National Policy—1939 Version

CHAIRMAN: Gentlemen of The Empire Club of Canada, I am sure that we all deeply regret the inability of the President to take the meeting today. I will, however, endeavour to act as a substitute.

Again we have the pleasure of welcoming home Norman M. MacLeod. Much has transpired since he spoke to us less than a year ago. In these days of fast moving events which are recorded by radio at once or within minutes of their occurrence, it is extremely difficult for the average man to sift fact from fancy and to intelligently interpret the significance of events. We have all heard interpreters of whose background and motives we are ignorant and whose interpretations we question. It is therefore fortunate that in Mr. MacLeod we have one of our own, educated in local schools, colleges and universities, and for the past few years a member and past President of the Press Gallery at Ottawa, who has had a close view of the proceedings at the Capital and has ably interpreted those proceedings. Mr. MacLeod at the present time is the resident correspondent of the Windsor Star.

Mr. MacLeod's title intrigues: "National Policy--1939 Version." I have great pleasure in presenting Mr. Norman M. MacLeod. (Applause)

MR. NORMAN M. MACLEOD: Mr. Chairman and Gentlemen: I would be very unappreciative if my first words were not those of thanks for this "welcome home," as the Chairman so very nicely phrased it. When I spoke to this Club a little less than a year ago I expressed then my deep appreciation. Today I feel that whatever my indebtedness was to you at that time it now is multiplied many times. For a year ago you were simply taking a chance--as you inevitably must at times--on a rather unknown speaker. But today you are graciously paying me the tribute of a return engagement and it is quite impossible for me to express how highly I esteem that compliment.

I esteem that compliment because I recognize the Empire Club as one of the most worthwhile organizations this Dominion possesses. Its vision is large. Its interests are concrete and practical. It is concerned, in an intelligent way, with the fundamental public problems upon the solution of which our country's continuing national greatness depends. Its spirit is progressive and its outlook is sincere and serious, without being lacking in optimism. Consequently, it is impossible for one who is interested in national affairs, and whose daily pursuits keep him more or less intimately in touch with the developing national picture, to stand before such an organization without appreciating that, if he has anything to say of public import, here is the audience before whom he wants to say it.

Gentlemen, I feel that all of us here today are on common ground in desiring nothing but the progress of our beloved Canada and our beloved Empire, that all of us here today are prepared to bring free and open minds, unburdened of all partisan, racial, or religious prejudices, to examining some of the problems of our beloved Canada and our beloved Empire and that all of us here today are sincerely anxious to strive diligently in the light of our best judgment to promote the future greatness of our beloved Canada and our beloved Empire. It is for these reasons that I welcome so genuinely this opportunity of being with you.

My subject today is "National Policy--1939 Version." It is, I am afraid, not so much a subject as a goal at which I hope to arrive before I conclude my remarks. Since I spoke to you last I have covered Canada twice from Coast to Coast on assignments of political journalism. Consequently, I have been afforded a fresh and extensive opportunity of viewing some of our national problems in their actual geographic and economic setting.

What I am anxious to do mainly today is to argue a certain conclusion to which my practical observations have led me. In so doing I want to suggest-and illustrate my suggestion briefly-that in recent months we have tended increasingly to be less objective and concrete in our attitude toward our national problems, that we have been disposed to forsake, in our thinking with regard to them, the highway of facts for the forest of theory--and of abstract, constitutional theory at that. Finally, having argued for a concrete, and objective approach to our problems, an approach of action as contrasted with the theorizing and procrastination in which we have been taking refuge, I desire to leave with you, for your open-minded consideration, a suggested programme of development which, for the purpose of giving this address a title, I have termed "A National Policy--1939 Version."

