The generalization of Walter Bagehot that successful administration “depends on a due mixture of special and non-special minds” has lost none of its importance with the passage of time, for the problem of combining competent administration with democratic control is more urgent today than ever before. Bagehot contended that the Cabinet Minister, the “non-special mind,” served a double purpose: he not only enabled a democracy to control the civil service, but he also made a genuine contribution to its administrative efficiency. The specialized civil servant, if left to his own devices, tended to become narrow in outlook, careless of the public convenience, and restricted by departmental routine; and the important secondary function of the Minister was to correct these failings by supplying a fresh mind and a different point of view.

The government of Great Britain still furnishes, as in Bagehot's time, the best practical application of this principle, and the high standards maintained by many of the departments bear testimony as to its essential truth. The need for this interplay of “special and non-special minds” is perhaps best seen in the history of the War Office, a department which by its very uniqueness in several respects presents in exaggerated form both the difficulty of the problem and the virtue of the remedy. The War Office is thus considered not merely as a sample department, but one which places, as it were, a magnifying glass over the general problem of departmental administration elsewhere.

I am going to speak on the Canadian aspects of the largest and most difficult problem with which the countries of the world are faced—that is, the method and characteristics of government and the ends it ought to serve. The world is in a state of anarchy today because there is universal demand that the scope and purpose of government shall be widened without any common agreement, either within individual countries or between countries, as to precisely the ends to be served or the techniques by which they are to be reached.

Much is heard of a reversion by some nations to ancient types of tyranny, but this is to misinterpret the points of resemblance. The new dictatorships rest upon the consent of their people who still feel that it is their approval that gives validity to the acts of their leaders; this is a condition far removed from the old tyrannies where the mass bowed their necks to the yoke of slavery. What will happen when these leaders lose the consent of the ruled remains to be seen; the demonstration, whatever form it may take, may be nearer than we think.

But considerations of this nature do not enter into a discussion of the question of government in Canada. This is a country in which no question arises of the right and the power of the people to direct and change national policies if they can make up their minds about what they want. The machinery by which they can give effect to their decisions is available. In theory, then, if popular government is the answer to all problems and difficulties, we should be the happiest of people. But perhaps there never was a time when there was such a general feeling that our machinery of government is inadequate to our needs, that it is unable to deliver to the people those benefits and alleviations which they desire and which they think should be within the competence of government if they could only devise the right machinery. This address is an attempt at a brief study of these discontents, difficulties, and dangers in the light of an acquaintance with political affairs which covers more than half a century.

Canada is the Scotland of America, and a proof is before you. Scotland gave a King to England in 1603; today Canada gives a President to the American Statistical Association. James Sixth of Scotland and First of England whose vasty shoes I thus inherit is, I fear, “mixed grill” to many. He was an apriorist, and he was a pedant. Though his education was bleak and early as Stuart Mill's, he hadn't a good style. His personal appearance was against him, also his northern accent, even his table manners (he drank his cocky-leekie from the bowl). He was given to cursing and swearing. It is a chilling historicism. Yet, despite that Professor Laski still uses him austerely in the Encyclopaedia of the Social Sciences, from a boy with the Fortunes of Nigel in my school-desk I have liked its “principal personage” (as Scott called him) James. And of course he is the James of Jamestown, first permanent English settlement, first cradle of representative government, in these United States.

The economist ordinarily draws a series of supply curves designed to show the relationship between cost per unit and units produced on the assumption of static conditions and usually without regard to the frequency distribution of units produced in relation to cost per unit. Accordingly, he focuses his attention on definitions of the marginal unit, of the marginal cost per unit, and of the marginal producer. This is largely because he wants to equalize price and marginal cost to obtain a rational theory of value under his own premises. It is true that the economist will not ignore variations about the margin and will even concede that, under dynamic conditions, you may arrange producers in series from low cost to high cost and that for the time being differential entrepreneurial costs will become manifest. It is assumed, however, that these variations will tend to disappear the closer dynamic conditions settle down to static or equilibrium conditions. But the variations do not disappear and we would be extremely surprised if they did; indeed, the probability of uniformity of unit costs of production for any given number of producers is mathematically remote. The important thing, however, is the degree of variation that actually occurs under certain conditions or for a certain number of producers or for a certain industry. If we approach the problem in this way we may bring reality to economic analysis, improve the working tools of marginalism or correct its inadequate theoretical structure.

