Dollars and Sense

LT.-COL. W. H. MONTAGUE: Today's guest speaker -The Hon. Donald M. Fleming, P.C., Q.C., M.P., B.A., LL.B., Minister of Finance and Receiver-General of Canada-honours us greatly by his presence here in his official capacities but, as we think of him first as a highly respected Torontonian, a long time fellow member of the Club, and a former member of our Executive Committee, I am sure you would want me to express to him a very warm "Welcome home" from all of us and, as we are not overly accustomed to federal cabinet ministers from these parts, to ask him to pardon us if we find somewhat difficult to draw a line between his personal and his high political identities.

Born in Exeter, Ontario, of Irish, Scottish, French and English ancestry--he received his early education in Galt, where his father taught mathematics at Galt Collegiate Institute and from which he graduated, at 16, after winning the first Carter Scholarship for Waterloo County. He came to Toronto that same year, 1921, as a student in Arts at University of Toronto. He won the Alexander MacKenzie Scholarship in Political Science in both his second and third years, thus establishing two more "firsts".

He graduated in Arts in 1925 as a winner of the highest award in that faculty, namely the Governor-General's Gold Medal for General Proficiency, and he was also awarded the Breuls Gold Medal for Political Science. Mr. Fleming then enrolled at Osgoode Hall Law School, and after winning two more scholarships, in 1926 and 1927 respectively, graduated from there in 1928 with the Silver Medal and the Christopher Robinson Memorial Scholarship.

Called to the Bar on 21st June 1928, he entered the practice of law here in Toronto and found time and energy to also secure his degree as Bachelor of Laws from U. of T. He was called to the Inner Bar as a King's Counsel in 1944. It is worthy of note that Mr. Fleming was called to the Bar on 21st June, 1928, and exactly 29 years later, on 21st June, 1957, was sworn as one of Her Majesty's Privy Council for Canada, Minister of Finance and Receiver-General of Canada.

Since his entry upon the Toronto scene in 1921 he has acquired an enviable reputation as a brilliant student, an eminent lawyer, an outstanding leader in community welfare, an ardent and practising churchman and as a rising and thoroughly experienced politician of great integrity. That he is highly regarded by electors in his home constituency of Toronto-Eglinton is best evidenced by the record majorities by which he was elected in 1945 and re-elected in 1949, 1953 and 1957.

He served an apprenticeship here in the municipal field as a school trustee in 1938, and then as Alderman for Ward 9, from 1938 to 1944. During this period he was Chairman of the Civic Property Committee, the Civic Works Committee and the Public Welfare Committee. For three years he served on the City Planning Board and for one year he was a Director of the C.N.E.

As a Member of the House of Commons, Mr. Fleming was a Canadian delegate to three Commonwealth Parliamentary Conferences; the first was held at London, England, in 1948, and following it he made an extensive tour in Western Europe, including both sections of Berlin; the second was at Ottawa in 1952, and the third took place at Nairobi, Kenya, in 1954, when he extended his trip to include East, Central and South Africa and Egypt--totalling over 30,000 miles in two months.

In 1952 Mr. Fleming privately visited England, Germany and France; in 1953 he attended the Coronation of Her Majesty in Westminster and, in that same year, was decorated with the Greek Red Cross Medal by King Paul of Greece.

In December 1957, he was a Cabinet delegate to the NATO Summit Conference in Paris, France. He surely qualifies as a Canadian who has been places and participated in important events.

He will address us now on the subject, "Dollars and Sense".

Gentlemen: The Honourable Donald M. Fleming, Minister of Finance and Receiver-General of Canada.

HON. DONALD M. FLEMING: Mr. Chairman and Gentlemen: You will forgive me if I say to you that it warms my heart very much to be here in the midst of so many friends today in this Club, of which I have had the honour of being a member for many years. I do thank you most warmly, Mr. President, for an introduction, extraordinary in its generosity. I can't tell you how much it means to be received thus, after all among those who know me best.

