Reciprocity with the United States of America
From the mid-19th century on, many Newfoundlanders thought that one of the keys to a more prosperous future was a close and free trading relationship with the United States. Here was an enormous market which could easily absorb exports of all kinds from Newfoundland. Further, Americans might be induced to invest in Newfoundland. The significant level of emigration from Newfoundland to the northeastern U.S. helped keep the idea alive.
The issue of "free trade" or reciprocity was first debated during the early 1850s, when it was proposed that Newfoundland should become party to a reciprocity treaty being negotiated between the British North American colonies and the U.S. The treaty was signed in 1854, and Newfoundland signed on the following year. It provided for free trade in certain goods, and opened the fisheries north and south of the border.
The impact on the local economy was not great, partly because of the outbreak of the American Civil War, but support for reciprocity persisted after the U.S. abrogated the treaty in 1866.
Newfoundland became party in 1873 to the next general agreement with the U.S., the Treaty of Washington (1871). Under the treaty certain Newfoundland exports received free entry into the U.S. in return for American access to the inshore fisheries. The same terms applied to Canada. Both countries received financial compensation from the U.S. for the difference in value between the concessions granted to the U.S., and those granted to Canada and Newfoundland.
American fishermen took advantage of the treaty to develop a winter trade in frozen herring along the south (and later the west) coast, and frequently visited Newfoundland ports to purchase bait and other supplies.
Newfoundland Negotiations with America
The fishery clauses of the treaty were abrogated by the U.S. in 1885. The Newfoundland government now became interested in negotiating independently with the U.S. for a new trade treaty. This was because it was thought that Canada's various disputes with the U.S., in which Newfoundland did not share, would stand in the way of a joint treaty. Thus the colony asked the British government - which at that time handled external relations for all members of the Empire - for permission to open separate discussions with the Americans. Canada was strongly opposed to any such move, and it was not until 1890 that the British allowed Robert Bond, then a member of Sir William Whiteway's Liberal government, to go to Washington to find out what might be possible.
Canada Vetos the Bond-Blaine Convention
Bond's discussions with the American Secretary of State, James Blaine, went well. They reached a draft reciprocity agreement (later known as the Bond-Blaine Convention) which was similar to, but more limited than the Treaty of Washington: it traded free entry for some Newfoundland fish and mineral ores for American access to Newfoundland bait supplies. The Canadian government was outraged at this development, and lodged a strong protest with the British government. It argued that its own bargaining position had been severely weakened, and that anti-confederate sentiment in the Maritimes, particularly Nova Scotia, would be strengthened. As a result the British government decided not to ratify the convention.
Engraving by J.C. Buttra, based on a photograph by Napolean Sarony. From John Clark, Life and Public Services of James G. Blaine (Cincinnati: Jones Brothers & Co., 1884) frontispiece.
An angry Newfoundland government retaliated by refusing to allow Canadian fishermen to purchase bait. Canada took the issue to court, and imposed duties on Newfoundland imports; Newfoundland did the same to Canadian imports. Canada then threatened to impose sanctions on Newfoundlanders fishing on the Canadian Labrador. At this point it was decided to end the "war", and refer all points in dispute to a conference between the two governments.
This took place in Halifax in November, 1892. Nothing was achieved. The Newfoundland delegates refused to discuss confederation, and the Canadian delegates refused to lift their veto on the Bond-Blaine convention. Their position was strengthened by a court decision that Newfoundland could not refuse bait to Canadian fishermen, the only lever which the colony had at its disposal, and by the knowledge that in the last analysis, the British government would support Canada over the reciprocity issue.
The Bond-Hay Convention
Bond did not give up, however. He became premier in 1900, and returned to his goal of negotiating a trade agreement with the U.S. The British government overruled Canadian objections, and Bond was able to conclude a draft reciprocity agreement once again, this time with John Hay, in 1902. The problem now was not the Canadian government, but the U.S. Senate and the hostile Massachusetts fishing industry, which lobbied hard against the ratification of the Bond-Hay Convention.
The Senate Foreign Relations Committee listened, and in 1905 effectively rejected the convention. The Bond government reacted by trying to ruin the American winter herring fishery in the Bay of Islands. In addition, the government adopted a highly restrictive interpretation of the 1818 Anglo-American Fisheries Convention, which governed American fishing activity in British North American waters. The situation became tense. The U.S. government was not prepared to allow American nationals to be harassed, and the British government would not allow Newfoundland to cause an international incident which might harm Anglo-American relations. Thus Bond was forced to retreat, accept the fact that his convention was lost, and agree to refer the legal points at issue to international arbitration at The Hague.
The judgement of arbitration tribunal, announced in 1909, generally supported the case submitted by Newfoundland and Canada. This clarified the meaning of the 1818 Convention, but did not revive reciprocity. There was no further talk of a U.S. trade agreement in Newfoundland until the 1940s. The idea then surfaced once more, in the context of the debate over the country's future which began in 1946.
During the Second World War, the U.S. government negotiated long-term leases of Newfoundland territory for military bases. Many Newfoundlanders thought that the U.S. should pay rent in the form of a trade agreement, and that such a deal would be preferable to confederation with Canada. An Economic Union Party fought on the anti-confederate side during the 1948 referendum campaigns, and generated a significant amount of support. However, in the end Newfoundlanders decided to join Canada; and as a Canadian province, Newfoundland developed a closer trade relationship with the U.S. than it had ever experienced in the past, and eventually the "free trade" talked about for the previous century.