Mr Laurier's first public address after his election to the leadership was given at Somerset, Quebec, in August 1887. After reviewing the deplorable discontent which pervaded the Dominion, due mainly to the Government's policy, he referred to the trade issue. The restriction policy practised for a decade had led to a reaction, he declared, 'which has not stopped within moderate bounds; on the contrary, it has gone to extremes, and at this very hour the great majority of the farmers of Ontario are clamoring for commercial union with the United States.... For my part, I am not ready to declare that commercial union is an acceptable idea.' The root of the commercial union movement, he continued, was the desire for reciprocity with the United States in some form, and to that policy the Liberal party had always been, and still remained, favourable.

In the following session the Liberal party made clear its position on the question. It definitely rejected by a large majority the proposal for commercial union. Adopting a suggestion of Mr J. D. Edgar, it advocated reopening negotiations with Washington to secure full and unrestricted reciprocity of trade. Under this policy, if carried to its full extent, all the products of each country would enter the other free, but each would continue in control of its own tariff, and the customhouses along the border would also remain. Sir Richard Cartwright opened the debate with a vivid summary of the backward and distracted condition of Canada, and of the commercial advantages of free access to the large, wealthy, and convenient market to the south. He concluded with a strong appeal to Canada to act as a link between Great Britain and the United States, and thus secure for the mother country the ally she needed in her dangerous isolation. Mr Laurier followed some days later. He emphasized the need of wider markets, of a population of consumers that would permit large-scaled industry to develop, and contended that any manufacturing industries which deserved to survive would thrive in the larger field. The same terms could not be offered England, for England had not a tariff in which to make reciprocal reductions. Canada would not always be a colony; what she wanted, however, was not political independence, but commercial independence. The opponents of the proposal had appealed to the country's fears; he appealed to its courage, and exhorted all to press onward till the goal should be reached.

In parliament the discussion led to little result. The Government took its stand against unrestricted reciprocity, on the ground that it would kill infant manufacturing industries and lead to political absorption in the Republic, and the division followed party lines. Meanwhile in the country interest slackened, for the time. In the presidential campaign of 1888 the Republicans, by a narrow margin, won on a high-tariff platform, so that reciprocity seemed out of the question. In Canada itself a new issue had arisen. Once more race and religion set Quebec and Ontario in fierce antagonism.

The Jesuits, or members of the Society of Jesus, do not now for the first time appear in the history of Canada. In the days of New France they had been its most intrepid explorers, its most undaunted missionaries. 'Not a cape was turned, not a river was entered,' declares Bancroft, 'but a Jesuit led the way.' With splendid heroism they suffered for the greater glory of God the unspeakable horrors of Indian torture and martyrdom. But in the Old World their abounding zeal often led them into conflict with the civil authorities, and they became unpopular, alike in Catholic and in Protestant countries. So it happened that 'for the peace of the Church' the Pope suppressed the Society in 1773, and it remained dormant for forty years. After the Conquest of Canada it was decreed that the Jesuits then in the country should be permitted to remain and die there, but that they must not add to their numbers, and that their estates should be confiscated to the Crown. Lord Amherst, the British commander-in-chief, made an unsuccessful attempt to have these estates granted to himself; but in the Crown's possession they remained, and fell to the province of Quebec at Confederation. This settlement had never been accepted. The bishops contended that the Jesuits' estates should have been returned to the Church, and the Jesuits, who had come back to Canada in 1842, asserted their own rights to their ancient lands. Thus the thorny question as to what disposition should be made of these lands baffled the provincial authorities until 1888, when Honoré Mercier, himself a pupil of the Jesuits, and now a most aggressively faithful son of the Church, grappled with the problem, and passed an act embodying a compromise which had been found acceptable by all parties concerned. The sum of $400,000 was to be paid in satisfaction of all claims, to be divided among the Jesuits, the Church authorities, and Laval University, in proportions to be determined by the Pope. At the same time $60,000 was voted to Protestant schools to satisfy their demands.

