Stock-Taking for the Postwar

MR. CONQUERGOOD: When you pick up your paper to scan the news of the day you give, as a rule, scant attention to the facilities through which the news has been presented.

Our guest speaker today is one of a great corps of people who gather material, sift it to remove as many errors as possible and arrange and classify it for presentation to us in the form of news and views.

Mr. Norman M. MacLeod was born in Toronto, educated in St. Andrew's College, Queen's and McMaster Universities. For more than twenty years, he has been a member of the Press Gallery' in Ottawa.

It will be three years next January since he spoke to us previously. We welcome him back today to address us on the topic of "Stock-Taking for the Postwar".

MR. NORMAN M. MAcLEOD: Mr. Chairman and Gentlemen: Whenever I am invited to speak before this Club I am reminded of Prime Minister Disraeli's advice to one of his parliamentary followers against speaking in a certain House of Commons debate. The follower did not altogether like the advice. "If I do not speak," he declared, "my constituents will wonder why I did not." Disraeli's reply was: "It is far better to have your constituents wondering why you didn't speak, than to have them wondering why you did."

Despite the obvious moral of this story, I am with you today. I am here for two reasons. The first is that we are, happily, in the victory phase of a terrible war, and consequently in the opening phase of a new struggle. We are being challenged now to mould a world worthy to stand as the product of the heroism and sacrifice which bore it. It must be a world in which the human spirit can know not only the blessings of peace, but also the true dignity that comes from the pursuit of worthwhile aims and the realization of worthwhile ideals.

The struggle to achieve this world calls for no less effort by way of thought, determination and sincerity than we have given to the war years. It is a struggle from which none of us can claim exemption. Our sense of social responsibility conscripts us. Our feeling of deep and humble obligation to the sacrifice by which our freedom to plan our own destiny has been preserved to us makes us eager volunteers.

The second reason is frankly a personal one, which I will mention only briefly. As a political journalist who lives daily under the shadow of national affairs, with the haze of propaganda from the different political parties drifting about him, my constant fear is lest I become lost in the woods for failure to recognize the trees.

In this circumstance, an opportunity to discuss with an audience such as this, certain national trends, and to evaluate some of the principles upon which, either wisely or recklessly, we are building our nation's future, is not only welcome but also highly useful. It forces me to detach myself from the daily stream of Parliament Hill events and view them in perspective. And I know I need not labor to anyone in this gathering the importance of perspective in these fast-moving times in which we are living.

I purpose to build my brief address to you today around the proposition that our aim, as Canadians planning for the postwar, is the achievement of a workable world in which peace and the human spirit can live and flourish together. No one here realizes more clearly than I how general a formula that proposition is. Nor is anyone here more conscious than I of the peril of just such general formulae to us as a people. We are too inclined to confuse them with solutions for our problems. Especially is this a danger where a general proposition carries any emotional appeal. We say, for example, that never must there be another depression such as the early 1930's. Or we say that after the war there must be jobs for all workers and a standard of living in keeping with the true dignity of the human race. Having said these things--perhaps because we have glowed with self-righteousness in the saying of them--we are disposed too often to feel that we have settled something.

Gentlemen, I believe it is a very practical thing, sometimes,--and especially in times like these when we are looking towards new horizons--for us to realize the futility of brave words or mere good-will by themselves to settle anything. For proof of this we don't have to go back to the classic instance of King Canute. We have only to go back to the early 1930's themselves. During those depression years, contrary to the impression which one might form from the tone of some of the references to them today, a spirit of human good-will perhaps unparalleled in world history battled valiantly but vainly to overcome basic economic forces.

We talk today as though men walked the streets and farmers lost their lands in those early 1930's because the public conscience of that day was indifferent to their plight. The truth is, if we only pause to remember it, that rarely, if ever, has the public, conscience been more humanely aroused, and that the depression which persisted through the 1930's would not have endured one day if good-will had had the power to end it, or if the panaceas of economists had held a cure for it.

Do not forget that the 1930's marked the era of Roosevelt's championship of the "forgotten man"; that in Great Britain the humanitarian Ramsay MacDonald was in power; that in the United States not millions but billions were sent vainly to bolster farm prices and to finance all sorts of public works; that in Canada much more than a billion dollars was added to the public debt for relief and recovery projects. Do not forget also that the glib bureaucratic economists, who today are assuring us, with disturbing lack of concrete detail, that our peacetime national income can be maintained at its wartime level, also were with us in those days.

Yet what was the combined effect of the intense goodwill and humanitarian impulsiveness of the period, of the daring experimentaiton in large-scale expenditures of public funds, of the scope given to the new school economists to apply their theories? You know the answer. You know that it took the mighty but tragic impetus of war to lift this country and the United States to the plane of full employment.

