Agriculture's Share of the National Income

Extract

The great increase in the construction of index numbers of economic data, particularly of prices, since the turn of the century, has increased our knowledge of the mechanism of the economic system. One of the earliest uses of index numbers of prices was to measure the long time movements of the general price level. Later, index numbers of prices were used a great deal in studying the movements of the business cycle. Within more recent years they have been used to study changes in the relative positions of different types of economic activity.

The world-wide depression of the 1930's stimulated the use of index numbers of prices in indicating the relatively unfavourable position of agriculture. As a result of the widespread use and study of index numbers of prices in this period, the “Parity Prices for Agriculture” slogan was born. The acceptance by the Government of the United States of the parity principle, based on price ratios, as a basic government agricultural policy has had a profound influence on the thinking of the farmers of Canada. Within recent years the distressing position of agriculture in the Canadian economy has resulted in a widespread demand by the farmers for parity prices for agriculture.

Recent research on national income in Canada and the United States has enabled estimates to be made of the total national income and break-downs of some of its more important parts. In Canada three agencies have computed these estimates, the Dominion Bureau of Statistics, the Bank of Nova Scotia, and a special committee for the Royal Commission on Dominion-Provincial Relations. The yearly levels of national income as computed by these three agencies do not agree exactly, as one might expect due to somewhat different methods of calculation, but the general trends correspond fairly well.