You have been kind enough to introduce me by the more respectable of my present offices, and thereby hangs a tale, a tale which no doubt some of you have heard me tell before, but I am going to run the risk of repetition.

It was on the fateful 21st day of June 1957, that a group of perhaps mildly excited individuals, including one lady, found themselves at the door of Government House in Ottawa. As they entered the portals, sheets were handed to them containing the roster of officers in the new government who were to be sworn into office, and the first one read: John G. Diefenbaker, Prime Minister, Secretary of the Council . . . Donald M. Fleming, Minister of Finance and Receiver-General of Canada. It didn't make any impression on me at the time, but it was in the course of the day, perhaps when opportunity had come for some quieter thoughts, that the thought struck me as a flash: Receiver-General of Canada--that is the bloke in whose favour I have been writing cheques all these years, and I have hated him every time I did it, and now I am it! My blood chilled in my veins at the thought. I scarcely know how to begin, Mr. President. If I would not be thought immodest or seeming to compare myself to the gentleman in question, I think I might recall a story that goes back some years, a generation ago, the first time that Ramsay MacDonald paid a visit to this hotel, and I think the Canadian Club, in his capacity as Leader of the Opposition. The following year he returned as Prime Minister and he opened his remarks in these words, as I recall them: Mr. President, a year ago I came before you as The Minister of the Congregation, today I appear before you as the Moderator of the General Assembly.

Mr. President, I am no Moderator of the General Assembly but perhaps that gives me an opportunity to say to you how much it means to me to have present here today the Very Reverend Dr. George Pidgeon, to whom I have looked as a spiritual father ever since I became one of his spiritual sons at the age of sixteen.

It is a privilege to address my fellow members of the Empire Club.

I think I should in fairness point out that our President's invitation was extended to me some months ago under somewhat, shall I say, more settled political conditions than now prevail. I should like you to know that following the dissolution of Parliament and the calling of a general election I immediately assured the President that the Club should feel entirely at liberty to withdraw the invitation. The President, I think knowing that I am well aware of the rule that speeches to the Empire Club are of a strictly non-partisan nature, chose however to renew the invitation and I am happy to be here among my fellow members. My remarks today, I do not need to say, will be strictly of a non-partisan nature. Indeed, I shall endeavour to disarm even suspicions in that regard. The march of recent events is bound to restrict seriously one's freedom in that respect.

Had I been addressing you a fortnight ago I might for instance have been disposed to at least mention,--if not discuss, such subjects as taxes. I understand that that has now become a political word. If by any possible chance, that dread word should escape my lips today, I can only hope that you in your charity will condone the slip and realize that I employ the word strictly in its non-political sense, if any.

The title of my remarks is "Dollars and Sense". Since I was sworn in as Minister of Finance seven and a half months ago much of my waking time has been necessarily absorbed with figures, mostly, I sometimes regret to say, large figures--figures preceded by dollar marks. If I were a worrier I suppose I would have been haunted by dreams--dreams of figures of astronomical proportions, all preceded by the magic sign of the Canadian dollar. I may assure you, however, that I have had no such experience.

No matter how we may seek to escape the domination of material things, dollars remain one of the most important tools of governmental policy and they must be an ever-present concern of a Minister of Finance. Dollars somehow take on some human characteristics. In their behaviour they can be moody and capricious, even as temperamental as a House of Commons. At times they can be responsive to effort and to law; at other times they can be elusive and contrary. If the dollar has a motto it must surely be "Liberty, Equality and Fraternity": liberty, because dollars do their best work when they are free to circulate without rigid and arbitrary restriction; equality, because every dollar, that is every Canadian dollar, is equal to every other Canadian dollar; and fraternity, because the dollar is a gregarious creature; it likes company and is unhappy in solitude. However, you have had enough, I am sure, of this abstract philosophy, which is usually considered unworthy of a politician.

