This discussion of capital grows out of investigation of the history of labour in Canada. Four major systems of organizing labour for the production of goods may be distinguished in the course of Canadian history. Each of these involved its peculiar methods of production, of organizing the labour market, and its characteristic attitudes of employers and employees. The change from one system to another is what is meant by economic development in this paper. The questions inevitably arise, why a period features one type of labour organization rather than another and why one system is displaced by another. These questions have led to concern with capital accumulation, importation, and investment, for it would appear that the availability and uses of capital are crucial to the answers. The role of capital is important, no doubt, to other fields of study as well. Many useful things about capital have been said by Canadian scholars, but no broad and coherent review of the whole subject appears to exist. The present is an exploratory paper, covering approximately two of the stages of development remarked above, and the change from one to the other.

About the middle of the nineteenth century, the Province of Canada was transformed from a raw, staple-producing area to a rounded, integrated economy that might be called metropolitan. Signs of the change were visible in 1830, unmistakable in 1840. By 1850 change had gone too far to be turned back, and 1860 and 1870 can denote only the filling out of the home-market exchange economy already implicit. Purely extractive industry was overlaid with a secondary development involving an elaborate transportation system, a capitalistic agriculture, an extensive list of manufactures that appear to have been efficient in their day, and a creditable financial structure. Probably the most telling evidence of the transformation was the fact that this colony, so recently at the mercy of the fluctuations of imperial markets for one or two commodities, could undertake successfully to swallow an empire of its own in the years after 1867.

The academic achievements of William Burton Hurd (894-1950) were fittingly recognized in his election to the presidency of the Canadian Political Science Association in 1949. The meetings of the Association in 1950 will be saddened by the loss of a president and weakened by the absence of his presidential address.

He was a casualty of the turmoil of this century. Born in Brockville, a graduate of the University of Manitoba in 1913, he enlisted in spite of ill health for service in the First World War. He became an officer in the 52nd Battalion in 1915-16, in the 9th Brigade in 1916-17, and senior Y.M.C.A. officer in the second division and adjutant of the Khaki University in France in 1918-19. His services were recognized by being twice mentioned in despatches and an award of the O.B.E. (Military Division).

After the Armistice, he was appointed a Rhodes Scholar and, studying at Queens College, Oxford, took his bachelor’s degree in 1921. On his return to Canada he became professor of political economy in Brandon College in 1921 and dean of arts in 1928. It would not be too much to say that his efforts, linked to those of President Evans, kept Brandon College alive during the depression years but at a heavy cost to the health of both of them. Toward the end of the depression in 1935 he was appointed to the staff of political economy in McMaster University, an obvious promotion since at that time examinations in Brandon College were conducted by the staff of McMaster University and degrees were conferred by the latter institution. His interest in students was again recognized by his appointment as associate dean of arts in 1939. In 1946 he followed Professor H. Michell as head of the department of political economy.

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.

Among the multitude of unionized occupations that have been analysed by labour economists and others, fishing, for some reason or other, has received scant attention. Few articles and no books, as far as the authors are aware, have been written about unionism in the fishing industry of the United States. College text-books and surveys of labour rarely if ever mention the subject. Yet fishermen's unions in that country have been organized and active for more than a half century, and the International Fishermen and Allied Workers’ Union today is an important affiliate of the Congress of Industrial Organizations. Their origins and history remain hidden in obscurity.

