The economic problems of a new country have, of course, a general as well as a particular interest because new countries are a distinct and important class among the countries of the world. But there are two reasons for an even broader scientific interest in such problems. It is here that problems of economic development can be studied; here are the clearest cases. Economic history continues to suffer because economists know too little history and historians too little economics. It can be said in defence of the historians that the scant attention given by economists to the economics of development has left them with but poor equipment. In criticism it might be said that historians have been over-ready to make economic generalizations. Generalizations in economic history are more attractive and more dangerous than in any other field except historical geography. It is, then, in the history of new countries that the economics of development can best be studied.

There is a second reason for our interest. Economists are prone to think in terms of closed systems, i.e., hypothetical economies, isolated and sufficient unto themselves. Studies in international trade and finance have been directed in the main toward the mechanism of adjustment. It is an important problem and a neat, tidy problem, but in most countries policies must rest on an analysis of the operation of open systems—economies functioning in full relation with other countries. I suggest that the fully operating open economic system is best exemplified in new, pioneer countries.

Modern civilization and modern science are in constant interplay and the relation of the state to medicine is simply one aspect of a much broader relationship—the changing sphere of government in the lives of the people. Industrialism has meant a large increase in population and the concentration of this population in huge cities. Factories and machine processes play a dominant role. Education has become almost universal. Research, inventions, still more research, and new applications of this research change industrial technology overnight. And the habits of living of the people through the development of apartment houses, radio, automobiles, aeroplanes, are also revolutionized. The pace quickens.

The myriad problems of post-War international relations and national security, of currency and tariffs, of economic adversity and unemployment, the mounting public debt—all have thrust upon national and local governments a huge weight of responsibility. The depression has forced governments to assume control of basic economic activities, and, according to present indications, the trend will continue in the direction of more rather than less state activity.

Governments have shown an increasing tendency to assume responsibility for the individual's general welfare. Modern industrialism and modern science have produced insecurity for a large section of the population—an uncertainty of life and limb and of employment, a risk of poverty in old age—that labour legislation and social insurance attempt to meet. Almost every type of social legislation has a direct or indirect effect upon the public health. Factory Inspection Acts, minimum wage legislation, control of the hours of work, housing schemes, health insurance, and workmen's compensation laws, illustrate the range of state activity in the field of public health. Legislation affecting medical care and public health agencies is simply a part of a much larger whole—the vast system of state activities and laws which has for its objective the greatest welfare of the people.

Seven years of depression and the rising cost of medical care, which has been taking place for more than twenty-five years, have forced a reconsideration of the relation of the state to the practice of medicine. The public is worried and the political opportunist is ready, as always, to capitalize this worry by providing a panacea in a hurry. There is little doubt in the minds of most thinking people that some form of health insurance must be provided; but the attempt to create a very complicated piece of machinery, and set it working at once, will lead to serious difficulties and hardships. The experience of European countries is not of much assistance to Canada. None can claim perfection, and most of them have to be satisfied with the best makeshift that circumstances will allow. England provides only such service in the home or office as a general practitioner can give. For ten years she has had, on paper, the provision of a complete but expensive medical service. Russia provides such a service at a cost which has been estimated at 20 to 25 per cent. of the employees' income.

In the recent English literature of international trade theory, one element in the adjustment of the balance of international payments has been brought once more into prominence, especially with regard to unilateral payments. It is described by various writers as the transfer of “purchasing power”, or of “buying power”, or of “means of payment”, or as a “shift in demand schedules”, which induces the receiving country to buy more goods and services and the paying country to buy less goods and services “in the absence of price changes”. This factor in the adjustment of the balance of payments was implied by Adam Smith, Ricardo, and Wheatley. Longfield referred to it explicitly. Bastable mentioned it in a journal article and Nicholson placed considerable emphasis on it. Mill, however, omitted it from his analysis. After 1900 it dropped from sight until 1918 when it cropped up again in a controversy in which Taussig, Wicksell, and Hollander took part. It was noticed in Viner's Canada's Balance and by 1931 had been developed considerably by Wilson, Ohlin, and Robertson. Since that time it has appeared in the published works of a large number of economists.

Many of the earlier proponents of the theory denied that unilateral transfers could change the terms of trade. To them it seemed obvious that the payment would by itself increase the purchases of the receivers and diminish the purchases of the payers by the amount of the payment. Thus the commodity balance would become unfavourable to the receiving country by the amount of the payment without price changes. Mill, on the other hand, and those who accepted his analysis in its entirety, claimed that the familiar specie-flow-price mechanism would necessarily lead to a change in the terms of trade in a direction favourable to the receiving country.

