3 R.B. Bennett: Taking the Broadaxe to the United States

Introduction

On first glance, many will likely conclude that R.B. (Richard Bedford) Bennett, as prime minister, was a face of yesterday. His repeated declamations in favour of the British Empire and against the United States paint him as a retrograde imperialist in an era when Canada was drifting towards greater autonomy. Bennett’s foreign policy actions only seem to reinforce this. Cooperation between Canada and the United States during his premiership was almost non-existent. Driven by his Tory sentiments, Bennett was a very willing belligerent in a trade war against the United States, all the while as Canada was suffering from the effects of the Great Depression. Bennett’s attempts to revive the old imperial connection with Britain ultimately ended in failure, and almost as soon as he was out of office, William Lyon Mackenzie King, his successor, concluded a trade agreement with the United States which signified the death of John A. Macdonald’s National Policy and ushered in a new era of North American relations.

It is easy to accuse Bennett of governing from ignorance: he did prefer sabre rattling against the old enemy of the British Empire to facing the reality of Canada’s growing dependence on the United States. But this assessment is rather unfair. Certainly, Bennett had a strong emotional attachment to the British Empire, as did many Canadians of his time. We must remember, however, that Bennett did not start the trade war with the United States and neither was he responsible for the Great Depression. Canada’s government was always on its back feet while Bennett was prime minister, reacting to situations over which it often had very little control. In these circumstances, Bennett showed a remarkable degree of adaptability and pragmatism, even with regard to the United States. Bennett’s premiership was undoubtedly a low point in Canada–US relations in the twentieth century; however, this was not borne out of animosity between the leaders of the two countries, as was the case, for example, of John Diefenbaker and John F. Kennedy. Far from being ignorant, Bennett was keenly aware of Canada’s dependence on the United States. He believed that Canada had a future of economic independence, separate from that of the United States, but he was repeatedly frustrated in setting the path for this because of the unstable factors around him.

Bennett’s Toryism, 1910–1930

British loyalism was baked into the Conservative Party since the coalition of John A. Macdonald, and the Party was able to use this to great electoral effect in the general elections of 1891 and 1911.^[1]  In particular, Conservatives advocated the policy of protective tariffs, directed primarily at the United States, as part of Macdonald’s National Policy. The Liberal Party, while not in favour of free trade, differed from Conservative policy by supporting smaller tariffs for solely revenue purposes.^[2] The tone of anti-Americanism continued to surround the Conservative’s tariff policy throughout the 1920s, with tariffs being a central piece of the Party’s platform in the elections of 1921, 1925, and 1926. Conservative Prime Minister Arthur Meighen, in a speech during the 1921 election campaign, declared that tariffs were the only alternative to the “absorption of Canadian industries and with them Canadian manhood and womanhood in the ever-expanding system of the United States.”^[3] The world, however, was changing in the 1920s, not least because of the effects of the First World War, and Macdonald’s National Policy was beginning to bend under the weight of the American behemoth. By 1922, the United States had displaced Britian as Canada’s largest capital investor and creditor (largely because that country had little credit to invest following the war),^[4] and by the end of the decade, the United States was also Canada’s largest trade partner.^[5] Although this can perhaps be attributed in part to the policy of the Liberal Party that, with King as prime minister, had been governing Canada for almost all of the decade, it was nonetheless unavoidable that the economic power of the United States would insert itself into Canada.

How, then, did Bennett address the changing landscape of Canada’s position vis-à-vis the United States?  With regard to his rhetoric, Bennett was proud to continue the Tory tradition of bashing the United States. At heart, Bennett was a hardline imperialist, and this necessitated some degree of anti-Americanism, but his loyalism to Britian was not so much ideological as it was a disposition. He called himself a “true imperialist” and viewed the British Empire as “[having] given to the subject races of the world the only kind of decent government they have ever known.”^[6] Thus, in 1911, Bennett had been strongly opposed to the Liberal government’s attempts at reciprocity with the United States, writing that if such an agreement were to be successful, “within a few short years half of the factories of Eastern Canada will be closed.”^[7] Also in the 1910s, Bennett became a vocal supporter of Imperial Federation, a cause first proposed by Britain’s colonial minister, Joseph Chamberlain, and then carried by Bennett’s close friend, Max Aitken, Lord Beaverbrook. Writing to Aitken, Bennett asserted, “If the Empire is to endure the self-governing nations which compose it must in some way be federated.”^[8] This notion would later be at the centre of Bennett’s attempts to form a new trade agreement with Britian.