I have included the word "sense" in my title. I refer, of course, to common sense, good judgment, even it may be, wisdom. Good sense has a leading part to play in the stages of the life of the dollar: its creation, its working years, as it is gathered, collected and spent and in determining its lifetime usefulness, whether it remains strong or is weakened and enfeebled by short-sighted and inflationary forces. Good sense in what they do in the acquiring, spending and saving of dollars is important enough in the lives of individuals. It is equally important for nations and governments.

"Avoid situations that worry you" is the advice I heard. on a recent radio programme sponsored by a well-known life insurance company urging careful attention to the laws of health. Do we not all wish that we could be free to follow such simple advice? However, I am well aware that no speech on an economic subject is held to have any value nowadays unless the speaker embarks upon the treacherous seas of prophecy. We are all so; anxious to know what is going to happen tomorrow, next. month or next year, it is small wonder that news of what happened yesterday is so often far less interesting and exciting to writer and reader alike than speculation as to, what is likely to happen tomorrow, next month ... and when I say next month I am not all together funny ... or next year.

Within limits, however, I shall endeavour to resist the temptation to assume the role of prophet and to content myself today with seeking to apply to known and established economic facts of today what may be regarded: as common sense. In so doing, I make it clear that I believe that governments should be guided by common sense. I have more faith in it than in magic or shortcuts or panaceas or the practice of cutting comers.

Economic problems have undergone a material change, at least in emphasis, in recent months. Last summer f was receiving more letters and pleas for action and advice concerning the premium on the Canadian dollar than on perhaps any other subject. A 6 per cent premium was indeed a very heavy handicap for our exporters and the tourist industry to bear. The premium, now running at approximately a cent and a half has ceased to be a major or urgent problem. I shall say only that I glad that we did not take some of the drastic and far-reaching courses of action that in some quarters, however well meaning, we were asked to take in this regard last summer.

What of Canada's economic position and outlook? 1957 has been a good year for Canada. Indeed, it has established some remarkable records. Canada's growth is an undeniable fact and an irresistible force. In 1957,

465,000 Canadian babies were born. This is by far an all-time record. In 1957, 282,164 immigrants entered Canada--the highest figure since the record year 1913 and double the post-war average. Canada's population this year will pass the 17 million mark. Our labour force is the largest in all our history--6 million people. In 1957 that labour force showed a 4 per cent increase, as compared with the average rate of increase in the five previous years of 1.9 per cent. We have more persons employed in Canada today than have ever before been employed at this time in Canada's history. Labour income in Canada in 1957 established an all-time record. In the first eleven months of the year--we haven't the figures complete--it exceeded $14 billion and showed an increase of 8 per cent over the same period in 1956. When the full figures for 1957 are available they will undoubtedly show that labour income exceeded $15 billion--an all-time record.

Over-all personal income in the first nine months of 1957 increased by nearly 7 per cent compared with the previous year. Consumer prices between these two periods rose by more than 3 per cent. Accordingly, real purchasing power was higher by about 3 per cent and on a per capita basis almost held even. Most of this change was reflected in spending on consumer items, particularly services, food and other goods. Outlays for durable items, as a group, changed little compared with the previous year. Consumer credit, which had risen markedly in preceding years, showed little further increase during 1957. Personal saving in all forms rose moderately.

Similarly, our export trade in 1957 reached an all-time record. Our gross national product in 1957 likewise achieved a new record, exceeding the 1956 record by approximately $1 billion. Capital investment in 1957 was the highest in Canada's history, exceeding the 1956 record by approximately 8 per cent. These records were achieved in spite of monetary restrictions and increasing unemployment at the year-end. As we enter 1958, as compared with conditions a year ago, money is today more plentiful, credit is somewhat easier and interest rates are substantially lower.

