YOU'RE RICHER THAN YOU THINK
On this anniversary of Confederation, you're twice as well off as your grandfather was thanks to our increased production and a tidal wave of foreign investment. You're rich, even if your wallet says it isn't so
MACLEAN’S OTTAWA EDITOR
L AST YEAR an American who represented an investment firm came through Ottawa. He already had large interests in the United States and Britain, but his company had some new money to invest. After a survey of the free nations he had decided to place all current and future investment programs in Canada.
“Best bet in the whole world today,” he told a. friend here.
Canadians were rather startled to hear it. Canada has “the second-highest standard of living,” and even to our own ears "second-best” sounds very like “second-rate.” In spite of our after-dinner speeches and our patriotic schoolbooks we are secretly taken aback when anyone ranks our country first. In our hearts we don’t believe it. They must mean the people next door.
Average personal income, after taxes, for each man, woman and child in the United States last year was $1,444. In Canada it was only $1,057. For each dollar earned by the average Canadian, the average American earned $1.37; for each dollar a Canadian spent on consumer goods and services, the American spent $1.43. This gap has closed a little since 1939 when the U. S. figures were $1.44 and $1.48 respectively, but there is no present likelihood that it will disappear. Canada’s living standard will remain "second highest.”
This is an old story to Canadians. We have been telling ourselves all our lives that the grapes are sour, that we have intangibles and imponderables here which outweigh the material advantages of our great neighbor, and that “money don’t bring happiness.” We used to think of ourselves as poor but honest, schooled in the sweet uses of adversity.
To other nations. Canadians must look and sound like the impoverished tycoon who was “down to his last million.” They don’t see us as the hardy self-denying sons of toil and austerity that we fancy ourselves to be. To them we’re rich—all of us. Moreover, we are growing richer fast. It is more than possible, it is highly probable, that before the present century has run its course Canada will have
more than twice the wealth that it is enjoying today.
Here are some of the resources we can count on this eighty-fifth anniversary of Confederation, which weren’t even suspected when World War II broke out:
OIL. Four billion dollars’ worth of reserves discovered as the result of half a billion dollars invested in exploration and development. Five years ago Canada got one tenth of her petroleum requirements from Canadian wells; today she gets half of it, with the percentage rising every year. Three thousand wells pour out one hundred and sixty thousand barrels a day, and a new pipe line runs from Edmonton to the Great Lakes to feed the oil refineries of Ontario. Incidentally, the development of western pipe lines and refineries brings new attention and importance to the Athabaska tar sands, which contain more petroleum than the total proved resources of the entire world. It is not yet economic to extract and transport the oil from these sands—but the oil is there and extraction processes are being improved by constant research and experiment. Oil men now talk of a “great triangle” of production areas, based in the established fields of the Texas Gulf and California and with a new but important field in the Canadian west.
IRON. Everyone has heard about the great new deposits of iron ore being developed in Ungava and Labrador, but shipments from there will not begin until 1955. Not so many Canadians realize that iron-ore production is already nearly five million tons a year only a quarter of what Labrador will produce when the St. Lawrence Seaway is completed, but thirty-eight times the Canadian ore production in 1939. Meanwhile two hundred million dollars are being poured into the Labrador project; one third of the roadbed has been graded for a 358-mile railway from the mines to the Gulf of St. Lawrence. Two hundred miles of track will have been laid by the end of this year.
HYDRO-ELECTRIC POWER. Not exactly
an unsuspected resource as we have already developed more than thirteen million horsepower; Canadian capacity has been increased by sixty percent since 1939. But you may be surprised to learn that only one quarter of the country’s water-power potential has been harnessed. The St. Lawrence Seaway will provide Canada with a million horsepower directly from the International Rapids and make it easier for Canada to develop another million and a half of her own. Other, remote power sites will become practical assets when Canada grows northward: the Aluminum Company of
Canada has already begun a tremendous project at Kitimat in northern B. C., and there are others.
ALUMINUM. Another unrealized resource. It was regarded as an industrial miracle during the war when the great Shipshaw dam in northeastern Quebec brought Canadian capacity up to half a million tons, but that development brought deep misgivings with it. Whatever should we do with all that “excess” capacity after the war? By 1957 Kitimat can, if demand still warrants it, double the present output. Even the first stage, already in process of execution and due for completion in 1955, will add one hundred thousand tons.