Much the same situation exists in Canada. Some incidental attention has been paid, in regional surveys like that of the Dawson Commission published in 1944, to trade unions and co-operatives among fishermen in the Maritime Provinces. The far larger, more active, and more important fishermen's unions of British Columbia have been virtually ignored. The 1948 edition of Professor H. A. Logan's Trade Unions in Canada, for instance—by far the most thorough and authoritative survey of the organized labour movement in Canada to date—gives passing reference to the Canadian Fishermen's Union of Nova Scotia, but makes no mention whatever of the Deep Sea Fishermen's Union or of the United Fishermen and Allied Workers Union, both of British Columbia. Yet these two organizations are, or should be, of considerable interest and importance to labour economists and other students of trade unionism. Their history reaches back through more than a half century of diverse organizational growth, numerous and sometimes violent strikes, and generally turbulent labour relations. Both unions are today affiliated with the Canadian Trades and Labor Congress. The U.F.A.W.U. has a membership of some 8,000 fishermen and allied workers and jurisdiction over several thousand more. It negotiates province-wide master agreements with employer associations, governing labour matters in all major branches of one of the most important primary industries in British Columbia. Over one special group of fishermen it shares jurisdiction with the much smaller organization, the D.S.F.U.

Although the English tradition of analytical economics was established at least as long ago as the publication of David Ricardo's Principles in 1817, doubt has never ceased to exist concerning the fruitfulness of abstract and deductive methods in economics. Indeed, although the significant advances made since Ricardo's day were the products of men following closely the theoretical tradition, this doubt has increased rather than lessened. While the established methods weathered the attacks of the historical school during the latter part of the nineteenth century, they were severely shaken by the fundamental questionings of Thorstein Veblen. No one has emerged in our day as a true inheritor of the Veblenian mantle, but the institutionalist school of economics, which acknowledges him as its source of inspiration, is undeniably a very serious critic of orthodox economic theorizing.

This paper stems in part from the most recent controversy on the methods and conclusions of economic theory. It attempts to meet the sense of dissatisfaction with which I read the arguments of both attackers and defenders. Perhaps also the fact that during the past few years I have frequently been asked embarrassing questions by students may have something to do with my interest in this problem. I am surely not the only person who has had to contend with the remark that “it looks all right in theory but how does it work out in fact?” For some time now I have been either a consumer or a purveyor of economic theory and I feel motivated to demonstrate (at least to myself) that the activity constitutes productive labour. If that has given this paper the character of rationalization, I hope that it will not be one that cannot be put to good professional service.

Fishermen’s organizations in British Columbia present an interesting and in many ways unique case study of unionism among a distinct occupational group. The peculiar economic and social factors which have conditioned their growth were examined at some length in a previous article. A brief recapitulation may be in order at this point, as a background to the more factual history that follows.

Unionism among the fishermen of British Columbia has experienced an intense and diversified organizational growth, accompanied by frequent and at times violent industrial disputes. As may be seen from Tables I and II below, there have been at least thirty different fishermen’s organizations formed at one time or another since 1893, and members of these, as well as numerous non-union fishermen, have engaged in more than forty strikes. The fishing industry of British Columbia today is highly organized, and industrial relations are relatively stable and harmonious. The majority of fishermen now belong to one union that has collective bargaining jurisdiction over all major branches of the industry. Most of the non-union fishermen (as well as a considerable number of union members) belong to processing and marketing co-operatives.

Yet it would be difficult to imagine an occupational group less amenable to unionism. Strictly speaking, most fishermen in British Columbia are not employees or “workers” in the usual sense of the term. They are proprietors who own and operate their own capital, that is, their boats and gear. Their occupation is by nature highly migratory, individualistic, and competitive, as it is carried on in many scattered operations along thousands of miles of rugged coastline. Their employment and income are very insecure by reason of the characteristically extreme seasonal and cyclical fluctuations in the supply, demand, and prices of fish.

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.

Thinking on balance of payments matters has been dominated for so many years by particular day-to-day problems that a reconsideration of longer-run factors seems clearly to be a timely topic for discussion. Admittedly, in times like these, this type of study has severe limitations: of necessity it has to be largely speculative, and one can certainly not expect it to yield a blueprint for the future. Nevertheless, it is the aim of this paper to suggest that a careful study of current and prospective developments is more rewarding than might appear at first sight; that it discloses or emphasizes a number of important enduring tendencies that are bound to have a decisive influence on our balance of payments for a long while to come; and that a realization of them will provide some bearings in a realm which nowadays involves all too large an element of dead reckoning. Needless to say, owing to reasons of space it will not be possible to do more than sketch the principal changes and suggest some tentative conclusions.

