WHERE DO WE GO FROM HERE?
Candid opinions about the causes of our present discontent
DORA M. SANDERS
OBODY seems to know just what is happening to the money of the world. Those who need it can’t get it, and those who have it can’t spend it. Business is waiting for buyers, and buyers for business. Borrowers are afraid to borrow for fear of having to repay three and four times the amount, and creditors are afraid to lend for fear of losing everything. Commodities have dropped so low in price that one saves money by not selling them, yet hundreds of thousands of people are starving.
Somehow, our economic and financial system is very much out of joint, and international physicians and surgeons, the appointed leaders of the people, are hurrying into conference over it. In the meantime, financiers and bankers are keeping consistently quiet, and many ready remedies are suggested by their helpful friends.
What is the matter with the world today? Among all the recipes proffered communism, fascism, nazism, socialism, currency inflation, international debt cancellation, free trade. Empire trade, bi-metallism, or a return to the gold standard—is any one the true solution?
Things may happen in the next few months that will be incomprehensible to the individual, confronted as he is with conditions affecting his own life and interests and knowing little of his neighbors.
Several prominent Canadians, specialists in their own fields of activity, have, therefore, consented to outline briefly for Maclean's Magazine the situation as they see it.
Here are 9ome of the factors that must influence our public men in any decisions they may make at forthcoming conferences: factors that will have a bearing on whatever course the history of Canada takes. These are men who have a wide knowledge of their subjects and can stand behind their opinions.
Included with their summaries is the verbatim story of an unemployed man, encountered by chance, who talked freely, unconscious that what he said might be published. He may be said to represent some 700,000 Canadians or about seven per cent of the population recorded in the 1931 census, and more than 60,000,000 citizens of the world.
Strangulation of World Trade
PROFESSOR GILBERT E. JACKSON. Department of Political Science, University of Toronto, states; “Before the war, world trade maintained a fairly even keel. The countries of the world divided themselves into two classes; the old or creditor countries, which had money to lend, and the new or debtor countries which had new industries to promote. The old countries were able to lend money, so that the new countries could pay them interest. They bought from each other raw produce and manufactured goods respectively. Everything was balanced, and the world was fairly prosperous.
“After the disaster of the war, conditions were radically changed. Some of the old countries, notably Germany, were heavily in debt. One of the greatest debtor countries, the United States, had become the second greatest creditor country in the world. For some time during the later 1920’s, United States financiers were able to lend the impoverished countries, particularly Germany, enough money to carry on business and pay their debts. The flow of capital and interest, in this instance reversed, still existed, and so did the exchange of commodities. Trade kept moving.
“Then several things happened.
“During the speculative mania of 1928 and 1929 the United States stopped lending money abroad in order to invest it at home. The countries of the world which had been depending upon American loans were thus unable to obtain the funds necessary to complete the financing of their industries. Moreover, rising tariff walls cut off their markets, and they could neither borrow money nor make it by disposing of their goods. Thus it became necessary for them to pay their debts in gold, and the depression in Europe and elsewhere was accentuated by a steady flow of gold, the international medium of exchange, from Europe and the rest of the world to the United States. France, too, having lost most of her long-term investments made before the war, embarked on a cautious policy of short-term loans, which she began to recall without reference to the convenience of her debtors, thus necessitating payment in gold when payment was most difficult.
"The result was a sort of strangulation of world trade. Commodities no longer flowed freely back and forth. Two countries, France and the United States, own two-thirds of the world’s gold money—an enormous wealth which they now find of no use to them.
“What is needed is the development of steady habits of investment among the millions of lenders whose psychology controls the movement of new capital; that, and the cancellation of the war debts, which are represented by no assets, and an agreed all-round lowering of tariffs. Trade is no longer a matter for individual national legislation, but, like war and peace, is international. The question the world faces is this: While England has had her election, France hers, and Germany hers, the Government of the United
States will not be sure of itself until the next president is installed in March, 1933. Can the world afford to wait until then before readjustment is made?’’
G. G. COOTE, M.P. and Agriculturist, says:
“Most farmers are carrying a higher per capita debt than other citizens, this having been incurred on account of the purchase of their farms, erection of buildings and other improvements, and the purchase of equipment. They sell at wholesale and free trade prices, and buy at retail and protected prices. The price of practically all farm products today is fixed by the price they bring when sold to other countries, particularly England, less the cost of transportation, handling, commission, and so on. In other words, the price of our wheat, cattle, hogs, dairy products, and so on is the net price received for these products when exported.
“Wholesale prices, at which t,he farmer sells his grain and other products, have dropped about sixty per cent in the last four years, while the average level of retail prices at which he buys his goods has dropped about fourteen per cent. Prices of farm products are twelve points below the level of 1913, while retail prices are thirty-seven points above the level of 1913. As an illustration of the absurdity of the difference in prices in Western Canada, it takes today a twelve-dozen crate of eggs to pay for half-soling a pair of shoes.
“The farmer’s debt, his interest and taxes are fixed in terms of dollars. He can only earn these dollars through the sale of his commodities. At present price levels, his debt, interest and taxes have been increased from two to three times. Farmers’ debts cannot be paid at present prices.
