The Creation of a Confederation
After the establishment of responsible government，Canadians began to take more initiative in their relationship with the United States because they believed that the British government would not put Canadian interests first in deciding its North American policy.In 1854，Canada signed a Reciprocity Treaty with the United States which removed tariffs between the United States and the British colonies.Then in 1859，it adopted a protective tariff in order to encourage industrial development.These actions stimulated economic development in the 1860s and Canadians wanted to expand to the vast and sparsely populated territories in the west.Westward expansion required cooperation among all the colonies，which would be facilitated by a confederation.
Meanwhile，the United States remained a threat to the colonies’security.Some Americans wanted the American government to annex Canada during the American Civil War.This caused fear among the British colonies，and a realization that they needed a more powerful government to defend their border.
The political situation in the United Province of Canada also pushed the trend toward Confederation.By the 1860s，the English⁃speaking population outnumbered the French⁃speaking population.French⁃speakers believed that having their own province within a Confederation would preserve their language，culture，religion，and civil law tradition，because the provinces in a Confederation would each have authority over these matters within their own territories.
For all of these reasons，the colonies finally agreed to form a Confederation.In 1867，the British Parliament passed the North America Act which created the Confederation of Canada，also known as the Dominion of Canada.July 1，1867，the day when the British North American Act went into effect，has been celebrated as Canada’s national day ever since.The Confederation had only four provinces when it came into being：Quebec（the former Canada East），Ontario（the former Canada West），New Brunswick and Nova Scotia.With the American Civil War in mind，Canada’s founding fathers gave the central government more power than the provincial governments.
The new government of the Confederation worked hard to consolidate the Confederation and to build it into a continental nation.In 1869，the Hudson’s Bay Company sold its vast territory to the Dominion of Canada.In 1870，the federal government incorporated the vast territory into the Confederation as a new province after putting down a rebellion by the local Métis，people of mixed Indian and white ancestry.The new province，called Manitoba，guaranteed the right to use both French and English，and both Catholic and Protestant schools were allowed.In 1871，the colony of British Columbia entered the Confederation on the condition that the federal government would assume its large debts and build a railway line to the Pacific between 1873 and 1883.With British Columbia in the Confederation，Canada became a continental nation.In the same year，Britain withdrew its last troops from Canada.The colony of Prince Edward Island joined the Confederation of Canada in 1873，but the colony of Newfoundland did not join until 1949.
The economy developed slowly in the early period of the Confederation and the country experienced a period of depression in the late 1870s.To stimulate the economy，the government adopted a high⁃tariff policy.As a result，many American companies established branch plants in Canada in order to avoid the high tariff.This helped to create jobs and stimulated the growth of domestic industry in Canada.The government also encouraged immigration to the west and completed the transcontinental Pacific Railway in 1885.
The westward expansion roused uneasiness among the Métis in the West.They felt that their way of life was threatened by the westward movement of white Canadians and rose up in rebellion again in 1885.The rebellion was put down and the Métis leader Louis Riel，a French Métis，was executed.The execution of Louis Riel fostered nationalism in Quebec because the French⁃speaking population there believed that Louis Riel was executed for his French background.As a result，Quebec began to demand more provincial autonomy.
Quebec was joined by other provinces in a movement for provincial rights because economic development in the provinces was unbalanced and slow.In addition，the country was divided by regional differences between the east and the west，by cultural antagonism between the French and the English，and by religious confrontation between Catholics and Protestants.Some provinces even wanted to withdraw from the Confederation.
Things began to change during the 1890s when rising demand for agricultural products in Britain and Western Europe stimulated the Canadian economy，and Canada entered a period of rapid economic growth.The invention of new agricultural machines made cultivation of large farms possible in the west，which was still sparsely populated.This made the west more attractive to settlers.In 1896，gold was discovered near the Klondike River in the Yukon Area，and the resulting gold rush brought more people to the west.Because of the fast pace of development in the west，the provinces of Alberta and Saskatchewan were created out of the Northwest Territory in 1905.Between 1896 and 1921，the population of the west increased from about 250，000 to over 2 million.During the same period，the Canadian population as a whole increased from 5 million to 9 million.The westward expansion and the development of northern mineral resources stimulated industrial growth in the east.Between 1900 and 1920，the size of the manufacturing industry increased four⁃fold in Nova Scotia and five⁃fold in New Brunswick.All of these factors created demand for transportation.By 1915，two new transcontinental railways were completed which further accelerated westward expansion.
Economic prosperity fostered Canadian nationalism.In 1903，when Britain gave in to the U.S.demands in an Alaskan boundary negotiation and thereby deprived Canada of maritime access to the Yukon Area，Canadians became very angry.They began to demand diplomatic independence because they believed that Britain put its relationship with the United States ahead of Canadian interests.When Britain asked Canada for support in its rivalry with Germany for naval supremacy in Europe，Canada chose to establish its own navy in 1910 instead of financially supporting the British Royal Navy.