I deeply appreciate the honour which the Canadian Political Science Association has done me by inviting me to fill this vacant place in the programme of these meetings. More than most of those present, I profoundly regret the necessity for the invitation which was extended to me. Professor William Burton Hurd, the president of the Canadian Political Science Association for 1949-50, had been one of my close friends for twenty-five years. We had worked together on various research projects and we were colleagues at McMaster University. The severe illness which came upon him more than a year ago, against which he maintained a gallant struggle, but which terminated in his death last February, cut short a career of distinguished research, of brilliant teaching, and of effective university administration at a time when it had reached the height of its power. In terms of the normal span of life we had the right to expect another dozen or fifteen productive years of maturing wisdom and scholarship. The deprivation we have sustained is a serious loss to Canadian thought and life.

I do not know what topic or what aspect of his work Professor Hurd would have chosen for his presidential address this evening, but it is natural that I should turn to a field of study in which we were both deeply interested, but which I have been forced to relinquish for the past twelve years. Our interests in population studies were different but complementary. Professor Hurd was trained and took his first degree in mathematics and, as an adolescent and as a young man, he witnessed the great wave of population movement which during the half-dozen years preceding the First World War poured more than a million migrants through the portal city of Winnipeg. It was natural, therefore, that after serving with distinction in the Canadian army overseas, and after turning to economics during his deferred tenure of a Rhodes scholarship at Oxford, he should develop a special interest in the statistical analysis of Canadian population trends with particular reference to their growth factors, our absorptive capacity, and the problems of assimilation into a developing Canadian culture.

Policy, the dictionary tells us, is a course of action adopted as advantageous or expedient. Government policy then is a course of action adopted by a government; presumably it will be alleged to be advantageous and at least believed to be expedient. There is no such clear or ample definition of economic policy. Obviously it is a course of action and probably one directed to economic results; that is, the maximization or steadying of national income or a desired modification of its distribution. However, there are few courses of action which are directed to purely economic results and many of the results so designated really fall within the field of social welfare. There are also many policies directed to non-economic results which produce important economic by-products. The term economic policy tends to be extended to any course of action which affects economic institutions or relations or those which are customarily thought of as such even though the object may be merely general equity. We are left therefore with a field of action which is not precisely defined.

Most of the classical economists, and more particularly their lesser followers, saw political economy as the art of managing, or setting the basis for managing, an economy so as to maximize national income either as a total or per capita. In fact, however, few of them consistently and rigorously exclude non-economic considerations from their work. Of them all Adam Smith dealt with economic policy most easily because he never classified himself precisely in the pigeon-hole of political economy and felt free to give the judgment of a moral philosopher and man of the world on everything from the treatment of the American colonies to the relative virtues of claret and port. This older view of political economy was easy to accept against its historical background. The policies supported by the writers and practitioners of mercantilism had by the eighteenth century become so grossly uneconomic that they could be effectively attacked with fairly crude weapons.

The expansion of Europe and the industrial revolution brought about revolutionary changes in the life of humanity, changes that had no counterpart in the previous history of the human race. The European peasant of 1700 or even of 1800 could have adjusted himself readily to the life of the agricultural communities in the valleys of the Nile or Euphrates in the year 5000 B.C. He would have been completely bewildered and frightened by the life of the farmers of Alberta or Kansas in 1950. A similar metamorphosis has taken place in the lives of other classes of society during the last two centuries. It is true that many of the commercial practices of the present day can be traced back to the earliest periods of recorded history, but while the clerks of King Hammurabi could have quickly adapted themselves to the handling of the commercial and financial problems of Henry VIII, they would have required a good deal of post-graduate training before they could have made the additional and very much briefer transition into the life of the twentieth century.

Radical as have been the changes in the forms and content of civilization since the Italian and English and Spanish and French explorers of the sixteenth century followed the sun westward across the Atlantic, there is no evidence that the process of change is terminating or even slowing down. Indeed, the contrary is true. As the changes of the nineteenth century exceeded those of several millenia, today the changes of a decade are likely to surpass those of the preceding hundred years.

For the purposes of this paper it is proposed that we should assume, for a short time, the role of the prospector, and take a look for ourselves at one particular Canadian mineral resource, iron; and having done so, should then, more dangerously, assume the mantle of the prophet, attempting to forecast what that metal may mean in the economy of Canada during the years immediately ahead.

