Economic literature of the past decade suggests, and most economists would surely agree, that there are two fundamental economic problems: unemployment and monopoly. Together, enforced idleness of resources and maldistribution of resources due to monopolization of all kinds are responsible for whatever gap exists between actual and potential national real income. They account for a good deal of the inequity of income distribution as well. Economic policy has as its chief concern the elimination of monopoly without loss of efficiency, and the elimination of unemployment without inflation or misuse of resources.

The post-war period will present these two basic problems in aggravated form. Exigencies of war have led to increased concentration of industry, which could easily crystallize into enhanced monopoly power. With half our national income now generated by war expenditures, the task of maintaining full employment while shifting production from things that win wars to things that promote welfare will be of unprecedented magnitude. At the same time, vast new holdings of cash and other liquid resources, combined with the backlog of demand for both consumers' and producers' goods that will have accumulated, will constitute a grave threat of inflation. The balance of the economy, which must be maintained by what Professor Lerner has aptly called “functional finance,” will be delicate indeed.

This article suggests an approach to post-war tax policy designed to meet these problems. While the setting is Canadian, the analytical tools and even the policies proposed would be applicable to the British or American scenes with minor modifications.

A transformation in the pattern of consumer expenditures has occurred in the nations that have reached high income levels during the past century. Smaller fractions of national income are spent on food, clothing, and shelter; larger fractions on recreation, medical care, education, and luxury goods. Cross-sectional studies of family budgets have been fairly reliable indicators of this trend. As early as 1857 Ernst Engel had pronounced his famous law about food expenditures on the basis of Edouard Ducpetiaux's Belgian budget studies. Similar assertions by others about clothing, fuel, and shelter followed; and in 1919 William Ogburn published his statistics of Washington, D.C., family budgets, indicating, in effect, that income elasticities of demand were highest for amusement and education. As the pattern slowly emerged, economists were not much disturbed. Why should consumers not be left alone in choosing between carrots and bedrooms? Interference with choices among luxury goods and services seemed even less warranted. Advertising posed no problem beyond encouragement of elementary veracity.

In the past decade, however, this unconcern has faded. Several economists have joined sociologists, moralists, and general philosophers in questioning trends in consumer expenditures. Their concern is less with morals and social repercussions than with optimum consumption patterns in terms of economic value and resource allocation. Advertising in particular is no longer reproached merely for a bent towards mendacity. It is seen as more insidious, as manipulating consumers' choices by kindling subconscious anxieties. It puts consumers in a squirrel cage in which production and the want-satisfying process create wants that would otherwise not exist.

This paper is primarily an impressionistic sketch of an on-going piece of family research. No conclusions can as yet be offered. Instead, I intend briefly to suggest a frame of reference for the study of family hostility as well as enumerate some of the procedures of field work used in the present project.

Much has been written about the family by many sociologists of various persuasions. Yet a large part of this phase of sociological effort leaves one dissatisfied. Admittedly data on our own types of family structure are hidden from clear view precisely because of their familiarity as well as their privacy. But this fact is not sufficient to account for the disparity between the experienced complexity of family life and the sparsity of published details made significant by a sustained and incisive theoretic orientation. Headway could be made by the use of a frame of reference which combines sociological with psychological considerations, without confusing them, and which draws its vitality from the impassioned analyses of the structure of large-scale social systems and of individual character as begun by Weber and Freud. At the present time family research seems on the whole to have made little consistent use of the leads of kinship analysis and to have by-passed a cumulative effort at spelling out the empirical details of the social structure of various types of American families. As it is, we hear much about the family as a “unity of interacting personalities,” about processes of accommodation or conflict, or about the kinds of valuation that marital partners place upon one another; yet we hear little of the intervening details which, in their fullness, would give us a sense of how indeed a family as an on-going concern functions and how the inherent or emergent demands of its social structure are met, how the social structure of a family is related meaningfully or functionally to the rest of the social system, and how any given family of orientation dissolves into successive families of procreation.

The bureaucratization of the political process that characterizes twentieth century politics in many countries has not bypassed Canada—as evidenced by skyrocketing rates of government employment and expenditure and, even more dramatically, by the ever-expanding policy-making power of Canadian bureaucracy. One observer sees the civil service as occupying an increasingly strategic role in Canadian politics, a condition that

reflects in part the expanding role of modern government into highly technical areas, which tends to augment the discretion of permanent officials because legislators are obliged to delegate to them the administration of complex affairs, including the responsibility for drafting and adjudicating great amounts of sub-legislation required to “fill in the details” of the necessarily broad, organic statutes passed by Parliament. Some indication of the scale of such discretion is found in the fact that, during the period 1963–8, an annual average of 4,130 Orders-in-Council were passed in Ottawa, a substantial proportion of which provided for delegating authority to prescribe rules and regulations to ministers and their permanent advisers. By contrast, the number of laws passed annually by Canadian federal parliaments is rarely over one hundred.

Partly because there is at present so much concern with problems of economic growth and partly because much has already been done to account for the years before the First World War, interest is now quickening in the process and magnitude of capital formation in Canada between Confederation and the end of the nineteenth century. An important part of Canadian capital formation has been in housing, and a historical series on housing investment, covering the years 1926–1941, was presented in an official publication prepared by Firestone and Urquhart in 1945. This series was superseded by revised estimates (which still form the basis for the historical figures in the National Accounts) made by Firestone in 1951; Buckley, partly on the basis of Firestone's later estimates, produced a series going back to 1896; and Firestone has recently returned to the problem. A consistent series from Confederation to the turn of the century is, however, still lacking.

The main purpose of this paper is to derive and present annual estimates of residential capital formation for the years 1871–1921. It is in three parts: the first presents annual estimates of the number of dwellings completed; the second considers the problem of securing annual average values and presents the final estimates of residential capital formation; and the third compares the new estimates with those published earlier, discusses the estimates and their limitations, and makes suggestions for their improvement. An effort has been made to present the material in such a way that the reader could go a long way towards reproducing the results. Inadequate data invite endless ingenuity: but unbridled wit can sometimes be dangerous and an effort has been made to keep the paper within the bounds of the plausible.