In 301 A.D. the Emperor Diocletian, with whom were associated his three co-rulers, promulgated an edict which fixed for the whole Roman Empire maximum prices for commodities, freight rates, and wages. According to the evidence available, and it is certain that the whole edict has not been recovered, price “ceilings” for over 900 commodities, 130 different grades of labour, and a considerable number of freight rates, were fixed and severe punishment promised to all “black market” operators who dared to buy or sell above the maximum. So elaborate a scheme of price control was not tried again until 1,600 years had passed. The reasons that led to this drastic interference in the economic life of the Empire and the success it attained, or rather did not attain, in regulating prices, provide a study for the historian which is well worth while.

The Chaos of the Third Century. In order to understand the circumstances that led to the issuing of this edict, it is necessary to envisage the appalling state of affairs which marked the third century of the Christian era. Utter anarchy engulfed the Roman world; emperors and pretenders to the imperial throne struggled for the great prizes of power. Armies marched and remarched over every province, plundering the wretched inhabitants. In 193 the Empire was put up for sale by auction by the Praetorians, the imperial guards, and bought by Didius Julianus. It is interesting to note that he enjoyed his bargain for exactly sixty-six days. Such cynical disregard for the glory of the imperial purple was too much even for those days and he was murdered. As each claimant reached the goal of his ambition, the first thing he had to do was to pay the soldiery that backed him. The imperial treasury was looted and empty, and the enormous sums necessary to satisfy the army could only be met by piling tax on tax, by confiscating the wealth of opponents and, worst of all, by debasing a currency that already was fast approaching the point when it was next to worthless. In 260, there came the last and most shocking degradation when the Emperor Valerian, who was trying to defend the eastern frontier, was captured by the Persians and held for six years in captivity until his death. The Empire was clearly breaking up in misery and confusion, bankruptcy and anarchy.

Since the end of hostilities in 1945, Canada has been undergoing a rapid constitutional change. The power to make laws on many vitally important matters, which on the outbreak of war in 1939 became vested in the national Parliament either under the emergency doctrine or under the specified jurisdiction over defence, has now almost entirely passed back again to the provincial legislatures. The process of decentralizaton is slower than the former centralization, but it is well under way. A shift in legislative authority is thus in process, affecting such subjects as production and investment control, labour legislation, rent restriction, regulation of prices and wages, man-power distribution, and other essential elements of economic planning. The War Measures Act ceased to be in effect on January 1st, 1946, and the National Emergency Transitional Powers Act which replaced it is being continued on a purely temporary basis. While further prolongation of the latter act may be sought on the theory that the war emergency is not yet over, the mere lapse of time will bring increasing doubt as to its constitutional validity. Sooner rather than later Canada will revert to all the constitutional limitations on the national government which existed in 1939; the one exception is unemployment insurance, the first and only transfer from provincial to federal legislative power made by formal amendment since 1867. The various taxation agreements between the central and local governments, some of which have been renegotiated on an individual basis, have not shifted the legal power to levy taxes but have merely produced a voluntary abstention on the part of some provinces in respect of certain forms of taxation.

This case study of union-management co-operation at the Toronto factory of Lever Brothers Limited was undertaken for several reasons. It is an example of the union-management co-operation in which increases in productive efficiency were brought about solely by savings in man-power requirements. Further it is a case of the fulfilment of a collective bargaining demand by co-operation. These two facts, in themselves, are highly unusual. Although this case of co-operation took place during the war and was influenced by war-time conditions, it is in no way a part of the general war-time pattern of labour-management co-operation, stimulated in Canada by the Industrial Production Co-operation Board and in the United States by the War Production Drive.

Historically, industrial relations can be divided into an area of conflict of interest or collective bargaining and an area of mutuality of interest or co-operation. Employee representation tried to integrate these areas, but without the presence of an independent union, management tended to determine unilaterally the conditions of employment. Union-management co-operation later developed the area of mutuality in parts of the railroad, clothing, steel, and printing industries, but with the exception of the clothing industry, little integration was affected with the area of bargaining. During the recent war labour-management co-operation had a mushroom growth, but little attempt was made to integrate the two areas of industrial relations. In Canada, particularly, the role of the union on the co-operation committees was largely undefined. Co-operation at Lever Brothers is significant because it provides a clearcut case of integration between co-operation on productive efficiency and bargaining on wages and hours. Co-operation arose as a result of a demand by the bargaining agency for increased wages and shorter hours, while their achievement was brought about by the joint action of union and management. This, then, provides an example of union-management relations which may have profound implications for the achievement of industrial peace.

