The Imperial Conference and Canada's Economic Problems

PROF. SWANSON was introduced by the Vice-President, MR. WM. TYRRELL, and spoke as follows: In undertaking to discuss before you today the question of the Imperial Conference in relation to the economic problems of Canada, I am aware that I am attempting to deal with a matter which is, at the moment, attracting more attention than any other question, and which, in its complexity, is one to make it necessary for me to weigh carefully what I say and to ask your indulgent attention. I propose to commence by attempting to define what is the economic problem facing our country today. It assuredly is not one of production, despite the many improvements which might be made in our productive methods. Since, the termination of the War, this country, which was steadily and rapidly expanding its productive organization before 1914, has entered on a phase of increase in the production of our agriculture, of our minerals, of our forest products and of our manufactures, which is almost unprecedented and unparalleled. The following figures will illustrate this point:

Total gross production of chief activities in Canada:

These are but a few of the major items, and the catalogue might be continued indefinitely if it were necessary, as I am sure it is not, to stress the point that, despite our frequent attacks of pessimism on the growth and progress of Canada, this country shows not the slightest sign of failure to expand its production in every line, at a rate which must cause every Canadian to feel pride in his citizenship in one of the most progressive of modern nations. (Applause.)

To interpret production in terms of national prosperity, however, requires that we shall distribute our products in volume sufficient to absorb them and at prices which would be remunerative to the capital and labour involved. It is to be regretted that in recent months this has not been the case. Without attempting to analyse this tendency to a shrinking in both the volume and the price of our products which the markets of the world can absorb, I may illustrate the case by reference to what has long been regarded as our staple product and the chief commodity of our export trade--I refer to wheat. There exists a tendency, at the moment, to lay stress on the increase in diversification of our national production, to talk of the end of the agricultural era and of a swing to mining and manufacturing. I am quite willing to accept as entirely desirable, from the national standpoint, every indication of this change, but I ask you to remember that agriculture in general, and the production of wheat ire particular, still remain the main-stay of our economic life. I feel that this is not only true at the moment but inevitably true for many years to come. You are familiar with the general geographic outline of our country; you are aware that by far the greatest portion of our national resources of fertile land lies in a great block on the western plains, in a climate and with a soil especially adapted to the production of wheat of the highest quality; you understand that wheat, the world's staple food, is of all agricultural products, the one best adapted to production with a minimum of capital investment, to transportation in great bulk and to the market needs of other countries. In Western Canada the farmer turns in increasing degree to other types of agricultural production, basing them first on the supplying of the needs of his own household, and of the many prosperous communities which today dot the great plains. It will, however, be a long time before the population of Canada is sufficient to absorb the entire agricultural production of the country, and until that time comes it is to be expected we shall continue to find in wheat the product most readily marketed abroad.

Despite the desirability of an increasing proportion of manufacturing and other industries in our economic life, there are sound biological and sociological reasons for trusting that agriculture will maintain its place in the national structure of society; and I therefore not only believe but hope that those who assert that wheat will cease to hold its present position in the economics of Canadian production are wrong.

Now, I shall not attempt to discuss in detail the growth of what, today, we may fairly call the problem of marketing the Canadian wheat crop. I shall not add my voice to the chorus of those who argue that the Wheat Pool has been responsible for the breakdown of our marketing system, nor shall I support the theory that those who once bought Canadian wheat today prefer the grain of other countries. I do not believe that either of these views is in any way representative of the truth. To me it appears that the present low price of wheat and its present slow movement to market may be very simply explained, when we consider that a temporary financial depression exists in all occidental countries, and that unquestionably a momentary apparent surplus of wheat is available for the market.

It will be noted that I lay stress on the temporary nature of these conditions, and I believe that I am right in taking this view. There does exist a financial depression but does it affect wheat alone? Far from it! Cotton, rubber, wool, tin, copper, lumber and every primary product in the world feel the same difficulty. Such a general condition can only be temporary. It is true, also, that there is a momentary surplus of wheat above the immediate needs of world markets; but can it be said that this, in any sense, represents a condition of overproduction? I think not. I find, on examination, that the production of wheat in those countries for which statistics are available, and which include every important wheat producing country except China, remains fairly constant except for the ordinary fluctuations that mark a change from years of good harvest to those unfavourable seasons when yields are low. I see no sign of wheat production outrunning wheat consumption, if wheat consumption per capita is to be based on a reasonably constant purchasing power. I do not even admit the often-made assumption that wheat prices have tended to be too high for the purchasing power of the importing nations, and that we face a permanent correction of prices downward before consumption can again be normal; and I base this view on the obvious fact that, far from the recent collapse in wheat prices having tended to stimulate the use of wheat, it appears, presumably by its unfavourable reaction on the general economic system, to cause an actual slackening in the demand for this product.

