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THE STATE AND ECONOMIC LIFE IN CANAD'A A. BRADY O BVIOUS 'among the direct effects of the present ,'economic depression is a profound 'change in the . ' relations of the state to economic life. The failure of capitalism or free enterpris~ to maintain it~ selfadjusting character has shaken western institutions to their foundations, and the nation-st~te in America 'as in Europe is inexorably forced to use its sovereign power in bolstering up an almost tottering economic system. This development does Iittle more than extend a former tendency , for the system of free enterprise never existed in a pure form, except in economic textbooks. In what are now viewed as the halcyon days before 1929, nowhere was the regulative influence on ·the production and consumption of commodities merely that of competitive econo.mics. In every' country collective action in varied forms had begun to check or to regulate c·ompetition. Even Canada is not the memorial to rugged individualism that. many Canadians are prone to assun1e. One need not describe the manner in which the state has fashioned the nature and extent of Canadian economic development through the tariff, the bounties' on certain forms of production, the attempts, too often feeble and , half-hearted, to conserve natural resources by regulations) such as those dealing with the protection of forests from fire and the establishment of forest reserves. The mo~t decisive influence of the state has come through its part in facilitating the transportation of staple exports from the interior to the seaboard and to the American boundary . This it has done by improving a system of naturaL 422 THE STATE AND ,ECONOMIC LIFE IN CANADA waterways and by helping .to 'extend railway transport into all areas where exportable products were to be found.. Previous to Confederation the efforts of colonial governments were directed to improving the St. Lawrence waterways as a means of shipping timber and grain from the western part of Upper Canada. By the time of Confederation the canals had 'wholly become public'property, and in the post-Confederation period the major attention of statesmen swung from canals to railways in unison with plans for extending the pqlitical unit from ocean to ocean. I need not here survey the tangled history of Canada's 'subsequent railways. Its principal lesson is unmistakable . The exploitation of Canada's natural wealth ,has been tied to railway development, and in turn railway development has rested on state aid. Even the Canadian Pacific, .so often considered before the depression -as a · shining example of private enterprise, was cradledand--' nurtured in its early years by the state. I t was the recipient of land grants, cash aid, and bond guarantees, and only attained prosperity after the state had energetically promoted the peopling of the prairies. The later transcontinental lines were given even more generous gifts at their birth. Their construction would never have been undertaken without liberal assistance from the state .in the form of land, cash, and the guarantee of bonds. The virtually bankrupt condition of these .lines by the mid...:period of the Great War can scarcely, therefore, be considered a criticism.of private ente~prise as such. The lavish assistance of the state under the pressure of poli- ,tical considerations must aSSUlne blame. .. . -.The present and future relation of state and railways is without ambiguity. In the nature of things 'it must be a relation of intimaey. .Even if the state agreed to an amalgamation of the Canadian National with the Cana- THE UNIVERSITY OF TORONTO QUARTERLY dian Pacific and under the management of the latter, it would still be forced in'varied ways' to control cJqsely this powerful ,private corporation. And the reason is-simple. I~ every modern state mechanical transport is important. In Canada it is vital to national life, for it provides a spinal column to ~hat is territorially a vast and disjointed community) and is much too essential to the' country's present economic existence to go uncontrolled. A government which failed to control it effectively would be false to its obligations. Besides railways, an increasing number of industries similarly require liberal aid and direction from the state, and if the depression endures for long...


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