“We do hereby Declare and Proclaim that a State of War with the German Reich exists and has existed in Our Dominion of Canada as and from the tenth day of September, 1939."
SINCE September 10, the Government at Ottawa has strained every nerve to transform this country from a democracy at peace into a democracy at war. Drastic steps, without precedent in 1914-18, have been taken. Governmental machinery of peace was useless for purposes of war. Almost overnight. Canada became a democratic dictatorship. On every side, individual rights and cherished liberties were temporarily sacrificed to the single end that Canada’s manpower and economic power be concentrated and focused at those points where the world’s future is in issue.
There have been scores of proclamations, orders-incouncil and statements by ministers. The purpose, here, is to gather up the record of these early days and to set it down in a way which all can understand. For the outline of Canada’s war program is now plain.
First is the War Measures Act. In time of war all power. Dominion and provincial, passes to Parliament. And the War Measures Act gives to the Government all the power possessed by Parliament, v Obvious measures for the defense of Canada were taken. Shipping passed directly under the control of the Government. The army was assigned to coastal and interior defenses. But before deciding ujxin a war program, Ottawa consulted the British Government. In the light of the advice received, a program was worked out. Here it is “in the order of import -ance of the various forms of contribution which Canada could make.”
1. Help Britain to purchase essential supplies in Canada.
2. Build naval craft and train naval personnel.
3. Train an air force. '
4. Enlist men with “technical training” for special service—mechanics, electricians, engineers, signal men and so on.
5. Begin to train an army but avoid indiscriminate enlistment. Use every man to the best advantage.
Do not allow a mechanic to become an infantryman.
He is more valuable at his work.
Mechanical Strength First
TT WILL come as a surprise to most people that a Canadian army was not first on the list. The explanation is that this is a war of machines. The side which can build and maintain the greatest air force, can assemble overwhelming strength in tanks and other mechanized weapons, can maintain by superior force the command of the seas— this side will win.
Mere men, minus scientific means of destruction, will be unavailing. The fate of Poland in the first few weeks of the war came as a swift confirmation of Britain’s wisdom in assigning Canada her role. Yet much misunderstanding still remains. The public associates war with fighting and
fighting with soldiers. The basic realities of modern war have passed us by. We feel that we must have an army, that we should have a contingent overseas as quickly as possible, that we should concentrate all our energy to this end. In short, we feel it is our manpower that Britain needs.
So she may, at some future time. But not at the moment. Britain wants from Canada now the equipment of war and the supplies essential to her own fighting strength at home and at the front. To Britain, as Rt. Hon. Winston Churchill pointed out, Canada is a priceless asset—an arsenal, a base of supplies of all kinds, accessible to Britain but removed from threat of Nazi bombers.
Just a word of explanation on each of the five points in this war program. Bear in mind that our effort, like Britain’s, is being calculated in the belief that war will continue three years.
To help Britain to purchase essential supplies in Canada means that Britain’s wealth in Canada, which is large, will be increased in two ways. That Britain has built up, particularly in the present year, large gold reserves in Canada is evident in the returns of the Bank of Canada. The sum total of these reserves must exceed $4(X) millions.
but the exact figure is not available.
These reserves will be increased, first, by the “repatriation” of British investments in Canada. The British Government will take over the Canadian investments of its citizens and pay for them in sterling. The Canadian Government will then buy these securities from the British Government and pay for them in dollars. Britain will use these dollars to pay for Canadian war materials and supplies.
Latest statistics place British investments in Canada at $2,684.800.000. It is not suggested, and in practice might be impossible, that the full amount be repatriated There
are $514,200,000 in Dominion, provincial and municipal bonds and another $513,100,000 in Canadian National Railways’ securities. The balance is in various kinds of enterprises. But at least one billion dollars of these securities—the government and National Railways bonds —can be taken over without undue difficulty. Canada will have to find this money.
Presuming that the balance of these securities cannot be repatriated, the Canadian Government will then provide credits for Britain. We will put up the money to pay for Britain's purchases in this country.
On the Economic Front
TRY 'TO imagine the immense effort Canada is now pledged to make. In the last war, up until “cease fire” sounded, Canada raised for war purposes slightly more than two billion dollars. Expenditures were substantially less than this, perhaps half a billion, but war costs continued until 1920. In addition to this, Britain spent very large sums in this country, financing her own requirements. This time we must finance, directly or indirectly, the great bulk of Britain’s purchases as well as our own. The only limit is the capacity of this country to produce. At the lowest, the scale of expenditure and of production will be many times greater than in 1914-18.
It is obvious that an effort on this scale could not possibly be made without the strictest control of our financial and industrial resources. If these controls, which will be discussed later, have come as a shock to many people, they must remember that modern war is different from wars of the past, that war now must have priority over everything, that it would be disloyal to our cause if any part, however small, of our strength were dissipated on nonessentials.