It might, at this point, be said that if I argue that the world wheat situation is basically sound, and if I assume, as I do, that the present financial problem is purely temporary, there exists no real wheat problem. That would, of course, be ridiculous. This country has wheat for sale and this country must sell wheat at a favourable price in order to avoid a national calamity. There is a wheat problem, and no amount of faith in its ultimate solution by the mere passage of time can alter that fact. There are 250,000 farmers on the plains of Western Canada, who see their product today selling at a price which makes it impossible for them even to maintain a reasonable standard of living, not to speak of their essential duty of meeting the obligations which they have incurred in establishing their homes in a new country.

Now, how, if at all, can this problem be solved? I have said that it is not our only problem. From the salmon fisheries on the Pacific coast to the lumbermen in the woods of Eastern Canada, similar problems exist, each as intrinsically important as that of wheat, each of as pressing concern to those whom it directly affects. I deal with wheat because it the greatest of our products in

volume and in value, and because what I have to say concerning the solution of this problem will apply, almost without exception, in the case of every other commodity.

In the case of wheat, the solution, obviously, since it is one of marketing, must lie chiefly not here but where we sell our wheat. The great market for Canadian wheat is today, as ever, the British Isles. We hear with pleasure of new markets being opened in other countries; we watch with interest the increasing consumption of wheat in the crowded Orient; and we send agents to introduce Canadian flour in countries where it has hitherto never been known. These are all important and desirable developments, but none of them, in my opinion, offers a solution of our marketing difficulties. If we are to sell Canadian wheat in the volume and at the prices which will enable Canada to prosper, we must find our chief market, as ever, in Great Britain.

Great Britain occupies a position unique in economic history. Its insular location, its commanding place in finance and world trade, and the maritime spirit of its people, combine to make it the world's great market for foodstuffs and raw materials. Were the people of Great Britain to cease to import wheat from other countries, the economic position of agriculture throughout the world would be altered beyond recognition. Now, whence does this country, occupying this extraordinary position, at present draw its supplies of grain? In the six years from 1923 to 1929, the imports of wheat into Great Britain came from the following countries:

It will be noted that in this list Canada comes, not only first, but easily first; and this very fact, on which we may legitimately pride ourselves, lends special stress to the importance of Great Britain as a market in the case of this country. Again, I am not going to delve into the details of recent history in the matter of British purchases of wheat from Canada. I am going to take the situation as it is.

At the present moment Canadian wheat, as always, holds the premier place in reputation and in quality in the British market. As always, it is a matter of pride among the importers of grain in Great Britain that they use Canadian wheat in preference to others. As I have said, however, temporary financial depression and a momentary surplus in the market, together with another influence to which I cannot refer at this point, tend to lessen the advantage which we hold, and there is no question that the immediate solution of our wheat marketing problem depends on the willingness of the buyers of wheat in Great Britain to increase their proportion of purchases from Canada. This, then, is the economic problem of Canada, at least in the matter of wheat. We must endeavour to solve it by finding some method of inducing the buyers of wheat in Great Britain to return to their customary preference for Canadian wheat, and, in my opinion, we must take precautions to see that this preference is never lost again.

Some weeks ago there assembled in London a Conference from all the nations of the greatest Empire in history. Australia, India, Ireland, Newfoundland, New Zealand, South Africa and Canada sent their delegates to London to confer with His Majesty's Government for Great Britain and Northern Ireland in an effort to find a formula which would create economic integration of the Empire. There were other questions to be discussed at this Conference. There were details of constitutional practice, matters of Imperial defence, but in the words of General Hertzog, Prime Minister of South Africa, the Conference of 1930 met with constitutional problems largely solved, and for the first time to deal with those of economics.

The atmosphere in which the Conference assembled is worthy of some thought. It would be obviously improper for one who, even in a humble capacity, sat as an advisor at this historic meeting to touch, even by implication, on the intricate question of domestic British politics. This audience, consisting of the intelligent leaders of public opinion in a great city have, no doubt, the information needed to form their own opinions on these points. What I may be permitted to discuss is the economic atmosphere of Great Britain at this moment and its inevitable effect on the opinions of the proud people of a proud nation.

In Canada, we are apt to think of Great Britain as a weary Titan bearing great burdens and struggling for economic existence. Great Britain, to the visitor, is essentially London, and of London I can only say that nowhere on the face of the earth will be found luxury, wealth and the outward evidences of prosperity on a similar scale. I shall not attempt to detail them, I shall only say that from the shop windows of Bond Street to the well-dressed and well-fed people who have replaced the tattered paupers of Whitechapel, London gives the outward impression of a great and prosperous capital of a great and prosperous nation. Behind this lies the reality. There are 2,300,000 unemployed people in Great Britain. The nation is living on its capital. The great industries of the industrial North are stricken with paralysis. Isolated cases exist of unprecedented booms, as in the fine steel industry of Sheffield, the radio industry and the luxury trades; but, on the whole, there can be no doubt of this serious condition of British industry and commerce.

