Canada's To-day
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The Empire Club of Canada Addresses (Toronto, Canada), 18 Feb 1954, p. 202-219
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Rogge, Herbert H., Speaker
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Text
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Speeches
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Being future minded in Canada. The speaker's company celebrating its fiftieth anniversary by sponsoring the Conference on Canada's Tomorrow held in Quebec City last November. Some of Canada's important personalities who participated. Some forecasts for Canada looked at during this Conference. The nature and degree of Canada's progress in the recent past. Some figures on growth. How such increases were possible with so few additional people to accomplish them. The growth of manufacturing industries. The changing concept of Canada as resource-based. Taking a look, as an example of this changing concept, at agriculture in Canada. Some new problems to which this fundamental change in our economic pattern has given rise. The increase in interdependence of forces in industrialization. Post-war conditions giving way to the current picture. Recalling the nature of manufacturing costs in a mass-production industry. The dilemma of the mass-production industries in Canada. The small domestic market. Cost differential. Competition. Legislative action which weakened the provisions of the anti-dumping law. The General Agreement on Tariffs and Trade. The realization that tariffs are only a minor factor under present chaotic conditions of world trade and finance, bedevilled by managed currencies, competitive currency devaluations, arbitrary and discriminatory exchange controls, inconvertibility of currencies, discriminatory export and import quotas, customs regulations, etc. Effects of the war and the post-war re-adjustment obscuring potential consequences. The accumulated impacts, long delayed, now asserting themselves on what is now the greatest single source of Canada's prosperity, the manufacturing industry. Some examples. An examination of the textile; steel; and electrical apparatus and supply industries, and some of the effects previously discussed. International trade. Tariffs and the need to protect Canada's developing industrial complex as well as sell our products abroad. The issue of high wage rates and the present Canadian scale of living, with regard to competing internationally with big-market mass-produced goods. Suggestions for solutions. National trade policies. The need for a review of our policies in the light of the new world economic climate. Some Canadian statistics on unemployment. The need for a trade policy that provides equalization of opportunity for Canadian industry. The need to be flexible and ready to adapt to changing circumstances.
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18 Feb 1954
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English
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The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
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Full Text
"CANADA'S TODAY"
An Address by HERBERT H. ROGGE
President, Canadian Westinghouse Company Limited
Thursday, February 18th, 1954
CHAIRMAN: The President, Mr. A. E. M. Inwood.

MR. INWOOD: Our guest speaker's subject "Canada's Today" is indeed a timely one following upon the recent successful conclusion of the "Canada's Tomorrow" Conference in Quebec City. As you well know, the purpose of that conference was to bring together leading Canadian figures in all strata of Canadian life to study and discuss the prospects for Canada's next fifty years. Therefore, we are most fortunate to have the gentleman responsible for that conference talk to us realistically about Canada's Today.

We are honoured that Mr. Rogge would take the time out of an all-too-busy life to share with us the benefits of his thinking on the subject while it is all so fresh in his memory.

The famous Canadian corporation of which he is president, "Canadian Westinghouse Company Limited", was incorporated in 1903 to manufacture electrical and allied equipment. Since then it has grown like Canada itself and today in ten different plants employs some 11,500 people. It is interesting to note that, like the Empire Club, Canadian Westinghouse is celebrating its 50th anniversary year and we offer you, Sir, sincere congratulations upon your company's attainments and best wishes for a prosperous future.

Mr. Rogge has served in varied capacities in his industry in many parts of the world including such places as Manila, Java, Singapore, Straits Settlements, Siam and the United States.

During world War II, the United States Navy recognized his personal contributions by awarding him a certificate of commendation "For outstanding service to the United States' Navy." Mr. Rogge is a director of The Bank of Toronto and a member of the advisory committee of The Royal Trust Company in Montreal. He is a Governor of Hamilton College--the Science Affiliate of McMaster University. Recently, Laval University honoured him by confering the degree of "Doctor of Economics".

