"LATIN AMERICA ON THE MARCH--A VALUABLE PARTNERSHIP"
An Address by JAMES STUART DUNCAN, C.M.G. Chairman of the Board and President, Massey-Harris Co. Ltd.
Joint Meeting with The Canadian Club of Toronto
Thursday, March 5th, 1953
CHAIRMAN: The President, Mr. John W. Griffin.
MR. GRIFFIN: Members and Guests of The Canadian Club of Toronto and The Empire Club of Canada: Like everyone else who grows up in Toronto I have been familiar with the name "Massey-Harris" since childhood. Like you I knew that it made plough-shares in peace and forged mighty weapons during war. It is commonplace knowledge that it has works and offices spread over five continents and that its products, of which $293 million worth were sold last year, are in use in 106 countries. The reading of these names which run through the alphabet from Algeria to Yemen, is an adventure in itself. But it is not such common knowledge that in its 106 years this great Canadian enterprise has fashioned a unique place for itself in the annals of our Dominion. The Massey-Harris firm, a wonderfully successful commercial undertaking, a money-making business if you will, has given more than it has taken. It has given to Canada the essential tools for the exploitation of her boundless agricultural spaces--that mighty patrimony whose frontiers are ever expanding. The late Sir Arthur Conan Doyle wrote of "the fields of grain that stretch from sky to sky and the little prairie hamlets where the cars go rolling by." A great empire was there but its dedication to wheat would never have been possible without machines--the machines made on King Street West in Toronto. The firm with the facilities and knowledge and resources to supply this need played a part in Canada's destiny comparable to the roles of the Hudson's Bay Co. and the Canadian Pacific Railway. It is not too much to say that as "The Bay" explored and charted the great plains and the C.P.R. opened them for settlement, Massey-Harris made it possible to realise their great destiny as the granary of Empire.
Mr. James Stuart Duncan has spent over 40 years in the service of Massey-Harris. Born in Paris, France, the son of a Massey-Harris man, he has learned his business at every level. At 16 he was an office boy in the company's office in Germany. At 17 he came to Canada alone and spent two years as a factory hand in the Toronto Works and earned the right to his pride in being known as an 'implement man'. Following this he worked on the Ontario sales force and then as a travelling sales representative in France. After gallant service with the British Army in the Great War, Mr. Duncan reached the executive ranks of his company and was in due course European General Manager. Ultimately and inevitably he returned to Toronto and in 1940 became President.
Shortly after he became General Manager he made the far-reaching decision to develop and then put into production a self-propelled combine. This machine, which other implement firms had regarded as impractical, did nothing less than revolutionise agriculture. Canadians generally were, and are, unaware of this bold development and of its epochal effect on the grain industry. With our deep-rooted distrust of our own capacity for greatness we have left unsung a mechanical marvel which history may rank with the cotton-gin and its effect on that industry a century and a half ago. Clinging as we do with rightful pride and affection to our noble heritage from across the sea and awe-struck as we sometimes are by the fabulous achievements of our mighty neighbour let us not ignore our own capacity to develop-to produce-to lead. Let us note large, for example, that the self-propelled combine, which does in one minute what a century ago required 40 hours came from King Street West in Toronto. Mr. Duncan, who is doing as much as any man alive today to lead Canada to ever-greater heights among the nations has said of her "Nowhere is there such unbounded opportunity, so many new frontiers to be opened. And Nowhere are there so many sure signs of the approach of a new era of expansion". Gentlemen, Mr. Duncan has given as part of his definition of an executive that "He ought to be able to sort out the wheat from the chaff". I think that is very appropriate for a manufacturer of threshing machines.
MR. DUNCAN: Mr. Chairman, Fellow Members of the Canadian and. Empire Clubs, and Gentlemen, May my first words be of appreciation, Mr. Chairman, for your friendly and generous introduction. Some of you, no doubt, when listening to the recitation of my many extracurricular activities, as you have just done, must wonder how, in addition to these, I find time to lead the destiny of a great Canadian Company, whose activities are spread wide over the face of the globe.
