Newfoundland History

Newfoundland Looks Ahead:

No Easy Choice

[For the source of this document, see the end of the article.]

The experience of 12 years, five of them among the most prosperous in the island's history, has not sold the people of Newfoundland on government by com mission. Neither, on the other hand, has it convinced them of the ultimate blessings of dominion status.

 

As they now appear to realize, neither the successes of one system nor the failures of the other are entirely the responsibility of the individual forms of government. Economics rather than politics are the prime factor in Newfoundland's existence.

 

In deciding her future form of government, Newfoundland is faced with a choice, not of democracy versus commission dictator ship - that would be easy - but of financial independence and all it can mean. Basically the question is: Can Newfoundland afford democracy?

 

Under the commission form of government - a tribunal responsible only to the Dominion's office - Newfoundland's deficits are guaranteed by the British Government. A budget can be planned on a basis of need. As a dominion and a democracy there would be no such choice. It would be a straight matter of available revenues determining possible expenditures.

 

It is these factors more than the straight political constitution which confront the national convention. Newfoundland has been independent and dependent. The problem is, which system can provide her people most efficiently with a standard of living which today is universally demanded in the western world. The system of politics must take second place to this.

 

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When the Newfoundland legislature surrendered its rights in 1933 the public debt stood at $100,000,000. Deficits were running at a rate of $1,000,000 and up and the credit of the country was exhausted. But the change to commission government made no real improvement except that it allowed for a refunding operation which saved some $2,000,000 in interest rates.

 

A table of revenue and expenditure, ordinary account, covering the period 1929-1930 to 1939-1940 shows a deficit each year. But with the commission came the guarantee of Britain and the deficits ceased to have the crippling effect they had had under dominion status.

 

In the years from 1940 on the per capita income for Newfoundland rose steadily and a conservative estimate would place it at around $300 against approximately $150 in the pre-war years. For this the commission can take little credit. External forces in the form of enormous war expenditures by Canada and the United States were chiefly responsible.

 

The economy of Newfoundland depends fundamentally on fish, wood and iron. More than 98 per cent of Newfoundland's exports, in terms of value, are obtained from these three products and the demand or lack of demand for them determines the prosperity or otherwise of the island.

In 1940, out of exports totaling $32,827,000, wood exports contributed more than $17,000,000, the sea $8,000,000 and mining $7,000,000. But though fishing may trail lumber in value received, in terms of employment it remains far ahead. The 1935 census listed 88,710 persons gainfully employed. Of this figure, 36,886 were connected with fishing, against 4,400 in logging and 1,800 in mining. The totals for logging and mining are no doubt now substantially increased.

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The commission has worked on the assumption it is merely an interim government and its main efforts have been devoted to broadening the island's production potential with some degree of success. The Fisheries board has put the fishing industry on a sounder basis, while agriculture, forestry and mining have been aided with government funds.

 

In addition, the commission has sought to improve public standards of health and education, and expenditures on public welfare have been increased from $800,000 in 1932 to approximately $3,000,000 in 1945.

 

An indication of the extent of Newfoundland's war-born prosperity lies in her bank deposits which last year amounted to $110,821,000. In 1935 they were $30,760,000. Furthermore the four year period between 1940 and 1944 saw the number of individuals paying income tax more than doubled and the budget for this year estimates revenue from corporation and in dividual income taxes at $9.5 millions.

 

This will allow for some reduction in the high customs tariff which, in the past and today, has been the main source of revenue for any government of Newfoundland. More than 55 per cent of the 1946-47 revenues are based on levies on imports, which are, and are recognized as, an unjust method of taxat ion since it cuts equally at the poor and the wealthy. But unfortunately for the island, n o alternative source of revenue has presented itself.

 

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The fiscal year 1945-46 produced a surplus of $4,340,000. This year the commission has budgeted for a deficit, with the extra funds to be drawn from a nest-egg of previous surpluses. Its allotments reflect the changed financial position of the country.

A loan of $2,000,000 will be made to the St. John's Housing corporation; $ 750,000 goes for the upkeep of Gander airport, which is considered by some in Newfoundland of dubious value; $8,000,000 will be devoted to reconstruction; $1,250,000 to soldier re-establishment; $500,000, education; $400,000, fishing, shipbuilding and forestry; $1,500,000, public works, health and welfare; $300,000, postal and telegraphs.

 

The basic problem of Newfoundland remains, however, as Newfoundland, Economic, Diplomatic and Strategic Studies * makes clear:

".it is evident that Newfoundland's post-war prosperity depends in a very large measure on the re-establishment of international trade about th e Atlantic basin on a broad multi-lateral basis. Economically Newfoundland is an integral part of the Atlantic community; it could fit into neither a close British Empire system nor a close Western Hemisphere system of trade. It has everything to gain by the restoration of world trade to the freest possible basis and the re-establishment of stable and free ex change relationships between national currencies and es pecially between sterling and the dollar. But as a small tra ding unit, New foundland can do little to bring about these desirable c ondit ions".

 

* New foundland Economic Diplomatic and Strategic Studies. Edited by R. A. MacKay,  577 pp. Royal Institute of International Affairs.

 

Source: " Newfoundland Looks Ahead - No Easy Choice", Winnipeg Free Press, June 17, 1946, p. A13. Article transcribed by Jonathan Kusek. Revision by Claude Bélanger.