The physical features controlling the economic development of a region can be classified under the two main headings of geological and climatic controls. All pastoral, agricultural, mining, or industrial life depends essentially on the distribution of minerals, soils, water supply, temperature, and rainfall. There is, however, another geological feature which exercises great influence on human interests, and that is the topography, i.e., the arrangement of mountain and plain, of rivers and lakes, and all the elements which in more precise language build up the science of geomorphology. The present study attempts to show, first of all, what are the main features in southern Ontario, more particularly within a couple of hundred miles of Toronto, which have necessarily greatly affected the settlement of the region. Secondly the evolution of the city of Toronto as determined by the minor topographic features is described in somewhat general terms. It is hoped that this will pave the way to a more complete study of the city in the near future.

The Legislature of Alberta has distinguished itself by enacting the most drastic reform measures ever seen in Canada. Supported by a very large body of public opinion, it has reduced debts, both public and private, has attempted to take several matters out of the hands of the Courts, and has, so far as legal enactment could do so, substituted the people’s own credit—Social Credit—for the financial credit which has hitherto been relied on. It is thought that this substitution is possible and might be complete. Whether or not this belief is sound, time only can tell. The present, however, offers a good opportunity to survey the situation in the light of the circumstances of the province and the general characteristics of its people.

When Mr. Aberhart's government took office in August, 1935, it found the provincial treasury empty and a long series of budget deficits. Almost the first act of the new administration was the appointment of Mr. R. J. Magor, a well-known Montreal industrialist, to make a report on the financial position of the province preliminary to an attempt to balance the budget. After a report from Mr. Magor, the Hon. E. C. Manning, acting premier of the province, on December 5, 1935, wrote to the investment houses and chartered banks stating that the government had “been forced to the conclusion that an adjustment in our debt charges seems unavoidable if we are to meet our necessary obligations and balance our Budget”. The co-operation of the investment houses and banks was requested in setting up a medium for negotiation with the holders of Alberta securities with a view to converting the existing indebtedness of the province amounting to about $160 million into new securities bearing “an interest rate of approximately two and three quarters per cent. plus the full Sinking Fund” which the government felt “would approximate the annual capacity of the Province to pay on debt account”. Some compensation for a lower interest rate would be afforded through “alteration of maturities and increased assurance of security”, though it was asserted that the government had “not formulated any cut and dried plan because it desires fully to learn and consider the views of the holders of the securities”. With the Dominion-Provincial Conference about to meet in Ottawa and much current discussion of Loan Council schemes to refund provincial indebtedness under Dominion guarantee, Messrs. Elliott and Walker observe, concerning the attitudes of investment houses to the Alberta government's proposals, that “it was apparently considered unwise to intrude into inter-governmental plans and no complete replies to the Government's suggestions were received” (ch. ii, p. 2).

The Report of the Alberta Bondholders' Committee contains the most detailed application of Canadian national income figures yet published for purposes of argument. Owing to the difficulty of breaking down national figures for provincial purposes, and the important effect of small errors in the total income upon the residual “margin of income”, the corrections presented below are of interest. Certain deductions from Alberta's income are made to avoid double counting (table I) while the value of “necessary expenses” is estimated with more care (table II).

A detailed explanation and justification of the revised estimates of income in table I is given below in section B, and of table II within the table, and in section C. It is only fair to add that there is more room for difference of opinion in the interpretation of necessary expenses than in correcting estimates of income. More than statistical technique is involved, as there must also be some value judgments.

The Report to the Alberta Bondholders' Committee is not, and was not intended to be, a report upon the economic and social conditions of that province, and it contains no recommendations for settlement of present-day problems. It is a report upon the fiscal problems of the provincial government, which have their origin in economic and social conditions generally common to the Prairie Provinces, as well as in a cleavage of financial philosophies most apparent in Alberta alone. Had the survey been broadened to require a report on the income, wealth, and indebtedness of the province and its people, we have no doubt that some of the criticisms expressed by Messrs. MacGregor and Britnell would be justified—but the investigators would still be investigating and the Report would not yet be written.

As it is, the Report was completed in thirty days. Not a figure (except one table relating to the domicile of Canadian bonds) has any other source than the published data of the Dominion Bureau of Statistics or of the provinces. No statement of fact relating to the present fiscal position of Alberta has any other origin than the published documents or the transcribed words of officials of that province. Only on such a basis could an impartial yet sympathetic study of this important Canadian problem proceed.