I take it for granted that a speaker before an audience such as this may spare himself the labour of demonstrating that our country does face grave and serious national problems. All of us here today have the intelligence, I believe, to recognize that they exist. And, while we may differ individually in our opinions as to what the chief problem among them is, I suggest that if we take a broad, general view of the situation we will conclude without much difficulty that it is the one of national unity. Almost every crisis confronting our people nowadays, whether financial, economic or imperial, can be stated in terms of this central problem. Is it the ability of a province to meet its interest payments that is the issue of the moment? Immediately the question arises of the relation of that province to the Dominion and the responsibility which the federal government should assume. Is it a problem of tariffs and industry? Immediately the issue emerges of the willingness of one part of the country to co-operate in a policy which may be substantially for the benefit of another part. Or is it the question of defense that holds the centre of the stage? In this case also the consideration which becomes paramount is the possibility of pre- serving the unity of the two great races that are joint partners in Confederation.

And so it goes. The problem of national unity underlies almost every major situation which these troublous times are raising for our country. We do not like to think of Confederation as hanging in the balance, but we must all privately admit in our innermost thoughts today that it is standing urgently in need of repair.

Let me put to you briefly some of the more salient, if unpalatable facts of our national position today. First of all, what is the situation at Ottawa? Simply this: a succession of deficits, loaded upon the national exchequer by over-government, by excess railway mileage, and by the depression, have rolled up into a national debt of staggering proportions. There is nothing to be gained by fooling ourselves any further. Our national credit no longer can be regarded as inexhaustible on its present basis. That we have been able to maintain it unimpaired up to the present and that we are relieved of concern for the immediate future, is due, in part at least, to the fact that the money market of recent years has made it possible for us to refinance our debt at lower rates of interest. But make no mistake about it, the time is rapidly approaching when we will have exhausted the respite that refinancing has given us. Eventually-in fact speedily-we are going to have to set our financial house in order, or it will become apparent that, fundamentally, Mr. Aberhart's curious doctrines of Social Credit are no more fantastic than the beliefs of so-called "orthodox" governments that financing by means of budgetary deficits can be continued indefinitely without disaster. Yet how are we to set our federal finances in order? The national budget this year will be in excess of $600,000,000 and of that total a large percentage consists of items that are uncontrollable. I will return to this situation later.

Let us look now at the provinces. In Ontario and Quebec we have the allied problems of unemployment and the burden of relief. On the western Prairies, we have a revolt against the tariffs. And, despite the assistance that has been forthcoming from eastern Canada to the drought-stricken areas in recent years, an open propaganda for secession has been launched among the farm organizations. It is true that, numerically, the advocates of secession are still but a noisy minority. But surely the fact that they are able to gain an audience at all is significant. It is by ignoring movements of this kind, instead of treating them as the handwriting on the wall and removing the grievances on which they feed, that future large-scale trouble is stored up.

Turn now from the unrest in the West to conditions in the Maritimes. Economic distress is acute there among fisher-folk and miners alike. And there, too, just within recent weeks, an open secession movement has been revived, and actually is receiving press support. In fact, so rapidly has the secession propaganda been spreading that the Halifax Herald, which fortunately is the leading Nova Scotia newspaper, has found it necessary as a national duty to take up the cause of Confederation and a united Canada in an editorial crusade.

So we have the situation. We have a federal government that is bending under the financial load that it must carry. We have the seeds of secession sowing themselves broadcast in the Maritime Provinces and in the Prairie West. And we have the central provinces depressed in their industrial and employment outlook.

But it would be unfair to suggest that this situation is escaping the attention of the federal authorities. As a matter of fact, if we except the international situation with its overwhelming burden of anxiety, there is perhaps no other problem that is causing more concern to the Prime Minister than this one of national unity. I do not propose to discuss the partisan aspects of it. I leave it to my good friends, the Hon. Dr. Manion and Col. George Drew to paint their inimitable pictures of the happy Canadian family that was to follow the 1935 election and the reality that has ensued. I believe few developments have been more disappointing to our Liberal Prime Minister than this situation and, on an occasion of this kind, I would like simply to pay him tribute for having recognized the facts and having taken steps which he believes will lead in the direction of their solution.

Something more than a year ago Mr. King appointed a Royal Commission to deal with this whole problem of national unity. That Commission consists of some of the most eminent minds in the judicial, economic and journalistic, life of the Dominion. Although it has not rendered its report as yet, I am confident that, as a result of its investigations, a mass of economic data of the most pertinent and valuable nature to the Dominion's future will be made available. But I am equally confident that, from the very nature of the national unity problem itself, any recommendations that the Commission may make will have to be supplemented by practical, dynamic policies that lie altogether beyond the constitutional field.

