Special Articles

Keep The Wolf From Canada’s Door

Only a New Government System Can Solve Our Financial Problems

John Bayne Maclean November 1 1917
Special Articles

Keep The Wolf From Canada’s Door

Only a New Government System Can Solve Our Financial Problems

John Bayne Maclean November 1 1917

Keep The Wolf From Canada’s Door

Special Articles

Only a New Government System Can Solve Our Financial Problems

John Bayne Maclean

BEHIND everything connected with the war, behind the clash of battle, the recruiting of armies, the moiling of munition mills, there is a serious menace arising to which the average man gives never a thought. It is time that Canadians gave some consideration to this menace—our National Debt.

If the war lasts until the end of 1918— and it would be optimism of a fool-hardy order to suppose that peace will come sooner—Canada will hove a war debt in the neighborhood of $1,400,000,000. This is entirely apart from our regular national funded indebtedness. Then it must be considered that each province has a debt of its own and, again, each municipality. It must further be considered that the Government has taken over the Canadian Northern Railway, and that other expensive government ownership proposals are under consideration. Experts say that the indebtedness of the country is likely to be increased by these ventures to the tune of $500,000,000, and. judging from the terrible results achieved with the Intercolonial, annual deficits of a staggering size may be expected.

When it is -emembered that the City of Toronto -s lost over $400,000 on a municipal car line just a few miles long and an average of $66,800 a year on a municipal abattoir, the possibilities of loss in large public ownership ventures can be shrewdly estimated.

Altogether, it is no exaggeration to assume that the total debt the people of Canada must carry will be in the neighborhood of $5,000,000,000,* at very lowest estimate.

Supposing that interest on this debt

must be paid at thy rate of —and it is quite possible that it will average a little higher,—then it means an annu. il outlay of two hundried and seventy-five miO''n dollars to meet1 . terest charges.

r-----— /--•The term billioi. in the United States is u Led to designate a thousai'M million. In Great Britain it ƒ designates t million millions /

Then there is the matter of war pensions. It must be reckoned that, for the next fifty years and more, the Dominion of Canada is going to pay out large sums to the families of soldiers who died in the struggle and to soldiers who were disabled wholly or in part. It is well within bounds to assume that there will be 100,000 claims on which pensions must be paid. Supposing that the average yearly pension is $300—a pitifully small amount —then the total paid out becomes thirty millions a year.

TT will be interesting to translate this A into terms of individual responsibility. There will be at the end of 1918 a little over eight million people in Canada.

Over that population will hang a total debt of five billion dollars or six hundred and twenty-five dollars for every man, woman and child in the broad Dominion! A man with a family of five can figure that his share of the debts of Canada is $3,275, and that he must directly or indirectly pay the interest on that amount.

It is difficult to figure what proportion of the indebtedness of Canada will have to be borne by direct taxation. Provincial debts are taken care of by the Provincial revenues, and the interest on municipal debts are figured into the local tax bill. As far as our national finances are concerned, the revenues of the country will take care of the interest on all funded indebtedness outside of direct war expenditures. It is too much to assume, however, that the or-

dinary revenues can be stretched to cover any part of our special war indebtedness. Certain-

ly during the years immediately following the making of peace, there will be no surplus from revenue; losses on the C. N. R. venture may actually create deficits. This means that our war debts and probably also our pension biil must be carried by measures in excess of all o' Jinary revenue-raising measures. It is assumed by foresigh ted men that this means a direct income tax to be levied by the Dominion Government-

Translate this again into terms of individual liability and it becomes apparent that at least $15 must be raised by special taxes each year on every man, woman and child, on every foreigner, every pauper, every non-producer and non-payer in the country. It means that the burden will fall heavily on every man who is in a jr. .! tion to pay, the burden becoming heavier according to his income.

To the average man the war debt is a huge, intangible something afar off that the Government and the banks will see to and which does not concern him personally. But, when he discovers that he may have to pay anywhere from $50 to $100 a year as his personal contribution to that debt, then he is going to waken up and take a very real interest. The man of big income will pay up into the thousands and tens of thousands every year.

C' OR that is what it means. Each ref sponsible Canadian is going to pay for this war for many, many years in cash, hard-earned, dearly-needed cash. He is going to pay for it in thrift and increased production. He is going to pay for it in the sweat of his brow, in longer hours

of work, and in restricted luxuries. He does not know this yet; but he will find it out soon.