Gentlemen, it is my privilege to present to you Mr. Herbert H. Rogge.

MR. ROGGE: I suppose there is no country in the world today as conscious of its great potential for growth and development as our own Canada.

We, in Canada, are future minded.

We see ourselves and our industries and our economy and our culture perhaps as great buds on some long dormant plant, now swelling in the new springtime of the modern day, at last stripped of the freezing shackles of the winter of our youth, and preparing to burst into the great flowering plant of our country that is to be.

And because we are so future-minded, many of us think almost with yearning of the years to come. Born thirty years too soon is the personal tragedy of each of us in this room.

That, in any case, has been my own conviction, particularly since being exposed to the Conference on Canada's Tomorrow held in Quebec City last November.

As you may recall, our Company celebrated its fiftieth anniversary by sponsoring this Conference, in which many of the country's important personalities participated--including several here today. It was a time for looking ahead-and look ahead we did--for a full fifty years. We foresaw in that time a population in Canada of 30 million people or more--double what it is at present and possibly a conservative estimate in the light of the fact that the population has just about doubled in the last 40 years and current growth is at a much higher rate than has prevailed over this period.

We foresaw our raw material resources being busily and wisely developed; our industries burgeoning; our people prosperous; our culture and education progressing; our importance in international affairs, assured and growing and our influence for good spreading to other nations of the world.

We foresaw many problems, too; the need for working more closely together as Canadians; the need for offering better incentives to our people for ventures of benefit to all; the need for improving education, of learning more about the scientific aspects of social phenomena; the need of coping with our great neighbour to the south in such a way as to gain the greatest good from our necessarily close economic, military and geographical associations-and at the same time preserve all that is best in Canadian culture, traditions, ideas, independence and ways of life.

I think, on the whole, it was a picture of great faith and optimism for Canada's future that emerged from Canada's Tomorrow Conference. And to my mind, quite rightly so. Gathered there were some 300 of the country's foremost thinkers, leaders and doers in many walks of life. They were taking the long look-at developments they were themselves helping to bring into being, and would, in the future, be helping to build and to nurture--and what they saw seemed good.

But it is often easy to be optimistic about the far future. After all, the good soil and the forests, the rocks and minerals, the seas, the lakes and rivers, and the great eternal verities of human existence and experience have tremendous survival value-and in the long run, affairs always seem to work out for the best.

But as everyone here knows; though the great stream of human experience appears in prospect to be a broad and placid river, always flowing inexorably into the blue beyond the horizon, its nearer passage, viewed at close range, reveals a rock-bound channel, rapids, whirlpools, strain and torture everywhere.

Which is simply to say that-before Tomorrow comes Today. We do not reach the promised land of the future except by a series of successive steps in the here and now.

Let us, therefore, take a look, this afternoon, at Canada's Today; for we shall never reach that happy future in our Country save by a long succession of todays; through seeking a solution of today's problems; of building today on yesterday's achievements.

Now, what has been the nature and degree of Canada's progress in the recent past?

In the last 15 years or so, as everybody knows, the Canadian economy has expanded faster than at any other time in history. We have attracted and kept more people; we have vigorously developed our raw material resources, we have created more employment, at higher real wages, and-we have enormously increased the amount of electrical energy available.

Perhaps the figures on our growth are already too familiar, but I would nevertheless, like to set them forth once again in order to establish a little perspective on what follows. Let us look briefly at these facts:

(1) Since 1939 our gross national product has slightly more than doubled in constant dollars. (4 1/2 times in current dollars).

(2) Since 1939 the value of goods produced in Canada's manufacturing industries has increased 2 1/2 times in constant dollars (5 times in current dollars). (3) In this same period, our population has increased only by one third.

Now, how could these great increases have been possible with so few additional people to accomplish them? The answer obviously, is the growth of the manufacturing industries. For it is the nature of modern manufacturing that it makes use of electrical and mechanical power and all the resources of modern technology to create goods and products. It utilizes the forces and energies of nature to do man's work, and uses man's skill, initiative, imagination, and organizing ability to aid this production.

