About eighteen months ago I had begun to fear that Canada might come out of the war with too low rather than too high a price level. I felt that if production and employment averaged little or no higher after the war than before it, and if prices were no higher than in 1944, the national money income would sink to the point where federal revenues would develop an enormous chronic deficit of, say, 30 to 50 per cent of current expenditures. Such might be the outcome, no matter how high the rates of taxation employed. Ultimately deficits of so great a size would lead to an expansion of bank credit and hence to a higher price level, but in the meantime the country would experience a demoralizing series of political and financial crises resembling those in France between 1920 and 1927. In the design of high policy I felt that care should be taken to avoid such an outcome, which would leave our political system and our social structure greatly weakened.

The long delay in making peace and in economic reconstruction threatens to bring upon the world an acute scarcity of United States dollars. Countries overseas, particularly on the continent of Europe, have not made the progress in production and exports which would make possible the balancing of their transactions with dollar countries, except at levels so low as to be ruinous to world trade and a most serious threat to the prosperity of North America. In this situation Canada's role is a dual one. We share with the United States a productive power enhanced by war; other nations need our products in replacing war's destruction; to countries overseas Canadian dollars are as scarce as American dollars. Yet when the United States looks abroad at the ranks of the countries to whose need for American dollars it must seriously attend, Canada is to be found in the line-up.

The familiar features of Canada's economic structure, together with American commercial policy, have conspired to bring it about that our trade with the United States, while naturally greater than with any other country, is an unbalanced one; we buy there more than we are permitted to sell. We must sell others more than we buy from them and use the proceeds to settle our debts in the United States. We are dependent therefore upon the free convertibility and a high value of sterling in New York. When sterling has fallen there, so has the Canadian dollar; when the convertibility of sterling into American dollars has been restricted, rigid control of the use of American dollars has been forced upon us. Thus important policy decisions may well await us in the not too distant future. It is appropriate therefore that we should look again at our past for possible guidance.

In 301 A.D. the Emperor Diocletian, with whom were associated his three co-rulers, promulgated an edict which fixed for the whole Roman Empire maximum prices for commodities, freight rates, and wages. According to the evidence available, and it is certain that the whole edict has not been recovered, price “ceilings” for over 900 commodities, 130 different grades of labour, and a considerable number of freight rates, were fixed and severe punishment promised to all “black market” operators who dared to buy or sell above the maximum. So elaborate a scheme of price control was not tried again until 1,600 years had passed. The reasons that led to this drastic interference in the economic life of the Empire and the success it attained, or rather did not attain, in regulating prices, provide a study for the historian which is well worth while.

The Chaos of the Third Century. In order to understand the circumstances that led to the issuing of this edict, it is necessary to envisage the appalling state of affairs which marked the third century of the Christian era. Utter anarchy engulfed the Roman world; emperors and pretenders to the imperial throne struggled for the great prizes of power. Armies marched and remarched over every province, plundering the wretched inhabitants. In 193 the Empire was put up for sale by auction by the Praetorians, the imperial guards, and bought by Didius Julianus. It is interesting to note that he enjoyed his bargain for exactly sixty-six days. Such cynical disregard for the glory of the imperial purple was too much even for those days and he was murdered. As each claimant reached the goal of his ambition, the first thing he had to do was to pay the soldiery that backed him. The imperial treasury was looted and empty, and the enormous sums necessary to satisfy the army could only be met by piling tax on tax, by confiscating the wealth of opponents and, worst of all, by debasing a currency that already was fast approaching the point when it was next to worthless. In 260, there came the last and most shocking degradation when the Emperor Valerian, who was trying to defend the eastern frontier, was captured by the Persians and held for six years in captivity until his death. The Empire was clearly breaking up in misery and confusion, bankruptcy and anarchy.

That the quantity of money in use by the community tends to rise and fall as the level of prices does, is (I believe) universally admitted. “The Quantity Theory of Money,” said J. M. Keynes in his Tract on Monetary Reform, “states that the amount of cash which the community requires, assuming certain habits of business and of banking to be established, and assuming also a given level and distribution of wealth, depends on the level of prices.” He might perhaps have added, as a summary of the discussion which with these words he introduces, “and vice versa.” Lord Keynes's own formulation of the dependence, n = p(k + rk′), expresses by way of a snapshot what Fisher's celebrated equation, MV + M′V’ = PT, expresses by way of a moving picture; that, the community's business and banking habits being assumed on the one hand, and on the other, the extent and distribution of its wealth, the quantity of money and the level of prices are proportional to one another. Open to argument remain such details as: how to define the quantity of money; and, whereby to measure the level of prices; and, how to judge of such changes in business and banking habits, or in the extent and distribution of wealth, as may change the quantity of money though prices were to stay constant, or raise or lower the price level though the quantity of money were kept unchanged.

