The freight rate structure is the price list at which railways sell their services. It is distinguished from the pricing systems of businesses other than public utilities by the degree of its differentiation or discrimination. Freight tolls are not based on cost except in a general way but on value of service. The carriers charge low rates on raw materials and basic commodities, the products of farm, forest, mine, and sea which will not stand higher rates and still move in volume, and they collect relatively heavier tolls on manufactured articles and general merchandise which are better able to bear such tolls. This differentiated pricing arrangement was devised to enlarge railway revenue by encouraging the movement of freight, the widening of market opportunities, and the settlement of the country. Though calculated chiefly to meet the financial requirements of the railways, the system aided business and advanced national interests. During the last twenty years, however, the conditions of transportation have so altered that a complete re-examination of the entire pricing system of railways is now required.

The need for this re-examination can be seen most clearly in terms of the historical development of the Canadian freight rate structure. During the period 1885 to 1915 railways benefited from improved technological efficiency, rapid growth in the volume of their traffic, and increasing density per mile of line. The gains from these changes went chiefly toward generous dividends on Canadian Pacific stock and capital re-investment in railway property. In addition, some important reductions in rates were granted. For the most part, these did not take the form of scaling down substantially all rates but of cutting the tolls on basic commodities and the rates to various sections of the Dominion.

When Sir Charles Trevelyan and Sir Stafford Northcote referred in their famous report of 1853 to the British Civil Service, they were undoubtedly indulging in wishful thinking. Applied to the administrative branch, the term suggested a degree of uniformity in conditions of service and a centralization of controls which was completely lacking. Horace Mann, first secretary to the Civil Service Commission, described the Service to the London Statistical Society in 1868 as “a chaotic mass of unorganized elements … an aggregation of separate departments governed, in many points, by no principle.” Nevertheless, three generations later, in 1931, the Royal (Tomlin) Commission on the Civil Service could point with justifiable satisfaction to the gradual process by which “a measure of common regulation and common staffing” had been achieved.

While this unification has been the work of reformers who succeeded Trevelyan and Northcote after the middle of the last century, it is clear that the foundations of a centralized bureaucracy were laid much earlier. Under the banner of “economical reform,” Burke, Pitt, Lord Liverpool, and others introduced measures which not only reduced administrative expenditures but also cleared away the feudal barnacles, which had clung so long to the ship of state. Economical or administrative reform was the conservative counterpart of parliamentary reform, the two alternating in popularity during the century following 1780. The removal of pensioners and sinecurists (1780-1850), the abolition of the sale of public offices (1809), and the extinction of the casual system of paying civil servants out of fees and perquisites were typical constructive changes fostered by the economical reformers. These preliminary measures were necessary before the modern bureaucracy could be erected on stable foundations.

The provision of a satisfactory transportation system is absolutely indispensable if Canada is to survive as a national unit. Without a transportation system which moved, relatively cheaply and conveniently, vast quantities of the country's primary products over long distances, it would be literally impossible for great sections of Canada to support its present population. In this context, modern transportation really means railway transportation for no other form of transportation can possibly transport such commodities as wheat, coal, and lumber over the distances and in the volumes which are involved in Canada.

For this reason, there has never been any difference of opinion as to the absolute necessity of providing the Canadian railways with sufficient revenue to enable them to continue to provide satisfactory transportation service. There have, however, been serious differences of opinion as to whether or not the present freight rate structure does yield to the railways enough revenue for that purpose and as to the source from which any additional revenue should be secured if it is decided that it is necessary. There have also been differences as to who was to be given the responsibility and authority to decide these issues.

Students of Canadian agricultural policy encounter many anomalies. Even superficial study indicates that Canadian farmers have not influenced governmental policy in any measure proportional to their share of Canadian population. Very little effort has been made to understand and explain the historical place of the Canadian farmer's voice in the councils of the nation. The hardy perennial verdict that agriculture is Canada's basic industry adds nothing to our understanding of the question.