For, consider the limitations within which the Royal Commission on Dominion-Provincial relations must confine its suggestions. It can--perhaps will--suggest a reallocation of the powers of taxation. And if a surplus were available to be redistributed in either the Provincial or Dominion fields, there might be some hope of solving either the federal or the provincial budgetary difficulties by this expedient. But all that exists to be shared in either field is a deficit. A greater measure of consistency and logic in our taxation setup may be brought about by a reallocation of federal and provincial revenues but, beyond that, it is difficult to see how an over-all surplus can be achieved by any juggling of deficits.

The other possibility is that the Commission may recommend a transfer of sundry jurisdictions from the provinces to the Dominion. Now, obviously, the optimism that such a policy can excite depends on one's belief that there is some magic superiority in federal auspices which causes problems to dissolve once they come under them. The trouble, in this connection, is the absence of any concrete evidence supporting such a hope. The record of the Dominion in solving its own problems has not been so conspicuously successful as to encourage the belief that problems now provincial will be eliminated by the simple expedient of laying them on Ottawa's doorstep. On the contrary, it might be contended more reasonably that Ottawa's doorstep at the present time is so crowded with federal problems that there is no room for any additional provincial ones.

And so I say that, regardless altogether of this valuable work that the Dominion-Provincial Relations Commission may be expected to do, it is not only sheer optimism but the height of unfairness to expect that body to solve a problem of national unity which, fundamentally, is not a matter of either financial or legal relationships between the Dominion and the Provinces, and is not soluble, consequently, merely by a financial or a legal formula.

At this point I think you will be asking yourselves: What is the basic character of this problem of national unity? Within recent months I have tried to answer this question for myself in the light of my observations of conditions in this Dominion from coast to coast. And the conclusion to which I have come, suggested and confirmed alike by what I have seen in the Maritimes, in the central provinces and in the West is that, at heart, the problem of national unity in this Dominion is an economic one. The different parts of Canada are being emboldened to have greater faith in themselves than they have in the Confederation whole, and provincial leaders are being encouraged to set themselves up against national leaders, I am convinced, because faith has been lost in the ability of a strong central authority to point the way to salvation. No longer does a sufficient Dominion--wide sense of team play survive, or of united pursuit of a national programme. The national psychology that is abroad, instead of being optimistic for progress, is pessimistic in its belief that at best we are merely drifting toward fresh and unknown situations of trial. If a nation could mark time, Canada would be marking time today in its national life. But as a nation cannot mark time, but must either go forward in strength or disintegrate, I think we must face the fact that, below the surface as yet but nevertheless active, the forces of disintegration are at work in our Dominion today.

Gentlemen, I have said that I am convinced that, at heart, the problem of national unity in this country is economic. Let me particularize further what I mean by that. I mean simply that the economic motive that once was so powerful in binding Confederation together has been steadily fading from the national picture. In other words, in some parts of the Dominion, Confederation is no longer recognized universally as the sound business proposition that it once was admitted to be.

The view may be a shallow one. I believe it is. I am sure any of us would be willing to argue with a Saskatchewan farmer or a Nova Scotia fisherman who imagines that he would be better off outside Confederation than he is in it. But the fact that we believe that we could win such an argument is not the point. The point is that the Saskatchewan farmer and the Nova Scotia fisherman have lost temporarily their faith in the economic benefits of Confederation. I suggest that our task, if we are to achieve any real solution for the problem of crumbling national unity, is to restore the economic motive in Confederation for every one of the nine provinces that subscribes to the pact.

We need not cease being idealists if we simply admit that we live in a materialistic age and that, in times of economic stress such as we are passing through, the economic motive is one of the most influential factors in our lives. And so I say that if we can make Confederation good business for the Nova Scotia fisherman, good business for the Prairie wheat grower, good business for the British Columbian fruit grower, good business for the Ontario manufacturer and good business for the picturesque, witty and industrious French-speaking Canadians, then we need worry no longer about national unity. The problem will not only be solved; it will have solved itself on a basis that will prevent it from troubling us again.