This has been the true nature of Canada's change in the last decade and a half. We have become increasingly industrialized. Our economy, based as it is on the enormous natural resources of our soil, our forest cover, our oil, gas, minerals and hydro power is primarily extractive in nature. The development of these resources has accounted for much of the spectacular amounts of capital that has been invested in recent years. No one will deny the great benefits accruing to our economy from this dynamic type of investment.

But were investment to stop with resource development, our economy would be purely extractive and we would be suppliers only of materials for others to process and turn into useful goods. Very fortunately for Canada we have been able to use Canadian brains and skills and initiative not only to farm, mine, fish, drill and cut timber, but also to make the end products of these materials. This, in my opinion, is the principal direction of Canada's future--to produce more valuable, finished and semi-finished goods from our raw resources; to invest and reinvest the returns from our labours in plants and industries and technology that will be able to go on and support increasing numbers of Canadians in the years to come.

In her manufacturing establishments, her skills, ingenuity, zeal, technology and reputation, Canada can build something that will never wear out or become depleted or extracted or destroyed, but can always stand as a means of making an increasingly better living for her people.

Yet, despite the clear fact that this dream is rapidly becoming a reality, many Canadians still think of their country's economy as being purely extractive, as suppliers to nations with superior manufacturing skills. Our national thinking is often patterned by this concept. Our national policies are often based on it.

But this concept, however, true it might have been once upon a time, is no longer so. At least it is subject to highly important modification.

Take, for example, agriculture.

Of our total national income in 1952--a total of some 18 billion dollars, only about 2.2 billion (or less than 13%) was derived directly from agriculture. A country that derives less than 13% of its income from farming is not, I submit, primarily an agricultural country!

But to go further, the total income from agriculture, forestry, fishing, trapping, mining, quarrying and oil wells--all the so-called extractive industries, in 1952 amounted to 3.3 billions or only about 18.4% of the total national income. In the same year, manufacturing accounted for over 5.3 billion or nearly 30% of the national income. The balance was made up of many other industries and trades, also related more to industry than extraction, including construction, transportation, retail and wholesale trade, finance and the like.

It is, therefore, something of a myth to think of our economy as agricultural or extractive. We are a manufacturing country, and no mistake.

This is strikingly revealed in the changing pattern of the labour force. Since 1939 the agricultural labour force has fallen from 1,365,000 to 827,000, a 40% decrease in numbers despite the natural population increase and a million immigrants. The manufacturing labour force, on the other hand, has increased from 658,000 in 1939 to 1,360,000, an increase of 107%.

This transition in the nature of our economy has been rapid. During a single generation Canada has changed from a country producing and exporting mainly primary products to a country producing and exporting mainly processed or manufactured goods.

This fundamental change in our economic pattern has given rise to new problems.

An industrial economy is a complex-and in some ways, a delicate sort of thing. It does not have the toughness and the degree of independence enjoyed by an extractive economy. The farmer on his farm, the mining operator by his shaft in earth, the fisherman or the woodsman, are to some degree, semi-independent units in the economy. Because of this independence of each other, and to some extent of the national economic and political winds that may be blowing at the moment, an extractive economy has a certain resiliency, a resistance to external influences and a toughness that may be far less evident in an industrial one.

For no industry and no company stands by itself alone. It is the fundamental nature of an industrial culture that each unit depends on the others. The total work is divided up, in a manner of speaking, among those who have the special resources, skills, experience, technical background and interest for performing each specific task.

There is a division of labour not only in each individual company, but also among the companies of an industry, and among the industries themselves.

Truly, in an industrial culture every action seems to affect all the others, in many and sometimes unexpected ways.

