How can the Maritimes get in on the boom?

Man for man they’re the smartest Canadians. Paradoxically, they’re the worst off. Here are the chief problems of our most troubled provinces and what’s being done to solve them

ERIC HUTTON May 11 1957

How can the Maritimes get in on the boom?

Man for man they’re the smartest Canadians. Paradoxically, they’re the worst off. Here are the chief problems of our most troubled provinces and what’s being done to solve them

ERIC HUTTON May 11 1957

How can the Maritimes get in on the boom?

Man for man they’re the smartest Canadians. Paradoxically, they’re the worst off. Here are the chief problems of our most troubled provinces and what’s being done to solve them

ERIC HUTTON

After eight years in Confederation our tenth province, Newfoundland, is going to find out whether it has been worth it, or whether the island would have done just as well on its own. A royal commission of two chief justices, John McNair of New Brunswick and Sir Albert Walsh of Newfoundland, and a University of British Columbia economist, John Deutsch, will conduct a year-long enquiry to determine whether the “financial consequences of becoming a province" have brought Newfoundland’s living standard to the level of other provinces. If not, what should the federal government do about it?

As far as most Newfoundlanders are concerned right now, their picture seems perfectly clear: they haven’t done as well as they expected and they're not doing as well as the other Atlantic provinces. On the other hand, as far as the other Atlantic provinces are concerned, even if Newfoundland's situation did compare with their own it would still be pretty bad when compared with the rest of Canada. For while nine out of ten Canadians are happily aware that the country is enjoying the most buoyant prosperity of its history, the tenth, who lives in the Maritimes, has somber evidence that the Canadian boom becomes a whisper by the time it reaches any of the Atlantic provinces.

The extent to which Maritime economy lags can be told in simple figures:

+ The average Maritime income is thirty-seven percent under the nation's average (without Newfoundland it would be a mere thirty-three percent under). Yet Maritimers pay more for many things they eat, wear and use than other Canadians.

+ Maritimers make up a little more than ten percent of the population, yet they continued on page 52

“When a Maritimer counts his share of ten years of prosperity in Canada he feels shortchanged”

earn only enough to make them liable for four cents of Canada’s income-tax dollar.

It's not a case of old-fashioned depression striking in the midst of plenty, either. Employment in the Maritimes has long been at or near the "no labor surplus” level. Maritime statistics, when not compared with the rest of Canada’s, are even fairly respectable. It’s just that this part of the country hasn’t been getting rich along with the rest of Canada.

It’s a situation, too, about which the rest of Canada is increasingly aware. The Newfoundland Royal Commission is only another spotlight of a number turned recently on the economics of Canada’s “far east." The most recent was the 1957 federal-government budget, which made two specific overtures to the Maritimes. The budget raised from twenty percent to thirty percent an existing subsidy on outbound rail traffic. It also offered a plan whereby the federal government would build and operate power plants and supply New Brunswick and Nova Scotia with power at cost.

Another spotlight on the Maritimes was the launching of the program of the Atlantic Provinces Economic Council, a grass-roots, self-help organization dedicated to the motto “let's quit blaming the Other Fellow for our troubles” and to the task of tracing and plugging the chinks and blank spaces in Maritime economy.

A few weeks later appeared the preliminary report of the Royal Commission on Canada’s Economic Prospects, commonly called the Gordon Report. This dealt with many aspects of Maritime economy, and a forecast of what Newfoundland will demand of the federal government. In its brief to the Gordon Commission the island government spoke of “a great deficiency of roads, hospitals, schools, sewage and sanitation works and other public utilities.”

But to Maritimers one paragraph in the Gordon Report virtually monopolized interest: "If it should turn out that there is not the necessary combination of resources in sufficient quantities to permit a substantial rise in living standards in the Atlantic region, generous assistance should be given to those people who might wish to move to other parts of Canada where there may be greater opportunities.”