When in 1927 Bennett became leader of the Conservative Party, his stance towards the Empire and the United States had not changed, and he continued to emphasize the need for protective tariffs. Luckily for him, the general election held on 28 July 1930 would make the tariff issue resonate with Canadians on a level not seen since 1911. King’s Liberal government had maintained a position of reduced tariffs for revenue purposes, so as not to alienate the Progressive Party members of Parliament (MPs), who were anti-tariff and on whom King relied to maintain confidence in the House of Commons. In essence, King harnessed a coalition of what he termed “anti-high-tariff forces.”^[9] This was in spite of steady US tariff increases on Canada throughout the 1920s, as well as the visible and increasing influence of the American economy in Canada. When campaigning in 1930, Bennett presented a program of economic nationalism, asking at one event, “How many tens of thousands of American workmen are living on Canadian money today?”^[10]

The most critical event occurred a month before the election, when US President Herbert Hoover signed into law the Smoot-Hawley Tariff Act, bringing about another round of tariff increases on Canadian imports. In anticipation of this, the Liberal government did increase tariffs a small amount prior to the bill being signed. But this was not enough for Bennett, who wasted no time taking King to task for what he deemed a weak riposte, “Imagine a country sunk so low that the Prime Minister says he will not do his duty by his country because, if he did, he might provoke someone. Is that the way your forefathers built up this province?”^[11] Tariff policy became a central issue of the 1930 election, one which Benett exploited with great effectiveness. He offered voters two closely linked solutions to the ongoing recession: protectionism and imperial trade. Most impressively, he was able to pitch these ideas to Western Canada, which was largely anti-tariff, with some success: “You say tariffs are only for the manufacturers. I will make them fight for you as well. I will use them to blast a way into the markets that have been closed to you.”^[12]

Politicians often talk tough and make many hopeful promises while on the campaign trail. But it is one thing to promise action and another thing entirely to deliver on it. Winning the 1930 election with a majority put the Conservative Party in a position to make policy. Here begins a divergence, however, for although Bennett’s rhetoric continued along the traditional Tory line even while he was in office, his policies did not always line up with the rhetoric. To be sure, some actions taken by the new government fit neatly into loyalist and anti-American ideals of Bennett and the Conservative Party, with tariff policy and the Imperial trade agreement being the two largest examples. Bennett also, however, showed a surprising acceptance of economic cooperation with the United States in his approval of the construction of the St. Lawrence Seaway and his eventual negotiations of the 1935 trade agreement with the United States. It is no coincidence that Bennet’s most anti-American measures were enacted in the early phases of his government, while the most pro-American agreement was made near the end. The economic crisis of the Great Depression forced Bennett and his government to behave in ways they otherwise would not have. Their standard loyalist policies were insufficient in solving Canada’s problems, forcing them to ultimately give in to American pressure.

Swinging the Broadaxe, 1930–1933

Bennett and his Conservative Party were elected in 1930 on a protectionist mandate. As prime minister, Bennett always strived to fulfil that mandate as best he could. Determined to show his mettle to the Liberal Party and to the United States, he raised tariffs on American exports to the highest level in Canada’s history.^[13] This may appear to be a reckless overreaction on his part, and certainly this was how the Liberal Opposition characterized it, with King stating in Parliament that Bennet used tariffs like a swashbuckler with a broadaxe: “He swings right and left in any direction regardless of where he strikes.”^[14] It should be noted, however, that the Liberals themselves had increased tariffs on the United States at the start of 1930, and C.P. Stacey has argued that they likely would have increased them even further had they stayed in government.^[15] The harshness of Bennett’s tariffs are to be viewed as an indication of how seriously he worried about the increasing dependence of the Canadian economy on the country’s southern neighbour. In a 1932 article, the Economist reported that Canada exported a larger amount of its products to the United States than to the entire British Empire combined.^[16] Of Canada’s manufactured pulp and paper – two of the country’s largest industries – 80 percent was being exported to the United States.^[17] Bennett’s long-term goal was to see Canadian industry blossom with Canada becoming a manufacturing powerhouse. He made this clear enough when he said, in response to the unveiling of the Liberals’ 1930 budget, “I am in favour of every proposal that will make for the advancement of Canada as an independent economic entity.”^[18] Thus, aside from raising tariffs, Bennett tried to subsidize Canadian industry as much as he reasonably could. In 1931, despite the worsening economy and low government revenue, the government gave substantial subsidies to the coal industry in the Maritimes against competition from the United States.^[19]