The very courage of the British people is today, perhaps, their greatest danger. The ordinary citizen sees around him the pageant of Empire, the vast movement of a great national life. He sees His Majesty, the King, going to open Parliament with all the ceremonies of a thousand years; he sees the Lord Mayor of the capital of the world moving in pomp and splendour to the Guildhall. He sees the great ones of the land about their duties and their pleasures, attended by every comfort of life. It is not to be wondered at that he is slow to realize that this may cease to be.

In quiet offices on Whitehall, in the universities, in the editorial rooms of great journals and in little conferences in private homes, the intelligentsia of the nation talk otherwise. They look beyond the glittering surfaces and see the realities which lie behind. They, too, have courage, but it is not the blind courage of ignorance. It is the courage of national leaders, some ready to step forward on new paths which they hope will lead the nation to recovery, others, I fear, tramping with eyes deliberately closed along the beaten road of ancient dogma.

On the whole, I believe that the forces of progress tend to triumph. I believe that in every economic group those who see the need of change are actually in the majority. Bankers and business men, shipping magnates, tradeunion leaders, all are willing to deal with actualities, and to throw aside outworn practices and shibboleths. No political party is without its element ready to achieve progress and reform. Britain, perhaps, is not ready to act today, but action will not be long delayed. (Applause.)

These men see a world undergoing a period of recrudescence of political and economic nationalism. They see vast forces of economic integration, such as the great Cartels. They see the forces of disintegration and of financial disorganization. They see one of the greatest nations of the world waging war against civilization by an economic policy best described as the starving of their own people to implement doctrinaire theories, and to strike a blow at the hated capitalistic structure of western Europe and America. These leaders of opinion realized that when the Rt. Hon. R. B. Bennett at the first session of the Imperial Conference made his offer, he offered something that was not a selfish and narrow policy intended to benefit Canada alone, but adapted to provide for Britain that security for the future, that correction of her present precarious position that Britain needs as much as Canada.

Now, what was it that Mr. Bennett offered? There are those who argue that he offered to make England rich by taxing her food; there are those who suggest that he offered mere empty phrases incapable of translation into realities. I can only give one man's opinion on this point. To me he offered something very different from this. He offered a system for the mobilization of the raw materials, of the finance, of the transportation, of the business capacity of one-quarter of the world which, properly applied, would, in my opinion, create the greatest economic power in history. He offered a project for the integration of the nations who hold in trust the vastest unutilized resources that any body of people in the world have ever commanded. He insisted that each part of the Empire must develop its own resources, that we must have a program under which each portion of His Majesty's Dominions would make itself strong in order that the whole might be stronger. That is Mr. Bennett's offer as it appeared to me in London and to those in England who read it with care and without prejudice. It was not a suggestion of a small addition to the Canadian preference on British goods, although this detail was mentioned as a symbol of the whole project. Mr. Bennett, backed by the Prime Ministers of the other Dominions, made it clear that they had in mind a general co-ordination of Empire economic activities, that should result in the full development of a system by which the Empire would do all the financing of the Empire; by which Empire ships would carry Empire trade; by which the development of the great natural resources of the Dominions would be a field for all the energy and initiative of the Empire; by which the factories to be built in the newer countries as a part of their legitimate development would be built by British capital, equipped with British machinery, and manned by British people. (Applause.)

Even the mere detail of a slight increase in tariff preference is capable of producing impressive results. It is a fact that less than half of Britain's foreign trade today is with the Empire, but is it a fact that this is inevitable and unchangeable? I think not. In the case of this Dominion alone, I believe examination of our trade statistics will show the possibility of the diversion to Britain of a volume of Canadian purchases sufficient to exercise a tremendous effect in restoring the prosperity of Britain. We hear much of the great market for British goods in Argentina. I sincerely trust that Britain will find it possible to hold and develop this market, but I have no hesitation whatever in saying that a concerted effort to direct Empire trade in Empire channels would make it possible for Canada, without a loss of a dollar's worth of domestic production, to divert to Britain a volume of purchasing in excess of Britain's whole export trade with Argentina.