Then, amid much head-shaking and hand-wringing over the poverty of the Maritimes, the region made fresh headlines. This time it rather delighted the Maritimers" dry sense of humor: the

federal government announced that the Canada Council to finance and foster Canadian arts could be launched immediately because a hundred million dollars was available from the duties on the estates of Sir James Dunn and Izaac W. Killam. Maritimers everywhere did not miss the opportunity of commenting. “It required the savings of two poor Maritimers to give Canada culture.”

Maritimers have never had reason to be modest about the contribution the region has made in brains and leadership to the nation. They will readily point out that proportionately twice as many natives of the Atlantic provinces find their way into the Canadian Who's Who as do

people born in other provinces. One historian maintains that the Maritimes are “the Canadian Scotland, exporting talent which achieves a disproportionate share of important positions in Canadian and United States political, educational and industrial life." The United Church of Canada depends heavily on the Maritimes for its ministers because, as one church official puts it, "Maritime families still consider it an honor to have a son in the church, while even devout families elsewhere try to steer their sons to more profitable callings.”

So, regardless of how well-intentioned was the Gordon Report's suggestion that some Maritimers might be better off elsewhere. it was greeted with indignation in the Atlantic provinces. George Nowlan, a Nova Scotia MP, made a sharp reply in the Commons: “If they take us away there’s going to be no foundation stock left—where would Canada get its leaders?" Back home, though, exasperation was tempered with laughter when a crusty New Brunswick farmer growled in a radio interview: “I don't know what all the fuss is about—Maritimers are always willing to go up to Canada and straighten things out for them.”

Steamships were a death blow

But most Maritimers would be willing to pass up some credit for a little more cash. When he counts his share of ten years of unprecedented prosperity in Canada he feels he has been shortchanged. He might even concede (a) that the Maritimes lack some of the natural resources that have boomed other areas, (b) that he has no intention, anyway, of chasing dollars as frenziedly as, say. his Ontario counterpart, and (c) that the average Maritime income has nearly doubled in real value during his lifetime and would look pretty good if the statisticians didn't insist on comparing it with the rest of Canada.

In any case, Maritimers don’t attribute their troubles primarily to recent events. When they’re being diplomatic they say their economy has been a problem “for three generations” or for “nearly a hundred years.” When they’re not, they arrive at the same date by saying bluntly, “ever since Confederation.” They remember that when the new nation first took stock of its people's affairs. New Brunswick's per-capita payroll in manufacturing industries was higher than both Ontario and Quebec; and that little Prince Edward Island had exactly the same rate of industrial employment as Ontario.

What are the Maritimes' principal complaints? Recently the government of New Brunswick drew up a list of the major factors affecting the region through the years. They include:

4* The coming of the steamship to destroy the Maritimes' proud, prosperous industry of buildtng wooden sailing ships. 4* The development of mass production and mass marketing which favored industries in dense population areas.

4» Tariffs which offset the Maritimes' advantages of closeness to export markets. 4* The opening of the Panama Canal which put Pacific Coast lumber into competition with Maritime lumber in Europe

that is making more products, and more money, than ever before in history, and a mineral potential that Maritimers are convinced has an enormously prosperous future. They believe, though, that Maritime economy is hindered by being treated as if it shared Canada’s boom.

For example, Maritimers say that lower incomes and native caution kept their consumer credit buying within bounds while the rest of Canada went on a “buy now, pay later” spree that Prime Minister St. Laurent called “cashing in on bearskins before we have shot the bears.” The credit crackdown by the Bank of Canada which recently resulted affected frugal Maritime borrowers as well as inflationhappy Upper Canadians. Premier Robert Stanfield of Nova Scotia complained dryly that Maritime farms and industries were being refused operating loans “because of a policy determined in Upper Canada that is in no way related to conditions here . . . curbs that the Bank of Canada put on credit were designed to arrest inflationary tendencies that were the result of a staggering economic boom — elsewhere. Industry here is not now—and has not been since Confederation — in any danger of growing too fast.”

Do they ran their own lives?

