created at enormous cost, why endanger these east and west lines by switching the volume of trade north and south, and so empty the ports of Canada of their ships? Eastern manufacturers believed that they would lose their western markets, and eastern banks the custom from the numerous branches which they had opened on the prairies and in British Columbia. Milling interests were disturbed, the fruit growers of the Niagara peninsula feared competition, those interested in natural resources claimed that raw materials would be ruthlessly seized by wealthy American companies with which Canadians could not compete. All this made a powerful argument to present to a people who had slowly acquired a sense of nationhood. Was Canada to become economically subject to the United States? Behind this lay an apprehension that reciprocity might lead to political subordination, and this developed into alarm when Mr Taft himself said "Canada is at the parting of the ways," and by this legislation she would become "a mere adjunct of the United States." In many minds the alarm grew quickly into a foreboding at the words of Champ Clark, Speaker of the House, "I am for the Bill because I hope to see the day when the American flag will float on every square foot of the British North American possessions clear to the North Pole."

The Americans were surprised but they took the

reply of Canada calmly; indeed, it seems to have awakened in them more regard for a neighbour whom they had not yet fully understood. Years before they themselves had used the same arguments against those who advocated free trade between them and Britain. If Canada, having become mistress of her own household, would make no move that would threaten her economic independence, that was her own affair; and they could not refrain from respecting her when for the sake of preserving the ideal of her nationhood she could sacrifice what seemed to them to be her immediate material advantage.

Now that the clouds of partizan strife have drifted far off the question is sometimes asked whether the fears of those who rejected Reciprocity were well founded. A dispassionate answer, however, cannot be given, because the intrusion of the War has dislocated many factors that entered into the situation. Moreover, the continuance or decline of prosperity on one or both sides of the line would have been a ruling element in the case. It is, therefore, more reasonable to consider trade relations as they exist to-day, and to endeavour to outline prevailing tendencies.

The War introduced unprecedented conditions into Canada, among which not the least influential on her trade has been the self-confidence created by the conduct of her people at home and in the field.

It proved that they possessed organizing ability of a high order and that the skill of her expert technicians was equal to that of her neighbour. But in addition, vast amounts of new capital were brought into the country during those years by the expansion of her general trade and the specific manufacture of munitions. Financially she has become a new country. Her national wealth was estimated by the Dominion Statistician in 1919 at sixteen billions of dollars, a remarkable increase from two billions in 1911; and though the War cost her over two billions it is probable that the loss has been made good through the immense development in manufactures and food production which it stimulated. Canadians hold eighty per cent. of their own debt, they have made large investments in publicly owned undertakings, and they exhibited their resources in 1923 by rapidly absorbing a government loan of two hundred millions of dollars.

The amount of outside capital invested in Canada has risen from four hundred and fifty million dollars in 1890 to over four billion, six hundred and forty million dollars at the present time, but simultaneously the United States has been displacing Great Britain from her position as an investor in the country. In 1900 by far the greater part of the invested capital was British; now American investment is at least equal to if not larger than that from Great Britain.

Of the total investments in manufacturing industries fifty-eight per cent. are owned by Canadians, ten per cent. by residents of the United Kingdom and thirty-one per cent. by Americans, these last valued at eight hundred and fifty million dollars. Onefourth of all the foreign investments of the United States are in Canada, which has now become the most attractive of all countries for the American who has money to send abroad. This investment brings with it the industries which it supports, and with the industries come the managers and expert staffs, who naturally introduce into these branches the methods of business of their head offices.

In transportation Canada has been very directly influenced by the United States, as also in general communication services, the mails of the two countries being forwarded as though they were parts of one nation. Across Ontario the Michigan Central Railway has a connecting link for its system between east and west; and through New England, Michigan and some of the north-western States there run lines which belong to the two great Canadian systems. Railway equipment, traffic organization and management are so nearly uniform in both countries that men trained on American railways are often transferred to Canadian lines, the two most conspicuous examples being Sir William Van Horne and Lord Shaughnessey; and American influence as to wages

and freight rates is reflected at once north of the border.

Canada has become a great exporting nation. Though her population is small she stands fourth in the world in the volume of her exports and first in the per capita value of her foreign trade. Until the War four-fifths of this trade was with Britain and the United States, the former buying from Canada, the latter selling to her. But since the War the ratio has been rapidly changing. In the year ending March 31, 1924, Canada exported products to the United States valued at four hundred and thirty million dollars, or forty-one per cent. of the total trade; and at three hundred and sixty million dollars, or thirty-four per cent. to Great Britain. To the United States went timber, paper, pulp, farm and animal products, furs, fish, nickel, gold and other minerals; to Great Britain went wheat, farm and animal products in larger proportion. The imports into Canada from the United States, constituting two-thirds of the whole, for the same period were valued at six hundred and one million dollars as compared with one hundred and fifty-three million dollars from Great Britain. Of the former far the largest item was coal, after which came petroleum and raw cotton, together with a great variety of manufactured articles, finished or in parts. However, Canada is fortunate in her vast waterpowers, which already have been developed on an