 7–24. 125 Toronto World, 21 December 1912; Toronto Star 20 December 1912.

526

Notes to pages 315–7

126 ao, r g3-3-046, Premier’s office, Land Taxation; r g3-3-066 Prime Minister’s Brief, Assessment. 127 Max Foran, “Land Development Patterns in Calgary, 1884–1945,” in Artibise and Stelter, Usable Urban Past, 309. 128 Cameron, “Government of Canadian Cities,” 345. 129 Law professor Frederick Walton also co-supervised Stalker. Frank Spitzer and Elizabeth Sylvester, eds., McGill University Thesis Directory: vol. 1, (Montreal & Kingston: McGill University, 1976); Frank Milligan, Eugene A. Forsey: An Intellectual Biography (Calgary: University of Calgary Press, 2004), 5–6; Montreal Gazette, 19 June 1925; Stanley Brice Frost, McGill University: For the Advancement of Learning, 1895–1971 (Montreal & Kingston: McGill-Queen’s University Press, 1984), 28–9. Hemmeon did his own thesis, published in 1912, under Edwin Francis Gay, a German-trained historical economist who had succeeded to Ashley’s position at Harvard in 1902. 130 Archibald Stalker, “Taxation of Land Values in Western Canada” (MA Thesis, McGill University, 1914), 54. 131 Ottawa Citizen, 18 November 1913. 132 Adam Shortt, “Municipal Taxation in Relation to Speculative Land Values,” Annals of the American Academy of Political Science 58 (March 1915): 214–21. 133 Toronto World, 10 January 1914. 134 A.B. Clark, An Outline of Provincial and Municipal Taxation in British Columbia, Alberta and Saskatchewan (Winnipeg: University of Manitoba, 1919), 19–20, 77. 135 Canadian Municipal Journal 6 (1911): 406–7; James Mavor, “Recent Municipal Finance and Taxation,” in Adam Shortt and Arthur G. Doughty, eds., Canada and Its Provinces (Toronto: Glasgow Brooks & Co, 1914), vol. 17, 273. 136 H.A. Innis, “The Teaching of Economic History in Canada,” Contributions to Canadian Economics 2 (1929): 62; Shortt, Search for an Ideal, 123. 137 E.R.A. Seligman, “The Single Tax,” in his Essays in Taxation (New York: Macmillan, 1895): 64–94. On Seligman: Dorothy Ross, The Origins of American Social Science (Cambridge: Cambridge University Press, 1991); John Louis Recchiuti, Civic Engagement: Social Science and ProgressiveEra Reform in New York City (Philadelphia: University of Pennsylvania Press, 2007). In defence of George: Andelson, ed., “Critics of Henry George”; Gaffney and Harrison, Corruption of Economics; Phillip J. Bryson, The Economics of Henry George: History’s Rehabilitation of America’s Greatest Early Economist (New York: Palgrave, 2011).



Notes to pages 317–23

527

138 Calendar of the University of Toronto for the Year 1901–1902 (Toronto: Hutchison, 1901), 147. Evelyn Forget, “Margaret Gilpin Reid: A Manitoba Home Economist Goes to Chicago,” Feminist Economics 2, 3 (1996): 6–7. 139 Vineberg, Provincial and Local Taxation, 56–7; Montreal Gazette, 13 August 1912. 140 New York Times, 15 February 1914. 141 Pittsburg Press, 19 October 1915. 142 Charles Bullock, “An Economist’s Study of the History and Operation of the Single Tax in Vancouver,” New York Market World and Chronicle, 4 July 1914, 6–8. 143 Allan Robinson, “The Heavier Land Tax,” Annals of the American Academy of Political Science and Social Science 58 (March 1915): 198–201. 144 Donald Wright, The Professionalization of History in English Canada (Toronto: University of Toronto Press, 2015), 82–3. 145 Finegold, Experts and Politicians, 182. 146 Clinton Rogers Woodruff, “Municipal Review 1909–1910,” American Journal of Sociology 16, 4 (January 1911): 511–12; “Symposium: What Is Americanism?” American Journal of Sociology 20, 4 (January 1915): 475; Arland D. Weeks, “The Mind of the Citizen,” American Journal of Sociology 21, 3 (November 1915): 398. 147 F.C. Wade, The Single Tax Humbug (Vancouver Province offprint, 1912); The Single Tax Failure (Vancouver Sun offprint, 1914). 148 Saturday News, 18 January 1908. 149 A.B. Clark, “Dominion and Provincial Revenues,” Bulletin of the National Tax Association 4, 4 (January 1919), 91; reprint from Manitoba Free Press, 5 December 1918. 150 Victoria British Colonist, 28 June and July 4 1890. 151 Grain Grower’s Guide, 11 March 1911. 152 Grain Grower’s Guide, 25 May 1910. 153 Manitoba Free Press, 17 June 1899. 154 Fernie Ledger, 15 May 1909. 155 People’s Voice, 14 July 1894. 156 McCormack, Reformers, Rebels, and Revolutionaries, 79–92. 157 Ian McKay, “Strikes in the Maritimes, 1901–1914,” in P.A. Buckner and David Frank, eds., The Acadiensis Reader, Atlantic Canada after Confederation (Fredericton: Acadiensis Press, 1985), 222–3; David Frank and Nolan Reilly, “The Emergence of the Socialist Movement in the Maritimes, 1899–1916,” Labour / Le Travailleur 4 (1979): 85–113. 158 J.K. Chapman, “Henry Harvey Stuart (1873–1952): New Brunswick Reformer,” Acadiensis 5 2 (Spring 1976): 79–104.

528

Notes to pages 323–32

159 Ian McKay, Reasoning Otherwise: Leftists and the People’s Enlightenment in Canada, 1890–1920 (Toronto: Between the Lines, 2008), 173. 160 Ian McKay, ed., For a Working-Class Culture in Canada: A Selection of Colin McKay’s Writings on Sociology and Political Economy, 1897–1939 (St John’s: Canadian Committee on Labour History, 1996), 209–11. 161 Moose Jaw Herald, 28 August 1891. 162 Alan Mendelson, “Grip magazine and ‘the Other’: The Genteel Antisemitism of J.W. Bengough,” Histoire sociale / Social History 40, 79 (2007): 1–44; Goutor, Guarding the Gates. 163 British Columbia, Reports of the Board of Taxation (Victoria: Government printer, 1919), 96. 164 b c a , g r 0786, Royal Commission on Taxation (1911), manuscript evidence, 512 in Rossland; 277–82, 287, 149–50, 9, for testimony from four single taxers: two carpenters, the mayor of Vancouver, and a customs officer from Victoria. 165 Lillooet Prospector, 22 March 1901. 166 Quoted in Ninette Kelley and Michael Trebilcock, The Making of the Mosaic: A History of Canadian Immigration Policy (Toronto: University of Toronto Press, 1998), 132. 167 John L. Hiemstra, “The Battle over Catholic Schooling (1870–1905): Casting an Assimilationist Public School Policy in Alberta,” Paper presented to the Canadian Political Science Association, May 2003. 168 William Pearce, The Absurdity and Injustice of Single Tax as Carried Out in the Western Provinces of Canada (Calgary: Herald Western Printing Co., 1915). 169 Manitoba Free Press, 31 March 1898. 170 Winnipeg Voice, 22 March 1912. 171 Jeffrey L. McNairn, The Capacity to Judge: Public Opinion and Deliberative Democracy in Upper Canada 1791–1854 (Toronto: University of Toronto Press, 2000). 172 W.L. Morton, The Progressive Party in Canada (Toronto: University of Toronto Press, 1950); C.B. Macpherson, Democracy in Alberta: Social Credit and the Party System (Toronto: University of Toronto Press, 1953; republished with new introduction by Nelson Wiseman, 2013). 173 Nelles, Politics of Development, 426.

C ha p t e r e i g ht 1 Daunton, Trusting Leviathan, 200–3. 2 Cohen, Contraband, 102.



Notes to pages 334–7

529

  3 Stephen Leacock, Sunshine Sketches of a Little Town (Toronto: Bell and Cockburn, 1912).   4 Stephen Leacock, Arcadian Adventures with the Idle Rich (Toronto: Bell and Cockburn, 1914).   5 David Tough, “‘Civilization Had Given Him a Vote’: Citizenship and the Ballot in Sara Jeannette Duncan’s The Imperialist,” Journal of Canadian Studies 40, 3 (Fall 2006): 120–34.   6 Eugene Forsey, in McGill News, Autumn 1937, 445–6, remarks on the absence of economic analysis. André Siegfried, The Race Question in Canada, trans. Anon. (Toronto: McClelland & Stewart, 1966); reviews of the book are collected together in Paris, Sciences Po, Centre d’histoire, archives André Siegfried. André Siegfried, Deux Mois en Amérique du Nord à la Veille de la Guerre (Paris: Armand Colin, 1916). See Sean Kennedy, “A Tocqueville for the North? André Siegfried and Canada,” Journal of the Canadian Historical Association, 14, 1 (2003): 117–36 and Gérard Bergeron, Quand Tocqueville et Siegfried nous observaient (Sillery: Presses de l’Université du Québec, 1990).  7 Myers, History of Canadian Wealth, 318–19.   8 In fact, Ashley studied at Heidelberg, but he read, translated, and claimed he learned more from Schmoller than from any other scholar: Bernard Semmel, “Sir William Ashley as ‘Socialist of the Chair,’” Economica, ns 24, 96 (November 1957): 343–53.   9 Adam Shortt, “The Nature and Sphere of Political Science,” Queen’s Quarterly 1, 2 (October 1893): 93–101. 10 Hugh Grant, W.A. Mackintosh: The Life of a Canadian Economist (Montreal & Kingston: McGill-Queen’s University Press, 2015), 42; Barry Ferguson, Remaking Liberalism: The Intellectual Legacy of Adam Shortt, O.D. Skelton, W.C. Clark and W.A. Mackintosh, 1890–1925 (Montreal & Kingston: McGill-Queen’s University Press, 1993), 51–2. 11 Rodgers, Transatlantic Crossings, 121–42; James Mavor, On Wage Statistics and Wage Theories (Glasgow: Robert Anderson, 1888), 6–8. 12 James Mavor, “The Relation of Economic Study to Public and Private Charity,” Annals of the American Academy of Political and Social Science 4 (July 1893): 39–40; Mavor, My Windows, 244; Fecteau, La Liberté du pauvre, 253; Hacking, Taming of Chance, 135–41; see also Thomas R.C. Gibson-Brydon, The Moral Mapping of Victorian and Edwardian London: Charles Booth, Christian Charity, and the Poor-but-Respectable, Hillary Kaell and Brian Lewis, eds. (Montreal and Kingston: McGill-Queen’s University Press, 2016). 13 James Mavor, “The Functions of the Municipality with Special Reference to Public Service,” in Clinton Rogers Woodruff, ed., Proceedings of the

530

Notes to pages 337–42

Chicago Conference for Good City Government and the Tenth Annual Meeting of the National Municipal League (Philadelphia: nml, 1904), 311–12; Nelles, Politics of Development, 405. 14 Peter Groenewegen, The Minor Marshallians and Alfred Marshall: An Evaluation (Abingdon: Routledge, 2012). 15 David A. Worton, The Dominion Bureau of Statistics: A Short History of Canada’s Central Statistical Office and Its Antecedents, 1841–1972 (Montreal & Kingston: McGill-Queen’s University Press, 1998), 28–9 and passim. 16 S.M. Wickett, “Political and Social Arithmatic,” in Appendix to the Report of the Ontario Bureau of Industries (1898), 3–9; see also S.M. Wickett, “Political Economy at German Universities,” 8, 29 (March 1898): 146–50. 17 Worton, Dominion Bureau of Statistics, 48–9. 18 Quoted in Worton, Dominion Bureau of Statistics, 51–2. 19 Krywulak, “Archaeology of Keynesianism,” 177–83; Stapleford, Cost of Living. 20 Laurence S. Moss, “The Seligman-Edgeworth Debate about the Analysis of Tax Incidence: The Advent of Mathematical Economics, 1892–1910,” History of Political Economy 35, 2 (2003): 205–40. 21 E.A. Ross, “Seligman’s ‘Shifting’ and Incidence of Taxation,” Annals of the American Academy of Political and Social Science 3 (January 1893), 53. 22 S.T. Wood, “Social Amelioration: The Contrast between Doing Good and Doing Right,” Canadian Magazine 11, 6 (October 1898): 461–6. 23 Trentmann, Free Trade Nation, 78–9. 24 Ferry, Uniting in Measures of Common Good, 220–5 and passim. 25 Oscar D. Skelton, General Economic History of the Dominion 1867–1912 (Toronto: Publisher’s Association, 1913), 202. 26 Thorstein Veblen, The Theory of the Leisure Class: An Economic Study of Institutions (New York: Macmillan , 1912), 82. 27 Myron J. Frankman, “Stephen Leacock, Economist: An Owl among the Parrots,” in David Staines, ed., Stephen Leacock: A Reappraisal (Ottawa: Ottawa University Press, 1986): 51–8; Terry Crowley, Marriage of Minds: Isabel and Oscar Skelton Reinventing Canada (Toronto: University of Toronto Press, 2003); Craven, Impartial Umpire. 28 Leacock, Arcadian Adventures. 29 John Davidson, “Luxury and Extravagance,” International Journal of Ethics 9, 1 (October 1898): 58. 30 Quebec Saturday Budget, 9 November 1889, Lecture by Goldwin Smith to the Associated Charities in Toronto. 31 Toronto Globe, 3 February 1894.



Notes to pages 343–8

531

32 J.W. Bengough, Cartoons of the Campaign. Dominion of Canada General Election, 1900 (reprint from the Toronto Globe; Toronto: Poole, 1900). 33 Borden, Memoirs; Robert Craig Brown, Robert Laird Borden, A Biography (Toronto, Macmillan, 1975 and 1980). 34 Canada, House of Commons Debates, 28 April 1896, 387–91. 35 Anon., Judas Iscariote Tarte: Sa carrière politique d’après divers auteurs (N.p., 1903) is rich with cartoons and jeremiads reflecting Tarte’s changing tariff politics. 36 J.W. Dafoe, Laurier: A Study in Canadian Politics (Toronto: Thomas Allen, 1922), 129–30. 37 Perry, Tariffs, Taxes, and Subsidies, 104. 38 Boston Evening Transcript, 11 June 1904. 39 Adam Shortt, “The Canadian Industrial Disputes Act,” American Economic Association Quarterly s3, 10, 1 (April 1909): 161–2, 170; Mary Van Kleeck, quoted in Craven, Impartial Umpire; Hodgetts et al., Biography of an Institution. 40 David Banoub, “The Patronage Effect: Civil Service Reforms, Job-Seeking, and State Formation in Victorian Canada” (PhD Dissertation, Carleton University, 2013), 127–8. 41 Naylor, History of Canadian Business, vol. 2, 207; Sueuchi, “Tariff Out of Politics,” 100; S.D. Clark, “The Canadian Manufacturers’ Association and the Tariff,” Canadian Journal of Economics and Political Science 5, 1 (February 1939): 28–9; “A Wrong Assumption,” Industrial Canada 4, 4 (November 1903): 201. 42 l ac, r 200-275-4e, Tariff Commission 1905–06, vol. 10, 547, 579. 60. 43 Ibid., 401, 484. The claim that the tariff was “educational” was aired frequently at the commission hearings and in wider public debate. 44 J. Castell Hopkins, ed., Canadian Annual Review of Public Affairs 1905, vol. 5 (Toronto: Annual Review Publishing Company, 1906), 136, quoted in Fergusson, Rt Hon. W.S. Fielding, Mr Minister of Finance (Windsor, ns: Lancelot Press, 1971), 27. 45 Hobson, Canada To-day, 138–9. 46 Skelton, General Economic History, 202. 47 Edward Porritt, The Revolt in Canada against the New Feudalism (London: Cassell, 1911), 30; Boston Evening Transcript, 2 October 1907. 48 Dafoe, Laurier: A Study in Politics. 49 Brown, Robert Laird Borden, vol. 1, 117. 50 James J. Harpell, Canadian National Economy: The Cause of High Prices and Their Effect upon the Country (Toronto: Macmillan, 1911), 9, 26. 51 Saint John Daily Sun, 8 April 1907.

532

Notes to pages 348–54

52 Naylor, History of Canadian Business, 14. 53 Taschereau, “Plutôt ‘s’endetter sur l’honneur,’” 396. 54 Hill, Voice of the Vanishing Minority, 220–4. 55 lac, rg200-275-4-e, Tariff Commission 1905–06, vol. 9, 159, 187; Harpell, Canadian National Economy, 125. A recent analysis is in Lyle Dick, Farmers “Making Good”: The Development of Abernethy District, Saskatchewan, 1880–1920 (Calgary: University of Calgary Press, 2008; 2nd ed.) 56 Western Home Monthly 10, 12 (December 1909): 1. 57 Patrice Dutil and David MacKenzie, Canada 1911: The Decisive Election that Shaped the Country (Toronto: Dundurn, 2011); Richard Johnston and Michael B. Percy, “Reciprocity, Imperial Sentiment, and Party Politics in the 1911 Election,” Canadian Journal of Political Science 13, 4 (December 1980): 711–29; Paul Stevens, ed., The 1911 General Election: A Study in Canadian Politics (Toronto: Copp Clark, 1970). 58 Patricia E. Roy, Boundless Optimism: Richard McBride’s British Columbia (Vancouver: u bc Press, 2012). 59 Miller, Knight in Politics, 70. 60 Brown, Robert Laird Borden, vol. 1, 26, 34. 61 Borden, Memoirs, vol. 1, 192–3. 62 Brown, Robert Laird Borden, vol. 1, 131. 63 Montreal Gazette, 15 and 21 September 1908. 64 Hobson, Canada To-day, 5. 65 Toronto Globe, 5 February and 31 January 1908, and passim through the late winter 1908. 66 Toronto World, 3 October 1912; Toronto Globe, 8 April 1908 and 19 November 1910. 67 Canada, Sessional Papers, 42 (1907–8), No. 29a, 969–70. 68 University of Toronto, Thomas Fisher Rare Books Library, James Mavor fonds, 119, box 70, Material Relating to the Cost of Living Study (Toronto); see also Thomas Adam, Buying Respectability: Philanthropy and Urban Society in Transnational Perspective, 1840s to 1930s (Bloomington: Indiana University Press, 2009), 81–2. 69 Andrew Macphail, Essays in Politics (Toronto: Longmans, Green & Co., 1909), 135–41. 70 Ian Ross Robertson, Sir Andrew Macphail: The Life and Legacy of a Canadian Man of Letters (Montreal & Kingston: McGill-Queen’s University Press, 2008), 104; Macphail, Essays in Politics, 152–8. 71 Toronto Star, 6 November 1908. 72 Industrial Canada, in Porritt, Revolt in Canada, 13–16.