Most Maritimers join in the complaint that they have received skimpy benefit from the premium-sized Canadian dollar, but they suffer its disadvantages. It has cost them much of the export trade that once made the Maritimes prosperous, for one thing. It has lost business for Atlantic seaports because, other things being equal, it is cheaper for traders to ship through U. S. ports and pay charges in U. S. dollars.

Maritimers resent particularly having their lives run by “policy determined in Upper Canada.” They point out that since the government's Industrial Development Bank, organized to lend money to sound businesses unable to get help elsewhere, opened a branch in Halifax it has been making three times more loans to Maritimers than when applications were handled by a staff working out of Montreal.

Even minor manifestations of absentee control can exasperate a Maritimer. On a CNR train running between Halifax and Montreal a passenger ordered what the menu called its “luncheon special.” salmon salad. It turned out to be canned British Columbia salmon. The passenger eyed it with distaste. “This train runs through some of the world’s greatest salmon country.” he muttered. “But some man in a Montreal office decides that canned stuff from three thousand miles away is something special to a Maritimer.”

But the Maritimer is not without his special streak of optimism. Depending on where the traveler happens to be, he will currently hear much of one of the four giant construction schemes for which Maritimers hold high hopes:

4* A stone causeway to bridge nine miles of ocean, eighty to ninety feet deep, and link Prince Edward Island by road and rail to the mainland.

4* A gigantic tidal power plant at Passamaquoddy on the Bay of Fundy that would produce one million horsepower of electricity to be shared equally by New Brunswick and Maine.

4* A ship canal across the isthmus that joins Nova Scotia to the continent. The Chignecto Canal, first proposed by the French more than three hundred years ago and on the verge of being started a dozen times since, would bring Saint John five hundred sea miles nearer Montreal and in effect make the Bay of Fundy part of the St. Lawrence Seaway.

4* A giant international seaport and in-

and in the Atlantic seaboard markets.

In recent years, though, three complaints have loomed largest in the minds of Maritimers. One concerns the railwayfreight-rate structure that puts the Maritimer at a disadvantage in buying from or selling to the rest of Canada. Another is the suspicion, as some express it, that the Maritimes are being penalized “to control the boom we haven’t got.” The third is resentment that the federal government failed to establish war industries in the Maritimes.

It is true that the government’s reasons

for concentrating war industries in central Canada may seem logical. Nevertheless when Maritimers saw big factories being built or subsidized in Quebec and Ontario by the federal government and later sold at a big discount to their operators to become the foundation of great industrial prosperity, they were understandably bitter at their own empty-handedness.

How far an inheritance of ex-war industries could have gone toward solving the Maritimes’ economic problems is debatable. The region has some deep-rooted disadvantages: a comparatively small

percentage of first-rate farmland; a primary industry, coal, that is struggling for survival against receding coal seams and encroaching competition from fuel oil and natural gas; a highway system that is inferior and in places rudimentary compared with the paved networks that have contributed to prosperity elsewhere in Canada.

But the Atlantic provinces have assets, too. Among them are an efficient and highly productive forest-products industry that is being managed on self-perpetuating principles; a fishing industry

diistrial metropolis on the Bay d'Espoir, a deep, sheltered ice-free inlet in southern Newfoundland that is being spoken of as the eastern terminus of the seaway, where lake vessels could stack cargoes in summer for winter trans-shipment, and where Newfoundland power and raw materials would be fabricated into many products.

The tidal power project, familiarly called 'Quoddy, and the Prince Edward Island causeway are in the realm of nearfuture possibilities. Canada has put up $300,000. and the United States $3,000,000, for a new survey of Quoddy's potentialities, and the governments have asked the surveying engineers to hurry their report. A few weeks ago Hon. George ('. Marler, minister of transport, said the causeway "deserved serious consideration.”

