As regards tariffs and trade regulations in the earlier Colonial period, nothing was left to the provincial authorities; all was regulated by British statutes and administered by Imperial officers. In the matter of taxation, after the American Revolution the British North Amer ican colonies had little to complain of, for in stead of being taxed to assist Britain the British people were taxed to assist the colonies. In return for her freedom to determine the com mercial policy of the colonies and to appoint their officials, Britain had to meet their deficits, besides furnishing the whole of the naval and military services.
The first important change in Colonial com mercial relations resulted from the recognition of the independence of the United States in 1783. Pitt and Shelburne had desired to con tinue practically the same commercial relations with the late colonies after the separation as had existed before it, considering that political independence did not alter the value of a profit able mutual trade. Technically, however, such a policy would do violence to the whole com mercial and colonial system, including the Navi gation Acts,— the system of °ships, colonies and commerce," upon which the whole British empire was supposed to rest — and this could not be permitted.
Canadians were for a long time too com pletely absorbed in questions connected with the control of their internal affairs to be much concerned with the fiscal policy of the country. Indeed they rather looked upon Britain's con trol of the fiscal policy as a means of obtaining increasing assistance from the mother country. The earlier tariffs were simple affairs, the rev enue being derived chiefly from duties on spirit uous liquors and the molasses from which rum was distilled. The sweeping prohibitions of the Navigation Acts simplified matters very much. There was no trouble with foreign European goods, because they were forbidden to be ad mitted to the colonies even in British ships, except when they had passed through British ports. It was in Britain, therefore, that the tariff dealt with them and qualified them for entrance to the colonies. In the matter of spirits and such things as were dealt with in colonial tariffs, a variety of preferential duties favored the more as against the less direct trade with Britain and the colonies. After the granting of representative legislatures in the colonies (1791 in Canada) they were permitted to impose customs duties on imports, for rev enue purposes only. The right of disallowance exercised by the Crown prevented any unfavor able treatment of British goods.
By the Act of 1778 the British Parliament maintained and freely exercised the right to regulate, by tariff or other restrictions, the com merce of the colonies, but explicitly stated that all revenue incidentally obtained, after paying the expenses of its collection, should go to the treasury of the colony in which it was collected.
There was thus a double jurisdiction in the mat ter of tariffs, the Imperial and the colonial. But, so far as the colonial and Imperial tariffs covered the same ground, only the colonial tariff was enforced. The Imperial tariff applied only where its rate of duty exceeded that of the colonial. The colonial tariff looked only to revenue ; the Imperial tariff to the regulation of commerce in the interests of Imperial trade.
The first legally recognized trade between the United States and Canada was provided for in the Quebec Ordinances of 1787-88, which permitted free export of all goods except furs and peltries, and the import of all forms of timber and naval stores, all kinds of grain and other natural products, and settlers' effects. Rum, spirits and manufactured goods were en tirely prohibited, but in 1790 pig iron was added to the list of permissible imports. Pitt's com mercial treaty with the United States in 1794 greatly promoted trade between the British American provinces and that country. In this he partly realized his earlier idea of permitting a free mutual trade in all ordinary goods be tween the United States and the British col onies. But, in deference to the Navigation Acts, so far as the trade was conducted by sea, it must be in British ships. A direct trade to the East Indies was also permitted to the United States. Later this led to several important re laxations of the British colonial policy.
The trade relations of the Maritime prov inces, as we have seen, were well established before the United States secured its independ ence, but, while the United States enjoyed.
great freedom of trade with all countries, the Maritime provinces still remained under the close restrictions of the Navigation Acts and the colonial system. Thus general merchan dise, even British and East Indian goods, was cheaper in the United States than in the British American ports. As a natural result there was extensive smuggling along the coasts of Nova Scotia and New Brunswick, and especially among the islands of Passamaquoddy Bay. American vessels supplied the colonists with liquor, tea, tobacco, molasses and other East and West Indian produce, and the chief lines of European and American goods. They received in return furs, fish, lumber, grain, etc., which they carried to their own ports and to the West Indies. Thus the restrictions designed to give Britain a monopoly of the colonial trade and shipping worked to the opposite purpose. Plainly the system had either to be given up or enforced by quite drastic measures. On the death of Pitt the latter policy was adopted, be ginning with the Orders in Council, which in turn induced the non-intercourse policy of the United States, and ultimately the War of 1812-15.