Confidence plays a role of vital importance in the economy of a free society. Psychological factors exercise a very strong influence in stimulating or retarding the momentum of a dynamic economy. Given confidence we can be assured of a wholesome prosperity. If we heed the voices of the timid, the skeptic and those whose personal interest lies in magnifying unfavourable factors we can create a synthetic setback for Canada's growth. Canadians are not a mercurial people. Their feet are planted firmly on the ground. Happily, in that way they avoid the extremes of exaltation and abasement. I would not be pleading for confidence on any other basis than reality. Canadians, I believe can justify their confidence by the facts, and may I give you a few of them.

The response to new issues of Government bonds has been most gratifying. It has reflected confidence in Government credit as well as strength in the market. On September 12th the Government, faced with maturities of the same amount offered two short term issues aggregating $700 million. Both were immediately over-subscribed. On November 28th, faced with a maturity of $250 million the Government offered two more short term issues aggregating $650 million. Both were immediately over-subscribed. The Twelfth Canada Savings Bond campaign was inaugurated in October and achieved a record response. The offering was discontinued at December 31st. By that time a record of gross sales of $1,175 million had been achieved, vastly exceeding the amount realized on any previous issue.

In January the market was again tested, this time with an issue of $300 million of Canadian National Railway Bonds bearing a Government guarantee. It is the largest issue of C.N.R. Bonds ever offered, and the first in a period of three years. It was the first offering of Dominion Government securities in the long term field for some time. The issue was immediately and heavily oversubscribed. These gratifying responses demonstrate, I think, the strength of the Bond market and the confidence of Canadians in their own country and its credit.

One of the factors in the present situation that we must look upon realistically, and I hope courageously, is unemployment. Expressed as a percentage of our labour force we now have more unemployment than at any time since three years ago. Normal seasonal unemployment, aggravated by a curtailment of markets for our forest products and base metals in particular, and the swiftest rate of increase in the Canadian labour force in all our history, must be a matter of concern to all Canadians, whether as individuals or as citizens deciding the course of governmental policy at the municipal, provincial or federal level.

The first duty we owe ourselves is to assess the true extent of the problem. The welkin is being made to ring with the figures of unemployment insurance registrations. These are not the accurate measure of actual unemployment. The unemployment insurance registrations have been actually swollen by legislation. This year's figures reflect the inclusion of fishermen, married women's benefits, and the lengthening of the period of seasonal benefits, all as a result of recent legislation. The most accurate statistical record of unemployment in Canada is issued by the Dominion Bureau of Statistics, and it is based upon a sampling of conditions in all parts of Canada. The latest issue showed that at mid-December there were 386,000 unemployed in Canada. So far as subsequent trends are concerned, it is worthy of mention that the rate of applications for unemployment insurance has declined recently as compared with the trend observable a year ago.

Unemployment even in these proportions must be a matter of concern to us all. The social as well as the economic consequences of unemployment are, I am sure, not far from the minds of any of us. There are measures which Governments and individuals can take to assist in combating unemployment. Now is the time when the jobs are needed. There are many individuals who with a little thought can create jobs now. Perhaps it is only habit that leads us to postpone so many odd jobs of work until the spring. The winter-work appeal of the Federal Department of Labour has received an excellent response. Its motto is "Why Wait Till Spring?" I commend it to you. There are those who say that the Prime Minister derived some inspiration from that motto.

There is much also that Government can do to assist in meeting an immediate problem of unemployment, particularly if they have sufficient warning of it. There is the opportunity for direct creation of work through construction programmes. This opportunity is open to all levels of government. The municipalities are a very fertile source of employment of this kind, and work provided at the municipal level has the advantage of providing it where it is needed, without uprooting those for whom the work is created. The provinces likewise have open to them a wide field of very useful public investment in the construction of highways, bridges and useful public works which will at the same time create a large volume of employment. The terms upon which all levels of government are able to borrow have eased greatly in the last six months. Money is more plentiful and interest rates on new borrowings are substantially lower. Parliament: has approved the Government's programme of placing at, the disposal of the Provinces additional fiscal payments, this year estimated at $82 million. It is expected that this, aid will soon reflect itself in works programmes of the provincial and municipal governments.