The Canadian Political Science Association is doing Laval a great honour in holding its annual meeting here and in asking some of us to contribute to its scientific discussions. We thank the Association very warmly indeed and we are happy that this occasion affords us the opportunity for new and fruitful contacts.

It was suggested that this paper should put forward our ideas relating to the teaching of social sciences. I will do so as simply as possible, without the slightest intention of imposing it upon anyone. In order to be more concrete and more concise, I shall try to set forth, as objectively and as unassumingly as possible, what is being done at Laval and why it is done. It must be kept in mind, at the outset, that the institution I want to report upon is still very young, still in a formative stage, still involved in initial experiments and, hence, still far from having found its final shape.

It is then my intention to put before you our conception of social studies and, at the same time, to describe the faculty which has been set up according to this conception. Since any systematic study always involves two things: a subject-matter and an aim for which it is studied, my remarks will simply follow this sequence pattern.

I Have been asked, before introducing the speakers, to take a quarter-hour to pay tribute on behalf of this Association to the memory of the great economist whose life and work are the subjects of this evening's meeting. I propose to use these few minutes to inquire very briefly into the philosophy and characteristics which made Lord Keynes so great a human being, perhaps as nearly a whole person as the twentieth century can show us.

In a recent article Mr. Harrod has expressed the conviction that Keynes had a more distinguished mind than Ricardo. There is food for reflection in the fact that Ricardian thought developed along two quite different lines, one through the so-called Manchester School and the other through the Christian Socialists and Karl Marx, and that Keynesian influences are already showing a similar bifurcation. On the one hand, we find developing a stereotype labelled a “Keynesian,” presumably preoccupied with unemployment, with a simple philosophy based upon the possibility of management of the economic macrocosm through monetary and fiscal means. On the other hand, we find Marxists claiming Keynes and non-Marxists repudiating him on the ground that the “philosophic implications” of his “doctrines” are Marxist in nature.

With respect to the first line of development, it seems to me that Keynes's devotion was to ends rather than to means, that he viewed means always as experimental, and that it is a central conviction in his personal philosophy that we do not know how human beings will react to a change in environment. For that reason, and also because circumstances alter with the passage of time, we must be prepared always to alter economic modes, or even to “reverse a process” which has been initiated. This is not the philosophy of the Keynesian stereotype.

My paper contains no theoretical aspects of physical planning; it merely recounts the progress that is being made in Great Britain in the pursuit of adequate legal and administrative measures to make physical planning a purposeful reality. The principles upon which the statutory instruments of planning have been devised are startlingly different today from the vague and somewhat superficial considerations which underlay the first planning measures enacted in 1909. In that year the purpose of planning was understood to be the preservation of amenity by regulatory control; today, planning is recognized in Great Britain to be one of the main functions of the internal affairs of government whereby the integration of public and private enterprise is to be achieved so as to insure an ordered and balanced national development. Planning is accepted as the matrix of national endeavour; as an instrument whereby positive development in the national interest may be assured.

Of the 38 million acres of land in England and Wales, about 27 million acres were embraced by planning schemes at the outbreak of the war. The schemes ranged from proposals for the safeguarding of great stretches of moorland in the interests of the preservation of natural beauty, to plans for the redevelopment of small areas of urban decay; and varied, too, from proposals of a purely advisory nature to statutory schemes operating under the planning law of the country. The operative schemes covered an area of a little over a million acres.

I Was asked to write a paper about “Keynes in Cambridge,” to supplement two other papers about his work as a public servant and as an economist. I am glad to do this, but let me explain at the beginning the limits of my qualifications. I worked under him as an undergraduate for two years, 1928 to 1930, and I saw something of him on three later visits to Cambridge in 1931,1934, and 1936. I saw him again in the United States several times during the war when he was representing the Government of the United Kingdom in financial discussions. From all this you will gather that I cannot claim for a moment to have been an intimate friend. Nevertheless I understand I am supposed to write in a rather more personal vein than those who are reading the other papers.