The other two projects are more dreams-that-might-come-true. But. as one Maritimer put it. "we like to have something to dream about while we work away at the grass roots.” And at present the people of all four Atlantic provinces arc engaged in a broad grass-roots program to cure their peculiar ills. The movement, known as "operation bootstraps” or more formally the Atlantic Provinces Economic Council, was started less than two years ago with one director, one secretary. an over-all budget of $26.000, the support of most Maritime businessmen and of some politicians. It has taken root and flourished.

APEC’s objective is to find the answers to the myriad economic problems of the four provinces. APEC wants to be able to advise on questions as small as. “Is there room for another hot-dog stand on the Cabot Trail?" and as big as. "Are conditions good for a multi-million steel mill in New Brunswick?"

APEC’s researches have already led along some strange routes. Like the journey taken by a certain one-pound package of frozen codfish. The fish was caught by Grand Manan Island fishermen in New Brunswick waters and sold to a processing plant on the Nova Scotia shore of the Bay of Fundy. There it was filleted, frozen and shipped, as forty-five percent of Maritime fish is shipped, to the U. S. A Boston broker sold the frozen fish to a company that sells food freezers and frozen foods to householders as a "package deal.” Part of the Boston fish purchase was shipped to Montreal to be distributed to Canadian customers — including those in the Maritimes.

Mountain of cheap potatoes

I hat wandering fish is by no means exceptional in Maritime marketing, which is replete with paradoxes. In Fredericton, capital of New Brunswick nóú íl.c-k ...o tof the Saint John River apple region, grocers do a brisk trade in British Columbia apples.

Maritime growers ship tons of fresh blueberries to the United States, and Maritimers buy them back, frozen, at double the price. Natural cheese is sold to processing plants outside the provinces and bought back at a high markup in the form of processed packaged “cheese foods. Maritimers dig literally mountains of high-grade, low-priced potatoes, then pay greatly inflated prices for potatoes imported from competitors in the United States, French-fried and frozen in a plant near Montreal and stored in Toronto warehouses until ordered by grocers in the Maritimes.

“At first glance it’s easy to decide that somebody must be to blame,” says Watson Jamer, manager of the Ford Motor Co. of Canada for the Maritimes and one of the founders of APEC. “But when you try to pinpoint the blame it turns out that we just don’t have the concen-

tration of customers to justify more than our meagre facilities for receiving, grading, processing, packaging, storing and marketing our own farm and sea products.

“If we had one city with as large a concentration of the consumer population as, say. Toronto has in Ontario or Vancouver in British Columbia, then we could attract both the capital to finance plants and equipment and the experienced manpower to operate them."

Lack of local capital to help finance a more efficient Maritime economy

arouses some bitterness among the provinces' planners. Clarence Gillis, Cape Breton MP, blames Ontario and Quebec financiers for ignoring the Maritimes. “The curtain is pulled at Montreal and there's no thinking east of Montreal," he said recently. “That’s where Canada ends as far as risk capital for industrial development is concerned."

There are reasons for this reluctance, of course.

Not long ago a Montreal industrialist with interests in five companies, one of which has a branch in Halifax, was asked

why he didn't open branches of his other companies in the Maritimes. “Simple," he answered. "With your spread-out population it takes four distributors to sell the volume one distributor handles in Ontario or Quebec.”

The extent to which Maritime population is “spread out" can be gathered from the picture in the most populous Maritime province: Nova Scotia's 700.000 people are divided among nearly as many cities, towns, villages, hamlets and populated crossroads as Ontario’s five and a half million. This scattered settlement

helps to create a vicious circle. The lack of concentrated population discourages industry; the lack of industry discourages concentrated population.

Maritimers whose job it is to lure industries to the region have become accustomed to that and a number of other standard objections — high freight rates, mediocre road networks, high cost of electricity, lack of top-skilled technicians. Occasionally a disadvantage is cited that they haven't encountered before. Not long ago a prospect who had looked over the Halifax area as the possible site of a plant gave as the final reason for his adverse decision: “I couldn’t ask my company’s executives to live in a place that offers so little night life and excitement.”