“Bearing in mind that home prices are largely determined by export prices, it will be seen that the value of the British pound in Canadian money has a great deal to do with home prices. The British pound is worth today to the exporters in Canada about $4.10. Our chief competitors in the British market are Australia and the Argentine, each with a depreciation in their currency of about thirty per cent, which makes the British pound worth in those countries about $6. Under such conditions, it is not possible for our farmers to compete with them. The exporters in those countries can undersell us in the overseas markets, and at the same time return a better price to their producers. The result is that we are losing out in both the Oriental and European markets.
“Wheat growing is Canada’s major industry, and only once since 1797 has the purchasing power of wheat been lower than it was last fall. By placing our currency on a par with that of Argentine and Australia, we would go a long way toward restoring the purchasing pow'er of the farmer. It is also necessary' to secure the removal of high tariffs which impede international trade in order to
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Where Do We Go From Here?
Continued from page 14
restore outside markets for our surplus agricultural products.
“Recently, the United States Congress took action to provide for the issuing of a large sum of money by the Federal Reserve Bank in order to raise commodity price levels in that country. Something like this might also be done in Canada. Then, too, assistance should be given to the farmers in establishing co-operative buying and selling associations, which would help to maintain a proper relationship between the value of farm products, and other goods and services.”
The Canadian Industrialist
T. A. RUSSELL, president. The MasseyHarris Company, Limited, gave his opinion as follows:
"The great obstacle to the renewal of business prosperity at the present time is very simply summed up—debts.
"Countries, corporations and individuals are heavily in debt; more heavily than they ever expected to be when the debts were incurred. Prices of commodities which the debtors expected to use in paying their debts have dropped so far in value that the burden of any debt has been increased two and three fold. For instance, the farmer who, three or four years ago, borrowed $500, knew he would have to sell so many bushels of wheat to meet his payment. Now that it is due, he must sell three or four times as many bushels as he actually undertook to do when borrowing the money.
“It is difficult to see a way out of depression until there is some improvement in commodity prices, some increase in employment, and consequently an improvement in the value of private incomes. It will not be necessary that commodity prices, should immediately reach their old levels before we see improvement, because the wave of economy which is so universal now will make more dollars available for the settlement of debt than would have been possible in the earlier period of free and easy spending.
“It is difficult to see how inflation, or depreciation of currency, can, in a long period, help much. If one country after another should attempt to remedy its situation by these means, we would have such a condition of uncertainty in respect to foreign business as to postpone indefinitely the period of improvement. The records of the past seem to indicate that world trade and prosperity have enjoyed their finest periods when exchange was reasonably stable, and importers and exporters could rely upon a dependable basis of settling international balances.
“At the moment, I have hopes that this year will see a definite improvement in agriculture, and consequently industry, in Canada. Seeding conditions have been uniformly good all over Canada and. while it is still too early to prophesy about the harvest, it is reasonable to expect a much better crop in Western Canada than we have had for two years. The failure of the winter wheat crop in the United States and the reduced acreage in Russia will greatly lessen the importance of both these countries in the world’s export markets, and in fact may eliminate them. If so, prospects should be good for some improvement in wheat prices.
“The adoption of new, untried methods such as radical changes in monetary standards and the basis of international exchange can only shake confidence and create conditions that will take years to correct. If each one so far as he can endeavors to do to the best of his ability the job that lies before him, utilizing the experience of the past as a guide, definite improvement must ultimately begin.”
Possible Remedy for Unemployment
H. C. HUDSON, general superintendent Ontario Offices, Employment Service of Canada, says:
“The problem of unemployment is too great to be handled by the Government alone, or any other single body. I think that no one who is not in close touch with the situation can realize how serious it is. We have had other periods of unemployment, but I certainly know of none that has even begun to approximate this one. It can be likened to a river that periodically overflows its banks and floods the houses of the squatters on the valley flats. Nobody worries about that much. The squatters j have only to camp for a week or two until the water drains out of their kitchens and then go back home. But when the water rises and rises, floods the permanent dwellings of the working folk on the higher country, inundates the farm lands, rises higher still and swamps the storekeepers and comfortable middle classes, and, higher yet, engulfs the professional and highly paid executives, it becomes a national disaster. Today, outside perhaps the bailiff and the tax collector, there is no one who has any security of position.
“Unemployment figures themselves are staggering, but they do not include underemployment, which is as great, if not a : greater menace. There is no statutory minimum wage for men in this province, and under-employment, while not allowing a sufficient living income, often prevents a i man from seeking other work.
“The Government undertaking which j sent thousands of men north last year to ¡ work on the roads was splendid for the men ! who were fortunate enough to get jobs. Approximately 35,(XX) men were employed up there at great expense to the Government, yet it helped scarcely one quarter of our unemployed men and did nothing, of course, for the under-employed. Moreover, since the road is non-revenue producing, the work could not possibly be carried beyond certain limits, which apparently have already been reached.
