¹ True unemployment was probably about 600,000 or 20 per cent of the industrial working force. See Plumptre, A.F.W., Mobilizing Canada's Resources for War (Toronto, 1941), pp. 1–17.Google Scholar

² Vide Mr. Usley's first war-time budget speech, September 12, 1939.

³ It was not until March 31, 1941 that the federal government discontinued its financial contributions to the costs of direct relief.

⁴ The number of fully employable persons on urban relief which had been nearly 200,000 in March, 1939, was still at 165,000 in April, 1940, but dropped rapidly to about 40,000 by the end of the year.

⁵ It is comparatively easy to look back over statistical tables and charts a year or two later and identify in retrospect the critical timing points in economic trends. It is much more difficult to see them coming. The substantial soundness of timing of each major step was a remarkable achievement of Canadian war-time economic policy.

⁶ See chart on page 82.

⁷ Wholesale prices of Canadian farm products advanced only 7 per cent in this six-month period largely because of continued low prices for wheat; and the wholesale index of producer goods prices was up only 5 per cent primarily as a result of an agreement reached in August, 1940 which stabilized steel prices at the levels then prevailing.

⁸ A preliminary step was taken in August, 1941 when responsibility for the Wartime Prices and Trade Board was transferred from the Minister of Labour to the Minister of Finance, and its jurisdiction extended from “necessaries of life” to include all goods and services; and when it was further provided that no federal, provincial, or municipal authority could fix any minimum, maximum, or specific price or mark-up without the written concurrence of the Board. In other words all price controlling powers were centred in a single authority, responsible to the Cabinet through the Minister of Finance.

⁹ From an early stage in the war Canada had been an active advocate of inter-Allied economic planning, but the implications in relation to domestic pricing policies did not become fully apparent until somewhat later.

¹⁰ How far prices might have risen it is hardly profitable to speculate, but one point may be noted. In the first war at no time were we devoting more than about IS per cent of our total productive resources to war and the general level of prices considerably more than doubled. In the second war, at the peak of our exertions, we were devoting not far short of 50 per cent of our total productive resources to the prosecution of the war. It would be safe to say. that without the most strict stabilization and control policies the democratic countries could never have brought anywhere near SO per cent of their resources to bear directly on the war, and at the same time the price rise would have been considerably more extravagant than a generation ago, (and they might not have won the war).

¹¹ An illusion that the price ceiling was an end in itself may appear to exist from a superficial reading of some of the publicity that launched and sustained the programme; but it must be recalled that this was a highly novel departure, and that its success depended overwhelmingly on voluntary compliance with, rather detailed regulations by, hundreds of thousands of farmers, small manufacturers, retailers, and housewives. A sort of mass enthusiasm had to be built up. There was a good deal of extravagance and not infrequently a conspicuous lack of qualifying phrases in the argument. But it was a pardonable, almost a necessary aspect of speedy mass education, that the price ceiling should be “sold” to the Canadian public as an end in itself. The quite extraordinary success that followed this essay in mass education was a remarkable achievement by the small group of persons who organized and developed the Information and Consumer Branches of the Wartime Prices and Trade Board.

¹² This is an article on price control, and for that reason all other aspects of economic policy are viewed in their supporting roles. It is not to be inferred that these other policies were merely designed to support price control. Each of them had its own raison d'être; and in a discussion of man-power controls or fiscal problems, price control would move into a supporting role to whatever policy took the centre of the stage.

¹³ Later this principle was partially adopted in the case of some commodities with the difference that the export premium was passed back directly or indirectly to all producers of that commodity, e.g., wheat, feed grains, maple sugar and syrup. In addition, the government invariably recaptured the ascertainable subsidy content in goods exported from Canada.

¹⁴ Companies subject to “profit-control” thus had to forego the 20 per cent refundable portion of their tax on all subsidies Which contributed to profits taxable at the 100 per cent rate; and when the E.P.T. was reduced they were subject to an additional squeeze on their profits; but with only a very few exceptions the profit-control formula was accepted by industry as a just and reasonable device, with the realization of course that the alternative was a drastically tougher and more complicated approach to the subsidy problem.

¹⁵ Summaries with considerable illustrative detail on this and other points will be found in the annual Reports of the Wartime Prices and Trade Board.

¹⁶ At least a foot-note should record a tribute to two men whose personalities have played so large a part in the Board's history and prestige: Mr. H. B. McKinnon, the first Chairman of the Board and later President of Commodity Prices Stabilization Corporation, and Mr. Donald Gordon, Chairman of the Board since November, 1941. Two more different men in personality and temperament (as well as in physique) it would be difficult to imagine; but in addition to sheer ability they have in common complete intellectual honesty, a high sense of public service, a quick grasp of the essentials of a problem, and the ability to inspire a rare degree of loyalty among their heterogeneous colleagues, and confidence among both the leaders and the rank and file of the public.

¹⁷ Only half a dozen groups of foods reached the point of coupon rationing (gasoline was rationed by the Department of Munitions and Supply), but in addition the Board had to prepare a complete and detailed scheme for rationing clothing and footwear, as well as some additional foods. For a considerable period of time during 1942 and 1943 it seemed as though clothing rationing must become inevitable within the ensuing three to six months, but it was always found just possible to avoid it, not without some difficulties, but with far fewer difficulties than coupon rationing in a country like Canada would have entailed. In addition to the familiar foods, the Board rationed by special coupon or by priority certificate evaporated milk, electric ranges, small arms ammunition, standard railroad watches, tires, motor cars, farm machinery, and suits for returning service men.

¹⁸ Similar kinds of pressure operated, mutatis mutandis, in the administration of wage control. As long as output was expanding rapidly few of these wage pressures were sufficiently great to breach the ceiling; but as production eased off and the more profitable lines of war production ceased, the pressure of higher wage costs on the ceiling became severe.

¹⁹ By the end of 194S some large subsidies and a great many small ones had already disappeared. During the course of its history the Board had subsidized over 200 classes of imports and about fifty lines of domestic production, of which about two-thirds had been withdrawn by the end of 1945. Of the bulk purchasing operations relating to about thirty commodities, most of which involved subsidy in the form of a trading loss, over half had ceased by December, 1945.

²⁰ Opportunity may be taken in a foot-note to point out briefly that subsidies properly applied and administered can provide very substantial net savings under the special conditions of war. The use of subsidies was absolutely essential to effective price control. The government in war-time is overwhelmingly the greatest purchaser of goods and services. Had prices gone up, say, 75 or 100 per cent, the costs of government operations would have risen probably not less than 30 to 50 per cent. Such percentages applied to the 1940 to 1946 budgets would produce figures enormously in excess of the total costs of price control and its subsidies. Moreover, because of the ineradicable principle of percentage mark-ups, the size of the subsidy required to hold a price at a primary level will be considerably less than the size of the consumer price increase had the primary cost gone up by the exact amount of the subsidy. Finally, subsidies with “profit-control” will normally amount to much less than the product of the price increase necessary to sustain the marginal producer multiplied by the total output.

²¹ This July 5 announcement in the House also included the return to parity with the United States dollar with its obvious and substantial measure of relief to price pressures and subsidy costs.

²² The next instalment which eventually appeared in January, 1947 was even more substantial and moved a very long way toward narrowing the circle of price control closely round the hard core of the staple constituents of food, fuel, clothing, and shelter.

²³ The publication elsewhere in this issue of Miss Sheila Stewart's very full list of Canadian war-time economic controls makes it unnecessary to add any bibliographical note here.