To World War I

National development, national autonomy, and national unity were the goals of the dominion government from its inception. These goals, however, were not achieved without difficulty. Soon after confederation, a strong movement developed in Nova Scotia to have the British North America Act repealed. Many Nova Scotians believed their interests would be better served in a union of the Maritime Provinces or even by annexation to the United States. The repeal movement died out, however, after several years.

Among the early accomplishments of the dominion government were the establishment of a postal system in 1868; the passage of a national banking act in 1871; and the opening of the first railway system, the Intercolonial, in 1876.

The building of the Canadian Pacific Railway, Canada's first transcontinental railroad, was the chief political issue for more than a decade. Prime Minister Macdonald's government fell as a result of the Pacific Scandal of 1873, when it was revealed that the Conservatives had taken large campaign contributions from financier Sir Hugh Allan and his business associates during the 1872 elections, and then rewarded them with the contract to build the railroad. The Liberals, led by Alexander Mackenzie, came to power proposing that the railroad be built by the government. They held office for five years, but were defeated in 1878 because Mackenzie's leadership was viewed as too cautious by many Canadians. The railroad was finally built by a group of private investors, with some financial aid from the dominion government, and was completed in 1885.

The Conservatives, still led by Macdonald, had returned to power in 1878 promising economic development. Their “National Policy,” as their platform was called, included protective tariffs, railway construction, and the settlement of the West. Until his death in 1891, Macdonald was the dominant figure in Canadian politics. His leadership did much to give firm foundation to the young dominion, despite a prolonged depression that hampered economic progress and discourged immigration, and the continuing conflict between French and British Canadians. After his death, dissension among the Conservatives cost them the confidence of the country, and the Liberals won the election of 1896.

The new prime minister, Wilfrid Laurier (who became Sir Wilfrid in 1897), was the first French Canadian to head the federal government. During the 15 years of his ministry, Canada experienced rapid economic development as well as a growth of national unity. Population increased from about five million in 1901 to seven million a decade later. There was significant development of mineral resources, hydroelectric power, lumbering, and manufacturing. The new national spirit of the era was exemplified by the laying of the Pacific cable from Canada to Australia; the removal of the last British garrisons and substitution of Canadian troops, making the dominion responsible for its own defense; and the negotiation of commercial treaties with France, Japan, and the United States.

Laurier lost the election of 1911. His defeat resulted from opposition in French Canada to his sending Canadian troops to South Africa to fight in the Boer War and from opposition in Ontario to his commercial treaties with other nations, which were felt to threaten the prosperity that had been bolstered by protective tariffs. The Conservative party under Robert Laird Borden took office in 1911, but continued virtually the same policies as Laurier.