The question is how to restore the economic motive to Confederation. Can it be done? Gentlemen, I believe it can, but only if we first reject certain counsels that are clamouring loudly to be heard at the present time. There is a school of thought that is on the march in Canada today. Its hosts are the battalions of fear and defeatism. They would have us pare everything to the bone, lop off the branches of our national expenditure without regard for the health and future stature of the national tree itself. And they would have us balance the country's budget immediately, without regard to the disturbance in the national economy that the rigours of such a programme would involve.

No one who has any sense of national responsibility or any appreciation of the growing seriousness of the national situation will disagree with the motive that actuates this school of thought. Its aim is to rescue the Dominion from an ultimate fate of insolvency that must bring hardship to the classes of the citizenship least able to endure it. That objective is one that we all would be prepared to support.

But my criticism of the movement that offers civil and public service reductions as a solution for our situation is that no such programme can possibly meet the emergency we face. Advocates of retrenchment who talk about saving tens and hundreds of millions of dollars by drastic elimination of civil service waste are simply talking the most glittering generalities that can never be fulfilled. I cite just one fact to establish this proposition: Of the $600,000,000-odd which the federal government will spend during the current year, approximately $400,000,000 will fall into the category of uncontrollable, contractual expenses which can only be diminished by repudiation. In other words, Gentlemen, we have gone too far along the road of huge federal and provincial deficits and staggering accumulation of public debt for retrenchment to save us.

And so I say that the counsels of drastic retrenchment now endeavouring to sweep everything before them in the realm of public opinion in this Dominion are basically counsels of despair. Rigorous economy, although it may be recognized as more important today in the national picture than it ever has been before, cannot, by itself, lift us out of the morass into which we have fallen.

At the same time, I pay sincere tribute to those patriotic individuals who today are striving to arouse us to a sense of the growing national emergency that is facing our country. Some 72 years ago the Fathers of Confederation created this Dominion. Theirs was an act of deliberate planning. They faced a situation and they -boldly plotted a course to deal with it. I do not think this audience will dispute with me when I say that once again we are facing a situation that calls for deliberate planning, and for the bold plotting of a course to meet it. Such a crisis is no time for howling down crusaders with sufficient national consciousness and patriotism to offer a solution simply because we do not consider their programme adequate. It is a time, surely, for examining all programmes with an open mind, for adopting perhaps some features from each and combining them all into a final plan that we hope will serve our country in the difficulties which it faces.

Consequently, while I refer to the advocates of a reckless economy programme--and I am convinced that there can be such a thing--as counsellors of despair, I do not do so disrespectfully, nor without appreciating that they at least are making a real effort to come to grips with our common problem. Indeed, my suggestion is that we should emulate their patriotic interest, while simply trying a different channel of thought. As a matter of fact, I suspect that many of these sincere individuals who are preaching the doctrine of national regeneration by retrenchment harbour the presentiment themselves that they are simply making a poor best of a very bad job.

What is wrong with their attitude and with their thinking? I wonder if we will not get our clue to the answer to this question if we compare the thought and spirit abroad in Canada today with the thought and spirit that infused the Fathers of Confederation? I believe we are entitled still to look back to those giants of our past as our examples of the ultimate in statesmanlike thought. Until we bungled their handiwork by our political excesses and reckless extravagances since the war, it was a magnificent job that they did for us. We cannot blame them for our troubles of today: we can only attempt to remedy our own abuse of the legacy they left us.

So let us compare our outlook with the outlook of the Fathers who met at Quebec and at Charlottetown, who looked west to what was a wilderness of forests and grass, and rivers and lakes and mountains and dreamed a Nation. Let us ask ourselves, simply, what was Confederation? My answer is that Confederation was a vision, a vision of the manner in which immense practical difficulties could be managed so that they would be the travail and the labour out of which a great people and a great nation would emerge.

Gentlemen, if we are all going to be the Fathers of Reconfederation today, as it is being urged that we all should seek to be, then surely what we need first of all is vision. Our horizon must not be limited by our present difficulties. We must look beyond it to a future greater than our past has ever been.

