Economic Crisis
In 1843, the Parliament of the United Kingdom passed the Canadian Corn Act, which favoured Canada's exports of wheat and flour on the UK markets through the reduction of duties. The protectionist policy of Lord Stanley and Benjamin Disraeli, in continuity with Great Britain's colonial practice during the first half of the 19th century, was overturned in 1846, by the repeal of the Corn Laws and the promotion of free trade by the government of Robert Peel.
Canada's chambers of commerce feared an imminent disaster. The Anti-Corn Law League was triumphant, but the commercial class and ruling class of Canada, principally English-speaking and conservative, experienced an important setback. The repercussions of the repeal were felt as early as 1847. The Canadian government put pressure on Colonial Secretary Earl Grey to have Great Britain negotiate a lowering of the duties imposed on Canadian products entering the United States market, which had become the only lucrative path to export. A reciprocity treaty was ultimately negotiated, but only 8 years later in 1854. During the interval, Canada experienced an important political crisis and influential members of society openly discussed three alternatives to the political status quo: annexation to the United States, the federation of the colonies and territories of British North America, and the independence of Canada. Two citizens' associations appeared in the wake of the crisis: the Annexation Association and the British American League.
After 1847, the fears of the chambers of commerce in Canada were confirmed, and bankruptcies kept accumulating. Property values were in free fall in the cities, particularly in the capital. In February 1849, the introduction in Parliament of an indemnity bill only aggravated the discontent of a part of the population who had watched d'un mauvais œil the passing of a series of legislative measures by the reformist majority, which took power in beginning of 1848, about a year before.
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