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Published online by Cambridge University Press: 07 November 2014
When Mr. Aberhart's government took office in August, 1935, it found the provincial treasury empty and a long series of budget deficits. Almost the first act of the new administration was the appointment of Mr. R. J. Magor, a well-known Montreal industrialist, to make a report on the financial position of the province preliminary to an attempt to balance the budget. After a report from Mr. Magor, the Hon. E. C. Manning, acting premier of the province, on December 5, 1935, wrote to the investment houses and chartered banks stating that the government had “been forced to the conclusion that an adjustment in our debt charges seems unavoidable if we are to meet our necessary obligations and balance our Budget”. The co-operation of the investment houses and banks was requested in setting up a medium for negotiation with the holders of Alberta securities with a view to converting the existing indebtedness of the province amounting to about $160 million into new securities bearing “an interest rate of approximately two and three quarters per cent. plus the full Sinking Fund” which the government felt “would approximate the annual capacity of the Province to pay on debt account”. Some compensation for a lower interest rate would be afforded through “alteration of maturities and increased assurance of security”, though it was asserted that the government had “not formulated any cut and dried plan because it desires fully to learn and consider the views of the holders of the securities”. With the Dominion-Provincial Conference about to meet in Ottawa and much current discussion of Loan Council schemes to refund provincial indebtedness under Dominion guarantee, Messrs. Elliott and Walker observe, concerning the attitudes of investment houses to the Alberta government's proposals, that “it was apparently considered unwise to intrude into inter-governmental plans and no complete replies to the Government's suggestions were received” (ch. ii, p. 2).
Courtland Elliott and J. A. Walker. Report to Alberta Bondholders' Committee: A Survey of the Fiscal Problems of the Province of Alberta in relation to the Economic and Social Conditions affecting them. Edmonton, July 17, 1936. The report was mimeographed and privately distributed. The Committee kindly provided a copy for the use of the reviewer, and this copy has been deposited with their consent in the University of Toronto Library. The Committee also issued a mimeographed “Statement of Bondholders' Committee to Alberta Government”, on September 16, 1936. This was widely copied in the press.
2 Analysing the revised estimate of revenue in more detail, other doubtful items may be noted. Messrs. Elliott and Walker anticipate that a 50 per cent, increase in the supplementary revenue tax (a surcharge on the local property tax) will yield an increase of more than 50 per cent. in revenue, notwithstanding that the reported arrears of this tax are almost equal to three years' levies on all farm property in Alberta. It is expected that half of the advances for seed grain, feed and fodder, and tractor fuel will be collected, yielding $375,000, and that the liquor administration will yield an additional $75,000 of profits over and above the provincial treasurer's anticipated increase of $356,000.
3 It is interesting to note that the provincial treasurer was determined to achieve the fiscal orthodoxy of a balanced budget and was more conservative than the investigators in refusing to charge deficits and relief costs to capital. The government had set its face against borrowing “which” Messrs. Elliott and Walker assure us “is the usual method of meeting such an emergency” (chap, iii, p. 1). The suggestion that depressions should be financed by budget deficits comes as something of a shock from bondholders' representatives.