“Certain industries in the United States and Canada, making such staples as soap, fcxxl stuffs and floor wax, are employing their men on contract, guaranteeing a fiftyweek year, and looking on their upkeep, good times and bad, as part of their overhead. No manufacturer, in times of depression, puts his machinery out on the streets and asks the Red Cross to look after it, but the working forces are not usually so fortunate. In Rochester, nineteen of the leading industries have agreed to lay aside a sum equal to two per cent of their annual payroll to carry at least a part of their employees’ wages in bad times. This, you notice, is not insurance, which they believe to be at best a sort of dole.
“Such policies, however, are only possible for industries depending on home markets. So much of our economic and unemployment problem is international. It is a fact, for example, that if China were on its feet economically, many of our big mills would be reopened; yet it seems ridiculous to state that in order to cure some of our present troubles we should send our best economists to China.
“I think, perhaps, much could be done for immediate relief by a committee of men working with the Government, as the Organization of Resources Committee did during the war, organizing production and consumption. Certainly the time has come when we must get together as a community and do something to stop this terrific national calamity. Our country is suffering severely, and the flood is not abating.”
International Agreement Necessary
RABBI EISENDRATH, Independent:
' “It seems to me that we human beings have been trying to build up a society based on purely material and not on moral values, and I don’t think it can be done.
“Somehow, we don't seem to practise ! fully the fundamental spiritual principles j which we all profess. That, I think, is one '
of the things most aw'ry today. What is needed is a readjustment, not of surface troubles but of the underlying evils that cause them. Otherwise, anything we do can be only a partial relief to perhaps a few people.
"In that respect. I suppose I am a radical. Doesn’t that word mean, etymologically, one who goes to the roots of anything? We must go to the roots of our present difficulties if we are to achieve anything that will prove a really worthwhile cure.
"Protective tariffs might help a certain section of Canada. The Imperial Conference should do—will do, if the delegates can agree—a great deal for the Empire. But what will happen then? Russia and the other European countries will, in their tum, form alliances to compete with the British Flmpire. We will have strained economic relations again, and conditions will be little better than they were before the war,
“We can no longer think from an individual or a national standpoint only. The world has grown too small for that. What we need is a recognition of the needs of other individuals, personalities, and the aggregates of personalities which are nations. Such far-reaching problems as production and consumption, tariffs and unemployment, can be solved only through international agreement. Surely, in a state of society where,on the one hand, we have abundance and, on the other, vast numbers of starving people, we have the intelligence to devise some items of adequate distribution.
"It will take time, yes. For that reason, we must concentrate immediately on peace. In wartime, all economic arrangements go for nothing. Here, in Canada, we are so far removed from the rest of the world, I think we don’t realize how heated the atmosphere in some countries is becoming, or how rapidly the temperature is rising. If we had started in 1918 to set our houses in order, it might have been different. Unfortunately we didn’t. We must concentrate now, before all things, to have all peoples pledged to peace, to build up a great bulwark of public opinion against war, if we are to have time to straighten out our economic troubles.”
The Voice of the Unemployed
STORY of an Unemployed Man:
“Yeah, I been out of a job sixteen j months now. Oh, I’m getting along all
right—not much, but enough to live on. I’m not married.
“That was the way I figured it. I’m used to the road. I could pick up enough to get along, so back about a year ago, when the boss came along and started talking about cuts—well, I was kind of fed up anyway. I tell you, there was two little girls in the office, see, one getting $26 a week and one $22, and I happened to know they needed the money, see. I was earning $55 a week then, and I said to the boss, ‘Listen, I’ll get out back on the road, and then my salary’ll take care of the cuts for these little girls here.’ Yeah, but they’re the rottenest bunch, that firm. I hadn’t been out two weeks before the little girls’ pay was cut ten per cent. Less than five dollars a week that was. So I said to the boss, ‘Five dollars,’ I said, ‘What are you going to make out o’ that, Charley?’ ‘Well,’ he said, ‘We just got to save money somehow.’ See?
“Well, a few days later I was back again—I kept dropping in just to see how everything was going—and there was a couple of fellows from out of town. Not business men, you know, just fellows. And the boss he calls over to me, ‘Say Jack,’ he says, ‘Here’s a couple of fellows, I’d like to show ’em the town. Will you go up and get some liquor?’ and he hands me over $15. Well, I got $15 worth of liquor, and that night was up at his place—I’d known him kind of well, oh, for five or six years before that. Well, that $15 worth of liquor lasted until nine o’clock, and the vendors were closed then. So the boss he got six more bottles and paid eight dollars apiece for them. That made $48, and $15 before that—there was $63 spent in one night, but he’s got to save money out of the little girls. Aw, it makes you sick. And here I telephone up there a couple of days ago, and they’ve got those little girls working alternate weeks, and the one who was getting $26 is getting $14 and the other $11—for a full week, mind you. That makes $7 a week for the one, you might say, and $6.50 for the other. I don’t knowhow they’re going to live and keep respectable.
“Say, you want to go up to the ball games or to the wrestling bouts. Listen to the betting that’s going on round there, and see who’s doing it. Then make a few enquiries about the cuts that’s going on in their businesses, and you’ll find out somep’n.”