ALBERTA'S AFFAIRS

Commonwealth and Foreign

[To the Editor of THE SPECTATOR.]

SIR,-It is natural, but unfortunate, that the Eastern Cana- dian, and even the British, Press should have come to regard Alberta as the " guinea-pig " of the Empire. For this attitude of mind has delayed understanding of the central fact that the rise of the Social Credit party in Alberta is itself a symptom.

It represents only one of the sequels of severe, protracted depression which "orthodox finance," as applied in Canada, proved impotent to allay, and which has left the West in a desperate mood, ready to try almost any expedient.

Aberhart, for a time, provided a figure of inexhaustible fun to those so minded. His weekly sermons at the Prophetic Bible Institute, in Calgary, with their odd mixture of Funda- mentalist theology and heterodox economics, were quite as amusing as Hitler's notions of ethnology—before the Nazis came to power. When Aberhart won his remarkable victory, in August, 1935, the pundits developed an attitude of amused toleration towards him. He would be sobered by the responsibilities of office, they said, and his Government would end up by being as conservative as that of the United Farmers which it had supplanted. Since then, however, they have received a succession of shocks, culminating in Alberta's drastic debt-cutting legislation.

Swiftly the chorus of comment has changed its tune. Aberhart, so long the butt of Eastern wits, is now represented as a sinister figure, or at least as holding communion with the Devil. But whether Aberhart be represented as a little Hitler, a little Lenin, or—as is currently suspected—a Kerensky preparing the way for a younger, more radical leader now admitted into the Government, he is beginning to assume some of the attributes of a dictator. His threat to control

the Alberta Press by a system of licensing is not empty. Piquancy is lent to it, however, by the fact that the Social Credit party has openly acquired control of one paper, the Calgary Albertan, which would doubtless enjoy seeing its rivals licensed.

In this overcharged atmosphere, few commentators present Alberta's case in perspective. Alberta and the whole Canadian prairie is caught "between two wars," as it were. The Great War, with its high prices for wheat, led to the tearing up of the prairie sod and the indiscriminate production of wheat.

With the post-War slump in prices the prairie knew depression before the Great Depression, and in particular felt the burden of debts. The fear of war, the rise of economic nationalism, and the desire for autarchy upon the part of her customers has raised severe problems for all Canada. Meanwhile, the wheat-growing West has run the gamut of agricultural mis- fortunes since 1928. First it had bumper crops which did not sell ; then it had a huge carry-over and disastrously low prices. Now it has drought and is within sight of scarcity.

Much is made of the present radical temper of the West. Less is heard of the astonishing endurance of the prairie dwellers who have borne the severest deprivations with stoicism. The wonder is, not that economic discontent has arisen, but that so much sanity has been preserved. Aberhart prcached his gospel of "basic dividends" and dangled the carrot labelled" $25 a month" before thousands of men,and particularly women, who had almost forgotten what it is like to have ready cash. The doctrine that lack of purchasing power was the root of all economic evil naturally had force with these thousands. Beside it the counsels of "sound finance" and tightening the belt fell very fiat.

Whether Social Credit proper can ever receive a full trial in Alberta remains doubtful, because the Dominion and not the Province has control over currency and banking. Meanwhile, Aberhart's experimentation with scrip has been on a trifling scale. (At the time of writing, only $250,000 of it has been issued.) But preparations are being made to go ahead with "basic dividends" on a modest scale, and monthly payments of $5 to $10 are being mentioned, in place of the $25 figure used as an " illustration " in the election. The problem of debts, however, both public and private, has been tackled in ruthless fashion. Interest in Social Credit experimentation pales before the concern felt in Eastern Canada over the effects of Aberhart's treatment of ordinary credit.

To begin with, by Order in Council, the Province has provided for a cut in interest rates upon Provincial securities amounting to 50 per cent., which, however, are not to fall below 2 per cent. per annum. Again, subject to formal promul- gation of the law, interest on municipal obligations has been reduced to 3 per cent. In another direction, a creditor seeking to sue or to foreclose now loses his right to appeal to the courts over the head of the Debt Adjustment Board, which happens to be a one-man board. But the most drastic provisions of all are contained in the "Reduction and Settlement of Debts Act," now actually in force. Under this law, debts contracted before July 1st, 1932, are classed as " old " debts, and no interest is payable upon them. Furthermore, all interest paid thereon since July, 1932, is to be deducted from the principal, which itself is to be paid off in ten annual instalments. On " new " debts, contracted since 1932, interest is fixed at 5 per cent. maximum. This law has created consternation amongst banks, insurance companies, mortgage companies and all who do business in Alberta upon credit, not only because of its immediate effect but also because of its influence upon the credit structure of the whole country.

Naturally, in a debt-ridden Province, such a programme is proving popular—with the debtors. It is generally agreed that if Aberhart were to go to the country today he would be re-elected with an overwhelming majority. The impetus for this attack upon debts, however, seems not to have come from Aberhart himself, but from his young Minister without Portfolio, J. L. P. Maynard. Far more radical than Aberhart, Maynard is credited with having effected a palace revolution within the Social Credit Government. Certainly he has forced the pace.

It has been strongly suggested that the Dominion Govern- ment should intervene by exercising its seldom-used right to disallow Provincial legislation. It seems likely, however, that the Dominion will leave it to private interests to test the validity of the new legislation in the Courts, thus avoiding the odium of a frontal attack upon the Aberhart Government. Though the Social Credit legislation, too, may well be contested on the score of legality, there is less disposition to challenge its validity, partly because of the desire to have a practical trial made of Aberhart's theories, partly because it is less immediately threatening to Canadian credit than the debt legislation.

Two recent developments are of especial interest. On the one hand, the Alberta Bondholders Committee have published a very full and careful report on the financial situation of Alberta. In sum, it finds that the Province is solvent, and can meet its interest payments in full, if it so desires. The Province, according to the report, could meet all its interest obligations for this year, without drastic economies or new taxation, and end up with a deficit of only $192,000. In these circumstances the bondholders see no justification for arbitrary reduction of the interest on Provincial obligations which would amount to $2,300,000 this year and $3,600,000 in future years. The Bondholders' Committee offers to submit its contentions to an impartial commission and thus to join with the Alberta Government in thrashing the whole matter out.

The second development helps to point the way out for Canada. It is the agreement reached between the Dominion Government, the Saskatchewan Government and the mortgage companies with reference to remission of farm debts and taxes in the drought areas of that Provinee. By voluntary action, some 875,000,000 of debt has been wiped cut, and the rate of future mortgage payments has been made dependent upon the size of the crops harvested. It is probable that a similar arrangement will be worked out for Manitoba. But the important thing is that it may help to reassure the West that there is hope of debt accommodation along voluntary lines, as distinct from repudiation. . The great danger seen in the debt-cutting legislation of Alberta is that "repudiationism may spread. The Saskatchewan settlement may do something to stop that.—! am, Sir, &c., YOUR CANADIAN CORRESPONDENT.