Let me begin by talking, about Keynes as a teacher. During the years in which I happened to work under him, 1928 to 1930, his thinking on monetary theory was changing. These were the transition years between his traditional quantity-theory-of-money approach, in his Tract on Monetary Reform published in 1923, and his novel savings-and-investment approach, in his Treatise on Money published in 1930. He put forward his new ideas in a series of eight lectures—one a week for one term. Obviously the lectures had to be highly condensed and, despite the pleasantness and clearness with which they were delivered, I doubt that many undergraduates got very much out of them. However, they were not primarily intended for undergraduates; Keynes was trying out his new ideas on anyone who cared to listen, and there was always a group of his fellow dons at his lectures, as well as some graduate students who were still rather rare in Cambridge.

Since the end of hostilities in 1945, Canada has been undergoing a rapid constitutional change. The power to make laws on many vitally important matters, which on the outbreak of war in 1939 became vested in the national Parliament either under the emergency doctrine or under the specified jurisdiction over defence, has now almost entirely passed back again to the provincial legislatures. The process of decentralizaton is slower than the former centralization, but it is well under way. A shift in legislative authority is thus in process, affecting such subjects as production and investment control, labour legislation, rent restriction, regulation of prices and wages, man-power distribution, and other essential elements of economic planning. The War Measures Act ceased to be in effect on January 1st, 1946, and the National Emergency Transitional Powers Act which replaced it is being continued on a purely temporary basis. While further prolongation of the latter act may be sought on the theory that the war emergency is not yet over, the mere lapse of time will bring increasing doubt as to its constitutional validity. Sooner rather than later Canada will revert to all the constitutional limitations on the national government which existed in 1939; the one exception is unemployment insurance, the first and only transfer from provincial to federal legislative power made by formal amendment since 1867. The various taxation agreements between the central and local governments, some of which have been renegotiated on an individual basis, have not shifted the legal power to levy taxes but have merely produced a voluntary abstention on the part of some provinces in respect of certain forms of taxation.

The historic controversy over the “rights of the subject” has again come into public prominence and gives evidence of being here to stay for a considerable period. The occasion of the new interest in the topic was apparently the notable departure from customary procedures in the espionage cases, but once attention was directed to the issue additional grounds for grave anxiety were found in the treatment of Jehovah's Witnesses in the province of Quebec. It would be a mistake, however, to consider that these particular examples of the invasion of civil liberties reveal a novel form of arbitrary conduct in Canadian government. The essential conditions of the situation have been present in most parts of the country for many years, though generally unobserved and unchallenged. Indeed, the current alarm might easily have been dissipated and the recent events might have been a warning only to the most sensitive if those responsible had expressed the least nominal regret at their mistakes.

The literature of scientific studies, either demographic, economic, or sociological, on Canadian families, is rather thin. Except for some valuable local monographs and theses interred in university libraries, one must rely almost exclusively on excellent but very few general studies of the Dominion Bureau of Statistics. Among such are the 1931 Census monograph on the Canadian family, the 1937-8 national survey on the Canadian family income and expenditure pattern and, more recently, the remarkable series of studies by Dr. Enid Charles on the trends and differences in Canadian family size as revealed by the last Census of 1941.

The French-speaking part of Canada geographically concentrated in the Province of Quebec represents, within the Canadian context, a culturally and politically conscious social structure. At present, this society, owing to rapid industrialization and concomitant adjustments, includes areas and communities of all the possible transitional shades from the solid, old-settled, rural type, to the more complex, dynamic, and urbanized variety. Studies of French-Canadian families in any of these differentiated areas are also scarce. The traditional type of French-Canadian rural family has been ably studied by the Canadian sociologist follower of the Le Play School of Social Science, Léon Gérin, especially in his monograph entitled the Habitant de Saint-Justin. More recently, Horace Miner scientifically analysed for the first time, the relationships between land and the family in rural Quebec. Both of these studies stress the following basic features of the traditional rural French-Canadian family: a high degree of familism and of internal solidarity, a fundamental functional relationship with the tenure system of large family-ownership of the farm as well as with a peculiar pattern of land inheritance which consists in the passing of the whole farm, undivided, to only one inheriting son in each family.