I have said that our uncontrollable and our contractual obligations prevent retrenchment itself from affording a solution to our problem. I make the further statement that our problem is insoluble so long as we are to plan our future in the terms of a nation of 11,000,000 people. Fundamentally, is not one thing that is wrong with Canada today the fact that we have governmental machinery, railway, highway, and other transportation services, and general facilities, sufficient to serve a population many millions greater than we have received? If our policy is to be one of a stationary population, we are like the builder who, after erecting a huge skyscraper for an office building, only half fills it with tenants and then wonders why his investment does not pay.

And so I say that our problem can be solved only on the basis of a greater population. But a greater population necessarily means that we must be prepared to offer more employment. And more employment necessarily means the carrying out of a programme of national development that will not only employ the newcomers to our midst during the construction period, but also bring new industries upon the scene to afford employment when the period of construction is over.

That is the way in which Canada has been built up in the past. The golden era of the Dominion's prosperity was the period of railway building, when work on construction employed its thousands and when, as the railway pushed ahead, new capital flowed into the country to take up land and establish industries along its route. There was no talk in those days of national disunity. Confederation was a going and a growing concern, with people eager and anxious to come from other lands to climb on the "band-wagon." I wonder if this audience realizes that in the three years following 1910 and prior to the war, no less than 1,000,000 immigrants took up their home in Canada? Consider the purchasing power, the demand for goods and services, and the new capital that these people brought with them. And contrast this figure of 1,000,000 immigrants for the three pre-war years with the figure of less than 38,000 for the past three years.

I do not believe that anyone here will suggest that Canada is even approaching the limit of its possibilities of development. But I do think that if we are frank enough we will admit that, under the strain and stress of the confusing years through which we have been passing we have lost the chart of national development that we were following. It is up to us to find that chart once more, to read it, and to set the Ship of State again upon the course of National prosperity. In other words, instead of thinking in terms of retrenchment and defeatism, we must think in terms of expansion and future progress. Canada has gone too far along the road of national greatness to be able to return to the once safe anchorage of mediocrity. She must reach the harbour which years of optimism have planned, or founder. No middle course is possible. The national overhead is too great for any cut in staff, or pinching of expenditure to meet the situation.

Now, on the assumption that you may agree with me so far in theory, I know you are asking where we can find any project of national development that would engage the labour of our people on a large scale, furnish a period of construction activity comparable to the old railway-building days, and leave in its train industries that would provide permanent employment for an enlarged population of many millions? I believe that if we are prepared to leave politics aside and examine the matter from the standpoint of the national interest, we have such a project right at our very doorstep. I refer to the St. Lawrence development undertaking.

May I say at once that I am familiar with the objections that have been advanced to the St. Lawrence scheme in this country. It has been urged that it would parallel the railroads--already struggling to maintain themselves and already burdening the national finances heavily--with another means of transportation that would simply cut further into their revenues. That argument, I think, is sound. As a means of transportation I do not think the St. Lawrence seaway project is justified.

But there is the power phase of the undertaking which, after all, is its major aspect. And, after having been myself an opponent of the general St. Lawrence scheme almost from its inception, I have become persuaded by my observation of conditions in the various parts of this Dominion and by my appreciation of the situation that we face-both nationally and imperially as a people-that it is expedient and even essential for us to embark on this project now, because of the power feature.

I suggest this because I believe the time is now at hand when St. Lawrence power can fulfil not merely a national but also an imperial mission. I wonder if the thought has occurred to you gentlemen that the British Empire is actually looking today, as it never has in the past, for a great industrial area to occupy, an area that will be reasonably beyond the reach of air raids and possible over-night obliteration by the bombs of enemy planes? I wonder if you gentlemen who are manufacturers on a large scale can enter into the feelings of anxiety with which owners of vast industrial establishments in the Old Country looked out over their plants from their office windows during the days of last September's crisis and wondered just how much of them would survive the first enemy air raids? Is it any wonder that in Great Britain today there is a practical movement on foot for the decentralization of the manufacturing industry which for so many years has been hived so densely on the tight little island?