The first of these trends, and perhaps the most important so far as the domestic economy is concerned, is the rebirth of natural resource development. Such development was, for many years, the main dynamic behind Canada's growth; however, it was in large measure inhibited for the better part of a generation except for a few specialized instances, first by the depression and later by the war. In spite of several recent spectacular discoveries, it is doubtful whether the full potential impact of these developments on our future balance of payments is adequately appreciated. Possibly the long interval of stagnation and reverses has tended to make Canadians rather cynical about favourable reports even when well substantiated. Admittedly nothing is easier than to be dazzled by thoughts of future riches; at the same time, however, a balanced appraisal of future prospects involves a realization of potential strengths as well as calculable risks. A good many of the projects referred to below are in their early stages and fall in the realm of the engineer and the geologist. But a general pattern of their magnitude and significance is beginning to emerge that merits the economist's attention.

Throughout the world governmental regulation of social and economic affairs has increased during the first half of the twentieth century. Whether prompted by the emergencies of two World Wars, by the wide-spread extension of social welfare measures, or by the rise of totalitarianism, this increase has caused apprehension among liberals and socialists alike. Enthusiasm for social reforms, whether they be moderate or radical, has declined in the face of these developments. The many social problems, which remain unsolved, call for reform measures as insistently as ever; yet the fear of governmental regulation besets the advocates of social change. They are confronted by the danger of regimentation in every extension of governmental power.

This concern with the danger of bureaucracy has grown apace with the realization that the countries of Western Europe and North America are on the road to a planned society. It is curious that among the advocates of a planned society, socialists are perhaps more apprehensive of these dangers of regimentation than are New-Deal liberals. In fact, fear of bureaucracy and dictatorial methods has been a recurrent theme of socialist thought. Before and after World War I the Revisionists advocated a gradual transition from capitalism to socialism in order to safeguard the institutions of democratic government; during the same period the Guild Socialists attempted to formulate a programme of industrial democracy, which would regularize worker-participation in the management of industry and government; and throughout the nineteenth century anarchists and “utopian socialists” sought to safeguard the freedom of the individual by conceiving of voluntary associations and co-operation in community organizations as the foundation of the ideal society of the future. Others, then as now, retained the belief that a proletarian revolution was necessary or inevitable; but they insisted that democracy could be preserved, if the people gave full support to the revolution; indeed, only then was a successful revolution possible. All these interpretations were concerned with the transition to a planned society. They were concerned to retain democratic institutions in this transitional period. Yet it is fair to say that the interpreters who were specific in proposing organizational safeguards against a future tyranny were usually vague when they discussed the political means by which socialism was to be established. Conversely, those who specified the necessary political means were ordinarily vague when they discussed how a revolutionary dictatorship could avoid a new oppression.

More than three years ago, Professor H. F. Angus published an article entitled: “The Canadian Constitution and the United Nations Charter.” In it he sought to show that the Canadian constitution, which provides for a division of legislative powers between the federal government and the governments of the provinces, will hamper the Dominion in its conduct of foreign affairs in the post-war world. In particular, he predicted that existing constitutional arrangements will obstruct Canada from fulfilling in a responsible manner certain international obligations incurred under the Charter of the United Nations. The immediate causes of this situation are threefold: the assignation by the British North America Act of topics with which international legislation may be concerned to the exclusive jurisdiction of provincial legislatures; the obsolescence of Section 132 of that Act, which governs the treaty-making powers of the Dominion government; and the juridical opinions on the ability of the Dominion government to implement international legislation which were handed down by the Privy Council and which, with the exception of the war years, have governed the situation ever since. One other factor serves to aggravate the problem: the growing importance of international legislation since 1945. Social and economic problems, no longer local or even national in scope, are now of international importance, and require international action for their solution. The recognition by the nations of the world of this fact and its implications is in part indicated by their decision to create the United Nations, its commissions, sub-commissions and affiliated agencies. It is more imperative today than ever before that members of the United Nations be both ready and able to ratify international legislation which the world organization promulgates. Canada may be ready, but she is certainly not able, to provide such implementation.