The purpose of this paper is to present a review of French economic thought. It has, however, definite limitations as to content and scope. First of all, it is restricted to the field of economic theory, because it was simply impossible to cover the other subjects of economic science. It is also limited in its scope, since many economists are not even mentioned. It deals especially with the contributions which, although not widely known, are important in the development of economic theory. Going beyond a simple restatement of the theories as originally expounded by their authors, it seeks to stress points of real interest for us. The following analysis is also purely descriptive; scarcely any criticism will be made of the works reviewed. Finally, in order to avoid subjectivism, which is always possible in essays of this kind, we will use the method of quoting abundantly from the original sources, a method less brilliant, perhaps, than summarizing but certainly more objective, offering, as it does, more direct contact with the authors themselves.

French contributions to modern economic theory may be viewed as a long cycle containing several phases. The first phase, extending from the Physiocrats to Walras, is marked by important developments which are at the origin of all the modern schools of thought. The second phase, which the outbreak of the Second World War brought to a close, is a period of decline; that downward movement can be explained, as we shall see, by several factors. Finally, many signs of revival have appeared in recent years.

The General Theory was written “with the object of persuading economists to re-examine critically certain of their basic assumptions.” In accomplishing this purpose it has been completely successful, for it has influenced a very large proportion of the economic writings, not only professional but popular as well, that have been published during the last twelve years. The purpose of this paper is not to attempt to predict the place in the history of economic thought which it will eventually occupy but rather to point out some of the fields in which its effects are already obvious and important. These effects are attributable on the one hand to its timeliness and on the other to its form and content.

In one sense its timeliness is obvious: during the twenties and thirties in Great Britain, and during the thirties in many other countries as well, unemployment had been severe and prolonged. But it was timely in a more general and significant sense. Many other shocking things had happened, too, and it may not be out of place to recall a few of the familiar details of the British setting. Britain had come through the war victorious and had proudly hitched the pound sterling to gold at the old par of exchange; but London was no longer supreme in international trade; in the early thirties it had fallen to a discount even in time of peace. Income from foreign property had diminished. International trade was decreasing in importance. Taxes were heavy; landed estates were being dismembered; naval supremacy was impaired; the formerly well disciplined English labourers now well organized had staged a general strike; tastes and technology were changing rapidly. In the east, in Russia, a new economic order had arisen; and in the west the United States had become the dominant power in wealth and productive capacity. In the past these things had occurred within a generation.

This case study of union-management co-operation at the Toronto factory of Lever Brothers Limited was undertaken for several reasons. It is an example of the union-management co-operation in which increases in productive efficiency were brought about solely by savings in man-power requirements. Further it is a case of the fulfilment of a collective bargaining demand by co-operation. These two facts, in themselves, are highly unusual. Although this case of co-operation took place during the war and was influenced by war-time conditions, it is in no way a part of the general war-time pattern of labour-management co-operation, stimulated in Canada by the Industrial Production Co-operation Board and in the United States by the War Production Drive.

Historically, industrial relations can be divided into an area of conflict of interest or collective bargaining and an area of mutuality of interest or co-operation. Employee representation tried to integrate these areas, but without the presence of an independent union, management tended to determine unilaterally the conditions of employment. Union-management co-operation later developed the area of mutuality in parts of the railroad, clothing, steel, and printing industries, but with the exception of the clothing industry, little integration was affected with the area of bargaining. During the recent war labour-management co-operation had a mushroom growth, but little attempt was made to integrate the two areas of industrial relations. In Canada, particularly, the role of the union on the co-operation committees was largely undefined. Co-operation at Lever Brothers is significant because it provides a clearcut case of integration between co-operation on productive efficiency and bargaining on wages and hours. Co-operation arose as a result of a demand by the bargaining agency for increased wages and shorter hours, while their achievement was brought about by the joint action of union and management. This, then, provides an example of union-management relations which may have profound implications for the achievement of industrial peace.

The subject of adult education has been chosen for this paper in order to provide a point of orientation for the discussion of certain related social problems of the western farming community. The conclusions are based upon field studies of several contrasting rural communities in Manitoba carried out under the direction of the Manitoba Royal Commission on Adult Education. Some characteristics of governmental institutions, farm movements, and farming conditions are peculiar to that province but basic similarities in the social structure of farming communities throughout the Prairie region mean that most of the findings have a wider application. It is necessary for reasons of space to treat ethnic communities only briefly, but this brevity may be partially justified on the grounds that the British-origin farming community represents the ideal type to which the ethnic communities are assimilating at various rates.

