May 3, 1939 (18th Parliament, 4th Session)


Percy John Rowe

Social Credit

Mr. ROWE (Athabaska) :

Thank you, Mr. Speaker, for coming to my assistance. I am trying to speak as loudly as I can.
As I said, the conclusion is inescapable that constructive cooperation and mutual aid must supplant the present blind competitive chaos if civilization as we know it is to survive.
The advocates of planning under the price and profit system, whether big business men or those who call themselves Liberals, all seem to overlook a number of important though simple facts. First, capitalism is a system of competition and not of cooperation. Second, business lacks orders for goods, not plans for the production of goods. Third, purchasing power cannot be increased by lending. Business men have always planned. Never did business men plan with more expert assistance or better information than during the past ten years, and never were greater financial follies committed. Our present situation is the result of business planning. But planning for scarcity can succeed only by making things scarce, so that the price may be kept up in order that profits may be made. Abundance of anything means calamity for the price and profit system ; and you can no more plan for scarcity and get abundance than you can mix oil and water. Therefore, planning for profit can never be done scientifically. The better the planning for profit, the more certain is the result- profitless business.
May I now for a moment or two turn to an examination of some harmful activities of our present system, things which must be eliminated before a planned economy can be established. The first and greatest is, in my opinion, the one which the Minister of Finance would only make worse if he succeeded in persuading persons with capital to create new capital goods where there is already a plant capacity in excess of presently effective consumer demand. How can he expect the new factories which might be erected under this plan to sell their output, when the output of the present factories cannot be effectively disposed of? I have stated that the present plant capacity to produce goods exceeds the
presently effective consumer demand, but I have already pointed out that the potential product capacity is eleven billion, while the present production is five billion or less, and the difference undoubtedly could be consumed if it were produced and equitably distributed.
Not long ago a large cement plant was dismantled in Alberta and shipped to Japan. That was not because no more cement was needed in Alberta, but because the effective consumer demand had fallen off. The railways are now talking of tearing up certain parts of their lines. When I was in Edmonton a couple of weeks ago I attended a meeting of farmers and business men who were protesting against the proposed tearing up of a considerable section of the Canadian National railway. They had invested their life-savings, had worked for twenty years, and were faced with the possibility of losing their entire livelihood. I suggest that is a retrograde step. We are not using our present capital equipment. We are using only a fraction of it. The present capital equipment is capable of providing a good living for everybody, but it is not being used. Why should we tear it up and destroy it until we can demonstrate that we have used it for the purpose for which it was created, namely, to provide the people of this country with a living.
There is plenty of capital in Canada. Capital is not the problem. I have here a classification of deposits which I should like to read into Hansard. This classification is based upon an analysis made as of October 31. 1938, of deposits payable after notice. I find here that there rvere 4,122,963 savings deposits in the chartered banks of Canada, but 3,797,481 of them have an average of only $119, a total of $452,808,233.46. Coming up the scale, I find that 284,243 persons have an average of $2,011; 38,077 persons have an average of $8,692; 2,541 persons have an average of $44,030; and 621 persons have an average of $298,285. This means that investors have plenty- of capital to invest, but there is no assurance that if that capital were invested in new production goods, factories and so on, the output of those factories could be disposed of. The reason why a great deal of that money is there is that there is no lucrative channel of investment for it. Therefore, I say, the first great difficulty we are facing to-day is this: People rush blindly in to
compete when excess capacity already threatens the industry.
Mr. Stuart Chase, in his book, The New Deal, shows that 111,000 service stations distributing gasoline in the United States, out of a total of 157,000, are unnecessary, ana

The Budget-Mr. Rowe (Athabaska)
the waste or loss in materials and labour amounts annually to $450,000,000 as a result. This is an illustration of the overlapping and competitive chaos resulting from planlessness, and runs to a greater or less extent through all the fabric of our economic life. Business men have almost no knowledge to-day of production capacity in relation to market demand. With touching optimism, particularly when prices are relatively high, they feel that the new plant or organization which they are about to build is bound, as a result of their superior skill, to take business away from those already in the field, and to prove profitable. This continuous avalanche of new capital into a territory already thickly settled, results in over-production, unemployment, profound maladjustment, and an appalling industrial death rate. The secretary of any active trade association can furnish full details on this point. Money is indeed made, but in a closed market; an equal amount is lost, while the economic structure reels dizzily with repeated blows in a vital spot.
Under our present system there are various ways of making money, all of which operate to the injury of society, all of which make fearful inroads upon purchasing power, none of which could be permitted under a planned economy, and indeed, all of which must be eliminated before a planned economy can be established. It would be necessary to speak for forty minutes on each of these points in order fully to outline each one, but I shall mention some of them briefly, and possibly discuss them more fully at another time.
The foundations of a great many fortunes on this continent have been laid through the creation of monopolies and the raising of prices; the tying up of a patent or a secret process, and charging all that the traffic will bear; the ingenious overcoming of the interest rate in selling credit to the poor. Recent discussions on small loans brought out many startling facts in this regard. The saddest commentary I can make on that is that poor people must pay 26 per cent for money which they need desperately for vital things, while people in better circumstances can get credit at from four to seven per cent.
The manufacturing of a useless, adulterated or even vicious product, and the creation of a demand for it by high-pressure selling and advertising, must be familiar to us all. A toothpaste containing a poisonous chemical may be worth a million to its owners so long as it tastes good and its owners broadcast amusing radio features. Then there is the method, closely akin to this last-mentioned abuse and far more common, of creating a 71492-222
demand for a product which, good in its modest way, deserves no such price as is asked for it and no such use as advertising blasts out for it. According to the American Medical Association, menthol, mixed with alcohol and oil of lavender, is bottled and ballyhooed as giving relief for colds and sold at more than fourteen times the price of the original ingredients. This practice is widespread.
The creation of new fashions in costumes, of fads and novelties, and the astute manipulation of social pressure to market them is another striking feature. One branch of this method has been coarsely called the "annual model racket," applying particularly to the automobile. This includes the sale of smart forms of entertainment. Our recreation is being poisoned by mechanization and commercialization. Arid and unrewarding forms of play are being substituted for direct participation, clicking turnstiles for open hillsides. The manufacture and manipulation of more or less dubious stocks and bonds and the unloading of these upon the public by high pressure methods, are on all fours with the methods employed in connection with patent medicines. In this division there is normally no tangible property at all behind the brightly engraved certificates. The bulk of investment trust securities are a case in point. The men who manufactured these millions of par value paper in the last twenty years were not conscious of any wrong-doing; they merely saw an opportunity to make quite legally a large amount of money. The fact that their activities dried up needed demand for consumer goods, helped to bring on the crash of 1929, and made it worse after it came, was quite beyond their limited vision-an academic point that never touched them.

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