OttawaMatters.com, in partnership with the Historical Society of Ottawa, brings you this weekly feature by Director James Powell, highlighting a moment in the city's history.
July 21, 1932
The New York stock market crash in October 1929 marked the start of the Great Depression. Over the next three years, the global economy contracted at an alarming rate. Matters were exacerbated by misguided economic policies in major countries, aimed in part at maintaining the gold standard.
In an effort to prop up demand for U.S.-made goods, the United States introduced the infamous Smoot-Hawley tariffs in 1930. Tariffs on tens of thousands of U.S. imports were raised to levels not seen in over one hundred years.
In retaliation, Canada and other countries introduced tariffs against American goods to protect their industries.
The combination of high tariffs and slumping domestic demand sent international trade into a tail spin. In the three years to mid-1932, Canadian exports fell by roughly 50 per cent, while imports declined by more than 60 per cent. Canadian gross domestic production shrank by 24 per cent in the 1929-32 period. The global economy fared better, but still contracted by more than 10 per cent; unemployment soared everywhere.
Against this backdrop, the leaders of the United Kingdom, the Dominions, and India met in Ottawa during the summer of 1932 to discuss the disastrous economic situation, and to try to mitigate its effects through closer imperial economic association.
The conference had been requested by Canadian Premier R.B. Bennett at the end of the previous Imperial Conference held in London two years earlier.
At that conference, Britain had rejected a Canadian proposal for members of the Empire to institute a reciprocal imperial trade preference aimed at boosting intra-Empire trade.
Through much of the previous century, Britain had pursued a free-trade policy, confident that its manufactured exports could compete at home and abroad, while importing food and other raw materials from countries like Canada, Russia, and Argentina. But by 1932, the situation had radically changed -- the key U.S. market was largely closed to British goods, Britain had been forced off the gold standard, and a protectionist-minded government was now in power.
The new national government, which consisted of members of all three major political parties but dominated by the Conservative party, broke with tradition and introduced a general tariff of 10 per cent against non-Empire countries, and threatened to extend them to the Dominions that had already raised their own tariffs against goods from the Mother Country.
Now, all members of the Empire had something to gain from successful trade negotiations.
For Canada, the conference was of vital importance. With Canadian exports to the United States in sharp decline, redirecting trade toward imperial markets was critical for the economy, especially its farmers.
To ensure the conference’s success, the Canadian government made meticulous preparations, including the compilation by the Dominion Bureau of Statistics of six volumes of trade and other statistics to provide a common reference base for conference delegates.
Leaders, their delegations, and wives began to arrive in Ottawa in mid-July.
In preparation for the social battles about to be joined, it was reported that some ladies had brought maids as well as 20-30 pieces of luggage filled with gowns, shoes, and hats to wear at the many gala events and garden parties.
The Globe reported that "Ottawa will be a gay and delightful centre of social activity for the next six weeks."
The Indian delegation provided an exotic touch when the wife and daughter of Haji Sir Abdullah Haroon, member of the Indian legislature for Karachi and a senior member of the Indian delegation, arrived wearing Indian saris of bright coloured silk, embroidered in gold thread.
But it wasn’t to be all fun and games. Underscoring the importance of the conference, British Prime Minister Stanley Baldwin arrived with more than half of his cabinet and their wives. Delegations were met at Union Station by Prime Minister Bennett and his sister, Mildred Harridge, who acted as the Canadian hostess.
The conference officially got underway on the morning of July 21, 1932 with the arrival of the Governor General, the Earl of Bessborough, in an open landau on Parliament Hill amidst full vice-regal pageantry, including a guard of honour and a marching band. Delegates subsequently convened in the chamber of the House of Commons, Parliament having adjourned for the summer.
The Canadian delegates sat on the government benches to the right of the speaker’s throne, next to the Australian and New Zealand delegations. The British team sat to the left of the speaker’s chair.
The Governor General started the proceedings with a message of goodwill from the King, followed by his own personal greetings. Bennett was unanimously elected conference’s chairman. There were nine keynote speeches from each of the heads of delegation. Bennett, going first, re-submitted his proposal for a reciprocal imperial trade preference. The British Prime Minister cautiously supported the idea but noted that a trade preference can be achieved by lowering tariffs on intra-Empire trade, or by raising tariffs on non-Empire trade; the British government favoured the former.
The conference broke up into committees that afternoon, followed by a gala dinner for 900 guests hosted by the Canadian government at the Château Laurier Hotel.
Delegates agreed to work every day and evening except for Wednesdays, Saturdays and Sundays which were devoted to social events.
That first weekend, the Governor General hosted the heads of delegations and their wives at a formal dinner at Rideau Hall. Other members of delegations were invited to less formal functions at the Royal Ottawa Golf Club and the Ottawa Hunt and Golf Club.
On Sunday, churches across Canada and the Empire prayed for the success of the conference. In Ottawa, Dr. Clare Worrell, the Anglican archbishop of Halifax and Primate of Canada led prayers for leaders at St. Mathew’s Church, while His Excellency, Mgr. Andrea Cassulo, the Papal Legate, did likewise at Notre Dame Catholic Basilica.
Despite resolves to work for the common good and avoid bargaining for parochial gains, delegates haggled like fishwives over the next six weeks.
Initial cheers for Canada changed to jeers when news leaked that Canada was the sole hold-out preventing an agreement. However, when negotiations wrapped up on August 18, all countries had cobbled together a series of bilateral arrangements between each other based on Bennett’s idea of imperial preference.
In essence, Britain agreed to keep in place the exemption for Empire products from its general 10 per cent tariff. It also gave in to Dominion demands to impose new tariffs and quotas on the imports of agricultural products from outside the Empire.
Canada didn’t give Britain much, agreeing not to raise tariffs further on British goods, and to lower them on 200 items, many of which weren’t even made in Canada.
The Imperial Conference was a boon for Ottawa businesses which enjoyed a marked pick-up in sales as the hundreds of visitors bought summer clothes, souvenirs, and novelties. Department stores, like Murphy-Gamble and Freiman’s, noted that even the locals were buying.
In the long run, however, the trade preferences negotiated at the conference did relatively little for the Canadian economy. Canadian trade continued to be oriented in a north-south pattern with the United States; geography trumped imperial ties. Canadian exports did rise somewhat in the years that followed the conference, but the upturn was more likely due to the recovery in the global economy that anything else.
Moreover, later in the 1930s, Canada negotiated lower tariffs with the United States, its most natural trading and investment partner.
Britain was the big loser. Going into the conference, it had hoped to lower intra-Empire tariffs while keeping tariffs on foreign countries unchanged -- a modest step toward freeing global trade, while at the same time strengthening intra-Empire political and economic ties. Instead, by raising tariffs and instituting quotas on non-Empire agricultural goods, it exacerbated the global retreat from free trade, raised domestic costs, and undermined Britain’s leadership role in the world.