If Canada were a country of restricted area, if our eight millions of people were cooped up into a country the size of Roumania or Bavaria, say, then this question of war obligations would be one of terrifying proportions. It would mean that only by the most exacting thrift and a dogged increase of production from the overworked soil, would it be possible to meet our debts. We would face a situation as dire as that which faced the povertystricken peasants o f France at the close of the Napoleonic wars; and again after the debacle of 1870. Each Canadian would have to say to himself: “From now on I must not expect any of the pleasures I have known in the past. I must expect, probably for the term of my natural life, to work morning, noon and night, to subsist on the most meagre fare, to dress in the plainest garb, in order that I may eke out a living for my family and pay for my share of the taxes.” That was what the French had to do. For twenty years after Waterloo the French Government had to pay 10 per cent, on all borrowed money! Imagine what that meant in taxes !

But, and lucky is the star und_er which Canadians are born, our country is one of boundless extent, packed from ocean to ocean with almost untouched resources, full of virgin territory for exploitation. We do not have to pay all this debt we have accumulated as part of the price of freedom by what we can wring by our labor from an unwilling soil. We can help out bv realizing on our resources. If we get the right kind of leadership we can proceed to open up our country and let Mother Nature help us with our yearly tribute to Mars.

The situation will be serious enough. To economists it offers very grave possibilities. No patriotic and discriminating Canadian would, however, doubt the ability of the Dominion to carry her debt. A country of such inexhaustible resources and with such prospects of growth and development could assume a debt as large as •ir« will be. The Government can graduallv refund the debt after the war at lower rates of interest, thus reducing the yearly interest bill. The increase of population—and Canada will grow rapidly after the war if the sluice-gates of migration are thrown open in Europe—will reduce the per capita proportion of the debt. In view of these possibilities the war debt would not be such a serious matter if it were certain that business conditions would continue after the war as they are


AND there, after all, lies the great danger. If conditions become bad— and there are the gravest possibilities —then the carrying of this accumulation of war obligations becomes a tremendous strain. A young country enjoying prosperity could shoulder the oeut with the ease of a lusty young soldier swinging his knapsack. To a country, struggling in the throes of depression, such a war load would become a burden almost intolerable.

It may be that certain conditions will arise to save Canada from the wave of hard times that threatens to sweep across the civilized world. It is by no means certain. Under no circumstances will we feel it as badly as the European oelligerents ; but we may have our share.

There is no agreement among economists—or, what is perhaps more to the point, among the biggest minds in the business world—as to what will follow after peace is declared. Some see nothing but the blankest, bluest ruin, a world full of unemployment, with credits shattered and cobwebs on the wheels of industry. Others see business kept going by the stimulus of government control. All agree, however, that the situation at best is uncertain and that only the most enlightened attitude on the part of Governments can save the impoverished nations from deep misery and suffering.

And they are right. Consider the facts, the primary facts on which any consideration of the future must be based. After peace will come an almost complete suspension of the munition industry. Even if the peace arrived at were inconclusive, and another war seemed not improbable, the making of war supplies would not be carried on in any country at even ten per cent, of its present volume. In Germany practically all men, except those at the front, are engaged in some war industry. In Britain and France, the proportion is very large. Peace, therefore, would mean the dumping on the industrial market of many millions of workmen. It would mean also the commencement of the process of absorption of millions of soldiers back into peace operations. And this would come at a time when the buying power of an exhausted, breathless world was at a low ebb!

Could industry absorb scores of millions of men at such a time? If industry is left to bear the shock unaided, the answer is unquestionably, unreservedly, No! There would follow widespread unemployment and all that means — hard times, bread lines, soup kitchens, suffering, even starvation.

AGAINST this dark picture there are certain factors which offer the possibility of escape. There is the need for reconstruction of Europe. France and Belgium, Poland and Serbia will need to rebuild and reconstruct and erase the tracings of war. This reconstruction will be on such a vast scale that only the State will be able to handle it. New towns and villages will spring up on the ashes and mounds that the guns have left, new bridges will have to be built, new roads laid. The operations will have to be undertaken with the credit of the various governments behind them. This will mean a demand for huge supplies, a sufficient demand even to keep the workshops of the world turning busily for several years. By that time industry would have had time to adjust itself and the world would have trodden gingerly, but safely, across this one narrow plank that spans the abyss. Such is the dream, and the hope, of the optimists. But it comes back to that one factor—adequate and aggressive leadership. The world will need to have constructive governments that actually do things, not the idle rich professional politicians who got us into this war. There will be plenty of reconstruction work undertaken in any case and Canada and the United States will benefit mightily. The old world will turn inevitably for supplies to the new.

