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Dominion Aids to Wheat Marketing, 1929–39

Published online by Cambridge University Press:  07 November 2014

V. C. Fowke
V. C. Fowke*
Affiliation:
The University of Saskatchewan
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Extract

Dominion aids to Canadian wheat marketing extend back at least to the beginnings of the western wheat trade and have been of three traditional types, viz.: (1) regulation, (2) investigation, and (3) elevator operation on a limited scale. Regulation of the Canadian grain trade has long been of a quality unsurpassed in other grain producing countries and has evolved in recent decades through repeated revisions of the Canada Grain Act. Investigation dealing specifically with the western wheat trade has involved a notable series of royal commissions commencing with the present century. Elevator operation by the Dominion Government started in 1913 with experimentation and compromise as its objects, and the Dominion Government still retains substantial interests in interior and other terminal elevator plants. In addition to the customary federal aids to wheat marketing before 1929, mention should be made of the exceptional intervention accompanying the Board of Grain Supervisors, which marketed part of the 1916 wheat crop and the crops of 1917 and 1918, and the first Canadian Wheat Board, which marketed the crop of 1919.

Important as the above-mentioned aids have been in shaping the destiny of the Canadian grain trade, they form a striking contrast in simplicity compared with the interventions of the decade4 herein considered. Dominion regulation, investigation, and elevator operation have continued to the present time, but the notable innovations in Dominion activity after 1929 lie beyond the traditional categories and include more or less sustained sorties in attempted stabilization, in bonusing, in international consultation, and in various types of wheat board operation. Dominion aids to wheat marketing, of special significance from 1929 to 1939, may therefore be classified as follows: (1) stabilization activities, (2) bonus payments, (3) international consultation and agreement, (4) wheat board operations; and since several important federal investigations of the grain trade took place within the decade, there should be added (5) investigation. These topics have, for the most part, been analysed individually and at short range in various current writings, so that factual material may here be reduced to a minimum and the emphasis placed upon interpretation in perspective.

Type
Articles
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 6 , Issue 3 , August 1940 , pp. 390 - 402
Copyright
Copyright © Canadian Political Science Association 1940

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References

1 Dr. D. A. MacGibbon has traced the antecedents of the Canada Grain Act back to general inspection legislation of 1874. See his article “Grain Legislation affecting Western Canada” ( Journal of Political Economy, vol. XX, no. 3, March, 1912, pp. 224–53).Google Scholar

2 Before 1929 Dominion Royal Commissions had reported on the grain trade in 1900, 1908,1924, and 1925. See Sessional Papers (1900), nos. 81-81b; Sessional Papers (1907-8), no. 59; Interim Report of the Royal Grain Inquiry Commission (Ottawa, 1924)Google Scholar; Report of the Royal Grain Inquiry Commission (Ottawa, 1925).Google Scholar

3 In 1932 Dr. MacGibbon reported 25 elevators owned by the federal Government. See The Canadian Grain Trade (Toronto, 1932), p. 384.Google Scholar

4 Crop years, or “cereal years” as spoken of in the United Kingdom, date from August 1 to the following July 31. The “decade” herein analysed comprises ten crop years and runs from August 1, 1929, to July 31, 1939. Marketing legislation passed in 1939 is not dealt with in this report since such legislation became operative only with the 1939-40 crop year. See note on this legislation by G. E. Britnell in this Journal, May, 1940.

5 Minutes of Proceedings and Evidence, Select Standing Committee on Banking and Commerce, 1934; Minutes of Proceedings and Evidence, Special Committee on Canadian Grain Board Act, 1935; Griffin, H. W., “Public Policy in Relation to the Wheat Market” (Canadian Journal of Economics and Political Science, vol. I, Aug., 1935, pp. 482–500)Google Scholar; H. S. Patton, “Observations on Canadian Wheat Policy since the World War” (Ibid., May, 1937, pp. 218-33); Evans, W. Sanford, “Canadian Wheat Stabilization Operations” (Wheat Studies, vol. XII, no. 7, March, 1936)Google Scholar; McFarland, John I., “The Story of Stabilization” (Address given in Calgary, February, 1936)Google Scholar; Report of the Royal Grain Inquiry Commission (Ottawa, 1938), chap. VII.Google Scholar

6 The Federal Farm Board was created by the Agricultural Marketing Act of 1929, and was provided with a revolving fund of $500,000,000 “to promote the effective merchandising of agricultural commodities” chiefly “by aiding in preventing and controlling surpluses in any agricultural commodity.” Stabilization Corporations were set up for wheat and cotton.