As expected, Bennett’s rhetoric turned more defensive in nature as he transferred from leader of the Opposition to leader of the government. The recession of 1929–1930 only worsened as the Conservative Party governed, and Bennett was forced to admit in Parliament that Canada’s economic situation was not just a product of Liberal mismanagement, that “certainly it is a world condition,” and that the Conservative Party had nonetheless chosen the correct course of action in raising tariffs against the United States, and, moreover, “had this new country taken the steps it should have taken in 1929 to produce a favourable trade balance, conditions would not be what they are.”^[20] Bennett would have to make good on his promise to “blast a way” into world markets, especially after taking the broadaxe to the market of the United States. Naturally, the most obvious trading partner for Canada, at least in Bennett’s mind, was the British Commonwealth.

A supporter of Imperial Federation at the beginning of his political career, Bennett still maintained this belief, in principle, even if the federation now looked different to him. What Bennett now wanted was an economic union between the countries of the new Commonwealth of Nations, generally referred to as the British Commonwealth, established in 1931.^[21] However, as someone who strongly believed in the potential of his own country, Bennett also wanted Canada to receive special treatment on matters of trade. Thus, he resolved to negotiate a preferential trade agreement with Britian. Such a thing had actually been proposed by the Liberal government of King at the beginning of 1930, but Bennett became its new champion following the July 1930 election. This was to be Bennett’s trump card: with a preferential trade deal for Canada from the Commonwealth, he could both remedy the current economic crisis and remove Canada’s dependence on the United States. He had long since believed that the British Empire could be used as counterbalance to American influence,^[22] and on two occasions, he attempted to put those beliefs into policy.

Two Imperial conferences occurred while Bennett was prime minister. For while they were not directly relevant to Canada’s relationship with the United States, the outcomes indirectly set the stage for the eventual trade agreement between the two countries in 1935. The most noteworthy outcome of the first Imperial Conference, which took place in London in 1930, was the establishment of the Statute of Westminster, although Bennett showed little interest in the constitutional debates, giving the statute his passive support.^[23] Instead, Bennett’s goals were entirely economically oriented, and so this first conference was largely a failure for Bennett, who was unable to convince the British pro-free trade Labour government of Ramsay Macdonald of the virtues of Imperial Preference. Nonetheless, there was sufficient interest to hold a second conference, in Ottawa in 1932, where deliberations became notoriously tense, with Bennett stubbornly making heavy demands while giving very few concessions. Britain’s Chancellor of the Exchequer Neville Chamberlain, in attendance, remarked, “Full of high imperial sentiments [Bennett] has done little to put them into practice. Instead of guiding the Conference in his capacity as Chairman he has stretched our patience to the limit. He has insulted us personally and still more our officials. He has been threatening and bullying in his manner, shifty and cunning in his methods.”^[24] The heart of the issue was this: Britian wished for low tariffs across the Empire, a proposition to which Bennett was understandably unwilling to agree. Conversely, Bennett wished for Britain to give preference to Canadian exports, which had been badly hurt by the US Smoot-Hawley Tariff Act.^[25] Consequently, the two countries arrived at a deadlock, one which Bennett was determined to force his way through.

In defence of Bennett’s behaviour, the economic situation in Canada was growing worse by the day, and the government would need to save face and come away with a deal they could prove would be beneficial to Canadians. In the end, the British delegates reluctantly gave Bennett what he wanted, agreeing to preferences on some Canadian manufactured goods. The government assured Canadians that this was a triumph, and 17 July 1932 was declared a National Day of Prayer for the success of the deal.^[26] On paper, the deal was indeed a triumph, and Canada’s exports to Britian received a great boost in the following years as a result of the Ottawa conference.^[27] However, on a larger political level, the deal failed, because it did very little to help Canada through the Great Depression. The promised deliverance from economic woes did not materialize for Canadians despite the benefits of Imperial Preference. Richard Wilbur writes, “By 1934, the three largest textile companies [in Canada] were reporting their highest trading profits since 1929 but were still paying wages as low as nine cents an hour.”^[28] As it happened, the Great depression would reach its nadir in 1933. Bennett’s trump card failed to save Canada from its economic crisis. Now that he could no longer look across the Atlantic for help, Bennett would begin to begrudgingly look to the south.

