The announcement proved too audacious. Secretary Blaine indignantly denied that the United States had initiated the negotiations, and Sir Charles Tupper so admitted after the elections. Mr Blaine further made it plain that no treaty confined to natural products would be entertained. In the face of this statement the Government executed another sharp turn, and appealed to anti-American sentiment and protected interests, denouncing vigorously the Opposition's policy as sure to lead to ruin, annexation, and—the climax—direct taxation. Sir John Macdonald issued a skilful address to the electors, and the cry of 'the old flag, the old man, and the old policy' appealed to noble feelings and to deplorable prejudice alike.
In his address to the Canadian people Mr Laurier arraigned the National Policy for its utter failure to bring the prosperity so lavishly promised. Reciprocal freedom of trade with the United States would give the larger market which had become indispensable. The commercial advantages of such a plan were so clear that they were not disputed, it was attacked entirely on other grounds. The charge that it would involve discrimination against Great Britain could not have much weight in the mouths of men whose object was to prevent the importation of English manufactures. If it did involve discrimination, if the interests of Canada and the motherland clashed, he would stand by his native land. But that discrimination was involved he did not admit. It was not essential to assimilate the Canadian to the American tariff: 'Should the concessions demanded from the people of Canada involve consequences injurious to their sense of honour or duty, either to themselves or to the motherland, the people of Canada would not have reciprocity at such a price.' Direct taxation might be averted by retrenchment and revision of custom schedules. The charge that unrestricted reciprocity would lead to annexation was an unworthy appeal to passion and prejudice, and, if it meant anything, meant that it would 'make the people so prosperous that, not satisfied with a commercial alliance, they would forthwith vote for political absorption in the American Republic.'
The Government's appeal to the flag was greatly aided by some letters and pamphlets of Mr Farrer and Congressman Hitt and other leaders in the commercial union movement, which were made public and which gave colour to the cry that unrestricted reciprocity was only a first step towards annexation. It was in vain that Oliver Mowat and Alexander Mackenzie, the latter now soon to pass from the scene, voiced the deep-lying sentiments of the Liberal party in favour of British connection, and indignantly denied that it was at stake in the reciprocity issue. Sir John Macdonald's last appeal rallied many a wandering follower on grounds of personal loyalty, the campaign funds of the party were great beyond precedent, and the railway and manufacturing and banking interests of the country outweighed and outmanoeuvred the farmers. The Government was returned by a majority of thirty. In Ontario it had only four seats to the good and had a minority of the popular vote, while in Quebec the Liberals at last secured a bare majority. The other provinces, however, stood by the party in power, and gave the Government another lease of life for five years.
The smoke of battle had not cleared when a remarkable letter from Edward Blake, the late leader of the Liberal party, was published. It was a curiously inconclusive document. It began with a scathing indictment of the Conservative policy and its outcome: 'Its real tendency has been towards disintegration and annexation.... It has left us with a smaller population, a scanty immigration, and a North-West empty still; with enormous additions to our public debt and yearly charge, an extravagant system of expenditure and an unjust tariff, with restricted markets whether to buy or to sell.... It has left us with lowered standards of public virtue and a death-like apathy in public opinion, with racial, religious, and provincial animosities rather inflamed than soothed.... It has left us with our hands tied, our future compromised.' A preference in the English market was out of the question. Unrestricted free trade with the United States would bring prosperity, give men, money, and markets. Yet it would involve assimilation of tariffs and thus become identical with commercial union. 'Political Union,' he added in a cryptic postscript, 'though becoming our probable, is by no means our ideal, or as yet our inevitable, future.'
Mr Blake had persistently withheld his aid and advice from the leaders of the party since his resignation. His action now was resented as a stab in the back, and the implication that the Liberal policy was identical with commercial union was stoutly denied. If, as Mr Laurier had made clear in his electoral address, negotiations proved that reciprocal arrangements could not be made except on such terms, they would not be made at all. Yet the letter had undoubted force, and materially aided the Government in the by-elections.
The Government formally carried out its undertaking to open negotiations with the United States. Sir Charles Tupper, Sir John Thompson, and George E. Foster went to Washington and conferred with Secretary Blaine. But the negotiators were too far apart to come to terms, and the proposals were not seriously pressed. Later, when the tide of reaction brought the Democrats back to power in 1892, the Conservatives made no attempt to renew negotiations; and later still, when the Liberals came to power in Canada, the Republicans were back in office on a platform of sky-high protection.
Meanwhile, the increase of exports of farm products to Great Britain promised the larger markets sought, and made admission to the United States of less pressing importance. When, in 1893, the Liberal party met in national convention at Ottawa, limited reciprocity, 'including a well-considered list of manufactured articles,' was endorsed, but it was subordinated as part of a general demand for a lower tariff, now again prominent in the party programme.