The answer is twofold, namely, that these things are not accomplished on the basis of a forty-hour week, and that I firmly believe that just as man does not live by bread alone, the industrial or business leader of today cannot, if he is to be effective, operate within the narrow confines of his own commercial activities, but rather must play his part in the wider sphere of national and of community interests, in which the education and training of today's youth play such an important part.
May I add that these things are not done on a basis of personal sacrifice. On the contrary, I get more relaxation, more interest, more fun and satisfaction out of my ancillary occupations than I would out of playing Canasta or bridge or golf, or taking long holidays.
I am grateful to you, Mr. Chairman, for having given me this opportunity of addressing the members of the Canadian and Empire Clubs in this great Canadian city, my home town and yours, and one in whose vitality, expansion and undoubted future, we all share a justifiable pride.
I returned but a few weeks ago from a Goodwill and Trade Mission to Latin America, and I have been asked to tell you something of what we have seen there, what we accomplished, and what the future holds in store for Canada in the Southern part of this great American Continent.
The Mission, as you know, was headed by The Right Honourable C. D. Howe, our Minister of Trade and Commerce. Few men, if any in Canada, were better equipped than he for this responsibility. It is said that no one is a prophet in his own land, and one must travel abroad to realize the extent to which The Right Honourable C. D. Howe has become a world figure. His distinguished services to our country, both in peace and in war, his realistic and practical approach to the problems of government, the part he has played in the upbuilding of Canada during the postwar period, his integrity, his drive and his immense capacity for hard work-all these things were well known in the official circles of the countries visited, and they added greatly to the prestige of our Mission.
I should like to take this opportunity of paying tribute to Canada's Foreign Trade Service, under the able and experienced leadership of Fred Bull, Deputy Minister of Trade and Commerce. In every country visited during this trip--and I have had the same experience in many other parts of the world--I have found our commercial representatives young, vigorous, intelligent, well-informed and highly thought of by the officials of the Governments with whom they were dealing. This Service has improved immensely since pre-war days, and those who are responsible are to be heartily congratulated.
These trade officials stationed in foreign lands can be of immense service to the Canadian businessman who wishes to find a market for his product. They can counsel him, introduce him to the right people, open the way for him, but from then on, he is on his own; his success will depend upon his own efforts, and this is as it should be.
It is interesting to note that being firmly convinced that trade to flourish and develop must be on a two-way basis, our commercial services are just as ready and just as well equipped to assist Latin American exporters to find a market for their products in Canada as they are to assist Canadian exporters to find a market abroad.
We did not go to Latin America to discuss trade agreements or tariff concessions. We went there as fellow-members of these great Americas, as friendly neighbours and as partners, who stood to benefit by the development of our mutual trade.
We went there to become acquainted with the vast potentialities of these markets, to tell them something about Canada, of the upsurge of our economy, of our approach to our problems, which is often so different to theirs, of the high living standard of our people, of our position as world traders, of the growing importance of our market for their products, and of the advantages of developing a stronger current of two-way trade between us.
Latin America received us with open arms. Not only did they make us feel at home in their midst, but they were greatly interested in Canada, in the why and the wherefore of our progress and prosperity, in the growing importance of our consumer market, and just what they should do to get a larger share of it. Their welcome was genuine and their hospitality heartwarming.
As the R. C. A. F. "C-5", in which we were travelling, and which added so much to the effectiveness of our trip, rolled to a stop at the airports of the various cities we visited, we were received with a degree of pomp and circumstance, which, I am sorry to say, we are far from being able to duplicate in Canada.
The receptions naturally varied in the different countries, but usually, as we landed, a guard of honour was drawn up, a military band would strike up the National Anthems of both countries, the Director of Protocol would introduce the dignitaries who had come to meet us -the President's representative, Cabinet Ministers, Provincial Governors, Heads of the Armed Services, and our own Canadian diplomatic and commercial representatives.
When the guard of honour had been reviewed by our Minister, the introductions completed, and the formalities duly dealt with, we were accompanied to the airport station, where a cavalcade of cars would be awaiting us. These were headed by two or three police motorcycle outriders, who, with sirens screaming, would whisk us off to our hotels at a uniform speed of no less than sixty miles an hour, through crowded thoroughfares and stop lights, with all traffic halted, for all the world as if a fire had broken out.
