Historically, French Canadians have not really believed in democracy for themselves; and English Canadians have not really wanted it for others. Such are the foundations upon which our two ethnic groups have absurdly pretended to be building democratic forms of government. No wonder the ensuing structure has turned out to be rather flimsy.

The purpose of the present essay is to re-examine some of the unstated premises from which much of our political thinking and behaviour is derived, and to suggest that there exists an urgent need for a critical appraisal of democracy in Canada. No amount of inter-group back-slapping or political bonne-ententisme will change the fact that democracy will continue to be thwarted in Canada so long as one-third of the people hardly believe in it—and that because to no small extent the remaining two-thirds provide them with ample grounds for distrusting it.

Most serious students of modern politics in the English-speaking democracies have regarded the two-party system as the norm of the liberal-democratic polity. The arguments for the superiority of such a pattern proceed along the following lines: (a) stability is encouraged when the powers of the political executive are at all times monopolized by members of a single party who are united by mutual adherence to common leaders, traditions, and policies and whose past and future fate at the polls is to a significant degree interdependent; (b) effective accountability of government to electorate is encouraged when power is not shared among parties and when a ruling party is therefore completely responsible for the use of such power; and (c) constructive opposition is encouraged when the party out of office is constantly faced with the challenge of justifying itself to the electorate as an effective alternative to the party in power.

Professor Leslie Lipson has defined the two-party system as one in which: “1. Not more than two parties at any given time have a genuine chance to gain power. 2. One of these is able to win the requisite majority and stay in office without any help from a third party. 3. Over a number of decades two parties alternate in power.”

The constitutional crisis of 1889 in Newfoundland offers an excellent example of what may occur when a governor, in the full belief that he is adhering to the strict observance of his constitutional position, yet manages to defy its limits, bring it into disrepute, and earn the opprobrium of nearly all concerned. That the Governor of Newfoundland did so, as the unsuspecting instrument of a political struggle, points up the dangers of appointing to high office men with little or no appreciation of the duties and responsibilities they are called upon to assume. The crisis of 1889 proves above all the importance that must be attached to the choice of men of good intelligence, even temper, and flexibility. When to insist on the exercise of his prerogatives and when to desist are questions that a governor can only solve by considering as far as possible the results of the choice he makes. A very difficult decision, admittedly, but one which will primarily depend on the governor's tact, influence, articulation, the vital features of his official personality. There is no need to stress the importance of the problem discussed below; the list of constitutional authorities who have studied similar questions is an impressive and well-known one.

The Governor in question was Sir Terence O'Brien, a military man who had qualified as an engineer and surveyor in India, had for some years been Inspector General of Police in Mauritius, and, immediately before coming to Newfoundland in 1889, had served as Governor of Heligoland. His immediate concern in Newfoundland was, as befits a man with military experience, the fortification of St. John's against attack in the event of a global conflict which he saw as imminent; but this project was fated to suffer the indifference of a government that did not share his views. In November, 1889, the Governor's attention was abruptly diverted from his scheme of defence to a situation that appeared quite normal and might have remained so but for a combination of events that he grasped only imperfectly.

There is little doubt that the Bank of Canada and Canadian monetary policy have been subjected to more public criticism since 1954 than at any other time since the Bank began operations in 1935. The force and the persistence of the criticism may in part be explained by a coincidence of events which included a move toward severe monetary restraint, a change of governor at the Bank of Canada, two national elections, and a change in government. Public criticism has for the most part concerned itself with the degree of monetary restraint or monetary ease in the economy generally and in specific sectors, with the timing of changes in policy and with the appropriateness of policy in the light of economic conditions. This paper will let those matters rest. Rather it will try to determine whether in a more fundamental sense the Bank's operations are in some respects open to criticism.

There would appear to be four important aspects to the Bank of Canada's approach to central banking: the Bank's interpretation of its role in the allocation of capital; its conception of the mechanism by which monetary policy becomes effective and of the bounds within which monetary management must operate; its method of making quantitative monetary controls more effective; and its emphasis on the use of moral suasion. The third section will include an examination of the new Bank Rate.

Most discussions of the control of investment during the late 1930's and the Second World War had their origin, for obvious reasons, in the desire to regulate the aggregate level of economic activity. An unfortunate consequence of this preoccupation was that insufficient consideration was given to another problem of great importance: the determination of the uses to which investment resources are put.

