January 15 1931


January 15 1931


“I can truthfully say that there are finer opportunities in Great Britain today for the marketing of Canadian products than there has been at any previous time in my MEMORY.


OF A NUMBER of the leaders in Canadian business, banking, transportation services and other spheres, MacLean’s asked this question: “What are your opinions concerning the outlook for 1931 and the measures which should be taken to restore public confidence?”

Some, in answering, subscribe to the views of one bank president who says: “There are a sufficient number of important items in the general situation which seem to be hanging in the balance at the present moment, so that a forecast would be of doubtful value.” Others, however, have been willing to express an opinion, and these views are presented herewith.


Minister of Trade and Commerce, whose opinion is based upon his visit to England.

ONE who, like myself, has visited England periodically (my last visit being three years ago) must this year be tremendously impressed with the changed public opinion toward Empire questions. I found everywhere that I went in England, and the one or two places in Scotland that I visited, a very strong sentiment in favor of purchasing Empire goods. One would find in the large retail distributing establishments, such as The Co-operative Stores, Selfridge’s, and other large concerns, very extensive space devoted to the display of Canadian and other goods from all parts of the Empire. Also a great deal of advertising is being done by these concerns to induce the public to use Empire goods. From my observations of the situation I am not quite sure whether this was being done on the initiative of these establishments with a desire to stimulate a demand for these goods, or whether it was the result of a shrewd estimate of the growing public sentiment in favor of the consumption of Empire goods. In any case, there it was.

“I can truthfully say that there are finer opportunities in Great Britain today for the marketing of Canadian products than there has been at any previous time in my memory.

“On the Continent, my reports from trade commissioners, and my personal observations to a limited extent, convinced me that Canada stands very well in the estimation of the different countries in Europe, that here again there is a disposition to treat Canadian goods with favor, but, on the other hand, the tariff provisions and other forms of trade embargo are so onerous that in many instances it is almost impossible for the Canadian exporter to penetrate into these European markets. This I think is particularly so in regard to Canadian wheat and flour.

“Another point that is to be noticed is that competition in the European and British markets is more keen at the present time than it perhaps has ever been before; that the United States, after years of concentrated and high pressure effort, has made tremendous inroads into the European market as well as the British market, but they in turn are now meeting the keenest competition from the various European countries.

“This competition, of course, finds a very free field in Great Britain. How long this open market policy is to be continued, it is impossible to say, but there is undoubtedly present in Great Britain a growing sentiment toward the sheltering of the British market in favor of first, the British producer, and secondly, Empire-made goods.

“The question is met everywhere one travels: ‘Is over-production the cause of our present depression?’ I am convinced that there is no over-production, if one takes the world as a whole, and the time has arrived when in all economic studies the world as a whole must be considered. Modern methods of communication have reduced this world to a very small compass. Consequently it must be viewed as one unit. Viewing it from that angle and realizing that one-half of the world’s population is living below the line of subsistence (indeed, millions dying from starvation annually) one is forced to admit that there is no over-production, but on the other hand there is under-consumption and what is worse, mal-distribution. Therefore, in my opinion, the prospects for the future for western civilization are exceedingly bright if—and I emphasize the preposition ‘if’—we solve the problem of the distribution of the over-production of western civilization to the grave and crying needs of one-half of the world’s population known as eastern civilization. That, to my mind, is the chief problem calling for immediate consideration by all who would preserve our present-day civilization.”


Chairman and President, Canadian National Railways.

I AM frequently accused of being an optimist, and so far as this Dominion is concerned, I do not see how I could plead otherwise than guilty, but when I am asked to make a prophecy as to developments in Canada within the next year the task has its difficulties. Not that there can be any doubt within the minds of those who know Canada as to her future, but present conditions are governed by causes entirely out of her jurisdiction, so that when one attempts to consider Canada during the next year, that consideration must take in the entire world.

“So far as this Dominion is concerned, we have felt the stress of a general ‘letting-down’ in both production and purchasing. Whether the cause was a previous wave of over-production and a general recovery from post-war hysteria, is something which we have not yet been able to determine. Certainly Canada, in common with other nations, found that the purchasing power of her customer nations had dwindled to a great extent, and while there is a feeling that a slow but sure recovery is setting in, this Dominion cannot hope for a complete recovery until there is a greater measure of recovery among those nations to which Canada looks as the purchasing markets for her products.

“For the past year the world has been on a sort of ‘old clothes’ basis. When any of us decide that things are going a little bit hard, we may decide to make last winter’s overcoat do for another winter, perhaps with a generous cleaning, pressing and overhauling. That sentiment helps the man who is doing the pressing and cleaning, but it brings no business to the manufacturer of new coats. However, such a policy cannot continue forever, and eventually we must go out into the markets for a new overcoat. The world must before very long recover from its ‘old clothes’ policy of recent months, and when that recovery comes, Canada will be in a position to take advantage of the business which results.