This time, our supreme effort will be financial and economic. And it is on this count more than on all the others combined, that the captains of government at Ottawa have been at their jx>sts day and night for weeks on end. It is no small task to organize the strength of this country so it can be exerted single-mindedly and directly as the strength of one man. But before discussing the controls which are being enforced and the organization which is being perfected to this end, a glance at the other points of the war program w ill be of interest. Construction of naval craft, in the broader sense, is already in hand. Every shipyard in Canada either is or will be working to capacity within a few weeks. All of them will be enlarged to the utmost, always bearing in mind the expected duration of the war.
Naval vessels will be built so that our navy can relieve the Royal Navy in convoying ships outbound for Britain from Canadian ports. And Canada will help Britain maintain the strength of the merchant fleet against the attacks of German submarines. In the first few' weeks of the war orders for cargo vessels were placed which mean day and night shifts in all our shipyards.
Continued on page 45
CANADA is organizing to concentrate her national resources in a great fivepoint war plan. Here are the five points:
1. To help Britain purchase essential supplies.
2. To build naval craft and train naval personnel.
3. To train an air force.
4. To enlist technicians for special service. 5. To train a hand-picked army.
Continued from page 9
Air force training is to be expanded as rapidly as possible. There is no conceivable limit to our contribution in this field, except our capacity to enlist, train and equip men.
The cirmy now numbers 50,000 men. Of these, two divisions of 16.000 men each are to be the nucleus of an expeditionary force to be sent overseas “when required.” The rest of the army is on duty at coast defenses and at key points in the interior. These troops, particularly the two divisions destined for overseas service, will receive some of their training here. But the real training, it seems, will have to be done in Britain where more modern equipment is available.
Of this five-point program, only the first point requires elaboration. We all know what is meant by the recruiting and training of a navy, air force and army.
AT THE outset, measures had to be taken to co-ordinate the entire resources of the country. These measures are fourfold.
A War Supply Board has been created with power to control plant, equipment, profits, raw materials—everything which has to do with production. The British Government has sent a War Mission to Ottawa, but this mission will not compete with the War Supply Board. It will function through the board. That is, subject to the approval of the British Mission, the Supply Board will do Britain’s buying in Canada. The head of this board
I is Wallace Campbell, of the Ford Motor ; Company of Canada.
The next step was to mobilize the ! financial resources of the country. To this end the Foreign Exchange Control i Board was created, under the chairman; ship of G. F. Towers, governor of the Bank j of Canada. This board lias power to ' control imports and exports, not only of goods but of money and securities; all dealings in foreign exchange; all payments from Canadians to those abroad. All foreign securities owned by Canadians must be declared and if need be the Government can take them over (paying for them in Canadian dollars) and sell them abroad to raise money for war purposes. To illustrate, Canadians own a little more than one billion dollars of United States securities. These could be sold by the Government on United States stock exchanges and the proceeds used to pay for war supplies. Many of the controls mentioned are already in effect.
No official action has been taken as yet to control the domestic market, but unofficial controls already are in operation. Right now, no government or individual can sell securities in Canada without the approval of Ottawa. This control, at the moment, is voluntary. All the channels through which securities are sold are cooperating with the Federal Government. But again, if need be, the War Measures Act will be used to give these controls the authority of statute law. All bond issues— indeed large-scale borrowing of any kind— are being scrutinized to make certain they are essential to the war effort.
Threat of price fluctuations, profiteering and the like, was forestalled by the appointment of the Wartime Prices and Trade Board which has jxnver to control all the ordinary trade of the country as well as much of the business which is vital to the life of the people. It is this board’s job to safeguard the public against undue enhancement in the price of food, fuel and other necessaries of life and to ensure an adequate supply and equitable distribution of these commodities. Hector McKinnon, tariff expert of the Finance Department, is the head of this board, and already it has one offshoot in an administrator of wool supplies—David C. Dick, of Cobourg, Ont.
Then there is the Agricultural Supplies Committee comprising the heads of the Department of Agriculture and under the chairmanship of A. M. Shaw, director of marketing. This committee’s job is to | mobilize “the agricultural industry to facilitate the maximum export of agricultural supplies to Great Britain and her Allies, and to ensure domestic requirements.”
One other phase of the war program completes the record. The war taxes im|X)sed at the special session of Parliament in September are already bringing in income. In a normal year, like 1938, these war taxes would net $62 millions. Under war conditions, with the productive plant of the country running wide open, the income will be many times greater—how great, of course, no one knows. To as great an extent as possible we will pay for this war as it proceeds.
There is the record. How different it is from the pattern of 1911-18! In the first Great War we spent, during the period of hostilities, nearly $1,500 millions. We collected in special war taxation exactly $101,578,486. We did nothing to regulate trade, control prices and prevent profiteering until late in the war. The first domestic controls went on in June, 1917, and adequate measures to control food prices and supplies were not imposed until January, 1918,
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