CANADA’S ECONOMY

Otago Daily Times, Issue 27039, 25 March 1949, Page 4

CANADA’S ECONOMY

The announcement by the Canadian Finance Minister that he expects a surplus of 410,000,000 dollars in the 1949-50 financial year is evidence that the Government intends to continue the policy of budgeting for heavy surpluses which it has maintained for the last two or three years. That policy, however, is to be slightly,- moderated, perhaps in answer to rising criticism. The surplus for next year is expected to be considerably below that of last year —575,000,000 dollars—and the difference can be accounted for by tax reductions. These are substantial, but taxation will still be high. The purpose of this heavy taxation has been, at least in part, the Government’s desire to build up funds with which to pay producers for goods exported to Great Britain for which that country cannot at present pay either in sterling or in goods. The policy is the outcome of the fact that Canada has to reconcile dwindling cash markets with mounting import needs. In a statement issued in January the Minister of Trade, Mr C. D. Howe, stated that the past year had been marked by the highest levels of production of external trade in peace-time history and levels of income and employment had never been exceeded at any time. Against this he admitted that the dependence of Canada’s domestic prosperity upon foreign trade was never more apparent than during the past year. A better indication of the state of the country’s economy than is provided by budget surpluses is given by the reserve funds which are much healthier as the result of the checking of the dollar drain and the reduction of the debt to the United States. The improvement in the position with the United States is partly the outcome of the Government’s action in restoring the Canadian dollar to parity with the American dollar and to the emergency import control programme introduced last year. Again, the reduction in tariffs obtained through the Geneva trade agreements has given a stimulus to Canadian exports to the United States. But, while the difficulties of Canada’s international trade position have become more explicit, the real progress which the country has made is also becoming more apparent. For example, Canada is now the third largest trading nation in the world. During the war a remarkable effort was made in industrial development, while primary production was adjusted to the increased needs of Great Britain. Since the war this industrial development has con-

tinued, necessitating a large expenditure on capital goods. Canada has more to export now and must find new outlets which can offer reciprocal trade to make up her natural deficiencies. Hence the interest which Canada has consistently displayed in the various conferences to break down the barriers of international trade. The same fact also explains why an international trade fair, sponsored by the Government, is to be held in Toronto in the near future.