“Canada starts another year without any reason for being panicky as to the future. Her natural wealth is undiminished; her resources are capable of greater development than has ever been attempted, and her man-power remains virile and aggressive, ready to tackle whatever the future may offer and secure the best that can be got from it. Canadian manufacturers and business men, during this winter, are invading other countries—South America and the Orient—in search of wider markets for their products, and they are doing their best to make progress in the markets which they already reach. The old war cry ‘Are we down-hearted?’ is answered with as vigorous a negative as ever was voiced.

“As to the Canadian National Railways, certainly we are not in the down-hearted class. During the past year, works of improvement and betterment have gone forward, and these works will continue in 1931 with the aim of giving to the Canadian people whom we serve the very best facilities that a complete transportation system can offer. During the period of stress through which we are passing, we have followed the policy of retaining our trained men, and seeking to create work for them, rather than to permit an aggressive and loyal force to be disrupted. This policy, we believe, will bear fruit, for when the upturn comes—and it will come just as surely as day follows night—it will find us prepared, with a tried and capable force, seeking every item of additional business which is to be secured.

“Canada faces the beginning of a new year with every prospect for betterment. The recovery from depression will not come in a day, but when the wave of improvement does set in, I confidently believe it will be a wave which will sweep this Dominion to greater heights than she has yet reached in her history.”


President, Canadian Pacific Railway.

A REVIEW of existing world conditions compels th^ opinion that among all other countries whose trade and industry are recording more or less severe declines, Canada stands out as, on the whole, being less seriously affected than most others and as presenting reassuring evidences that a return to normal conditions may be reasonably expected to make itself felt in this country well in advance of the upward swing which sooner or later will be world wide. Nothing profitable to the

country can be gained by refusing to admit the fact that, even if we are better off than other countries, we are in the midst of a passing phase that is serious, and that its termination does not at the moment clearly appear. In this country the situation largely revolves around wheat. Indeed, I am of the opinion that had the wheat crop of last year been successfully marketed at normal prices we should have heard comparatively little complaint of industrial recession or trade contraction. Certainly we would have experienced no such semiparalyzing conditions as are reported to exist in less favored countries.

“Wheat and its market will continue to be the chief factor in our economic condition for some time to come. Western Canada is faced with adversity and the first task to hand on the way back to normal conditions is the amelioration of that adversity upon a sound and generous basis. No part of Canada can be prosperous while another great section of it is in the throes of a depression based upon a passing failure of its greatest industry, and it is reasonable to suppose that the acceleration of our wheels of industry will in some considerable measure wait upon the re-establishment of comparative prosperity upon the prairies.

“There are sound reasons for believing that if wise measures are promptly set afoot this may be effected well before the end of the next crop year, thus ensuring a broadening of the improvement in several directions that already has become discernible to close observers. When once this improvement is so marked as to be clearly apparent its further development will be stimulated by the courage and enterprise of the Canadian people whose attitude toward the situation all along has been one of cheerful confidence in their own ultimate well-being and in the future of their country.

“In the last analysis it is wealth of natural resources that establishes the foundation of the economic condition of a country’s people. Events of the past two years have destroyed nothing of the basic wealth of this country. Ever since the war, exploration and development have uncovered in every provincesources of industrial activity, the proper exploitation of which eventually will mean work and prosperity for a population far larger than that which we number today.

“It may be that in the renewed prosperity conditions will be somewhat different; that lower cost production of high quality product may be the requisite of largescale world marketing. Such conditions need not alarm any Canadian. We already produce the world’s best wheat and in the quality of other farm products and most of those of mine, forest and sea, we are on a pariy with any other country in the ’world. In the matter of quantity production we are better off than most. Thus we are justified in the confidence that, come what will, the return to stabilized world conditions will find Canada moving higher among the world’s great producing nations.

“In the meantime we have not suffered to the same extent as have other nations. Our indications of activity have not swung so low, and in some cases their downward movement has been impelled by undue sympathy with foreign stock markets. The return to normal conditions will be the earlier therefore, and when that occurs Canada will still be a young man’s country as rich as ever in opportunity, and will continue to advance along the way of progressive development.”


President, The Canadian Bank of Commerce.

Y\7 HEN Mr. Moore, the editor of Maclean's Magazine, asked for my opinion on the outlook for business in 1931 and the measures to be taken to restore normal economic health, I felt in much the same position as a physican who is requested to discuss the physical career of a patient suffering from a serious illness. I assume this physician would consult his text books not only for a review of the ailment, but also to find some effective remedies used in former cases. So, having economic records that cover business cycles for nearly o years, I have looked over these. I have found, first, that Canada has always shown remarkable resistance to depressing influences, which means, in effect, that she has a strong constitution. Secondly, I note that, while there is no regular duration of a depression one in the i s asted five years and there have since been some as short as seven months—the average length is about a year an a half. The present depression started in the late summer of 1929.