Within the scope of a brief paper only a few points can be touched upon. This analysis is limited to a consideration of the use of royal commissions of inquiry in the formulation of Canadian agricultural policy. It is further limited to the period after 1900. In fact the second limitation is embodied in the first, for, with negligible exceptions, only after 1900 were royal commissions used in the formulation of Canadian agricultural policy.

We are to consider, then, the period during which the central economic fact for the Dominion of Canada was the establishment of the prairie wheat economy. The most cursory examination of the relationships which existed between farmers and the governments of this period calls attention to the very considerable number of royal commissions of inquiry appointed by Dominion and provincial governments to deal with some phase or other of what we loosely call “the agricultural problem.”

This paper is the product of the rather unusual experience of interdisciplinary collaboration which I have had during the last two years. It will, I believe, be more intelligible if it is prefaced by a brief indication of the character of that experience. After a long residence in the ivory tower of economic theory I was thrown, some two years ago, into the muddy field of industrial relations, being appointed director of a new Institute of Industrial Relations in the University of Toronto. Though an economist by profession, I had for a long time subscribed to the view that economics is but a part, albeit an important part, of social science. It was therefore not too difficult for me to decide to put a good deal of the new Institute's resources into the study of what has come to be known as “Human Relations in Industry,” where the contributions of anthropology, psychology, and sociology appear to be more valuable than does that of my own specialty, economic theory.

My interest in the work on human relations of Dr. Elton Mayo and his colleagues at Harvard had been stimulated by Professor Hart, whose article on the “Hawthorne Experiments” in this Journal stressed their methodological importance as “steps towards a unified social science.” “The experiments,” he wrote, “started with, continued with, and ended with, attention focussed exclusively on one thing and one thing only, what people do. This was the new procedure and it was revolutionary.”

The fruits of victory in a world war are never easy to appraise and perhaps it is not wise to look this gift horse of Providence too closely in the mouth. We cannot say with any degree of confidence what our condition would have been if we had lost the war, if we had made a compromise peace, or if we had avoided the conflict altogether by submitting to the will of the enemy. And the results of victory consist only in part in escaping the unpleasant consequences of defeat and the possibly less distasteful consequences of compromise or submission. They include, as well, a fleeting opportunity to reorganize the world on better lines.

So probable is it that this opportunity will vanish in abject failure, as similar opportunities have vanished in the past, and so little can anyone do to enhance its prospects of success, that it bears some resemblance to an expensive lottery ticket, whose holder has paid a high price for an infinitesimal chance of winning a great prize. Mathematics may reveal to us (as they did to Pascal) that an infinitesimal chance may have an immense value if the prize is adequate; but psychologically even the most inveterate of gamblers will shrink from backing an argument such as this.

The present period is one in which emphasis on the need for rendering economic theory “dynamic” is widespread. Yet there is little reference in the literature to the concepts and measures of time which are appropriate for the economist. Indeed one is sometimes at a loss in examining certain dynamic theories to know precisely what notion of time is held by the authors. It is this situation which has prompted the present writer to ask a few questions concerning the problems posed for the economic theorist who would treat time specifically.

In 1886 a large gold field was discovered in the heart of South Africa. This led not only to a significant change in the comparative advantage of the country, but also to a considerable inflow of both labour and capital. The movements of these productive factors came in spurts and for many, years set the pattern for, or at least synchronized with, the cyclical swings in the South African economy.

One of the most striking of the capital movements of this period was occasioned by the gold mining boom of 1894-5. The initial wave of foreign investment in the gold mining industry came in 1888-9. However, the excessive exuberance of the early speculators, the difficulties arising from the occurrence of pyritic ore below water level, and the development of a world-wide business crisis in 1890 all conspired to make this initial boom short lived. Furthermore, the gold mining industry needed to acquire maturity and respectability before it could arouse the interest of more conservative investors. It was therefore not until the middle nineties that the major wave of foreign investment developed.