7 See Dummeier, E. F. and Heflebower, R. B., Economics with Applications to Agriculture (New York, 1934), p. 532.Google Scholar In addition, the Board donated some $24,000,000 worth of wheat to the American Red Cross.

8 See Report of the Canadian Wheat Board, Crop Year, 1937-1938, p. 2.

9 See A Raw Commodity Revolution (Boston, 1938), p. 60.Google Scholar

10 See Barron's, September 21, 1936, pp. 5, 8. Among other estimates in this article, Dr. Boyle gives his “careful, reasoned opinion” that the huge stocks of wheat held by the McFarland Agency depressed the price of wheat 25 cents per bushel on the five crops involved. Since these crops totalled 1,743,000,000 bushels he concludes: “Therefore, the loss due solely to government control of pool holdings and its own holdings amounted to the tidy sum of $435,750,000.”

11 See Evans, Sanford, “Canadian Wheat Stabilization Operations,” p. 271.Google Scholar

12 Canadian Journal of Economics and Political Science (Aug., 1937), p. 227.Google Scholar

13 Minutes of Proceedings and Evidence, Special Committee on Bill 98, Canadian Grain Board Act, 1935, p. 182.Google Scholar In their 1935 Report the directors of the Central Selling Agency said stabilization operations had prevented more ruinous price declines “and have strengthened the farmer in the belief that has persisted throughout the West since 1919 that only a Central or National Marketing Agency, handling the whole of the western crop, would give the farmer the most efficient service and satisfactory returns.” See Eleventh Annual Report of the Saskatchewan Wheat Producers (Regina, 1935), pp. 55–6.Google Scholar

14 21-22 Geo. V, c. 60 (Assented to Aug. 3, 1931). The Act provided for its own termination, July 31, 1932.

15 Debates of the House of Commons of the Dominion of Canada, 1931, p. 4152.

16 Estimates of the Secretary of Statistics, Regina, as quoted in Britnell, G. E., The Wheat Economy (Toronto, 1939), p. 72.Google Scholar

17 The criticism that bushel-bonuses aid only those with crops applies with equal force to stabilization measures and to minimum-price guarantees.

18 See for instance the resolution introduced by the McKenzie, Hon. Robert (Assiniboia), Dabates, 1932, p. 289 Google Scholar, and the memorandum and petition of the Saskatchewan Association of Rural Municipalities, ibid., pp. 310-12.

19 The preference amounted to a duty of 2s. per quarter on non-Empire wheat entering the United Kingdom, while Empire wheat continued to enjoy free entry. The preference became effective November 17, 1932, and persisted till January 1, 1939. The 10 per cent ad valorem duty on foreign-milled flour, established February 29, 1932, survives. See Wheat Studies, vol. XVI, no. 4, Dec., 1939, pp. 126–7.Google Scholar

20 22 and 23 Geo. V, c. 24 (May 12, 1932).

21 For an outline of these proposals see Wyman, Ada F., et al., “Britain's New Wheat Policy in Perspective” (Wheat Studies, vol. IX, 1932–1933), pp. 305–50Google Scholar, especially 320 ff.

22 For Mr.Bennett's, address see Appendices to the Summary of Proceedings, Imperial Economic Conference at Ottawa, 1932, Cmd. 4175, pp. 65–72.Google Scholar

23 See Eighth Annual Report of the Saskatchewan Wheat Pool (Regina, 1932), pp. 39, 41–43.Google Scholar

24 Ibid., pp. 19-21.

25 “British Preference for Empire Wheat” (Wheat Studies, vol. X, 1933–1934), p. 5.Google Scholar

26 Ibid., p. 6.

27 This conference was called by the Secretary-General of the League of Nations on the request of the four principal wheat exporting countries, representatives of which had already held a preliminary conference in Geneva under League auspices. The agreement was signed by the representatives of 22 importing and exporting countries, and was to apply to two crop years, 1933-34 and 1934-35. Export quotas for 1933-34 rested on an estimated world-trade requirement of 560 million bushels; and for 1934-35 the plan was to reduce exports, by means of an elaborate formula, by 15 per cent from an elusively-defined norm.

