Ontario Businessmen and the Federal System, 1898 - 1911

Why were the major interest groups on opposing sides of government?

Since businessmen constituted the dominant class in Canadian society, they assumed that the state should be organized to meet their needs. But these changes in the structure of economic life meant that different groups within the business community now seemed to have conflicting needs. Two opposing groups of business interests- large, internationally- oriented financiers on the one hand and local businessmen and small manufacturers on the other--engaged in economically-based political conflict over the proper nature of the federal system in early twentieth- century Canada. The national financial community proved unable to protect its conception of private property rights by legal and political means at the national level, and the resulting victory of provincial rather than federal control over property rights made possible the creation of a publicly owned hydro-electric system in Ontario (Harry, 135).

In the province of Ontario, moreover, a publicly owned hydro- electric system was established over the objections of a powerful group within the business community, fearful of a general assault upon the rights of private property.

Why was part of the business community concerned about the rights of private property? Who were they and what was their concern?

In that struggle to define property rights, businessmen discovered that Canada's federal system provided them with a number of different points of access to the political process. Under the Canadian constitution, the provinces retained jurisdiction over property and civil rights, a provision liberally interpreted by the courts. During the 1890s a series of constitutional cases clarified the extent of provincial power. In 1892 the Judicial Committee of the British Privy Council decided that the British North America Act had not been intended "to subordinate provincial governments to a central authority, but to create a federal government, each province retaining its independence and autonomy." In the Fisheries Reference of 1898, the claim of the provinces to control all their lands and natural resources was sustained, and at the same time the argument that provincial powers might be abused by the confiscation of private property was summarily dealt with: "The supreme legislative power in relation to any subject-matter is always capable of abuse, but it is not to be assumed that it will be abused; if it is the only remedy is an appeal to those by whom the legislature is elected."

The significance of these decisions may be gauged by noting that in the same year, 1898, the Supreme Court of the United States completed a process of constitutional reinterpretation on precisely the same issue and came to the opposite conclusion. The Fourteenth Amendment forbade the states from taking anyone's property without "due process of law." Previously, this phrase had always been construed in purely procedural terms (Nelles, 189). After the Civil War, however, the claim began to be advanced that due process had a substantive connotation as well, that it included the protection of vested rights. By 1898 the Court had accepted this, declaring ...