The difficulty of defining adult education may be avoided by noting briefly its place in the educational process. In complex societies the term “education” has commonly been used to apply to the explicit function of the formal institutions through which social groups prepare young candidates for adult participation. It is apparent that, in terms of this social function, education is part of the more inclusive processes of socialization and acculturation necessary to all social groups and carried out in many societies without benefit of formal institutions. To prepare the young for integration in social groups as adults it is necessary that they acquire and incorporate in their personalities at least a minimum of the normative behaviour patterns necessary to various social roles as well as learn such elements of the cultural tradition (systems of knowledge, techniques, value-patterns, language, art, and the other expressional forms) as the adults controlling the training deem desirable. Although an unprecedented amount of training is acquired within formal institutions in our society, these institutions provide only part of the training necessary for social participation as an adult.

Of the forty years of his working life, John Maynard Keynes spent approximately eleven as a public official. These years of public service were broken into three widely separated and differing periods. Of the first two, I know no more than does most of my audience. The Keynes of the third period I had some limited and intermittent opportunity to observe.

The Civil Service was Keynes's first choice as a career—or at least as the beginning of a career. Not achieving the first place necessary for the Treasury, he was assigned to the India Office where he remained from 1906 to 1908. John Morley was the secretary of state for India and the permanent secretary, Sir Arthur Godley, was an experienced and skilful administrator. I mention John Morley because it is well to remember that Keynes knew and understood Morley's generation though the Keynesians do not. I mention Godley because it was under him that Keynes acquired his knowledge of the workings of government and of the official's point of view. He was never thereafter completely an outsider as far as the government service was concerned. There too began his interest in Indian currency and finance which bore fruit in his Essays and in his work as a member of the Royal Commission on Indian Currency and Finance in 1913. To this period too may perhaps be attributed his readier knowledge of India than of the Dominions.

It has been a truism that the distribution of income is relatively fixed. The slope of the Pareto curve of income may change slightly in the various stages of the business cycle; but it oscillates about a norm, it does not fluctuate at random. It conforms itself to relative productivity.

Relative income is important socially as well as economically. Income is one of the major yardsticks by which people establish themselves in a social hierarchy; and any attempt to alter the income pattern may be expected to produce serious disturbances. The new situation can persist only if the relative supplies of labour of different grades are correspondingly altered. Otherwise unemployment may be expected.

The distribution of income among wage-earners has been sharply altered since 1939. There was a very strong tendency to give wage increases as so many cents per hour and not as a given percentage of the previous wage. The cost of living bonus was so designed; and its pattern was followed by the large industrial unions when they demanded further wage increases. The total of increases given in this fashion was large enough to narrow sharply the percentage spreads between the skilled and the unskilled occupations. The present situation is one of unstable equilibrium and the study which follows attempts to measure the degree of distortion in the wage structure and therefore to indicate how much change must be made in it before it is again normal. The broad fact is clear; all that can be claimed for this paper is that it helps to give precision to what is now vague common knowledge.

Mr. Mackeigan has done me the honour of contributing, in the November issue of this Journal, full-length “Notes” in answer to my article on “Patents in Relation to Monopoly,” published in the August issue. If I now appear for the purpose of making the usual rejoinder it is not to be taken that I do so in any controversial spirit but only in an endeavour to answer his allegations and, if I can, to restore the patent system to the position it was in before it suffered the not inconsiderable knocking about which it has received at his hands. In doing so, I hope that I may make my points as temperately and as gracefully as has my learned friend, whose treatment of the subject from his point of view has been, if I may say so without impertinence, wholly admirable.

I must begin by taking sharp issue with Mr. MacKeigan on one point. I did not, as he says, extol the “theoretical adequacy of the Canadian Patent Act as an instrument to prevent abuses of patents.” I did and I do extol its practical adequacy for such purpose by reason of the provisions regarding compulsory licensing and revocation in case of abuse. And in this I interpose no mere ipse dixit. It would be a simple matter to append quotations from a multitude of sources which would build up an impressive body of opinion confirmatory of my statement. But I shall content myself with two extracts: The first of these is from an author in the United States who, in discussing cartels and the patent system, observes: “The most concrete and constructive suggestion for patent reform as a solution of the cartel problem calls for the compulsory licensing of patents when they have been used to foster international cartels, e.g. by the allocation of markets. … Compulsory licensing would be expected to remove the most serious obstacles which our patent laws at present interpose to the solution of the cartel problem.”