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Published online by Cambridge University Press: 07 November 2014
World events during the past twenty years, the great depression and the war, have challenged economists to improve and enlarge their theoretical framework. The stresses and strains of this period have brought forward vitally important problems which demanded solution. At the same time, these events helped to produce an environment which responded more generously to the social scientist's quest for new data. There can be little doubt that there was an intimate interdependence between developments in economic theory and analysis, and the growth and systematization of quantitative data.
Perhaps the most significant of these developments has been in the field of national accounts. The purpose of this paper is briefly to describe and illustrate this development in Canada, as follows: (1) summary of work on national income in Canada, 1918-41; (2) some principles involved in the new departure of national accounting; (3) the work of the Dominion Bureau of Statistics in preparing national accounts for Canada; (4) some illustrative applications of national accounts to economic analysis and policy; (5) problems of concepts and statistics involved in national accounting; and (6) lines of future development.
A Summary of Work on National Income in Canada, 1918-41. When it was decided in 1944 to undertake the preparation of a new set of national accounts, in line with Canadian needs and developments elsewhere, we were fortunate in having at our disposal a great deal of pioneer work on national income in Canada.
This paper was presented at the annual meeting of the Canadian Political Science Association in Vancouver on June 19, 1948. Detailed acknowledgment has not been possible at all points in this paper. I owe a great deal to the writings on national income which have appeared in recent years, and particularly to those of Richard Stone. I must also acknowledge my great indebtedness to my colleagues in the Dominion Bureau of Statistics. All opinions expressed here are, however my own responsibility.
1 Coats, R. H., “National Wealth and Income of Canada” (Monetary Times Annual, 01 3, 1919).Google Scholar
2 First Annual Report of the Dominion Statistician, for the Year Ended March 31, 1919 (Ottawa, 1919), p. 14.Google Scholar
3 Ibid., pp. 7 and 30-5.
4 Survey of Production in Canada, 1920 and Later (Ottawa, 1923).Google Scholar
5 The National Income of Canada (Ottawa, 1934).Google Scholar The study was made by the late S. A. Cudmore. See also Canada Year Books.
6 Monthly Review, Bank of Nova Scotia, Nov., 1935, Dec, 1935, May, 1937, July, 1938, Sept., 1940, June, 1941, Nov., 1941, and Dec., 1941. The Sept., 1940 Review indicates that “the estimates were originally compiled by Professor D. C. MacGregor of the University of Toronto” and kept up-to-date by the Batik's Statistical Department. See also MacGregor, D. C., “These Insignificant Budgets” (Canadian Forum, 07, 1934).Google Scholar
7 National Income: A Study Prepared for the Royal Commission on Dominion-Provincial Relations, Appendix 4 (Ottawa, 1939).Google Scholar With Bureau participation the study was prepared by D. C. MacGregor, J. B. Rutherford, G. E. Britnell, J. J. Deutsch.
8 National Income of Canada, 1919-1938, Part I, and Advance Report on the National Income of Canada (Ottawa, 1941).Google Scholar These series, constructed under the direction of Sydney B. Smith, were continued, with periodic revisions, in the Monthly Review of Business Statistics, beginning with the April, 1942 issue, and in the Canada Year Books, up to 1945.
9 The figure of “gross home investment,” for example, is adjusted to include an estimate of “capital expenditure charged to current account,” and depletion charges are added back to profits.
10 See “Measurement of National Income and the Construction of Social Accounts,” Report of the Sub-Committee on National Income Statistics of the League of Nation's Committee of Statistical Experts, and Appendix by Richard Stone (United Nations, Geneva, 1947)Google Scholar, particularly p. 8, and chap. VII. “We are not unmindful of the need for certain additional information in connection with some uses of the system but we think that most of the practical uses are best served in the present state of knowledge by avoiding as far as possible those types of estimates for which the operational basis of calculation is obscure” (p. 8). This publication will be referred to in the remainder of this paper as Report.
11 For example, Meade, J. E. and Stone, Richard, “The Construction of Tables of National Income, Expenditure, Saving, and Investment” (Economic Journal, 06-Sept., 1941, pp. 216–33)CrossRefGoogle Scholar, and various articles in the Survey of Current Business and other periodicals, by members of the National Income Division, United States Department of Commerce.
12 See Denison, Edward F., “Report on Tripartite Discussions of National Income Measurement” (Studies in Income and Wealth, vol. X, 1946, pp. 3–23.Google Scholar
13 National Accounts - Income and Expenditure (Ottawa, 04, 1946).Google Scholar
14 House of Commons Debates (Ottawa, Tuesday, 05 18, 1948).Google Scholar
15 See Report, particularly pp. 27-9.
16 A similar set of accounts, with a great deal of detailed information for the years 1929-46, has been published in the July, 1947 Supplement of the United States Survey of Current Business. The design of the tables included here is modelled after Appendix V “National Income and Expenditure of the United Kingdom, 1938 to 1946,” Cmd. 7099 (London, H.M. Stationary Office, 1947)Google Scholar and Stone, Richard, “National Income and Expenditure: A Review of the Official Estimates of Five Countries” (Economic Journal, 09, 1947, pp. 292–6).Google Scholar For a similar set of Canadian tables covering the years 1938 to 1947 see National Accounts-Income and Expenditure, 1938-1947 (Ottawa, 11, 1948).Google Scholar
17 See, for example, the reports to the President of the United States by the Council of Economic Advisers, and Colm, Gerhard, “The Government Budget and the Nation's Economic Budget” (Public Finance, vol. III, no. 1, 1948).Google Scholar
18 Kuznets, Simon, National Income, A Summary of Findings, National Bureau of Economic Research (New York, 1946), p. 117.Google Scholar For a contrary view see Shoup, Carl S., National Income Analysis (New York, 1947), pp. 205–8.Google Scholar
19 Hart, A. G., Money, Debt and Economic Activity (New York, 1948), pp. 161–4.Google Scholar
20 The national income can also be measured at market prices by adding indirect taxes less subsidies to the sum of factor shares. This sub-total appears in the tables of the National Income Division of the United States Department of Commerce under the heading of “net national product.” In the Canadian tables this sub-total is not shown, and the unqualified phrase “national income” applies to “net national income at factor cost.”
21 It should be noted that “gross home investment” includes investment by private business and institutions, and by government enterprises. Government expenditure on durable goods, other than by government enterprises, is excluded. It is included with government expenditure-on goods and services. The figures which follow are taken from National Accounts-Income and Expenditure, 1926-1947 (Ottawa, 09, 1948)Google Scholar and the appendix to the 1948 Federal budget referred to above.
22 “Proposals of the Government of Canada,” Dominion-Provincial Conference on Reconstruction (Ottawa, 1945), p. 5.Google Scholar
23 Profits of government enterprises are included with government investment income in Table IV. Under the present classification, Wheat Board undistributed profits are included with private saving. Accordingly the figures of government investment income and surplus are smaller than they would be if the alternative classification were adopted.
24 National Accounts-Income and Expenditure 1938-1947 (Ottawa, 10, 1947).Google Scholar
25 The Conference on Studies in Income and Wealth of January, 1948 explored the problems involved in developing a “balance sheet” for the United States. See the forthcoming publication by the National Bureau of Economic Research on this subject, particularly the papers by M. A. Copeland, R. W. Goldsmith, and A. G. Hart.