It appears that very little has been written about the multi-product firm. What has been done is largely an extension of single-product theory to those multi-product firms which have their origin in related demands and related supplies. For example, the utilities of two or more products may be so interrelated as to produce a joint demand. In such event, if the products are linked in a technical sense, as, say, the pieces and pawns of a chess-set, then they will be marketed by a single firm, usually under a name inclusive of the component products. If there is no such technical link, still the products (e.g., knives and forks) are more likely to be produced by a single firm than are unrelated products. Again, regardless of demand, the production of one product by a firm may necessarily result in the production of other products. To take the classic example of joint supply, the production of wool entails the production of mutton.

Each of these cases presents special analytic difficulties, notably problems of cost imputation. Various writers have essayed solutions, some of which have found their way into text-books, and some of which (by no means a separate class) are still matters of controversy.

The present paper, however, is not concerned with the extension of single-product theory to multi-product situations. Rather, it is an effort to analyse those features of the multi-product firm which belong to it as such. In effect, this means that it concerns costs and receipts peculiar to the multi-product firm, other costs and receipts being considered as given. This approach serves to emphasize those factors which give rise to the multi-product firm and which limit its size. It must be remembered that all firms are potentially producers of all products. Single-product theory demonstrates why no single-product firm expands its production without limit, and shows on what grounds a choice of output is made. Multi-product theory is required to show why expansion by variation is also limited, and on what grounds a choice of output is made when there is no restriction of the number of products.

While this is too early a date to produce for discussion a tentative questionnaire for the 1951 Census, with all the necessary definitions, we, in the Dominion Bureau of Statistics, are greatly pleased to have the opportunity of placing before you some of the problems that we will have to solve before our army of enumerators begin their house to house canvass to gather the information. Along with the discussion of these problems, I would like to mention some of the improvements that we propose to make in the 1951 Census as compared with previous censuses.

The taking of a census is a very important and costly operation. The Advisory Committee on the United States Census stated in 1921: “Of all the peace-time activities of the federal government, taking and compiling the census is the largest.” Because of its high cost, it is necessary to make it yield its maximum both in quality and quantity of returns. The problem of determining the optimum quantity, keeping in mind that quantity very often works against quality, is possibly one of the most difficult ones to solve. Just before the census is taken we receive suggestions from a very large number of persons and groups for additional questions to be placed on questionnaires. These persons reason quite correctly that the most costly part of our organization is the one which makes it possible to cover every nook and cranny of this vast country of ours; and they also reason, not quite so correctly, that since our enumerators visit every home anyway, there is no harm is asking a few more questions. Mind you, the great majority of these questions are worthwhile and would produce information which is not available anywhere else. We are, therefore, placed in the unhappy position of having to appear to be unco-operative or to load our questionnaires beyond the point where it is possible to obtain reliable information. The first point, then, is to determine how long census questionnaires should be to provide as much information as possible without placing the quality of the statistics obtained in jeopardy.

Although the doctrines of Social Credit have been systematically and extensively promoted throughout many parts of the British Commonwealth and the United States for nearly thirty years, it is only in Alberta that there has emerged a Social Credit movement sufficiently strong to win and maintain political power. It is proposed, in the present paper, to trace the historical development of this movement with specific reference to those data that are essential for its interpretation as a phenomenon of mass psychology. Such an approach must be restrictive and selective: data of primary importance to the economist, the political scientist, and even the sociologist must necessarily be omitted.

The Social Credit upsurge in Alberta was essentially a people's movement which sought to reform, but not to revolutionize, the existing social order by changing the pattern of certain existing institutions. It has passed through the four stages which constitute the natural history of a social movement—social unrest, popular excitement, formalization, and institutionalization; and it has exhibited, in the course of its evolution, the five mechanisms of reform movements—agitation, esprit de corps, morale, ideology, and operating tactics. From the perspective of social psychology, the movement may best be understood if, taking its more general sociological aspects for granted we consider its appeal to the people of Alberta in terms of its leadership, its philosophy, and its techniques of organization and promotion. In analysing this particular social movement, the social psychologist is faced with two serious methodological difficulties: he must be careful not to confuse the evolution of the movement with the political history of Alberta, especially after 1935; and he must, as far as possible, present the movement as a dynamic rather than a static social phenomenon.

