The significance of navigation in the economic development of a region penetrated by the St. Lawrence to the south and by Hudson Bay to the north has been evident in concentration on production of raw materials for consumption in the highly industrialized area of Europe, and in problems which have arisen with intense specialization, such as unused capacity in terms of vessel space as a result of inability to secure a balanced two-way cargo. The green fishery as conducted from French ports on the banks and along the coast required heavy outbound cargoes of salt to balance return cargoes of fish, but the dry fishery, which became important with the development of Spanish trade at the beginning of the seventeenth century, required smaller quantities of salt and equipment on the outgoing voyage and made necessary the carrying of ballast. The English dry fishery in Newfoundland involved a further lack of balance in that crews necessary to carry on the industry were larger than those necessary to man the vessels, and, because of the seasonal fluctuations and agricultural limitations of that area, men were carried back at the end of the season. Sale of fish in the markets of Spain and the Mediterranean necessitated the dispatch of vessels to England with the men necessary to carry on the fishery, and additional larger vessels (sack ships) with cargoes of fish to market. The addition of sack ships lowered the cost of provisions and facilitated the beginnings of a settlement in which men remained over the winter. Consequently, competition between sack ships and fishing ships for cargoes of fish and for profitable return cargoes of salt, tropical products, and specie from Spain and the Mediterranean to England, contributed to the long severe struggle which dominated the history of Newfoundland and placed severe restrictions on the introduction of political institutions. New England, with a winter fishery and a favourable area for the development of agriculture, lumbering, and shipbuilding, offered possibilities of all-year-round operation. Settlers rather than ballast, therefore, were brought to New England. Expansion of settlement contributed to more effective exploitation of the fishery, shipbuilding, and trade and to the decline of control of fishing ships from England. Numerous small New England vessels extended the fishery to the banks and the shores of Nova Scotia, participated in the coastal trade to Newfoundland in spring and summer, and carried products to the West Indies to exchange for sugar and molasses in winter when these products came on the market and there was freedom from hurricanes. Relative absence of unused capacity in New England shipping meant low costs and contributed to rapid economic development which facilitated control over Nova Scotia after the expulsion of the French in the Treaty of Utrecht in 1713. The expansion of New England involved a continued drain of labour from Newfoundland and weakened the position of settlement in that area.

The term “sterling area”, which came into existence immediately after Great Britain's departure from gold on September 21, 1931, has become increasingly current, so that at the present time it is generally accepted in the terminology of international economics. The term sterling area, or sterling bloc, is necessarily extremely loose. In no sense are the countries contained in this group bound together in a formal monetary union. Nor can the boundaries of the area be defined precisely. As generally understood, however, the sterling area includes those countries both within and outside the British Empire whose currencies are closely linked to the British pound and whose monetary policies are governed more or less directly by those which may be followed from time to time by the British Exchequer and the Bank of England. It includes, in addition to the Dominions and colonies, Argentina, the Scandinavian countries (whose currencies were more promptly and more closely linked to sterling in the 1931 crisis than even those of the Dominions), Finland, Portugal, Egypt, Palestine, and some smaller countries.

In contrast to the gold bloc, whose scope is limited strictly to currency problems, the sterling bloc is also to a certain degree an economic bloc. That is, trade within the sterling area represents a fairly large proportion of the total foreign trade of the countries included in that group. The attempt to forge closer links of currency and trade with the countries of this group has now become a well recognized principle of British foreign policy. The instruments which Great Britain has used in forging these closer links are represented by the Ottawa Agreements of 1932, by the reciprocal trade pacts with non-Empire countries, by the maintenance of stable exchange rates with these countries, by securing favourable treatment in exchange allotment, by the development of central banks in the Dominions, and by giving preferential treatment in the matter of international loans, which are, or at least may be, of vital importance in maintaining stability of exchanges in relation to sterling.