Some cynic has said that if the freightrate question didn’t exist the Maritimes would have had to invent it. That’s unfair because freight rates are an unpleasant reality to Maritimers. For thirty years federal and provincial governments and various interested bodies have tried to soften the penalty of doing business a long rail haul away from the nation’s principal markets.

One bold proposal (quite seriously put forward by assorted sponsors) is to treat freight rates like postage rates—a uniform charge throughout Canada regardless of distance. (Jp to now, though, the authorities have settled for piecemeal measures: a twenty-percent cut in freight charges within the Atlantic region; subsidies on feed shipments from the west, on agricultural lime needed by many Maritime farms, on coal shipments. These measures may not solve the problems, but they’re not trivial gestures. Last year freight-rate subsidies, which the government prefers to call “subventions,” amounted to more than $23.000,000.

Another approach to “prosperity despite freight rates” is to manufacture suitable articles, high in value in proportion to weight and bulk, to keep the freight content of their cost low when they are ofTered for sale in outside markets. Products that have tackled the freight-rate bogey with conspicuous success include candy, brushes and highquality shoes. Other products that APEC officials maintain can be produced successfully in the Maritimes are plastics, clothing, electronic equipment.

On the other hand, Maritimers themselves complain that the phrase “freight rates” has been used to cover a multitude of unwarranted overcharges by merchants. “Our grandfathers, fathers and now we keep hearing that ‘freight rates’ refrain,” said one Maritimer. “If you ask why a shirt costs a dollar and a half more than the identical article in Montreal, the answer b ne.;"ht rates-’ Why does frozen orange juice sell for a quart«,. « and sixteen cents in Toronto?: ‘freight rates.’ A couple of cents in freight certainly grows muscles before it gets on the store shelves. We have a saying down here that ‘all freight travels first class to the Maritimes.’ ”

Certain small industries do flourish in the Maritimes, provided they stay small. Pursuing the idea that clothing manufacture would be an appropriate business for Maritimers, APEC investigators made an interesting and little-known discovery: dozens of small outfits were operating busily and prosperously in the production of clothing, prosperously enough, at any rate, to support two or three workmen and a proprietor who doubled as shop foreman and trebled as traveling salesman. Typical procedure was for the proprietor to go off on two or three selling trips a year, taking just enough orders to keep his small shop busy until his next trip.

One result of this method is that many a Maritime retailer is never called on by

these manufacturer-salesmen, and in fact do not know such local industries exist. When a typical small manufacturer was asked why he did not try to expand, for example by hiring a full-time salesman and concentrating on production, he explained:

"If I hire a salesman, soon he will be selling more pants and workshirts than I and my men can make. So I’ll have to hire more men and teach them to work my way. This shop I own will become too small and I'll have to get a bigger place and rent this. Today I’m neither a landlord nor a tenant; if I expand I’ll be both. Next, the extra workmen will make more clothes than one salesman can sell, so I’ll have to hire another and my inventory will pile up until his orders catch up. I'll have to worry about freight rates and drafts, invoices and commissions and insurance. Soon I will be no longer running a business; my business will be running me. No thanks . . .”

They have to import pilots

There is, however, no general lack of enterprise in the Maritimes. There are, for example, larger oil companies in Canada than Irving Oil Co. Limited, but no bigger individual oil man than K. C. Irving. There are at least three larger airlines ;n Canada than Maritime Central Airways, but no bigger individual airline owner than Carl Burke, founder and boss of Maritime Central, an airline that grew so fast from a one-plane feeder service in Prince Edward Island that, although the majority of his eighty-three pilots are Canadians, he has had to reach out into nine other countries to find trained men to man his planes.

Some Maritimers have shown that enterprise can overcome the “sell cheap,

buy dear” cycle that has plagued the Maritimes. For years the farmers of Carleton County, N.B., shipped peas to Maine to be processed into frozen peas. But today the McCain brothers of East Florenceville are freezing a big share of the county’s crop in their modern freezing plant.

