After the
Act of Union in 1840, all was not smooth sailing for the
Canadian economy. Radical change was in progress within the structure of the
British Empire. In 1846, the British
Corn Laws were repealed and the
Baltic Timber Tariff, which had favoured Canadian timber over Baltic timber in the interests of security during the
Napoleonic Wars, was significantly reduced. This led to the extremely severe
recession of 1848-1849. In response to this, Britain negotiated the Elgin-Marcy
Reciprocity Treaty with the
United States on behalf of
Canada.
The Treaty was meant to help in accessing new
markets and to stop the spread of the
Canadian Annexationist Movement, intent upon joining the
Unites States. The Treaty lasted from 1854-1866. Ironically, the
Crimean War and
railway building had ended the
recession by then. The Treaty served Upper and Lower Canada as well as
New Brunswick and
Nova Scotia and allowed the
Americans unrestricted rights in the
Gulf of Saint Lawrence Fishery. It also made all
trade in
natural resources and
agricultural products duty-free.
The Treaty was
abrogated by the
United States in 1866 in response to the
Cayley-Galt Tariffs of 1958-1859. These applied only to
manufactured goods and represented an effort by the
Canadian Government to raise funds after the severe
recession of 1857.