I recall how Sir James Jeans, in his book the "Universe Around Us", explained a somewhat similar though much more majestic interdependence-the interplay of the forces of gravitation that holds the stars and planets in their courses, each in delicate balance between gravitational and centrifugal force, and all affected by changes in any one. So interdependent are these forces, said Sir James in effect, that when a baby throws its rattle out of its crib in a nursery on the earth, it literally shakes the farthest star in the universe.

And so it is with the decisions, activities and successes or failures of each individual company or industry in an industrial complex such as we have in Canada today. As a whole, it is strong and not without some flexibility, but the interbalances are delicate, interdependent and very subtle. This explains, perhaps, the great importance to every business man of the financial and business press of this country--which in my opinion does a really splendid job--and the avidity with which commercial and industrial managers follow the indices marking each other's successes or difficulties. In an integrated industrial culture, we can surely say with John Donne, "never send to know for whom the bell tolls: it tolls for thee".

Now obviously, this interdependence means that when industry is healthy, and meeting its problems, and growing and prosperous, all parts of it tend to share in the prosperity. There is a feeling of well-being, of inevitability, of success. That was the sort of feeling that most of us were having, I think, a year ago, when we had shown ourselves--as we thought--that we could meet the peacetime world in our stride, avoid post-war depression such as had been long prophesied, rise to the demands upon us for expansion and development, pay ever higher wages to our people, and still price our products within the reach of our customers.

A year ago, I believe, that was the general feeling throughout industry not only in Canada, but also in the United States, and to a large degree also in the European countries that are highly industrialized. In Britain, the wants and needs of the people were being more or less caught up, industry was regaining some of the strength it had lost through the shattering, dislocating war years. The country and the industry was adjusting itself to a changed post-war world, and was finding successful ways to cope with it. And there was still a large unsatisfied market for British production at home and nearby. In most other countries of Western Europe, a similar regeneration and rebirth was taking place, with the populations of those countries moving toward satisfaction, but with good markets still alive with demand, and the future looking rosy.

But that was a year ago. Almost suddenly--so it seems in retrospect--the picture began to change.

In the United States the mass production industries, especially, began to find their distribution pipelines full. The long pent-up demands fostered by the war and postwar shortages at last were reasonably satisfied. Mass production industries began to look for additional markets and across their northern border they saw one--a dandy--whose own mass production industries were singularly vulnerable to the kind of competition the Americans could offer.

Now to understand this, you must recall the nature of manufacturing costs in a mass-production industry. As the very name suggests, a mass production industry gets its economic results through large volume. If it costs, say, $1,000,000 to provide the tools for a given product line, and you produce and sell a million units, your tooling costs are only $1 per unit. But, if your production is only 100,000 your tooling costs amount to $10 per unit.

This is the dilemma of the mass-production industries in Canada. By and large, our domestic market is small, usually only about 10 percent or less than the American market for the same kind of product. Yet there is no practical way to reduce the original tooling cost or the other basic costs of mass production. So our mass-produced products really always come higher than the same or similar products produced across the border.

The question that normally leaps into mind, of course, is this, "Does not the Canadian manufacturer enjoy a tremendous labour cost advantage over his U.S. counterpart?" My answer to this is that in the Electrical Manufacturing Industry, with which I am most familiar, the average hourly rate in the U.S., according to the Bureau of Labour Statistics, was $1.67 in 1952, while in Hamilton as of December 1, 1952, average hourly earnings for the Electrical Apparatus and Supply Industry was $1.671/2 according to the Dominion Bureau of Statistics.

In addition to the cost differential, competition from the United States in mass-production goods is currently favoured by some other important factors. There is, for example, the premium value of our dollar which acts to reduce in effect the remaining tariff barrier between countries trading with Canada.