“In regard to specifics, there is none better than hard work, not only to get the most out of the materials we have to work with, but to produce more cheaply than at present. The farmer has to accept world prices for his products and as these are much lower than in recent years, it is obvious that if his financial returns continue at the present level, he will not be able to buy a normal quantity of goods unless these are of equal exchange value to his products. I consider price adjustment, perhaps both in respect of producers’ and consumers' goods, necessary to economic recovery.

“The whole record of Canada is one of fairly quick adjustment to new conditions. I cannot set the exact time for this event, any more than a physician can say just when a sick person will be well. But we have never yet given away to depression and I think it is the will of our people to combat this depression. If so, and provided there are no further major disturbances in other countries, Canada should gain in strength during 1931.”


President, The Bell Telephone Company of Canada.

'"TELEPHONE SERVICE—local and long distance— -L relates itself so intimately to general social and economic conditions that the plans of the Bell Telephone Company of Canada as expressing the carefully considered view of the management on the general outlook are not without interest. Our gross outlay in 1931 for extensions and betterments of telephone plant will be only a relatively small amount below the average of the past five years. As those years have included a period of abnormal business activity, it is clear that the executives of this company look for continued demand for additional telephone facilities— a demand inseparable from basically sound general business conditions.”


President, General Motors of Canada, Limited.

TET me say that I, for one, am not afflicted with ' pessimism. Business in Canada has been sick, but there is evidence that it has been suffering partly from psychosis. It looks to me now as if all the patient has to do is to sit up and express the determination to live. Already the old fighting spirit, as one economist puts it, has brought back a shade of pink to the cheek of the sufferer.

“The immediate situation with respect to business generally contains much to inspire optimism. There are sections of Canada, outside of the West, where purchasing power is unimpaired, and where the recession of business was undoubtedly largely psychological. We have proof in the recent accomplishment of the Dynamiters’ Club of General Motors of Canada. This organization came into being because it was recognized that the country was suffering from what might be called ‘conversational financial blues.’ The Dynamiters’ Club, consisting of salesmen, dealers and service men of General Motors of Canada, adopted the motto: ‘We're Out to Make Business Better,’ and they talked faith and optimism to the people of Canada. The results speak for themselves. The Dynamiters in three months September, October and November, 1930—rolled up a sales volume total of $11,815,249. It was proved that there was good purchasing power where on the surface there seemed to be none at all.

“Another instance of buying capacity might be cited. When the McLaughlin-Buick models for 1931 were introduced on August 1, 1930, the market was problematical to say the least. Yet in the following three months the four McLaughlin-Buick branches in Ontario were able to report an increase of sales volume over the same period in 1929. These two instances from our own business are produced as evidence that there was less of a crisis than a psychosis of timidity. There are plenty of other evidences that this timidity can be overcome. Commodity prices are at low levels. Stock market inflation is a memory. Money and credit are plentiful, inventories are lower and savings are higher.

“Speaking strictly from the automotive viewpoint, there is much to be said for the probability of normal recovery. Our highways are lengthening, and there has been evidence of a national sentiment in favor of the expansion of the arteries of motor travel. Notwith-

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“When the wave of ini' provement does set in, I confidently believe it will be a wave which will sweep this Dominion to greater heights than she has yet reached in her history.”


Continued from page 7

standing certain prophecies about a limit to the demand for passenger cars, I do not think we are within sight of the saturation point in Canada. In the United States, there are said to be 5,000,000 more drivers in the country than there are cars registered. Here in Canada, proportionately, there is an even greater reservoir of automobile buyers still unsupplied with cars. There is plenty of space for these cars when they are supplied, and it should be many, many years before replacement demand alone will have to be looked upon as the backlog of uroduction.”


President, Sun Life Assurance Company of Canada.

YOU ask my views in regard to business prospects. It would be easy for me to refer to the vast resources of this continent, the enormous wealth already accumulated and the soundness of our basic conditions, but of what use would this be? We all know these facts, and we all have a faith in the future of our country so strong and buoyant that it cannot long be repressed. We know that the reaction through which we are passing is but a temporary lull in our progress, a mere pause before we rise to even greater heights of prosperity than we have ever before enjoyed. We know that we will pull through, and are pulling through. We already sense the tone of returning confidence in the voices of the people we meet. And there is a sound basis for this confidence, for signs of coming improvement are beginning to multiply on all sides.