This is not the time for me to speak of the Dominion_ Government's plans in this regard. There will be other occasions and other platforms where that may be done. I will be glad to furnish all interested with a list and a very hearty invitation. Let me, however, say in a word that the emphasis is placed upon programmes of a capital nature, and not in enlarging expenditures of a current nature.

All levels of government can use the present situation to their own and the national advantage of undertaking development programmes. At the federal level this situation in particular affords a ripe opportunity for the inauguration in partnership with the provinces of plans for national development of our resources.

Before I leave this subject of capital expenditure by governments, however, let me stress the importance of private investment. Capital outlays by governments are not intended to replace private investment, but to encourage and supplement it to give it more confidence. The productivity of the economy will be increased by useful expenditures of a capital nature, whether from public or private sources.

Now, I turn to the sometimes vexed question of fiscal and monetary policy and what has been called "tight money". Even in a free society Governments exert a strong influence on the economy. It is so in this country. At the federal level fiscal policy and monetary policy have a very influential bearing upon the tone, the strength and the trend of the economy.

In the fiscal realm a Government whose expenditures amount in all forms to $100 million per week, undeniably by that fact alone, plays a very important role in the play of economic forces. It is gathering and spending approximately 18 per cent of the gross national product. I have already spoken of governmental participation in capital investment.

I should like, however, to make reference to the subject of monetary policy, especially as it affects money supply, credit and the cost of borrowing. These are all matters of the liveliest concern to Canadian business and finance. Monetary control in Canada has been largely vested by Parliament in the Bank of Canada. It has the sole right to issue notes and it possesses wide and clearly defined powers in relation to money supply. The preamble of the Bank of Canada Act assumes that the Bank is "to regulate credit and currency in the best interests of the economic life of a nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to protect the economic and financial welfare of the Dominion". This is a high responsibility to place upon any institution.

In 1955 a policy which has come to be known as the "tight money policy" was put in force. It contemplated that the chartered banks would discontinue the practice of making term loans, that is, those not repayable within one year, and would adopt as an operating principle a monthly average liquidity ratio of not less than 18 per cent of deposits.

In the same year the Bank of Canada raised its discount rate on three occasions. In 1956 it raised it on three more occasions and in November of that year announced a new practice of figuring the bank rate each week at 1/a of 1 per cent above that week's average Treasury Bill tender rate. Interest rates moved to a peak in August 1957, when the Treasury Bill rate reached a high of 4.08 per cent. Money supply, which had been expanded in 1954, a year, may I remind you, of mild recession, by $779 million, or 8 per cent, and by $857 million, or 8.6 per cent in 1955, and by $318 million, or 2.9 per cent in 1956, was expanded by only $227 million, or 2 per cent in 1957.

The so-called "tight money policy" was introduced with a view to combating the pressures of inflation. An eminent Canadian banker said two years ago:

"Experience shows that monetary policy is more effective against inflation than against deflation. But there are dangers. As I have already pointed out, the policy may go too far. It may also be unselective, curbing healthy as well as unhealthy or excessive bank credit."

Economic conditions influenced by the tight money policy have been changed considerably in recent months and with them I find that thinking in the United States has changed. In September, when I was in Washington attending the Annual Meeting of the Governors of the International Bank and the International Monetary Fund and conferred there with officials of the Federal Reserve System, the emphasis was still heavily laid upon the dangers of inflation. Since that time the leading Federal Reserve Banks in the United States have reduced their interest rates several times. Whatever may have been said for the tight money policy in 1955 and 1956, it is evident that it does not fit the needs of 1958, and I am glad to report that so far as we could we have moved some distance away from it. Money is more plentiful, credit is somewhat easier and interest rates have been reduced to a remarkable extent in recent months. From the peak Treasury Bill rate of 4.08 per cent in August it dropped to a new low last week of 2.99 per cent. The market for new issues of Government bonds, as I mentioned, has been very strong. The tight money policy has been the subject of particular complaint by the provinces and municipalities and small business.

