Regional Prospects and Problems in Western Canada

LT.-COL. MONTAGUE: Rhodes Scholar, trained in the law, called to the Bar of British Columbia before his 25th birthday, lecturer in Economics at U. of T. within a year, appointed Professor of Social Science and Director of the Department six years later--our guest speaker, Albert Edward (Dal) Grauer, B.A., Ph.D., turned his attentions away from academic pursuits, after two years, to the field of privately owned public utilities and became General Secretary of B.C. Electric Railway Co. Ltd., Vancouver, in his native province.

It took him just seven years to progress, by 1946, to President, B.C. Power Corporation Ltd., B.C. Electric Railway Co. Ltd. and B.C. Electric Company Limited.

The University's loss has certainly been the West Coast's gain. In eleven years under Dr. Grauer's presidency, B.C. Electric Company Limited has expanded to the tune of $300 millions of dollars and a Hydro capacity of nearly 800,000 horsepower. This privately owned company which has been described as Canada's largest utility has a new 8 million dollar head office building; has retired Vancouver's rickety trams for smooth riding, cream coloured trolley coaches, and has carried power to Victoria and the southern tip of Vancouver Island by laying an 8 million dollar underwater cable from the mainland. All this is only one phase of planned hydro expansion towards a target of 1,500,000 horsepower by late 1960, with a further capital investment of perhaps 400 millions of dollars.

Nor can it be said that Dr. Grauer is strictly public utility minded. He carries the following additional and varied responsibilities: he is a Director of Montreal Trust Company, Royal Bank of Canada, Sun Life Assurance Co., MacMillan & Bloedel Ltd., Can. Chemical & Cellulose Co. Ltd., Dominion Bridge Co. Ltd., Webb & Knapp (Canada) Ltd., Ventures Ltd., Can. Liquid Air Co. Ltd. and Investors Syndicate of Canada Ltd.

On the community level and in the national picture he is also making a major contribution; being Chancellor of the U. of B.C., Past Pres. of the Vancouver Symphony Society, Past Chairman of Trustee Board--Vancouver General Hospital, Member of Executive Committee and B.C. Regional Committee--Canadian Chamber of Commerce, Member of Advisory Committee on Atomic Power, Member of Canadian National Committee of World Power Conference, Chairman of Canadian Council--National Industrial Conference Board, Member of Honorary Advisory Committee--Canadian Transit Association, Member of the Board of Governors--Canadian Welfare Council and a Member of the Royal Commission on Canada's Economic Prospects.

In his spare time, he relaxes with his charming wife and six children and plays golf.

His subject today is "Regional Prospects and Problems in Western Canada". Gentlemen, I am proud to introduce Dr. A. E. (Dal) Grauer--a young dynamo from the West.

DR. GRAUER: Most of you will remember the French cynic's definition of women as--"A good idea, badly carried out." Much the same estimation has been made of Canada, as a nation.

Personally, I profoundly disagree with both allegations. In each case, I believe the words of the philosopher much,' more applicable who said, "He who would achieve unit must have an affection for diversity."

Certain it is that Canada, with its traditional six regions--; the Atlantic Provinces, Quebec, Ontario, the Prairie Provinces--British Columbia, and the Yukon and Northwest Territories--has a most interesting diversity which has nevertheless achieved a surprising degree of unity.

These various Canadian regions are greatly dependent upon each other but they have characteristics within themselves which give them each a particular economic complexion and which cause prospects and problems of an individual nature.

A look at Canada from the viewpoint of its various regions will therefore complement and illuminate studies; of Canada as a national entity.

Today, I thought you might be interested in some description of, and comment on, the three regions of Western Canada, that is, the Prairies, British Columbia, and' the Yukon and Northwest Territories. The Yukon and Northwest Territories are often referred to as "the North", which convenient practice I shall adopt.

The three western regions have 70.3% of the land area of Canada, more than half of it in the vast North. Yet, they hold only about 261/2% of Canada's population; and here the North is statistically unusual with only 27,000 people in its huge area; a small fraction of 1% of Canada's population.