I ask this audience what other spot under the whole British flag is better fitted to be a future workshop of the British Empire than the St. Lawrence Basin? Everything that industry needs is there. Power can be developed for $9 per horsepower. Steam power, which is what industry in the Old Country has to use, costs in the neighbourhood of $25 per horsepower. Cheap water shipment to all the markets of the world lies at the very door of any industry located there. The sections of the Dominion tributary to the area are a veritable reservoir of raw materials. And those that have to come from more tropical climates can be brought at a minimum of cost by water carrier.

In its construction stage the St. Lawrence project would mean, according to the figures used at the time the last treaty was negotiated with the United States, the expenditure of $197,000,000 upon Canadian labour and materials, of which the Dominion Government would finance some $38,000,000. It is probable that a new treaty would alter somewhat the proportions in which the cost of the undertaking would be borne among the Dominion Government, Ontario and the United States. But, presumably, the total expenditure for labour and materials would be largely the same under a new treaty. Just what this expenditure upon labour and materials would mean to Canada in the existing condition of business and employment within the Dominion is a point I need not labour before a business audience such as you gentlemen comprise.

The ultimate power which the St. Lawrence undertaking will develop is 5,000,000 horsepower. And competent economists and engineers who have surveyed the district and its resources, its accessibility to the markets of the world and the easy availability to it of raw materials, have declared unhesitatingly that nowhere else in all the globe is there an area better fitted to support a dense industrial population. Lancashire and Sheffield are great industrial names. But there is no reason in the world, experts declare, why their glamour should not be eclipsed in time by the development of the St. Lawrence Basin as a manufacturing centre of Empire--and as an arsenal of Empire relatively free from air raid hazards.

Let us visualize an industrial population in the two central provinces increased by the development of the St. Lawrence Basin to 25,000,000 people--or even, not to look so far ahead, to 15,000,000 people. What would this mean to the other parts of the Dominion? It would mean, to the Maritime Provinces, a market for all the fish and coal that its primary producers could ship. It would mean to the Prairies an important market for their agricultural products at their very doors. Do you think for a moment that western Canada would become fanatical, as it is always threatening to become, on the subject of tariffs if it had an industrial market of 25,000,000 or even of 15,000,000 people in eastern Canada for its produce? I suggest that the main grievance of the West against tariffs is their failure so far to build up an industrial east that could absorb a sufficient proportion of western production. Similarly with the Maritimes: their restiveness in Confederation will disappear in proportion as we solve their economic difficulties.

In other words, I repeat that if we restore what may be termed the profit motive to Confederation, if we make Confederation once more a good business partnership to which to belong, we will solve at one stroke and in all parts of our Dominion the problem of national unity that today is giving us so much concern. And I submit that St. Lawrence development is the one project which, at the present time, can meet the requirements of the situation we face. It alone, I suggest, can open up a new chapter of national and imperial greatness for this Dominion upon which our hopes, not only for ourselves but also for our children, all rest.

Gentlemen, I have come to the end of my thesis. I am afraid my presentation of it has been unpardonably dull, but my defense for having wearied you is my strong belief that prevailing cries of defeatism--of national defeatism and imperial defeatism-are coming to have altogether too depressing an effect upon our national psychology. I believe that it is important that we should answer them, that we should proclaim to our people at large what we who have seen all parts of this Dominion have had impressed upon us at every stage of our travels, namely, that Canada is truly an invincible country, that resources sufficient to repair even our mistakes of the past lie ready to our hands, that we need recapture only the practical vision, the sense of adventure, and the faith of our forbears to build a greatness far beyond anything that we have yet known. That has been my thesis today. I have tried to present it in terms of a concrete programme. And I thank you sincerely for the attention you have given me. (Hearty applause)

CHAIRMAN: Mr. MacLeod, I am sure that you realize that every man in this room has moved a vote of thanks. On behalf of The Empire Club of Canada, I wish to extend that vote of thanks for a very brilliant and thought-provoking address.

Gentlemen, the meeting is adjourned. (Applause)