Capital Formation In Canada, 1896-1930

273 Pages·1974·11.313 MB·English

by  Kenneth Buckley

Capital Formation in Canada
1896-1930
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Capital Formation in Canada
1896-1930
By
KENNETH BUCKLEY
With an Introduction by M. C. Urquhart
The Carleton Library No. 77
McClelland and Stewart Limited
THE CARLETON LIBRARY
A series of Canadian reprints and new
collections of source material relating
to Canada, issued under the editorial
supervision of the Institute of Canadian
Studies of Carleton University, Ottawa.
DIRECTOR OF THE INSTITUTE
Davidson Dunton
GENERAL EDITOR
Michael Gnarowski
EXECUTIVE EDITOR
James H. Marsh
EDITORIAL BOARD
B. Carman Bickerton (History)
Dennis Forcese (Sociology)
J. George Neuspiel (Law)
Thomas K. Rymes (Economics)
Derek G. Smith (Anthropology)
Michael S. Whittington (Political Science)
Capital Formation in Canada, 1896-1930
was first published in 1955 as the
second volume in the series Canadian
Studies in Economics published by
the University of Toronto Press.
© McClelland and Stewart Limited, 1974
ALL RIGHTS RESERVED
0-7710-9777-8
The Canadian Publishers
McClelland and Stewart Limited
25 Hollinger Road, Toronto 374
Printed and bound in Canada by
T. H. Best Printing Company Limited
Table of Contents
Introduction to the Carleton Library Edition vi
Author's Preface xiv
1. Introduction 1
2. Investment in the Wheat Economy 18
3. Investment in Transportation 38
4. Urban Building 54
5. Public Investment 80
6. Savings and Capital Flows 95
7. The Volume of Construction, 1896 to 1930 112
8. Investment in Machinery and Equipment 142
9. Investment in Inventories 162
10. Balance of International Payments, Current Transactions
171
11. Transportation, Housing, and Direct Government Investment;
and Indexes of Building and Real Estate Activity 172
Appendix 197
Notes 230
Index 249
Introduction to the Carleton
Library Edition
It is a great pleasure for me to write the introduction to this republi-
cation of Kenneth Buckley's Capital Formation in Canada, 1896-
1930. In doing it, I have acceded gladly to the request of the man-
agers of the series that I include some biographical material about
Ken Buckley. I first met him in the summer of 1944, worked quite
closely with him at that time and again fifteen years later, and kept
fairly well in touch with him until his death in 1970.
Kenneth Buckley's Capital Formation in Canada, 1896-1930 is
the best original work on Canadian economic history of the post
World War II period. Its capital formation estimates for 1896 to
1930-the first such data available for the years before 1926-con-
tinue to be the standard estimates for that period; and its still rele-
vant analysis of the part played by capital formation in the eco-
nomic history of the time remains a model of clarity and elegance.
This book emerged from Ken Buckley's Ph.D. thesis, which
was presented at the London School of Economics and Political
Science in 1950. Whilst it represents his first work in economics, it
established both the subject matter of his lifetime work - the growth
of the Canadian economy - and the conceptual design of the analyt-
ical model which shaped nearly all his work. I shall say more on
these matters, but first I believe it worthwhile to turn briefly to the
formative forces of his earlier years, which besides being of interest
in themselves, throw light on the direction of his work.
First, there was his background in and his deep attachment to
the Prairies; he was born in Saskatchewan in 1918 and aside from
relatively short periods of absence, mainly connected with further-
ing his education, spent his entire life in that province. The settle-
ment of Saskatchewan and Alberta had taken place sufficiently
recently that he personally knew many of the original settlers - his
own parents were among them. He knew from them, first hand, the
conditions of early settlement, much of the course of settlement and
many of the problems of settlement. The period covered by the life
of these settlers was to be the early focus of his studies of Canadian
growth; it was the period during which the developing wheat econ-
INTRODUCTION TO THE CARLETON LIBRARY EDITION Vll
omy provided the force that merged the segregated parts of Canada
into an integrated economy.
Second, Kenneth Buckley's age group contained those who
reached their teens at the onset of the Depression and who spent
the next twenty years of this formative period of life in the depres-
sion of the 1930's and in the wartime years and their immediate
aftermath in the 1940's. The years of depression in Saskatchewan
were dreadful. Net income received by farm operators from farm
production in that province was negative in five of the ten years
from 1930 to 1939. Personal income per capita in Saskatchewan fell
from $465.00 in 1928 to $124.00 in 1933; it was still only $161.00
in 1937. In many municipalities, both rural and urban, the propor-
tion of families on relief varied from a fifth of all families upward.
It was not an easy period in which to grow up. How Ken Buckley
managed to get to University - he was the only member of a family
comprising four brothers and four sisters to do so -1 do not know,
for his family was among those that were hard hit by the depres-
sion. Whether it was this experience that made him the rebel in
spirit he was is open to question - I should guess not entirely. But I
have not much doubt that it helped shape the direction of the
research work that he did later.
Third, as a graduate student he spent the summers of 1944 and
1945 in Ottawa in the public service, where, more or less by acci-
dent, he was assigned to a position in which he participated in the
preparation of the first estimates of capital formation in Canada, a
topic related to his major interest in his later life on which point I
will elaborate shortly. He had graduated from the University of
Saskatchewan, having specialised in English, in 1942, had then
spent some months in the R.C.A.F. but had been mustered out for
reasons of health in 1943, and was taking an M.A. in economics at
the University of Toronto in 1943 to 1945 where he was a student
of Harold Innis. His experience in Ottawa, at this time, comple-
mented his studies at the University of Toronto.