Another underlying factor--almost a sleeper--was the legislative action which weakened the provisions of the anti-dumping law. Prior to 1948 this legislation required that the imported article must be priced at what was considered fair competitive value based on cost. The 1948 amendment in effect deleted the words fair competitive value based on cost and substituted that if a foreign manufacturer could demonstrate that he had sold his goods in his own country at any price, without relation to cost, then that price would govern his exports to Canada. This means that the economic misfortunes of other countries can be exported to Canada and that U.S. manufacturers or those in other countries will continue to look to Canada when faced with so-called distress selling. Any economic misfortunes in the U.S. can reflect quickly on our own much smaller and less absorptive economy.

All these rattles the baby threw out of his crib and at the time we were all very proud of the little fellow ... We all subscribed in principle to the General Agreement on Tariffs and Trade--particularly while we were under the impression that it was a general agreement and that other countries were going to follow Canada's shining example. Now we realize that tariffs are only a minor factor under present chaotic conditions of world trade and finance which is bedevilled by managed currencies, competitive currency devaluations, arbitrary and discriminatory exchange controls, inconvertibility of currencies, discriminatory export and import quotas, customs regulations and other devices too numerous to mention.

I quote the following from Review of Foreign Trade published by the Department of Trade and Commerce: "Canada is one of the few countries in the world today which has almost no significent barriers to imports aside from tariffs and the Canadian tariff has been considerably reduced since the war."

We felt a certain upsurge of national pride when the Canadian dollar reacted so strongly in the free money market.

One by one the rattles were tossed out with little visible effect on the rising stars of gross national product, employment, wages, standard of living. In fact, the effects of the war and the post-war re-adjustment almost completely obscured the potential consequences. But the accumulated impacts, long delayed, are now asserting themselves on what is now the greatest single source of our prosperity, the manufacturing industry.

It would not be fitting on this occasion to expose you to all the horrors that many of the manufacturing industries are facing today, but a few examples of what I mean are perhaps necessary.

The textile industry is one of our oldest manufacturing industries and is often the chief or only source of employment in a community.

Fifteen years ago, the Canadian textile industry put almost 3 yards of fabric on the market for every yard imported-today it is barely matching imports yard for yard. This manufacturing industry, which only a few years ago led in number of employees, has shared but little in Canada's post-war development. Its output from the prewar average to 1952 increased 6%; imports have increased 131%. During the period 1946 through 1953 the industry will have spent over $300 millions for new machinery, new buildings, and for maintenance and repair of existing buildings and machinery. As its volume drops its unit costs go up, rising unit cost of domestic production makes it easier for foreign competition and foreign competition is finding the Canadian textile market one of the most easily accessible in the world.

From textiles to steel is a long stride but here is the beginning of a similar situation, particularly in light finished products with a high labour content, some of which are laid-in from Europe at prices 40% below Canadian domestic prices. Since it is quite impossible to counter price competition of this magnitude it has caused lay-offs and a reduced work-week for many employees and my friends in the industry believe that this is just the start of an invasion of "low-wage" produced goods from overseas.

The substantial export business with Commonwealth countries which Canadian industry enjoyed prewar has all but disappeared, due to price competition from the U.K. and Europe, to the desire of former customers to buy in soft currency countries, and to the increasing self sufficiency of such countries as South Africa, New Zealand and Australia.

My last example is the industry with which I am most familiar--the Electrical Apparatus and Supply industry which is comprised of some 400 firms and produces an extraordinary variety of products.

The economy of this country, its great progress over the last few decades, its high productivity, its high standard of living, is dependent upon electric power and the proper equipment to generate, to distribute and to use it.

Plentiful power at low cost is one of the few low-cost advantages enjoyed by Canadian industry. Canadians now use almost twice as much electric power per capita as Americans do at about half the cost per kilowatt hour. This abundant energy, along with better methods of production, better tools and machines, has been of enormous assistance in enlarging the Canadian's capacity to produce.

The electrical manufacturing industry has experienced remarkable growth since World War II and some statisticians have indicated that with just normal growth its output in ten years time will be double what it is today and that it will employ 30,000 more people than at present.