Western Canada's people are anything but evenly spread over the territory, tending to be concentrated in the south, a characteristic which is shared by Canada as a whole. 75% of our population is within 200 miles of the United States border.

The Prairies have long been known for agriculture, particularly for grain crops. Currently (1953) they still account for about 45% of Canadian total net value of agricultural products; although it may surprise some of you to know that Ontario is the biggest single producer of agricultural products among the Provinces, closely followed by Saskatchewan.

However, the importance of agriculture to each of the Prairie Provinces differs markedly, ranging from 23% of the total net value of Canadian agriculture in the case of Saskatchewan to 7% for Manitoba, with Alberta almost exactly in the middle.

Prairie agriculture, based on grain, has been able more than any other part of Canada to take advantage of the remarkable technological revolution in agriculture--surpassing that of industry--that has characterized the last few decades and has been marked by a much greater use of capital equipment and a tendency to larger farms. Farming population has, in this process, dropped quite sharply and has been absorbed in the growth of Canadian cities. With larger farms and better methods, the output of farms has been on a rising curve despite the smaller farming population.

There is every reason to believe that Prairie agriculture will continue to expand chiefly by intensive rather than extensive farming. Although there are still substantial blocks of new land that could be brought under cultivation, particularly in northern Alberta, the cost of clearing and developing new land is heavy as compared with the more intensive cultivation of larger farms.

This same cost situation would also appear to be true of big irrigation projects, although in this case other considerations might cause the public treasury to subsidize them.

The outlook for Prairie agriculture seems to be reasonably good for the future. Basic trends are favourable. The rapid growth in Canadian population, which is expected nearly to double in the next 25 years, will give a bigger domestic market for farm products. The Canadian taste for beef and pork which has shown a persistent increase for many years will take substantial acreage from the production of wheat to coarse grains and to pasture lands. There is every reason to believe that the efficiency of prairie farming will continue to improve impressively.

Nevertheless, it is on the non-agricultural sides of the Prairie economy that the rosier prospects seem to lie. The post-war trend from great dependence upon agriculture to a diversification of economic resources will go on, probably at an accelerating rate.

The remarkable tale of gas and oil has been told so often that it is sufficient for my purposes to note that this field is eminently a developing one with splendid prospects for the future. There are still vast possibilities on the side of discovery and production--only about 15 million acres out of a potential of some 470 million has been explored--while the outlook for increased consumption is tremendous, as shown by the forecasts in the Preliminary Report of the Gordon Commission.

Alberta has yielded by far the best oil and gas results of the three Prairie Provinces so far and seems destined to hold that position, with Saskatchewan a healthy second and Manitoba a rather poor third.

These oil and gas developments on the Prairies are of outstanding importance to all Canada. They mean not only a new and efficient source of heat and energy--natural gas--for the whole region from British Columbia to Quebec but also a reversal of our former import--export position with the United States regarding petroleum products. Contrasted with only two decades ago when almost all petroleum products were imported, the area from British Columbia to Ontario will soon be practically free from imports.

On top of this there will be a considerable export of both natural gas and oil, the size of which will depend upon the results of future exploration. All this will be of prime importance in Canada's balance of trade with the United States which, as you know, is now heavily in favour of the United States.

Turning to other sources of energy, we find that Alberta is by far the best endowed of the Canadian provinces with coal. Her coal resources are not only among the largest in the world but well diversified and in many areas capable of surface mining with its very cheap costs. For the time being these coal resources are put into the shade by oil and gas but they are an important long-time economic strength.

Regarding coal, Saskatchewan again is in second place, with large reserves of lignite in the south which can be surface mined and are now beginning to be used for the generation of reasonably priced electricity.

When it comes to water power, the tables are turned heavily in favour of Manitoba. Her potential, however, is a considerable distance from present centres of population and presents the problem of high costs for the first units of development. The northerly location of this water power potential is nevertheless strategic for the probable development of mineral resources, as witness the present Moak Lake-Mystery Lake nickel undertaking of International Nickel.

The Prairies have so long been regarded as an agricultural region that it is a surprise to many Canadians to hear of their fine mineral prospects and considerable forest resources.