Notes to pages 354–60

533

73 Skelton, General Economic History, 271. 74 Montreal Star, 12 April 1910. 75 Jeffrey M. Taylor, “The Language of Agrarianism in Manitoba, 1890–1925,” Labour / Le Travail 23 (Spring 1989): 117; Paul Frederick Sharp, The Agrarian Revolt in Western Canada (Regina: Canadian Plains Research Center, 1997; 2nd ed.), 48. See also John Frederick Conway, “To Seek a Goodly Heritage: The Prairie Populist Resistance to the National Policy in Canada” (PhD Dissertation, Simon Fraser University, 1978); David Laycock, Populism and Democratic Thought in the Canadian Prairies, 1910 to 1945 (Toronto: University of Toronto Press, 1990). 76 Glasgow Herald, 1 September 1910 contains detailed descriptions of the speeches. 77 David Tough, “The Rhetoric of Dominion Income Taxation and the Modern Political Imaginary in Canada, 1910–1945” (PhD Dissertation, Carleton University, 2013), 95; The Siege of Ottawa (Winnipeg: Grain Growers’ Guide, n.d.), 21–2 and passim. 78 Daunton, Trusting Leviathan and Wealth and Welfare, 473; Frank Trentmann, Free Trade Nation; Bruce K. Murray, The People’s Budget 1909–10: Lloyd George and Liberal Politics (Oxford: Clarendon Press, 1980). 79 Heath Macquarrie, “Robert Borden and the Election of 1911,” Canadian Journal of Economics and Political Science 25, 3 (August 1959): 272. 80 Robert D. Cuff, “The Conservative Party Machine and the Election of 1911 in Ontario,” Ontario History 57 (1965): 149–56 and “The Toronto Eighteen and the Election of 1911,” Ontario History 57, 3 (December 1965): 169–80. 81 Stevens, 1911 General Election, 48. 82 Dutil and MacKenzie, Canada 1911, 120–1. 83 Fergusson, Fielding, Mr Minister of Finance, 128–9; a ns mg 2 Fielding papers, vol. 521, 5128. See also Miller, Knight in Politics, 345–8. 84 James Livingston, Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890–1913 (Ithaca: Cornell University Press, 1986). 85 David Kimmel, “Sir Byron Edmund Walker,” dcb . 86 Dutil and MacKenzie, Canada 1911, 86–92. 87 Theodor D. Regher, “Zebulon Lash,” dcb ; R.B. Fleming, The Railway King of Canada: Sir William Mackenzie, 1849–1923 (Vancouver: ub c Press, 1991), 39. 88 lac , Sir Wilfrid Laurier Fonds, 180930–9. 89 lac mg 27 i i d 9 192, Albert Kemp fonds, Kemp to Borden, 1 February 1911.

534

Notes to pages 360–8

90 lac, rg43-a-I-2, Canadian Pacific Railway Taxation, vol. 211, file part 1, file 689. See also memos in lac, Sir Robert Borden fonds, 177787–837. 91 Clippingdale, Power of the Pen, 260–2. 92 David Kimmel, “Walker,” dcb ; see James L. Darroch, Canadian Banks and Global Competitiveness (Montreal & Kingston: McGill-Queen’s University Press, 1994): 168–210. 93 Toronto Star, 17 February 1911. 94 Toronto World, 20 February 1911; Stevens, 1911 General Election, 64. 95 Kemp papers, Kemp to Borden 20 February 1911 and Borden to Kemp, 21 February 1911. 96 Hall, Clifford Sifton: Lonely Eminence, 227–9; Stevens, 1911 General Election, 69–70. 97 Dutil and MacKenzie, Canada 1911, 105–7; Simon J. Potter, “The Imperial Significance of the Canadian-American Reciprocity Proposals of 1911,” Historical Journal 47, 1 (2004): 81–100. 98 Arthur Hawkes, “The Place of the British Born in the General Election,” unpaginated pamphlet (1911). 99 Dawson Daily News, 8 March 1911.On Sifton, Hall, Clifford Sifton, vols. 1–2; J.W. Dafoe, Clifford Sifton in Relation to His Times (Toronto: Macmillan, 1931). 100 Bliss, “Cox,” dcb . 101 Pittsburg Gazette Times, 3 December 1911; Dutil and MacKenzie, Canada 1911, 122. 102 Toronto World, 24 August 1911. 103 l ac , mg 27 i i d 9, Kemp fonds, vol. 194, “Political Speeches.” 104 Toronto World, 11 September 1911; Montreal Gazette, 6 September 1911. 105 In Dutil and MacKenzie, Canada 1911, 124. 106 Montreal Gazette, 6 September 1911. 107 Réal Bélanger, L’Impossible défi: Albert Sévigny et les conservateurs fédéraux (1902–1918) (Ste-Foy: Presses de l’Université Laval, 1983), 107; Roy, Progès, harmonie, liberté, 184. 108 Sylvie Taschereau, “Charles Chaput,” and René Castonguay, “Thomas Chase-Casgrain,” dcb . 109 Montreal Patrie, 17 and 18 September 1911. 110 Montreal Patrie, 7 September 1911. 111 L’Action Sociale, 2 and 16 September 1911. 112 Quebec Telegraph, 18 September 1911. See also John Turley-Ewart, “Gentleman Bankers: Politicians and Bureaucrats: The History of the Canadian Bankers’ Association, 1891–1924” (PhD Dissertation, University of Toronto, 2000), 190–2.



Notes to pages 368–75

535

113 Joseph Levitt, Henri Bourassa and the Golden Calf: The Social Program of the Nationalists of Quebec, 1900–1914 (Ottawa: University of Ottawa, 1969): 47–56. 114 Montreal Patrie, 5 September 1911. 115 Milwaukee Sentinel, 15 September 1911; Pittsburg Gazette Times, 15 September 1911; Dutil and MacKenzie, Canada 1911, 64. 116 l ac, Kemp fonds, Nichols to Kemp, 17 November 1910. 117 In L. Ethan Ellis, Reciprocity, 1911: A Study in Canadian-American Relations (New Haven: Yale University Press, 1939), 179. 118 Montreal Gazette, 26 August 1911. 119 Montreal Gazette, 23 February, 1 April, and 15 September 1911. 120 Le Pays, 24 August 1911. 121 Schull, Laurier, 531. 122 Dutil and MacKenzie, Canada 1911; Boston Evening Transcript, 12 September 1911. 123 Le Pays, 20, 8, and 5 September 1911. 124 Bliss, Flavelle, 217. 125 Boston Evening Transcript, 23 February 1911. 126 Macphail, Essays in Politics, 182. 127 Grain Growers’ Guide, 8 February 1911. 128 Western Home Monthly, September 1910, 24–5. Foster in a subsequent issue took a different position. 129 Dutil and MacKenzie, Canada 1911, 118, 180. 130 Montreal Gazette, 8 September 1911. 131 Toronto Star, 2 February and 2 March 1911. 132 Marchildon, Profit and Politics, 222–5; Pomfret, Economic Development of Canada, 171. 133 Max Aitken, Lord Beaverbrook, Friends: Sixty Years of Intimate Personal Relations with Richard Bedford Bennett (London: Heinemann, 1959). 134 Trentmann, Free Trade Nation; Daunton, Trusting Leviathan; Potter, “Imperial Significance.” 135 Quoted in the Waterloo Advertiser, 27 October 1911. 136 Montreal Gazette, 15 September 1911. 137 Borden, Memoirs, vol. 1, 326. 138 Montreal Gazette, 22 September 1911; Dutil and MacKenzie, Canada 1911; Ellis, Reciprocity, 1911, 181. 139 Montreal Gazette, 3 November 1979. 140 Boston Evening Transcript, 21 and 22 September 1911. 141 Andrew Macphail, McGill University Magazine 11 (February 1912), 32–3; Robertson, Sir Andrew Macphail.

536

Notes to pages 375–81

142 O.D. Skelton, American Economic Review 1, 2 (June 1911): 383–4 and “Canada’s Rejection of Reciprocity,” Journal of Political Economy, 19, 9 (November 1911): 726–31. 143 Ferguson, Remaking Liberalism, 143. 144 Macphail, “Theory and Practice,” McGill University Magazine 12 (October 1913): 382–7.

Chapter nine 1 Dutil and MacKenzie, Canada 1911, 293; Heath N. Macquarrie, “The Formation of Borden’s First Cabinet,” Canadian Journal of Economics and Political Science 23, 1 (February, 1957): 90–104. 2 Anon. “The Hon. W.T. White,” 530. 3 Turley-Ewart, “Gentleman Bankers,” 197. 4 Alain, “Sir Thomas White,” 41. 5 Bliss, Flavelle, 183. 6 Bliss, Northern Enterprise, 371. 7 W. Stewart Wallace, The Life of the Rt Hon. Sir George Foster (Toronto: Macmillan, 1933), 159–60. 8 Who Shall Rule? The People or the Big Interests? (Ottawa: Liberal Party, 1917), 24–6. 9 Waterloo Advertiser, 27 October 1911. 10 Toronto Telegram, 23 January 1913. 11 Naylor, History of Canadian Business, 77–8; see also Krywulak, “‘Archaeology of Keynesianism,” 58; Turley-Ewart, “Gentleman Bankers,” 206. Turley-Ewart sees a strong finance minister dictating terms to bankers. 12 E.P. Neufeld, The Financial System of Canada: Its Growth and Development (Toronto: Macmillan, 1972), 503–4. 13 Taylor and Baskerville, Concise History of Business, 254–5. 14 John Boyko, Bennett: The Rebel Who Challenged and Changed a Nation (Toronto: Key Porter, 2010), 76–9; Carman Miller, personal communication, re Borden. 15 Canada, House of Commons Debates, 20 November, 1911, 14–26; P.B. Waite, In Search of R.B. Bennett (Montreal & Kingston: McGillQueen’s University Press, 2012), 196. 16 Grain Growers’ Guide, 12 May 1912. 17 Courrier de l’Ouest, 5 September 1912; Grain Growers’ Guide, 10 April 1912, letters. 18 Grain Growers’ Guide, 29 May 1912.



Notes to pages 381–3

537

19 André Siegel and James Hull, “Made in Canada! The Canadian Manufacturers’ Association’s Promotion of Canadian-Made Goods, 1911– 1921,” Journal of the Canadian Historical Association 25, 1 (2014): 1–31. 20 Donica Belisle, “Crazy for Bargains: Inventing the Irrational Female Shopper in Modernizing English Canada,” Canadian Historical Review, 92, 4 (December 2011): 581–606. 21 Toronto Star, June 1912 passim; Carolyn Strange, Toronto’s Girl Problem: The Perils and Pleasures of the City, 1880–1930 (Toronto: University of Toronto Press, 1995), 116–17. 22 Linda Kealey, Enlisting Women for the Cause: Women, Labour, and the Left in Canada, 1890–1920 (Toronto: University of Toronto Press, 1998), 43–5. 23 Ibid., 81; Toronto World, 14 August 1912. 24 Toronto Star, 25 February 1910. 25 Armour and Trott, Faces of Reason, 134–5. 26 Mary Hallett and Marilyn Davis, Firing the Heather: The Life and Times of Nellie McClung (Saskatoon: Fifth House, 1993); Peter Campbell, Rose Henderson: A Woman for the People (Montreal & Kingston: McGillQueen’s University Press, 2010); Toronto World, 3 October 1919. 27 Toronto World, 29 March 1914. 28 Toronto Globe, 17 February 1910; see Heron, Lunch-Bucket Lives, 485–8 and Heron, “Allan Studholme,” dcb . 29 Toronto World, 5 November 1913 and 27 December 1912. 30 Nancy Christie and Michael Gauvreau, A Full-Orbed Christianity: The Protestant Churches and Social Welfare in Canada, 1900–1940 (Montreal & Kingston: McGill-Queen’s University Press, 1996); Elizabeth B. Mitchell, In Western Canada before the War: Impressions of Early Twentieth-Century Prairie Communities (Saskatoon: Western Producer Prairie Books, 1981), 127–44. 31 Year Book Containing the Report of the 20th Annual Meeting of the National Council of Women of Canada (Toronto: Parker Brothers, 1913); N.E.S. Griffiths, The Splendid Vision: Centennial History of the National Council of Women of Canada 1893–1993 (Ottawa: Carleton University Press, 1993). 32 David Frank, J.B. McLachlan: A Biography (Toronto: Lorimer, 1999), 151–3. 33 H. Clare Pentland, “The Western Canadian Labour Movement, 1897– 1919,” Canadian Journal of Political and Social Theory 3, 2 (Spring– Summer 1979): 54; Joe Cherwinski, “Early Working-Class Life on the Prairies,” in R. Douglas Francis and Howard Palmer, eds., The Prairie West: Historical Readings (Edmonton: Pica Pica Press, 1992; 2nd ed.).

538

Notes to pages 383–9

34 b c a , g r 786, bc Royal Commission on Taxation, evidence, 545–6, 679, 348, 299–300. 35 Carman Miller, “William Stevens Fielding,” dcb . 36 Ottawa Citizen, 20 June 1911. 37 E.g., The Voice, 29 November 1912, 6. 38 Toronto World, 14 November 1912. 39 Tim Cook, “‘Our First Duty Is to Win, at Any Cost’: Sir Robert Borden during the Great War,” Journal of Military and Strategic Studies 31, 3 (Spring 2011): 4. 40 Montreal Gazette, 4 November 1913. 41 Montreal Daily Mail, 2 December 1913. 42 Le Pays, 24 September 1914; see Dutil, Devil’s Advocate. 43 Montreal Gazette, 6 December 1913; Le Devoir, December 1913, passim; Paul-Andre Linteau, “Georges Pelletier et les questions économiques (1910– 1929), rhaf 23, 4 (1970): 583–600; Bélanger, Henri Bourassa, 462. 44 Montreal Le Canada, 20 April 1914. See also L’Acadien, 2 July 1914. 45 Quebec Daily Telegraph, 9 December 1913, Montreal Daily Mail, 10 December 1913. 46 Montreal Gazette, 13 December 1913. 47 Quebec Daily Telegraph, 28 November and 9 December 1913. 48 Canadian Municipal Journal 4, 10 (1908): 453–6. 49 Toronto World, 27 September 1913. 50 John C. Weaver, “Order and Efficiency: Samuel Morley Wickett and the Urban Progressive Movement in Toronto, 1900–1915,” Ontario History 69, 4 (December 1977): 226. 51 Canadian Municipal Statistics (Toronto: Wood, Gundy, & Company, 1917). 52 l ac , White fonds, 3 January 1918, 2757–8. 53 Toronto Bureau of Municipal Research, Archives of Toronto, Fonds 1003. 54 Finegold, Experts and Politicians, 182. 55 Vancouver Board of Trade, Notes on the Cost of Administration of the Province of British Columbia (Vancouver, March 1918); City of Vancouver Archives, Report of Joint Committee; Brittain, Report to the City of Vancouver on Methods of Municipal Taxation. 56 Montreal Daily Mail, 11 December 1913. 57 Paul Starr, The Social Transformation of American Medicine (New York: Basic Books, 1982); Harold Perkin, The Rise of Professional Society: England since 1880 (London: Routledge, 1989); Mark Humphries, The Last Plague: Spanish Influenza and the Politics of Public Health (Toronto: University of Toronto Press, 2013); Zaslow, Reading the Rocks; Jennifer M. Hubbard, A Science of the Scales: The Rise of Canadian Atlantic Fisheries Biology, 1898–1939 (Toronto: University of Toronto Press,



Notes to pages 390–4

539

2006); Mark Kuhlberg, One Hundred Rings and Counting: Forestry Education and Forestry in Toronto and Canada (Toronto: University of Toronto Press, 2009). On medical knowl­edge, Heaman, St Mary’s, 104. 58 On inscription devices, Bruno Latour and Steve Woolgar, Laboratory Life: The Construction of Scientific Facts (Los Angeles: Sage Publications, 1979); also Bruce Curtis, The Politics of Population: State Formation, Statistics, and the Census of Canada, 1830–1875 (Toronto: University of Toronto Press, 2001). 59 Toronto World, 26 January 1914. 60 Historical Souvenir Book (Toronto: ym c a , 1913). 61 Robert N. Proctor and Londa Schiebinger, eds., Agnotology: The Making and Unmaking of Ignorance (Redwood City: Stanford University Press, 2008). 62 ao, Whitney fonds, Whitney to Cochrane, 11 March 1913. 63 Quebec Daily Telegraph, 22 December 1913; Montreal Daily Mail, 11 December 1913. 64 Bryce, Maturing in Hard Times, 19. 65 Perry, Taxes, Tariffs and Subsidies; Richard Krever, “The Origin of Federal Income Taxation in Canada,” Canadian Taxation 3, 4 (Winter 1981): 170– 88; Tough, “The rich … should give”; Shirley Tillotson, The Power to Govern: Taxation and Democracy in Canada, 1967–1971 (Vancouver: ub c Press, forthcoming). 66 Turley-Ewart, “Gentleman Bankers,” Bliss, Flavelle. 67 Canadian Municipal Association Journal 10 (October 1914): 395–7, in McGill University, rbs c, Union of Canadian Municipalities. 68 Carman Miller, Painting the Map Red: Canada and the South African War 1899–1902 (Montreal & Kingston: McGill-Queen’s University Press, 1993), 432; Nancy Christie, Engendering the State: Family, Work, and Welfare in Canada (Toronto: University of Toronto Press, 2000); Desmond Morton, Fight or Pay: Soldiers’ Families in the Great War (Vancouver: ub c Press, 2004). 69 Mourad Djebabla-Brun, Combattre avec les vivres: L’effort de guerre alimentaire candien en 1914–1918 (Montreal: Septentrion, 2015). See also Caroline Durand, Nourrir la machine humaine: Nutrition et alimentation au Québec, 1860–1945 (Montreal & Kingston: McGill-Queen’s University Press, 2015). 70 Board of Inquiry into Cost of Living, Report of the Board (Ottawa: King’s Printer, 1915), vol. 2, 2; see Worton, Dominion Bureau of Statistics; Bryan Palmer, Working Class Experience: Rethinking the History of Canadian Labour, 1800–1991 (Toronto: McClelland & Stewart, 1992), 164; Bettina Liverant, “The Promise of a More Abundant Life: Consumer Society and the Rise of the Managerial State,” Journal of the Canadian Historical Association 19, 1 (2008): 229–51.

