The late 19th century marked a new wave of global competition. Although the British empire still enjoyed its global dominance with extensive colonial control, its colonies in the New World gradually gained self-governance from the central government and experienced rapid economic development. Meanwhile, emerging industrial countries, especially Germany and United States, created arising threats and challenged the global dominant status. The emerging international conflicts mark the eve of worldly wars. Under such context, the British empire’s voluntary grant of self-governance to Canada in 1967 became a confusing action: the empire seemed to forfeit its global power as well as a military and economic base by doing so. Some may argue that self-governance would generate a global impression of Britain’s stagnation and decline to mediocre. Some believe that self-governance was the intention with which Britain still maintained the manipulative relationship with Canada. One question thus arises from the debate: how did British imperialism impact its economic and political relationships with Canada in the late 19th century? Although the British empire loosened its political interference in Canada after granting self-governance, Canada’s political and economic reliance on the empire demonstrated that the autonomous dominion was de facto subjugated to British imperialism such that the manipulation facilitated Britain’s global superiority among imperial powers.
While the British empire refrained from involving Canada’s domestic policy, the empire still held the political tie through international relations. Granting self-governance didn’t necessarily mean providing full independence to Canada, instead, the empire still reserved some rules in the dominion for securing imperial interests. In his book British Imperialism and the Making of Colonial Currency Systems, Narsey explains the empire was legal to decide policies of migration, capital investment, and tariffs for the empire’s “self-sufficiency” (Narsey 237). The central government could also, though rarely used, veto or appoint administrators in its colonies and dominions (Narsey 237). Considering emigration, trade and capital flow were essential factors for imperial expansion, the empire’s gripes on them showed its ambition in maintaining superiority in the world. Canada was still an important market for accommodating excessive capital and labor from Britain; so does the bilateral trade. On the other side, the loose local administration was a preventive action from another American Revolution, which was led by American elites for economic reasons. Thus, the acknowledgment of self-governance was a relief and hindrance to any potential rebellion from Canada. Secondly, the military further facilitated the implementation of policy. In the book British Imperialism: 1688-2015, Cain and Hopkins record the British military expense that equaled 37% of central government expenditure; dominions only disbursed 3-4% of their budget (Cain and Hopkins 229). The huge distinction between the two governments reveals the central government took a financial burden for securing its colonies from foreign imperial threats. By utilizing Canada as a military base, the imperial military could check and ensure its loyalty, such that the imperial policies could be implemented more effectively without hindrance. Although the empire loosened the political tie with Canada by providing some autonomy, it still grasped the essential instruments for imperial power and employed the military for supervision to maintain its political impact on Canada. Nevertheless, its shift in attitude hinted the central government had found a stronger tie to keep Canada subjugated in its imperial power.
In addition to the political connection, the Canadian government had a heavy reliance on British investment. Narsey has recorded the imperial policy about currency circulation that restricted the capital inflow of Canada, “British mercantilist laws prohibited the export of coin to colonies, while Britain vetoed similar colonial government laws which tried to ban the export of coin and bullion from colonies” (Narsey 232). Considering the international economies adopted the gold standard at that time, Britain feared excessive capital outflow (except oversea investments) would deplete the bullion in the country and thus lose its financial advantages among imperial powers. However, such policy discouraged trade and constrained economic growth and debt repayment in Canada. The dominion government struggled to self-sustain but had a further reliance on oversea investment to support its expenditure on infrastructures and repayment of debts. Therefore, the Canadian government had to please London for greater financial support: the 1897 budget plan of the Canadian government announced a 25% tariff reduction on British products (Dilley 121). Through the tariff reduction, the Canadian government intended to gain financial support by presenting its loyalty to the empire as an extensive market for British products and hint a lower cost in supplying raw materials. The courting finally won a £2 million concessional loan with a 2.5% interest rate from London—it was the first time a British colony could gain such a low-interest rate (Dilley 123). Nevertheless, such concessional loan revealed the so-called “self-governance” administration heavily relied on and was impacted by the British government in order to provide welfare and repay its loans. The dominion government was powerless to self-sustain its expansion under a small capital market, nor able to fight back the restrictions from the central government. The economic control from the British empire was proved to replace the political control to manipulate its settler colonies. Such economic control further extended to the economy in Canada.