Mr. Mackeigan has done me the honour of contributing, in the November issue of this Journal, full-length “Notes” in answer to my article on “Patents in Relation to Monopoly,” published in the August issue. If I now appear for the purpose of making the usual rejoinder it is not to be taken that I do so in any controversial spirit but only in an endeavour to answer his allegations and, if I can, to restore the patent system to the position it was in before it suffered the not inconsiderable knocking about which it has received at his hands. In doing so, I hope that I may make my points as temperately and as gracefully as has my learned friend, whose treatment of the subject from his point of view has been, if I may say so without impertinence, wholly admirable.

I must begin by taking sharp issue with Mr. MacKeigan on one point. I did not, as he says, extol the “theoretical adequacy of the Canadian Patent Act as an instrument to prevent abuses of patents.” I did and I do extol its practical adequacy for such purpose by reason of the provisions regarding compulsory licensing and revocation in case of abuse. And in this I interpose no mere ipse dixit. It would be a simple matter to append quotations from a multitude of sources which would build up an impressive body of opinion confirmatory of my statement. But I shall content myself with two extracts: The first of these is from an author in the United States who, in discussing cartels and the patent system, observes: “The most concrete and constructive suggestion for patent reform as a solution of the cartel problem calls for the compulsory licensing of patents when they have been used to foster international cartels, e.g. by the allocation of markets. … Compulsory licensing would be expected to remove the most serious obstacles which our patent laws at present interpose to the solution of the cartel problem.”

In a number of important aspects Canadian war-time price controls were a pioneering venture and for this reason have aroused considerable interest both at home and abroad. It is too soon to present a considered appraisal of these policies and procedures—indeed the operation has not yet been concluded—but it is perhaps not too soon to record in a broad way what was done and why.

When war broke out in September, 1939 Canada, in common with most other countries, was emerging uncertainly from a decade of economic depression. Prices were low, unemployment was high, and the costs of relief were still a heavy charge on federal, provincial, and municipal budgets. The general index of wholesale prices was 28 per cent below 1926 and only 9 points above the low point of the depression in 1933. The iron and steel industry was operating at 20 per cent below 1928-9, and probably not in excess of 50 per cent of capacity. Recorded unemployed formed 12 per cent of the normal working force, and under-employment affected a further large percentage. Nearly a million persons were on direct relief and the fully employable persons on direct urban relief numbered nearly 200,000. In brief we entered the war with a high proportion of idle and underemployed resources.

We also entered the war with a sound and reasonably well thought out conception of overall war-time economic policy, but, excepting foreign exchange control which had been carefully prepared in detail well in advance, with very little organization for carrying it out and no very clear notion of what kind of a war it would be and along what lines our major contributions would, lie. The Defence Purchasing Board, predecessor of the Department of Munitions and Supply, began operations in July, 1939, but the organization of price and supply controls received detailed consideration only a few weeks before hostilities broke out. The Wartime Prices and Trade Board was created on September 3, 1939, and within a few weeks was actively involved in half a dozen commodity fields.

The statutory basis for Canada's war-time economic controls and programmes is to be found, in the main, in a number of orders-incouncil issued under authority of the War Measures Act of 1914 and, only occasionally, in acts of Parliament. Even in those cases when the control agency derived its powers and responsibilities from an act of Parliament (e.g., the Department of Munitions and Supply) many of the more important operations of the agency in question were conducted by controllers who derived their powers from successive orders-in-council. The detailed regulations of the various war-time controllers and administrators in turn were usually promulgated in the form of additional orders-in-council or in the form of administrators' and controllers' orders. Thus, while the statutory powers and responsibilities of the Wartime Prices and Trade Board—the operations of which touched upon almost every section of Canada's economy—were derived from less than half a dozen basic orders-in-council, the hundreds of regulations governing the conditions of production and distribution applicable to specific industries were issued in the form of board orders and administrators' orders and, less often, in the form of informal directives.

Apart from the latter type of measure, all the various war-time orders and regulations were printed in Canadian War Orders and Regulations (now Statutory Orders and Regulations) or, previous to October 1, 1942, in Proclamations and Orders-in-Council, both issued from the office of the Privy Council. Such orders and regulations have run into the tens of thousands during the war years. The student of Canada's war-time economic controls approaching this subject for the first time would find it difficult to select from this mass of printed material, much of it dealing with minor administrative procedures or appointments, the more basic or significant regulations.