The northern part of the Prairie Provinces together with the adjoining area of the Yukon and Northwest Territories is estimated to contain more than one-quarter of Canada's accessible productive forests. With long-term world demand favourable and with more economically placed forests of British Columbia, Quebec and Ontario being rapidly developed, it appears reasonable to expect that the forest resources of this part of Canada are of increasing practical importance for the future.

The Great Canadian Shield, which is the backbone of Canada's mining industry, extends across the prairies in a generally northwest direction and covers a great area of Manitoba and Saskatchewan. This region, therefore, is blessed with a large territory of favourable geological formation; and a good part of it has potentially low cost energy. Important uranium mines have been established in northern Saskatchewan and the outlook seems good for copper. Rich nickel-copper strikes have been made in Manitoba. Outside of the Shield large deposits of potash have been established in central Saskatchewan. Indeed, the Premier of Saskatchewan has expressed the arresting opinion that the value of wheat in his province would be exceeded by the value of mining and mineral products within ten years.

Secondary manufacturing has had a very small growth in any of the western regions compared with Ontario, but nevertheless it has been a significant growth compared with the West's own past experience. The major single industrial development in the Prairies has been related to natural gas and oil, both as raw materials and as sources of energy, and the greatest beneficiary of this has 1 been the Edmonton district. There has also been scattered manufacture developed by local markets and by special demands such as that for pipe for the gas and oil industry.

On the whole, though, Winnipeg has maintained its position as the largest industrial centre in the Prairies partly because of the favourable start it got as "gateway to the prairies" and partly because its relatively low industrial cost structure has kept it in competitive position.

British Columbia as a region, is topographically quite different from the prairies and the north.

It has been described as "a sea of mountains", an epithet coined by one of the Confederate Fathers, Edward Blake, in his angry opposition to the construction of a railroad between Canada and British Columbia; the railroad which was one of the principal terms of union when the Province joined Confederation in 1871.

The "sea of mountains" soon engendered an optimism of its own. Its supreme example is perhaps found in the case of a miner who was a fervent disciple of G. M. Dawson, the pioneer geologist, and who was also an ardent, if not too understanding, reader of Dawson's great report, "The Mineral Wealth of British Columbia". When the time arrived for this miner to pull his last stake, he asked an itinerant clergyman at the diggings to read from the "Good Book". The clergyman chose the 21st Chapter of Revelations and described the new Jerusalem descending from above, its foundations garnished with precious stones, jasper, sapphires, emeralds, topaz and amethyst. "Stop," protested the miner, "Man, that's not the Bible, that's the Dawson Report!"

The other distinctive geographical characteristic of British Columbia is its 7,000 miles of open shoreline on the Pacific Coast including inlets and offshore islands, about twice the length of the Canadian-United States boundary.

B.C. has a larger area than the neighbouring Pacific states of Washington, Oregon and California put together, but only about 6% of it is potentially arable compared to about 54% in Alberta and 29% in Ontario. British Columbia, therefore, does not have the agricultural base that the Prairie region does.

The industry in British Columbia that more closely corresponds to agriculture in the Prairies is forest products.

The long coastal shoreline--with a mild, open climate caused by the Japanese current and heavy rainfall as the result of moisture-laden westerlies hitting the mountain ranges, has meant lush coastal forests in an area ideally suited for water-borne transportation. The result is that the B.C. Pacific slope has the finest softwood timber producing area in the world.

The western slopes of the Selkirks and the Rockies catch a second precipitation from these winds and produce rain forests similar to those on the Coast. The interior plateau as a whole is covered largely with lodge pole pine as is the southern part of the Rocky Mountain Trench. In all, 30% of B.C.'s huge land area is covered with productive forests.

The forest laws of the province are designed to achieve a sustained yield in perpetuity and, on this basis, there is still considerable scope for the expansion of the industry, particularly in the interior of B.C. There is every reason to expect, therefore, that forest products will continue to be the basic industry of British Columbia for a long time to come.