From 1905, when Saskatchewan was made a province, to 1911, the Liberal party in Saskatchewan controlled both the federal and the provincial patronage. These six years gave it an enviable opportunity for laying firm foundations for a political organization. During the next ten years the federal patronage was in the hands of a Conservative or a Union party but the more important provincial patronage remained with the Liberals. Then in their last eight years of uninterrupted power, the Saskatchewan Liberals once more had the support of a federal Liberal government. Thus for twenty-four years after the formation of the province the Liberal rule over Saskatchewan was uninterrupted, and for fourteen of those years the Liberals also ruled over the Dominion. Until a few years before its defeat in 1929, it seemed as if the longer the party remained in power the stronger grew the party organization. It is this long period of development under favourable conditions which makes the Liberal organization in Saskatchewan worthy of close study.

The Liberal party in Saskatchewan, like Liberal and Conservative parties in the other provinces, had two sides to its organization—one formal and ineffective, the other informal and effective. In its formal aspect it resembled party organization elsewhere. The Liberals in each polling sub-division elected one or two representatives. These met to elect a constituency executive. Each constituency executive had one representative on the central council of the provincial party, on which there also sat the executive elected at a party convention. This formal organization, which paid so strict a homage to democratic theory in its pyramidical structure based upon the people's will, was unimportant. The constituency organization, for example, did very little; it met, perhaps, once a year. The formal organization constituted a democratic façade which hid from the common gaze the naked autocracy of effective party management. In the effective party organization which did the work, won the elections, and consequently possessed the reality of political power, appointments were from the top down.

While the net effects of the Reciprocity Treaty, 1855-1866, are difficult to estimate, it has been generally held that the Maritime Provinces gained more than did the province of Canada. The rapid development of central Canada and the painful readjustments of the Maritime Provinces since the abrogation of the treaty and the consummation of Confederation may seem to justify this conclusion, but the following analysis of the trade statistics of the period suggests grave doubts as to the validity of this interpretation. It appears that it was the province of Canada that had most to gain from free access to the American market.

The simplest and most general test of the efficacy of any trade policy is the measure of increase or decrease in those branches of commerce that it was designed to influence. In order to apply this test, a table has been prepared (table I) showing for the province of Canada and the Maritime Provinces the percentage changes in exports to, and imports from, the United States. In each case the imports and exports for the years 1854 to 1866 are shown as percentages of those for the year 1853. Had 1854 been chosen as the base year a slight advantage would have been gained for the thesis of this paper, but the results would not have been materially different.

The evidence presented to the Royal Commission on Banking and Currency in Canada, 1933, is preserved in some three thousand five hundred multigraphed foolscap pages. There are fifty or sixty copies in existence. A number of these are in the possession of those who were attached to the Commission and of the Canadian banks: others are to be found in certain Canadian libraries: and that is about all. There is only one other avenue of access to the material. During the course of the proceedings the Financial Post of Toronto published a weekly summary of the more important submissions; and the daily papers throughout the country printed extracts irregularly. It is, therefore, clear that few people have had, or will ever have, the opportunity to become familiar with the evidence. And even those who have access to the copies available in libraries will be confronted by a vast, undigested, poorly indexed mass of material.

Hence this article. It has two objects. It attempts, in the first place, simply to describe the evidence to those readers who either have not the inclination or the ability to consult it. In the second place, it attempts to guide those who may in the future wish to consult it away from the more arid patches and towards the oases. In what follows, I find myself between two fires. Since I was fortunate enough to be attached to the Commission in a minor capacity, and the only economist so attached, I am tempted to give a critical review from the standpoint of an economist. On the other hand, my connection with it imposes some restraint upon my remarks both regarding the Commission itself and those appearing before it. Indeed, as I write, I feel acutely conscious that I am compassed about by a great cloud of witnesses. To those who, reading this article, feel that I have done them any injustice, I apologize, asking them to bear with me, remembering the magnitude of the task of condensation which I am undertaking.