Exam 3: Regionalism

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Answers will vary, but students should show an understanding of why these concerns are historically and politically significant.
$\bold{\text{Ownership, taxation, and regulation of natural resources:}}$ The problem of natural resource ownership began in 1870 with the creation of the province of Manitoba.While the Eastern provinces and British Columbia always had jurisdiction over their own natural resources, Ottawa decided to retain such control in the case of Manitoba, and when Saskatchewan and Alberta were created in 1905, these provinces were placed in the same subordinate position.The logic of Prime ministers Macdonald in 1870 and Laurier in 1905 was that the federal government (i.e., central Canada) should control such resources in the national interest, allowing Ottawa to guide the development of the West.The Prairie provinces fought vehemently against this discrimination, and were finally successful in gaining control of their natural resources in 1930.
This conflict re-emerged in the 1970s with respect to oil pricing.Federal policy began to favour the consumer/manufacturing interest of central Canada at the expense of the producer interest of the West.The height of the regional economic conflict occurred in 1980 with the Trudeau government's National Energy Program (NEP), which imposed new federal taxes, retained a larger share of petroleum revenues for Ottawa, kept the national price below the world level, encouraged frontier-largely offshore-development, and promoted Canadianization of the industry, all objectives opposed by most Westerners.
$\bold{Tariffs:}$ The West has historically complained that Canadian tariff policy was designed in the interest of central Canada at the expense of the Prairies.This was because as early as in the 1879 National Policy, Macdonald saw the tariff as a means of promoting and protecting the industrial heartland of Ontario.Adding a tariff (an import tax) to the price of imported manufactured goods would raise their price above that of goods manufactured in Canada, even if foreign production costs were lower, so that domestic goods would cost less than imports.Thus, while the policy created jobs in central Canada, this policy hurt Western farmers by increasing their production costs.The Free Trade Agreement between Canada and the United States can be seen as an attempt to redress these complaints.
$\bold{Banking:}$ In contrast to community-based unit banks as in the United States, Canada deliberately developed a centralized branch banking system.This policy was in part an attempt to construct a sound, stable banking community that would avoid frequent local collapses, but the resulting lack of competition was also favoured by the established banking interests themselves and provided more evidence of corporate pressure on government policy.The result was a handful of large national banks, usually with headquarters in Montreal or Toronto, and with local branches spread across the country.From a hinterland perspective, money deposited in the local branch of a national bank would not remain in the community to be lent out for local purposes, but instead was sent to headquarters in central Canada to be used in the economic development of Ontario or Quebec.Moreover, decisions to make large loans were centralized at the head office, so that Western entrepreneurs would have to travel east if they wanted to borrow substantial sums.
$\bold{Transportation:}$ Another aspect of Macdonald's National Policy that displeased the West was transportation, especially railways.The Crow rate of 1897 was meant to subsidize transportation costs for the West.However, there were peculiar inequities within the freight rate structure, including higher rates for finished goods than for raw materials, which discouraged manufacturing in the West.