This year a start is expected to be made on a million-dollar freezing plant, fostered by APEC research, in the Saint John suburb of Lancaster. It is hoped that the plant will become a nucleus for a cluster of food-processing plants and packaging factories to improve the distribution of Maritime-grown produce and keep “markup money” in the region.

In 1955 the Atlantic provinces bought nearly two million pounds of poultry from other provinces, and some Christmas turkeys from as far away as California. But a new figure showed in the statistics: half a million pounds of poultry had been shipped into Ontario and Quebec. Only a few years before the Maritimes’ “poultry industry” had consisted largely of unattractive birds raised in small flocks by farm wives as a sideline. Today many families in the Annapolis Valley of Nova Scotia are raising flocks numbering in the hundreds of thousands. Many other forms of efficient diversified farming have come to the valley where once apples were supreme. Recently a veteran Annapolis farmer complained bitterly to a provincial agricultural representative: “I remember the wonderful days when a man sprayed his orchard in the spring, harvested and sold his apples in the fall and curled all winter. Now the new generation wants us all to work every day in the year.”

The Maritimes’ fishing industry is described by provincial authorities (and even by some men in the industry) as “a

bright spot in the economy.” Cooked and frozen fish sticks have boosted fish consumption and the industry is confident of added stimulus to sales by two innovations: cooked, frozen and individually packaged servings of fish and chips, and the use of antibiotics to keep fish fresh long enough to reach millions of potential new customers.

Many Maritimers feel, though, that individual “bright spots” are not enough to lift living standards anywhere near those of the rest of Canada. They feel that major operations, literally, are needed. That is why they never tire of discussing gigantic projects like 'Quoddy. the Chignecto canal. Newfoundland's superseaport and the Prince Edward Island causeway.

Islanders would welcome that causeway almost as much for the cheaper power it might bring them, over the new overland route from New Brunswick, as for the convenience of being able to drive cars, trucks and trains without a ferry interlude. The island, with its scattered population served by power generated by imported fuels, has one of the highest power rates in North America.

But islanders ponder one knotty problem that the causeway will bring: who will pay for the new roads that increased traffic will require? Among the things that kept P. E. I. out of Confederation six years after her sister Maritimes had joined was the question of transportation. Islanders considered an internal railway as essential as a train ferry to the mainland. They got it. But today the passenger trains are gone, freight trains run two to three days a week, and Premier Alex Matheson predicts that by 1973. P. E. I.’s centennial year as a Canadian province, “all the rails will be rusted.” Meanwhile car and truck traffic runs on roads built out of a small province’s budget.

The reason for the demise of P. E. I.’s passenger trains, as described by Premier Matheson. was a saga of frustration: “A farmer living twenty miles out of Charlottetown wanted to come into the city on a winter’s day to do business. He'd have to leave home before daylight to drive the average of three miles to catch the 8.20 train. This would get him into Charlottetown at eleven, and he’d find the people he had to see were beginning to think of lunch. If he waited until after lunch to do business, that didn’t give him much time because he had to get his train at 3 p.ni. to get him back home long after his suppertime, tired out and with nothing accomplished. That was why the trains had to go: they didn't serve the people.”

It should be made clear, though, that if none of the projects dear to Maritimers are realized they will continue to make the best of things. The Gordon Report took that characteristic of the Maritimer into account when it suggested that perhaps many of them would be better off in other provinces:

"Many people in the Atlantic region would not exchange on any terms their more peaceful way of life and the comparative ease and quiet that goes with it for the noise and the bustle and the tenseness one associates with living in large metropolitan areas like Montreal, Toronto and Vancouver.”

A young Saint John businessman nodded amen to that paragraph and added: “in Montreal I have to run for buses. In Toronto 1 don’t even try running because I know the door will close in my face. In Saint John I walk to my bus. and the driver waits. That to me is the difference between the Maritimes and Upper Canada. When the time comes that I have to run for Saint John buses, I'll move out.

I might as well be making the extra money, then.” -fa