URANIUM. This is the basic raw material of the atomic age. Production figures and values are both secret, but it is known that the new development at Beaverlodge Lake, northern Saskatchewan, will produce at least as much and probably more than the Great Bear Lake mine which alone made Canada a major source of uranium.
TITANIUM. This mineral before the war had only obscure industrial uses, but now turns out to be an important ingredient of the new light alloys or "wonder metals.” The Canadian deposit recently discovered at Allard Lake, Que., is believed to be the largest in the world.
NATURAL GAS has been heating the cities of Calgary and Edmonton for years, but has always
THESE PHOTOGRAPHS DRAMATIZE THE WAY YOUR
refrigerators — 21 % radios — 78%
vacuum cleaners 24% telephones — 40%
been considered a scarce and dwindling resource to be hoarded with care. Now, with every year bringing new discoveries, it looks as if western natural gas will proride the raw material for a new Canadian chemical industry' on the prairies, and also (if the necessary pipe lines are built » a cheap fuel as far east as central Ontario.
Each of these developments stimulates and assists all the others. Alberta has enormous coal resources which, up to now. have lacked a market. If chemical and other industries do spring up in the west they’ll find cheap coal almost at their doors.
And capital is available to develop these things on a scale never seen before in Canada.
Last January Max Mackenzie, who has just resigned as deputy minister of defense production to go into one of the new developments himself, gave a talk to the Canadian Institute of Mining and Metallurgyin which he compared the military and civilian investment programs in the period 195C-53. He drew a rather striking series of parallels: Six types of airframe and. for the first time in our history, two aircraft engines, as well as many instruments and components, call for a capital outlay of twelve hundred million dollars. That is the biggest single item of defense investment. It happens to be just the amount which will go into hydro-electric development in the same threeyear period. That is not counting special projects like Kitimat. and not counting the St. Lawrence Seaway.
Electronics—radar, asdic, and so on are the second biggest defense item: five hundred million dollars. Just the amount planned for exploration, development, transmission and refining of oil and natural gas.
Shipbuilding will cost about two hundred and fifty millions, a neat match for the sum now planned for increasing aluminum smelting facilities. Tank and automotive equipment, two hundred and fifty millions, take about the same amount earmarked for iron-ore development throughout Canada.
In short, Canada is pouring enormous and approximately equal amounts of money into production of guns and butter. Either program would have seemed hopelessly ambitious before the war. Both are taken for granted today-.
These things mean expansion. Canada in 1952 is evidently, in many ways, like the Canada of 1900—just on the eve of tremendous things. Then it was the opening of the west, the first great wave of immigration, the beginnings of industrialization. The results have been fabulous. Two and a half times as many people are producing five times the volume of wealth in three quarters of the working time forty-two hours a week compared to fifty-six .
Yet the results of today's beginnings may be even greater, in proportion, than those of two generations ago. In a lecture at McGill University this spring Dr. O. J. Firestone, economic adviser to the Department of Trade and Commerce, set forth some interesting comparisons between 1900 and 1952.
Then, as now, trade was buoyant and enterprise was in the air. The Klondike gold rush was at its peak: new people and new money were pouring into Canada at a rate beyond all precedent.
Then, as now, a great new source of energy was just being applied. Then it was hydro-electric power, of which Canada was producing only two hundred and seventy-five thousand horsepower
('compared to thirteen millions nowk Todayit is atomic power. In March the Rt. Hon. C. D. Howe publiclyforecast the industrial use of atomic energy within ten vears. and Canada is in the veryforefront of its development.
In 1900 the motor car was just coming into use; the earliest Canadian records show three hundred and sixty-two automobiles imported in 1904. In 1950 Canadians bought four hundred and thirty thousand, most of them made in Canada. But the new thing in Canada new is the jet aircraft.
In 1900 the prairies were still empty. Saskatchewan and Alberta were Northwest Territories. only latelythe domain of the Hudson’s Bay Company-. Canada produced fifty-five million bushels of wheat, compared to four hundred and sixty-two million bushels in 1950. Today the new wealth is being found under the western prairies, in the oil fields of Alberta and perhaps of Saskatchewan and Manitoba; the empty territoryis the far north, where Canadians are just learning
So much for the similarities. The differences are equallystriking, and theyall favor 1952.