540

Notes to pages 395–9

71 Monod, Store Wars, 131. 72 Board of Inquiry, Report of the Board, vol. 2, 1065–6. 73 Speaking in New Brunswick, Montreal Gazette, 4 December 1917. 74 Ian Hugh Maclean Miller, Our Glory and Our Grief: Torontonians and the Great War (Toronto: University of Toronto Press, 2002), 173–4. 75 Anne Loft, “Towards a Critical Understanding of Accounting: The Case of Cost Accounting in the U.K., 1914–1925,” Accounting Organizations and Society 11, 2 (January 1986): 137–69; Theodore M. Porter, Trust in Numbers: The Pursuit of Objectivity in Science and Public Life (Princeton: Princeton University Press, 1995), 97. 76 Industrial Canada, 5 (April 1905): 538–9; Craven, Impartial Umpire, 99. 77 A.C. Pigou, The Economy and Finance of the War (London: Dent, 1916); Review by F.Y. Edgeworth, The Economic Journal 26, 102 (June 1916): 223–7. 78 Leslie Thomas Fournier is highly critical of White: “Canadian Federal Finance during the Great War” (M A Thesis, ubc, 1923), 52–4; Dan Usher, “The Rise and Fall of the Public Sector in the Estimation of the Economists,” in Athanasios Asimakopulos, Robert D. Cairns, and Christopher Green, eds., Economic Theory, Welfare and the State (London: Macmillan, 1990): 28–62. 79 Michael Hudson, Killing the Host: How Financial Parasites and Debt Destroy the Global Economy (Petrolia: Nation Books, 2015). 80 Henry F. Grady, “British War Finance 1914–1919” (PhD Dissertation, Columbia University, 1927), 98–103; Martin Horn, Britain, France, and the Financing of the First World War (Montreal & Kingston: McGillQueen’s University Press, 2002); Toronto Globe, 7 May 1917. 81 Steinmo, Taxation and Democracy, 75–6. 82 Mehrotra, Making the Modern American Fiscal State, 299–301, 325–6. 83 Queen’s Quarterly 20 (July 1912): 112–13; Ferguson, Remaking Liberalism, 169. 84 W.J.A. Donald, “Canadian Financial Problems,” Journal of Political Economy 23, 8 (October 1915): 759. 85 Kotsonis, States of Obligation, 208 and passim, Perry, Taxes, Tariffs, I, 624–7. 86 J. Stephen Ferris, Stanley L. Winer, and Bernard Grofman, “Do departures from democratic accountability compromise the stability of public finances? Keynesianism, central banking, and minority governments in the Canadian system of party government, 1867–2009,” Revised conference paper presented at New Perspectives on Public Debt, University of Rome, September 2011, 14. 87 J.J. Deutsch, “War Finance and the Canadian Economy,” Canadian Journal of Economics and Political Science 6, 4 (November 1940): 531, 537, passim.



Notes to pages 399–402

541

88 Silver, French-Canadian Idea. 89 Bélanger, Henri Bourassa, 384–99. 90 Patrice A. Dutil, “Against Isolationism: Napoléon Belcourt, French Canada, and ‘La grande guerre,’” in David MacKenzie, ed., Canada and the First World War: Essays in Honour of Robert Craig Brown (Toronto: University of Toronto Press, 2005), 96–137; Prang, N.W. Rowell; Lévesque, Histoire du parti libéral. 91 Elizabeth H. Armstrong, The Crisis of Quebec 1914–18 (New York: Columbia University Press, 1937), 95. See also Marcel Martel and Martin Pâquet, Speaking Up: A History of Language and Politics in Canada and Quebec, trans. Patricia Dumas (Toronto: Between the Lines, 2012). 92 Armstrong, Crisis of Quebec, 140. 93 Chad Gaffield, Language, Schooling, and Cultural Conflict: The Origins of the French-Language Controversy in Ontario (Montreal & Kingston: McGill-Queen’s University Press, 1987), 186. 94 Krever, “Origin of Federal Income Taxation in Canada,” 178–9. 95 Miller, Knight in Politics, 357–8. 96 nsa , m g 2, Fielding papers, vol. 524, folder 92. 97 Norman Hillmer, O.D. Skelton: A Portrait of Canadian Ambition (Toronto: University of Toronto Press, 2015), 50–7. 98 O.D. Skelton, “Are We to Have a Federal Income Tax?” Monetary Times 55, 17 (October 1915): 5–7. 99 Robert A. Wardhaugh, Behind the Scenes: The Life and Work of William Clifford Clark (Toronto: University of Toronto Press, 2010), 14–21. 100 Bradford James Rennie, The Rise of Agrarian Democracy: The United Farmers and Farm Women of Alberta (Toronto: University of Toronto Press, 2000), 124. 101 lac , Borden fonds, W.D. Lamb to Borden, January 1917, 105779–84, 26 May 1917, 105826–30. 102 Grain Growers’ Guide, 24 February 1915 and 4 October 1916. See Djebabla-Brun, Combattre avec les vivres, 316–17. 103 David Bright, The Limits of Labour: Class Formation and the Labour Movement in Calgary, 1883–1929 (Vancouver: ub c Press, 1998), 116–17. 104 Sharp, Agrarian Revolt, 57–60; Michael J. Lansing, Insurgent Democracy: The Nonpartisan League in North American Politics (Chicago: University of Chicago Press, 2015), 53–4. 105 Rennie, Rise of Agrarian Democracy, 165–6. 106 Allen Seager and David Roth, “British Columbia and the Mining West: A Ghost of a Chance,” in Craig Heron, ed., The Workers’ Revolt in Canada, 1917–1925 (Toronto: University of Toronto Press, 1998), 243.

542

Notes to pages 402–8

107 City of Calgary Archives, City Clerk’s Department fonds, Correspondence Series iii, Box 113, contains the correspondence from 1917. 108 l ac , White fonds, 1, 376–7. 109 Toronto Globe, 1 March 1917. 110 Sharp, Agrarian Revolt, 85; Laycock, Populism and Democratic Thought, 60. 111 Martin Robin, Radical Politics and Canadian Labour 1880–1930 (Kingston: Queen’s University Industrial Relations Centre, 1968), 133. 112 Montreal Daily Mail, 19 May 1915. 113 James Thwaites, “La grève au Québec: Une analyse quantitative exploratoire portant sur la période 1896–1915,” Labour / Le Travail 14 (Fall 1984): 185. 114 Pascale Ryan, Penser la nation: La ligue d’action nationale 1917–1960 (Montreal: Lémeac, 2006), 23–4; Jean-Claude St-Amant, “La propagande de l’Ecole sociale populaire en faveur du syndicalisme catholique 1911– 1949,” rhaf 32, 2 (1978): 203–28. 115 Geoffrey Ewen, “Quebec: Class and Ethnicity,” in Heron, ed., Workers’ Revolt, 87–143. See also Babcock, Gompers in Canada, 129 on Quebec’s resistance to the afl. 116 Brock Millman, Polarity, Patriotism, and Dissent in Great War Canada, 1814–1919 (Toronto: University of Toronto Press, 2016). 117 Palmer, Working Class Experience, 196, 181. 118 Ian McKay, “For a New Kind of History: A Reconnaissance of 100 Years of Canadian Socialism,” Labour / Le Travail 46 (Fall 2000): 69–125. 119 Heron, Lunch-Bucket Lives and his “National Contours: Solidarity and Fragmentation,” in Workers’ Revolt, 276. 120 Campbell, Rose Henderson, 49–55. 121 Mitchell, In Western Canada before the War, 203–4. 122 R.T. Naylor, “The Canadian State, the Accumulation of Capital, and the Great War,” Journal of Canadian Studies 16, 3 (Fall 1981): 26–55; Christopher Armstrong, Blue Skies and Boiler Rooms: Buying and Selling Securities in Canada, 1870–1940 (Toronto: University of Toronto Press, 1997): 73–90. 123 Sir Thomas White, The Story of Canada’s War Finance (Montreal: 1921), 33–4. 124 Alain, “Sir Thomas White,” 92–3; University of Toronto, Thomas Fisher Rare Book Library, Sir Byron Edmund Walker fonds, ms coll. 1, box 13. 125 Canada, House of Commons Debates, 26 January 1917, 178; Krever, “Origin of Federal Income Taxation,” 183. 126 Stephen Leacock, “Our Organization for the War,” in J.O. Miller, ed., The New Era in Canada: Essays Dealing with the Upbuilding of the



Notes to pages 408–14

543

Canadian Commonwealth (London: J.M. Dent & Sons, 1917), 431; Toronto World, 2 March 1917. 127 Viscount Byng, speaking several years later, quoted in Jonathan Vance, Death So Noble: Memory, Meaning, and the First World War (Vancouver: ub c Press, 1997), 233. 128 Montreal Gazette, 30 April 1917. 129 Monetary Times, 27 April 1917, 14; Piva, Borrowing Process, 125. 130 Montreal Le Canada, 21 January 1918. 131 C.A. Curtis, “The Canadian Banks and War Finance,” Contributions to Canadian Economics 3 (1931): 32 and passim. 132 Toronto World, 19 October 1916. 133 Alain, “Sir Thomas White,” 166. 134 Bliss, Flavelle, 297–301. 135 Alain, “Sir Thomas White,” 163. 136 Canada, House of Commons Debates, 23 May 1917, 1701–2. 137 Canada, House of Commons Debates, 22–23 May 1917, 1679–80, 1631. 138 Robert Bothwell and Susan Colbourn, “Canada and the British Commonwealth in the Great War: An Historiographical Review,” Histoire@Politique 1, 22 (2014): 11. 139 A.M. Willms, “Conscription 1917: A Brief for the Defence,” Canadian Historical Review 37, 4 (December 1956): 340. 140 In the Toronto Globe, 9 June 1917. 141 Borden fonds. See also Fournier, “Canadian Federal Finance,” 30–1. 142 l ac, Borden fonds, Percy Cowans to Robert Rogers, 19 May 1917, 105799. 143 Toronto Globe, 18 January 1917. 144 l ac, Borden fonds, J.P. Bell and A.K. Bunnell to Borden, 28 May 1917, 105806–14. 145 q ua , Flavelle fonds, 2237–46, Flavelle to White, 21 April and undated April. 146 Tim Cook, Warlords: Borden, Mackenzie King, and Canada’s World Wars (Toronto: Penguin Canada, 2012), 95. 147 Toronto World, 23 February 1917; English, Decline of Politics, 101. 148 l ac, Kemp fonds, Hughes to Kemp, March 1910; Kemp to M.E. Nichols, 21 November 1910. 149 Kenneth Scheve and David Stasavage, “The Conscription of Wealth: Mass Warfare and the Demand for Progressive Taxation,” International Organization 64 (Fall 2010): 529–61 and their Taxing the Rich; Pierre Rosenvallon, The Society of Equals, trans. Arthur Goldhammer (Cambridge: Harvard University Press, 2013), 169, 183–8. 150 Alain, “Sir Thomas White,” 117–18.

544

Notes to pages 414–20

151 l ac , Borden fonds, 4316–18, White to Borden, 8 June 1917. 152 Brown, Robert Laird Borden; John English, “Political Leadership,” in MacKenzie, ed., Canada and the First World War. 153 Montreal Daily Mail, 11 June 1917. 154 Krever, “Origin of Federal Income Taxation,” 186; Grain Growers’ Guide, 20 June and 18 July 1917. 155 Manitoba Free Press, 13 July 1917, in Robert S. Prince, The Mythology of the War: How the Canadian Daily Newspaper Depicted the Great War (PhD Dissertation, University of Toronto, 1998). 156 Ottawa Citizen, 11 June 1917. 157 Toronto World, 14 June 1917; Toronto Globe, 16 June 1917. 158 Montreal Gazette, 23 June 1917. 159 Toronto Globe, 11 July 1917. 160 l ac , Borden fonds, White to Perley, 3 July 1917, 105839. 161 l ac , White fonds, 4215–47. 162 l ac , Borden fonds, Memo 42734. 163 Bliss, Flavelle; London Times, 4 June 1917. 164 Djebabla-Brun, Combattre avec les vivres, 307–8, 312, 317, 327. 165 W.R. Young, “Conscription, Rural Depopulation, and the Farmers of Ontario, 1917–19” Canadian Historical Review 53, 3 (September 1972), 302; Rennie, The Rise of Agrarian Democracy, 123. 166 Bliss, Flavelle, 336–40; R.T. Naylor, Dominion of Debt: Centre, Periphery and the International Economic Order (Toronto: Black Rose, 1985), 81. 167 l ac , White fonds, 4248–9. 168 Montreal Le Canada, 29 October 1917; see Tim Cook, The Madman and the Butcher: The Sensational Wars of Sam Hughes and General Arthur Currie (Toronto: Penguin Canada, 2010). 169 Anthony Mardiros, William Irvine: The Life of a Prairie Radical (Toronto: James Lorimer, 1979), 59–60; Christie and Gauvreau, FullOrbed Christianity. 170 Rutherdale, Hometown Horizons, 166–77. 171 James Naylor, The New Democracy: Challenging the Social Order in Industrial Ontario, 1914–25 (Toronto: University of Toronto Press, 1991), 95; Martin Robin, “Registration, Conscription, and Independent Labour Politics, 1916–1917,” Canadian Historical Review 47, 2 (June 1966): 101–18. 172 Heron, “National Contours,” 269, 275. 173 Ian McKay and Suzanne Morton, “The Maritimes: Expanding the Circle of Resistance,” in Heron, ed., Workers’ Revolt, 49–55; lac, r g 10, vol. 989, 1202819. 174 Sir Edmund Walker, “East and West,” in Miller, ed., New Era in Canada, 147–52.



Notes to pages 420–7

545

175 Reinhold Kramer and Tom Mitchell, When the State Trembled: How A.J. Andrews and the Citizens’ Committee Broke the Winnipeg General Strike (Toronto: University of Toronto Press, 2010). 176 Canada, House of Commons Debates, 11 May 1917, 1641. 177 Alain, “Sir Thomas White,” 170. 178 Barbara Ann Roberts, Whence They Came: Deportation from Canada, 1900–1935 (Ottawa: University of Ottawa Press, 1998), 82; Gregory Kealey, “State Repression of Labour and the Left 1914–1920: The Impact of the First World War,” Canadian Historical Review 73, 3 (1992): 282– 314; Millman, Polarity, Patriotism, and Dissent. 179 In McCormack, Reformers, Rebels, and Revolutionaries, 129. 180 James Mavor, Government Telephones: The Experience of Manitoba (Toronto: Macmillan, 1916), 163. 181 Toronto World, 13 November 1916. 182 l ac, Kemp fonds, vol. 194, “Political Clippings 1897–1929,” has the Toronto News, Telegram, and Mail and Empire for 17 April 1914. 183 l ac, White fonds, 7198–9 (Lash), 7044–6 (Flavelle), 7035–6 (Bennett), 7055–6, 7087 (Meighen). 184 l ac, White fonds, 8328–35, 8892–5. 185 Roger Graham, Arthur Meighen, A Biography: The Door of Opportunity (Toronto: Clarke, Irwin, 1960), 95; Turley-Ewart, “Gentleman Bankers,” 217; see Naylor, History of Canadian Business, vol. 1 and vol. 2, 288. 186 English, Decline of Politics, 148; Don Nerbas, Dominion of Capital: The Politics of Big Business and the Crisis of the Canadian Bourgeoisie 1914– 1947 (Toronto: University of Toronto Press, 2013), 122. 187 Fleming, Railway King of Canada, 225. 188 l ac, White fonds, 8751, Shaughnessy to White, 13 January 1914. 189 l ac, White fonds, 12228, White to Foster, 26 April 1917. 190 Graham, Arthur Meighen, 153–9; Canada, House of Commons Debates, 8 August 1917, 4275, 4277, and passim. 191 l ac, White fonds, McLennan to White, 21 September 1917. 192 Manifestos by Rt Hon. Sir Robert Laird Borden, 1916–17 (Ottawa: King’s Printer, 1918), 11–16; also in J. Castell Hopkins, The Book of the Union Government: A Record and Souvenir of 1917 (Toronto: Annual Review Publishing Company, 1918), 46–8. 193 Quebec Daily Telegraph, 19 October 1917; Brown, Robert Laird Borden, vol. 2, 97, 111–12. 194 l ac, White fonds, 1062–72. 195 Monod, Store Wars, 135. 196 James. M. Pitsula, For All We Have and Are: Regina and the Experience of the Great War (Winnipeg: University of Manitoba Press, 2008), 175.

546

Notes to pages 427–32

Similar tensions are noted in Nathan Smith, “Comrades and Citizens: Great War Veterans in Toronto, 1915–1919” (PhD Dissertation, University of Toronto, 2012). 197 Lara Campbell, “‘We Who Have Wallowed in the Mud of Flanders’: First World War Veterans, Unemployment and the Development of Social Welfare in Canada, 1929–1939,” Journal of the Canadian Historical Association 11, 1 (2000): 125–49. 198 Bélanger, L’Impossible défi, 168 and passim. 199 John Herd Thompson, The Harvests of War: The Prairie West, 1914–1918 (Toronto: McClelland & Stewart, 1978), 87–94. 200 Bélanger, Henri Bourassa, 409. 201 Brian Cameron, “The Bonne Entente Movement, 1917–1917: From Cooperation to Conscription,” Journal of Canadian Studies 13, 2 (Summer 1978): 44–5 and passim. See also Robert Rutherdale, Hometown Horizons: Local Responses to Canada’s Great War (Vancouver: ubc Press, 2004), 157–9. 202 Cameron, “Bonne Entente Movement,” 50. 203 Morton, Fight or Pay, 176. 204 Réal Bélanger, Paul-Émile Lamarche: Le pays avant le parti, 1904–1918 (Ste-Foy: Presses de l’Université Laval, 1984); Nelson Michaud, L’Énigme du sphinx: Regards sur la vie politique d’un nationaliste (1910–1926) (Ste-Foy: Presses de l’Université Laval, 1998). 205 Jeff Keshen, Propaganda and Censorship during Canada’s Great War (Edmonton: University of Alberta, 1996). 206 Montreal Le Canada, 9, 19, 27 October 1917. 207 Edouard Montpetit, Notre Avenir: L’Enseignement professionnel et la constitution d’une élite (Montreal: Revue Trimestrielle Canadienne, 1917); Yvan Lamonde, Histoire sociale des idées au Québec, 1896–1929 (Montreal: Fides, 2004), vol. 2, 127, 148. 208 Morton, Fight or Pay, 176. 209 Montreal Gazette, 26 March 1917. 210 Georges Pelletier, Tout est cher … Pourquoi? (Montreal: Devoir, 1917), iii; Linteau, “Georges Pelletier,” dcb . 211 Quebec Daily Telegraph, 11 December 1917. 212 Mason Wade, The French Canadians 1760–1967 (Toronto: Macmillan, 1968), vol. 2, 160; André Siegfried also took that view: see Jacques Michel, La Participation des Canadiens français à la Grande Guerre (Montreal: Éditions de l’A.C.F., 1938), 54, 66. 213 Canada, House of Commons Debates, 18 June 1917, 2397–8. See also English, Decline of Politics, 130–1.



