The Economic Future of Canada

MM. GIBSON: I well recall the address which Mr. Charles Schwab, then President of Bethlehem Steel, gave in New York City on an occasion similar to this. He remarked "The real aristocracy of the world are those men who create and build any form of enterprise that is of benefit to their community or to their fellow-men, and share their lives in service for the betterment of society."

As Second Lieutenant with cavalry troops in the Philippines in 1902 and 1903, and again as Major sailing for France in 1917, and in 1918 promoted to BrigadierGeneral, we have General Wood as a worthy citizen rendering military service in the hour of need.

His ten years' association with the construction of the Panama Canal, with all its benefit toward Commerce a truly colossal undertaking led him to say "Everything I have done since has seemed easy". In his business world, his associations cover twenty-six companies and institutions. This realm embraces Honorary President of the Boy Scouts of America and culminating in his crowning achievement--the guiding genius of the modem Sears-Roebuck Company.

Truly General Wood belongs to the real aristocracy The State has honoured him in the only way it can honour devoted service. The United States Government conferred on him the Distinguished Service Medal, the French Government the Legion of Honour and the British Government the honour of a Commander of St. Michael and St. George.

We are greatly honoured, and full of appreciation for since our first correspondence in August 1949, two long years have passed--Gentlemen it is a special privilege to call upon and to welcome our distinguished guest and speaker, General R. E. Wood who will now address us.

GENERAL WOOD: I am very happy to be in Toronto today. It has been many years since I have been in this city; my last real visit here was some 30 years ago, though I have passed through en route a few times in the intervening years.

Like millions of other Americans I have many ties with the Dominion and its people.

My younger brother, who was an officer in the United States Army resigned his commission in September of 1914, went across the border and enlisted in the Canadian Army. He was here at Toronto, was later commissioned as a Captain in the 16th Battalion Canadian Scottish and went to Europe in the Winter of 1914-1915. He went into the trenches of France in May of 1915. He was wounded in September of 1915, came out of the hospital in December, was wounded again in January, released from the hospital in February and was killed at Ypres in June of 1916. He is buried in the Canadian cemetery at Poperinghe, Belgium.

My other brother, a mining engineer enlisted in a Canadian Engineers Company in 1916, but was given his discharge in 1917 when the United States entered the war. He then re-enlisted in our army, went over in my division to France and was wounded in 1918.

For nearly 20 years I took my vacations in western Canada. I would get a pack train and go into your beautiful Canadian Rockies and hunt mountain sheep, mountain goat and caribou. During these trips I became well acquainted with Alberta, British Columbia and the Yukon. My eldest daughter has a residence just off Vancouver Island, about 40 miles from Victoria. I have visited her and have cruised along British Columbia's coast many times. I have taken fishing trips in the Hudson Bay region and in Quebec and New Brunswick so that I feel I know Canada fairly well. I have always liked your country and your people and have always had great faith in your future.

Nothing has given me more cause for satisfaction than the friendliness which has developed on both sides of the line during the last 20 years. Old jealousies and misunderstandings have largely disappeared and I think the vast majority of Americans have a genuine admiration for Canada and the Canadian people. They wish Canada well, and hope to see the country prosper. I do not know as well the sentiments on this side of the line, but I hope our sentiments are reciprocated. The old bogy of annexation has entirely disappeared. If the two countries ever do unite it will only be because the Canadian people desire such a union. The question will be decided by Canada, not the United States.

The last 10 years have shown marvelous development in the Dominion, but in my opinion, Canada has really just begun its real development. The progress in the decade, 1950 to 1960, will be far greater than the progress in the last decade. You will be the leading member of the British Commonwealth of Nations. If the British Empire survives its present period, you will probably be the seat of the Government of the Empire, if you so desire. Your population, which by the census just completed is 14,000,000, will probably reach 18,000,000 in 1960 and 22,000,000 to 25,000,000 in 1970.

I think that while all of you must realize the enormous changes which have been taking place in the world since World War I, few people have fully realized some of the primary causes for these changes. The business, of which I have the honor to be the head, gives me a marvelous opportunity to view the industrial panorama of the United States, dealing as we do with 12 to 15 million consumers on the one side and with 12,000 manufacturers on the other. These changes are occurring in all parts of the world.

In the 19th century raw materials were brought from all over the world to the workshops of the world, where they were processed and re-exported to the raw-material country. The original workshop of the world was the British Isles; then the United States and Germany came into the picture, followed later by Japan, Belgium and Holland and the smaller countries of western Europe, though on a smaller scale. With the spread of manufacturing know-how, the advance in machine tools and the exportations of machine tools to the raw-material countries, these countries began to develop their own manufacturing. For a century the raw-material countries were exploited. Today every country realizes that there must be a balance between agriculture and industry, that the three primary needs of man--food, clothing, shelter--must be provided for by local manufacturers.

The same applies to the segments of a large country--fifty years ago, our cotton raising south and our western wheat raising states were colonies of New York and New England. From what little I have observed, the prairie provinces of Canada were in a similar situation with respect to Ontario and Toronto.

