130. The figures of revenue and expenditure in the 12 years 1920-32 are given in the following table which shows also the annual additions to the public debt.

  131. The main features of this period were, as we have indicated, a recurring budgetary deficit and an annual recourse to fresh borrowing, partly in order to meet the deficit on current account and partly to finance new schemes of capital expenditure. These features were common to each year under discussion. In other respects the period was noteworthy for the slump of 1921-22, the acquisition of the railway in 1923, the establishment under private enterprise of the Paper Mill at Corner Brook in the same year, the adoption of an intensive highroads policy in 1924 and its continuation in subsequent years, the decision of the Privy Council in 1927 confirming Newfoundland in the sovereignty of Labrador, the opening of the lead and zinc mine at Buchans in 1928, the boom years of 1928-29 and 1929-30 and the onset of the depression in 1931-32.
  We need not perhaps enter into details of the expenditure in this period apart from noting that it was marked by waste and extravagance on a reckless scale. These are, however, certain aspects of the Government's activities to which we wish to refer.

  132. Notwithstanding Newfoundland's resources of timber and minerals, the economic structure of the Island is based primarily on the fishery, and in particular on the cod-fishery. Its prosperity is thus largely dependent on the prices obtainable for salt codfish in the principal markets of the world, viz., those of Spain, Portugal, Italy, Greece, Brazil and the West Indies. This dependence on the fishery has always been a source of anxiety to those called upon to administer the country since, although the yield from the fishery has remained remarkably consistent, it is liable to setbacks from exceptional climatic and other conditions, and the experience of the last hundred years has shown that a bad season has invariably been followed by distress and destitution in many parts of the Island, necessitating large payments for what is known as "able-bodied relief". The need for new outlets which would serve both to widen the activities of the people and to absorb the growing population has long been the dominant consideration in the minds of successive Governments. With the coming of the mechanical age, the salvation of the Island seemed assured; at last, it was thought, it would be possible to open up the interior of the Island which had hitherto lain neglected. With this object a policy of railway construction was started in 1880, but lack of capital held up progress and it was not until 1893 that an intensive campaign of railway development was launched. This policy was continued until 1914. The hopes held out were not, however, fulfilled; the agricultural possibilities of the country had been over-estimated and, while the advent of the railway led in time to development of small farming communities on the southern portion of the west coast, where the most fertile land in the Island is to be found, it was not responsible for any appreciable widening of the activities of the people.

  133. After the War a second intensive drive for the development of the country was made, this time by means of highroads. Increasing numbers of tourists and sportsmen had been visiting the Island from the United States, Canada and the United Kingdom and it was felt that if a net-work of first class high-roads could be constructed, which in themselves would be of domestic utility, the Island, with its wonderful scenery and unrivalled salmon and trout fishing, could look forward to becoming a rich tourist centre. This policy, for reasons which need not be entered into here, also failed. In the meantime some millions of dollars had been expended on the construction and improvement of roads which are practically confined to the Avalon Peninsula, do not extend to the parts of the country most likely to attract tourists, and are to-day a costly luxury.

Flat-Rock [sic] near Pouch Cove, n.d. Photo by Holloway. From the album of photographs furnished to the Newfoundland Royal Commission, August 1933. Courtesy of the Centre for Newfoundland Studies Archives (Coll-207), Memorial University of Newfoundland Library, St. John's, Newfoundland. (40 kb)

  134. Hopes had also been held out of industrial development. The Paper Mill at Grand Falls, owned by the Anglo-Newfoundland Development Company, had been established in 1905 and had proved an unmixed blessing to the people. After protracted negotiations, which are referred to in detail in Chapter VII,† a second Paper Mill was established in 1923 at Corner Brook on the West Coast, under the ownership of the Newfoundland Power and Paper Company. With the establishment of this Mill, it was felt that a new era had dawned, There was still room, it was thought, for a third Mill; the initiation of construction work with a view to the opening of the lead and zinc mine at Buchans in the interior encouraged hopes of mineral development on a large scale; and it was thought that the time was to be broad-based on a number of activities instead of primarily on the fishery. When, in 1927, Newfoundland was confirmed by a decision of the Privy Council in the sovereignty of Labrador, which was reputed to contain vast resources of timber, minerals and water-power, it was felt that the old bogey of dependence on the fishery had been expelled for ever.

  135. We have entered into these considerations at some length since they serve to explain, in part at least, the actions of successive Governments in incurring an annual deficit on the budget and at the same time raising new loans for capital development. Unfortunately, the failure of these schemes has left the Island in its former position of dependence on the fishery. At the same time a debt has been incurred out of all proportion to the capacity of the country. Moreover, throughout this period the fishery has been neglected by the Government, while hopes of regular employment on the roads and railways and in the forests have lured men away from the fishery and seriously weakened the position of the country's primary industry. The fishery, instead of moving forward, has stood still, while continuous progress has been recorded by Newfoundland's competitors in foreign markets. The advent of the depression has thrown out of employment numbers of men who had left the fishery for other work, but they cannot easily be re-absorbed in the fishery since they have long since disposed of their boats, gear and fishing equipment. They have no alternative, therefore, but to claim public relief. At the same time few of the men engaged in the fishery are now able to make a livelihood from it; since the combined effects of the increased cost of catching fish and the exceptionally low prices received for their catch make it impossible for the average fishermen to do more than balance his accounts with the merchant. For three successive years, 1930, 1931 and 1932, the fishery failed to yield a livelihood to the average fishermen, and large numbers of fishermen have thus been forced on the dole in the off season. In this combination of circumstances no less than one-quarter of the population were in receipt of relief during the winter of 1932-33, $1,085,000 being expended for this purpose during the financial year.

  * The figures in this column include the deficit on the management of the Railway.
  † See paragraphs 399 et seq.

Image description updated May, 2004.