I have said enough, I think, to dispose of any illusion that we can enter into the brave new world of our dreams through the easy, inviting portals of wishful thinking, or simply by taking the all-too-willing hand of bureaucratic guidance. Having said this, may I also say at once that I am no defeatist in respect to the postwar destiny that Canadians can claim as their own.

I believe implicitly and unreservedly that once our people see an issue clearly, their capacity for achievement is unlimited. I know you must share that conviction, for it is a faith which has been established beyond anv dispute by the exploits of our people in two world wars. With our qualities of national genius, of national perseverence and of national character, we Canadians are invincible people once we target our purpose.

The national target which I raised before you a moment ago was a postwar world in which peace and the human spirit can flourish together. Now, peace by its very nature cannot be national. but must be international. It is something, in other words, that we cannot achieve alone. We must seek it in company like-minded to ourselves and in co-operation with whatever world agency offers the best hope of its effective realization.

I need not ask the members of this Club where we can be certain of finding peoples like-minded to ourselves or an agency better than any other to serve the cause of world peace effectively. You know that we will find both the peoples and the agency in the British Empire. You know that neither in World War I nor in World War II was it the British Empire that betrayed world peace. You know that in the interval between the two world wars the British Empire had no other world aim than peace. You know that when peace comes nothing will make it stronger than a united British Empire; nothing will make it more precarious than a British Empire at cross-purposes in its own councils.

Gentlemen, is it not time that not only clubs like yours realized this, but that our people from coast-to-coast and in every Province realized it too? The realization need not carry with it any lessening of pride in our own nationhood. On the contrary, it calls for an even greater pride arising out of our recognition of the great destiny into which that nationhood, in the fullness of time, now is being called.

It is understandable that in our period of national adolescence we should have set high store upon the events which raised us finally to the dignity of full nationhood and individual sovereignty. When Canada through the late Sir Robert Borden became a separate signatory to the Treaty of Peace at Versailles it was a milestone in our constitutional development and worthy as such to be recognized. It was another milestone when the late Right Hon. Ernest Lapointe signed the first treaty which Canada had ever negotiated in her own right with a foreign power. The Statute of Westminster was still a further occasion for national self-congratulation, with its effect of repealing the Colonial Laws Validity Act and making Canadian law in the Dominion superior whenever it came into conflict with an Imperial statute.

But has the time not now come when we should consider these delights in status and stature as belonging to a period of national adolescence that is past? Canada as a nation now is of age. She has graduated to full partnership in not only the greatest Empire which the world has ever known, but also the only Empire of modern times which has ever accepted the protection of civilization against the forces of militant evil as the responsibility of its greatness.

Many of the members of this Club are business men. I ask them: What would they think of the judgment of a man who grew up, say, in some great departmental store enterprise, who advanced in importance in the business, until he was on the point of becoming a full partner, and then declined the partnership to run a small neighbourhood store of his own? Gentlemen, Canada today will be in that position if she fails--as there is danger that she may fail--to recognize the Empire destiny which simply awaits her fulfilment.

That most honored and honorable firm, the British Empire yet unlimited, is looking to us to take our place as a full and senior partner in its great world undertaking. Our voice in its councils can be as great as the responsibility for leadership that we are willing to accept. There is no other organization through which we can so surely guarantee the future security of our people. There is no other association from which we can obtain for them such solid economic advantages. There is no other agency through which the resources that we wish to dedicate to the case of world peace can be so effectively used.

Now, nothing is to be gained by avoiding frank discussion. The spectacle of aggressive nationalism in Quebec Province has been too apparent in recent times for us to blind ourselves to it. We must recognize that we have in our midst a problem of national unity in connection with this dominant Empire issue. We are accustomed to hear Quebec blamed for this. Gentlemen, as one whose Empire instincts have the same Ontario roots as your own, I suggest that we should ask ourselves seriously if we are being entirely fair to our French-Canadian compatriots in our criticism of them. Is there no responsibility on the door-step of us English-speaking Canadians for the vogue which nationalism has succeeded in gaining in French-speaking Canada?

I contend there is. Just ponder this thought. Ever since the last war successive governments, Conservative and Liberal alike, have preached to the people of Quebec, that true national dignity is inseparable from complete sovereignty. They have preached it, furthermore, with am emphasis which should not make it surprising if some French-speaking listeners have confused complete sovereignty with isolation from British policy.