Thirty thousand new employees will require additional plant, and if we assume an average of $8,000 per employee as the cost of providing such facilities, the industry might be expected to spend approximately $240 millions on new facilities, and to absorb and train thousands of engineering graduates and other technical personnel.

But, while the industry is eager to keep abreast of the country's requirements, it is now experiencing the most brutal sort of competition both from the United States and from overseas.

The figures are revealing: in 1939 the value of U.S. exports to Canada of electrical goods amounted to about $19 millions and this accounted for 18% of all such exports. In 1952 the value of such exports had increased by 785% and Canada accounted for 27% of all U.S. electrical exports. U.S. exports to Canada increased again by 60% in the first 6 months of 1953 and Canada accounted for 36% of total U.S. electrical exports during this period.

The largest single category of these exports to Canada were refrigerators, freezers and refrigerator systems, amounting to nearly $40 million in 1952 and accounting for almost 50% of all refrigerators sold in this country. This is a good example of competition facing our own mass-production industries, with wage rates comparable to those in the U.S., but with higher unit costs because Canadian production is less than 7% of that in the U.S. Canadian production has been cut back 30% and is now operating at about 50% of capacity with all that this entails in higher costs per unit. This trend continues into 1954, and is causing a situation in this segment of the industry paralleling that of the textile industry.

However, this problem of our mass production industries is not the end of the foreign competition-by any means.

For now, in these last few months, comes a new form of competition-this time in the heavy apparatus field; generators, transformers, switchgear-and this competition comes not from the United States, where it is being felt too, but from European countries, notably Sweden and Switzerland, and some from Britain.

It may give you an idea of the magnitude of this problem to disclose that some of the orders recently given to overseas manufacturers for major electrical equipment add up to at least 1,400,000 man-hours of employment lost to Canada. These orders have been lost at laid down prices approximately two-thirds of present-day domestic prices, notwithstanding the fact that Canadian prices are 15 to 20% lower than prevailing U.S. prices for similar equipment.

This is not competition from highly mechanized mass production industry. These machines have a large labour content. For example, as much as 60% of the cost of a large generator made in Canada is labour.

This helps to explain the enormous cost advantage that the overseas manufacturer enjoys-and I do not belive this fact is either known or understood in this country.

Recently, a thorough survey of wages in the electrical industries of overseas countries was made by the National Industrial Conference Board. It compares wages and wage supplements in the several competing countries with those prevailing in the United States. Since wages and wage supplements in this sector of the electrical industry closely approximate those in the U.S., the comparison could apply with almost equal force to Canada.

Here are the figures, expressed as a percentage of the wages prevailing in the U.S. for the year 1952:

Sweden and Belgium 33%
France 30.9%
United Kingdom 28%
Switzerland 23.8%
West Germany 22%
Netherlands 20.7%
Italy 19.6%

In the light of these figures, it is very difficult to follow the well-intentioned advice of those who say the answer is to reduce production costs. In the electrical industry, we have done a great deal to reduce costs by introducing every possible efficiency into our operations. But we are still a long way from being able to compete price-wise with these low-wage produced products.

Nor is this situation one that seems to be curing itself. The spread between overseas wage rates and our own rates has widened substantially since before the war. It is going to be more and more difficult to compete against the products of our foreign competitors, regardless of customers' preferences and their loyalties to Canadian-made equipment,

While this has fallen with special impact on the electrical industry, it is by no means limited to that industry. It seriously affects all machinery manufacturers and their suppliers of materials. Here, may I remind you, is the chief repository of the technical skills which are of such vital importance in time of war.

Basically the foreign competition is a threat to the Canadian living standards that have been so laboriously built up over recent years. Unemployment, as you know, is already increasing. I am afraid there will be more, unless some solution can be found to the problem of which I speak.

This particular dilemma to a large extent is a result of our national policy with regard to tariffs and international trade. The national policy leans-and with much apparent justification-toward free trade, or at least toward only such tariff barriers as are judged absolutely necessary, and which are kept purposely low enough to encourage trade. So large a part of Canada's national product goes into foreign trade-that the policy has seemed justified not only on theoretical grounds, but also on practical grounds.