These highly efficient and greatly daring outriders, if somewhat authoritarian and unavoidably noisy, accompanied us every time we left the hotel. They added much to the rapidity with which we made our various calls, and also, let it be said, to the excitement of progress throughout the city. We visited the Heads of State, the Senior Ministers, the leaders of industry, of trade and of agriculture in all the countries concerned. We discussed our mutual problems in an atmosphere of frankness, of understanding and of goodwill.
The Trade Mission was heralded throughout Latin America with detailed advance newspaper coverage. When the Mission got underway, news of its progress was printed daily in the press of the countries which were included in our schedule, and after our arrival, the widest possible coverage was given in each country, not only in the press, but over the radio and television.
A factor which created considerable interest in each of the countries visited was the fact that the Mission was not only composed of Government officials, but of businessmen, some of whom spoke their language, all of whom had business connections with Latin America, and most of whom represented also organizations, such as the Canadian Manufacturers' Association, the Canadian Chamber of Commerce, the Canadian Exporters' Association, the Chamber of Commerce of the Province of Quebec, the Canadian Inter-American Association, etc.
Latin America is a major producer of food and raw materials, such as coffee, sugar, cocoa, wheat, vegetable oils, wool, fiber, cotton, petroleum, nitrates, iron ore, copper, zinc, tin and manganese, and just to give you a measure of the importance of this market, Latin America supplies two-thirds of the United States' food imports, and one-quarter of her raw material purchases from abroad. On the other hand, these twenty countries, which go to make up Latin America, are great importers of iron and steel products, manufactured articles, such as farm implements, automobiles, industrial equipment, chemicals, textiles, wheat, flour, salted fish, milk and other foods. Fifty per cent of all Latin America's imports come from the United States. In 1952 these amounted to nearly over $300 million a month.
We Canadians have done well in this market also. We have lifted our exports from $18 million per annum in 1938, to $275 million in 1952. This latter figure is inflated by abnormal shipments of wheat, both to Brazil and to the Argentine, due to crop failure in the latter country, and yet this performance, satisfactory in many ways, is overshadowed by that of Germany, whose exports have increased from $3,200,000 in 1948 to no less than $369 million in 1951.
Germany's performance, which should serve as a lesson and a warning to us, is all the more remarkable, because in 1951, Latin America purchased 8 % less in volume from Europe than in 1913, whereas its purchases from the United States increased to more than fivefold in the same period.
Each war has resulted in a loosening of the ties of Latin America with Europe, and in an increase in the importance of the United States in its trade. There is a tendency, however, ever since 1950, to revert towards the old trade pattern because of Latin America's growing dollar shortage, and both Canada and the United States will have to look to their laurels, if they are to hold the ground which has been won and continue their progress in this market.
From what I have seen down there, I do strongly believe that there is a great opportunity for Canada to continue to expand her trade with Latin America, and that this can be accomplished if we do but go about it the right way. I base this assertion on many factors, which include: the similarity of many of our exports to those of the United States and, therefore, the possibility of sharing some of their exports, which are so very much larger than ours; the complementary rather than competitive nature of our economy with that of Latin America; and the high regard in which Canadian goods and Canadian methods of trade are held in all the countries concerned.
When one considers the inflationary trends in certain of the countries which we have visited--their shortage of dollars, the accumulation of unpaid commercial debts--one could well be pessimistic about the future. But yet, each one of the countries visited is in full evolution--roads, public services of all kinds are being developed, factories, public buildings, apartments and private homes are being built on a scale which at times is almost breathtaking.
The standard of living of the people, which is still comparatively low, is rising rapidly, and one cannot help but feel that although the pace may be at times unduly fast, and that many of these countries will undoubtedly suffer from growing pains--as vigorous youth is wont to do--yet their forward march towards a higher standard of life, greater productivity, higher national income and increasing purchasing power is unescapable.
