CANADA 



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CANADA 



allow Nova Scotia to withdraw from the union, 

 and a compromise was finally effected, by in- 

 creasing the amount of the annual subsidy to 

 be paid to the province by the Dominion. 



The first years of the Macdonald Ministry 

 were occupied chiefly in organizing the new 

 government. Postal rates were unified and the 

 postoffice placed under the control of a single 

 department, the tariff was systematized, and a 

 civil service and a militia were established. A 

 national banking system was created by an act 

 of 1871, and the Intercolonial Railway was 

 opened to traffic in 1876. The most serious 

 difficulties arose in connection with the exten- 

 sion of the Dominion to the west. The Red 

 River Rebellion (see above), while easily sup- 

 pressed, caused great anxiety, and the Pacific 

 Railway was a political issue for ten years. 



Foreign Policies. Without doubt the most 

 notable achievement of Macdonald in dealing 

 with foreign relations was the settlement of a 

 number of long-standing disputes between the 

 United States on the one hand and Canada and 

 Great Britain on the other. At the request 

 of the Canadian government Great Britain 

 asked the United States to make a peaceful 

 settlement of the questions in dispute. A 

 joint commission was appointed, with Macdon- 

 ald as Canada's representative, which met at 

 Washington, the capital of the United States, in 

 February, 1871 . The United States claimed that 

 Great Britain should pay for the damage in- 

 flicted by the Alabama, a Confederate cruiser 

 which was fitted out in England (see ALABAMA. 

 THE) . This claim the commission submitted to 

 arbitration. The Canadian claim for damages 

 from the Fenian raids was withdrawn by the 

 Dominion at the request of the Imperial govern- 

 ment, but in return for this surrender Great 

 Britain guaranteed a loan for the construction 

 of Canadian railways. The Saint Lawrence 

 River and the Great Lakes were opened to 

 ships of both countries, and the Oregon boun- 

 dary was at last definitely settled. The fish- 

 eries dispute was turned over to a commission 

 which held sessions at Halifax, N. S., and 

 granted the United States the unrestricted use 

 of Canadian waters for ten years in return for 

 a cash payment of $5,500,000. The Treaty of 

 Washington in this way disposed of several 

 troublesome problems. 



Fall of the Conservatives. When British 

 Columbia entered the Dominion in 1871 it was 

 with the understanding that a transcontinental 

 railway would be begun at once. In 1872 two 

 companies of Canadian capitalists, one headed 



by Sir Hugh Allan, the other by Hon. David 

 Macpherson, sought a charter for the construc- 

 tion of this railway. While negotiations were 

 under way to unite the two companies, the 

 charge was made in the House of Commons 

 that Macdonald and certain other members 

 had received and used money furnished by 

 Sir Hugh Allan to influence voters in the elec- 

 tions of 1872. While it did not appear that 

 Macdonald or any other member of the Min- 

 istry had profited personally from these transac- 

 tions, it was generally admitted that Allan had 

 paid out large sums of money with the under- 

 standing that his company would be awarded 

 the contract. Public feeling became very in- 

 tense, and the Macdonald Ministry resigned in 

 October, 1873, before the charges could be 

 brought formally. The Governor-General, 

 then the Earl of Dufferin, called on Alexander 

 Mackenzie, the leader of the Liberal opposi- 

 tion, to form a new Ministry, which received 

 an overwhelming majority at the general elec- 

 tions. 



Mackenzie and Liberal Rule. The new Pre- 

 mier, Mackenzie, soon announced that it would 

 be impossible to build the railroad as had 

 been planned. He proposed that the Dominion 

 should itself undertake the task and build the 

 road a little at a time, as its finances per- 

 mitted. This suggestion was unsatisfactory to 

 British Columbia, which forced the government 

 to agree to build a wagon road and telegraph 

 "line at once and to complete the railway by 

 1890. During the years that the Mackenzie 

 Ministry held office a number of important laws 

 were passed. One established the Dominion 

 Supreme Court, another adopted the Australian 

 ballot (which see) and a third organized the 

 Northwest Territories. Immediately after the 

 Red River Rebellion the Northwest began to 

 fill with settlers, who needed some organized 

 government. A new feature of this govern- 

 ment, which has since been copied in Australia 

 and elsewhere, was the Royal Northwest 

 Mounted Police (which see). 



Though the Liberal Ministry was responsible 

 for these and other advances, it was not very 

 popular. It was handicapped in its policies 

 by a strongly Conservative Senate and a pow- 

 erful opposition even in the House of Com- 

 mons. Canada, moreover, was passing through 

 a period of business depression, which was 

 unjustly laid at the doors of the Liberals. 

 The factories of the United States, which 

 were then suffering from a similar depressed 

 condition, tried to flood Canadian markets with 