Notes to pages 432–40

547

214 Canada, House of Commons Debates, 18 June 1917, 2409–10, 2426–7. Borden’s views were expressed in a letter to Sir Charles Hibbert Tupper in January 1917: “The vision of the French Canadian is very limited. He is not well informed and he is in a condition of extreme exasperation by reason of fancied wrongs supposed to be inflicted upon his compatriots in their provinces, especially Ontario.” English, Decline of Politics, 124–5. 215 J.E. Rea, T.A. Crerar: A Political Life (Montreal & Kingston: McGillQueen’s University Press, 1997), 44. 216 Donald Wright, “Donald Creighton,” dcb and Donald Creighton: A Life in History (Toronto: University of Toronto Press, 2015). 217 Brown, Robert Laird Borden, vol. 2, 38–40; Ramsay Cook, “Dafoe, Laurier, and the Formation of Union Government,” Canadian Historical Review 42, 3 (September 1961): 208. 218 English, Decline of Politics, 141–4; Hall, Clifford Sifton: Lonely Eminence. 219 Djebabla-Brun, Combattre avec les vivres, 341–3. 220 Naylor, New Democracy, 99. 221 Kerry Badgeley, Ringing in the Common Love of Good: The United Farmers of Ontario, 1914–1916 (Montreal & Kingston: McGill-Queen’s University Press, 2000), 62; Thompson, Harvests of War. 222 Toronto Globe, 3 November 1917. 223 Norman Hillmer, O.D. Skelton: A Portrait of Canadian Ambition (Toronto: University of Toronto Press, 2015), 57. See also Ferguson, Remaking Liberalism, 145. 224 Skelton, Life and Letters of Laurier, vol. 2, 535–6. 225 Hall, Clifford Sifton: Lonely Eminence, 290; English, Decline of Politics, 196. 226 Toronto World, 20 December 1917. 227 Quoted in Macpherson, Democracy in Alberta, 39. 228 William Irvine, The Farmers in Politics (Toronto: Macmillan, 1920), 108–10, 81. 229 In Noel, Patrons, Clients, Brokers, 140. 230 Brown, Robert Laird Borden, vol. 2, 114. 231 Graham, Arthur Meighen, 147. 232 Skelton, Life and Letters of Laurier, vol. 2, 537; Patricia Dirks, “George Augustus Warburton,” dcb . 233 Toronto Globe, 12 December 1917. 234 A O , Series C 233-2-6, Citizens’ Union Committee, images I0016372, I0016368, and I0016373. 235 McKay, “Strikes in the Maritimes, 1901–1914,” in Buckner and Frank, eds., Acadiensis Reader, 217; Geoffrey Ewen, “Quebec: Class and

548

Notes to pages 440–3

Ethnicity,” in Heron, ed., Workers’ Revolt, 99; Donald Avery, ‘Dangerous Foreigners’: European Immigrant Workers and Labour Radicalism in Canada, 1896–1932 (Toronto: McClelland & Stewart, 1979). 236 Calgary Archives, City Clerk’s Department fonds, correspondence, series i i i , box 113, file 799 loose clippings. 237 Cook, Warlords, 116; Leacock, “Our Organization for the War,” 415; Djebabla-Brun, Combattre avec les vivres, 298–300; Badgeley, Ringing in the Common Love of Good, 79. 238 J.L. Granatstein and J.M. Hitsman, Broken Promises: A History of Conscription in Canada (Toronto: Oxford University Press, 1977); Willms, “Conscription 1917”; Cook, “Dafoe, Laurier”; Charles-Philippe Courtois and Laurent Veyssière, eds., Le Québec dans la grande guerre: Engagements, refus, héritages (Quebec: Septentrion, 2015). 239 Cook, “Dafoe, Laurier,” 198; Granatstein and Hitsman, Broken Promises, 82. 240 Clippingdale, Power of the Pen, 324–5; English, Decline of Politics, 113–15. 241 Sir J.S. Willison, “Immigration and Settlement,” in Miller, ed., New Era in Canada, 121. 242 Montreal Le Canada, 22 January 1918; Montreal Gazette, 9 November 1911. More generally, see Tarah Brookfield, “Divided by the Ballot Box: The Montreal Council of Women and the 1917 Election,” Canadian Historical Review 89, 2 (December 2008): 473–501. 243 McGill Daily, 1 December 1917. 244 Wright, Professionalization of History; Robert Bothwell, Laying the Foundation: A Century of History at University of Toronto (Toronto: University of Toronto Press, 1991); Alan Franklin Bowker, “Truly Useful Men: Maurice Hutton, George Wrong, James Mavor and the University of Toronto, 1880–1927” (PhD Dissertation, University of Toronto, 1975), 219. 245 Bowker, “Truly Useful Men,” 221. 246 George M. Wrong, “The Bi-Lingual Question,” in Miller, ed., New Era in Canada, 229–62; English, “Political Leadership,” 84–5; George M. Wrong, et al., The Federation of Canada 1867–1917 (Toronto: University of Toronto Press, 1917), 12–33. 247 Toronto Star, 12 December 1917. 248 Winnipeg Telegram, 14 December 1917, quoted in Thompson, Harvests of War, 137; on Nichols: W.H. Kesterton, A History of Journalism in Canada (Toronto: Macmillan, 1978; 1st pub. 1967), 99; Gene Allen, Making National News: A History of Canadian Press (Toronto: University of Toronto Press, 2013), 44. 249 Hopkins, Book of the Union Government, 74.



Notes to pages 443–8

549

250 Ibid., 73–5. 251 Roderick Stewart, Wilfrid Laurier (Toronto: Dundurn, 2002), 135; Graham, Arthur Meighen, A Biography, 190. 252 Toronto Globe, 7–8 December 1917; Prang, N.W. Rowell; McGowan, Waning of the Green, 280. 253 Allen, Making National News; Keshen, Propaganda and Censorship, 56–7. 254 Cook, Warlords, 120. 255 Montreal Le Canada, 25 October 1917 and 24 January 1918. 256 Montreal Le Canada, 8 October 1917, quoting the Guardian of 8 September 1917. 257 Granatstein and Hitsman, Broken Promises, 78; Armstrong, Crisis of Quebec; Bélanger, L’Impossible défi; H. Blair Neatby, Laurier and a Liberal Quebec (Ottawa: Carleton Library, 1973). 258 Laurier wrote to Newton Rowell on 4 July 1917: “I have evidences coming to me every day that certain railway interests are actively at work amongst our friends still.” Though he does not name the interests, Dafoe understands the reference as being to the Canadian Northern. Dafoe, Clifford Sifton, 433. 259 Toronto Globe, 18 September 1919; Prang, N.W. Rowell, 240–2. 260 Paul Bernier, Ernest Lapointe, Député de Kamouraska 1904–1919 (La Pocatière: La société historique de la côte-du-sud, 1979), 148; Lita-Rose Betcherman, Ernest Lapointe, Mackenzie King’s Great Quebec Lieutenant (Toronto: University of Toronto Press, 2002). 261 Canada, House of Commons Debates, 8 August 1917, 4278–9; Graham, Arthur Meighen, 154. 262 Hopkins, Book of the Union Government, 95. 263 David MacKenzie, “Maritime Canada and Newfoundland,” in MacKenzie, ed., Canada and the First World War, 365; English, Decline of Politics, 174. 264 n sa , m g 2, Fielding papers, vol. 524, 96, 5959; Quebec Morning Chronicle, 24 October 1917. 265 Andrew Theobald, “Une Loi Extraordinaire: New Brunswick Acadians and the Conscription Crisis of the First World War,” Acadiensis 34, 1 (Autumn 2004): 80–95, and The Bitter Harvest of War: New Brunswick and the Conscription Crisis of 1917 (Fredericton: Goose Lane, 2008). 266 Granatstein and Hitsman, Broken Promises, 82. 267 Prang, N.W. Rowell, 226. 268 Brian Douglas Tennyson, Canada’s Great War 1914–1918: How Canada Helped Save the British Empire and Became a North American Nation (London: Rowman & Littlefield, 2015), 108. 269 Armstrong, Crisis of Quebec, 213–25.

550

Notes to pages 449–53

270 William Lyon King, Industry and Humanity: A Study in the Principles Underlying Industrial Reconstruction (Toronto: Thomas Allen, 1918), 144. See Craven, Impartial Umpire; Reginald Whitaker, “The Liberal Corporatist Ideas of Mackenzie King,” Labour / Le Travail 2 (1977): 137– 69; F.A. McGregor, The Fall & Rise of Mackenzie King: 1911–1919 (Toronto: Macmillan, 1962); Terence A. Crowley, “Mackenzie King and the 1911 Election,” Ontario History 61, 4 (December 1969): 181–95. 271 Betcherman, Ernest Lapointe, 23–34. 272 Ewen, “Quebec: Class and Ethnicity,” in Heron, ed., Workers’ Revolt, 129–33 and passim. 273 English, Decline of Politics, 159; Robert A. Wardhaugh, Mackenzie King and the Prairie West (Toronto: University of Toronto Press, 2000), 27. 274 Sir Robert Borden, Problem of an Efficient Civil Service (Ottawa: Acland, 1931); Helaina Gaspard, “Canada’s Official Languages Policy and the Federal Public Service,” in Linda Cardinal and Selma K. Sonntag, eds., State Traditions and Language Regimes (Montreal & Kingston: McGillQueen’s University Press, 2015), 193–4; Betcherman, Ernest Lapointe, 77; Alasdair Roberts, So-Called Experts: How American Consultants Remade the Canadian Civil Service 1918–21 (Toronto: Institute of Public Administration of Canada, 1996). 275 Banoub, “Patronage Effect,” 184. 276 Saint John Morning Freeman, 12 March 1868. 277 E.R. Forbes, “The Origins of the Maritime Rights Movement,” Acadiensis v, 1 (Autumn 1975): 54–66. 278 Stephen Leacock, The Unsolved Riddle of Social Justice (New York: John Lane, 1920), 132, 141. 279 Tillotson, Power to Govern. 280 E.P. Neufield, The Financial System of Canada: Its Growth and Development (Toronto: Macmillan, 1972), 505; Pomfret, Economic Development of Canada, 179. 281 Sandy Brian Hager, “What Happened to the Bondholding Class? Public Debt, Power and the Top One Percent,” New Political Economy 19, 2 (2014): 155–82. 282 Piketty, Capital; Graeber, Debt. 283 I.W. Killam, The Case against Tax-Exempt War Bonds (N.p.: September 1918). 284 Borden’s observation to Rowell in September 1918: Alain, “Sir Thomas White,” 201. 285 Ferguson, Remaking Liberalism, 166. 286 Toronto World, 8 May 1918. Clark briefly joined Crerar’s Progressive Party but was back in the Liberal fold by 1921.



Notes to pages 453–9

551

287 Montreal Le Canada, 15 November 1917. See also Toronto World, 16 September 1918. 288 Badgeley, Ringing in the Common Love of Good, 62. 289 O.D. Skelton, “Federal and Provincial Finance,” Monetary Times 62, 1 (3 January 1919): 108. 290 Byron Lew and Marvin McInnis, “Guns and Butter: World War I and the Canadian Economy” (Working Paper, Trent Department of Economics, 2005) 25. 291 Ibid., 39. 292 Bliss, Northern Enterprise; Piketty, Capital, 316. 293 St John’s City Government,” New Brunswick Magazine 5, 3 (April 1905): 186–92; Murray, “Local Government in the Maritime Provinces,” in Wickett, ed., Municipal Government in Canada, 65. 294 Saint John, Report of the Civic Assessment Commission (September 1916), 64–5. 295 Michel Foucault, Power / Knowl­edge: Selected Interviews and Other Writings, 1972–1977, ed. and trans. Colin Gordon (New York: Pantheon Books, 1980). 296 Daniel C. Goodwin, “The Origins and Development of Wilfrid Currier Keirstead’s Social and Religious Thought,” Acadiensis 37, 2 (Summer / Fall 2008): 11 and passim; J.R.P. “Wilfrid Currier Keirstead, 1871–1944,” Canadian Journal of Economics and Political Science, 11, 1 (February 1945): 111–14; University of New Brunswick Archives, Keirstead papers. 297 J.R.P., “Wilfrid Currier Keirstead.” University of New Brunswick Archives, Keirstead papers contain extensive notes on their lectures. 298 Allen, Social Passion, 2–3. 299 W.C Keirstead, “Taxation,” 79–85, Meeting of Union of New Brunswick Municipalities, 1911, in pan b, m c 203, m s 1a1. 300 Wilfrid C. Keirstead, “Some Essential Facts of Social Progress,” The Biblical World 39, 1 (January, 1912): 38–46. See also “The Forces and Movements that Make for Social Betterment,” notes for an address, c. 1912, Keirstead papers, University of New Brunswick Archives. 301 W.C. Keirstead, “Rural Taxation in the Province of New Brunswick,” Journal of Political Economy 34, 6 (December 1926): 669–90.

C onc l us i on 1 Ajzenstat, Canadian Founding, 64. 2 Clifford Orwin and Nathan Tarcov, eds., The Legacy of Rousseau (Chicago: University of Chicago Press, 1996); Clifford Orwin, The Humanity of Thucydides (Princeton: Princeton University Press, 1997).

552

Notes to pages 461–3

  3 Goldwin Smith, quoted in Underhill, “Development of National Political Parties,” 382.   4 Christopher Moore, “Looking at 1867 from 1967 and 2017,” activehistory. ca/2016/07/looking-at-1867-from-1967-and-2017 (accessed 12 November 2016).   5 Anne Hardy, “‘Straight Back to Barbarism: Antityphoid Inoculation and the Great War, 1914” Bulletin of the History of Medicine 74, 2 (2000): 265–90.

Index

ability to pay: in Halifax, 286; local vs federal, 292, 411, 454; in Manitoba, 178; in Montreal, 210, 220–1; as progressive reform, 185; Seligmanian, 242, 272, 275; in Toronto, 314 Acadians, 69, 359, 447 Action sociale catholique, 368, 404–5 Adams, Henry Carter (economist), 242, 273, 397, 452 Aitken, Max, Lord Beaverbrook (businessman-financier), 350, 372, 378, 413, 420–1, 452; MaxAitkenism, 446 Alberta: and election of 1911, 362, 364, 372; and election of 1917, 434, 438; progressivism, 328; and railway taxation, 321; schools, 325; and single tax, 305, 308–9, 401–2 Ames, A.E. (Toronto financier), 387, 390 Ames, H.B. (Montreal civic reformer): and election of 1911, 369, 373; and First World War, 393, 432; statistics on poverty, 230–1, 348

Anglin, Timothy Warren (nb politician): attack on Confederation, 61, 64–6, 71, 76; and civil service reform, 450; resignation, 69; and taxation in Ontario and Saint John, 240–3, 288, 387 Annand, William (ns premier): campaign, 124–5; compared, 387; criticism of b na Act, 62, 66, 70; as premier, 71, 80, 85 annexationism debated, 41, 80, 158–9, 360–5 anti-Confederation agitation, 60–84, 343 Anti-Poverty Society, 152–4, 253–4, 284, 339–40 anti-semitism, 285, 419, 440 Archibald, Adams (ns politician): as advocate of Confederation, 61–2, 65, 70, 78; on local taxation, 61, 67; at Quebec Conference, 43; in Senate, 71 Ashley, William J. (economist), 140, 243, 336, 372 Asselin, Olivar (Quebec Nationalist), 399

554 Index

assessment, municipal, 6, 185–6, 293; in British Columbia, 104–5, 117, 307–8; crisis in Ontario, 240–1, 250–4, 262, 275, 289, 421; in Edmonton, 306–7; and franchise, 30, 34, 60, 295–7; in Halifax, 50, 83, 282–3; in Hochelaga, 195–6; Indigenous, 110; in Montreal, 187– 9, 191, 196–200, 205–6, 212, 221– 2, 227; and municipal finance, 16, 50, 185–6, 234, 252, 281, 327, 392–3; professionalization of, 266– 9, 456; in Saint John, 288–9, 454–6; and single tax in western Canada, 289, 301–3, 305, 308–9; in Toronto, 234–8, 248–53, 257, 271, 285, 304, 309, 326, 352; in Vancouver, 289– 91, 300, 304, 307; and Whitney, 278, 311, 313–4; in Winnipeg, 301– 3. See also Ontario commissions and committees: on assessment assimilation, 21, 30, 32–3, 109–10, 325 Atkinson, Joseph (Toronto journalist), 362, 369–70, 400 Atlantic region: and Confederation, 42, 56; Maritime Provinces in, 65–6, 127, 70–1, 84, 171–2, 180, 347, 435, 447, 450. See also individual provinces Bank of Commerce: and Canadian Northern Railway, 422–3; in election of 1911, 310, 344, 360–1; and Liberal Party, 165; and Thomas White, 253, 363, 422–3 Bank of Montreal, 37, 93, 344, 398, 423 banks: in Borden government, 378, 409–12, 422–3, 433, 436; in

election of 1911, 358–64, 368, 371, 375; federal influence of, 127, 165, 167, 169, 279, 310, 350; and federal state, 398, 416, 409–11; and finance capital, 252–3, 328, 333, 347, 379, 422; and state in British Columbia, 96; and state in Montreal, 165, 222; and state in New York, 162, 314; and state in Nova Scotia, 57, 68, 281–3; and state in Quebec, 91, 187–9; taxed in Manitoba, 302; taxed in New Brunswick, 457; taxed in Ontario, 255–62, 268, 272, 275, 277. See also Bank of Commerce; Bank of Montreal; Canadian Bankers’ Association Beaudry, J.L. (Montreal businessman and mayor), 197, 199, 200 Beaugrand, Honoré (Montreal mayor), 146, 201–2 Beausoleil, Cléophas (Montreal politician), 205–6 Beaven, Robert (b c politician), 103, 104, 109, 303 Belcourt, Napoléon (Quebec politician), 399 Bell, Archibald (Ontario judge), 272– 4, 276 Bell, F.H. (ns lawyer, fiscal reformer), 281–2, 287 benefits theory of taxation, 205–6, 242, 256, 260 Bengough, J.W. (Toronto cartoonist and reformer): cartoons of John A. Macdonald, 147–8, 390; and progressive reform, 366; and racial stereotypes, 324; on Shacktown, 352; and single tax, 154, 238, 313

Index 555

Bennett, R.B., 348, 372, 377–80, 384, 423 Bernard, Claude (French physiologist), 147 Bertram, George (Toronto businessman and politician), 165, 171, 179–80 Blake, Edward (Ontario premier): as Liberal leader, 137, 148, 157, 202; as Ontario rights spokesman, 85, 93, 109; on tariff, 148, 151, 154–9, 181; and Zebulon Lash, 360 Bland, Salem (social gospeller), 402, 419 Blue, Archibald (statistician), 144, 338 Blumenthal, Abraham (Montreal politician), 392 boards of trade, 345; of Halifax, 286–7; of Montreal, 361; of Sherbrooke, 429; of Toronto, 310, 361–2, 384, 429 Boas, Franz, 286 Bonar Law, Andrew (British prime minister), 409, 416, 418 Booth, Charles (British social investigator), 337, 340 Borden, Frederick (n s politician), 164 Borden, Robert: criticisms of wartime leadership, 402, 414, 437; and election of 1908, 353–4; and election of 1911, 318, 325, 348–9, 363, 365, 373–4, 445; and election of 1917, 441, 436; as leader of Conservative Party, 127, 343, 350–1; post-election leadership, 376–80, 384–5, 391; progressivism, 350, 361, 432–4, 450; wartime leadership, 406–16, 422–5, 429, 434–8, 443–6

Bourassa, Henri (Quebec Nationalist): and election of 1911, 368–9; and cost of living, 386; and Ontario schools, 399; and First World War, 428–9, 439, 443 Bourget, Ignace (Montreal bishop), 27 Bradshaw, Thomas (Toronto financier-official), 387–8, 390, 438 Bristol, Edmund (Toronto lawyer-­ politician), 443 British Columbia: and Confederation, 92–5, 118; demography, 94–5; ­federal head tax, 116; income tax, 101–3, 329; and John A. Macdonald, 106–7, 111, 113– 14, 118, 156; and railway politics, 38, 93; single tax, 243, 303–8, 324–5, 402; support for Borden, 350, 373, 448; tariff in, 109, 177, 358, 383; taxation of Chinese, 94–109, 113–18, 161, 227, 324; taxation and Indigenous peoples, 96, 109–13, 117, 161; taxes on vacant land, 94, 300 British imperial governance and Canada, 21–2, 37, 63–4, 68–9, 72, 76–7, 81, 368 British North America Act, 6, 462; and federal versus provincial responsibilities, 50–2, 47, 129; and governance of property, 39, 127; and liberalism, 12–13, 336, 460; and poverty, 12, 53, 426; and provincial subsidies, 6, 44, 50, 53–5, 70–1, 80, 88–92; and systemic impoverishment of periphery, 56, 70–1; and taxing powers, 9, 44, 72, 88 129, 351; unconstitutionality of, 71–2, 441–2