28 Speaking in Washington, September 5, 1939, Secretary Wallace said: “Before the outbreak in Europe there was, I believe, substantial ground for hoping that an effective wheat agreement would be reached very soon.” See Wheat Studies, vol. XVI, no. 4, 12, 1939, p. 140 n.Google Scholar

29 3 Geo. VI, c. 39.

30 See his article in The Canada Year Book, 1939, pp. 569–80.Google Scholar

31 Ibid., p. 574.

32 For these crops the Governor in Council approved the price fixed by the Board (87½ cents per bushel, basis No. 1 Northern, Fort William), with the condition that the Board should accept wheat only if No. 1 Northern closed below 90 cents per bushel in Winnipeg. The Board did receive some 600,000 bushels of wheat in the fall of 1936, but released it at a loss of $50,000.

33 See Report of the Canadian Wheat Board, Crop Year 1936-1937, p. 2.

34 See the Annual Reports of the Saskatchewan Pool from 1931 to 1935, embodying in each case the Annual Report of the Centra! Selling Agency. See also the evidence of farm leaders before the Special Committee on the Canadian Grain Board Act (1935). Before that Committee Mr. R. S. Law, of the United Grain Growers, stated: “To some extent some feeling in favour of a resumption of governmental activity similar to that of 1919 persisted even in the most successful time of pool operation” (Minutes of Proceedings, p. 83). Mr. Brouillette stated: “Ever since the Canada Wheat Board of 1919-1920 suspended operations there has been a strong desire on the part of the vast majority of western farmers for the re-establishment of a national Wheat Board” (Ibid., p. 187).

35 See, for example, ProfessorHope's, statement in Proceedings of the Conference on Markets for Western Farm Products (Winnipeg, 1938), p. 240.Google Scholar

36 See Minutes of Proceedings and Evidence, Special Committee on Canadian Grain Board Act, 1935; Minutes of Proceedings and Evidence, Special Committee on Marketing of Wheat and Other Grains under Dominion Guarantee, 1936; Report of the Commission to Enquire into Trading in Grain Futures (Ottawa, 1931)Google Scholar; Report of the Royal Grain Inquiry Commission (Ottawa, 1938).Google Scholar Considerable information on stabilization operations was given before the Select Standing Committee on Banking and Commerce at Ottawa, 1934.

37 Minutes of Proceedings, p. 331.

38 The Royal Grain Commissions of 1900 and 1908 followed House investigations. The Turgeon Commission of 1923-25 was appointed upon the recommendation of a Special Committee of the House. See Report of Royal Grain Inquiry Commission, 1925, p. 8.Google Scholar When tricky problems confronted the Special Committee on the Grain Board Act (1935), Prime Minister Bennett repeatedly avoided a direct issue by promising a royal commission, at any time and under any desired judge. The recommendation of the 1936 Special Committee, referred to in the text above, led to the appointment of the Turgeon Royal Commission of 1938.

39 For citation of these reports see foot-note (36) above.

40 See Prime Minister's statement to the House, , Debates of the House of Commons, 1931, p. 523.Google Scholar

41 See Report of the Royal Grain Inquiry Commission, 1938, p. 5.Google Scholar

42 Chap. IV.

43 See Report of Royal Grain Inquiry Commission, 1925, pp. 121–39, partic. p. 139.Google Scholar

44 Appendix XII was a chart offered as evidence by a Grain Exchange witness, and allegedly contrasted pool prices and open market prices over a number of years. There was some question whether all of the Commissioners had seen the chart.

45 For a suggestive investigation of the forecasting ability of speculators see an article by Hoffman, G. Wright, “Futures Trading and Regulations” (Journal of Farm-Economics, vol. XIX, 1937), pp. 300–9.CrossRefGoogle Scholar See also Stewart, Blair, “The Profits of Professional Speculators” (Economic Journal, vol. XLIV, no. 175, Sept. 1934), pp. 415–33.CrossRefGoogle Scholar