But regardless of policy, regardless of party in power, regardless of war or peace, depression or prosperity, our exports of goods and services over the last quarter century have fluctuated between 21 and 31 percent of gross national product and last year accounted for 23.3% with the highest dollar value ever recorded.

This seems to me to support the idea that Canada is in the international trade business for reasons more basic than national policy. So also is Iceland and New Zealand, both of which countries, might I remind you, have a higher per capita international trade than does Canada. However, Canada with a relatively small population ranks a very good third in the free world after the U.S. and the U.K. in total volume of international trade. I strongly suspect that the basic reasons for this are geographical in nature and all the artificial devices employed either to encourage or discourage it are relatively puny in their overall effectiveness.

But, puny as these artificial devices may be in influencing the trade statistics, they can have enormous repercussion on the lives of millions of individual Canadians. The baby's rattle can be, and is, as devastating to them as an atomic bomb.

We have believed that if we wish others to buy from us, we must make it easy for them to sell to us.

But we now see that some unhappy results can follow from this policy. I suppose every Canadian business man is a free trader at heart-so long as his heart is beating. But a business man can remain in business only so long as he has some business left.

The tariffs, it seems to me, must take cognizance of the fact that we need to protect our developing industrial complex as well as sell our products abroad. We must become fully aware that ours is not any longer predominantly an agricultural nation, or a nation of raw materials extractors. Today we are an industrial nation-and tomorrow we need to become even more of one. We cannot do this--nor can we maintain high wage rates or the present Canadian scale of living-if we must try to compete on an unequal basis with big-market mass-produced goods from the U.S., or with the low wage scales of Europe.

Faced with this dilemma, I do not pretend to know what the solution should be. I am not for building a tariff barrier around Canada. At the same time, I think industry must be afforded protection necessary to safeguard our key industries which are the treasure-houses of our strength for national emergencies and the storehouses of our precious skills and industrial technology.

Many of the comments and suggestions about this problem that have been proposed recently, by business men as well as others, seem to me to be based on fallacies.

I think it is a fallacy to imagine that by opening her economic doors to all comers Canada can single-handedly raise the wage scales or the living standards of the world. What she may do, instead, is level hers down to theirs.

It is a fallacy to think that in this instance we can cure our difficulties merely by increasing our efficiences, cutting our costs, or improving our marketing methods. All of these steps must be taken-and are being taken. But in the face of wage differentials between ourselves and overseas producers so great as exist today, it is hopeless to expect that the margin of difference in cost can ever be made up by increased production or other measures available to us-without lowering wages-which is the last thing any Canadian wants to do.

It is a fallacy to think, that the present trade policies have been in any major way responsible for our recent prosperity and our great growth. The fact is that the trade policies have never really been tested until now. We have been highly protected by adverse conditions abroad. We have been imagining that all would remain equally well with us in the future.

National trade policies are not made by individual companies, or by industries. They are made by government. As Professor Maurice Lamontagne declared, at the Canada's Tomorrow Conference in Quebec:

"The major task which lies ahead for government is in the field of short term economic stability. This is probably the most difficult assignment that can be given to government, and yet it is most imperative. If we do not succeed in achieving a satisfactory degree of economic stability, if we do not take the necessary means to avoid inflationary spirals, and, above all, acute depressions, then the present foundation of our democratic society is doomed and we may go through a very dark period before returning to a new situation of stable equilibrium."

It seems to me the time has come for those in charge of our national trade policies to review those policies in the light of the new world economic climate and review them immediately.

This is not a matter that can safely be delayed.

In January of this year the Dominion Bureau of Statistics reported that some 777,000 Canadians were unemployed, temporarily laid off or working a short week. Of this number some 280,000 were classed as unemployed-without jobs and seeking work. While this unemployment is partly seasonal in nature it does represent an increase of 50% over the same time a year ago-largely the result of industrial layoffs arising from the causes I have been discussing.