Furthermore, it should not be overlooked that all countries in Latin America are not suffering from dollar shortages. Venezuela, Colombia, Cuba, Mexico, Peru, the Dominican Republic and Haiti, are all importers of large quantities of North American goods, and are--in varying degrees, of course--in a position to pay for them in American or Canadian dollars.
I have returned from Latin America with the firm conviction that, present difficulties notwithstanding, the long-term potential of these markets is very great indeed, and that their movement of trade, important as it is today, will seem small in comparison ten or fifteen years hence.
That Canada, who has so much to offer in raw materials, foodstuffs, chemicals, engineering equipment and other manufactured articles, could play a much larger role than she is playing in these countries is, to my mind, self-evident. If we, as a people, were as export-minded--not only in the pioneering and exploratory meaning of the term--but in our approach to our day-today transactions in foreign countries, as are many of our European competitors, we would already have done so.
This criticism would, on the surface, appear unjustified, when one considers that with a population of but fifteen million in a world of two billion four hundred million, we have reached the proud position of third exporter among all nations.
The facts are, however, that our outstanding achievement in this direction is based, in no small degree, upon the abundance of our natural resources and the energy with which our people have developed them, rather than upon the knowledge and ingenuity which they have displayed in finding markets for our produce.
The very abundance of our resources, plus the fact that we found a ready outlet for the majority of our exports in the two great English-speaking democracies--the United States and the United Kingdom (with Sterling area), who traditionally have accounted for about 80% of all our exports, made it less urgent for us in the past to develop the skills and the techniques essential to successful trading in foreign lands, whereas many of our competitor nations, less favoured than we were and who have had to do their exporting the hard way, are more adept at it than we.
But this situation does not apply to our trade with Latin America alone. It is a problem which we are facing in many parts of the world, and which is all the more difficult to deal with because it is not apparent. Our exports have increased so greatly since pre-war days that this issue is beclouded.
Before the second world conflict, 40% of our exports found their way to the Sterling area and an equal proportion to the United States. Even then, our position was not sound, because we had too many eggs in two baskets.
Today, only 23% of our exports go to our traditional market in the Sterling area, and 54% to the United States. This dependence upon the United States for over half of all our exports carries with it hazards, which we should recognize and guard against. Do not let us overlook the fact that, due in part, at least, to our small population, we are more dependent upon our exports than most nations.
Supposing, for instance, that there are four hundred people gathered together in this room today, nearly one hundred of these would derive their income directly, or indirectly, from our exports. When 24% of a country's national income springs from its foreign trade, it becomes vitally important that it be protected at all cost, because a substantial decline would immediately affect, not only our prosperity, but our standard of living as we know it today.
That we should continue to expand our markets in the United States with the utmost vigour, goes without saying. In my own Company, no effort is spared in this direction. It would be most unwise, however, to rely upon this market to the extent of slackening our efforts in others.
A sharp recession in the United States, having in mind the parallel nature of our economies, would result in almost immediate and drastic curtailment of their imports. We ship them so many things, which in a time of recession, they could do without or produce themselves.
It is to guard against the unfortunate consequence, which a sudden and important drop in our exports would have upon our economy, that a wider pattern of distribution is desirable. It is generally recognized that in this postwar world a country's exports are largely governed by her ability to import. We could ship more goods to the Sterling area, for instance, if we bought more goods from them, and I cannot emphasize too strongly that that is precisely what we should do.
It is, to my mind, of vital importance to Canada as a whole, and particularly to her agriculture, with special emphasis upon the wheat economy of our Western Provinces, that we should build back our traditional markets with the Sterling area and Western Europe.
The point which I was trying to make with regard to our exports as a whole, and those of Latin America in particular, is that however discouraging the situation may be in certain countries from time to time, there is business to be done in most of them, and this in ever-increasing measure if we do but go about it in the right way.
It cannot be done from a swivel chair in an office in Toronto or Montreal; it cannot be done effectively by correspondence. It can only be done by becoming thoroughly acquainted with the country in which we wish to do business, with the language of its people, with their currency problems, their regulations, their habits of thought, their idio-syncracies, (and we have just as many of these as they have), with their tastes, their fashions or their fancies.