Canada in 1900 was a sparselysettled land with five and a half million people: the labor force numbered about a million and three quarters. By and large it was an unskilled force. Two fifths of it worked on the farms, one fifth in factories, the rest in various trades and service occupations. Industrial expansion had begun; in 1900 it was particularly notable in pulp and paper, smelting, iron foundries, shipbuilding and flour milling. The great development of hydro-electric power was getting under way. But this was all new, all starting from scratch. Industrially, Canada was
•ANDARD OF LIVING HAS RISEN IN A DECADE
refrigerators — 47% radios — 93%
vacuum cleaners 42% telephones — 61 %
still in the stage where a man who wanted to drive a nail had first to make the nail, then make a hammer to hit it with.
This time, by contrast, we are getting off to a running start. Not only can we look to the new forces, the new resources, the new techniques for new wealth. Expansion has already been tremendous in what we had to begin with.
Canada has been making basic steel, the very cornerstone of industry, since well before the turn of the century. Not all Canadians realize, though, that our steel capacity has been enlarged one hundred and thirty percent since 1939 and now includes a number of special steels and alloys which we had never been able to make before. Another twenty-one percent increase in primary steel is already projected.
Canadian automobiles are nothing new—but did you know we are making three times as many as in 1939? Pulp and paper have been a staple Canadian export for more than two generations; production has doubled in the thirteen years.
Even after allowing for price increases the actual volume of all Canadian production is ninety percent higher than it was before the war.
Another dilference from 1900: We're using more of our own money now. Previous Canadian booms have been financed largely from abroad, first by British and then by United States capital. This one is mostly Canadian.
We are still getting lots of foreign money— sixteen hundred millions in the past two years, or about thirteen times the entire new investment of 1900. But even this large sum is believed to be no more than fifteen percent of all capital investment in Canada 1950 and 1951. (It’s true
that foreign capital is taking the lion’s share of new enterprises with the higher risks and the higher returns while Canadian money is going more into plant expansions of existing and established activities. But, at least, Canadians are now doing some of their own risk investment.)
Small wonder that an itinerant American investor should conclude that Canada is the soundest buy in the world. Thousands of other Americans have formed the same opinion. Europeans are of similar mind when they can persuade their governments to let them have dollars for investment, and it is significant that dollar-short governments are becoming easier to persuade. One British oil company, which had spent several millions on exploration in Alberta, was forced to abandon its holdings in 1946 because the British Treasury wouldn’t authorize any more hard currency. Five months later Leduc No. 1 came in. The company lost its money lone of its projects had been right in the middle of the fabulous Redwater field i but at least the treasury seems to have learned its lesson. Brit ish oil firms are sending men to Alberta now with real money.
All these people have confidence in Canada because, they say, no other land has our combination of highly skilled labor force, well developed plant, stable political climate and virtually untapped resources. No other land offers the investor such a high probability of steady secure increase over a long period.
But this high-level financial assessment leaves a good many Canadians cold. What does it mean, after all, to the ordinary wage and salary earner.’ To the man who has never owned a share of stock because he can’t save enough money to buy one?
The man whose main preoccupation, in the economic field, is to keep ahead of the bill collector ami the rising cost of living?
That man doesn’t believe he is rich. He certainly doesn’t feel rich (only millionaires do, apparently). Does it really do him any good that these hundreds of millions are being poured in, and tens of millions taken out, by a wealthy handful in his own and other lands?
The answer is yes, it does. Whether he knows it or not the average Canadian is at least twice as well olí as his grandfather was in 1900, and forty percent better off than he himself was when World War II broke out.
To take the latter point first, here are some comparisons between the 1941 and the 1951 census. We don’t think of 1941 as a depression year; on the contrary it was extremely prosperous. Some of us, thinking of price controls, may suppose wo were better off then than we are now. But here are the actual figures on the ownership, by Canadians, of various household articles that everyone seems to want but not everyone can afford.