To those, then, who argue that the offer of the Dominion Prime Ministers had nothing of value to Britain in it I offer these facts: I inquire whether a system that would make Britain economically dominant in one-quarter of the world, without fear of competition, has not at least the possibility of benefit to the Mother Country? Is this not a quid pro quo? Is this not something substantial? Is this not a sufficient answer to those who imagine that the Prime Ministers of Canada and the other Dominions held so low an opinion of the intelligence of the people of Britain as to offer them a mere shadow in return for substantial concessions? In my opinion, this is the only solution of our problems. It is the first time that we have suggested bringing into one concerted force all the economic power of the Empire.

Against this but one argument has been offered, the ancient doctrine of freedom in trade. Mr. Chairman and Gentlemen, I wish to say that I am a free-trader. In London I conceived that, in supporting the Prime Minister of Canada in what I believe to be one of the outstanding statesmanlike offers in the history of the Empire, I was doing more service to the ideal of world freedom of trade than I could have accomplished in any other manner. Where, in all the long and vexed history of the struggle to accomplish something for the benefit of humanity by the removal of unnecessary barriers, can there be found an opportunity as great as that which would set on the road to complete, fair and equitable exchange of commodities one-quarter of the human race? Moreover, I felt that I was assisting at the mobilization of the greatest army in history for the penetration of unjust trade barriers raised by foreign powers. And above all, I could not forget that I am first and last a Canadian, with an abiding faith in my country's destiny and the role it is to play inevitably in helping to create Empire opinion, and in consolidating the economic interests of the greatest political entity known in the history of mankind.

Now, how are we to show that this program would have directly and tangibly aided us in the solution of what I would call our typical problem of the marketing of wheat? I cannot, in this short address, attempt to deal with this subject in detail. I can only say that it can be demonstrated beyond the peradventure of a doubt, that the application of a small tariff preference in favour of Empire wheat would immediately cause Great Britain to draw her supply of this staple foodstuff from the Empire sources--Canada, Australia and India--without in any way exposing the consumers of bread in Britain to any danger of exploitation by unreasonable price increases. I do not hesitate to say that this statement can be defended by facts and figures which, I am confident, would satisfy the keenest critic. That these facts and figures were not examined at the late Conference is to be regretted; but, as I have already said, it would be improper for me to go too far into a description of detailed occurrences at the Conference. Note that I have said that no unreasonable price increases would result to the British consumer. I shall frankly and honestly say that I should expect some increase in price, for, at the present time, wheat is selling, not at a price set by fair and open competition, but at levels to which it has been lowered by the slave labour of the Soviet Republic, driven by a heartless group of fanatics who do not scruple to starve a nation in order to make a case. I admit that I am anxious to see wheat selling at a price which will return a fair reward to the producer and free of hysterical competition of this kind, and I believe that, anxious as the people of Britain are to protect themselves from exploitation in the prices of their foodstuffs, it will be hard to find even a handful there who do not accept this view.

It is important to correct any impression that may exist that, because the Dominions approached the British Government with a prepossession in favour of tariff preference, they were unwilling to consider tangible alternative offers. During the sittings of the Conference the press carried many references to supposed British offers of the bulk purchasing of wheat, of boards to control the import of wheat, and of systems by which a fixed quota of Empire wheat would be used in Britain. It would be highly improper for me to attempt to discuss in detail the reasons which led to the rejection of these alternative solutions in the case of bulk purchasing and import boards, and to a decision to postpone final consideration of the quota system. I may say without any breach of confidence that it is a great mistake to believe that the British Government made definite offers of any of these systems, which were refused by the Dominions. These projects were all submitted to the Conference for examination and discussion. They were considered without prejudice, in the fairest and most friendly of spirits. That none of them was found capable of immediate establishment was not owing to any unwillingness of the Dominion delegations to consider alternatives to tariff preference, but entirely owing to inability of the Conference to accept any of these schemes as immediately workable.

You will undoubtedly be told that the Conference failed. I have told you that, in the circumstances in which it assembled, it would have been impossible to achieve complete and immediate success. It has not failed. The economic discussions have been adjourned to be resumed at Ottawa next year-the first time that an Imperial Conference has met except in London. This in itself is significant as showing the growing importance of the opinion of the Dominions, and indeed it will rank as one of the milestones of Imperial history. It is an outstanding personal triumph for the Prime Minister of Canada. Once more we have a man among us who is bold enough to be honest, and honest enough to be bold, and public opinion in Great Britain has not failed to appreciate that fact. Without the Rt. Hon. R. B. Bennett the Imperial Conference of 1930 would have failed. Unquestionably that will be the verdict of history.

Mr. Chairman, and Gentlemen, I am not a politician. I know nothing of party politics. I do know the needs of the farmers of the West--their distress and their high courage. For their sake, and that of our beloved country, I trust that this great question will be raised above the level of mere party strife. (Loud applause.)

Mr. Napier Moore voiced the thanks of the Club to the speaker for his instructive and inspiring address.