Now-is speaking out on behalf of necessary protection for our Canadian industry an indication that we do not believe in competition? That we are afraid to meet the world on its own terms?

I do not think it is. Competition we certainly believe in: competition in terms of design, manufacture, skills, delivery, quality and customer satisfaction. But most Canadians shrink, I think, from competition based on the living standards of Canadian people. In that kind of competition the lowest-wage scale country can always win. The total effect in the long run is to level all wages down to those of the lowest country. I believe that need not--should not--happen to Canada.

What we need is a trade policy that provides equalization of opportunity for Canadian industry. Government has at its command many means of arranging for such equalization of opportunity, of which tariffs are only one. Let us provide adjustments all along the line, such as to equalize Canadian industry's ability to compete, and at the same time give us an opportunity to maintain and continue the economic growth in which we have made such notable strides in these last fifteen years!

And by all means let the formulation of such a policy, recognizing the drastic change that has and is taking place in our economic pattern, begin at once. For this is no theoretical situation in which we find ourselves. It is one that every day grows more and still more serious. As a country we are losing the momentum we have striven so mightily to build up over the past several years.

I thoroughly agree with the Right Honorable C. D. Howe when he recently said:

"Canada's future depends to an important degree upon the retention of a flexible, adaptable economy. While there is every reason to believe that the best is yet to come progress will not be automatic. The world is not being run to suit the Canadians. We must be ready to adapt ourselves to changing circumstances."

Indeed we must be flexible and ready to adapt ourselves to changing circumstances. Ready to act to keep the economic momentum going. Ready to help ourselves as Canadians rather than to hope for help from others. Ready to change policy to meet changing circumstances.

Gentlemen, if we are ready now--we may just have time, before the baby throws another rattle.

THANKS OF THE MEETING were expressed by Mr. Robert H. Saunders, Chairman of The Hydro-Electric Power Commission of Ontario.

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Canada's To-day


Being future minded in Canada. The speaker's company celebrating its fiftieth anniversary by sponsoring the Conference on Canada's Tomorrow held in Quebec City last November. Some of Canada's important personalities who participated. Some forecasts for Canada looked at during this Conference. The nature and degree of Canada's progress in the recent past. Some figures on growth. How such increases were possible with so few additional people to accomplish them. The growth of manufacturing industries. The changing concept of Canada as resource-based. Taking a look, as an example of this changing concept, at agriculture in Canada. Some new problems to which this fundamental change in our economic pattern has given rise. The increase in interdependence of forces in industrialization. Post-war conditions giving way to the current picture. Recalling the nature of manufacturing costs in a mass-production industry. The dilemma of the mass-production industries in Canada. The small domestic market. Cost differential. Competition. Legislative action which weakened the provisions of the anti-dumping law. The General Agreement on Tariffs and Trade. The realization that tariffs are only a minor factor under present chaotic conditions of world trade and finance, bedevilled by managed currencies, competitive currency devaluations, arbitrary and discriminatory exchange controls, inconvertibility of currencies, discriminatory export and import quotas, customs regulations, etc. Effects of the war and the post-war re-adjustment obscuring potential consequences. The accumulated impacts, long delayed, now asserting themselves on what is now the greatest single source of Canada's prosperity, the manufacturing industry. Some examples. An examination of the textile; steel; and electrical apparatus and supply industries, and some of the effects previously discussed. International trade. Tariffs and the need to protect Canada's developing industrial complex as well as sell our products abroad. The issue of high wage rates and the present Canadian scale of living, with regard to competing internationally with big-market mass-produced goods. Suggestions for solutions. National trade policies. The need for a review of our policies in the light of the new world economic climate. Some Canadian statistics on unemployment. The need for a trade policy that provides equalization of opportunity for Canadian industry. The need to be flexible and ready to adapt to changing circumstances.