The problem of deciding upon a national wage-price policy has become increasingly urgent in recent years both because of the growing importance of “full employment” as an objective of economic policy in the United States and elsewhere, and because of the economic conditions accompanying and following the war which have had the effect of creating a “full employment” situation. Many economists, including some with such widely divergent views on public policy as Sir William Beveridge and the late Professor Henry Simons, have in recent years expressed concern over the possibility that labour unions might create inflationary pressures by demanding large wage increases in time of “full employment.” (The problem may arise before full employment is reached; this possibility is mentioned below.) However, the economists who are concerned with this possibility are by no means agreed as to what policy can or should be adopted to cope with it. In this paper we shall analyse various possible alternative policies and the theoretical problems that underlie them.

Traditionally the government, as regulator of the currency, has been responsible for maintaining its value, i.e. controlling the general price level. While discharging this responsibility is by no means an easy task, it is, theoretically at least, capable of achievement. However, to couple this responsibility with that of maintaining continuous full employment of the labour force, is to saddle the government with two responsibilities which it may be impossible to discharge simultaneously. The following argument will serve to clarify the nature of the difficulty.

Various observers of the North American scene have called attention to the problem of mass passivity and political apathy in our culture. Myrdal has pointed out that the masses in America “are accustomed to being static and receptive. They are not daring but long for security. They do not know how to cooperate and how to pool risks and sacrifices for a common goal. They do not meet much. They do not organize. They do not speak for themselves: they are the listeners in America. They seldom elect representatives from their own midst to Congress, to state legislatures or to city councils. They rather support friendly leaders from the upper strata, particularly lawyers.”

Myrdal's description of American mass passivity is an accurate one for most parts of the United States and Canada. There are, however, certain areas on this continent where the political behaviour of the people contradicts the assertion that the American lower economic classes, the workers and farmers, are politically apathetic. The Wheat Belt regions of the United States and Canada have repeatedly given rise to large-scale “class-conscious” political organizations which were genuine mass movements. The Greenback, Populist, and Non-Partisan League organizations in the United States, and the Progressive party and the Cooperative Commonwealth Federation (C.C.F.) in western Canada involved large numbers of people in agrarian political action. The recent success of the C.C.F. in attaining power in the Wheat Belt province of Saskatchewan is the latest instance of a mass North American “people's party.”

This paper is concerned with rural local government, and particularly with the equalization feature of grants to local governments. Reference is made to the Alberta situation.

Significant Differences between Urban and Rural Municipalities. The position of the rural municipality is significantly different from that of its urban counterpart. The basic difference is in fiscal capacity. Fiscal capacity is financial ability, within the taxing powers provided, to perform the functions for which the municipality is responsible.

All taxes are ultimately paid out of income. Rural per capita income is relatively low; disparities in income are less pronounced; production and income are more variable and uncertain; and income produced in rural areas is largely spent within urban jurisdictions. Consequently taxable capacity is lower; and certain forms of taxes (for example, income taxes, sales taxes, and amusement taxes), efficient and appropriate under urban conditions, would be unproductive and uncertain sources of revenue under rural circumstances. The fiscal capacity of rural units is further affected by population dispersion so that the costs of some services, frequently sources of net revenue to urban governments, are high or prohibitive in rural areas.