When the founder of the science which has become Economics came to write the title-page of his immortal work, he wrote boldly An Enquiry into the Nature and Causes of the Wealth of Nations. From this it might be thought that Economics was the science of wealth; that it would tell us what are the conditions which make one society wealthy and one poor, or which make for the growth and decline of wealth, in general or in particular. In fact, however, the science has not developed primarily along these lines, in spite of many interesting and important observations on this subject on the part of the standard writers. Especially in these days we seem to be interested not in Plutology—the science of wealth—but in Economy—the science of management, of budgeting, of the distribution of given resources. In other words, our interest has shifted from the study of the Nature and Causes of the Wealth of Nations to the study of equilibrium and disequilibrium.

In many ways this shift of emphasis is regrettable, in spite of the undoubted achievements of equilibrium theory. Part of the loss of prestige from which Economics has suffered is undoubtedly due to this very point. To the general public, equilibrium seems to be a vague and irrelevant ideal. Most governments, and most individuals, would rather be in chronic disequilibrium, and be rich, than be in glorious equilibrium, and be poor. The assumption which frequently underlies economic homiletics—that equilibrium is synonymous with riches and disequilibrium with poverty—is not one which can be long maintained.

Protection as an economic creed has been largely an expression of industrial capitalism in Canada. It is true that Ministers of Finance have endorsed the tariff as a means of providing revenue independently of the interests of manufacturers, that such groups as farmers at various times have favoured the imposition of duties on particular commodities, and that certain newspapers, political parties, and organizations of a reform or patriotic character have advanced the general philosophy of protection. But in none of these cases has the support of tariff increases grown out of any broad economic movement. The tariff system developed with the growth of manufacturing industries, and it was pressed upon the Government as a necessary policy by organizations formed to advance the interests of manufacturers.

The first organized attempt of Canadian manufacturers to secure protection of which we have knowledge was made at a meeting in Toronto, April 14, 1858, called “for the purpose of recommending such a readjustment of the tariff as would place the manufacturers of Canada on a footing of greater equality with those of the United States.” Previous to the meeting, consultations had taken place between a committee in Toronto, the Tariff Reform Association of Montreal, and manufacturers scattered throughout the country, and, as a result of these deliberations, a detailed draft of the necessary tariff changes was drawn up.

The economic activity of the state in the British Dominions conforms throughout to a common pattern, which might be described as neo-mercantilist, conditioned by the geographic and peculiar socio-economic forces of frontier countries. That activity issues in a complex of policies concerned with tariffs, bounties, quotas, marketing controls, and varied forms of financial assistance, or outright public ownership, in order to establish fresh industries, or to aid those existing, in the face of intense competition from more mature industrial competitors; to facilitate the exploitation of natural resources, and to increase populations. These policies broadly resemble the older mercantilism in that their end, where rationalized in terms of the state, is the achievement of national power and prosperity by the development of the ill-balanced economic life of sparsely settled colonies into economies integrated and diversified.

The interpretation of what contributes to national prosperity is determined by the contemporary interests politically powerful, and ordinarily it is a composite product of the many interests with free play under the parliamentary regime. Sometimes there is agreement among the chief interest-groups in recognizing that the claim of a small population to an extensive territory is precarious unless it furthers settlement and development. Such a recognition underlay the generous bonusing of the Canadian Pacific syndicate in the eighties in order to ensure a transcontinental railway, tariffs to develop in Canada east-west traffic, the numerous controls of Commonwealth and state respecting Queensland sugar to guarantee a white population in the Australian tropics, and the aggressive efforts made at some time in every Dominion to increase immigration.

The reform of the Canadian civil service in 1918 largely destroyed the influence which the members of Parliament had been able to exert on the administrative personnel; but it apparently did not diminish their interest in the subject. Some wanted to keep in touch with the service because they hoped to discredit reform and abolish the merit system; others wished to assure themselves that their relinquishment of power did not result in its unfair use by someone else; others desired to improve the service by studying its faults in order to provide remedies which would make it more effective. The result of these mixed and even conflicting motives has been that the members have been unusually sensitive to the faults and needs of the service, and unusually desirous of keeping themselves informed of its condition. The obvious device for carrying out this purpose has been the parliamentary committee, and this form of collective surveillance has been used no less than seven times since 1918. The Royal Commission, which used to be the recognized instrument for conducting enquiries into the service, has at the same time fallen into desuetude, only one, the Beatty Commission of 1930, having been appointed in the past twenty years.

