What the Fathers of Confederation meant by Canadian federalism was stated fairly clearly, or confusingly if you are looking for absolutes, in the preamble to the BNA Act, 1867 30 & 31 Victoria, c. 3.. It reads, in part:
Whereas the Provinces of Canada, Nova Scotia, and New Brunswick have expressed their Desire to be federally united into One Dominion under the Crown of the United Kingdom of Great Britain and Ireland, with a Constitution similar in Principle to that of the United Kingdom:
And whereas such a Union would conduce to the Welfare of the Provinces and promote the Interests of the British Empire:
And whereas on the Establishment of the Union by Authority of Parliament it is expedient, not only that the Constitution of the Legislative Authority in the Dominion be provided for, but also that the Nature of the Executive Government therein be declared:
And whereas it is expedient that Provision be made for the eventual Admission into the Union of other Parts of British North America:
This is the historic compromise, "the deal" if you will, achieved at Confederation between a theoretical federalism bridging the concerns of space and demography, on the one hand, and, on the other, a legislative union or "Constitution similar in Principle to that of the United Kingdom," which is and was a unitary state. The American example was specifically avoided, quite naturally, given the obvious failure of American federalism which had resulted in the Civil War raging at the time of the key conferences leading to Confederation, in 1864. Though Confederation would provide for the "Welfare of the Provinces", it was to "promote the Interests of the" nation (that word again), meant prior to the Statute of Westminister (1931) to mean the British Empire and now meaning Canada, not some alliance of state-like provinces. Moreover, they were uniting British North America, with provision for "eventual Admission...of other Parts of British North America". The ideal of the Fathers of Confederation was a strong union of British North America, not American federalism.
We are Canadians first and last. That is our ideal. Provincial autonomy, as claimed incriminatingly by Stephen Harper to be the belief of all "conservatives", is a belief no Tory understanding of Confederation would hold and it is at odds with the "deal" struck at Confederation which was designed to mitigate the sectarian divisions between the provinces by allowing specific powers of a local nature to remain with local provincial legislatures (s. 92. 16) while any undeclared residual powers were to lie with the federal government.
This is not to say that other opinions were without advocates, only that the final resolution, "the deal", which achieved the Canadian federal principle was an historic, workable, compromise between federally united provinces into "One Dominion" with powers "in Matters of a merely local...Nature" (S. 92. 16) and the unifying power of a truly national government "with a Constitution similar in Principle" to the United Kingdom under the Crown.
It was a wise compromise, a necessary compromise because provincial powers were necessary to 19th century conditions in a way that has long passed. It was made with eyes wide open to the dangers of unmitigated federalism of the kind idealized unwisely by those whose political beliefs echo Preston Manning and Stephen Harper.
...will the application of the federal principle heal the sectional difficulties under which we labor? On this point we may refer to the experience of our neighbours across the lines, where under the fostering care of this same "Federal principle," the sectional difficulty has grown, in one generation, to proportions so gigantic as to astonish the world by the "irrepressible conflict" waged in its interest." (the Conservative Mount Forest Examiner quoted in the Toronto Leader, July 2, 1864, in Waite p. 113)
We do not say nor do we wish to believe the popular cry of today that the federation of the Provinces will bring trouble upon us if consummated. We would trust that our case will prove an exception to the many instances... (the Hamilton City Enterprise, October 22, 1864, in Waite pp. 113-4)
Have we not seen enough of federations with their cumbrous machinery of government, well enough in fair weather, but breaking up with the least strain - with treble taxation - with staffs of state functionnaries...and with harrassing disputes of various jurisdictions? (S.E. Dawson A Northern Kingdom Montreal:Dawson, 1864, p. 13, in Waite p. 115).
The answer to the application of the federal principle in British North America was to submerge the sectionalism of the provinces in a new appointed Senate of Canada, styled after the House of Lords, restrained in its sectionalism by its appointed status and a shared duty of loyalty to a sovereign Crown. Regional representation in the Upper Chamber would balance representation by population in the Commons. Establishing equally represented Senate Divisions comprising broad regions rather than individual provinces and distributing seats in the Upper Chamber within the Divisions would dissipate the forces liable to wrench and tear apart the union were the sectionalism of provincial representation to be paramount, as could be seen to be the common fate of formal and idealized federations. This was the genius of Confederation, at times vague in its apparent meaning, consciously, so as to guard against the fragility of more brittle, too exactly designed and therefore less flexible arrangements. The instruments of sectionalism within our Parliament and federal principle were meant to ameliorate and dissipate the insecurities of sectionalism, which is what recourse to federalism is all about, and so to become more formal and dignified rather than instruments of division.
The historian P.B. Waite, from whom I have quoted, sums it up well:
Canadian Confederation was a native creation....[I]n legislative union, many believed lay the unequivocal, sovereign design of political excellence. A compromise with the realities of British American political circumstances was necessary, but it was not to be allowed to weaken the structure of the whole. Federation was essential, but it was federation in a unique, and to some at the present time a strange and twisted, form embodied not so much not so much in the relationship between the general and the local governments as in that between the House of Commons and the Senate. The great compromise between representation by areas and by population that lay at the heart of the American Congress was understood to be the basis of the federal principle and so accepted; but even here the Senate of Canada was not intended to be similar to its American counterpart. The Canadian Senate was peculiar in its use of regional, as opposed to state, representation. It is conspicuous that no attempts were made in the Quebec Conference, and few outside to develop the American view. Thus, while it is fair to say that the federal principle in its application to the federal leglislature reflected the American example, it is probable that American ideas did not, in any sense more specific than this, determine the character of Confederation. The immediate character of Confederation was determined by British North American political experience and political traditions. And it may be asked if Macdonald did not suspect that the principle of cabinet government might fatally weaken the Senate in its federal capacity, and thus its principle raison d'etre....for a powerful majority...Confederation was an attempt to put aside the insidious federal contrivances that had grown up within the Union of Canada, to relegate the questions that had caused them to the care of subordinate, local legislatures, and to establish at Ottawa a strong, cohesive, sovereign, central government. (Waite, pp. 115-6)
