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.

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 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.

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.

Our civilization is properly called an urban civilization, for the forces which shape it gather in the cities and spread out from them. The cities integrate, and in many ways dominate, the entire society. An inquiry into the nature of the city, then, is also an inquiry into much that is important to the nature of civilization itself. The defects of cities are defects of the whole system of living.

There are different types of large cities, but the type which is most significant in this inquiry is the industrial-commercial metropolis. Resort cities, capital cities, shrine cities, and the like may be conspicuous, but they do not have the same kind of influence. It is the metropolis which expresses the essence of our system. All references to cities in this paper are to this type.

The most thorough studies of cities have been made in the United States, but in so far as other observations have been made they indicate that with caution the results may be extended to other large cities of the world. It has been shown that the large expanding city has a natural form which is repeated in all cities, and which is not only unplanned, but for the most part not responsive to efforts at control. There is a basic pattern which no city escapes; a spatial order of population groups and institutions and of functional parts of the economy, and a number of states of social organization and disorganization which are related to this order. This paper is principally concerned with the typical forms of disorganization, and the conditions under which they arise and some of the results of efforts to deal with them.

This paper is an attempt to suggest methods of approach to the materials of Canadian social history. As such it is an appeal for a greater utilization of historical data in the development of sociological principles. It should be admitted at the outset that the point of view advanced is partly the result of a bias in favour of what might be described as the documentary as opposed to the interview method of research. Certain problems can be studied only by means of the interview. There are times, however, when a greater understanding could be gained from documentary records with much less expenditure of time and energy. Furthermore, the interview method, if it is to yield fruitful results, must be employed by those with a particular aptitude for “feeling out” information in this way. It is no accident that the most successful research students in sociology very often have been those with experience in journalism or those with a flare for journalism who found an outlet for their inclinations in sociological research. The penetrating insight of a Sinclair Lewis or Sherwood Anderson cannot be matched by the finest tools forged in the laboratory of the sociologist.

If for any national income and its given distribution we could estimate the amount of annual savings, we should be able to tell how much investment is necessary to make the aggregate receipts of entrepreneurs (plus the value of any additions to the inventories) equal to their outlay and thus avoid entrepreneurs' losses and shrinkage of output, and keep national income at a given level.

The relationship between national income and savings has been estimated in three ways: (1) by studying the relationship between incomes and savings of families, leaving the undistributed corporation incomes out of the picture; (2) by studying separately savings of wage-earners and of profit-receivers out of their respective incomes (distributed or not); (3) by confronting, through time, national income and investment. Only the first method will be discussed here.

If people adjusted their behaviour to changes in their income more quickly than they actually do, the family budget statistics could give an answer as to how a change in the total national income affects the national savings, apart from the undistributed profits of corporations. Actually, there is probably a time lag between income changes and changes in consumption and savings, which should be studied separately.

When people receive their money incomes they may employ them in any of three ways: (1) they may spend them on imported products, (2) they may spend them on services or goods produced locally, (3) they may save, accumulating bank deposits or securities. The way in which people in general and exporters in particular dispose of additions to their incomes, and the manner in which they economize when their incomes diminish, are important factors in determining the ultimate effect of an initial change in the level of incomes. If most of an increase of incomes is spent upon the purchase of goods produced within the country, it will induce re-employment and a further increase in incomes; if spent upon imports, its effect will be upon the foreign exchange situation rather than employment.

The Marginal Propensity to Import. The extent to which a community devotes any addition to its existing incomes to the purchase of goods from abroad has been called by Mr. Paish the “marginal propensity to import.” The high per capita trade of the Dominions ensures a fairly high propensity to import. But another cause contributes to the high propensity. Their imports are, in considerable degree, high grade manufactures and luxury articles: just the sort of things which will be more in demand if incomes rise and will be dispensed with if incomes fall. Moreover, machinery and capital goods rank high amongst their imports, and these will be in demand chiefly when incomes are rising.

Some attention must first be given to the nature of the determination of the general levels of incomes, production, prices, and employment. Of course these levels are in some way or other affected by most things under the sun and are, in fact, merely statistical aggregates composed of millions of individual activities and transactions each determined by its circumstances, and all interdependent. Even if one concedes that some grouping is necessary to bring this chaos within the realms of description and analysis, it may still be urged, particularly in Canada and the United States, that regions and industries must be dealt with separately, that we cannot lump together production of wheat, newsprint, and houses and get any results of significance. While recognizing the validity of this contention, it has seemed necessary to use a number of familiar aggregative concepts in this paper.

In the decade following 1929 all currencies of the world, save the Albanian franc, have undergone either devaluations in terms of gold or exchange restrictions tantamount to devaluations. These changes reflect not only the depreciation of several originally overvalued currencies to equilibrium, but also a nearly complete round of successive depreciations of individual currencies to temporary undervaluation. Each such undervaluation has set in motion forces tending to restore equilibrium, through rising supply and demand schedules in the undervalued-currency country, falling supply and demand schedules in the overvalued-currency countries, counter-depreciation in the latter countries and sometimes adverse tariff action. The proportions in which the effects have been divided among these four channels have differed among countries; consequently with the end of the round of depreciations, the re-establishment of something like equilibrium of exchange rates has come about without having involved equal degrees of devaluation by all countries. Thus the new exchange rates differ from those of 1929 in many ways additional to those necessary to cancel the disequilibrium of that year. That, toward the end of this decade, something like equilibrium of the major exchange rates has been established, is indicated by agreements that sharply limit the possibility of further depreciations to under-valuation and even the possibility of depreciations to counteract over-valuations which may arise in the future from changes in international reciprocal demand, etc. It is now opportune to examine the effects of these depreciations of the past decade upon the prosperity of the countries concerned.

There was much of the realist in Aristotle, more perhaps than in many political scientists of today. In defence of the moderns, however, it may be claimed that Aristotle had comparatively little to try his patience. The British Empire, which “defies classification,” along with its legal appendage the Dominion of Canada—with all the complications of a federal system—is no doubt sufficient to exhaust the patience of a political scientist who would be sure of his constitutional foundations.

Political scientists as well as others are impatient with the constitutional situation at present existing in Canada. They characterize this situation as uncertain; they want this uncertainty to be corrected so that they can get on with the job of progress. They say that not only are their efforts impeded by constitutional limitations but that many of the constitutional usages now relied on may be merely illusory. So there is a tendency to blame the law and the lawyers even to the point of ridicule. Certainly if all the proposed reforms really do spell progress the law and lawyers have a lot to answer for; and yet should we not be charitable to this law which is required to do the impossible: to stand still and go ahead at the same time?

In the nineteenth century, the dominant theory of the state restricted the latter's activity to external and domestic defence and the provision of an adequate law of contract by reference to which disputes between individuals could be settled. The theory, however, never represented much more than an ideal. In the twentieth century, it became necessary to abandon even the ideal. Already, before the turn of the century, technological progress had created problems which could be solved only by state action. The demand of organized labour for a measure of security and improved working conditions produced others. Still others resulted from the concentration of capital and mass production. These and other factors forced the state to intervene in spheres which had been traditionally reserved for private enterprise. With the war came even greater problems; and the state became more and more involved. In 1918, a vain effort was made in some countries to return to “normal” conditions; but for the most part the evolution continued unabated though not always in the same tempo or in the same angle of direction. In a few states it produced collectivism, in others a “new deal,” in others fascism; but in none did laissez-faire survive.