The purpose of this paper is to examine the status and functions of the Bank of Canada against the background of the principle of responsible government. The Bank of Canada is not the only agency of the federal government that has been freed from the burden of direct responsibility to Parliament through a minister. But of all these agencies, and they are both numerous and varied, the Bank is the most important from the standpoint of the national economy, and it also enjoys a degree of independence that is quite exceptional. The contention of this paper is that the constitutional status of the Bank, as it currently seems to be, is a gross incongruity in a parliamentary democracy based on the principle of executive responsibility.

A discussion of the relation of responsibility between the government and the Bank of Canada must distinguish two distinct periods in its evolution up to this time. The point which demarcates these two periods is the emergence of “tight money” about the middle of 1955. Up to that time the Bank had not been the object of any significant public complaint or controversy. The hostility in the financial community that accompanied the Bank's founding in 1935 was speedily overcome by the diplomatic skill of the first Governor, and the Bank's handling of monetary problems during the war met with such universal acclaim that by 1945 the Bank enjoyed a reputation that might well have been envied by the older central banks of other countries. In the post-war period, the Bank pursued an easy money policy that placed no restraints on the private banks and, perhaps unfortunately, engendered no criticism from the general public. Not a word was to be heard anywhere against the Bank. When the calm was broken by Professor Timlin's critical paper on monetary policy, which she read to the American Economic Association in December, 1952, one received the impression in Ottawa that an act of blasphemy had occurred.

Lorsque les vingt-huit délégations des divers partis socialistes nationaux du monde se rencontrèrent en congrès le 27 avril 1960 à Haïfa, les représentants des sections européennes de la IIe Internationale ouvrière n'y apportaient pas un bulletin de victoire.

Au Royaume-Uni, les Travaillistes avaient essuyé trois défaites électorales successives. En Allemagne occidentale, le parti social-démocrate n'avait fait qu'aller d'échec en échec depuis le rétablissement de la démocratie. En France, malgré la participation au pouvoir, le parti socialiste se désagrégeait. En Italie, la division du parti paraissait insurmontable. En Belgique, le parti socialiste ne parvenait pas à s'assurer des votes de nombreux ouvriers et employés flamands. Aux Pays-Bas, les clivages religieux continuaient à l'emporter sur les clivages politiques, bloquant le parti travailliste. En Suisse, on observait une situation analogue. Quant à la forteresse de la IIe Internationale ouvrière en Europe, la Scandinavie, elle ne tenait bon qu'en Norvège. L'électorat suédois glissait en effet peu à peu vers la droite, l'électorat danois continuant à se montrer instable. Et pour la Finlande, le parti social-démocrate ne parvenait toujours pas à retrouver sa prééminence de 1939. Quant à la Péninsule ibérique, les dictatures de Franco et de Salazar semblaient encore interdire tout retour immédiat de formations socialistes agissant au grand jour.

Economists have never had much influence on legislators or electors regarding the issue of protection. In part this may be because they have seemed to talk about different things. Economists have traditionally urged free trade as a way to reallocate domestic resources more efficiently in the long run. Legislators, concerned with an immediate and adverse effect of cheaper imports on some of their constituents' incomes, have usually reacted as though domestic resources were forever immobile among different occupations. But it would be wrong to infer that the economist's case for more open trade does not also apply to such extreme short-run situations.

Accordingly, to demonstrate that a powerful case can be made for freer trade under extremely short-run conditions, the following analysis assumes that no factor of production can be transferred by its owner to another employment. The resultant gains from trade must then arise because the outside world places different relative values on domestically produced goods than does the home economy. Of course the altered international distribution of the fixed domestic output that results from trade is both a cause and an effect of the increases and decreases in personal incomes that accompany trade. The prices of traded goods will be more drastically altered by increased trade if domestic resources are immobile. So will their owners' incomes. However, even when resources cannot be reallocated, the redistribution of their output through trade provides a gain.

Claude-Henri de Rouvroy, comte de Saint-Simon, was born in 1760; his writings date from 1802 until his death in 1825. He is widely regarded as perhaps the most enthusiastic of all scientistic writers, and one of the most influential, but the nature and motivation of his scientism have been frequently misunderstood. Scientism I understand to be the belief that all, or virtually all, moral and political problems can be solved by methods similar to those used in the natural sciences. Historicism, a form which scientism very often takes, I would define as the revealing of laws of history by which, it is claimed, the future of man can be predicted. Exponents of scientism appear to have one or more of three different but related objectives: one, the pursuit of truth about man and society; the second, the acquisition of techniques to cure social ailments; the third, the re-establishment of ideological uniformity.

In 1952, when a Social Credit Government assumed office in British Columbia, the net public debt stood at $190 million. On August 1, 1959, the public debt was declared nil, and a document confirming this declaration was issued by the Comptroller General and the Deputy Minister of Finance. To celebrate the debt-free status of the province, a bond-burning ceremony was held in Kelowna. In summing up the record of his Government, Premier Bennett stated: “It took 70 years to build the debt; it took 7 years of Social Credit to wipe it out.” To consolidate this claim and to affirm the continuing rectitude of the Government, the legislature, in the 1960 session, passed a bill cancelling the borrowing powers of the province.

Taken at their face value these developments suggest a high degree of fiscal integrity. Taken in conjunction with an increase in capital expenditures far in excess of the increased revenues of the province, they have aroused confusion and bitter opposition. The paradox of debt elimination coincident with increased capital expenditures will be the subject of this paper. We shall examine, firstly, the techniques and, secondly, the apparent objectives of the Social Credit Government.

The distribution of urban peoples and activities among cities of various sizes and characteristics has for a long time interested social critics, town planners, geographers, historians, journalists and some economists in western Europe and the United States. A common theme is that the distribution of urban peoples depends on the distribution of urban jobs. Thus to understand population changes, the analysis of cities usually becomes a study of trends in job location. A decentralized pattern of industrial jobs is thought conducive to a proliferation of small and medium-sized cities. Or to put it the other way, it is often suggested that the concentration of industrial jobs into large cities is a principal explanation of their size.

For more than half a century social critics and theorists have been predicting a coming era of decentralization in manufactures and, as a consequence, of urban peoples. The development of the automobile and of electricity, the use of mass production techniques in specialized single-storey buildings set on large tracts of land, improvements in telecommunications, a high income elasticity of demand for space—all of these have been suggested as forces tending to decentralize manufacturing employment. But what has in fact been the experience of the last half-century?