The trouble in Manitoba settled, Canada had next to pacify her remote Pacific Province, separated from her by an immense and almost unpeopled wilderness. In 1871 British Columbia entered the confederation on the condition that a railway across the continent should be begun within two years and completed within 10. At the time the province contained but a few thou sand people of European origin, and there were complaints in eastern Canada that the vast ex penditure involved in the bargain would burden too heavily the country's resources. But, on pain of her withdrawal from the union, Britsh Columbia insisted angrily that the bargain should be carried out, and her attitude brought to the front the building of the trans-conti nental line which was to prove of supreme mo ment to Canada.
That Canada's small population should spend a hundred million dollars on this undertaking was a stupendous proposal; on the basis of the proportionate cost of each head of population a project for the United States to spend $2,000, 0D0,000 would be its equivalent. But to build the railway was the condition of national exist ence in Canada, and in the end the thing was done. Not, however, before the project had long disturbed Canadian . political life and threatened to overwhelm its promoters with ruin. When the Canadian Pacific Railway (q.v.) was projected, Canada was face to face with the question that has perplexed all the progressive states of modern times. Should the railway be a government or a private enter prise? Though a similar line, the Inter-Colonial Railway, connecting the eastern provinces, was a state enterprise, the cabinet of Sir John Mac donald shrank from saddling the country with so vast a burden as a railway to the Pacific, and it was resolved to hand over the task to a pri vate corporation.
In 1872 there was a general election in Can ada, and in the session of Parliament which fol lowed the Canadian Pacific Railway Company with Sir Hugh Allan as president, secured a charter to build the road. With this went also assurances of assistance from Canada amount ing to many millions. But when, as a result of the exposure by the opposition, the fact came out that Sir Hugh Allan had contributed more than $350,000 to Sir John Macdonald's campaign fund for the recent election, this *Pacific Scan dal' brought the downfall of the Government, which had accepted the obvious bribe. Amidst great excitement Sir John Macdonald resigned and the Liberals with Mr. Alexander Macken zie (q.v.) as prime minister took office in No vember 1873.
For five years the Liberals remained in power. Throwing less energy into the construc tion of the Pacific Railway than had been promised, they met naturally with discontent in British Columbia. The menace of withdrawal
from the confederation was renewed and at length the matter was referred for arbitration to Lord Carnarvon, the Colonial Secretary,' in London. He decided that the original terms were too onerous and proposed 'new ones under which a trans-continental railway should be opened by the end of the year 1890. When the Liberal Government thought even this al most impossible of accomplishment, *Carnarvon Terms of Separation' became the war cry in British Columbia. Financial depression over took Canada in 1876-78 and this heightened the difficulty of the question. But in 1876 the Gov ernor-General of Canada, the Earl of Dufferin, visited British Columbia to soothe her discon tent, and he helped to tide over the period of danger. It is interesting to speculate whether an attempt to withdraw from the Canadian union would have been resisted, if necessary, by force of arms. Probably the Canadian and Imperial governments would have agreed in using coercion.
The financial depression that helped to delay contentment for British Columbia produced ef fects in Canada even more far-reaching, for it led to the cleavage of political parties on the question of Protection (q.v.) or Free Trade (q.v.). .In 1878 Canada had a tariff of 17% per cent, which was hardly sufficient for her growing revenue requirements. During a gen eration she had tried to secure free exchange of natural products with the United States and in 1854 her governor, Lord Elgin, had succeeded in making a Reciprocity Treaty on this basis. But the treaty was not long in force and when abrogated at the close of the Civil War a heavy tariff upon Canadian products was soon imposed by the United States. Over and over again Canada tried to secure the reversal of this policy but always in vain. Meanwhile the low Cana dian tariff permitted American manufacturers to supply the Canadian market at prices with which the necessarily smaller producers in Can ada could hardly compete, and in time the cry for increased Protection was often heard. Had Mr. MacKenzie's Government taken it up in 1878 probably Sir John Macdonald would have rallied his forces under the banner of Free Trade. But when the Liberal leader refused tenaciously to adopt Protection, Sir John Mac donald proclaimed it as a Policy* for building up Canada, and the Canadian elec torate, forgetting the discredit which attached to him in connection with the Pacific scandal, returned him to power by an overwhelming majority. Since that time Protection has re tained its hold upon Canada, for though the Liberals favored free trade they disturbed the system but slightly on their advent to power in 1896.