As a result of these changes, instead of raw materials moving to the concentrated workshops of western Europe and of the eastern United States, factories and population are moving to the raw materials and the food. This is true not only in western Europe, but it is also true in the United States where a tremendous shift in industry is taking place from the New England and Middle Atlantic States, to the Middlewest, the South and the Southwest and the Pacific Coast. The manufacturing of Canada is largely concentrated in Ontario and in Quebec. Eventually, some of your manufacturing will be transferred to the prairie provinces and to British Columbia, though this movement will probably take a number of years. To develop local manufacturing industries there must be enough population with enough distribution so that manufacturers can keep their machines busy and cut their costs down. This is difficult where the population is small. My firm had this experience in California when we tried to develop our purchasing on the Pacific Coast. For ten years we made little headway, but when the great surge of population arose in the state of California from 1940 on then it became easy. 22 years ago we bought 5% of what we sold from Pacific Coast Manufacturers, today we purchase 40% there.

You have to a certain extent similar conditions in Canada where your manufacturing is concentrated in the eastern provinces and you have a long, expensive haul to the prairie provinces and to British Columbia. Your natural avenues of communication out there run north and south, but the political boundary, duties, etc., largely prevent the natural flow of goods from south to north and vice versa. It would lower manufacturing costs and cut living costs in the Prairie Provinces and British Columbia if goods could move up from America factories in the Middlewest and the Pacific Coast into the Prairie Provinces and British Columbia. However, this will occur only when Canadians decide it is to their advantage to take such a course.

I believe the decentralization of industry to be healthy and beneficial not only between nations, but between segments of nations--like Canada and the United States. The transfer of industry from our crowded New England and Middle Atlantic States to the Southeast, Southwest and Pacific Coast will be to the advantage of the United States, just as in the future similar changes will be to the good of Canada.

In my many trips to British Columbia, it has always seemed to me that our system of life was crazy, when that beautiful province with every natural resource, with 365,000 square miles of territory, or four times the area of the British Isles, has 1,100,000 population while on the British Isles, 50,000,000 people are crowded into 89,000 square miles of territory. Most of the troubles of Britain stem from the fact that the little island which is raising only 39% of its food does not have today the resources to provide 50,000,000 people with a decent standard of living. The same applies to the other countries of western Europe which are all over-populated. France is the only country of western Europe that can feed itself. Every province in Canada, with 4 exceptions, is larger than any country in Europe except Russia.

You in Canada have every reason to be happy. You have immense resources in land and minerals. You have space, plenty of room to maintain your present population and a much larger one on a high standard of living. You have an intelligent, hard working population, you have capital, a good Government and a stable currency.

You should be thankful that you are Canadians.

I was in western Europe last summer and it seemed to me that for the first time I saw Europe in true perspective. The British, German and French Empires, stripped of their colonies or of effective control over them, are in no sense to be compared to a single one of your great provinces or to some of our larger states like Texas or California. Quebec, Ontario, Texas, California all have the area and the resources.

I returned a few days ago from Venezuela and Columbia where my company has several stores. These South American countries too have immense resources--they are young, alive, growing. Brazil is an Empire in itself.

In 1951 Canada had the largest trade with the United States, Brazil came next, and Mexico next--all ahead of Great Britain or any country in Europe.

Europe is old, tired, overpopulated. The future belongs to the two virgin continents of North and South America.

The next 100 years will show an astonishing development in the countries of the western hemisphere and in this development Canada will play a leading part. Your population and your wealth will increase, your standard of living and your purchasing power will steadily increase. The western hemisphere will have both the economic and the political power far superior to that of Europe and Asia.

I am a firm believer in the capitalistic system, the so-called free enterprise system. With all its faults, it is the best system yet devised, and properly administered and handled, it will give the best results to the people of the World, far superior to any form of statism.

Businessmen, as the administrators of this system, we must get a new view of our responsibilities. I always say to my associates that there are four parties to any business--the customer, the employee, the community, the stockholder. I name them in the order of their importance. If the interests of the first three are properly taken care of, the stockholder will profit in the long run. If the customer is not properly served, the business perishes; if a company has a disgrunted, sullen set of employees, the business will never prosper as it should. I believe the head of every business, large or small, should regard himself as the trustee of the men and women working for him and should be glad to better their wages, their working conditions, and their security within the limits of what the business can afford. Sears antidated our government by 20 years in providing social security through our profit sharing plan. The employees' fund today has assets of $400,000,000; our older employees are retiring as capitalists. In the last 10 years of labor strife and turmoil in the United States our relations with our employees have been peaceful.

Corporations should contribute liberally to the public and charitable projects of the communities where their plants, factories or stores are located. With the present system of taxation, they cannot assume the load that wealthy individuals formerly carried.

If the corporation does its part toward the customer, employee and community, the stockholder will prosper.

From a material viewpoint your prospects are unlimited. With modern science and modern technology, with your immense resources, the standard of living of every class of the Canadian population should rise continuously for the next 20 years. But it takes more than material wellbeing to make a great nation. Canadians must retain the courage and faith of their forebears--Canadians and Americans must retain their faith in God and in the principles and ethics of the Christian religion. We must not follow the leadership of the so-called intellectual, the man without faith in God. If Canadians as well as Americans retain this faith, both nations have a glorious future.

THANKS OF THE MEETING were expressed by Mr. D. H. Gibson, the President.