The Western Cordillera of North America runs the length of British Columbia into the Yukon and embraces some of the highly mineralized mountains of the globe; and thus mining, next to forestry, is B.C.'s leading primary industry. So far, almost 90% of B.C.'s total mineral wealth has been found within 150 miles of the United States border. Airborne prospecting and new access roads make it likely that the wild northern part of the Province will now come into its own. Considering the large area involved, the geology and the indications already found, we may suppose that there will be important discoveries made in fields such as uranium, iron ore, nickel and rare minerals as well as in the fields--zinc, lead, silver, copper and asbestos--already more commonly found in B.C.

The Gordon Commission's research studies forecast an increase in the total value of mineral production for Canada of from 31/2 to 4 times during the next 25 years and see mining and mineral processing surpassing forest products in value of output. It seems certain that British Columbia will participate handsomely in this big growth.

Turning to the important field of energy resources, without which no great economic development is possible, British Columbia finds itself in a favoured position. It has within its own borders, two of the three most efficient and flexible energy sources in abundant supply, both actual and prospective, namely hydro-electricity and natural gas; with good prospects for the third, oil--which in any case it is getting efficiently by pipeline from neighbouring Alberta.

B.C.'s proven resources of natural gas and oil centre on the Peace River area which occupies a 34,000 square mile triangle in the extreme northeast corner of the Province. The reserves in this area are now over two trillion cubic feet and exploration is only beginning to gain momentum.

This gas has an outlet throughout B.C. and to the United States border through the Westcoast Transmission Line from whose opening ceremonies on Monday and Tuesday I just came.

Hydro-electricity is the form of energy in which Canada has historically had great advantages over most other nations. British Columbia's abundant rainfall and rugged topography have endowed the Province with enormous resources of water, considerably greater than those of any other western region. Its undeveloped potential is surpassed only by that of Quebec in all of Canada.

Perhaps the two outstanding aspects of B.C.'s hydro situation are, first, the existence of several large-scale projects, remote from centres of population, whose energy can efficiently be used at tidewater on the Pacific Coast and, second, the enormous potential of the Upper Columbia and the Fraser Rivers, two of the best power rivers in the world, strategically located in the populous southern half of the Province.

These big power developments all have their problems; for instance, the international division of downstream benefits on the Columbia, the fisheries on the Fraser and the question of a suitable port for the utilization of the Yukon-Taku and of the Iskut-Stikine-Dease Lake power potentials in northwestern British Columbia. But assuming that these problems can be overcome, and that is the general assumption, B.C.'s hydro potential should not only mean reasonably priced electricity for her centres of population for many years to come but large blocks of low-cost energy for those types of industry like aluminum in which electricity is the most important single part of final cost.

With respect to secondary manufacturing, the probability is that Greater Vancouver and the surrounding Mainland area of B.C. will become the third most important manufacturing area of Canada, albeit a good distance behind the manufacturing complex centred on Toronto and Montreal, respectively.

Greater Vancouver has outstanding transportation facilities of every kind and to every part of the world. "Fuel, power, capital and men," says the Province of Ontario brief to the Royal Commission on Canada's Economic Prospects, "all follow great industries;; but industry seeks out areas blessed by nature and history with exceptionally good transportation facilities." Nowhere in Canada does this observation apply with greater relevance than in the Greater Vancouver area.

B.C.'s splendid all-year-round ports give her a particularly strategic location opposite the awakening countries of Asia. The countries around the Asiatic side of the Pacific Ocean are determined to develop diversified economies, and if they are now going to see growth similar to that of the countries around the Atlantic Ocean during the past two centuries, then the Pacific side of North America will indeed have a fortunate economic location. It takes little imagination to see what a relatively small increase in the standard of living of Asia's abounding millions, and an associated development of her vast resources, would mean to international trade in general and to British Columbia in particular.

In a sentence, British Columbia seems to have arrived at a stage where there is a beneficent working of a circle of mutually stimulating factors, namely, bountiful natural resources, abundant energy, temperate climate, strategic location, population growth and industrial development.

When one turns to the North--the Yukon and Northwest Territories--the land mass is so huge, about 41% of all Canada, and exploration of resources in such an early stage that one can talk less particularly about prospects than of problems. Flying across this almost endless North, with hours between each small community, one is awed by the sheer size of it.