For example, every situation in which we have acted alone, where previously we would have acted through the Empire, has been represented to Quebec by speakers for successive governments as am occasion for national pride. It has been so each time we have negotiated and signed a foreign treaty on our own account. It has been so whenever we have despatched our own delegation to some international conference at which, a few years ago, the United Kingdom delegation would have represented us. It has been so on the several occasions when we have made plain that we are mot committed by some treaty made by the British Government. And it has been so notably whenever we have opened a legation or am embassy in a country where formerly our interests were represented by Britain.

Gentlemen, let us be honest with ourselves and fair with Quebec. For years we have asked French-speaking Canada to applaud us every time that, in our high-spirited progress through national adolescence, we have hacked another Empire tie away. Now, when we find that a section of our Quebec compatriots have taken to heart the nationalistic lessons we have taught them, when we discover that their instinctive re-action is not one of Imperialistic fervor, we profess to be shocked. I suggest to you that no little of the blame rests with ourselves.

So much for the question of responsibility. We still are left with the situation. We are left with it, furthermore, at a time when it is vital to our postwar aspirations for peace that we play our part in the association of British peoples with all the strength with which national unity cam endow us.

What are we to do about this problem? I suggest that there are at least two things. In the first place, we must cultivate a sincere appreciation of the contribution that our French-speaking compatriots, through their distinctive culture and their versatility as a people, are capable of making to our genius as a nation. In the second place, we must deal honestly and frankly with the people of Quebec in approaching them on matters of national politics. Instead of backing away from the theme of Empire among them, we must stress it. We must tell them frankly that the days of our national adolescence, in which questions of status and stature were all-important, have passed. We must awaken them to an appreciation of the value of the Empire partnership as affording Canadians, irrespective of their race, their greatest possible scope for development and self-expression as a free people.

In brief, gentlemen, we must do something that I do not believe, despite its importance, we have ever yet really attempted. We must "sell" Quebec on the privileges and advantages of Canada's leadership in a close partnership of Empire. It is the only way by which true national unity in this Dominion can ever be won. And it should not be by any means an impossible task. If, gentlemen, we believe in the Empire-as we do-then surely we should be able to give expression, at least with clear logic if the gift of eloquence is denied us, to the faith that is in us.

In addition to a world of peace, we want our postwar world to be a workable world. By a workable world I assume that, we mean basically one whose functioning economy provides jobs for all able and anxious to work. But mere jobs will not be quite enough to meet the specifications of the postwar world of our aspirations. In addition, they must be jobs that will pay wages sufficient to maintain an adequate standard of living. They must also be jobs that will satisfy the normal individual's desire to be engaged in work that is socially useful. Boon-doggling jobs will never provide the self-respect upon which the human spirit feeds, any more than will so-called state "allowances" prevent the deterioration of national morale when they are made the substitutes for adequate income from a worker's own efforts.

Now, I do not think that anyone will dispute the social validity of any of these aims. Taken all in all, they simply mean that we are seeking a postwar world which, in addition to being workable in the sense that it will provide basic employment for our people, will also be a fitting dwelling place for that sacred link with divinity which we all share, namely, the human spirit.

That is the ideal. What are the steps which we are taking to make it real?

The answer to this question cannot be given without an excursion into the realm of fundamental national economics. I promise that I will be brief and that I will not weary you with any burdensome statistics. In the first place, in normal times approximately 25 percent of our employment arises directly, and another 25 percent indirectly, out of our export trade. That is to say, 50 percent of our normal peacetime employment depends on the business we do in foreign markets, either directly in producing goods for them, or indirectly as the result of the purchasing power which these export sales bring into our domestic market.

Recently some of our economists have expressed this situation in another, and perhaps even a more impressive, way. By relating the statistical line representing our ex ports to the statistical line representing our national income, they have established that for every 29 cents in our export trade there is an increase of one dollar in our national income.

Lest these considerations should not yet impress you with the crucial postwar importance to us of export trade, I will mention just three other facts. The first is that, when demobilization comes, we will need at least one and one-half million jobs for Canadians now in the Armed Services or employed in war industry. The second is that $5,000,000,000 of our present national income of $10,000,000,000 is derived from war sources, and will have to be replaced with the coming of peace. The third is that the difference between the peak of the boom in 1928-29 and the low point of the depression in 1932-33 was a drop in national income of less than two and one-half billion dollars.

Let us now return to our questions as to what we are doing to bring about the employment conditions that are basic to our conception of a workable postwar world. For now we have some idea of where we must look for our answer. We know now that a positive answer should be able to recite some substantial measures that we are taking to assure our success in export markets.

Some of you gentlemen are exporters. You know from experience the difficulties you face in foreign markets. You have first-hand knowledge of the important factor that price is in any market, once quality is standardized. You realize, too, that in many of the new markets towards which we are looking after the war-notably South America and Asia-price competition will be more important than ever, due to the relatively low purchasing power of the masses of the people in those areas.

