Innovations and Maritime Economy

INNOVATIONS AND THE MARITIME ECONOMY

THE FOUNDERS' DAY ADDRESS

AT THE

UNIVERSITY OF NEW BRUNSWICK

FREDERICTON, N. B.

FEBRUARY 14, 1949.

BY

BURTON S. KEIRSTEAD, B.A. (OXON)

Chairman of the Department of Economics and Political Science, McGill University

After expressing his deep pleasure at being back home in Fredericton, and his appreciation of the honour U. N. B. had done him in inviting him to deliver the Founders' Day Address, Professor Keirstead said:

The Founders, whose wisdom and foresight we celebrate today, established this institution to play a two-fold role in the life of the province. It was designed to maintain the aristocratic tradition and cultural inheritance of humane learning, and it was to serve to make available to the people of the province knowledge of the useful arts to alleviate their life and to increase their welfare. The University still serves, and serves loyally these two purposes. It has remained true to its dedication. The Founders knew what they wanted. They knew, too, some of the problems and difficulties which the Loyalist people would have to face, and the virtues and strength they brought to face these difficulties.

They had come to a new country. It was one which possessed some wealth, but it was uncleared, its resources were unknown, and it was competing for existence, so to speak, against communities which had long since been cleared, developed and settled, and which had already established lucrative trade connections and achieved wealth and prosperity. The Founders realized that the new colony, under these conditions, would have a long hard struggle, that there would be hardship and disappointment. They believed, however that the men and women who had come to New Brunswick brought with them the courage, skills, knowledge and determination necessary to overcome these difficulties and to build up a flourishing and prosperous British community in this land. I will draw your attention, if I, may, to the emphasis the Founders put upon knowledge and skill. It was not in the unknown and problematic natural wealth of the land in which they put their trust, but, as they would say, "under God", in the capacity and knowledge of the people. The handicaps of history and geography were to be overcome by the determination and knowledge of men.

The subsequent history of the province showed the wisdom of the Founders. The province proved not to be rich in good agricultural land, but it possessed one invaluable resource,—great stands of white pine, which an ingenious and adaptable people were quick to exploit. On this single resource the great wood and wind economy was established, and New Brunswick ships sailed all the oceans and carried a significant proportion of the commerce of the world. The prosperity of the days of the clipper ship has not, however, endured, and, in the words of a former premier of Nova Scotia, many Maritime communities of these later days, have found themselves "left behind, derelict, so to speak, in the march of progress".

It is into the causes of this, shall I say failure of development, that I wish now to inquire. There are two popular schools of thought which claim to explain this failure of the Maritime economy, and I doubt if either of them has the true explanation. One point of view is that of people who fix their gaze on political history and political developments, and who seem to exclude any other considerations. They find that New Brunswick, and the Maritimes generally, were prosperous in the days before Confederation, and that since the formation of the Union these Atlantic provinces have never enjoyed a prosperity comparable to that of the rest of the Dominion. They conclude by a natural, if fallacious, process of thought, that Confederation has been the cause of our discontents, and that, but for this political event, the Maritimes would have continued to flourish and to prosper. In their language, the Maritimes got a raw deal. This school of thought is, unfortunately, only too common among our people. I can remember when a certain newspaper of this province was so convinced of the truth of this fallacy that anyone who would not subscribe to it was regarded as the agent of a foreign power, the foreign power being, in this case, not Russia or Germany, but an equally hostile land called' Canada.

The other school of thought, to which I referred, was based on what was believed to be hard-headed, down-to-earth economic thinking. According to this school, the Maritime provinces were poor in resources, and were inevitably doomed to sink into relative poverty and decay, as the greater wealth of the Dominion was discovered, and the new lands opened up. Reciprocity with the United States offered the Maritimes some benefits between 1854 and 1866, when the American states were enjoying a great boom, and it was the end of reciprocity, not Confederation, which brought Maritime prosperity to an end. Since then, these people point out, the history of the Maritimes has been like the history of the New England States, the history of an area poor in resources, gradually declining in wealth and importance, as the great resources of the new lands to the west were opened up. In an extreme form this theory is set out by an American historian who said, "had the Pilgrim fathers landed in California instead of Massachusetts Bay, the Atlantic Coast would not yet have been discovered".

This point of view is widely held, I discover, among the business men of the central provinces. I have repeatedly run across it, frequently accompanied by the 'corollary that the sensible thing for people of the Maritimes to do is to leave these wretched provinces and come up to central Canada to form a cheap supply of labour for the industrialists there. "Nobody will invest capital in the Maritimes", they say.

Well, I haven't a great respect for this view either, though it is the view taken in certain provincial political circles in Canada. (I hope you will not feel there's any duplicity in the language in which I drew up this criticism). According to them, if the Maritimes are poor, it is their own fault, and no federal government should attempt to distribute to the poorer provinces services supported by taxes levied against the richer. That is what these politicians mean, when they say they stand for provincial rights. They mean that they stand for the rights of Quebec and Ontario to disregard the problems and conditions existing in the Maritimes and the Prairies. Intellectually this is an understandable point of view, as long as we think in purely provincial terms and refuse to think of Canada as a nation whose people share a common lot.

Now I believe this latter view of Maritime economic history is about as fallacious as the former one. It is shallow, superficial, and one-sided. As the political view, so popular in the Maritimes, neglected certain economic facts, so the economic view, so popular in St. James Street, Quebec and Queen's Park, neglects certain political facts, and, for that matter, certain economic facts as well.

Of recent times economists have been attempting to make a new approach to the interpretation of economic history. We have been trying to understand the process of economic change. I want to try to look at the problems of Maritime economic history in the light of some of the things we have been finding out.

We believe now that the location of industry depends in large measure on what we call innovations. By an innovation we mean the application to production of some new invention or some new process. It may be an engineering invention, such as the steam engine. It may be a chemical invention such as the Bessemer process. It may be a management invention such as the dictaphone. Or it may be an organizational invention, such as the conveyor belt, which is basic to mass production. Practically all these innovations have had the result of making both more possible and more profitable large scale plant units. And this has meant that industry gravitates towards the market, rather than towards the source of raw materials. Indeed innovations in transportation have so reduced the cost of moving raw materials, together with preferential rail rates which favour bulk freight, that proximity to populous markets has come to be one of the prime considerations in determining the location of manufacture. Availability of power, not,—I emphasize this because it will be important in what I have to say later on,—cost of power, is a further important consideration, because the innovations making for large scale plant require inevitably great power consumption