Commonwealth and Foreign
CANADA AS WAR WORKSHOP?
By R. S. LAMBERT Ar the beginning of the war, when the United States Arms Embargo was still in force, and it was still uncertain whether it would be removed, many people expected that Canada would become the arsenal of the Empire, and would serve as a supply centre to Great Britain and France for all kinds of munitions and implements of war. This expectation was heightened by the enormous expansion of Canada's natural resources that had taken place since the beginning of the last war. Thus, since 1914, Canada's production of gold has multiplied sixfold; of copper, eight-fold ; of lead, over ten-fold ; of nickel, over four-fold ; of zinc, nearly fifty-fold ; of wood-pulp, five- fold ; and of petroleum, thirty-fold. The total acreage of her field crops has increased from 33+ to 59 million acres, and her water-power from xi to over 8 million horse-power. Her factories have increased in number during the same period from 21,300, employing 515,000 employees, to (in 1937) 24,800, employing 66o,000 ; while the value of the products of these factories has risen from $1,400 millions to $3,630 millions.
But since 1931 Canada has experienced a trade depression at least as severe as that which prevailed in the United Kingdom, and her rate of industrial unemployment has risen even higher. Moreover, recent statistics, published by the Workers' Educational Association of Canada, show that the standard of living of the Canadian worker is not as high as it should be. The Canadian Welfare Council, and other bodies, have calculated that a family income of $1,100 a year is the minimum required for bare subsistence ; but the average Canadian worker's yearly wage amounts to only $875. Naturally, therefore, Canada was glad to anticipate an access of prosperity which large orders for war supplies for Britain and France might be expected to bring. But it soon appeared that both these countries had started the war with big accu- mulations of war stocks and materials in hand ; so that orders for additional supplies were slower in reaching Canada than had been expected. Nevertheless, there was a sudden increase in the demand for certain commodities which Canada produces in large quantities—such as nickel and wheat—as well as for ethers which Canada usually produces only in small quantities, or even imports from abroad—such as sugar, aeroplanes and munitions. The country, therefore, began to expand its pro- ductive capacity in already existing fields, as well as to open up new lines of production, such as shipbuilding.
While, however, an artificial stimulation of Canada's pro- ductive economy may be necessary for war purposes, this stimulation raises serious problems for Canada's future. What will happen at the close of hostilities, when orders for war supp:ies begin to fall off? Canadian manufacturers might then find themselves over-capitalised, and liable to incur further huge costs in converting plant and equipment to peace-time Purposes. Again, the diversion of labour to new war enter- prises may mean that when peace returns many skilled workers will be thrown out of employment, because their technical skill is only adapted to the requirements of war—and this quite apart from the problem which normally arises at the end of any war, of finding work for demobilised soldiers.
A similar prospect faces Canadian agriculture. After the last War, when wheat-growing was resumed on a large scale in continental Europe, Canada suddenly found herself burdened With an excessive wheat acreage, which she had expanded during the war to meet the needs of the Allies. This time the Dominion Government intends, if possible, to prevent a repeti- tion of such excess ; and to see that whatever marginal land has to be brought under cultivation for war purposes is taken out of production again after the war, unless the resultant peace establishes such settled conditions throughout the world, with lowered tariff barriers, as will enable more buyers to be found for Canadian wheat. Naturally, also, any war-time expansion of agriculture and industry in Canada would throw a heavy burden on her railway-system, bringing it, indeed, a temporary prosperity, but also causing considerable deterioration in rolling stock and equipment, which would entail a large capital outlay after the war.
The war economy of Canada, however, is dependent not merely upon the needs of Britain and France, but also upon the policy and position of the United States. For instance, if by any chance the latter were to decide to grant credits direct to Britain and France, the Allied Governments would probably place the bulk of their war orders in the States, and proportionately fewer of them in Canada ; because many of the goods which they want can be produced at a lower price in the States than in Canada—for instance, machinery— and can be delivered more quickly. On the other hand, if the United States were actually to enter the war on the side of the Allies, this would stimulate Canadian production, since the States would, for some time as least, hold back, to supply their own needs, many of the products which they are now producing in anticipation of the Allied demand.
What, then, has been the effect upon Canada of the action of the United States in lifting the Arms Embargo, and revising its Neutrality Act? In the first place, this action enables the Allied Governments to place orders for supplies of arms and aeroplanes with American firms, which, being better equipped for such production, can deliver them sooner than the parallel, but fewer, firms in Canada. One effect of the neutrality revision, therefore, has been to check what might have become an immense but lop-sided expansion in the armaments and aeroplane industries of Canada. This has the advantage, howevcr, that at the end of the war Canada will possess less excess capital equipment, and will therefore have to face less industrial dislocation than would otherwise have been the case. On the other hand, those clauses in the revised Neutrality Act which prohibit the granting of loans and credits to belligerents will have an opposite effect. For, though the Allied Governments can now buy most of what they want in the States, they have only limited means of paying for their purchases. Under the "cash and carry" system, belligerents must pay for what they buy in the States on the spot, i.e., either by gold, or by the sale of repatriated securities, or by exports ; and these three resources together are unlikely to prove enough to pay for all the supplies required. Therefore, the Allies may be expected to place in Canada a growing number of orders simply because they can there obtain the necessary credit.
Lastly, the clause in the revised Neutrality Act which pre- vents American shipping from approaching European belligerent ports will probably bring increased business to the Canadian railways, since the purchases made by Britain and France in the United States will be increasingly carried through Canada to be loaded on ships in the River St. Lawrence, and at the maritime ports, in order to take advantage of the short North Atlantic convoy route.
In conclusion, then, the trend of events to date seems to promise Canada a moderate agricultural and industrial ex- pansion, whose rate of growth is dependent on future U.S. policy. The course of Canadian stock markets—boom in the first month, set-back and irregular movements more recently— reflects the extent to which early exaggerated hopes are now settling down into a more healthy but more restrained optimism. This is not going to be a get-rich-quick war for Canada—which is just as well.
Previous page
