Finance
Political Bribery and Canadian Credit, •
AMONG many enquiries I have received during recent weeks concerning investments, . some have related to the future of Canadian securities. It has been difficult, however, to give any very definite reply to such enquiries . if only for the reason that the outlook in Canada seems to be so complicated by political considerations. ' Having regard to the long period of depression and also to the fact of the rally which has taken place in industry in the United States, there are many things which might be said in favour of an improvement in Canadian securities, especially taking into consideration the vast natural resources of that, great country., It SG happens,lowever, • that within less than two months' time there will be • a General Election in Canada and, according to the various cable advices from Canadian centres, there seems to be a general anticipation that the result will be the, defeat of the present Ministry with a; return of the Liberal Party to power under the leadership of Mr. Mackenzie King. •
POLITICS AND ,FINANCE.
Needless to say, I am not concerned here with the political aspects of the campaign, but there have been certain events and developments within recent months in Canada which have indicated that in the bidding for votes sound financial principles have tended to be thrown overboard. It is only quite recently that the threatened default on the external bonds of the City of Vancouver gave a blow to Canadian credit as a whole, while the repudiation of the Ontario Power contracts early in the present year also, had an adverse effbct upon- pon tariadian credit.
£5 A MONTH.
The latest example, however, of the extent -to which :political candidates may go in bidding for support has been furnished by the Province of Alberta. At the recent Election held in that Province the " slogan " of the Secial Credit Party was ' £5 a, month to every citizen," and although the scheme was opposed by, the Conservative Party, the bribe seems. to have been completely successful, securing for the Social Credit ,League an overwhelming victory at the Election.
It is estimated that if this pledge were carried out it would involve a cost to the .Provincial 'Exchequer of something like £24,000,000 annually, and not unnaturally the question is being raised how such a situation could possibly be met. Nor has public anxiety on that matter been satisfied by the statement of the leader of the 'Social Credit League,- Mr. A:berhart, to the effect that-nearly eighteen months' preparation., will be required `befOre the scheme can be put into operation. Mean- • while, the London Stock Exchange has expressed its .own opinion both as to the workability of the scheme and 'the nature of its origin by marking down heaVily all Canadian Provincial and Municipal obligations, _while in Canada feeling has been so stirred that the-re are predictions of new Elections in Alberta before Six Months are over. The Premier of the Province ,of Quebec has declared that the situation which has arisen as a result of the Social Credit supporters' victory in Alberta con- stitutes an economic problem which affects all' Canada; • UNWORTHY TACTICS.
In this brief article I do not propose to consider in any detail whether such a scheme as that which is contem- plated by the Province of Alberta is feasible or. not, and by that I mean _feasible on sound lines, conferring benefit not merely upon the recipients but upon the whole Province. I do not believe for if inOrnent that it is feasible; but there is another aspect of the matter which I would prefer at this juncture to emphasise, name y, that when proposals such as these are made by politicians at General Elections almost immediately the effect is seen in a decline in the securities of the country directly affected. I have .no hesitation b-L saying that the cause is to be found in an instinctive reaction to the smack of political bribery which characterises and condemns in advance the whole proposals.
ILLUSORY BENEFITS.
If, for example, the Election had taken place in this country and any one political' party had as a foremost plank in its programme declared that if returned to power there would be a payment of £5 a month to every eitizeO, I believe that to all who had a real concern for the country • and who in addition had anything like an understanding of the very rudiments of economics and finance, the pro- posal would be obnoxious for at least three very good reasons.. In the first place, I think every honest and right- minded citizen would ask himself what right he had to - expect that-as the result of his vote in a certain direction he should receive from the State £60 a year. In the second place, the whole affair would so reek of political bribery, as to weaken confidence on the part of the public in the Party responsible 'for the scheme. And, in the third place, there would, 'I think, be a recognition by very many that the-final benefits would be wholly illusOry. If the proposed -g60 per annum were obtained by 'an increased tax on capital those chiefly affected would simply be taxing themselves to' receive possibly a smaller amount than that represented by' the tax: If, -on the other hand, the scheme were to be made operative by some inflation of the currency; it would, of course, soon be found that the increased income was no' real increase as reflected in purchasing power owing to the general rise in prices. Indeed, one could almost wish that the " 15 a month, to every citizen " scheme could be put into force in the ProVinee of'Alberta if. only to note the final result of the experiment. It might serve to restrain the movement
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