New Deals, 1933–1935

We have seen that anti-Americanism played a very important part both in the ethos of the Conservative Party, and in R.B. Bennett’s 1930 election campaign. Certainly, his retaliatory tariffs and other protective measures against the United States are actions completely in line with his words. Yet, a closer look at his policies while prime minister show that Bennett’s scepticism regarding the United States should not be mistaken for overt hostility. In fact, President Hoover commented on the disparity between Bennett’s actions and rhetoric, observing that “for political reasons … Mr. Bennett frequently finds it advisable to criticize us despite the fact that he personally is friendly to this country.”^[29] The Washington Post reported that, with the formation of the new government, hopes of Canada–United States collaboration on the construction of the St. Lawrence Seaway had been revived: “It appears from the campaigns that the new premier, R.B. Bennett, is especially interested in opening a channel for deep-water transportation between the Great Lakes and the Atlantic.”^[30]

On the Canadian side, work on the St. Lawrence Seaway had begun in 1929, under Mackenzie King’s Liberal government. It became greatly slowed, however, because it required delicate negotiations not just between the federal government and the provincial governments of Ontario and Quebec, but also with the US federal government and the government of the State of New York. Once again, Bennett was keen to fulfil his mandate, for during the campaign he promised “the improvement of the whole scheme of Canadian transportation,” a pledge which included completing the St. Lawrence Seaway.^[31] Large nation-building projects like this had always been a core policy component of Canada’s Conservative Party, dating back to the construction of the Grand Trunk and CPR railways.^[32] Even before becoming prime minister, Bennett believed that the project was getting bogged down because of chicanery and squabbling between those involved: “We are pussyfooting … because men think that your friend or my friend may be associated … and we have not the courage to stand up and talk about it.”^[33] Twice Bennett met with Hoover in Washington, D.C. to, among other things, grease the wheels of the waterway construction. The result was an agreement in 1932, pledging Canada and the United States to collaborate on completion of the seaway. Unfortunately, despite Hoover’s personal support for the project, the agreement did not receive the necessary support in the US Senate, which deliberated on it only in 1934, after Hoover was out of office.^[34] This was a frustrating blow to Bennett’s government, which greatly wished to collaborate on this matter, but could do nothing about the inaction of the United States.

If there seemed to be a silver leaning to 1933, it was that the newly inaugurated President Franklin D. Roosevelt was apparently more willing to reduce tariffs on Canadian goods. Initially, the Canadian government was enthusiastic upon Roosevelt’s election; Bennett and Roosevelt both pledged to reduce trade barriers between their two countries shortly thereafter.^[35] Bennett also endorsed a Liberal resolution in the House of Commons which called for trade negotiations with the United States.^[36] Even within Bennett’s inner circle, there were suggestions for an agreement with the United States: Bennett’s brother-in-law and ambassador to the United States, William Herridge, wrote in a memorandum to the prime minister, “Our debts to this country cannot be paid unless there is a restoration of our trade. A trade treaty is therefore necessary, if the United States desire to protect its huge investment and loans in Canada.”^[37] For the US part, on the passage of the Reciprocal Trade Agreements Act, Roosevelt received powers to negotiate trade treaties. This was only done in 1934, however, and Roosevelt’s preoccupation with other New Deal legislation meant that no serious negotiations on trade could occur with Canada until the end of that year, by which point Bennett’s government was coming close to the end of its term.^[38] Despite much public boasting about the benefits of the Imperial Preference Agreement, Bennet tried desperately to forge a new deal with the United States before his term expired.

