* A Distributed Proofreaders Canada eBook *

This eBook is made available at no cost and with very few restrictions. These restrictions apply only if (1) you make a change in the eBook (other than alteration for different display devices), or (2) you are making commercial use of the eBook. If either of these conditions applies, please contact a https://www.fadedpage.com administrator before proceeding. Thousands more FREE eBooks are available at https://www.fadedpage.com.

This work is in the Canadian public domain, but may be under copyright in some countries. If you live outside Canada, check your country's copyright laws. IF THE BOOK IS UNDER COPYRIGHT IN YOUR COUNTRY, DO NOT DOWNLOAD OR REDISTRIBUTE THIS FILE.

This eBook was produced by: Hugh Dagg, John Routh, Brittany Jeans & the online Distributed Proofreaders Canada team at https://www.pgdpcanada.net

The military history of Canada is concerned with a series of conquests in which France was forced by Great Britain to retreat from Nova Scotia and Hudson Bay in 1713 and from Cape Breton and Canada in 1763 and in which captured territory was consolidated during the American revolution and the war of 1812. Diplomatic history sealed the effects of naval and military success and established boundaries in a series of negotiations particularly with the United States. Political history is concerned with the government established within boundaries accepted by nations and is closely associated with the history of ecclesiastical organizations.

Important work in the field of economic history has proceeded from political, particularly constitutional, history, to studies of public finance and closely related fields of exchange, money, and more recently, banking. Dr. Adam Shortt’s name will always remain associated with this field. More recently interest has advanced to studies of the organization of commerce and its relations to public finance, to political history and to diplomatic history, evident in treaties dealing not only with boundaries but also with trade. Professor Creighton’s paper on the “Commercial class in Canadian politics, 1792-1840” (Proceedings of the Canadian Political Science Association, Vol. V, 43-58) may be suggested as an illustration of the significance of this work. The increasing importance of capital equipment following the effects of the industrial revolution based on coal and iron has led to similar studies of capitalism (i.e., long-term in contrast to short-term credit) in later periods, but these have been concerned to a large extent with the muck-raking phases of the development of railroads.

Work in these fields has developed most rapidly and has been determined by the accessibility of material in government documents, correspondence, published and unpublished, newspapers, biographies and volumes, collected in the archives of France, Great Britain, the Dominion, the provinces and the Hudson’s Bay Company, and in larger libraries. Lack of skilled research students has limited work even on accessible material and general interest in problems of government has precluded interest in other fields.

Increasing attention has been given to narrower fields of government, and work has advanced in studies of provinces and municipalities. With the growth of interest in this direction regional studies have become more important and the significance of geography has been more widely appreciated. Political units reflect regional influences. An extremely fruitful approach has been developed by Professor Gras in his work on the metropolitan economy and by Miss Hartsough, The twin cities as a metropolitan area. We have only begun to appreciate the significance of metropolitan areas and of the growth of Toronto, Montreal, Halifax, St. John, and Charlottetown, and more recently Winnipeg, Vancouver, Calgary, Edmonton, Saskatoon and Regina. The history of banking, railroads and finance is illuminated by reference to metropolitan influence and the surface has only been scratched in such works as Tanghe, Geographie humaine de Montreal. Most significant work has been done on the problems of metropolitan influence as reflected in the dominance of London and New York. The study of prices, through the influence of cyclical changes, has been suggested in Statistical contributions to Canadian economic history in Professor Mackintosh’s volumes in Canadian Frontiers of settlement. Capital movements have been given intensive study in Jenks, Migration of British capital to 1870, and in Viner, Canada’s balance of International indebtedness. On the other hand the whole field of long-term credit has been neglected and comparatively little is known of the history of capital structure in terms of corporate finance, insurance companies, trust companies and exchanges. Nor is much known as to the course of the business cycle in Canada and in turn as to the character of the Canadian economy. The collection of price statistics has been carried out with precision and in great detail over a considerable period, but lack of interpretation work has been conspicuous. The significance of rigidities in the price structure, in price policies, tariffs, railway rates, and interest charges and of the wide swings characteristic of the prominent position of overhead costs with transcontinental railways has been far from appreciated.