556 Index

Brittain, Horace L. (Toronto civic reformer), 388 Brodeur, L.B. (Quebec politician), 345 brokerage politics: classic pattern, 38–42, 125, 189, 460–1; repudiated, 441, 446, 448, 450; versus expertise, 181, 359 Brown, George: criticisms of Union of Canadas, 21–30, 33, 38–41, 80; and Confederation, 41–5, 48, 53–5, 59, 70, 127, 132; and direct taxation, 44, 48, 91, 129, 193, 354; and Ontario in Confederation, 60, 70, 85; death of, 148; legacy of, 93, 120, 157, 370, 448 Brown, Robert Craig (historian), 347, 414, 433 Bryce, Peter (Reverend), 352 Bryce, Peter H. (Ontario public health official), 352 Buler, Henry J. (Kwakwaka’wakw chief), 285 Bullock, Charles (economist), 279–80, 318, 397 Bullock, Thomas (Saint John mayor), 288 Bulwer-Lytton, Edward (Colonial Office official), 110 Bunster, Arthur (b c politician), 98–9 Bureau of Municipal Research: New York, 230, 314; Toronto, 314, 387–8 Bureau of Social Research, 382 Burke, Edmund, 39, 320 Business Profits War Tax Act, 406, 408, 411–12, 417, 420 business rental tax: in Maritimes, 287–9; in Montreal, 189–90; in Ontario, 262–5; in Winnipeg, 302

businessmen, consolidation and influence: 165, 179, 181, 246, 287–8, 292–3, 333, 340, 353–4, 358–62, 371–7, 381, 390, 419, 425, 433, 445–6; re tariff, 121–3, 132, 135– 6, 140–1, 147, 157, 163–5, 167– 78, 345–7, 358–61, 365–70; re wartime profit taxes, 406–7, 411. See also business rental taxation; Canadian Manufacturers Association Calgary taxation, 291, 293; and First World War, 402–4; and single tax, 299–301, 305, 315 Campbell, Alexander (Ontario politician), 76, 111 Canada East. See Lower Canada Canada Life Assurance Company, 257, 315, 364, 438 Canada West. See Upper Canada Canada Year Book, 384 Canadian Bankers’ Association, 165, 380, 256, 360, 379–80, 409 Canadian Committee for Taxation of Land Values, 401 Canadian Council of Agriculture, 404 Canadian Industrial League, 167 Canadian Magazine, 174, 339 Canadian Manufacturers Association: and election of 1911, 343, 363, 381; and First World War, 429; lobbying for tariff, 120–1, 137–8, 141, 167, 354; and single tax, 327 Canadian National League, 358 Canadian Northern Railway, 344; and election of 1911, 360, 363; nationalization of, 385, 422–5, 435–7 Canadian Pacific Railway: financing of, 249; and labourers, 4, 96,

Index 557

107–8, 351; and single tax, 301–2, 424, 436; and taxation, 192, 201, 260, 301–4, 308, 321, 348, 360; ties to Conservative Party, 123, 148, 163, 167, 344, 362, 367 Canadian Political Science Association, 375 Canadian Press, 444 capital taxation, 16; denounced by economists, 272, 318–19; in 1917, 421, 425, 436–7; rejected, 263, 278, 280; western enthusiasm for, 292, 309, 319, 327–9, 361 Cartier, George-Étienne: advocate of Confederation, 36, 43, 46, 49, 78; as businessman, 29; death of, 54; and election campaigns, 125, 199– 200; ; legacy of, 93–4, 231, 409, 439; as political leader before Confederation, 22, 30–2, 37–42, 57, 67, 442 Cartwright, Richard (Ontario politician): criticisms of National Policy, 55, 85–6, 91, 143, 148, 181; as finance minister, 89, 151; and Liberal Party policy, 157–8, 165, 167, 169; as trade minister, 169, 171, 176, 179, 345–6 Carvell, F.B. (New Brunswick politician), 410, 414, 421, 425 Catholic Church: and labour agitation, 404–5; political influence, 59, 189, 335, 363, 367–8, 430, 450; and separate schools, 167–8, 428; and taxation in Quebec, 27–9, 34, 90, 203, 206, 231, 399 Chamberlain, Joseph (British politician), 179, 372 Chambre de Commerce de Montreal, 429–30

Chapleau, Joseph-Adolphe (Quebec premier), 54–5, 113, 219 Charity Organization Society, 36, 171, 215 Chase-Casgrain, Thomas (Quebec politician), 367 Chautauqua movement, 402 Chinese in Canada: disenfranchised, 156; immigration, 94–5, 107–8; purportedly undertaxed, 16, 95–100, 102–4, 108–9, 113–14; taxed, 105–6, 109, 113–17, 103, 227–8, 324–5 Chipman, George (Manitoba agrarian journalist), 298 Church, Tommy (Toronto mayor), 387 citizenship, 97–8, 109, 117, 228, 285, 297, 427 civil service reform, 278, 310–11, 343–4, 350, 426, 450 Clark, A.B. (economist), 317 Clark, John Bates (economist), 268 Clark, Michael (Alberta politician), 414, 425, 453 Clear Grits, 26, 29, 31 clientelism: as Canadian political culture, 35–7, 70–1, 80, 112, 122–6, 194–200, 334–5; Canadian vs American, 159, 334; Canadian vs British, 23, 119, 417; and finance capital, 264–5, 409, 422–5, 435, 451–4; reform criticism of, 126, 157, 194, 228–9, 377–8 Clouston, Edward (Montreal banker), 310, 378 Coats, Robert (statistician), 338, 355, 391, 394–5, 426, 431, 451 Cobden, Richard, 24, 101, 139; Cobdenites, 130

558 Index

Cochrane, Frank (Ontario politician), 278, 377, 391, 435 commission to investigate tariff: in 1874, 135; in 1876, 136; in 1912, 384. See also Fielding, William Stevens Confederation: as bookend with conscription crisis, 9, 392, 450, 460; and British Columbia, 92–5; as brokerage politics, 37–9, 46–51, 54–5, 147–8, 375, 393, 444, 459– 60; as clientelist project, 54–5, 80, 147–8, 185, 453, 459; debated in Atlantic colonies, 56–71, 84; debated in Canada, 46–9; debated in New Brunswick, 60–1, 66, 69; debated in Nova Scotia, 71–82; as historical theme, 5–6, 10–12; as liberal reform, 49–51, 80, 127, 185, 252, 393; and Manitoba, 167; negotiated, 41–5; and Newfoundland, 41, 59, 69; as political referent, 135, 246, 420, 442–3; and Prince Edward Island, 41, 58–9, 66, 69, 80, 92; and protection, 119, 121–3, 147; as tax revolt, 21–8, 30–3, 45–6 Connolly, T.L. (Halifax archbishop), 76 conscription: of manpower, 405, 410–16, 419, 422–3, 426–51; strategic politicization of, 438–9, 441, 444, 446, 449; of wealth, 402, 414–16, 420–2, 434, 442 Conservative Party: in 1890s, 127, 327; after Borden, 449; of Borden, as Conservative-Union Party in 1917, 434–45, 447, 449; of Borden, as government party, 408– 9, 411, 414, 428, 437–8; of

Borden, as opposition, 127, 332–3, 347, 358, 360–4, 369, 371; in Manitoba, 124, 322; in Nova Scotia, 86–7, 372; in Ontario, 168, 255, 310–11; prior to Macdonald, 327; in Quebec, 428–30; Toronto Citizens’ Union Committee, 438–9, 444, 448; under Macdonald, 21, 41–2, 85–6, 119–20, 123, 135, 148, 335; Unionist Party Publicity Committee, 439 consumerism, 48, 120, 130–2, 136–7, 174–5, 343; conspicuous consumption, 234, 341–2. See also cost of living Cook, Ramsay (historian), 152, 433 corporations, taxation of, 252; in British Columbia, 303; federally, 406–7, 411; in Ontario, 16, 233, 250–2, 255–76, 278, 315; in Quebec, 88, 90–1, 189–90, 225, 227 corruption: and Borden, 285, 409, 413, 445, 459; in Britain, 23, 119; and British Columbia, 102; in elections, 125; and Laurier, 335, 354, 367, 371, 380; and Macdonald, 40, 86, 167, 335, 459; in Ontario, 124, 126, 265, 297, 310; in Quebec, 36–8, 225, 228–9, 429–32, 441; racialized, 33, 431; and United States, 128, 137, 357 cost accounting, 314, 387–8, 396, 409, 455 cost of living: and discovery of poverty, 342, 353–5, 367, 382; and federal tariff, 143–6, 211, 332, 369, 381–95; and First World War, 400, 419–20, 426, 433–4 Courier de St Hyacinthe, 125

Index 559

Cox, George Albertus (financier), 165, 253, 361, 379; Cox financial network, 273, 361, 363–4, 390, 409, 438 Creighton, Donald (historian), 206, 433 Crerar, Thomas (Manitoba progressive politician), 401, 425, 433, 449 Crothers, Thomas (Ontario politician), 419 culture: and race, 51, 194, 335; consumer, 121, 129, 132, 372; FrenchCanadian, 33, 45–7, 97, 109, 185, 194, 335, 431–3; irrationality of, 45–7, 51, 194; popular, 121, 216 Dafoe, J.W. (Manitoba journalist), 343, 411, 441 D’Alton McCarthy (Ontario politician), 168 Darlington, William (Montreal blacksmith), 220 Davidson, John (economist), 91, 165, 189, 342–3, 455 Davies, Louis Henry (P.E.I. premier), 92–3, 172 debt, 452; in British Columbia, 96, 291; in Calgary, 403–4; Confederation negotiations of, 54–6, 67, 80, 86; federal debt in Canada, 164, 377, 391–7, 409–10, 430, 434, 438, 452–3; as impetus for Confederation, 22–3, 31, 41; as impetus for municipal annexations, 194–5; local debt in Ontario, 85, 90, 186, 280, 387; in Montreal, 188, 191, 194–5, 208, 222, 228–9; municipal, 289, 292, 305, 314–16, 387–8, 396, 404; in Prince Edward Island, 92; taxed domestically, 101,

236; untaxed commercially, 236, 245, 248–9, 262, 270–1, 457. See also stock watering DeCelles, A.C. (librarian), 344–5 De Cosmos, Amor (b c premier), 106–7, 109 democracy: demanded, 205, 306, 382, 405; emergent, 277, 280, 306, 374, 410; repudiated, 32, 60, 295– 7, 310, 424, 433 Dempster, James (oven-builder), 176 Denison, George (imperialist), 179 Derick, Carrie (botanist-progressive), 343, 382–3 Deutsch, J.J. (economist), 398–9 Dewey, John, 151, 266, 456–7 direct taxation: early antipathies to, 30–1, 42, 57, 82–3, 88–9, 127–9; later antipathies to, 90, 154–7, 160–2; 398, 420; demands for, 178, 401; growing legitimacy of, 31, 186, 252, 258, 328, 451; in b c , 92; in pei, 92–3; in Quebec, 90–1 Dixon, Frederick J. (Manitoba progressive), 322, 370 Dodd, Walter (b c single taxer), 300 Dominion Securities, 252, 253, 378 Dorion, A.A. (Quebec politician), 45, 54 double taxation, 101, 236, 256, 260– 2, 266, 279, 322 Douglas, James (b c premier), 110 Douglass, W.A. (single taxer), 153, 313, 322 Drayton, Henry (Ontario politician), 423 Drummond, George (Montreal businessman), 140, 164, 176 Drury, Ernest (Ontario agrarian-politician), 313, 348–9, 357, 391, 404

560 Index

Duncan, Sara Jeannette (author), 334 Duncan, William (Reverend), 110 Dunkin, Christopher (Quebec politician), 54 Dunsmuir, Robert (bc mining magnate), 95 Durham, Lord, John Lambton, 21–2, 30, 32, 110 193, 437 École sociale populaire, 405 economics: and evidence, 339; as profession, 12, 139–40, 242–3, 337, 380, 389, 430–1; progressive, 375, 396; and single tax, 242–3, 269, 291, 318–19 Edgeworth, Francis Y. (economist), 256, 339, 397 Edmonton: franchise, 296, 301, 306– 7; incorporation, 301; taxation, 291, 293, 306–7 Edmonton Bulletin: on franchise, 296, 306; on tariff, 159, 167, 294 Edwards, Eustace (single taxer), 159 elections, federal, 120, 123–5, 136; of 1867, 119, 125; of 1872, 119, 122; of 1878, 53, 119, 122, 137; of 1887, 90, 148, 157, 202; of 1891, 125, 154, 158–61, 163, 304; of 1896, 164–9, 172; of 1900, 343; of 1904, 343, 350–1; of 1908, 348, 353–4; of 1911, 16, 333, 349, 357– 74; of 1917, 263, 411, 414, 416, 422, 426, 434–47, 462 elections, local: in British Columbia, 96, 101–3; in Montreal, 197, 202– 3, 229; in New Brunswick, 69; in Nova Scotia, 60, 71, 85, 86, 89–90; in Ontario, 85, 274, 278; in

Quebec, 197; in Toronto, 258; in Winnipeg, 296, 301; in Yukon, 125 Elliott, A.C. (b c premier), 101, 116 Ely, Richard (economist), 185, 242, 283, 288 English Canada: and brokerage politics, 12, 22, 27–30, 45–7; mobilization around schools, 168, 400; mobilization around war, 429–30, 432–3, 437–46, 450; purportedly overtaxed, 25–39, 55 expertise: and democracy, 388, 464; and economics, 242–3, 318–19, 451; as state-business alliance, 140, 333, 349, 359, 377, 455 facts and liberalism, 136, 146–7, 171–4, 212–13, 215–16, 231–2 fairness, 8–9, 13–15; empirical definition, 211–16, 252–3, 264, 463–4; and finance, 392, 421; political definition, 267, 276–8, 343; and progressive fiscal reform, 261–7, 311, 330, 351, 399, 433; and state capacity, 97, 427, 457; wartime reconception of, 396–7, 415, 424, 427, 446–7 Farmer, A.B. (single taxer), 313 Farmer, S.J. (Toronto single taxer), 322, 326 farmers: Grange, 126, 153, 157, 181, 247, 313, 340; Manitoba Grain Growers’ Association, 298, 357; Manitoba United Grain Growers, 401; New Brunswick Farmers’ Association, 357; political organization, 147, 164, 177, 298, 355, 381, 440; Siege of Ottawa, 357; United Farmers of Alberta, 401–2;

Index 561

United Farmers of Ontario, 313, 404, 435–6, 453 federalism, 5–6, 15–17, 43–51, 120, 246; as imperialism, 55–6, 59, 74–5, 80, 87–9, 118, 123, 329–30 Fenians, 69 Fielding, William Stevens (Nova Scotia premier–politician): after 1917, 448, 451; and election of 1911, 357–60, 368; as finance minister, 84, 169–80, 289, 333, 343–9, 451; as journalist, 79; and Liberal policy after 1911, 384–6, 400; as premier of Nova Scotia, 89–91, 148, 165; as Unionist candidate, 447 financialization, 244–6, 249; and election of 1911, 333, 359; and election of 1917, 436–7, 446; and profiteering, 372, 395; of the state, 377–8, 387–8, 403–4, 409–12, 453–4; and taxation, 248, 271, 451–3, 457; vs democracy, 424, 460 First World War, 6, 13, 391; Canadian financing of, 396–400, 406–11, 430, 453–4; effect on Canadian debts, 291, 403, 453; and pressure for income tax, 402, 414–16, 420– 2, 428, 433, 442, 451 fiscal reform movement, 10, 15; American influences, 162, 185, 314; contestation over value, 263– 4, 269–71, 286; fissured by nativism, 441–8; and income tax, 185, 263–4, 279–80; local roots, 16, 185–6, 331, 349; in Montreal, 187, 210–11, 225, 229; in Toronto, 238, 263–4, 278; transnational

agitation, 304, 318, 328–30, 355, 371, 390, 400–5, 433–7. See also business rental movement; Income War Tax Act; single tax fiscal sociology, 9; and cost of living, 391; and federal state, 420, 451; and fiscal transfers, 431; as Liberal party politics, 432, 439; local roots, 332; and settler colonialism, 284 fiscal transfers: ethnic, after Confederation, 90–1, 119–20, 192–4, 431; ethnic, before Confederation, 25–8, 30–1, 34, 37–40, 63; regional and Confederation, 41–2, 44, 53–4, 60–1, 78–80, 84–5; regional, after Confederation, 119–20, 86, 91–2, 324–56; regional, before Confederation, 24–31, 34, 37–9, 40, 63, 442; social, after Confederation, 37–40, 122–4, 154, 192–4, 211, 216, 220–1, 232, 324–6, 407–8, 433, 454–7; social, before Confederation, 25–35, 37–9; and taxation, 10, 123, 463 fiscal transfers, public to private: liberal understanding of, 126, 284–5; as patronage, 123–4, 126, 154, 452–3; and single tax, 151, 154, 238, 260, 276, 293, 303–4, 323, 326, 328, 321; via franchises, 234, 238, 260, 276 Fisher, Sydney (Quebec politician), 358, 369 Flavelle, Joseph (Ontario businessman): cronyism, 277, 390, 418–19, 423; and election of 1911, 361–2, 364, 378; and University of Toronto, 310, 442; wartime

562 Index

criticisms of, 418–19, 441, 446; wartime service, 410, 412, 416, 425, 453 Fleming, R.J. (Toronto mayor, tax commissioner), 253 Flux, William (economist), 337 foreign investment in Canada, 127, 409, 423–4, 453 Forman, James (Toronto tax commissioner), 241, 271–2, 309–10, 314 Foster, George (n b politician): in Borden cabinet, 378–9, 386–7, 391, 424, 426; and conscription, 432, 443; early career, 118, 141; on Liberal tariff, 171, 180; in Macdonald cabinet, 84, 161–2, 164 Foucault, Michel, 15 France, taxation, 11, 21, 48, 337 franchise: in election of 1917, 443, 446; gendered restrictions, 142, 146, 359, 443; Indigenous, 156; in Montreal, 30, 193, 201, 203, 225; in New Brunswick, 288; in New Westminster, 296; in pei , 59, 92–3; and political agency, 132, 146, 156; post-Confederation, 130, 146, 161, 295–6, 354, 359, 374; property restrictions, in Nova Scotia, 59–60, 83–4; property restrictions, in United Province of Canada, 27, 30, 32, 34; racialized restrictions, 51, 116, 156, 161, 295–6, 359, 443; taxpaying franchise, 30, 59, 60, 93, 306; in Toronto, 296; in western Canada, 296, 306; in Winnipeg, 296, 301 Fream, E.J. (Alberta progressive), 321–2, 357 French Canada, and brokerage politics, 16–17, 21–2, 31–3, 46–7,