“Life assurance is generally considered a pretty fair index of general conditions. May I be pardoned if I point out that the new business of our own company for the past eleven months is about two per cent ahead of the corresponding months of last year.

“I wish, however, to refer particularly to one special fact which to me is highly encouraging. One of the features of the present depression has been the marked drop in prices in every line of business. Economists refer to this as a drop in the commodity price level. This refers of

course to the average price, and not to the price of individual articles. This reduction in the price level has meant a reduction in profits and a general reduction in purchasing power. It has been the chief cause of the severity of this depression.

“Without going into technical details, there is a fairly general agreement among economists that this drop in the average price of commodities has been caused by a lessening of the purchasing power of the dollar, which in turn depends on the amount of dollar currency and currency credits outstanding. If too many legal tender notes were issued, prices might be raised disastrously, as happened in Germany. If, on the other hand, the amount of the circulation be unwisely curtailed, exactly the opposite result happens, and we can have a disastrous reduction in prices, which is in fact what we are now suffering from.

“It is admitted that in the United States the purchasing power of the dollar depends entirely on the amount of currency and currency credits which the Federal Reserve authorities may permit to be outstanding. Over-production or competition may affect the value of one commodity as compared with other commodities, but the average price of all commodities combined depends on the purchasing power of the dollar, and that can be regulated by the Federal Reserve authorities, and by them alone. During 1922-29 they kept this average commodity price level fairly even by buying government bonds, and paying for them in currency when they wished to raise the price level, and selling government bonds and taking payment in currency when they wished to lower it. During the past year, however, there has been a change in regime, and the commodity price level has been allowed to drop, with the result which we see.

“The fact which I have found particularly encouraging is that the published statements show that the Federal Reserve banks recently took a step in the direction of stabilizing the dollar by purchasing government bonds and bankers’ acceptances of over $100,000,000. This movement is no doubt partly seasonal, but if this w'ise course be but continued for a few weeks longer the depression will soon be a thing of the past.”


President, Imperial Oil, Limited.

'■‘PHIS is a season for careful calculation 4and exacting administration of business; but not for alarm or undue curtailment of activities.

“Recessions in business are inevitable and serve their purpose by enforcing a careful accounting whereby we estimate our resources and ability to make further progress under altered conditions.

“It is unfortunate that our business structure is such that sharp peaks and declines are unavoidable. We have not yet learned how to plan so that these will be levelled out but we do know that recessions, like abnormal advances, must be ephemeral and that over a period of time nothing is lost and much may be gained.

“In our industry we shall develop in an orderly fashion during 1931 and we expect that by the fall of the year a distinct improvement in conditions will warrant our established policy which is based upon unshaken confidence in Canada and her future.”


President and General Manager,

The Goodyear Tire and Rubber Co. of Canada, Ltd.

CANADIAN conditions will improve as world conditions improve. World conditions will improve when stabilized governments are established and both business and individuals have an adequate earning power. The income of any country largely measures its purchasing ability.

“At this time most countries of the world have the maximum of political unrest. The bringing into operation of wise and efficient governments is not an easy proposition and will likely not be accomplished rapidly. However, these conditions will later correct themselves and there will be a re-establishment on a sound basis.

“Canada is fortunate in comparison with any other country because we have good government, good schools, a good banking system, personal liberty, immense natural wealth and intelligent and progressive people.

“Our cities can no longer provide

employment in the same ratio to their population as they have done in the past. Employment has been and is, and will continue to be, rapidly displaced by machines and by the consolidation of business.

“It would appear that our solution is to establish a greater proportion of our people on small farms where they can live well, intelligently and happily. Our farm settlement would likely be more efficient if it was done on the group plan, say, of 100 families to a settlement with an acreage of 100 acres each. People living in groups in this way would have the advantage of school, church, store, medical service and have a healthy social condition. Isolated land settlements cannot be beneficial to the individuals or the state. There is little necessity for unemployment if our people are properly distributed and are willing to work and adjust themselves to these changing conditions.”


President, The Russell Motor Car Company; Acting President, Massey-Harris Co., Ltd.

I AM not optimistic enough to anticipate an immediate or widespread return of general business activity, but I am hopeful that the beginning of the New Year will see the commencement of improvement in some industries while others lag behind. I expect that the number and variety of industries showing improvement will slowly increase during the year, so that before its close we shall see a marked advance in business activity which will be noticeable pretty generally across the range of Canadian business.

“The importance of Canada's agricultural output is so great that one must always realize that a good or a poor crop, fair prices or low prices, might very materially change what was otherwise the general trend of industry as a whole.”

Editor's note:—Because of pressure on space it is impossible to include the statements of all those whose portraits appear at the opening of this article. These statements, together with a number of others, will be published in MacLean’s, February 1.