As everyone here will know, the amount of iron produced in the course of the astonishing and proliferous mineral output of the last fifty years, has been small, sporadic, and, for certain periods, non-existent. Now, for the first time in Canadian history, we stand on the verge of a great age of iron production, which will certainly have a profound influence on the economic development of this country, of the North American continent, and quite possibly beyond. In addition, iron production, on the scale which can now be reasonably expected, may well prove to be the greatest single factor in redressing our financial and trade imbalance with the United States, and in tipping the scales towards the accomplishment of the long-awaited St. Lawrence Deep Seaway. The purpose of this paper will be to attempt to give some factual underpinning to these large assumptions.

A system of multilateral trade means no more, fundamentally, than the right of exporters of a country to sell in any market and the right of importers to buy in any market. The right to export must be without discrimination and with complete freedom to transfer the proceeds of exports; and the right to import must be without discrimination and with complete freedom to transfer the funds to pay for imports. In short, multilateral trade involves the convertibility of currencies for current payments and the absence of any discrimination in exports and imports on the basis of the country with which or the currency in which the trade is undertaken.

On the face of it, multilateral trade yields the greatest benefits to each country from any given volume of exports and imports. As the exports can be sold in the highest-priced markets, without regard to the currency in which payment is received, the money value of the exports will be maximized. And as the imports can be bought in the lowest-priced markets, without regard to the currency in which payment is made, the money cost of the imports will be minimized. On the other hand, under bilateral trade, it becomes necessary to import, even at higher cost, from those markets whose currencies are available from export proceeds. And it becomes desirable to export, even at lower price, to those markets whose currencies are needed to pay for more essential imports. Because it is difficult to direct exports on the basis of social need for currencies, there will be a strong tendency to secure the bilateral balancing of payments through a restriction of imports by the country with a bilateral deficit.

To understand the peculiar implications of sterling devaluation for the Maritimes, it appears necessary to review briefly the nature of the Maritime economy. The economy of the Maritime region, including Newfoundland, has long been based upon the exploitation of the major resources of the area: the forest, the farm, the sea, and the combination of Newfoundland iron ore and Nova Scotia coal. It was aptly termed by the Royal Commission on Dominion-Provincial Relations a “wood-wind-water” economy. The Maritimes are essentially a primary producing area, and the secondary industries are for the most part engaged in processing forest, farm, and sea products, and in the production of steel and steel products. There are, of course, other secondary industries producing consumer goods such as textiles, boots and shoes, brushes, and other specialized products. These plants are usually small, and confined to the local market. Many have survived competition from Ontario and Quebec with difficulty.

Traditionally most of the Maritimes' key products—lumber, pulp and paper, fish, apples, and potatoes—have been exported. With the exception of pulp and paper produced on the mainland, these exports have gone for the most part to sterling markets; in Newfoundland, even pulp and paper products have gone to Britain. The United Kingdom has been the traditional market for lumber and apples; fish has gone to the United Kingdom, the British West Indies, and Australia. Most of the exported potatoes have gone to the Latin American countries, principally Cuba and the Argentine, as seed stock.

Last December the chairman of the Programme Committee for the 1950 Conference of the Canadian Political Science Association asked me if I would prepare a paper on aspects of the relations between governments and the universities. I agreed to do so, on the understanding that a good deal of the work would have to be done by others of my colleagues in consultation with myself. For that reason the present paper falls into two parts: the introductory section and the second and principal section prepared by Mr. D. C. Rowat.

The subject which I have chosen is not one that it is possible to discuss adequately, much less exhaust, in a short paper. I believe, however, that it is fast becoming one of the major fundamental problems of democracies. With a world-wide challenge confronting democratic institutions, no one can feel complacent about our political future in the broad sense, and no amount of wishful or traditional thinking will replace serious reconsideration of some aspects of government as we understand it.

It might be appropriate to start with a few definitions. It is relatively easy to find a comprehensive definition of the term “public administration.” A former president of the United States, some fifty years ago, defined it as “a detailed and systematic execution of public law.” Leonard D. White, in his book Introduction to the Study of Public Administration, writes: “In its broadest sense, public administration consists of all those operations having for their purpose the fulfillment or enforcement of public policy, as declared by the competent authorities.”