In one field in which the Government was free to take direct action to mitigate the tight money policy action has been taken. The construction industry had felt severely the effects of tight money. In the spring of 1957 the policy itself was modified by the Bank of Canada by the creation of between $12 and $13 million of new cash reserves. With this backing the chartered banks made direct loans throughout the year in the aggregate value of $150 million on National Housing Act mortgages. In further relaxation of the policy an additional $300 million was provided, first of all at the end of summer and again in late fall, for the same purpose on direct Government account. This time no additional cash reserves were created by the Bank of Canada. The action was a case of direct Government intervention.

A further sensible relaxation in the tight money policy would undoubtedly have a stimulating effect on the economy and be of particular assistance now to small business. A greater measure of flexibility in the policy would undoubtedly mitigate and have mitigated some of the stresses and strains which have been associated with it.

Now, I turn to the subject of Trade. External trade is a factor of high importance in relation to the Canadian economy. Our exports and imports combined represent approximately one-third of the Canadian gross national product. Our exports have been running approximately 16 per cent of the gross national product. The retention and expansion of our markets abroad must be a principal aim of Government Policy.

Canada's trade in the post-war years has been flowing to an increasing degree in one channel, to and from the United States. Of our imports 73 per cent in recent years have been coming from the United States and 60 per cent of all our exports have been going to that country, with the result that two-thirds of our total external trade is being done in one channel. The consequence is that the Canadian economy has been exposed to a very uncomfortable degree to changes in the economic climate and trading policy at Washington.

Moreover, in our trade with the world we have been sustaining a heavy deficit. In 1956 it aggregated $848 million. It will be somewhat less in 1957. In our commodity trade with the United States we incurred in 1956 a deficit of $1-1/4 billion. This figure will be somewhat reduced in 1957, but is still expected to amount to a billion dollars.

These and other factors have stimulated the desire to expand Canada's trade with the United Kingdom and the Commonwealth. No arbitrary or forceful measures have been taken, and none are contemplated, but there is ample reason to encourage a policy which will help the United Kingdom to earn more dollars wherewith she may be able to purchase more of our agricultural products as well as Canadian finished goods. There has been no thought of transferring abroad purchases of goods produced by Canadians.

The Mont Tremblant Conference last September marked the first time that a meeting of the Finance Ministers of the Commonwealth has been held on Canadian soil. It was an outstanding success. Unanimous agreement was reached on the part of the Ministers to recommend the holding of a Commonwealth Trade and Economic Conference in 1958. A preparatory meeting at the official level is proceeding in London this week and I am happy to announce to you that the countries of the Commonwealth have now accepted the invitation of the Canadian Government to hold a plenary Trade and Economic Conference in Canada this year. It is expected that the Conference will commence in September. This Conference offers hope of fruitful results that will give new significance to the Commonwealth relationship and contribute also to the strengthening of the Canadian economy, particularly in the field of primary production.

Now, I should like to say a word about Canadian-United States relations. Concern has been expressed of late in certain quarters in regard to relations between Canada and the United States. There is always danger that differences of viewpoint even among the best of friends may be exaggerated in the course of public discussion. The relationships between Canada and the United States are the closest existing between any two neighbour countries in the world and they will always so continue. In our defence, in our plans for common survival, we have linked our forces, our friendship and our efforts. We should rejoice that our friendship is so strong and enduring that we can discuss our differences frankly and without any fear of jeopardizing our relations.

I have referred to the extent to which as the result of the channelling of so much of our trade in that direction the Canadian economy has been exposed to changes in the economic climate and trade policy in the United States. I have mentioned also the heavy imbalance in the commodity trade with that country. Canadians have been buying almost $3.00 worth of goods for every $2.00 that the United States purchases from us. It would be unrealistic ever to expect a complete balance in our trade with any country or indeed, with all countries, but Canadians are concerned over the fact that the United States is buying so much less from us than we buy from her, and that the United States tariff is designed to increase the difficulties in selling Canadian products in the United States market.

