The pulp and paper industry has fallen on evil days since 1929. It is still our largest manufacturing industry both in value of output and amount of payroll, and still ranks second only to wheat among the export staples on which our economic life is built: in the calendar year 1934, wheat provided just over 20 per cent, of the value of our exports; pulp and paper, 17¼ per cent, a gain of 4¼ per cent, since 1930. Unhappily it is also second only to wheat in the calamities which have overtaken it. In 1933, its salary payments were barely 68 per cent, of the pre-depression figure, its wage bill not quite 50 per cent., its bond and debenture interest payments less than 15 per cent., its dividends about 9 per cent. Mr. C. P. Fell, in his valuable chapter in The Canadian Economy and its Problems, says that “mills having 58 per cent, of the total Canadian [newsprint] capacity are in bankruptcy or receivership, or are passing, or have recently passed through, some form of reorganization; … they include five out of eight of the larger newsprint manufacturers in North America.”

The general decline in prices and consumption will explain only a small part of the disaster. It is tempting to dismiss the rest as no more than an instance of the common plight of all export industries; especially as the only section of the pulp and paper industry in a reasonably satisfactory financial position is the small group of firms producing fine paper and specialty goods for the protected home market. But this explanation also is hardly adequate. The Canadian wheat grower has had to contend against the vagaries of nature, against foreign tariffs, quotas, and other such restrictions, against a considerable expansion of home production in his chief markets, and against the formidable competition of exporters from countries with depreciated exchanges. The Canadian newsprint manufacturer, on the other hand, faces no such obstacles. On the contrary, he has free entry into the United States market, and, until the worst of the depression was past, enjoyed the advantages of a depreciated exchange, netting him at times as much as $8.00 a ton, and an average of $3.00 in 1933. It is necessary, therefore, to look deeper to discover why the industry has suffered such exceptionally severe losses.

Whatever may be regarded as the immediate motives which impelled the Price Spreads investigation it will be generally agreed that a careful examination of the Canadian economy as a whole is long overdue, and that present conditions and current trends require the formulation of intelligent and co-ordinated economic policies. We are now in the sixth year of a major industrial depression and, while there has been a substantial measure of recovery from the low points of 1933, there is no clear indication of continued improvement and there is at least a possibility of the crumbling of the statistical ledge to which we have been rather precariously and nervously clinging for the past twelve months. Canada, with its large measure of dependence on the exports of two or three staple products, has always been in a vulnerable position, but this has been greatly accentuated by the widespread trend towards economic nationalism and self-sufficiency. Our professional optimists to the contrary, Canada has been one of the heaviest sufferers during the past five years and the outlook for the future is still uncertain and still threatening.

It is not necessary to elaborate the familiar problems of the Canadian economy: an income that fluctuates violently with the volume and value of our exports, and expenses that are made highly rigid by the dominating factors of heavy overhead costs; the wide differences in the technological problems of the several major industries; the concentration of staple industries in specialized geographical areas and the growing political and cultural domination of metropolitan centres which accentuate political and economic sectionalism, and at the same time a high degree of concentration of the control of finance, commerce, and manufacturing on a national scale—a concentration to which it is difficult to apply social regulation and control within the present framework of the British North America Act.