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.

The mishandled problem of reparations and inter-Allied war debts looms large in customary analyses of the wreckage of the European peace settlement after World War I. The seminal source of trouble then was the insatiable appetite of the Versailles victors for “spoils,” joined by the Shylock American insistence on repayment of war debts.

After World War II the war debt problem was gently erased, but reparations proved even more troublesome. Although those powers which a generation before had moulded the Versailles Treaty were, under American leadership, comparatively tame in their reparations demands, the Soviets were not. This is readily understandable, since the German armies spent their destructive fury on Eastern and not on Western lands. The Soviet loss of life and resources in repelling German armies from the heart of Russia was truly colossal. The war wiped out hard-won advances (factories, inventories, power plants, residences, tractors) achieved since 1917 under lash and by dint of incredible austerity.1 The Soviet economy was planned and, with its insistent commodity needs, could absorb immense quantities of manufactured goods. Despite bomb-smashed German city centres and residences, German manpower remained, as well as powerful industrial facilities which operated up to the closing months of the war. Any trained observer would expect the Soviets to demand maximum one-time drainage and continuing arrangements whereby some German industrial facilities would be worked by some German labour to produce goods and services for Eastern benefit. This was precisely the policy later carried out within the Soviet Zone of Germany which, if it was not “milked dry,” was converted into a massive pumping station for current product reparations.2 A less self-regarding Soviet policy toward the leading “ex-enemy” country would have been astonishing in view of the substantive drainage from “liberated” satellite areas.

In this paper, the peculiar pattern of the 1921-9 Canadian upswing of activity is examined and its major domestic determinants indicated. In addition, various factors are examined to ascertain their relative significance in determining the size of these domestic determinants. External determinants are not discussed in this paper.

The Canadian upswing from 1921 to 1929, generally speaking, was relatively sharp. By the latter year gross national product had risen 46.9 per cent over the 1921 level; net national income increased 50.4 per cent in the same period. Despite the relatively great strength of the initial expansionary forces, however, the expansion in the years 1923 and 1924 was relatively slow. Gross national product in real terms had risen 16.9 per cent from 1921 to 1922; by 1924 it had only risen 25.9 per cent above the 1921 level. By 1929 gross national product in real terms was 34.8 per cent above the 1924 level. Generally speaking, before 1925 the development proceeded gradually; from 1925 on more violence is evidenced. Hence the problem arises of explaining this peculiar pattern of the Canadian upswing and particularly its failure to continue at its original speedy rate.

Canadian incomes rose at a relatively fast pace in 1922 mainly because of increased investment activity. The theory of the multiplier and acceleration principle would lead us to expect then that as incomes rose from the increased investment, consumption would also rise and thus encourage additional investment in the consumers’ goods sector and those industries equipping this sector.

A Bibliography on Canadian war-time economic controls appeared in the February, 1947 issue of the Canadian Journal of Economics and Political Science. This bibliography covered the period from 1939 to 1946 during which the war-time controls were introduced and brought to full development. The following supplement has been prepared to record the principal statutes, orders, and official statements relating to the period since 1946, which coincides approximately with the period of decontrol.

In the earlier bibliography, there were few references to war-time controls relating to grain marketing and grain prices. In the present supplement, in response to a number of requests, this deficiency has been remedied by including references to the principal legislation and official statements in this field throughout the period since 1939.

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.