62–6, 71–2, 84; politically attacked, 168, 413, 428, 432, 439, 441–5, 450; politically reconsolidated, 399, 428–9, 438, 444–6; politically weakened, 148, 193, 368; purportedly overtaxed, 85, 193–4; purportedly a tax beneficiary, 25–39, 228–9, 348, 438; purportedly undertaxed, 25–39, 55, 63, 225–7 French Revolution, 21, 30, 79, 222, 384 Fukuyama, Francis, 126 Fyshe, Thomas (banker), 281–2 Galt, Alexander Tilloch (Quebec politician), 401; and Confederation, 32, 38, 41–3, 46–7, 49, 55, 132; and tariff of 1859, 22–3, 25, 36, 40, 409, 453; and tariff of 1879, 138 general property tax: in British Columbia, 100–1, 103, 108, 305; difficulties in regards to intangible property, 236, 241, 248, 265, 268– 71, 275, 279, 288, 426, 460; in Halifax, 281–4, 287; in Montreal, 91; in Ontario, 233–6, 240–1, 263, 257, 260–1, 265, 277–80; in Saint John, 241, 455; in United States, 162, 233, 241–2, 452; in Winnipeg, 302 Geological Survey of Canada, 138, 140 George, Henry (popular economist): and academic economists, 242–3, 268; ideas, 151–2, 292–3; lectures, 152, 238; sinophobia, 324. See also single tax Gibson, John (Ontario politician), 153, 169, 264–5, 268

Index 563

Gilbert, Arthur (Quebec Nationalist), 368 Gladstone, William Ewart, 23–4, 120, 128, 256 Globe: on cost of living, 144–6, 312– 13; criticisms of Union finance, 24–6, 28–31, 40, 45, 59–60, 66; on election of 1917, 444; on franchise, 296; on general property tax evasion, 237, 248, 253–4; and George Brown, 21, 148; on income tax, 128, 370; on Indigenous land ­tenure, 204–5; on Joseph Flavelle and William Davies Company, 410, 434; on poverty in Shacktown, 352; on single tax, 152; on tariff, 142, 158, 167, 343–4 Gouin, Lomer (Quebec premier), 429, 448 Gradual Civilization Act, 51 Graham, George P. (Ontario politician), 411, 416 Graham, Hugh (Montreal newspaper magnate), 385–6, 423, 435 Grain Growers’ Guide: and reciprocity, 355, 370, 371; and single tax, 298, 308, 322, 324; vs cm a, 355, 381; wartime agitation for fiscal reform, 402, 436 Grand Trunk Pacific Railway, 385, 403 Grand Trunk Railway, 29, 37, 254 Grant, George Monro (university president), 154 Grant, John (Victoria mayor), 303 Gray, John Hamilton (New Brunswick politician), 43, 103, 113 Great Britain: and First World War finance, 6, 392, 396–8, 401, 406, 409–10, 417–19; fiscal reform, 16,

21, 23, 119–21, 179–80, 186, 332, 357, 347, 397–8; liberal politics of property, 8–9, 32–3, 48, 50; marginalism, 268, 319, 336–7; protectionism, 372; and Victorian wars, 6, 60 Grenier, Jacques (Montreal mayor), 199, 204–5 Groulx, Lionel (priest–historian), 448 Gundy, J.H. (financier): and Bon Entente campaign, 429; and election of 1917, 435, 448; member of Cox network, 364, 387, 390; and Victory Bonds, 380, 435, 438 Habermas, Jürgen, 49, 342 Hacking, Ian, 14–15 Haig, Robert Murray (economist), 292, 299, 308–9, 318 Halifax: and Borden, 343; and Confederation, 41, 61; and cost of living, 381–2; Dartmouth, 126–7; Halifax platform, 350–1; and Killam, 452; municipal assessment, 50, 241, 281–7; patronage, 125; school taxes, 86; single tax, 319 Halifax Acadian Recorder, 359 Halifax Morning Chronicle: on Confederation, 26, 58, 62–5, 81–3; on repeal election, 89–90 Hamilton: economic development, 84, 264; and Knights of Labor, 152, 203; labour agitation, 405; and taxation, 250–1, 257, 261, 265, 270, 275, 317, 388 Hanna, W.J. (Ontario politician), 351, 390, 434 Hardy, A.S. (Ontario premier), 153, 169, 241, 255

564 Index

Harris, Lloyd (Ontario businessmanpolitician), 363 Harris, R.V. (Halifax civic reformer), 286–7 Hatheway, W. Frank (Saint John progressive), 287–8 Hautes Études Commerciales, 430 Hawkes, Arthur (Ontario propagandist), 363, 429 Hearst, William (Ontario premier), 311, 315, 443 Helbronner, Jules (Montreal journalist): and corvée, 203; in election of 1911, 367; and Royal Commission on the Relations of Labour and Capital, 211–17; and social facts, 215–19, 232, 433, 463–4; and water tax, 217, 220–2, 230 Hemmeon, J.C. (economist), 316 Henderson, Rose (Montreal social worker), 382, 405 Hepburn, Jennie (labour activist and single taxer), 159 Hill, Philip Cartaret (n s premier), 73 Hincks, Francis (Quebec politician), 188, 437 Hingston, William (Montreal mayor), 51–2, 208 historical economics, 64, 139–40, 336 Hobbes, Thomas, 460 Hobson, J.A. (economist), 180, 340– 1, 346, 352 Hopkins, J. Castell (publisher), 446 Houde, Camillien (Montreal mayor), 449 Howe, Joseph: and better terms, 55, 77–80, 84, 87; critic of Confederation, 60, 62–4, 68–9, 71, 73, 76, 444; and franchise, 32, 60, 84

Howland, O.A. (Toronto mayor), 258 Howland, W.H. (Toronto businessman and mayor), 122, 236 Hudson’s Bay Company (hb c ), 94, 104, 300–1, 305, 307–8, 436 Hughes, Sam (Ontario politician), 409, 412–13 Hutton, Frank (Hamilton tax assessor), 265 immigration: and access to land, 305, 395; agents, 6, 124, 338; Chinese, 94–7, 107–8, 116; and cost of ­living, 352, 386, 394; diminution, 291, 423; progressivism of, 332; restrictions, 350; settler colonial, 94; as threat to Canadian nationalism, 360, 362, 424, 440–1, 450 income taxes: in Halifax, 286–7; imposed federally, 392, 399, 414– 16, 418, 420, 425–6, 433–5, 452– 3; imposed outside Canada, 23–4, 127–8, 397; in Ontario municipalities, 237–8, 241–2, 261–3; as progressive reform, 233, 241–2, 251, 277–9; in Saint John, 241, 288–9, 454–7; urged federally, 274, 370, 392, 396, 398, 401–4, 407–8, 410– 12, 414–15 Income War Tax Act, 10, 254, 392, 425, 462 independent labour parties, 420; Independent Labor Party of Manitoba, 322; Independent Labour Party of Manitoba (successor organization), 322, 434; Independent Labour Party of Ontario, 404, 420, 434 Indian Act, 51 Indigenous peoples, 193, 284–6; Kwakwaka’wakw, 286; and

Index 565

property, 51, 284–6, 294, 335; and rights, 33, 37; Salish, 110; Six Nations, 334; and taxation, 16, 96, 109–13, 155, 420; Tsimshian, 110; as voters, 156, 334 indirect taxation, 5–6, 90–1, 398; and b na Act, 23, 42, 45, 67, 129; liberal critique of, 119, 128, 151, 154–7; in United States, 129. See also tariff insurance: consumption of, 378–9, 394; and finance capital, 253, 264, 350, 379; taxation of, 188–9, 256– 7, 272, 302, 315 Intercolonial Railway, 61, 66, 412, 450 Ireland, 152, 238, 294, 357; Irish in Canada, 27, 33–4, 38, 125 Irvine, William (Alberta progressive politician), 419, 436 Jameson, Richard Willis (Winnipeg lawyer-mayor), 302 Japanese, taxed in British Columbia, 325 Jarvis, W.M. (Saint John progressive businessman), 287–8 Jeannotte, Hormidas (Montreal politician), 203, 205 Jesuits’ Estates Act, 168 Jetté, L.A. (Quebec politician), 195, 200 Jevons, Stanley (economist), 141, 181, 256, 268, 319, 336 Johnson, George (statistician), 338 Jones, A.G. (n s Anti politician), 82 Joussaye, Marie (labour activist and single taxer), 159 Judicial Committee of the Privy Council, 91, 189, 197, 246, 321, 361

judicial review: of b na Act, 86, 123, 129, 246; of Chinese taxes, 100–1, 105, 115; of corporation taxes, 189; courts of revision, 104, 195, 209, 252–3; of direct vs indirect taxes, 91, 189, 315; of Edmonton business taxes, 301; of Montreal taxes, 199, 204, 206, 220; and municipalities, 252, 258, 321, 328, 360; of taxes, 11, 236, 399; of Toronto business taxes, 236, 240, 250–2, 263, 276, 278, 421; of western business taxes, 328 Julien, Henri (cartoonist), 34–5, 143 Jury, Alfred (labour radical), 176–7, 181 Keirstead, Wilfred Currier (economist-philosopher), 455–7 Kemp, A.E. (businessman-politician), 167; election of 1911, 361, 363, 365; in government, 377, 413–14, 423, 443 Keynes, John Maynard (economist), 121 Keys, Ella M. (student), 353 Killam, Izaak Walton (financier), 452–3 Kingston, 32, 154, 159, 336 Kingston Queen’s Quarterly, 375, 401 Kirkup, Jack (b c sheriff), 96, 108, 115 Knights of Labor, 126, 157, 220, 225, 238, 244, 246; in Hamilton, 152; in Montreal, 202–3, 206, 231; in Nanaimo, 303; in Toronto, 143, 237 Kuhn, Thomas, 215

566 Index

Laberge, Louis (Montreal health officer), 213–15, 217 labour: Department of Labour, 338, 390–1; political organization of, 147, 247, 323, 353, 383, 405, 419– 21, 440. See also independent labour parties; Knights of Labor; Trades and Labour Councils Labour Gazette, 338, 339, 353 Lacombe, Georges-Albini (Quebec politician), 348 Lafontaine, Urbain (Montreal typographer-labour activist), 220 land value taxation, 282–3. See also single tax landlordism, 151–2, 289, 293–4, 326; absentee landlords, 59, 64, 92; landlords in politics, 218–19, 306, 323 Langevin, Hector (Quebec politician), 55, 125, 141, 201, 225 Langlois, Godfroy (Montreal politician), 386 Lansdowne, Lord, 157, 294 Lapointe, Ernest (Quebec politician), 369, 399, 432, 445, 449 Laporte, Hormidas (Montreal politician), 229 Lash, Zebulon (Toronto lawyer-­ investor), 317; and cronyism, 320, 422–3; and election of 1911, 360, 362–4; and wartime Canada, 420 Laurier, Wilfrid: and clientelism/ patronage, 246, 310, 333, 345, 347–8, 351, 354, 360, 369, 371, 423, 445, 450; and conscription, 428, 432–3, 437; and cost of living agitation, 348, 384–6; and election of 1896, 165, 167, 169, 172; and election of 1908, 347, 353–4; and

election of 1911, 318, 357–60, 368–74, 406; and election of 1917, 411, 414, 416, 428–30, 432–5, 439, 445, 448; and finance capital, 246, 310, 333, 344; and Liberal Party, 157–8, 165, 196, 325, 400, 448; and nativism/racialization, 119–20, 325, 348–9, 368, 413–14, 428, 433, 437, 441, 443, 445, 450; and progressive defections, 425; and progressive taxation/fiscal sociology, 400–1, 430, 432–4, 445–6; and public opinion, 181, 344, 377; and Quebec, 148, 167, 196, 202, 229, 368, 413–14, 428, 433, 441, 443; and state modernization, 338, 344, 355; and tariff, 84, 132, 142, 157–9, 165, 169, 172, 179–80, 332, 343–8, 355 Lavergne, Armand (Quebec Nationalist), 399 Leacock, Stephen (economist): career, 251, 337, 341; Conservative and anti-French activism of, 343, 372– 3, 385, 440, 442, 450; on corruption and faction, 230, 334, 371, 385; on cost of living, 385–6; on First World War, 408, 440; on social justice, 450 Lee Chuck (American labour contractor), 108 Lee Soon (b c labour contractor), 108 Lekwungen Reserve, Victoria, 284–5 Lemeiux, Rodolphe (Quebec politician), 386, 446 Le Play, Frédéric (French social theorist), 219, 337 Leslie, T.E. Cliffe (economist), 64 Letellier de Saint-Just, Luc (Quebec politician), 75–6

Index 567

Lever, Hardman (British diplomat), 418 Liberal-Conservative Party. See Conservative Party: under Macdonald liberal conservatism, 13, 21, 33, 60, 132, 161, 185, 460 liberal economics, 11; and consumption, 146; vs historical economics, 64, 336–7; vs managerialism, 371, 374, 422; vs marginalism, 334–7; precepts of, 30, 33, 39, 48, 50–1, 73–4, 119, 185, 336, 342–3; vs protection, 120, 122, 127, 132, 136–7, 139–40; vs single tax, 291, 303–4, 309, 319, 329; and ways of knowing, 135, 141, 210, 212–13 liberalism: agnosticism, 135, 147, 345, 349, 369; anti-clientelist strain, 23, 30, 48, 126; anti-state strain, 10, 30, 50; in British Columbia, 88; Liberal order framework, 37; in Nova Scotia, 57, 59–60, 67, 83–7; in Quebec, 192, 196–8, 192, 216–17, 231–2, 428– 9; racializing strain, 33, 51, 97–8, 194, 117–18; vs social knowledge, 128, 216–17, 231–2, 463–4 Liberal Party, 24; and clientelism, 89, 126, 335; convention of 1893, 165; and election of 1891, 157–9; and election of 1896, 163–9; and election of 1908, 348; and election of 1911, 333, 369–70; and election of 1917, 424–8, 434, 438, 448–9; in Nova Scotia, 85; in Ontario, 85; and public opinion, 132, 137, 142, 147–8, 180–1, 347, 330, 332; in Quebec, 196, 339, 430, 449; and taxation, 127–9, 326, 347–8, 400–2, 407, 435

Lighthall, W.D. (Westmount mayor), 258, 432, 441 Lillooet, 99, 102, 103, 105, 112, 114 Lloyd George, David (British prime minister), 416 Locke, John, 8, 459 Lougheed, James Alexander (Alberta politician), 377 Lower Canada: affinity with Atlantic provinces, 55–6, 66; constitutional history of, 21–2, 41–5, 193, 246; economic development, 28–30, 33, 37–8, 47; and fiscal transfers, 16, 24–31, 39, 41–2, 44, 55–6, 63, 70, 442; local government, 31, 24–5, 34, 42, 50; and sectarianism, 27–8 luxury taxes, 48, 146–7, 174, 179, 394–5, 426 Macdonald, Alexander (Winnipeg journalist-mayor), 302 Macdonald, Ernest (Toronto mayor), 257 Macdonald, Hugh John (Manitoba politician), 348 MacDonald, James (Nova Scotia politician), 57 Macdonald, John A.: and British Columbia, 106–7, 109, 111–14, 118, 156; and clientelism/patronage, 23–4, 3–40, 51, 53, 60, 77, 79–80, 123–6, 137–8, 157, 175, 302, 311, 335, 351, 361; and Confederation, 41–2, 49, 51, 54, 70–2, 88, 460; death of, 163; and election of 1887, 90, 157, 203, 211; and election of 1891, 159–64; and elections of 1872 and 1874, 86; federalism of, 15, 70–1, 80, 86–9, 93, 118, 147–8, 185, 328–9,

568 Index

344–5, 437; and fiscal transfers, 30, 39, 129; and franchise, 32, 156, 296; and French Canada, 22, 37, 39, 148, 231; liberal conservatism of, 33, 39, 48, 132; and Nova Scotia, 54, 71, 73–80, 84–7, 89–90, 148; and Ontario 85–6, 89, 148, 246; and politics of knowledge, 135–6, 138–41, 143, 146–7, 160– 1, 180, 338, 388; and protective tariff, 22, 36, 119–27, 132–43, 147–8, 158, 332, 351; and public opinion, 32, 38, 72, 78, 120–30, 162, 180–1, 211 Macdonald, John A., legacy and repudiation, 123, 167, 171, 185, 231–2, 277, 332–3, 335, 342, 427–8, 437, 439–40, 448, 450, 453; Borden’s debt to, 388, 439–40, 448; Bourassa’s debt to, 428; Laurier’s debt to, 180–1, 332, 344, 450; White’s debt to, 398, 408–9, 460 Macdonald, John Sandfield (Ontario premier), 32, 85, 310 Machar, Agnes Maule (Ontario writer and reformer), 159 Mackenzie, Alexander: as austerity prime minister, 52, 85–6, 89, 96, 169; and public opinion 135, 137, 140, 170; and tariff, 132, 146 Mackenzie, William (Toronto railwayman-financier), 317, 344, 358, 422 Mackenzie King, William Lyon: education, 341; deputy minister of labour, 338, 343–4, 355, 389; and election of 1917, 430, 433, 436; leader of Liberal Party, 448–9, 451; on poverty, 352, 448; on reciprocity, 360; on Thomas White, 378

Maclean, W.F. (Toronto journalistpolitician), 312 Maclean’s magazine, 434 Maclennan, James (Ontario judge), 258, 265 Macphail, Andrew (professor and journalist), 334, 343, 353–4, 370, 374–6 Macpherson, C.B., 328–9 Magna Carta, 11, 37–8, 200 Mallett, James (Victoria ironworker and single taxer), 304 Malthus, Thomas, 28; and Malthusianism, 152, 450 managerialism, 181, 333, 351, 359, 371, 374, 393–4, 422, 430, 436 Manchester Guardian, 444 Mandeville, Bernard de, 48 Manitoba: and election of 1891, 163; and election of 1896, 167; and election of 1908, 348; and election of 1911, 349–50, 364, 374; and election of 1917, 435, 447; and franchise, 296, 301; and income tax, 421; and patronage, 124; and railway taxation, 304; and schools, 167–9, 192, 399, 428; and single tax, 243, 298, 302, 308, 317, 325– 6, 401–2; and statistics, 338, 382; and tariff, 146, 177–8, 298, 355, 357; and utilities nationalization, 350, 422; and war bonds, 438. See also independent labour parties Manitoba Free Press: on French Canada, 228; municipal elections, 296, 301; single tax, 244, 302; on tariff, 159; wartime income tax, 421 Mann, Donald (Ontario railwayman), 344, 423

Index 569

Manning, Alexander (Toronto mayor), 236, 247 marginal economics, 141, 256, 268, 319, 332, 335–6 Marshall, Alfred (economist), 336, 337, 339 Martin, Joseph (b c politician), 325 Martin, Médéric (Montreal mayor), 197, 230, 428, 433–4 Marx, Karl, 128, 152, 331 Mauss, Marcel, 286 Mavor, James (economist): appointment, 243, 336–7; on cost of living, 353; on franchise, 297; on state, 390, 422; on taxation, 255–7, 279, 317–18 McBride, Richard (bc premier), 350–1 McClung, Nellie (Manitoba writerpolitician), 382, 401 McCully, Jonathan (n s politician), 62, 71, 73–6, 82 McDougall, William (Ontario politician), 26 McGee, Thomas D’Arcy, 38, 41, 58, 72 McGill Magazine, 353 McGill University, 337, 343, 373, 382 McInnes, W.W.B. (bc politician), 446 McKay, Colin (Saint John labour radical), 323 McKelcan, Frank (Hamilton city solicitor), 266–7, 271 McKinley, William, 140, 165; McKinley tariff, 158 McLachlan, J.B. (n s miner and labour organizer), 383, 420 McLelan, Archibald (n s politician), 67, 70, 84