In Quebec the measure was accepted with little discussion. All the Protestant members in the legislature voted for it. But in Ontario the heather was soon on fire. It was not merely that the dispossessed Jesuits, whom some Protestants regarded as the very symbol and quintessence of clerical intrigue, were thus compensated by the state, but that the sanction of the Pope had been invoked to give effect to an act of a British legislature. The Protestant war-chiefs, D'Alton M'Carthy, Colonel O'Brien, and John Charlton, took up the tomahawk, and called on the Dominion Government to disallow the act. But Sir John Macdonald declined to intervene. A resolution in the House of Commons calling for disallowance was defeated by 188 to 13, the minority being chiefly Conservatives from Ontario.

In opposing the resolution Mr Laurier congratulated the Government on its tardy conversion from the vicious doctrine of centralization. The revolt of its followers from Ontario was the inevitable retribution due to a party which had pandered to religious prejudices in both provinces—due to 'that party with a rigid Protestant face turning towards the west and a devout Catholic face turning towards the east'; and which at the same time had proclaimed the right to disallow any provincial act. He did not, however, base his position solely on the plea of provincial rights. In itself the legislation was just and expedient, a reasonable compromise between seriously conflicting claims. Nor would he listen to those who called upon the Liberals to emulate the Liberals of continental Europe in their anti-clerical campaigns. He preferred to take tolerant Britain as his model rather than intolerant France or Germany. Once more he declared, as he had declared in Quebec twelve years before, that he was a Liberal of the English school, not of the French.

Outvoted in parliament, the champions of militant Protestantism found strong support in the country. An Equal Rights Association was formed to resist the danger of Catholic domination which many believed imminent. It had less influence in the politics of the Dominion than in the politics of Ontario, where Oliver Mowat was solemnly accused of having conspired with Honoré Mercier to raise the Jesuits to power. It contained many able and sincere men, yet its influence soon ceased. By 1894 its place was taken by the Protestant Protective Association, or P.P.A., a boycotting organization imported from the United States, which had a deservedly short life. But, while the fires burned low in the East, the torch had been passed on to the far West—from D'Alton M'Carthy to Joseph Martin. Of the conflagration which ensued we shall learn in a later chapter.

Men will sometimes pray, or may try to prevent others from praying as they list; but they must always eat. The pendulum of public interest swung back to trade relations with the United States. Depression still pervaded farming and manufacturing centres alike, though the abandonment of the policy of federal coercion had lessened political discontent. The return of the Republicans to power in 1888, it has been seen, appeared to put freer trade relations out of the question. The M'Kinley tariff of 1890 slammed the door in Canada's face, for in order to delude the American farmer into believing that protection was in his interest, this tariff imposed high and often prohibitive duties on farm products.

Should Canada retaliate, or make still another effort at a reasonable arrangement with its unneighbourly neighbour? The possibility of adjustment was not as remote as might have seemed probable. After all, reciprocity is as much a protective as a free-trade doctrine, since, as usually interpreted, it implies that the reduction in duties is a detriment to the country making it, only to be balanced by the greater privilege secured at the expense of the other's home market. James G. Blaine, secretary of state in President Harrison's Cabinet, was strongly in favour of reciprocity, particularly with Latin-American countries. In the same session which saw the passing of the M'Kinley Act, the House of Representatives agreed to the Hitt resolution, providing that whenever it should be certified that Canada was ready to negotiate for a complete or partial removal of all duties, the president should appoint three commissioners to meet the Canadian representatives, and report their findings.

This was the position of affairs when, early in 1891, Sir John Macdonald suddenly decided to dissolve parliament, in spite of an explicit promise to the contrary made a short time before. With the dissolution came an adroit attempt to cut the ground from under the feet of the Liberal party. It was asserted that, on the initiative of the United States, negotiations had been undertaken to settle all outstanding disputes, and to renew the Reciprocity Treaty of 1854, 'with the modifications required by the altered circumstances of both countries and with the extensions deemed by the Commission to be in the interests of Canada and the United States.' This announcement greatly strengthened the Government's position. Since the United States had taken the initiative there was likelihood of a successful outcome. Many who favoured reciprocity but felt doubtful as to the political outcome of the more sweeping proposals of the Opposition were thus led to favour the Government.