New Markets in the Orient

PRESIDENT STAPELLS Introduced the speaker.

MR. IMRIE was received with applause, and said: When the members of the Trade Delegation of the Canadian Chamber of Commerce to Japan, China and Hong Kong returned to Canada several weeks ago, they entered upon a new and important phase of their work. The first phase-in the Orient-had been the expression of the goodwill and friendliness of Canada's business interests, the study of trade conditions and requirements, the establishing of personal contacts, and the enlargement of that basis of understanding that is a prerequisite to continuing and expanding trade. On our return to Canada we entered upon a corollary work of interpreting the transpacific countries to our own citizens. Therefore I am very happy in having the privilege of speaking to the Empire Club, and I thank you for the kind invitation that has made this possible. I must, however, dissociate myself from the reputation that has been given to me in the notice calling this meeting. I do not pose as an authority on the Orient, and have not had the privilege of participating in any of the international conferences of the Institute of Pacific Relations.

Before dealing specifically with the impressions that our delegation brought back from the Orient may I submit a concrete proposal, with respect to the marketing of Canada's livestock and dairy products? This proposal had its genesis in the knowledge I acquired in the Orient of the intricacies of export markets. It is stating the obvious to remind you that the farmers of Western Canada are today facing new and serious problems, in part the result of Russia's five-year program and the world surplus of wheat. None of those problems are insoluble, but they call for intensified study by experts in marketing and agriculture, and for new and intensive sales methods. May I submit that they call for a new confidence on the part of the individual farmerconfidence, first, that the new path they are being urged to take is the right path" and secondly confidence that at the end of that path, and along its course, they will find markets for the new type of products which they are. being urged to produce. Mr. E. W. Beatty's recent proposal of an Agricultural Credits Corporation had a large secondary value in that it offered assurance to farmers of Western Canada that the outstanding transportation and business interests were prepared to stand behind them financially, should they diversify their products. Corresponding economic and psychological elements are necessary, I believe, in relation to the marketing of the products of mixed farming.

Not only in Canada, but in several other countries, are farmers being urged to reduce wheat acreage and turn to the raising of livestock, and to dairying. Thus we have in prospect a large increase in livestock and secondary products, and intensive international competition in their sale. Under these circumstances it is of paramount importance that every effort be made to ensure adequate markets for the new products of Canada's diversified farming. Therefore I suggest, as I did ten days ago to the National Executive of the Canadian Chambers of Commerce, that a Farm Products Marketing Commission be organized as an essential corollary of the Agricultural Credits Corporation proposed by Mr. Beatty. This Commission should be purely advisory. Its functions would be to coordinate production and marketing, and it would endeavor to secure the largest possible proportion of the domestic market in livestock anal secondary products for Canadian farmers. Outside Canada the commission would endeavour to extend existing markets, to find new markets, to study the peculiar requirements of each, and to spread that information amongst Canadian farmers. This would not be a selling body; rather it would cooperate with and seek to stimulate existing marketing channels. On that basis it should be possible to secure the active assistance of the Federal Department of Trade and Commerce, and the Government Trade Commissioner Service; also of related mercantile and trade firms and individuals, as well as of the farmers themselves. The Commission would become a vital organism in promoting that intelligent cooperation and friendship upon which sound marketing and export trade must be based.

Now let me pass to other impressions that are more definitely related to my subject. Japan, China and Hong Kong were wonderfully kind to the Trade Delegation that visited them last fall representing the Canadian Chambers of Commerce. Their central governments, their municipalities, their chambers of commerce and their people were lavish in their hospitality. Some 46 public functions, mostly banquets and luncheons, were tendered in our honor, and those attending included the most highly placed in the public and business life of the community. Thus we were able to establish personal contacts of a influential and far-reaching character, which were augmented by contacts established at business conferences of one or another of the nine sub-committees into which our delegation of twenty was divided. Thus we had exceptional opportunities for observing and analysing conditions. Yet I do not feel that twenty-two days in Japan, and twelve or thirteen days in China are adequate as a basis for final conclusion. I have brought back certain impressions, each of which I shall hold subject to revision in the light of a re-visit, and further study. One of the impressions is how little we in Canada know of transpacific countries. Our delegation had prepared itself by advance reading, and yet each of us was obliged to revise our previous conceptions in view of conditions as we found them. A second impression is in part a corollary of the first; it is that Canada has much to learn from Japan and China. Japan has a recorded history that anti-dates that of Canada by more than 1,000 years, and a further background of tradition. Back of that again she has the culture and philosophy imported from China, which country has a recorded history extending over the past 4,000 years. Our delegation was profoundly impressed by the evidence of their culture and traditions. Japanese hospitality is carried to a point that we have not even approximated in Canada or the United States. The Japanese have developed an artistry that we might well emulate, and have established a mental poise that should be the envy of the average Canadian. In China there is an abundance of ethical and philosophical culture.

