Evening star., 1943-06-21
Canada Fights InfIution

Canada Fights Initiation
The inexorable pressure of total
war upon even the most wisely regu-
lated national economy is illustrated
by mounting difficulties in Canada.
Our northern neighbor enjoys de-
served reputation for the compre-
henslve measures taken betimes to
maintain economic stability and
combat inflationary trends. The
result has thus far been much bet
ter record in such respects than our
own.
Canada entered the present war
from its very start in September,
1889, two years ahead of the United
States. That was also true of World
War Number One, from which it
grievously suffered economically.
Determined to profit by those costly
lessons, Canada resolved to regulate
its wartime economy this time as an
organic whole instead of dealing
with problems piecemeal as they be-
came pressingly urgent. Accordingly,
the Canadian government presently
established an overall, horizontal
price ceiling, including wages and
salaries, all of which were frozen"
at the levels of November, 194l.
This basic formula was not inflexi-
BILE. 1t could be modified under ex-
ceptional circumstances But the
burden of proof for any specific
change was on the complaint and
the need had to be convincingly
demonstrated to the Dominion War
time Prices and Trade Board which
administers the system. Wage and
salary increases were bound up
strictly to living costs. Price rises
were sometimes averted by govern
ment subsidies, granted, not so much
to hold down the general price level
as to assure continued adequate pro-
duction of essential goods or products
in specific lines.
Until recently, this pioneering ex-
pertinent worked extremely we'll.
This was notably true of living costs.
These had begun to rise with the war
and rapidly accelerated, so that
when the ceiling was imposed in No
vember, 1941, it stood at 14.6 per cent
over September, 1899, the velocity of
increase just before the ceiling i'm
position being IA per cent monthly.
But, from the establishment of the
ceiling to last April, the further rise
was only 81 points, whereas in that
same period the rise in the United
States was approximately 116 points.
This gratifying record may not,
however, be maintained, according to
a report recently issued by Donald
Gordon, Dominion price director,
chairman of the board which en-
forces the ceiling. A survey COM
pleted by his economic experts re-
veals- pressures on the ceiling from
many quarters, especially from wage
demands and price rises urged by
farmers. Mr.. Gordon points out that
yielding to those pressures would
crack the ceiling, asserting: If we
Canadians cannot hold down food
and labor costs, we shall have to
abandon our price ceiling"
Mr.. Gordon gives as one of the
prime reasons for the current inf1a-
tionary trend the widening gap be-
tween disposable income and avail
able goods. He shows that, this year,
Canadians as individuals will have
some $400, 100000 more to spend than
they had in 1912, but that there will
be $500 100000 less goods for them to
buy. This "inflationary gap" has
arisen despite war taxation heavier
than ours and designed to mop up
surplus purchasing power. Those
figures may look small to us, but
they apply to a nation of only H.
100000; so the inflationary impact
is proportionately severe.
All this shows that even the wisest
and most scientific planning may
delay and mitigate but cannot wholly
avert the disrupting effects OF total
war upon the economic life OF any
nation engaged therein. Those ef-
fects are too all-embracing for any
system fully to compensate the
destructive processes now at work.
Yet Canada is doing its best and
offers us an example by which we
can profit in many ways.