A combination of severe climate, muskeg and mountains strictly limits agriculture. Cultivation of parts of the Mackenzie River Valley and certain other small areas and reindeer herding are the chief possibilities here.

Fisheries, too, have some present development but neither fisheries nor agriculture have prospects of a magnitude that would support an important economic development.

Similarly, the traditional fur trade has passed the peak of its growth as far as wild animals are concerned but there are good possibilities for fur farming because of the availability of cheap fish food supply. But again, in dollar terms these prospects are small.

There are forest resources in the southern part of the region but the really important question which only the future can answer is: What lies underneath this tremendous land mass?

From the point of view of mining, there is favourable geology, with the Canadian Shield running into the Northwest Territories and the Cordilleras running through the Yukon. Actual strikes, particularly of gold, base metals and uranium, have been of an importance to justify great hopes for the future.

The geology is again favourable for natural gas and oil, with extensive sedimentary formations particularly in the Northwest Territories. Just recently a whole new field seems to be taking shape stretching from north of Great Slave Lake into Alberta and northeast British Columbia. The problems of the North are much the same as those of the northern parts of the two other western regions, accentuated by an overall lack of population and associated lack of financial capacity.

Transportation is without doubt the central problem. A handful of 27,000 people in such a vast area can obviously support little in the way of roads and railways for such a far-flung region. The requirements of transportation have been helped by the needs of national defence, as witness the Alaska Highway and the DEW line; and at the exploratory and developmental level, the advent of the aeroplane has been revolutionary. But roads and perhaps railways are needed for any real opening up of the Northland, and the provision: of these is essentially a matter for wise timing.

To what extent is the Federal Government justified in using national revenues to build expensive transportation arteries, particularly in a time of tight money, in order to develop resources which the various Canadian provinces are developing anyhow in fields where there is no apparent lack of supply in world markets? This is the central question.

For all three western regions the ability to attract capital is of fundamental importance. Generally speaking, the resources of these regions are of such a nature--minerals, forests, gas and oil--as to provide the strongest possible attraction for capital both nationally and internationally. Post-war history so far has demonstrated this beyond doubt and there is no reason to believe that this situation will change during the next few decades. I have not the time to go into all the reasons here, but the forecasts of the Gordon Commission for the next 25 years for world demand in these various resource fields are quite bullish.

In mining, and particularly in gas and oil, capital is apparently willing to do exploratory and developmental work even where prospects for the immediate use of the resource are not good. For instance, a program of drilling for gas and oil is now under way in the remote Peel

River area of the Yukon. Naturally capital is inclined to work from more accessible and proven areas outwards and for this reason one would expect a continuation of intenser effort in the Prairies and British Columbia than in the North.

Taking everything into consideration, it seems reasonably obvious that remotely located properties with high development, operating and transportation costs are not going to be as competitive in world markets as closer in properties. The fortunes of the northern parts of the' Prairies and B.C. regions as well as of the North will therefore to a large extent depend upon world demand and supply conditions or, in other words, on world prices.

While there is every reason to be optimistic about the long term prospects for these more northern regions, it is also very easy to think with one's hopes for the nearer future and to be led into heavy expenditures which world markets for the near future may not justify.

Our various governments are faced with pressures for expenditure on all sides. In a period of tight money like this one the question of alternative expenditures thus becomes a pressing one for our governments. Should a substantial expenditure be made in a remote area or in one closer to centres of population or should it be made at all? This is the type of question that our governments will again and again be faced with. It is easy to lay down certain basic rules such as that government expenditures should be held back during periods when private capital expenditures are heavy or that marginal resource developments should not be encouraged but rather held for the time in the future when they become more profitable.

But actual life is much more complicated than simple basic rules indicate and our various governments deserve sympathy in arriving at decisions in this whole area of regional development.

As for the three western regions in general, I believe my review leads to optimistic conclusions. They have the resources, they have the ability to interest capital and they are attracting population. The growth of certain parts of this western territory, notably Alberta and British Columbia, has been nothing short of phenomenal since the end of the war. With Western Canadian resources basic in nature and relatively undeveloped, one can conclude with the poet "but westward look, the land is bright'.

THANKS OF THE MEETING were expressed by Mr. Marvin Gelber.