The purpose of this article is to make available in somewhat more detailed form than has heretofore appeared, the results of a population projection recently made by Mr. M. C. MacLean and the present writer and to discuss some of the more important implications of the indicated changes in the Canadian population structure.

The Basis of Projection. In making the projection specific, birthrates were computed by relating the average number of births over the six years 1931-6 to the estimated number of survivors of the 1931 adult female population at the mid-point of that period. The projection was carried forward by five-year intervals for the two sexes separately using birth-rates so computed and mortality rates derived from the official all-Canada life tables for 1931. These rates were held constant throughout and no account was taken of the possible future effects of immigration and emigration or of war.

The reason tor this procedure as well as tor the selection oi the above-mentioned birth- and death-rates may be stated briefly. During the post-war decade (1921-31) the crude birth-rate in Canada as reflected by the ratio of children 0-4 to women 15-44 experienced a quite unusual and drastic decline. It fell by as much as 14.4 per cent in the ten-year period as compared with an average drop of approximately 5 per cent per decade in the preceding fifty years. About half of the decline in the last intercensal decade may be attributed to postponed marriages. A further drastic decline was registered during the depression years which undoubtedly resulted in many more postponed marriages. It seemed reasonable, therefore, to regard the existing low rates as somewhat abnormal and cyclical in character, and to anticipate at least a moderate though perhaps temporary revival as soon as economic conditions permitted the resumption of marriages on anything approaching a normal level. At the same time experience in Canada, as well as in other countries, suggests that the underlying trend in Canadian birthrates is likely to be downward for some time to come. Instead of attempting corrections for trend and cyclical movements which at best would involve a good deal of guess-work, it was decided to use throughout the low rates prevailing during the first part of the present decade (1931-6) on the assumption that their use would offset in some measure the neglect of the long-term downward trend.

Competitive rates for road and rail transport have their origin in an unacknowledged, unintentional, but nevertheless acute competition between three groups of public authorities. Dominion, provincial, and municipal governments, yielding to the varying pressure exerted on each, have provided a framework which enabled or forced every transportation agency in the country to operate at rates below a strict cost-of-service basis. The result might be termed transportation chaos except that, so far, the system has not broken down. Since transportation is an essential economic function, it is inconceivable that it should be allowed to do so. In our wild, unplanned efforts to maintain it, however, there is every indication that a breakdown in public credit may be involved. The results of this policy reach the public through high taxation that is only partially offset by artificially low competitive rates based on uneconomic costs. It cannot continue indefinitely. Pressure of taxation, if nothing else, will eventually force a rationalization of the transportation structure. One might even go so far as to suggest that a discussion of the competitive aspects of rates is essentially a study in applied (or misapplied) public finance.

The Prairie Farm Rehabilitation Act was passed in April, 1935. The circumstances of the immediately preceding years had precipitated a condition of acute distress throughout wide sections, if not over the entire area, of the three Prairie Provinces. The immediate cause of the distress was the persistence over a period of years of low returns to farm producers, the result of a combination of physical and price factors. Within the area to which the Act has been applied, the dominant factor was probably inadequate precipitation, but the situation as it appeared in 1935 would have been substantially different without the aggravating condition of low prices for the principal farm products. Under the condition of reduced gross revenue the rigidity of certain elements of expense became an important factor contributing to farm and community distress.

An analysis of the causes of the condition of the distressed areas of the Prairie Provinces suggests: that the lands of the dry areas are physically less productive than could have been anticipated with the knowledge available at the time of their settlement and development; that the price of the principal product, wheat, may be expected to be lower than it was, or was expected to be at that time; and that there remains a considerable measure of uncertainty regarding the “normal” level of physical productivity, the annual variations in physical productivity, and the future prices of agricultural products. But local differences are also significant. Even within the areas to which the Act has been applied, there is considerable diversity of physical conditions, and of the combination of resources and organization of production. In addition, errors of judgment respecting physical productivity and price were not uniformly involved throughout. As a result of these diversities the incidence and effects of drought and of price decline have been appreciably different in different localities.

[1] In a recent paper the thesis was advanced that while it is not possible to demonstrate rigorously that free trade is better (in some sense) for a country than all other kinds of trade, it nevertheless can be shown conclusively that (in a sense to be defined later) free trade or some trade is to be preferred to no trade at all. I should like here to amplify these remarks with respect to the last point, that some trade is better than no trade.