FROM the purely Canadian standpoint there is the all-important question of immigration to consider. It is on this that our greatest hopes are based. Warracked Europe may be glad to lessen her internal problems by opening her gates to such as desire to find food and employment in the New World. It would not surprise close students and observers if many millions of European immigrants came to North America in the few years immediately folic, áng peace. Canada would get a large s'fere of this influx, certainly plenty to fill up some of our gaps out West, to break in new land and to increase our production.

In addition Canada can count upon a larger inflow from the United States of the very best kind of settlers, due in some degree to the feeling of increased amity growing out of our comradeship in arms.

The lessons of history show that, after all great wars, there has been a distinct migration westward. This was particularly noticeable after the American Civil War. Canada benefited greatly in that way after the South African War.

There would be the solution, readymade, to our business problem. A growing population would mean a growing demand for everything and our increased agricultural production would provide the money to foot the bills. But—an influx of poverty-stricken immigrants into Canada would be a source of increased difficulty if the whole matter were not carefully handled by the Canadian Government. The new-comers would probably have to be put on the land, provided with the material to get to work and financed for a certain period until they could become self-sustaining. This would mean a new system of government credits—a system requiring very careful working out. Otherwise immigration would simply mean that we would assume part of Europe’s burden in providing for indigent people.

IT all works back to the same point.

Canada can carry her war debt without undue difficulty if business conditions continue favorable. Business conditions can be kept good if we have the right kind of leadership.

Let us face this tissue squarely. We have got to start right in and reform things at Ottawa. \Our whole system is wrong there, wrong (from top to bottom. Our Government as a\t present constituted is utterly incapable or handling the crisis that is coming. Thelcabinet is made up of men of political wisdom and business childishness. Important posts are held by mediocrities, men wha are incapable of ' grasping and coping with a big situation. It would be useless tol turn the present government at Ottawa out and put the Opposition in. It would simply be filling the breach with the samif’ brand of incompetence bearing different names. It isn t Borden that is wrong, no'r, in the event of

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a change, would it be Laurier. It is ft system that is wrong.

A cabinet is formed of the men wl have the most weight in the party thi happens to be in power. They are shuflk around and fitted into the most convenia job, without any real consideration j their fitness for that particular jo Thus we have Sir George Foster as Mil ister of Trade and Commerce, an orati filling a position that needs a hard-headi business man; Crothers, as Minister j Labor; Burrell, as Minister of Agï culture; Roche, as Minister of Interii —capable men in their way, but utterf absolutely unfitted for these importai posts. If the Liberals went in, we wou! probably get a somewhat similar distribt tion of misfits, politicians essaying exec; tive work, the whole aggregation bein perhaps a little better than our presen one, or perhaps a little worse.

The failure of the party system has bee established by the course of events in Cal ada since the war started. The men wi should have been guiding us, seeing oj portunities, sensing situations and me» ing them have lagged far behind publi opinion. They have done nothing c worse than nothing. The same inept tude applied to post-war conditions wi spell danger for Canada! And nothin better can be expected from any part government, Conservative or Liberal.

A new system is needed. It is the urj ent, all-embracing need of the momen Canada must have real leadership, ni merely political leadership. There are j be found in Canada the counterparts &t; Sir Eric Geddes, that grandly dynanii Englishman who has taken a businei training into the British Admiralty an revolutionized some phases of warfare, { David Lloyd George who remade the who] fabric of British life to suit new cond tlons, of Lord Northcliffe. They can I secured—the men who could take over ft management of affairs and steer Cañad through the rough waters that are aheai

Are we going to let the party that wa the impending election go back to 0 tawa and fill these important posts agal with political hacks? If we do, we can st this to ourselves: “Soon there shall coa upon us hard times such as we have nevi seen before. We shall have to work eaft and late for lower wages than we hat made for years. We shall see our frient and neighbors thrown out of employmej and we shall have to contribute to ket them from want and suffering. Out of ft smaller earnings that we are able to mafc we shall have to pay such heavy war tax| that there will be nothing left for us j

It is not too dark a picture! Only ft most enlightened and aggressive handlij of national affairs can save Canada frœ a position where her war debt becomes; burden for generations. And the kind cabinet that either party can give us, p cruited from party ranks, will fall ft short of what is needed. The Governme that faces the problems of peace must i elude the brainiest and most courageoi and the best trained men in Canada.

EDITOR'S Note.—As we go to press the « nounoement comen oj the formation of a VfM Government, which will, undoubtedly, effect j improvement.