Moreover, the agricultural surplus disposal policies followed by the United States have greatly damaged Canadian trading interests abroad. We have made repeated representations to the administration at Washington over the damage done to Canada's overseas marketing of our wheat in particular by the disposal methods followed by the United States.

Now we are faced with the prospect of tariffs being raised against Canadian exports of zinc and lead and possibly beef cattle. Canadian oil exports to the United States have been restricted by Washington in the face of agreements entered into years ago and still in effect, linking the common defence of these two countries.

It is the hope of all Canadians that their earnest representations will be heeded in Washington and that regard will be had for Canada's interests when the overwhelming advantage in the trading relations between these two countries undeniably rests with the United States.

Now, will you forgive me for taking advantage of the opportunity to address this audience which includes so many business men, to make a few comments. My experience of the past seven and a half months has been reassuring in many respects and for that I am deeply grateful, but disturbing in one. I confess to you that I do feel disturbed at the tendency of many people to lean upon Government, to rush to the Government for a quick, ready-made and, above all, painless solution of their problems. I wish I could say to you that the business community has been immune from this tendency, but I cannot. Will you permit me then to say that I think the Canadian businessman can set an example, if he will, by standing on his own feet.

This subject also has its lighter side, of course. I mentioned last summer when some good people were asking me to wave a wand and restore the Canadian dollar to parity. Some of the requests that come to my desk reflect an almost sublime faith in the power of government. I have been asked to control the fluctuations on the stock market. That is one I won't be trying. Numerous individuals write to me requesting personal loans. After all, so they apparently reason, what is a Minister of Finance for anyway? Some individuals write to me to ask for income tax exemptions for themselves alone on personal grounds. "Please give me some assurance that the business world is going to pick up" was the request I received recently from another correspondent.

How should we sum it up, then? The productive capacity of Canada, like that of the United States and other Western nations, has been enormously enlarged in recent years. It has for the moment overtaken consumption in both domestic and export fields. In this situation Canadians at every stage in the producing and marketing stream need to exert themselves to retain and expand every market and every advantage open to them. Competition has grown keener. The times put a premium on efficiency. Boom days and lush times do not breed efficiency, and some consequent stresses are appearing now in some parts of the economy. Canadians now supremely need to be efficient, economical producers and aggressive, effective salesmen. This is not the time for any of us, whether employer or employees, to seek to take from the economy more than we are contributing to it in the form of increased productivity.

You will permit a digression. It is certainly no time to be resting on our oars or discarding those ancient Canadian virtues which are just as valid in my humble view as ever they were--the virtues of thrift and hard work. It is no time for any of us to be lax.

Mr. Justice MacGillivray, who among his other accomplishments is the President of the St. Andrew's Society, will I am sure forgive me for recalling the prayer uttered not long ago by the Chaplain on the reunion of a famous Scottish Clan. It ran somewhat to this effect:

"Enable us, Oh Lord, we beseech Thee, if it be possible, to be worthy of the high esteem in which we so rightly hold ourselves."

Mr. President, and Gentlemen, I have sought to take a realistic, balanced view of the forces at work in the Canadian economy today. We have difficulties; we also have much to be thankful for. I believe that we can with confidence in ourselves confront and overcome the difficulties. The long-term future of this country is dazzlingly bright and I do not speak merely of a distant future. This is a land teeming with resources. New wealth is being discovered every day--discovered by those who have courage and enterprise and who are prepared to take risks. Our people are intelligent, vigorous and determined. The future is Canada's. It is a future not to be exchanged for that of any other country the wide world over.

THANKS OF THE MEETING were expressed by Mr. John W. Griffin, a Past President of the Empire Club of Canada.