It is not so easy, however, to obtain agreement as to what exactly represents public interest as applied to public administration. In a democracy, the public must reach wide agreement on the duties to be performed by government; or in other words, the objectives of public policy must correspond fairly well with public views concerning the proper functions which should belong to governmental activity. Otherwise the efficient administration of these functions becomes almost a practical impossibility. But the word public is difficult to encompass in a restrictive definition. It is composed of individuals, groups, institutions with different ideals, philosophies, and interests. Consequently, public interest must necessarily represent a working compromise and be subject to continuous redefinition, as need arises, in the process of achieving an often delicate balance among conflicting interests.

This paper has been written with only limited objectives in mind; the subject has too many ramifications throughout the fields of population and economic theory to make possible even rudimentary analysis of all its aspects. The first section will give consideration to the usefulness of optimum theory and general economic theory in the formulation of immigration policies; the second section will give a brief outline of a few of the hypotheses suggested by theory and of some of the quantitative inquiries which would be useful in testing hypotheses. Two great fields of inquiry must for the most part be left out; the systematic discussion of the relations between immigration and emigration and of the relations between population increase and wage theory cannot be undertaken here. Either one of them, attacked singly, would be probably too extensive for a paper of this length. Certain aspects of both will however enter briefly into other phases to be discussed below.

The welfare state—as a term of abuse or approval, depending on the point of view—is a phrase which has only recently come into common use, although contrasts between the so-called “negative” and “positive” state have been frequently drawn during the past two decades. The idea that the primary function of government is to make a good life possible, is, however, as old as Aristotle, and political theorists in democratic countries have long been agreed that the state exists for the well-being of its citizens, and not vice versa, although their views of what constitutes the welfare of the people have been markedly divergent. The expansion of government activities, which is conveniently summarized under the term “social welfare state,” in this country as in others is usually considered a twentieth-century phenomenon. Its origins in Canada, however, may be traced to the first thirty years after Confederation, when the proper function of government was a matter of general concern and wide debate. During this early period public opinion as to what the state ought to do for the social well-being of its citizens developed rapidly, and underwent a marked transformation.

Present-day critics of the British North America Act are given to pointing out that, as a nineteenth-century document drawn up when laissez-faire theories were at their height, it has become increasingly ill-adapted to further social welfare by state action. Yet contemporary historians have shown that in both Great Britain and the United States, during the past century, the classical doctrine of laissez-faire, interpreted as government abstention from interference with individual or group action, was more honoured in theory than in practice. This contention is supported by illustrations of early factory, mines, public health, and education acts in England, and of such American intervention in economic affairs as tariffs and grants to individual industries. There is much evidence that similar developments took place in Canada, which lends support to similar conclusions concerning the mythical nature of laissez-faire.

Before attempting to deal with the problems of provincial-municipal relations one might well ponder the following comments of some who have previously delved into the problems of the relationship between governments: “A student should enter the field of intergovernmental fiscal relations with modesty and even humility…. It is a field in which students and committees, one after another, have spoken their piece, registered complaints, made recommendations and achieved no action. It is a field mined with explosives; beneath a placid surface lie some very deep emotions ready to burst into flame at the slightest provocation. If discretion were the determining factor, the student might well choose some other field to conquer.” The problems of provincial-municipal relations are of such urgency and importance, however, that the risks of indiscretion must be incurred. The urgency, from the municipal view point, arises from the increasing pressure on the limited municipal finances; its importance lies in the necessity of preserving the reality of local self-government in a democracy. On the surface the problem appears to be a financial one but the political aspects may be of even greater significance in the long run.

The role of “participation” by individuals or groups in American culture in general and in industrial organizations specifically has been treated by many writers. Its implications for political theory as well as for a theory of human relations in formal organizations are numerous. However, in spite of this academic and extra-academic interest, a clear-cut, operational definition of the concept, or a precise set of hypotheses regarding its dynamics, has not been developed. While to do so will be the object of this paper, the treatment will not be completely operational. The development of appropriate methods of measurement is conceived as a next step that should follow the preliminary one of conceptual clarification undertaken in this paper.

A review of the literature indicates that three major approaches have been taken in dealing with “participation”:

(1) The Experiential Approach. This approach is exemplified by writers who in the course of their experience in enterprise work have obtained a “feel” for the role of participation in the decision-making process and have put down their experiences in article or book form. Writings such as these provide a set of insights and hunches whose verification in any systematic fashion has not been attempted. The actual referants from which these formulations are derived often are single sets of observations in a single or in a few enterprises—observations generally made in an uncontrolled fashion.