While there is nothing unusual about the practice of giving special price assistance to particularly needy producers in times of emergency, the provision of agricultural price support as a matter of general policy is a comparatively recent development. Despite this fact the circumstances surrounding the adoption of the policy have indicated a considerable variation in objectives. The diversity of aims can perhaps best be shown by a few specific examples.

The agricultural price support provided in the United Kingdom during the past decade or more was designed to achieve several purposes. It was supposed to bring about a very definite improvement in the net income and purchasing power position of farmers generally. It was intended to act as a stimulant to production so that the country could become, agriculturally, more self-sufficient and foreign exchange could be conserved. In addition there was the hope that, by increasing the profitability of farming, it would make it financially possible to take advantage of the latest technological developments and thereby increase productive efficiency. All these results were expected to flow from guaranteed prices based on costs and announced well in advance of production.

Since well before the turn of this century economists have been attempting to explain the phenomena associated with pricing in the transportation industry. Of recent years this subject has received both descriptive and prescriptive treatment at the hands of welfare economists. In the course of this paper it will be argued that the current descriptive theory is based upon a fundamental misconception of the nature of transportation output and that, in consequence, the policy prescriptions, even when they are right, are usually right for the wrong reasons.

As a starting point it will be useful to recall a controversy which began with a journal article, written some sixty years ago, in which Professor Taussig was endeavouring to show that railway rates could be fitted within the framework of general price theory. He argued that the wide differentials which were apparent in the railways' charges for their services could be explained by the preponderant influence of joint costs. If this were true, the rates charged for output A would be the consequence of passive adjustments in price to changes in the output of B in response to changes in demand for the latter product. Actually Taussig argued that the commodities transported (e.g., coal and copper) were sold to different consumers and should be treated as different products. Many years later the criticisms of Professor Pigou precipitated a lengthy debate over the validity of the joint cost doctrine, Pigou contending that railway output was homogeneous and measurable in units of ton-miles.

In both Canada and the United States the agricultural programmes that attempt to support or raise the level of farm prices were conceived during the inter-war period of readjustment and depression. Now that we have had ten years of full employment and high-level incomes in our respective economies, it is perhaps time to reassess the role of support prices.

The reassessment that I propose to make is based on the assumption that we will be able to maintain full-employment economies most of the time and that if a depression should come, it will be relatively mild and of reasonably short duration. Fear of war, war, and preparation for war are likely to lead to a full-employment economy for some time. It may not be too much wishful thinking to believe that if the happy era should come when war no longer serves as an impetus for aggregate demand, our economies will be guided by competent monetary and fiscal leadership and will be able to maintain a fairly even keel. The mild recession which the United States experienced in 1949 and which had almost ended before the fateful attack in Korea offers some support for, though obviously not confirmation of, this view. In any case, we should clearly separate in our thinking and in our actions the problems of agricultural price policy as they relate to conditions of full employment and to conditions of depression.

In the Spring of 1951, after more than three years of planning, the organized leadership of the Canadian co-operative movement made a determined effort to persuade the Government of Canada to support before Parliament a bill to incorporate a national co-operative credit society–a national co-operative central bank. While this attempt did not succeed, the co-operative leaders, far from abandoning the proposal, intensified their efforts to secure this incorporation, and a campaign is being conducted throughout the country. In this article an examination will be made of the central co-operative credit societies now existing in the different provinces of Canada; their economic function will be considered and elements of strength and weakness found in them will be analysed. While the emphasis will centre on the provincial units, certain observations on the proposed national co-operative credit society will also be made.

The principles of co-operative banking can be derived from observation of existing institutions. During the 1930's well-developed systems of co-operative credit were operating in almost every civilized country in the world. While these banking systems professed a certain similarity of purpose, embracing such characteristics as non-profit operation, low interest rates to borrowers, the accumulation of funds for the development of co-operatives, and the like, they exhibited a wide variety of organizational structures. Some of these societies served only co-operatives, while others dealt with the general public; some served only credit societies, others all types of co-operatives; some were primarily systems of agricultural credit, while others served urban tradesmen and producers; some operated under the aegis of the state while others were independent of state aid; some practised open membership, while others accepted as members only certain racial or religious segments of the population. Thus the problem of classification of co-operative banking systems is a difficult one.

During the last two centuries economic and demographic changes have taken place with unprecedented speed. The population of the world, after several centuries of stability, has increased from 728 million in 1750, to 1,171 million in 1850, and then to 2,171 million in 1940, a phenomenal leap of 1 billion in ninety years. Meanwhile the European whites, the most prolific of the world's races in the eighteenth and nineteenth centuries, were streaming overseas. From 1815 to the 1920's, some 55 million Europeans emigrated; about 19 million of them were from the British Isles. Some 36 million settled in the United States, over 4 million in Canada, 10 million in South America.

The outlines of the demographic phenomena associated with this expansion are well known; perhaps even better known are the revolutionary agricultural, scientific, industrial, and commercial changes of the same period. The succession of events need not be traced here; and of the actual increase in aggregate or per capita productivity of the industrialized nations no precise estimate can be made. The rise in the gross value of international trade from $3 billion in 1840 to $40 billion in 1913 is one indication of the expansion of economies.

On May 1, 1851, Queen Victoria, accompanied by the Prince Consort, to whom must be given credit for the undertaking, with the royal family, the ministers of state, ambassadors, and a great throng of all who were famous in the United Kingdom, opened the Great Exhibition housed in the Crystal Palace, “that blazing arch of lucid glass.” A massed choir of a thousand voices—the Victorians loved massed choirs and massed orchestras—sang an ode composed by Tennyson, the Poet Laureate, in which they praised “the invisible, universal Lord,”

Who lets once more in peace the nations meet,
Where Science, Art and Labour have outpour'd
Their myriad horns of plenty at our feet.

The exhibition was off to a good start, and its success was phenomenal. Fourteen thousand exhibitors from all the leading nations of the world had brought the best they had of their wares. Six million visitors, brought to England by the new steamships and to London by the new railways, came to see the marvels displayed, and thought it all very wonderful. And it was wonderful; nothing like it had ever been seen before. It was the apotheosis of the Industrial Revolution. The Victorians believed in Progress; they had every reason to believe in it and the Crystal Palace was its outward and visible sign. The entrepreneurs, the manufacturers were entirely satisfied with things. Everything was for the best in the best of all possible worlds. God was in his heaven and all was right everywhere; or at least it was all right in Manchester where they made fortunes from cottons; and in the Black Country where, under the shadow of those “dark satanic mills” which had vexed the gentle soul of William Blake, they were making even greater fortunes.