Economists are in a weak position to appreciate the extent to which problems of prices are offset by the ability to resist their effects through reliance on self-sufficient agriculture, through technological improvements and through policies of utilization of natural resources. Aside from studies of organized labour and organized farmers, little attention has been given to the problems of exposed groups. Failure of the economist, through lack of acquaintance with actual working conditions in the depressed raw material-producing regions, to undertake intensive studies of a range of phenomena which are not registered adequately in prices has left broad gaps in our knowledge of the Canadian economy. The conspicuous absence of “dirt” economists^[1] has tended to narrow interest to the study of recorded material or in other words to stress the economics of success and utilization of natural resources and to neglect the economics of failure and of conservation. The character of the geographic background, of the industries which emerge from that background, of the cultural characteristics in social and political institutions of the industries, and of the changes which accompany technological advance and more rapid utilization of exhaustion of resources tends to be neglected in the emphasis on price statistics.^[2] The continuous patient labour of generations in the development of basic industries is reflected in social and political institutions. This is not to neglect the significance of the equilibrium approach of the importance of quantitative economics but rather to attempt to give them content and meaning.

Appendix A

Equilibrium adjustments of capital, labour and land and the role of profits in the Canadian economy are disturbed by technological rigidities such as transcontinental railways particularly under government ownership. In a country dependent on major staples with technological rigidities, pressure of overhead costs tends to be shifted to labour. Profits are a reflection of major disturbance incidental to technological advance or rapid exploitation of new resources and wages are determined partly by the flow of profits in relation to exploitation and partly by the extent and efficiency of the monetary structure. Natural resources and the social and political framework become determining factors and profits tend to play a subsidiary role as a directing force. A mining economy based on placer mining differs widely from that based on smelting industries as the salmon fishing of the Pacific differs from the dry fishing industry of the Atlantic. The fur trade of the monopoly period differs widely from that of improved transportation. Social and political organization varies widely between different industries and between different stages of development in the same industry as does the price structure. The varying importance of transportation costs in basic industries tends to accentuate differences in price structures. Consequently regional considerations occupy a crucial position in price organization. For example the St. Lawrence system in the export of wheat extends its influence roughly to the Alberta-Saskatchewan boundary and its decline has been a result of the Panama Canal. The struggle between the Pacific coast and Vancouver and the St. Lawrence and Montreal is waged at varying boundary lines dependent on flexible ocean rates, or on the ability of the political organization representing the regions concerned to secure lower statutory rates or to secure better ports or better roads. A sudden shift such as accompanied the Panama Canal involves a break in the dam and a rapid backward extension of hinterland which concerns the basic industries of the region and the subsidiary industries. The unpredictable results of shifts follow transportation improvements, technological changes, the discovery of new ore bodies. Economic activity is constantly flowing into new channels with sudden eddies and eventual approach to equilibrium, or is being disturbed by technological changes with consequent losses and consequent profits. The rate of disturbance and the extent of profits and losses are dependent partly on the character of the natural resource exploited, on the technique involved, on the inherent characteristics of the industrial system, on the efficiency of the monetary structure, on the phase of the business cycle, on the sharpness of the profit motive, and on the educational system and the character of its products in terms of business men and engineers.

Appendix B^[3]

Failure to persist in the difficult task of attempting to understand the significance of the position of the “common man” has led the social scientist into strange paths. Internationalism has been a favourite fetish and has provided a theme for a large part of our oratorical and economic literature as a reference to world markets for wheat, fish, lumber, pulp and paper and minerals will suggest. The League of Nations, the British Empire, Canadian-American relations are variants. There has been much said about the great role Canadians play in these matters. Toasts to a hundred years of peace, 3,000 miles of unprotected boundary line, the great North American experiment, our position as interpreter between the United States and England and our part in Pacific affairs have been enthusiastically cheered. But the Prime Minister of England purchases a ticket direct to New York and we have 3,000 miles of respectable tariff walls manned by customs officials and immigration agents. American advertising is cherished for its effects on the newsprint industry and American tourists are welcomed for their benign influence in the balance of payments. Regionalism is a corollary of internationalism. Regions engaged in the production of raw materials for export are internationalist in outlook and the strength of internationalism is a rough indication of the strength of regionalism. Regionalism raises an unsightly head in the position of the provinces under the British North America Act and provides definite legal restrictions against a united Canada. Occasionally the regions most seriously affected by depressions talk in terms of secession. The effects have been evident in a great tangled mass of legislation involving railways, railway rates and hotels, ports, bonuses, the tariff, natural resources, labour, legislation and other evidences of political pork barrels. In spite of its unfortunate effects regional pressure has been the only weapon available by which regions have been able to obtain a reasonable distribution of the burdens of Canadian nationalism.

