CHAPTER V.--THE PRESENT STATE OF THE ISLAND.

The Political Machine. (continued)

  234. It might have been expected that the influence of the Churches, so strong in Newfoundland, would have acted as a check to political malpractices. It is clear from our investigations that this is not the case, and we have reluctantly come to the conclusion that the denominational divisions, of which the people are daily reminded, so far from exercising a beneficent influence in the direction of cleaner politics, have failed to check, if indeed they have not contributed to, the general demoralisation. For members of successive Administrations have been led, consciously or subconsciously, to place the interests of particular sections of the Church before the good of the country as a whole; and the desire to serve those interests, and to promote the welfare of the individual members of the same denomination, has conduced to a disregard of the proprieties which would never have reached such proportions had Newfoundland been united in one religious community, or if sectarianism had not assumed such political influence.

  235. In short, public life in Newfoundland is confused by many obligations, political, denominational and domestic; in the gratification of these, the obligations of good government are apt to be ignored.

  236. It has been the rule rather than the exception, in these circumstances, that members of an Administration and their supporters should obtain what benefits they could during the party's tenure in office. It is safe to say that under no other system would it have been possible for the budget to remain unbalanced for twelve successive years and for a public debt to be amassed the interest charges on which, without provision for sinking fund, amount to over 50 per cent. of the average annual revenue of the country. We have good reason to think that by 1928 it was appreciated in Government circles that the country was rapidly approaching insolvency. Yet there was no modification of policy. Further external loans were raised in 1928, 1929 and 1930, although the financial houses negotiating the loans knew or could have known of the financial plight of the Dominion; and the Government affected to be surprised and pained when an attempt to raise an even larger loan in 1931 had finally to be abandoned owing to lack of tenders. The manner in which the budget deficit of that year was eventually liquidated has already been recounted.

  237. This continuous process of misgovernment has increased the burden on the fisherman and on the poorer members of the community until it is now insupportable. As expenditure increased, so was it desirable that revenue should be increased, in order that there might not be too large a gap to be bridged from loan funds. Customs duties were therefore raised. No scientific plan was adopted, but a series of ad hoc increases was brought into force by a succession of financially embarrassed Governments. When the depression set in and revenue fell, taxation had further to be increased and customs duties were once more raised. Previously it had been the practice to admit free of duty certain of the goods, such as petrol for fishing boats, salt and flour, which might be said to form the raw material of the fisherman. In the desperate endeavour to raise additional revenue these were now taxed, though petrol was made subject to a rebate if used in fishing vessels. The fisherman, the producer of the wealth on which the stability of the Island depends, is now in the position of having to pay exorbitant prices for his supplies, that is, food, clothing, fishing gear, etc., while receiving at the same time a very low return for his catch. We are satisfied that the point has now been reached where the tariff presses with undue hardship on the poorer classes and constitutes a serious handicap to the rehabilitation of the fishing industry in the face of foreign competition. In other respects, too, there appears to be reason to believe that duties are now so high that the law of diminishing returns has begun to operate. The conclusion is inescapable that the tariff urgently needs readjustment on a scientific basis, and we are glad to know that the Government of Newfoundland is seeking expert advice with this consideration in mind.

Dissipation of Natural Resources.

  238. A further aspect of life in Newfoundland which cannot fail to impress the detached observer is the reckless manner in which the resources of the country have been dissipated. Of Newfoundland's total area of 42,000 square miles, some 25,000 square miles are forest lands, of which some 15,000 square miles are either owned by or leased to the two Paper Companies, the Anglo-Newfoundland Development Company of Grand Falls and the International Power and Paper Company (of Newfoundland) Limited of Corner Brook. The balance, including some of the lands which were originally awarded to the Reid interests under various contracts for railway construction and operation, is mostly held by private individuals. In cases where tenure is by licence from the Crown the annual rental is $2.00 per square mile. In very few cases have the individuals in question made any attempt to develop their land; in almost every instance the land is held purely for speculative purposes. Great hopes have been entertained that a third paper mill might be erected by foreign interests in the Gander Valley; it is possible that but for the depression these hopes might have been fulfilled. In such an event, the greater part of the land not now held by the two existing Paper Companies would probably be required by the new company and the holders of the land would expect to be bought out at a handsome price. The prospects, too, of mineral developments following the discovery of the Buchans mine have proved an added incentive to the speculative holding of undeveloped lands. We cannot avoid the conclusion that the continuance of such a state of affairs is not in the national interest. The right principle is that lands which are capable of being put to commercial use should either be operated by the licensees or surrendered to the Crown or that an annual tax be paid during the period in which they are not operated.

Placentia General View of Placentia, looking Southwest, n.d.
Photographer unknown. 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.
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  239. Newfoundland has always been anxious to attract outside capital. The low earning power of the people, the general loss of confidence which followed from the failure of the Banks in 1894, and the tendency of successive merchants to retire with their fortunes to other countries have all militated against local investment and local enterprise. Although Newfoundlanders are intensely proud of their country and its potentialities, there seems to be a generally accepted belief that it is too much to expect foreign companies to undertake schemes of development in the Island unless they are granted concessions. This may be the case to-day, but it was not always so; the belief has been fostered by politicians who have not been slow to turn it to their personal advantage. They were well aware that the greater inducements that could be offered to outside interests without offence to public opinion, the greater would be the scope for remunerative negotiation with such interests. The question of attracting outside capital has thus been approached from the wrong angle; the fact that there can be no more powerful attraction to capital than good government has been either overlooked or ignored. In the absence of good government, inducements are doubtless required, and a point is finally reached when the interests attracted are those represented by concession-hunters and speculators, and reputable concerns are repelled. This is what has taken place in Newfoundland, where ever-increasing inducements have been offered to capital until to-day few promoters would dream of undertaking any enterprise in Newfoundland without being assured first of such concessions as substantial free grants of land, free entry for his goods either indefinitely or for a prolonged period of years, and exemption from taxation and other restrictions. Had attention been concentrated on improving the standard of government instead of on increasing these artificial inducements to the entry of capital, it is safe to say that there would have been a greater degree of development at a much lower sacrifice of revenue to the Exchequer. For, under the present practices, the interests encouraged in recent years have not been of a sufficiently solid character to enable their enterprises to be pursued with success, while the concessions granted to such companies as are engaged in useful activity in Newfoundland have deprived the Exchequer of a valuable source of revenue.

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