Another lasting impression had its inspiration in the emphasis placed, in both China and Japan, upon understanding and friendship as a prerequisite of permanent trade relations. This was illustrated in an address which the acting Prime Minister of Japan made at a farewell dinner to our party early in December last. Let me read a few sentences: "Friendship is a greater thing than trade. Without it the springs of trade will be frozen. Trade can thrive only in a genial atmosphere of good feeling, and friendship rests on knowledge." A similar attitude was reflected in two successive boycotts which China maintained against Great Britain and Japan respectively. Chinese, and chiefly because there was a feeling that the basis of friendship had been temporarily disturbed. These were conducted at large monetary cost to the

From that standpoint I would suggest that every present and future relationship between Canada and Japan and China respectively be studied carefully with a view to the removal of anything that might stand in the way of friendship and understanding. I would suggest particularly a revision of the existing immigration regulations insofar as they apply to three preferred classes of Chinese, from the standpoint of temporary residence. I refer to students, to bona fide merchants, and to tourists. If there is any basis for the examples given to us of the operation of present regulations, then it is apparent that we have not considered Chinese psychology, which emphasizes the element of "face" or prestige, in framing and operating our immigration regulations. Emphatic, and in some case vitriolic. reference to these regulations was made at 12 of the 14 functions in our honor in China, and, :clearly, those representations were inspired by the Nanking Government.

Canada's exports to Japan, China and Hong Kong are already substantial. They have increased from a prewar five-year average of $2,500,000 to an average over the five years ending 1929 of $55,000,000. In one of those last five years they reached a peak of $70,000,000. From the trade standpoint, I feel that Japan and China should be considered as quite separate and distinct units, with due regard to their individual, and in many senses quite different, natural resources, stages of development, psychologies and aspirations. It is a mistake to group those two countries in the broad term "Orient". With respect to trade prospects in Japan our delegation brought back two main impressions. Japan proper has a population of 63,000,000. It has doubled in the last sixty years, and is increasing today at the rate of more than a million per year. Yet the total area of Japan proper is but a little more than one-half of that of my own province, Alberta, in which we have one percent of Japan's population. Only 17 or 18 percent of the area of Japan proper is arable land, but that is being cultivated with a physical energy that is quite unknown on this Continent and approached in only one or two European countries. But the total population is divided about equally between urban and rural, and the rural portion is located upon small farm units averaging only three acres. Notwithstanding the intense physical effort and liberal use of fertilizer, the combined production of those farms is inadequate for the needs of both rural and urban populations, and therefore Japan is a substantial importer of foodstuffs, and must become increasingly so as her urban population increases. Japan's rapid growth in population, coupled with the initiative and resourcefulness of her people, has led that country into an unparalleled industrial development which has increased her dependence upon other countries. Thus Japan must import 100 per cent of her requirements in nickel" cobalt and asbestos, 50 per cent of her requirements in lead and zinc, and substantial amounts of various other minerals. Japan has a large deficiency in forest products. She is endeavoring to meet that deficiency through afforestration and reforestration on a tremendous scale. Entire mountainsides have been utilized for this work. Meanwhile Japan is dependent upon other countries for classes of timber that are not indigenous, and for other classes which can be imported at lower cost than through the utilization of her own isolated reserves.

From these few remarks you will realize that Japan is almost an ideal complement of Canada insofar as three of Canada's primary industries are concerned. Thus, during the fiscal year of 1929 Canada was able to sell to Japan more than $22,000,000 worth of wheat and other foodstuffs; $10,000,000 worth of minerals; and $7,000,000 worth of forest products. Our delegation foresees a gradual increase in Canadian exports in these three main items-(Applause)-that increase depending in part upon the much needed improvement of economic conditions in Japan, and in part upon the further conversion of her people to the use of wheat. With respect to fully processed commodities the outlook is quite different. Japan, in view of her varied industrial development, and comparatively low manufacturing costs, does not present a large opportunity for the sale of fully-fabricated goods. There is, and will continue to be, a market for a limited quantity of these, but I certainly would not advise any Canadian manufacturer to make a large expenditure in promoting a new line there, without careful study of the nature and the character of local competition.