The year 1948 goes down in the history of Canadian politics as the year of national party conventions. Meeting at Ottawa, both the Liberals and the Conservatives used national party conventions to select new national leaders, to revitalize their national party organizations, and to revamp their party platforms. The C.C.F., meeting in Winnipeg, although not in the throes of change of party leadership, likewise used a national convention as a vehicle for discussion of organization and platform problems. That the questions of leadership, organization, and platform are properly subjects for deliberation by representative assemblies of party stalwarts is today unquestioned in Canada.

Yet, so far as the Liberal and Conservative parties are concerned, acceptance of the convention procedure for consideration of important party matters is based upon limited experience. While national party conclaves have not been uncommon, national party “conventions” especially designed to include delegates selected by and representing the individual federal ridings have been infrequent. Actually, the first truly representative national convention after confederation was that of the Liberal party in 1893.1 In 1919, Mackenzie King was selected as leader of the party at another great convention2 and it was not until 1948 that the Liberals met again. As a party in opposition, whose path back into office has been far from smooth, the Conservatives have in recent years had more occasion to use national party conventions. They assembled in 1927, 1938, 1942,3 and again in 1948.

The national party convention appears to have challenged the role of the party’s elected members of parliament as the dominating ruler of the party in selecting the party leader and formulating the party platform and organization. Of course the parliamentary party group plays a prominent part in convention proceedings, but the significant thing is that the parliamentary group now must, in some instances, exercise its influence through the medium of a representative convention in which the members of parliament can be outvoted by the local delegates.

Among the few Canadian provinces and American states which have effected major changes in the structure of local government in recent years is the province of Alberta. During the last fifteen years, rural local government in that province has been reorganized extensively. It is the purpose of this paper to describe the main features of the reorganization, to suggest why it took place, and to appraise briefly its effects and implications.

Local Government Units in Alberta. The structure of local government in Alberta finds no counterpart elsewhere except in the other Prairie Provinces of Canada. In Alberta, the municipal district is a rural local government unit which is empowered and required by the provincial government to provide for local public works, public welfare, sanitation and health, and the protection of persons and property. Such a district levies the property taxes required to pay for these services as well as to pay the requisitions of school and hospital districts. Towns and villages within the boundaries of a municipal district are not under its jurisdiction; they are small urban incorporated municipalities operating under a special statute, The Town and Village Act. Cities are self-governing under separate charters. Thus a municipal district is peculiarly rural in character. It is governed by elected councillors, while a secretary-treasurer and office staff appointed by the council administer the district's affairs in accordance with the council's by-laws and the provincial statutes.

The less-developed rural areas of the province are divided into improvement districts. These are administrative areas in which the provincial government performs the functions alloted to the elected councils and the administrative staffs in the municipal districts.

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.

In the past year there has developed a strong campaign for a devaluation of all currencies in terms of gold, a campaign in which the narrowly self-interested arguments of the gold producers have been augmented by the arguments of those who see a rise in the world price of gold as a painless way of solving the present international monetary disequilibrium. The obvious special pleading of the former, and the ignorance or naiveté of the monetary opinions of the latter, should have been sufficient to reveal the weaknesses of the case; but surprisingly enough the arguments for a higher price of gold have been allowed to pass practically unchallenged, with the consequent danger that by sheer reiteration the advocates of the scheme will secure an unthinking acceptance of their proposals.

The writer does not deny that a rise in the world price of gold would be of some benefit not only to the gold producers, but also to the non-American world generally; obviously any measure which increases the price which America is willing to pay for imports will provide more dollars for the rest of the world economy. But it is his contention that the arguments which have so far been advanced in support of the measure are of a dubious or fallacious nature, in large part attributable to a lack of understanding of the problems involved; that the arguments over-estimate the gains and under-estimate the difficulties that would follow a rise in the price of gold; and that consequently it would be a major error of policy for the British and other European authorities to commit themselves to a request for a higher price of gold as a substitute for more fundamental international economic reforms. These contentions are substantiated by an examination of the case for increasing the world price of gold, to which the remainder of this article is devoted.