My own contact with Ken Buckley began when he joined the
government unit to which I belonged, in Ottawa, in 1944. At that
time I was with an economic research unit - its director was Dr. W.
A. Mackintosh - in the Department of Reconstruction (later
Reconstruction and Supply). Its purpose was to do research related
to problems of post-war reconstruction and post-war adjustment.
One of the projects being undertaken within this unit at that time
was the preparation of the first estimates of capital formation in
Canada, covering the period 1926 to 1941, estimates which ulti-
mately appeared in a document prepared for the Dominion-
Vlii CAPITAL FORMATION IN CANADA 1896-1930
Provincial Conference on Reconstruction which was held in
August, 1945. O. J. Firestone was in charge of the preparation of
estimates of direct government expenditure - that is, expenditure by
Government departments - in capital formation. I was in charge of
estimation of private and commercially-oriented public capital for-
mation including capital formation in both privately-owned and
publicly-owned public utilities.
Ken Buckley worked with me in the summers of 1944 and 1945
on the part of the capital formation estimates for which I was
responsible. How far it is fair to say that his experience in Ottawa at
this time shaped his later work is conjectural. However, it is perti-
nent, I believe, that he was, on this occasion, immersed in the
preparation of these estimates of capital formation and saw their
emergence with the information that they provided for a period of
time which had spanned prosperity, depression and then the onset
of war. Further, the Keynesian Revolution was widely accepted by
then and the importance of the critical role of capital formation in
determining levels of economic activity was better understood than
ever before. The unemployment of the 1930's had disappeared with
the war but there was concern that it might reappear afterward.
The Federal Government had pledged itself to the goal of main-
taining full employment and was preparing bold proposals to be
made to the Provinces for the maintenance of high levels of eco-
nomic activity and the improvement of social well-being at the
Dominion Provincial Conference of 1945. I think it probably fair
to say that much of Ken Buckley's interest in capital formation,
which plays a major part in his research through the rest of his life,
came from this time.
My other main experience of working in direct collaboration
with Ken Buckley occurred when the Historical Statistics project,
which culminated in the publication of the volume Historical Sta-
tistics of Canada in 1965, was under way. I should like to record
here his contribution to it. I believe that it was Ken Buckley who
first suggested looking into the possibility of a historical statistics
volume for Canada at the first meeting of the Committee on Statis-
tics of the Canadian Political Science Association, in 1958, under
Gideon Rosenbluth's chairmanship. In any event, he was asked to
see if there appeared to be enough material for a volume of histori-
cal statistics in Canada and to report back on the matter. After his
report that there were adequate statistics, the project then pro-
ceeded and he became Assistant Editor. He and I laid out a design
of the volume and did the necessary collation of the work planned
for each of the sections at the time that the contents of the various
INTRODUCTION TO THE CARLETON LIBRARY EDITION IX
sections were decided upon. This collation work had to be repeated,
of course, at the time the final editing was done. Ken Buckley
himself did three of the sections in the volume for all of which he
was eminently the most suitable person. In addition to the work on
his own sections, he did a very considerable amount of work in
editing the introductory write-ups in other sections. In this last
regard he did a substantial amount of work on the sections on the
Balance of International Payments, etc., on Agriculture, and on
Minerals and Fuel. But in addition he helped with the editing of
much of the rest of the volume. As well as the substantial amounts
of time devoted to the project in Saskatoon, he spent a summer in
Ottawa on it and the major parts of two other summers in Kings-
ton.
Before touching more directly on his work in economics, I shall
make brief allusions to his other contributions as an academic.
First, he did a substantial amount of work in trying to further the
well-being of academia itself. He was strongly committed to his
own university (even although, at times, he was critical of what was
being done with it). And, especially in his early years, he put a good
deal of effort into trying to maintain and strengthen it as an aca-
demic institution. Related in part to the foregoing, he put a sub-
stantial amount of effort in the 1950's into trying to improve sala-
ries and other staff amenities mainly through his local faculty asso-
ciation but also through national bodies by way of contribution of
material to the C.A.U.T. Bulletin and the N.C.C.U. Proceedings in
1954-55. At that time academic salaries were relatively very low as
they had been from the end of the war. Ken Buckley worked up
much of the data to provide the background for the presentation of
the case for salary improvement. In the first instance, it was, I
believe, for use at his own institution. But it became more widely
available and used more widely than in the University of Saskatche-
wan itself. And it was an important element in the presentation of a
brief by the Canadian Association of University Teachers to the
Royal Commission on Canada's Economic Prospects of which
Walter Gordon was chairman, which marked, at least in time and I
believe also as a causal factor a turning point toward improvement
in University salaries. It is well known also that he did considerable
amounts of work in trying to arrange improved pension plans for
academics. While an imaginative plan proposed by him and a col-
league in the Department of Mathematics in his University was not
accepted, their efforts helped to draw attention to pension problems
and indirectly contributed to improvement in pension plans. Ken
Buckley contributed to these activities in the 1950's through his