We must be prepared for disappointments, prepared to find our money tied up occasionally by some unexpected crisis, or some change in regime, prepared to do business in a different way from what we have been accustomed to in Canada, in the United States or in Great Britain, and yet those who embark upon foreign business, and who do it painstakingly and intelligently and who spread their risk wide enough, will find in the long run that it is well worth their while.
In fact, so long as we continue our policy of restricted immigration, so long as we have not built up a population, which is large enough to consume a greater proportion of the products which we grow, or extract from the earth, or manufacture, there is, to my mind, no safe alternative to a greater diversification of our exports. And I maintain that there is more danger in an over-concentration of these than in their wider distribution. I say this with a full knowledge gained at times from painful experience, of the numerous pitfalls, which are so liberally strewn along the path of the Canadian exporter, who operates in a large diversity of foreign lands.
But this much I would say about operations abroad. Those who have engaged in them, be they bankers, traders or industrialists, have found that, notwithstanding the ups and downs, their operations--on balance, have been profitable.
I believe that, as has been the experience of Canada, more people will come to recognize that national prosperity and higher living standards are intimately connected with greater freedom of trade, with convertible currencies, and with a political climate that welcomes, not penalizes--venture capital, whether that capital comes from domestic or from foreign savings.
How slow would have been our Canadian development if, like many countries today, we have refused to allow foreign capital to come in and help us develop our natural resources, our agriculture and our industries. It is heartening to note that many countries--and I have seen some of them in Latin America, who are still pursuing policies diametrically opposed to ours--are taking note of our less restrictive approach to commercial, financial and investment problems, and the extent to which these are paying off in greater production, higher living standards, and mounting national income.
One could argue indefinitely about the kind of world one will be living in, ten or twenty years hence, and there would be strong arguments on both sides. I happen to believe, however, that the world of tomorrow will be a freer and more prosperous one than that of today, a world in which there will be fewer restrictions, where goods will move more freely, and where interchangeability of currency will once more be the rule rather than the exception.
So many people surveying the economic scene are alarmed and downcast at the present state of affairs. They overlook perhaps the disastrous and widespread effects of two world wars.
To nay way of thinking, the astonishing feature of present day conditions is not the multiplicity of our economic problems, but rather the rapidity with which the world has recovered from the chaotic conditions in which it found itself at the end of World War II.
Two factors, among many others, give me cause for optimism. One is the ferment, the leaven, which is working in the great masses of the people, who everywhere are striving towards a more abundant life, a higher standard -of living. This carries with it as it has already in many countries, increased purchasing power, a larger national income, and an insistent and growing demand for more goods made and produced both at home and abroad.
The other factor, and it is an important one, is the giant strides of air transportation, which has made neighbours of us all.
Not so many years ago it took me twenty-one days to travel to the Argentine. Today it takes me twenty-two hours, and tomorrow jet liners will cover the distance between an early breakfast and a late lunch.
This ease of contact, this neighbourliness, this wider knowledge of how we all live, this cancelling of distance will, in the course of time, inevitably bring about a greater integration of world economies.
According to my book, we should not mould our policies of the future on the assumption that World War III is just around the corner, or that each country is going progressively to isolate itself behind an ever-growing economic fence. To adopt this attitude would get us no place at all. If my optimism is unjustified, if we are going to live in a world of economic nationalism, where each country is going to live behind the walls of restriction, we will be living in a poor world and one in which Canada could not prosper. But, if I am right, and I believe I am, that we will be living in a freer, more neighbourly world, then the countries, whose commercial and financial interests are spread wide throughout the earth, will benefit greatly, and I should like to feel that Canada, with her natural resources, with her youth, her vigour and her determination will be among these.
So let us be optimistic about it; let us have faith in the future; and let us go out and develop our export trade along sound and tried lines in every region whose consumer power justifies the effort, and Latin America will be chief among these.
THANKS OF THE MEETING were expressed by H. H. Wilson, Vice-President of The Canadian Club of Toronto.