The rising demand by industrialists for Asian labor during the first decade of the 20th century led to a dramatic increase in Japanese and Chinese immigration to British Columbia and a growing fear by residents of what was called a “yellow peril.” With immigration to the province having risen from 500 in 1904 to more than 12,000 in 1908, racial tensions rapidly escalated. During 1907, with the recession and resulting unemployment, Vancouver residents were shocked to read of the decision of the Canadian Nippon Supply Company to bring over Japanese laborers for the building of the Grand Trunk Pacific Railway. Erroneous reports suggested that as many as 50,000 might become part of the latest “invasion.” During a public rally organized in September 1907 by the Asiatic Exclusion League, angry and impassioned mobs marched through the city, destroying Japanese and Chinese property. This resulted in an immediate government investigation led by Deputy Minister of Labour William Mackenzie Lyon King
, who determined that the Japanese government was not responsible for the circumstances leading to the riot, but rather Canadian immigration companies that sought laborers principally from Hawaii, rather than from Japan itself. King awarded Japanese and Chinese riot victims $9,000 and $26,000, respectively, and made several recommendations, including prohibition of contract labor and the banning of immigration by way of Hawaii. Prime Minister Wilfrid Laurier also sent Minister of Labour Rodolphe Lemieux to Japan to negotiate an agreement regarding the limitation of Japanese aliens. Despite provisions of the Anglo-Japanese Treaty of Commerce and Navigation (1894), which provided for unfettered immigration, an agreement was reached by which the Japanese government voluntarily restricted the number of passports issued to its citizens traveling directly to Canada to 400 per year. By 1908 and 1909, the number of Japanese entering the country dropped from 7,601 to 495, remaining at the latter level for the following 20 years.