This is by no means a novel proposition. Indeed, it can be traced back to the beginnings of the Classical theory of international trade. It has become associated, however, quite unnecessarily in my opinion, with a labour theory of value, or a “real cost” theory of value, or more recently, with an opportunity cost theory of value. All of these have come in for considerable criticism in recent years as restrictive special cases of the so-called theory of general equilibrium. Those writers who have insisted on the need for a modern theory of value for a positive description of behaviour in international trade have in general ignored the normative aspects of international trade, presumably in the belief that as soon as one gives up the inadmissible special theories indicated above, nothing can be said concerning this problem. It will be argued here that this is a mistake, that from the most general theories of equilibrtlim all valid normative propositions can be derived.

The underlying assumption of Dr. Rollit's paper is that transportation ought to cover its own costs, and I should like to register my general agreement with it. But the main argument is to the effect that the present difficulties of the railways are the result of unequal subsidies, unequal regulation, and unequal labour costs. By inference, one would expect that when public bodies come to their senses and when the abnormally low wages paid to transport operators are brought to a proper level, then railways would be restored to prosperity. It is a much rosier picture than the available facts appear to justify.

A study of table I would suggest that the relative retrogression of the railways is not at all closely connected with the rise of direct motor competition. The peak in per capita use of rail service would appear to have been reached well before such competition became effective and the persistence of the subsequent decline in railway gross revenues as a percentage of the national income would suggest that even the most sudden and devastating access of sanity on the part of the taxing authorities would not restore the railways to that position in the life of the community which they once held. Humpty-dumpty has fallen off his wall for good and the sooner he learns to get along on a footing of equality with common mortals the better it will be for all of us.

The major factor in determining the production of western farms is the amount of water available for plant growth. Climatic fluctuations apart, this quantity has apparently diminished as a result of settlement. This diminution of the water supply seems to be the main cause of the disquieting decline in the productivity of the Canadian prairies; though the decline may have been due in part to the loss of those advantages which are enjoyed for a brief time by newly cultivated land, viz., relative freedom from plant disease, insect pests, and weeds.

The supply of soil water depends on three factors—precipitation, evaporation, and the nature of the soil, each of which is subject to considerable local and regional variation, and the variations in which are roughly indicated by the natural vegetative cover. The northern forest belt indicates a plentiful water supply; the long grass region of the foot-hills and the park belt areas have normally an adequate supply, which, in spite of sporadic drought, can be depended upon to yield a satisfactory volume of agricultural produce. The short grass area, extending along the forty-ninth parallel from the Manitoba boundary to the foot-hills, and narrowing northward to the Saskatchewan River in the vicinity of Battleford, has an inadequate supply of water, yet it is one of the most highly developed areas in Western Canada. Here the decline in productivity has been catastrophic. In spite of occasional wet years, there appears to be a chronic and increasing shortage of soil water.

The professions, conceived as a select body of superior occupations, have existed from time immemorial, although their identity has often been in dispute. The ancients wrote and argued about them, while Herbert Spencer traced their origin among primitive peoples. The earliest view to which we need here pay attention was that occupations should be judged and valued according to their compatibility with the good life. They were to be tested by their effect on the giver of the service rather than on the recipient. The professions were, in English parlance, the occupations suitable for a gentleman. This idea naturally flourished in societies which distinguished sharply between life lived as an end in itself, and life passed in pursuit of the means which enable others to live as free civilized men should. The professions in such a society were those means to living which were most innocuous, in that they did not dull the brain, like manual labour, nor corrupt the soul, like commerce. They even contained within themselves qualities and virtues which might well find a place among the ends of the good life itself. Leisure, based on the ownership of land or of slaves, was the chief mark of aristocracy, and here too the professions were but slightly inferior. For leisure does not mean idleness. It means the freedom to choose your activities according to your own preferences and your own standards of what is best. The professions, it was said, enjoyed this kind of freedom, not so much because they were free from the control of an employer—that was assumed—but rather because, for them, choice was not restricted and confined by economic pressure. The professional man, it has been said, does not work in order to be paid: he is paid in order that he may work. Every decision he takes in the course of his career is based on his sense of what is right, not on his estimate of what is profitable. That, at least, is the impression he would like to create when defending his claim to superior status.