Trade issues with the United States almost certainly brought R.B. Bennett to power with a majority government in the summer of 1930. It is quite ironic, then, that it was almost certainly trade issues which sealed his government’s fate in the general election held on 14 October 1935. Herridge had remarked that failure to work out an agreement with the United States would greatly harm the Conservative Party in that election.^[39] In a statement which showed clearly softening rhetoric towards the United States, Bennett proclaimed that a bilateral trade agreement, at least one he deemed fair, “cannot do possible harm and may do us great good, for the investment of the United States in our industries is very large.”^[40] Bennett appreciated that the economic situation was dire enough to necessitate a loosening of his protectionist policy on which he had campaigned. What he may not have fully appreciated was that Roosevelt understood this as well. The United States generally preferred Liberal governments in Canada, which tended to be more more-pro American. Policy analyst Marc T. Boucher argues that Roosevelt intentionally delayed negotiations for as long as possible, so that Bennett could be ejected from office and a more favourable deal could be struck with King. Indeed, Roosevelt covertly sent Professor William Elliott as an unofficial representative of the State Department to discuss trade issues with King, even though the Conservatives were still in government.^[41]  Conversely, Richard N. Kottman argues that it was Bennett who hoped to stall negotiations and blame Roosevelt for negotiating in bad faith, asserting that Bennett could thus revive anti-Americanism in his campaigning.^[42] In any case, seeing that his government would not reach a deal with Roosevelt before the election, Bennett backtracked and campaigned on defending the Imperial Preference Agreement with Britain.^[43] This cut little ice with Canadian voters, who by this point were disillusioned with Bennett’s promises to enter new markets. A trade agreement between Canada and the United States ended up being signed at the end of 1935 by the newly formed government of Mackenzie King, shortly after Bennett and the Conservative Party suffered a landslide defeat at the polls.

One more element of Bennett’s relationship with the United States ought to be examined: the so-called Bennett New Deal. In January 1935, Bennett shocked Canadians when he made statements over the radio which seemed to signal a great shift in his otherwise laissez-faire policies. “The old order is gone. I am for reform. And, in my mind, reform means Government intervention. It means Government control and regulation.”^[44] The government then put forth a series of bills containing progressive reforms, including legislation for unemployment insurance, a national minimum wage, and the creation of a central bank. It is undeniable that Bennett was attempting to emulate Roosevelt’s success in the United States. The concept of a Canadianized New Deal was largely formulated by Herridge, who as ambassador to the United States, could see the effect of Roosevelt’s efforts close up.^[45]

Still, there is some distinction to be made between the policies of Roosevelt and Bennett. Notably, Herridge’s plan for a Canadian New Deal had little to do with policy and much to do with rhetoric. Herridge argued that Roosevelt’s New Deal was working not because its policies were effective in ameliorating the effects of the Great Depression, but because Americans had been infected with a new sense of hope and believed that it was working. Thus, the purpose of adopting the New Deal north of the border was “to evangelize the country.”^[46] Bennett tried to distinguish his new policies from their American versions whenever he could. In unveiling his proposals for reforms over the radio, he made no reference to the United States. The old Conservative loyalism reared its head when his government stated that the proposed Employment and Social Insurance Act would put Canada “on a fair level with Great Britian,”^[47] referencing the British model of unemployment insurance. Critics of the Bennett New Deal sometimes accused the prime minister of copying Roosevelt. Others, however, made comparisons to British models of reform just as the government did. One of them was the socialist Frank H. Underhill, who backhandedly remarked that Bennett’s reforms “will bring Canada up to about the point which England reached under Mr. Lloyd George in the years before the war.”^[48] In the end, only a few of Bennett’s reforms actually survived his government. If Bennett is to be accused of pinching ideas from Canada’s southern neighbour, then his plagiarism was that of rhetoric and spirit, not necessarily policy.

Conclusion

R.B. Bennett’s tenure as prime minister of Canada offers is a sobering example of how the United States can limit the actions of Canada. American policy acted like a giant rubber band around Canada: if the country wished to move too far from the American orbit towards Britian, it would inevitably be constricted and shot back towards North America. Regardless of his flaws, Bennett was a man who unquestionably did his best to deliver on his government’s democratic mandate, and it was this drove his decisions. Rather than being a snow-blind imperial crusader, Bennett was a pragmatist, and he adjusted his policies in the ways he thought best for Canada. Bennett may fairly be accused of wanting to turn the clock back on Canada–US relations, but his concerns over economic absorption by the United States were real enough, and we ought not look at the 1930s with too much hindsight bias.