It is too often assumed that the social legislation which has been hammered out in the British Parliament of the last two years is the product of some purely socialistic blue-print. In reality it is the culmination of a process dating back to the first decade of the twentieth century, which has been carried out by Liberal, then Conservative and now Socialist governments over the whole period from 1907 to 1947. Although there are differences of opinion on the timing of this process, and on many administrative and legislative details, the broad pattern of development has almost common acceptance. In its essence this pattern is simple. It is no less than the replacement of the Elizabethan Poor Law, with its emphasis on the relief of poverty, by a more modern structure of social legislation intended to ensure the freedom of the individual from the major evils of a modern industrial society. These evils have been aptly summarized by Sir William (now Lord) Beveridge: “physical Want, … Disease which often causes that Want and brings many other troubles in its train, … Ignorance which no democracy can afford among its citizens, … Squalor which arises mainly through the haphazard distribution of industry and population, and Idleness which destroys wealth and corrupts men, whether they are well fed or not, when they are idle.”

The accompanying table sets out the steps in this process of social change in the chronological sequence of the legislative measures by which it has been achieved. In order to prevent the confusion of over-elaborate detail, this tabulation gives only the major changes as they occurred. To have included, for example, the complete tally of unemployment insurance acts from 1911 to 1944 would have been unprofitable and would have obscured the issue.

In the Canadian constitution, that which relates to the national interest is the responsibility of the federal government; while the provincial governments deal with those matters of local concern. In a perfectly static situation this division of labour would present no problem because the national interest would always assume the same form. But governments operate in a situation that is never static. Changes in techniques or beliefs, in the location of population, and in the political and economic conditions of the external world are taking place all the time. If there is an equilibrium within the Canadian federal system, it is a dynamic equilibrium in which those common purposes which are the proper concern of the federal government are in a constant state of flux. The national interest expands and contracts: it is ever shifting its ground.

It has been quite impossible to contain this elusive concept within the angular Victorian frame of the British North America Act. It would be unreal to suppose that the division of legislative power produced entirely water-tight compartments of action for the Dominion and the provinces. It could not. There is a large range of governmental activity which quite evidently may be the preserve of either the federal parliament or of the provincial legislatures, or, in fact, of both. Much of the difficulty which was created by the judicial interpretation of the constitution between the eighteen-nineties and the nineteen-thirties flowed from an attempt to make the enumerated heads of Sections 91 and 92 represent fields of exclusive legislative power. The only way in which this could be done was by interpreting away the meaning of several heads of Section 91 in order to preserve some meaning for Section 92. This search for water-tight compartments was unnecessary and contributed to the unsatisfactory decisions of those years. One of the results of this before 1939 was that it limited the effective range of action of Canadian governments—Dominion and provincial—to such activities as would commend themselves to a Victorian liberal.

Modern war has frequently been described as “total” war. While such a description may not be precisely meaningful, it serves to emphasize the magnitude of the social changes which are now inevitably associated with a major war effort. Modern war has been well described as an industrial art, whose effective prosecution necessitates fundamental alterations in the manner of operation of the democratic peace-time economy.

The basic problems which confront a country in time of war may be classified as follows: (1) producing the goods and services necessary for carrying on the war; (2) paying for the goods and services used for war purposes; (3) supplying the everyday needs of the civilian population. While it is with the second problem, that of financing the war effort, that we shall be directly concerned in this paper, the fundamental and most immediate problem is that of production, to which all others must always be subordinated. Because of the enormous technological advances in the methods of modern warfare, World War II presented all of these problems on a scale vastly greater than ever before.

In time of war there occurs a revaluation of social ends, and maintenance of the state itself becomes the supreme social objective. To accomplish this objective under conditions of modern warfare, it is essential that, the organization and expansion of war production be accomplished with the utmost, possible speed. This point was well illustrated by the experience in World War II, where the problem of mobilizing the required quantities of productive resources was extremely complex, and where various nations with superior economic war potentials found themselves in imminent danger of suffering defeat before their full economic strength could be directed effectively against the enemy. Under these circumstances, where speed is the essence of effective economic mobilization, the sudden demand for an ever-increasing quantity and variety of war goods and services is likely to be highly inelastic, since the needs must be satisfied, if at all possible, regardless of price. But in the short run, supply is also relatively inelastic, and the government consequently finds itself confronted with immediate problems of procurement.