It was precisely this problem of the allocation of investment resources which became a matter of major concern to the Labour Government in Great Britain in the years after the Second World War. This paper will examine the manner in which the problem was handled with respect to investment in building, investment in plant and equipment will be ignored since no serious attempt was made to regulate it. The Government did not go much beyond entering into “gentlemen's agreements” with engineering firms respecting the percentage of their output which they planned to devote to export purposes-agreements of the sort which D. H. Robertson has delightfully described as “… the characteristic English processes of jollying along—of encouragements which are not quite promises, frowns which are not quite prohibitions, understandings which are not quite agreements.”

The control of investment in building, by contrast, was a very ambitious venture. The Labour Government's experience in operating these controls is interesting for the light it sheds on problems of government planning for a major private industry. Moreover, this experience is particularly important since the industry concerned is one which is likely to play a crucial role in the programmes for development and welfare undertaken by many governments. The central focus of this paper, therefore, will be on the problems which arose in the attempt to control the pattern, as well as the volume, of activity in construction.

Since the fourth quarter of 1950 the Canadian dollar has been allowed to find its price in terms of foreign currencies, usually with little official interference. During this period special interest groups have occasionally complained about the level of the rate of exchange, but, on the whole, the operation of the new system of exchange has met with satisfaction at home and admiration abroad. This success has depended on the small amplitude of the fluctuations that have taken place in the rate of exchange during short periods of time, say quarter to quarter. However, very little is known about the mechanism that has operated to maintain such stability as the rate has shown in practice. Confidence in the future stability of the rate can easily be mistaken under these circumstances. It is the purpose of this paper to shed some light on the equilibrating process in the market in foreign exchange by identifying the stabilizing influences in the balance of payment and by developing a possible explanation of their movement.

The items in the balance of international payments can be divided into two categories according to the manner in which they are related to the rate of exchange if it is assumed that they have demand and supply functions that are independent of each other and that they have ordinary Marshallian elasticities. The appropriate assumptions about other things to be held constant when analysing merchandise trade, for instance, include income and its distribution, relative prices, tastes, and production functions. The things held constant do not include other items in the international accounts such as movements of capital from which come the offsetting net supply or demand for foreign exchange. Some of the items are not independent: freight and shipping are obviously related to trade; but the smaller items are not taken up separately in this analysis.

Reliable predictions of future employment are but one of many pieces of intelligence useful to governments in the formulation and implementation of policies of economic stabilization. With the adoption of a stabilization programme in 1945 an explicit need for these predictions was created in the Canadian government. In that year the “Employment Forecast Survey” was initiated by the federal Department of Labour in an attempt to secure the data from which these predictions could be derived. This survey is still conducted by the Department.

This article summarizes the results of an analysis of the predictions which were derived from data obtained by the Employment Forecast Survey from 1946 until 1957, when this method was abandoned, and a new technique of securing predictions from the data was adopted. Because these predictions were so little known outside Canadian government circles it may be useful to provide a brief description of the technique by which they were made, and an assessment of their reliability.

The original conception of the survey was comparatively simple. It seemed reasonable, a priori, that the individual decision-makers in an industrial establishment would be able to forecast the future employment of their own establishment with considerable reliability.

In his work on group settlement in western Canada Professor C. A. Dawson has described five major ethnic-religious groups but he has not treated one very distinctive Canadian people, the Hutterites, who prefer to be known as the Hutterian Brethren. There is a sociological study of this group by the Canadian Mental Health Association and several monographs on various aspects of Hutterite life have been published in the United States, but on their settlement in western Canada there is only an unpublished M.A. thesis. My purpose here is to outline briefly the coming of the Hutterites to Canada, their economic and social habits, and the problems they present to western Canada.

The first Hutterites came to Canada in a delegation of three which arrived in Winnipeg in May, 1898, to explore the possibilities of moving the seven existing colonies from South Dakota to western Canada. The delegation was welcomed by the Commissioner of Immigration in Winnipeg and was supplied with free transportation to see southern Manitoba and Saskatchewan. On their return to South Dakota members of the delegation reported that though they had some doubts about the weather and the land they were “resolved to make a trial” at settling in Canada, if their requirements concerning schooling, military service, and freedom of religion were met by the federal government. Meanwhile a government agent was sent to the Hutterite colonies by the Department of the Interior to encourage the proposed move and to make a report on the Hutterities.

This study sponsored by the National Bureau of Economic Research lives up to the Bureau's object which is “to ascertain and to present to the public important economic facts and their interpretation in a scientific and impartial manner.” Important economic facts are presented to throw light on four topics: concentration in Canadian manufacturing industries in 1948; differences in concentration between plants and firms in Canadian manufacturing industries at the same date; differences between firm concentration in a number of Canadian manufacturing industries in 1948 and firm concentration in the corresponding United States industries in 1947; and the trend in the concentration of plants in Canadian manufacturing industries in the period from 1922 to 1948.