H mes with radios .............. 78 93
Refrigerators ................ 21 47
Telephones ............ 40 61
Vacuum cleaners ............... 24 42
Automobiles . ................ 37 42
And the farther back you go the sharper the contrast liecomes. Dr. Firestone recently found a family budget survey made in Winnipeg in 1910 and compared it with a survey made in the same city in 1948.
In 1910 you could
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house a family of five in Winnipeg for twenty-one dollars a month in reasonable comfort and respectability. You could feed them well for four hundred and twenty dollars a year on sirloin steak at eighteen cents a pound and the best creamery-print butter at thirtyfive cents a pound.
Yet, even making allowances for changes in the purchasing power of the dollar during those thirty-eight
years. Firestone found that the Winnipeg family of five in 194$ was buying more of everything. The family's purchases of goods and services had risen by sixty-five percent.
Basic buying lagged behind the overall average but even here the family bought twenty-five percent more food, thirty-five percent more clothing, with women's purchases rising more sharply than men's. In spite of the inflation in house-building costs rents had risen only slightly.
Motor-car purchases went up by a percentage so high as to be meaningless
for ail piactical purposes there were no motor cars in 1910. Now. as noted above, forty-two percent of Canadian families own one.
Household appliances and furnishings in 194$ took three times as much of family spending as in 1910. and general costs of running the house went up one hundred and fifty percent. Three times as much was spent on education, recreation, holidays and similar amenities. But perhaps the most significant point of all. as an index of living standard, is the fact that insurance protection and gifts to
charity both rose by a liigher percentage than any other item except motor cars. People in 194S could afford to be generous and alert to their dependents' interests, as the people of 1910 could not.
Between 1900 and 1950 Canada's population increased about two and a half times, while Canada's productior
in real, not dollar, terms) increased more than five times. In other words, real income per capita more than doubled. And there are plenty of other figures to show that this is no mere dead average between a few rich and a great many poor. With few exceptions the increase has been spread right across the board.
In 1900 the average worker in manufacturing earned $3-50. just a little over a dollar for each ten-hour working day In 19-50 he earned $2.300. or fortyfive dollars per forty-two-hour week. Roughly speaking, prices have tripled. In real terms, therefore, the 1950 worker got twice the pay for threequarters of the work.
His employer could afford to pay this difference because the rate of production per man-hour is greater by one hundred and fifty percent than it was in 1900. It's interesting to nou that the output per man year has riser somewhat less—it has merely doubled like the worker's pay. The difference of course, is what the worker takes out in leisure. He works fewer hours in the year nowadays.
Besides haring twice the pay. a man has twice the opportunity for advancement now that he had in 1900. Out of ten people employed in manufacturing in 1900 only one was a salaried man: now two are salaried.
Does all this mean that everyone is now secure, inevitably headed up s constant and even slope to more and more and more? Has Canada become depression-proof?
Of course not. Canada's economy is still as vulnerable as always to world conditions. From 1919 to 1939 export trade accounted for an average twentyone percent of Canada's gross national productFor the years 1946 to 19-51 the average was just under twenty percent. In other words, a collapse of foreign markets would hit us just as hard now as it ever would have done.
We still depend on a handful of major exports: wheat, pulp and papier, metals, lumber. In one way our dependence on the foreigner has got worse, for of recent years we've been channeling our trade more and more to a single and highly unreliable customer. the United States. Before the war we used to sell forty percent of all exports to Britain, thirty-seven percent to the U. S. Now we sell only sixteen percent to Britain and fifty-nine percent to the U. S. The U. S. has shown too often, and is now beginning to intimate once more, that no foreign goods can depend on a market there in time of depression.
If another depression comes along we shall feel it all right. Like other countries we have new techniques and a new resolve to ward off its worst effects, but that doesn't mean we shall escape it.
However, this is beside the point. We have had depressions before. Sino 1900 we've had the one big one anc no fewer than five little ones. Even the big one did no more than slow us down for a few years. In spite of it we have doubled earnings, output, every index of wealth in the past fifty years.
Sir Wilfrid Laurier said, away back then, that "the twentieth century belongs to Canada." So far his prediction hasn't been quite borne out. but Canadians may be able to make a prophet of him yet. The century' is only half over.
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