With respect to China we have two main impressions also. The first of these is that China, already eighth among Canada's exporting nations, is a potential market for a much larger volume and variety of Canadian goods, both primary and fabricated. But-and there is a very large "but" here-the development of that potential market is directly dependent upon the stabilization of China's political and economic conditions, upon extension of railways and highways, and upon the resultant enlargement of the purchasing pourer of her people. China's imports in the fiscal year of 1928 approached a billion dollars$956,000,000. On a per capita basis that is only $2.40 as compared with Japan's imports of $16 per capita in the same year. Canada's exports to China increased from $3,000,,000 in 1922 to $24,000,000 in 1928. Let us visualize some of the physical conditions of China from the standpoint of trading opportunities. Picture, first, a country larger in area than the United States, deeper but not quite so broad, having only one ocean front, and having on three sides long stretches of high mountains and desert areas tending to keep her from contact with other nations. Picture her population, estimated at from 400,000,000 to 475,000,000, with an illiteracy up to 90 per cent. Her railway mileage is a small fraction of what we have in Canada, largely scattered along the ocean front, excepting a line running east and west through Manchuria. One province, for instance, of 72,000,000 people has not a single mile of railway. There is a comparative absence of telegraphic and telephonic communications except close to the Pacific. Picture the gradations in types and the many dialects in, that vast country. With that composite picture, and a knowledge that there is no national magazine or newspaper press, you will have some conception of the difficulty of creating national spirit and unity. I should also include her family life and long traditions associated therewith. I mention all this, in order to help you understand why China has not yet set her national house in order. Many observers are highly critical because a Chinese revolution that commenced in 1911, having as its objective representative government, has not achieved its purpose. But recall that it is only in recent years-less than a century ago that China had her first willing contacts with the outside world. Until that time she was a hermit nation. Then her people became interested in the systems of government and customs of other civilizations, and finally in 1911 the revolution under Dr. Sun Yat Sen commenced. In the light of later events, many think that revolution started too soon. Dr. Sun Yat Sen forecast three distinct phases-first, a period of military force and conquering power; second, a period of political tutelage and discipline; and finally a period of representative government. The first period is not yet over; it has taken longer than Sun Yat Sen anticipated, partly due to the conditions that I have mentioned militating against the rapid development of national spirit and unity, and partly to the fact that other revolutions were taking place concurrently. It has been said that China is in the throes of a revolution that is at least five-fold-educational, social, physical, economic" and political. In Great Britain and other countries several centuries transpired before the shock of so great a change was overcome. In China they are accentuated by their concurrence, by the physical conditions, by the avarice and ambition of a number of individuals, and, recently, by the sharp decline in the comparative value of silver.

I have no time to take you over the field of political developments and ambitions, and I am not qualified to do so; but the prevalent picture of China, in which all is confusion and fighting, is inaccurate. Side by side with the more spectacular developments, economic and other changes of a definitely constructive character are taking place. I could cite changes of this nature which are positively astounding, about which little is known in other countries. Therefore, I choose to regard the changes of the past two decades in China not as signs of chaos and disintegration, but rather as symbols of growth and progress, the forerunners of a great transformation. The Oriental conception of time is quite different from ours. A few decades-in the life of a nation that has recorded history for over 4,000 years-are considered a necessary prelude to the economic and political development that is envisioned by her people.

Certain conferences were in session in Nanking during our visit in China, and many highly placed Chinese told me that these conferences provided a better prospect for peace than anything that had developed since the revolution; a significant feature was the presence, for the first time, of the young Marshal of Manchuria and the prospect of cooperation between Manchuria anti Nanking.

Faith in China led our delegation to include that country in our itinerary, and we have returned with an enlargement of that faith, but with a realization of the country's difficulties.

Now I will refer more specifically to the transpacific market for Canada's wheat. One of our nine sub-committees was related directly to wheat and other foodstuffs, and met Japanese and Chinese importers in nine different cities. Six concrete suggestions for the enlargement of Canada's wheat exports were submitted to us, and on our return were conveyed to those in a position to use them if satisfied as to their soundness. We foresee a substantial enlargement in our exports of wheat to both Japan and China. This enlargement is dependent upon economic recovery, change in food habits and tastes, and improvement in the exchange both in China and Australia. In Australia a situation has developed which enables that country to sell to China at a figure that appears much lower than Canadian quotations, but which, if the funds are payable in the United States, represents an increase. These conditions must change, and when they do change we may see a substantial increase in trade. I deprecate very much some of the recent high-sounding estimates of immediate sales of wheat to China which are liable to arouse false hopes. I refer particularly to one fantastic story of a 100,000,000 bushel order likely to result from Hon. Mr. Marler's recent visit.

One last impression that is related more to Canada than to the Orient: every member of our party returned to Canada with a new pride in our country and its citizenship. This does not mean that we made invidious comparisons with countries which were most hospitable hosts. My point is simply this-we saw in Japan what a population of 63,000,000 had been able to accomplish in a short time, notwithstanding serious deficiencies in natural resources, and there came to us a new vision of Canada's future. From that standpoint, our stretch of 3,000 miles from Pacific to Atlantic, our broad areas of fertile lands, our wealth in forest resources, our almost untouched mineral storehouses, our basis for a broad diversification in manufacturing-all these assumed a new significance, for we saw them not in relation to a population of 10,000"000, but in relation to a future population several times that number, even of 63,000,000. The thought-provoking and self-analytical mood that follows upon return from a foreign country made us reappraise our national objectives in education and culture, our standards of law, order and justice, and our civil and religious liberty. Therefore, arriving at Vancouver, our thoughts bridged the Pacific, and we envisioned Japan and China on one side, and Canada on the other, each conscious of its own destiny, and each aided by exports across the Pacific that will include not merely tangible commodities such as wheat and lumber" silk and tea, but also those great intangibles of the spirit-good-will, friendship, ideals and inspirations. (Loud and long continued applause.)

HON. N. W. ROWELL, in voicing the hearty thanks of the Club for the instructive address, said that the review of conditions in China and Japan could not be surpassed, and that his own observations in those countries would lead him to agree with everything that had been said. (Applause.)