McLennan, John (Ontario merchant and MP), 139 McLennan, John Stewart (Cape Breton businessman-senator), 425 McLeod, Stuart Cameron (accountant), 297, 306, 316 McShane, James (Montreal mayor), 200 McVitty, James H. (b c machinistlabour activist), 383 Meighen, Arthur, 423, 449 Meighen, Robert (Montreal miller), 370 Mercier, Honoré (Quebec premier), 91, 148, 192, 202, 225 Métis, 112, 201, 295–6 Metlakatla, 4, 110–11 Mill, John Stuart: on infant industries, 139; on taxation, 10, 91, 128, 145, 432 Mills, David (Ontario politician), 129, 136 Mirabeau, Comte de, 79 Mitchell, Elizabeth (journalist), 382, 406 Monetary Times, 90, 157, 244–5, 401, 410, 453 Montpetit, Édouard (economist), 430–1 Montreal: agitation for fiscal reform, 385–6, 392, 405, 418, 430, 434; arrears, 404; business rental tax, 187, 189, 263, 282–3, 288, 302; clientelism, 189, 195–200, 228–9; and the construction of modern poverty, 16, 142, 161, 181, 189, 216, 220–2, 232, 433, 454; corruption, 36, 198, 334; as economic hegemon of Canada, 25, 29, 33–4, 37–8, 42, 47, 66, 93; and election

570 Index

of 1867, 127; and election of 1911, 365–7, 370, 372–3; and election of 1917, 441–2, 444–5; finances, 186, 198, 207–9, 404; franchise, 30, 193, 201, 225; public health, 209, 213– 15, 217–19; ratepayer politics, 33–4, 39, 91, 187–90, 194–7, 200, 432; smallpox epidemic, 201, 227; suburb of Hochelaga, 194–6, 207, 367; suburb of Maisonneuve, 291; suburb of Ste-Cunégonde, 4–5, 177, 222–4; suburb of St Gabriel, 207–8; and suburbs, 4–5, 29, 194–6, 207, 291; and the tariff, 171–2, 178, 351, 361; taxation of Chinese laundries, 227; taxation of religious institutions, 190–2; vs Toronto finance, 344, 378–80, 423, 437, 439, 453. See also popular violence Montreal Gazette, 91, 190, 244, 386, 408, 423 Montreal Herald, 131, 213, 386 Montreal La Patrie: on election of 1911, 367; on smallpox in Montreal, 201; on tariff, 120, 142, 146, 162 Montreal Le Canard, 209 Montreal Le Monde, 201–2 Montreal Le Pays, 368–9, 386 Montreal Le Reveil, 192, 197 Montreal Mail, 386 Montreal Moniteur du commerce, 247 Montreal Prix Courant, 247, 367 Montreal Star, 244, 313, 367–8, 423 Montreal True Witness, 203 Montreal Witness: on corvée, 202–5; defending Anglo-Protestants, 28, 91; local taxation, 188, 195, 201, 227; tariff, 142; violence, 225

Montreal, La Minerve, 195, 201 Montreal, La Presse, 90, 203, 367, 423, 434 Montreal, Le Canada, 369, 386, 409, 430, 444 Montreal, Le Devoir, 386, 428 Montreal, Le Trait d’union, 203 Montreal, L’Union ouvrière nationale, 203 Moose Jaw Herald, 389 moral economy, 5, 34, 52, 68, 82, 215–16 Morgan, J.P., 248–9, 276 Morton, W.L., 328–9 Mowat, Oliver (Ontario premier): and federal politics, 158, 165, 169, 179; as premier and champion of Ontario, 85–6, 124, 140, 246; and single tax, 154, 240, 243 muckrakers, 247, 335 Mulock, William (Ontario politician), 153, 338 Munro, William Bennett (economist), 36, 247, 297, 316, 375 Murray, John Clark (philosopher), 343, 382 Myers, Gustav (muckraker), 335 Nanaimo, 98–9, 104, 106, 110, 300, 303 National Council of Women of Canada, 382–3 National Research Council, 389, 426 National Tax Association, 247–8, 273, 279–80, 317 National Trust, 277, 364–5, 413, 422–3, 438, 400 nationalism: American, 132, 158, 359; British model, 119; economic,

Index 571

121, 332, 346, 359, 431; EnglishCanadian, ethnic, 120–1, 325, 445, 450; French-Canadian, ethnic, 30, 37, 168, 429; and political history, 10, 12, 13, 459; wartime, 427, 441, 445, 449 Nationalist Party of Quebec, 349, 368, 386, 399, 428, 443, 449 New Brunswick: and better terms, 72, 75, 76, 78, 85; and Confederation, 41, 43, 58–61, 66, 69–70; economic development, 84–5, 287–8; and federal elections, 167, 372–3, 447; local taxation in, 89, 287–8, 457; and tariff, 84, 177, 357. See also Saint John, assessment Newfoundland, 41, 44, 59, 69 New Westminster, 106, 112, 296, 300, 303 New Westminster Mainland Guardian, 294 New York Times, 129, 164, 294, 302, 318 Nichols, Mark Edward (publisher), 368, 386, 443–4 Nonpartisan League, 402 North West Mounted Police, 108 Nova Scotia, 15–16; and banking, 282, 379–80; and better terms, 38, 55, 58, 70, 77–90, 148, 177; and business rental taxation, 289; colonial finances, 56, 67–8; on Confederation as tax grab, 15–16, 56–71; economic growth, 84; and federal elections, 85–6, 90, 124–5, 167, 372, 447; fiscal reform agitation, 323, 353, 420; provincial finances, 70, 80, 86, 92; and tariff, 72–7, 84, 177

objectivity: as intersubjectivity, 15, 146, 271, 463; as statistical comparison, 212, 388–9, 390, 397; as technical or apolitical, 171, 174, 212, 214, 264, 269, 371 O’Brien, William (Irish politician), 294 O’Connor, W.F. (Halifax lawyer), 418 Ogilvie, W.W. (Montreal miller), 171, 175, 188 Oliver, Frank (Edmonton journalistpolitician), 167, 294, 325, 411, 446 Ontario: and balance of power in Confederation, 252, 443–4, 461; economic development, 84, 153, 157; federal fiscal reform agitation, 404–6, 435; and federal subsidies, 85, 438; and hydroelectricity, 422; patronage, 123–4; provincial finances, 86, 88–9, 186, 280; schools, 325, 399; and single tax, 309–15; on tariff, 349–50, 346, 358; tax crisis, 248–50, 257, 264, 421. Ontario before Confederation, see United Province of Canada, Upper Canada Ontario Bureau of Industries, 143–4, 155, 338, 384 Ontario commissions and committees: on taxation, 1878, 236; on municipal institutions, 1889, 88; on assessment, 1893, 240–4; on assessment, 1900, 258–64, 271–2; on railways, 1904, 272–7; on assessment, 1912, 313–14 Ontario Municipal Association, 257, 266–8 Osler, B.B. (Ontario lawyer), 251, 310 Osler, E.B. (Ontario politician), 378

572 Index

Osler, Featherstone (Ontario judge), 251 Osler, William (physician), 463 Ottawa: business lobbying in, 138, 362, 366, 399; and centralization of power and wealth, 56, 58, 62–5, 67–71, 75, 78, 85, 109, 246, 444; and Chinese laundry taxes, 227; and municipal union, 258, 393; organized labour, 141; seige of, 355–7; single tax in, 152, 314, 316, 401, 415; and tariff, 172, 178; and tax exemptions, 234, 286 Pardee, F.F. (Ontario politician), 414 Parliament of Canada: and bn a Act, 41, 44, 46; and class brokerage, 405; debates of, 123, 130, 137, 158, 164, 335, 358, 414–16, 432, 445; as economic forum, 29, 54, 66, 74, 138; and ethnic brokerage, 22, 46–7, 66; and regional brokerage, 63–6, 71, 92, 328, 348, 360, 445; senate, 70, 75–6, 79–80, 245, 350, 384, 425. See also elections, federal Parliament of Great Britain, 50, 63, 72, 84–5, 372 Partridge, E.A. (Manitoba agrarian journalist), 298, 357 partyism and partisanship: and control of government, 22, 65, 163; finance capital as political party, 359, 377, 433, 438; Laurier’s use of, 147, 180, 334–5, 347–8, 362–3, 371; Macdonald’s use of, 36, 37, 74, 79, 120, 123–7, 160; Mowat’s use of, 124, 243; municipal machine politics, 197, 228–30; partisan repudiation of, 362, 364, 369,

371, 378, 423, 428–9, 438–9, 441– 2; perpetuation and modernization of partyism, 375–6, 384, 400, 453– 4, 459; poverty not feigned for party purposes, 154; progressive critique of, 154, 201–2, 328, 349, 362, 364, 389–90, 449; Whitney’s rejection of, 278, 310–11. See also patronage Paterson, William (Ontario businessman-politician), 169, 171–3, 345, 358 Patriotic Fund, 393, 429, 431 Patronage: federal vs provincial, 54, 62–3, 69–71, 140; and Borden, 127, 363, 423, 426, 428, 450; and Laurier, 345, 351; Macdonaldian, 39, 54, 79–80, 123–6, 163, 311, 335, 450; racialized, 26, 39, 100, 363, 431, 450; and White, 409, 423, 453–4; and Whitney, 310–11 pauperism, 28, 50–1, 53, 126, 177, 208, 215, 219, 352, 393 Peacock, Edward (financier), 251–2, 273, 277, 364, 378 Pearson, Alfred (Winnipeg merchant and mayor), 302 Pelletier, Georges (Quebec journalist), 386, 431 Perley, George (Ontario lumbermanpolitician), 377, 413, 419 Perry, J. Harvey (historian), 6, 398 Petit, Maud (journalist), 381 Pettypiece, H.J. (journalist), 272–4, 278, 404 Pigou, A.C. (economist), 396–7 Piketty, Thomas (economist), 9, 457–8 Pipes, W.T. (ns premier), 89 poll taxes: in British Columbia, 101, 106, 111, 113, 300, 324–5, 383; in

Index 573

Montreal, 197, 201, 203–6, 210, 225; in New Brunswick, 287–8, 323, 454–6; in Nova Scotia, 86; in Prince Edward island, 92–3; in Winnipeg, 302 Poor Laws, 52–3, 68 Pope, J.H. (Quebec politician), 148 Pope, William Henry (pei politician), 43 popular violence, 33, 38, 130, 225; in British Columbia, 96, 111–12, 115–16; in Low Township, 8; in Montreal, 33–4, 51–3, 189, 193, 225, 435; in Nova Scotia, 72–5, 77, 82–3; in Quebec City, 448; Riel uprising, 111–12 Porritt, Edward (Ontario journalist), 346, 354 potlatch, 109, 285 poverty: as accidental, 73–4, 87; and b na Act, 16, 49–51, 129, 135; as Catholic, 27, 192; as female, 143, 382–3; and franchise, 230–2; as French-Canadian, 29–30, 431; as immigrant, 352; and improvidence, 202; as middle class, 333, 342–3, 354; as object of policy, 12, 67, 231–2, 311, 393–5, 420–1, 426–7, 451; and political history, 5, 11–13, 16–17, 39, 426; as product of policy, 52–3, 58, 63–4, 153, 326, 393– 5; racialized, 15, 51; and single tax, 152–3, 325–6, 330–1; as social fact, 210–16, 332–3, 337, 390; and tariff, 120–3, 172, 178; and tax exemption, 128, 153–4, 198, 209–10, 214, 222–4; taxed directly, 160–1, 190, 206, 216–17, 287–8, 330–1; and veterans, 427, 432; and violence, 68. See also rights, of poverty

Powell, J.I. (Indian agent), 111, 113 pragmatic philosophy, 15, 266, 271, 329, 424, 456 Préfontaine, Raymond (Montreal mayor), 196, 205, 228–9, 371 press and public opinion, 13, 444; and consumerism, 130; and cost of living, 372, 385; fiscal outrage in Anti press, 58, 71, 73–6; fiscal outrage in British Columbia press, 99–103; fiscal outrage in Montreal press, 171, 223–4, 260; fiscal outrage in progressive press, 298, 310, 321–2, 324, 328, 355, 370, 381, 402, 421, 436; fiscal outrage in Toronto press, 24–7, 31, 54, 227; and single tax, 312, 329; and stock market, 248, 276–7; wartime fiscal outrage, 443–4 Prince Edward Island: and Confederation, 41, 59, 69, 80, 92–3; in 1917, 447; taxation, 88, 92–3, 177 Prince Rupert, 285–6, 308 professionalization, 14; of accounting, 388; of economics, 242, 264, 273, 317, 456; of science and medicine, 389; of tax assessment, 253, 264 progressive economics: in Britain, 268, 319, 336–7, 396–7; in Canada, 309, 336–7, 430–2, 436; in United States, 185, 279, 309, 397 progressive fiscal reform, 10, 452; federal, 331–3, 349–51, 357, 400, 405–6, 455, 462; international, 245–8; local, 16, 185, 252, 263, 330, 351. See also farmers, labour, single tax, specific organizations

574 Index

Progressive Party, 328, 449 property, politics of, 11, 49, 147, 216–17, 360–1; as civilization, 284–5; and gender, 383; qualifications, 39; reconstructed, 238, 240, 265, 277, 324–6, 331, 426, 451. See also franchise protectionism: American, 23, 121, 129, 140, 158–9; British, 121, 372; challenged, 164, 324; emergent in Canada, 36, 86, 119, 122; enacted in Canada, 134–9, 147, 158; revisited in 1911, 355, 367 Protestantism and Protestants: purportedly overtaxed before Confederation, 15–16, 27–8, 34, 38–9, 59; purportedly overtaxed after Confederation, 120, 148; in Manitoba, 167–8; in Montreal, 190–3, 196–7, 203, 231; in Ontario, 399 provincial legislatures, responsibilities of, 46, 49–53, 62–3, 70; and the reconstruction of federalism, 88–92, 252, 328, 321, 361 public health in Montreal, 208–10, 214–15, 217–18, 389 public opinion: and consumption, 130, 176, 207; and crowds, 34, 52–3, 126, 137, 189, 193, 205, 225, 373; in election of 1911, 358– 9; merging with propertied opinion, 354, 392, 427, 451, 460; and municipal decision-making, 291–2; and political history, 13–14, 112, 295, 330, 370; and use of commissions, 137, 172, 176, 177, 180, 340, 347; vs professional knowledge, 12, 140, 263, 277, 296, 305 316–19, 329, 339–40, 401; vs propertied opinion, Macdonaldian,

32–5, 51, 83, 130; vs propertied opinion federally, 349, 375, 397, 424–5; vs propertied opinion in Montreal, 190, 194–8, 232, 367; vs propertied opinion re single tax, 281, 294–300, 309, 320–6. See also fiscal reform movement; partyism and partisanship; press and public opinion; single tax Puttee, Arthur (Winnipeg labour politician), 322 Quebec Conference, 42–4 Quebec Daily Telegraph, 197, 385, 391 Quebec L’Action Sociale, 368 Quebec La Semaine Religieuse, 191 Quebec: economic growth, 84–5; and federal fiscal reform, 404–5, 446; and federal subsidies, 86–91, 148; isolated in Canada, 439, 448–9, 461; provincial finances, 85–8, 90–1, 188–9; and separate schools, 325, 348, 399, 428. Quebec before Confederation, see Lower Canada; United Province of Canada Queen’s University, 243, 336 racialization and nativism, 16, 33, 193, 399, 439–40, 463; in British Columbia, 94–118, 303; in 1917, 424, 429–30, 437–45; and Quebec, 193, 228, 348–9; and single tax, 303, 324–5; and statistics, 156 Rae, John (popular economist), 139 railway, finance: in the Canadas, 22, 29, 37, 57; Intercolonial, 41, 57, 66, 92; nationalization, 422–3, 423, 450, 453; North Shore, 90; and stock watering, 249;

Index 575

transcontinental, 53–5, 93–4, 127, 148, 385; in United States, 162, 244–5 railway taxation, 236–8, 252, 260–1, 272–8, 349 reciprocity with the United States, abrogated in 1866, 23, 41, 67; as factor in election of 1911, 349, 357–63, 365–71, 373–4; as Liberal policy, 132, 150–1, 158–61, 165 Regina, 302, 437 regressive taxation: 5, 462; effect of war on, 396, 406, 435, 451; federal, 36, 119, 128, 178, 281, 331– 2, 396–8, 400, 430–2, 450–2; general property tax as, 261, 270, 288; measurement of, 146, 210, 213, 288, 455–7; nativism and, 69, 324, 445; poll tax as, 190, 324; tariff as, 23, 146, 179, 330, 398, 405–6, 451; water tax as, 190, 210, 213. See also fiscal transfers, social representation by population, 27, 32 responsible government, 22, 32, 38, 437; legacy of, 232, 295, 327–8; in Nova Scotia, 83 Ricardo, David, influence of, 101, 139, 153, 313, 340 Riel, Louis, 111–12, 148, 201, 203 rights: in b na Act, 6, 45–7, 429; of poverty, 5, 34, 53, 57, 84, 87, 162, 206, 221, 224, 232, 323, 330, 333, 370; as power, 8, 38, 45, 53, 59, 81, 84, 87, 266, 371, 439, 444, 461; of property, 5–6, 37, 39, 123, 186, 246, 251; provincial, 162, 168, 192, 428; of taxpayer 10, 30, 34, 37, 59, 62, 81–2, 100, 195, 200, 219, 224, 258, 307, 323

Robb, Charles (Montreal official), 198, 210, 221, 227, 229 Robinson, Christopher (Ontario ­lawyer), 260–1, 263, 270–1 Roblin, Rodmond (Manitoba premier), 349, 351 Robson, John (b c journalist politician), 99, 111 Roebuck, A.W. (Ontario journalist and single taxer), 313 Rogers, Robert (Manitoba politician), 124, 377, 411, 426, 428 Rolland, Damien (Montreal businessman-politician), 195–6 Rolland, Jean-Baptiste (Montreal businessman-politician), 195–6 Rose, John (Quebec banker-politician), 39, 77, 80 Ross, George (Ontario premier): and federal Liberal Party, 169, 360; investigates taxation, 258, 264, 272, 258; on single tax, 154 Rostap (Owen Staples) (Toronto cartoonist), 257, 258 Rousseau, Jean-Jacques, 335, 340–1, 459 Rowell, Newton (Ontario politician): and single tax, 312–3, 391; and schools question, 399; and 1917 election, 425, 435, 443–5, 448 Royal Canadian Mounted Police, 421 Royal Commission on Chinese Immigration, 113–14 Royal Commission on DominionProvincial Relations, 51 Royal Commission on the Relations of Labour and Capital, 137, 143, 211–15, 240, 338 Royal Commission on Taxation, British Columbia, 1911, 324–5, 383