The effect of the influence of these myths has been evident in the social sciences. Certain tribes never regard their own medicine man as having as much power as the medicine man of neighbouring tribes and in cases of severe illness prefer to call in two medicine men from such tribes, and in case of failure in such an event to refer wistfully to the extraordinary powers of a very distant medicine man whom they have never seen. In the case of extreme difficulty such as that which concerned the railways medicine men were brought in as commissioners from both Great Britain and the United States. In the case of the banks an extremely powerful medicine man was chosen and it is said carried great influence with all concerned. Difficulties in the grain trade were also overcome by a powerful economist. Medicine men from Great Britain tend to be regarded as more potent. Titles, the world’s greatest travel system and its need for passengers and settlers, the demands of the increasingly large number of second rate medicine men for a hearing, and the ease with which it can be had, the vested interests of American branch factories in the Canadian tariff and imperial markets are factors tending in this direction.

In the past a medicine man from abroad has been regarded as worth about six of the local product. But the depression has shown that we have an innate strength which has been largely neglected and the growth of nationalism as contrasted with internationalism and regionalism has brought forth a substantial crop. The great source has been the law but ancient history, history, the classics, physics, the sciences and the arts and even economics have all made their contributions and I am told do very effective work—as why should they not. Our fellow citizens the Eskimo, it is said, often succeed in bringing back the caribou after a long period of starvation through the efforts of their medicine men, and the pronouncements of their more “educated” brethren are entitled to the same regard in curing the depression. Indeed, they are entitled to a higher regard as they will gladly share their secrets if you have time to listen to them or you can buy them at a very moderate price.

We have had much of the exorcising of spirits during the present depression to refer only to what a colleague of mine has described as the extensive witch hunting of the royal commission on price spreads. I should like to refer personally, however, in a final word to the exorcising which has been conspicuous in youth movements particularly as to war and peace. The weakening control of age and the loss of a generation have been evident in the emergence of dictatorship in Germany and Italy strongly supported by the blind enthusiasm of youth. In a young country without a strong cultural background the dangers become more serious and it is doubtful whether as an individual I should be allowed to make any comment on the problems of war and peace because of the bias which arises from participation in the last war and the feelings which are stirred up annually by celebrations of the Armistice and by the misery of the depression. On the other hand it may be urged that fifteen years is ample time to permit of a sober analysis even by participants, and that to await a longer period would court the confusion which arises from the babblings of senility and the increasing lapses of academic memories. But the time is short, and it has not been long since most of us have been wakened by nightmares of intense shellfire and even now the military bands played with such enthusiasm by young men are intolerable, and Armistice day celebrations are emotionally impossible.

But there is no reason to believe, speaking from an experience covering over a decade with students in this department that your generation is more brilliant than mine and realizing my own limitations and the loss of those who might have been your guides there is some reason for believing that you are less adequately equipped. It is doubtful, therefore, whether the response of your generation would differ from the response of mine in case of another war. The increasing power of the state and its conquest of the press, the Church and the University, and of the tremendously improved system of communication, for example the radio, which have characterized the war and the post-war periods perhaps weighs more heavily against you than it did against us. You have been warned by the fate of your predecessors through every conceivable avenue and you have recognized the warnings in resolutions stating your refusal to serve the state but you have not seen the effects of mobilized propaganda. The bugle and drum count for more than your resolutions. To quote Houseman’s Shropshire Lad, written on the occasion of the Queen’s Jubilee in 1887.

Evil spirits are not exorcised by an appeal to other spirits. They die only with the scepticism which follows a persistent attempt to understand the problems of modern society.

TRANSCRIBER NOTES

Misspelled words and printer errors have been corrected. Where multiple spellings occur, majority use has been employed.

Punctuation has been maintained except where obvious printer errors occur.

A cover which is placed in the public domain was created for this ebook.

[The end of Approaches to Canadian Economic History, by Harold. A. Innis]