Like its government, the shallow capital market could not satisfy Canada’s rapid economic growth; British investment became a necessary pulling factor to support the trend. Although Canada enjoyed surging economic growth at the beginning of industrialization in the 1840s, the domestic capital market became a critical disadvantage to support the pace. By the end of the 19th century, Canada still found the capital market relatively shallow with scarce labor and investment (Dilley 15-16). Since the capital market lacked ways to generate resources, the Canadian economy had to rely on investment from London. Canada’s economic reliance on Britain not only in governmental expenditure, not in domestic development—such an economic tie was much more effective and manipulative than a political tie in the empire’s perspective. On the other side, as the largest financial center at that time, London’s trust in its colony along with the high volume of investment turned Britain into the biggest investor in Canada until WWI (Dilley 37). From 1865 to 1900, Britain invested roughly £71.49 million in the market of Canada (except the investment to the government) (Dilley 39). The economic reliance further proves Canada had to maintain a loyal and obedient relationship with Britain in order to foster its domestic development. The bilateral trading relationship wasn’t conducted with equal status, as the British empire had a much larger negotiating power in trading. The industrialization in Britain led to heavy food importation from its colonies for sustaining the population growth. As Cain and Hopkins discover that “Britain was by far the largest purchaser of wheat internationally, but her imports accounted for only 10 percent of the total production of all the wheat-exporting countries in the late 1880s. Britain’s demand for Canadian wheat could not have added more than 2 percent to Canada’s per capita income at the time […]” (Cain and Hopkins 225). Considering wheat was one of the major commodities for exportation in Canada, Britain’s little importation of wheat from its dominion revealed the bilateral trade did not involve mutual benefits, but rather Britain gained a larger negotiating power while Canada relied on the export-oriented economy. Meanwhile, since Canada encountered restrictions in money circulation and the continuous borrowing increased its indebtedness, the exportation of raw materials to the British empire became a better way to repay the debts in the dominion. In other words, the imperial relationship between the British empire and its colony Canada did not confront many changes after the entitlement of “self-governance”. Instead, the one change was the deepening economic tie between the two places, in which both the Canadian government and market had more dependence on the British capitals.
Some scholars argue that the granting of self-governance to Canada brought positive and long-term benefits to the colony. In his book The Broad Stone of Empire, published in 1910, Bruce argues that “our colonial policy had for its aim to supply the colonies with a constitutional apparatus, to educate them in political methods, and to provide them with an equipment of political leaders and departmental officials with a view to their ultimate separation as independent States” (Bruce 170). Bruce considers the British empire’s ultimate goal in imperialism was to spread its civilization and democratic political system to its colonies. Its colonies than would become an independent replica of the British empire and share a friendly, mutually beneficial relationship with the empire in the long run. Bruce’s perspective is a vivid example of the White Man’s Burden, which is more an excuse to justify imperialism in the exploitative relationship. Even though Canada nowadays does embrace a matured democratic political system with decent GDP per capita, the entitlement of so-called “self-governance” was not the single reason contributing to the country’s status quo. Moreover, Bruce neglected that self-governance at the early stage did not generate major changes in the colonial relationship. Canada still confronted indebtedness, reliance on British capitals in government and development, and no full autonomy from the British empire until much later. In hindsight, the granting of self-governance to Canada seemed more like a disguise for the continuous colonial relationship between Britain and Canada.
This essay provides an insight into the economic and political relationship between the British empire and Canada in the late 19th century. Although Canada embraced some more political autonomy from the empire, Britain still grasped the right to control migration, tariffs, and capital investment which were essential to maintain its imperial dominance and determine Canada’s future growth. In the economic aspect, however, the colonial relationship had no change as Canada still relied on exportation and investment from Britain to sustain the development in the government and domestic market. The reliance on loans revealed the British empire loosened its political ties and shifted to economic control to maintain its impact and dominance on its settler colonies.