576 Index

Rundle, W.E. (Toronto financier), 438, 448 Russia, taxation, 398 Saint John, assessment, 228, 241, 287–8, 454–7 Saint John Daily Sun, 287–8 Saint John Freeman, 61 Saint-Martin, Albert (Quebec politician), 404, 449 Sanford, W.E. (Montreal businessman), 135, 175 Saskatchewan: and federal elections, 364, 448; and First World War, 393; reform agitation, 402; schools, 325, 428; taxation in, 292, 299, 308–9, 325, 360 school taxes, 325; in Alberta, 308; in British Columbia, 99, 101, 105–6, 108, 112; in Manitoba, 167–9, 435; in Nova Scotia, 67, 82–3, 86; in Ontario, 399; in Quebec, 28, 31, 188, 192, 399 Schuman, Jacob (philosopher), 247 Schumpeter, Joseph (economist), 9, 247, 336 science: admiration for German, 430– 1; applied to assessment, 263, 272, 279, 314–15; applied to charity, 171, 215; applied to economics, 319; applied to shopping, 384; applied to tariff, 132, 138–40; and democracy, 457, 463; and fairness, 463; in government, 138–40, 380, 389–90, 396, 409, 426; sanitary, 218–19; scientific revolution, 140, 231; wars, 15. See also statistical analyis scrap iron decision, 250–1, 258, 261– 2, 265, 270–1

Seligman, Edwin (economist): correspondence with Canadian economists, 273, 318; hostility capital taxes (general property tax and single tax), 242–3, 272, 279–80, 283, 299–300, 317–18, 421; and progressive economics, 185, 242, 247– 8, 268–9, 314, 338, 397; quoted in Canada, 255, 261, 283, 287; theory of taxation, 190, 339 Sellar, Robert (Quebec journalist), 348, 357 settler colonialism and taxation 284–6 Sévigny, Albert (Quebec politician), 367, 428, 438 Shakespeare, Noah (Victoria mayor), 105–6, 108 Shaughnessy, Thomas George (railwayman), 419, 423–4 Shaw, John (Toronto mayor), 247, 257 Shea, Ambrose (Newfoundland politician), 43 Shortt, Adam (political economist): academic career, 243, 247–8, 291, 375, 456; economic liberalism, 249, 251, 276–7, 336–7, 344, 453; government service, 272–7, 343–4, 386, 389–90; single tax, 316–17 Siegfried, André (French sociologist), 334–5, 371 Sifton, Clifford (Manitoba businessman-politician): and Catholic schools, 168–9, 325; and election of 1911, 325, 363–6, 370, 373–4, 408, 446; and election of 1917, 325, 433, 435; and finance capital, 248; and patronage/clientelism, 124, 374; Siftonism, 446; and ­tariff, 169, 346

Index 577

Sing Koo (Victoria farmer), 105 single tax: and cost of living agitation, 382, 390–1; early history in Canada, 151–7, 304; in election of 1891, 159–60; in election of 1911, 370; in election of 1917, 405, 436– 7; in Manitoba, 302–3; in Maritime region, 289; in National Council of Women, 383; in Nova Scotia, 286–7, 289, 323; in Ontario, 243–4, 241, 260, 309, 404, 415; and political modernization, 326–7; in Quebec, 220; as transnational movement, 157, 401–2; vs mainstream economics, 238, 242–3, 246–7, 320–5, 339– 40, 342; in western Canada, 243–4, 289, 291, 293–4, 304, 307–8, 315– 16. See also Grain Growers’ Guide and place names Skelton, O.D. (economist): academic career, 340–1, 375; advocate of progressive taxation, 317, 397, 401, 430, 434, 453; and Bon Entente campaign, 429; consumption and cost of living, 340, 354–5; and election of 1911, 375; and election of 1917, 430, 434–6, 440; statist, 337, 455; on the tariff, 135, 180, 346 Smith, Adam, 23, 47, 52, 139, 157–8, 397 Smith, A.J. (n b premier), 66 Smith, Donald, Lord Strathcona (Montreal railwayman), 344 Smith, Goldwin (scholar-journalist): career, 247; on Confederation, 57, 148; and cost of living, 353; distrustful of popular vote, 297, 342– 3; in election of 1891, 163; on taxation, 128, 251

Smithe, William (b c premier), 111 smuggling, 7, 82, 172, 348 social construction, 15, 136, 463; Georgeite, 263–4, 269–71, 276–8; implications for war finance, 421, 424; marginalist, 335–6, 340; pragmatic, 266, 456–7; of social facts, 129, 219, 230, 331 social solidarity, 209, 285–6, 293, 330, 340, 458, 461–2. See also moral economy socialism: in Alberta, 402, 440; in British Columbia, 303, 322; and First World War, 401–2, 404–5, 424, 440; in Nova Scotia, 322–3; in Ontario, 176, 237, 404–5; in Quebec, 192, 404; in Saint John, 289, 323; and single tax, 157, 281, 283, 299, 322, 324, 327; in Winnipeg, 310, 322 Société canadienne d’économie sociale de Montréal, 405 Société d’économie sociale, 219 Southam, Wilson M. (journalist and single taxer), 312, 401 Spectator (London), 22, 52, 189, 232, 285 Stairs, J.F. (Halifax banker-politician), 350, 452 Stalker, Archibald (student), 316 stamp tax, 72 state capacity, 13–14, 17; academic pressures for, 336–7; constrained by White, 398, 408, 410, 412, 421– 3, 426, 451; constrained under Macdonald, 120, 126, 129, 135, 160–1, 172, 185, 398, 462; federal expansion of, 338, 344, 393–6, 428, 450; limits in British Columbia, 97, 106, 109, 114–17;

578 Index

local expansion of, 198, 208–9, 277–9, 311, 331, 410, 457. See also civil service reform statistical analysis, 14–15; bureaucracy of, 143–4, 272, 337–8, 394– 6, 426; and cost of living, 348, 382; lack of, 25, 171; political uses of comparative, 155–6, 177, 276, 291, 369, 387–9; and property–tax evasion, 162, 241, 288; and regressivity, 215–16, 219–20, 357, 454– 7; scientific development of, 208–9, 336–9, 353, 384, 387, 389–90, 426 statute labour: in pei , 92–3; in Montreal (corvée), 180, 203–6 Stephen, George, Baron Mount Stephen (Montreal railwayman), 122–3, 164 Stephens, George Washington (Montreal civic reformer), 189, 196–7, 199, 205, 211, 224–5, 230–1 Stephens, Harrison (Montreal developer), 196, 211 Stevens, H.H. (b c politician), 432 stock watering, 244, 248–9, 266, 275–7, 283, 372, 380–1, 412 Stuart, Henry Harvey (New Brunswick progressive reformer), 323 Studholme, Allan (Hamilton labour politician), 382 succession taxes, 128, 192, 327 Sullivan, William W. (pei premier), 93 Swanson, W.W. (economist), 291–2, 341 Sydney Canadian Labor Leader, 383 Taché, Joseph Charles (Quebec politician and official), 46

Tammany Hall, 35–6, 125, 197, 314, 335 tariff, 10; before Confederation, 22–3, 25, 36, 60, 453; of 1867, 72–7; and British Columbia, 95, 109, 117; and clientelism, 123, 163–4, 355–7; and cost of living, 253–4, 383, 385, 391; and election of 1911, 355–74; and evidence, 132–3, 139, 147; and Maritimes, 56–7, 61–7, 72–7, 83–5, 90, 117, 171–2, 289, 350; of 1879, 119, 121–3, 138–40, 147–8, 164, 181; as a tax, 120, 238, 333, 358–9; and western Canada, 297–8; under Borden, 351–2, 384, 400, 406, 411; under Laurier, 169–80, 343–9, 353–4, 394 Tarte, Isräel (Quebec politician), 343 Taussig, F.W. (economist), 273, 341 taxation and representation, 33; as education, 110; incidence of, 339; and legitimation, 266. See also particular taxes taxes imposed on Chinese: in British Columbia, 98 (1865), 99 (1872), 100 (1878); federal head tax, 116; laundries, 227–8 tax evasion, 330; evasion by debt, 248–9, 457; of general property taxes, 161, 234–7, 241, 248–9, 292, 401; and the liberal state, 117, 156, 200–1; mayors accused of, 199, 236, 302–3; racialized, 16, 95, 109, 117, 120, 324–5, 463; and war taxes, 407–8, 445, 452–3, 457 tax exemption: clientelist, 191, 195, 197, 248–9, 263; of Indians, 96, 111; for the poor, 128, 153–4, 209–10, 214, 257, 262, 288, 294,

Index 579

310, 383; of railways, 234, 236, 260–1, 301, 304, 313, 360; religious, 190–2, 206, 220, 227, 234, 286; state and state officials, 108, 190–1, 234, 286; and Victory Bonds, 434, 452–3. See also statute labour; on exemption of improvements, see single tax tax relief: for corporations, 91, 287; for the poor, 3–5, 17, 116, 403; and single tax, 312–13; tariff reform as, 137, 177; and water tax, 187, 209–10, 212–15, 222–4, 231 Taylor, L.D. (Vancouver mayor), 289– 91, 307 Thompson, Alan C. (single taxer), 271, 313 Thompson, E.P. (historian), 52 Thompson, John Sparrow, 89, 125 Thompson, Phillips (Toronto radical journalist), 144–5, 153, 177, 238, 264, 366 Thomson, E.W. (Toronto journalist), 343–4, 370, 374 Tilley, Leonard: and Confederation, 43, 60–1, 65–7, 69, 76; and Nova Scotia, 78; and patronage, 125; and the tariff, 84, 137–8, 142 Times (London), 159, 363, 418 Tocqueville, Alexis de, 98, 384 Toronto: assessment, 241, 250–3, 271–2, 285; Board of Trade, 360; and Earlscourt crisis, 352–3; Eighteen, 362, 438; finance, 186, 190, 257–8; and finance capital, 360, 378–80, 387–8, 423, 433, 438, 445, 449; and International Tax Association, 248; municipal reform movement, 387–8; municipal union, 258; and single tax, 260,

291, 309–10. See also Anti-Poverty Society Toronto Canadian Manufacturer, 167 Toronto Citizens’ Union Committee, see Conservative Party Toronto Daily Mail and Daily Mail and Empire: on French Canada, 54, 192, 194, 227, 432; on Ontario Assessment Commission, 258; on single tax 152–3, 159, 284 Toronto Financial Post, 263, 422 Toronto Industrial Canada, 381, 411 Toronto Irish Canadian, 294 Toronto Monetary Times, 90, 157, 244, 401, 410, 453 Toronto News, 277, 325, 361, 370, 423, 441, 444 Toronto Star, 313: on income tax, 453; on Montreal, 227; on single tax, 244; on tariff, 354, 362, 390– 1; on Thomas White, 364; on women’s work, 381 Toronto Telegram, 357, 379 Toronto World: on election of 1911, 361, 364, 367; on nationalization, 422; on single tax, 312, 315; on tariff, 151; on tax assessment, 252; on wartime finance, 410, 416 Tory, H.M. (university president), 393 Toynbee, Arnold (historian), 336 Trades and Labor Congress of Canada, 220, 238, 385, 402, 434 Trades and Labor Councils, 345; Calgary, 402, 419; Montreal, 203, 220–5, 405; Toronto, 143, 313; Vancouver 383; Winnipeg, 325 trusts, 245; blamed for cost of living, 386, 394–5; Borden policy on, 379–80; debate about in Canada, 251–3, 283; in election of 1911,

580 Index

265–7, 369–70, 374; and public opinion, 346, 357; taxation of, 272, 279 Tupper, Charles: and better terms, 72, 77–8; and Borden, 343, 350; and Confederation, 32, 43, 60–2, 66, 83–4, 71; death of, 443; and election of 1887, 90; and election of 1896, 167; as premier, 67, 87; and patronage, 124–5; ; as prime minister, 163; and tariff, 84, 122, 137, 180 Tupper, Charles Hibbert (n s politician), 443 Turnbull, Thomas (bc single taxer), 300 Turner, Frederick (American theorist), 298 Turner, J.H. (b c premier), 116 Turriff, J.G. (Saskatchewan politician), 407, 414, 425, 441 Underhill, Frank (historian), 29, 37 Uniacke, Andrew (n s Anti merchant), 61 Union of Municipalities: of Canada 258; of New Brunswick, 456 Unionist Party, see Conservative Party United Province of Canada, 21–7, 38, 41. See also Lower Canada, Upper Canada United States: Canadian emigration to, 146; Canadian fears of, 40, 120, 158–9; Civil War, 6, 40, 80, 451–2; and consumerism, 120, 131–2; and financialization, 359, 365–7; and First World War finance, 397–8, 401, 410, 415, 451–2, 454; and franchise, 295; and progressive fiscal reform, 16, 128–9, 161, 165,

185–6, 233–4, 241–2, 246–8, 263, 270, 280, 332, 338, 408; prosperity, 28; railways, 273, 275; Revolution, 21; and single tax, 305; tariff, 23, 140, 158, 357, 374, 385 University of Alberta, 393 University of Manitoba, 317 University of New Brunswick, 342, 455–6 University of Saskatchewan, 292 University of Toronto, 252, 262; ­economics, 140, 243, 336–8, 353; historians, 433, 442, 459 Upper Canada: affinity with Atlantic provinces, 55–6, 66; constitutional history of, 21–2, 41–5, 193, 246; and fiscal transfers, 16, 24–31, 39, 41–2, 44, 55–6, 63, 70, 442; Liberal Party, 24, 26; local government, 31–2, 42, 50; and sectarianism, 27–8 Urquhart, Thomas (Toronto mayor), 258 utilities: and civic government, 228; municipalization of, 159, 251–2, 279, 317, 422; nationalization of, 357, 361, 422; taxation of, 249– 51, 260–2, 270–1, 307, 327 value, 11, 263, 269–71, 283, 340; federal taxation of, 154–7, 351, 421–2; and stock watering, 244, 248–9, 269, 275, 283; taxation of, 267–9, 271, 275, 283 Vancouver: and election of 1917, 443; finances of, 186; municipal reform movement in, 388, 432; and single tax, 289–91, 303–4, 307, 318, 326

Index 581

Van Horne, William (railwayman), 163, 367, 373 Vankoughnet, Lawrence (Indian Department official), 112–13 Veblen, Thorstein (economist), 234, 286, 341–2 Victoria: and Chinese immigrants, 95; and Lekwungen reserve, 284–5; and potlatch, 105; and single tax, 291, 303, 321; taxation of Chinese, 99–100, 102, 104–6, 108, 113, 284–5 Victoria British Colonist: on Chinese, 73, 99, 101, 103; on single tax, 244, 303–4, 313, 321 Victory Bonds, 418, 434–5, 438, 451–2 Vimy Ridge, 408, 427 Vineberg, Solomon (economist), 272, 288, 318, 329 Von Schmoller, Gustav (economist), 336 Wade, F.C. (party activist), 168, 319, 325–6 Wakefield, Edward Gibbon (authorpolitician), 22 Waldron, Gordon (Ontario agrarian), 404 Walkem, George (bc premier), 96, 98, 101, 103, 111, 116 Walker, Byron Edmund (financier): cronyism, 379, 387; and election of 1911, 361–4, 370; and Liberal Party, 165, 310; and University of Toronto, 317, 420, 442 Warburton, G.A. (political party activist), 439 water tax in Montreal, 190, 200, 206–10, 231; brutal execution of,

217, 221–2; and corvée, 180, 203– 6; and fairness, 220, 222; revolt against, 206, 210–29 wealth: centralization of, 63–5, 178; and conscription, 432; governance by, 359, 371, 376–7, 395, 406–8, 412, 421–2, 426, 434, 438–9, 444, 452, 453–4, 463; governance in Halifax, 282–3; governance in Montreal, 34–7, 187–90, 192, 194, 209, 215–16, 231; governance in Ontario, 314–15; governance in Toronto, 16, 233, 237–8, 257–8, 276–80; governance in Vancouver, 326; governance in Winnipeg, 302; Indigenous governance of, 110, 284–5; Macdonaldian governance of, after Confederation, 119–24, 127, 129, 132, 134, 139, 140, 147, 185, 460; Macdonaldian governance of in the Canadas, 17, 29, 46, 49, 53, 56; obstacles to taxation of, 5, 223, 287–8, 452–3; and political history, 11, 13, 16, 39, 461–4; post-Macdonaldian liberal governance of, 330–1, 333–6, 398, 420; progressive governance of, 336–7, 350–1, 391–2, 395, 398, 418–19, 448–9, 451, 461; rights of, 5, 57; single tax theory of, 151–4, 156, 289, 304, 323–7; threats from, 164, 320, 342; threats to, 22–30, 89, 128, 251, 314–15 Weekly Sun, 353 Wells, H.G., 294 West, Byron H. (Nanaimo labour activist), 303 Western Canada: and cost of living, 382; economic development, 347– 8; and election of 1911, 163, 349;

582 Index

and election of 1917, 402–5, 435, 443, 446–8; and finance capital, 423; labour movements, 247, 383, 402–5; political alienation, 201, 347–8, 360, 380, 390; and single tax, 281, 289–96, 298–309, 316, 318–22, 324–6, 328–9; and tariff, 180, 346, 355, 357, 380 Westmount, 230, 334 White, Thomas (Montreal journalistpolitician), 91 White, Thomas (Toronto financierpolitician): correspondence with British Exchequer, 416–18; and Cox network, 254, 310, 387, 418– 19, 422; and election of 1911, 363–6; introduces income tax, 392, 416, 425, 451; named finance minister, 377–9; and nativism, 430, 437, 444; policies as finance minister, 386, 400, 402, 406–11, 426, 438, 449; and public opinion, 424– 5; reluctance to tax income, 398, 410, 412–18, 421, 460; as tax assessor, 252–4, 255–7, 261–2, 269; and Victory bonds, 453 Whitney, James (Ontario premier): and cost of living, 353; and election of 1911, 349–50, 358, 378; and French schools, 399; hostility to single tax, 310–14; and insurance taxation, 315; as opposition leader, 255; as progressive premier, 278, 280, 349–50, 364; and railway taxation, 274 Wickett, Samuel Morley (progressive businessman-reformer), 297, 337– 8, 387, 392–3 Wilkins, Martin (n s politician), 71–2

William Davies Company, 364, 369– 70, 378, 417–19, 434 Willison, J.S. (Ontario journalist): break with Laurier, 325; on Confederation, 54; in election of 1911, 361, 363; in election of 1917, 439, 441, 448; on railways, 249; on single tax, 311; on tariff, 158, 169 Wilson, Woodrow, 376, 385, 397–8 Winnipeg: general strike, 420; poverty in, 436; single tax, 322, 357, 436; and tariff, 171, 355, 363; taxation, 291, 301–5, 326, 388 Winnipeg Telegram, 440, 443 Winnipeg Tribune, 277 Winnipeg Voice, 310, 355, 421 Winnipeg Western Home Monthly, 256, 349, 370 Withrow, J.J. (Toronto politician), 236 women: and cost of living, 159, 381– 3; and franchise, 142–3; and nativism, 440; and tariff, 175–6, 371 Wood, Edward Rogers (financier): and consolidation of bond industry, 380, 435, 438; and Cox network, 253, 387, 390; and election of 1911, 363–5, 380; and election of 1917, 438, 448 Wood, Samuel T. (journalist and single taxer), 153, 339–40 Woodsworth, J.S. (social gospeller), 382, 402, 419 Wrong, George (historian), 442–3, 459 Wrong, Hume (historian), 443 Yarmouth Herald, 65