You know, furthermore, that ability to compete in foreign markets depends almost always on technical efficiency, and that foreign business can only be held if plants are kept up to highest productive standards by constant re-investment in latest equipment. You know that export business does not just "grow up" like Topsy, but that substantial exploratory and initial expenditures frequently are necessary to establish it. You know, above all, that the capital which you risk in operations abroad lies very definitely in the category of venture capital.

Now, has there been any suggestion of policies to assist Canadian exporters under any of these basic headings? Is there, for example, a definite project for getting postwar taxation down to or below prewar levels so that our exporters may meet any price competition? Or has there been any proposal for granting an income tax concession for monies spent in exploring for exhort business? Or, finally, has there been any suggestion that some distinction should be made in taxation law in favor of venture capital?

Unfortunately and disturbingly, the answer to all these questions is still in the negative. In place of a policy of taxation at or below prewar levels, we are being told to expect a postwar budget of at least one billion dollars. just twice the national outlay in the last year before the war.

We are told that this billion-dollar budget--Mr. Coldwell says it will be one billion and one-quarter and the Financial Post says it will be one billion and three-quarters--will be necessary to finance a social security program. There are to be state allowances, housing bonusses, health insurance, credit schemes for industry and farmers alike, an elaborate program of public works, and various other paternalistic measures.

Empire Club members, we are told that this billion-dollar budget and these variegated measures constitute a social security program! Well, they either constitute that, or they constitute the greatest political Christmas tree that Canadian politics has ever known. From the fact that no political party is opposing them, but that all are more or less clustering around them, I think we are justified in suspecting that the latter theory is the one to which we should hold.

For, as a social security program, a budget that will burden an export trade to the extent that our markets--and the jobs dependent upon them--will pass to our competitors is a contradiction in terms. But as a Christmas tree proposition, a billion-dollar budget, supported in varying degrees by all political parties, is a perfectly understandable phenomenon. It is difficult for any political party to get the people to vote against a Christmas tree--unless they can remember how bare of everything save the trimming every Christmas tree they have ever seen was, on December 26th.

Gentlemen, I contend that there can be no social security program to compare with one which is concerned with jobs for our people. If jobs could be supplied by paternalist government action, I think it is safe to say that we would not today be witnessing the intense struggle that is being waged among the political parties. For parties in power long ago would have discovered that all they needed to do to retain the reins of office was to provide prosperity and employment for their people. The fact that they have been unable down through history to entrench themselves by such action should be the warning that there is no magic for us and for them and no long-range virtue; in policies of economic paternalism.

You can easily understand why this is so if you go back to the first principles upon which the state is founded. The state is an organization in which a people unite for ends of security against aggression and for ends of internal law and order. As society has become more complex, ends of culture. enlightenment. and the control of undue class privilege have become legitimate state interests. But in none of its functions is the state a creator of economic wealth, nor is it possible that it ever should be. Wealth by its nature becomes a social commodity only after some human agency has given it marketable form or set a marketable value upon it.

Let me give you an example: We are coming into possession of new wealth today in the Yellowknife and other areas of our great North-West. But so long as these areas were just Crown lands, they didn't constitute a source of wealth to which a government could turn to finance paternalistic legislation. It was not until the prospector had uncovered their minerals, until investors had risked their capital, and until mine workers had applied their labor, that the wealth of these areas became negotiable.

In other words, a government has no magic lamp to which it can resort for the funds to finance paternalistic policies. Its only source of funds for such a purpose must be the tax-gatherer, adding to the cost of our national production, casting the shadow of a new income tax burden over the farmers on our back concessions, increasing steadily the deductions from the pay envelope of the industrial worker.

In short, it is the final contradiction of a so-called social security program that ultimately it has to impose its burden upon the nation's workers because there is no source of unique wealth upon which the state itself can draw.

Gentlemen, with our very wonderful nation standing on the threshold of the postwar era toward which we have dreamed in the dark years when we needed some dreams to sustain us, I have tried to take stock briefly today of what the Empire must mean to us, and we to the Empire. I have held up a problem of national unity which it is vital for us to solve. I have suggested that in policies aimed at trade and production, which alone can create new wealth upon which we all can draw, the solution of our employment problem must lie.

Gentlemen, this is one course. There is another. And in this very hour which is witnessing among our enemies the national disaster to which the doctrine of a corporate state inevitably leads, we are being urged to entrust our destiny to state schemes and bureaucratic planners. Are you going to yield your judgment to what you know is false doctrine, to what you know is unworkable economics, or are you going to stand loyal to your conception of a workable world, which must be brought into actuality by realistic policy and which is unattainable by Utopian politics?