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The interconnections of natural resources, empire and labour run through the most central and conflict-ridden crises of our times: war, environmental degradation, impoverishment and plutocracy. Crucial to understand and to change the conditions that give rise to these crises is the critical study of resource development and, more broadly, the resources question, which is the subject of this volume. Intended for researchers, students and activists, the chapters in Resources, Empire and Labour illuminate key aspects of the resources question from a variety of angles through concrete analyses and histories focused on the extractive industries of mining, oil and gas.
Saskatchewan: Social Democracy in a Resource Hinterland – by John W. Warnock
Saskatchewan has always been seen as a hinterland area and economy within the Canadian territorial state. Geographically, it is part of the interior plains of the North American continent. Prior to the European colonial invasion it was the home to Indigenous Peoples who had adapted to the local ecology and survived mainly as hunter-gatherer communities. The colonial settlement of the region expanded in the late nineteenth century under the National Policy of John A. Macdonald’s Conservative government. Across the prairie grain belt, land taken from the Indigenous Peoples was declared state land and then distributed to white settlers through the Homestead Acts.
The National Policy was a capital accumulation project: the creation of a national market, the population of the west by white settlers from Europe and the United States, the development of the wheat economy for export and the protection of industrial capitalism in central Canada.Behind a tariff wall, an economic surplus could be extracted from independent commodity producers via banking and finance and the monopoly power of the farm supply industry and the downstream processing and distribution industries. As I have argued and referenced elsewhere (Warnock 2004), this system of political economy became a major Canadian example ofmetropolitan domination of hinterland areas.
For the people of Saskatchewan, hinterland status was all-consuming. Following the creation of Saskatchewan as a province in 1905, all governments and political parties desperately sought ways to diversify the economy. Some efforts were made to establish fishing and forestry operations. Coal was developed but was limited to local use. Everyone saw natural resource development as the only hope for diversifying the economy.
The largest class by far was the small farmer, the independent commodity producer. They mobilized politically and economically to resist their exploitation by finance and industrial capitalists. The agrarian “populist” movement took off inthe United States during the first great depression in 1873. U.S. farm organizations
and movements crossed the border into Canada. Convinced that the major parties were all under the control of the dominant capitalist class, farmers formed their own “peoples” or “populist” parties. These petit bourgeois movements also sought alliances with the non-Marxist labour movement (Conway 1994; Warnock 2004).
In Canada the farm movement placed a high priority on forming producer and consumer co-operatives and credit unions. After the First World War, it formed the Progressive Party, followed by the Social Credit Party and the Co-operative Commonwealth Federation (ccf). The populist movement in Saskatchewan took a social democratic orientation. The Saskatchewan ccf was formed as an alliance between the more radical farmers and the Independent Labour Party of Saskatchewan, led by M.J. Coldwell and T.C. Douglas. In 1932 the two parties joined, along with the Farmers’ Political Association, to form the Farmer-Labour Party, the precursor of the ccf, and called for the nationalization of the railways and utilities and government leadership in the development of natural resources.
The CCF Government and Natural Resources, 1944–64
The ccf under T.C. Douglas was elected to the government of Saskatchewan in
1944, the first social democratic provincial government in Canada. The party had
a strong group of socialists who pushed for public ownership of natural resources
and other more radical policies. They were opposed by the elected leadership of the
party and the majority in the caucus, which took a more moderate and pragmatic
approach (Eager 1980; Brown, Roberts and Warnock 1999).
Despite inheriting a very large provincial debt, the ccf government was determined
to implement progressive legislation. Under Tommy McLeod, the Economic
Advisory and Planning Board undertook a major study of the potential for industrial
development. They reported that less than 1 percent of the families in Saskatchewan
had incomes above $10,000. Thus the government would have to depend heavily
on co-operatives and credit unions to mobilize small savings and would have to borrow
on the capital markets to finance diversification. The newly created Industrial
Development Fund (1947) was later used to support the founding of Inland Cement
and the Interprovincial Steel Corporation (McLeod and McLeod 1987).
One early success was in the forest area. In 1945 the ccf government created
the Timber Board, which became the marketing agency for hundreds of small
lumber mills and collected and distributed wood for pulp mills. In 1949 they created
Saskatchewan Forest Products, a Crown corporation that built and operated
a plywood plant and a saw mill. These operations were very successful and proved
that social ownership could work. In the north, the government created two Crown
corporations: Saskatchewan Government Trading, to support the fur industry, and
the Saskatchewan Fish Marketing Service. In 1959 these were transformed into
government-financed co-operatives.
After a struggle within the ccf, it was agreed that the government would seek
private investment for the development of the oil industry and other minerals. The
large foreign-owned oil corporations had begun exploration and development in
Saskatchewan in the 1930s and 1940s. The government would not nationalize exist
ing private resource operations but would seek to raise royalties to try to capture
more of the economic rent for the general public.
The government provided research and mapping assistance. Prospecting was
heavily subsidized. Infrastructure was provided by the province, including road
construction and airfields. Saskatchewan Power Corporation subsidized natural
gas and power. Direct subsidies included very low taxes and royalties and a range
of tax expenditures including resource depletion allowances, accelerated depreciation
and tax holidays. This followed the trend across Canada, where taxation on
the resource extraction industries was well below that of other business industries
and formed a key part of the Canadian version of state capitalism (Aitken 1961).
In 1949 Premier Douglas announced that “no steps will be taken to expropriate
or socialize the mining or petroleum industry in the province.” The government
established royalties at 12.5 percent, the same level that the international oil companies
had imposed on their Middle East colonies. In a short time, 80 percent of the
permits for petroleum development were held by large transnational corporations
(Crane 1982: 150–3; Tyre 1962: 140–1).
One of the province’s major success stories has been the Saskatchewan Power
Corporation (spc), originally created as a Crown corporation by the provincial
Liberal government in 1929. Under the ccf government it was charged with providing
electricity to all rural areas. The spc owned coal mines in the Estevan area
to fuel its coal-fired generation plants.
More significant, in my opinion, was the ccf government’s decision to give spc
control over the natural gas industry in the province. It was granted a monopoly
on the distribution of natural gas. Like many state-owned corporations in the
industry, spc’s professional staff studied the geographical data, staked claims, paid
royalties for the development of lands and hired independent service companies
to do the actual on-site work. Reserves were developed and banked, to serve the
future provincial needs.
Uranium mining began in northern Saskatchewan during the Cold War period
of the early 1950s. The operations included fifty mines, and processing was
done at Beaverlodge, Gunnar and Larado. Uranium City was founded in 1952
and served as the home base for the miners and their families. The uranium was
shipped to the United States for the development of nuclear weapons. The mining
was done by Eldorado Nuclear and Uranium Canada, federal Crown corporations.
The Saskatchewan government received royalties for this development, and the
Douglas ccf government became a strong supporter of the industry (Gullickson
1990; McIntyre 1993).
In 1943 it was discovered that Saskatchewan had significant potash resources.
The ccf government was keen on developing the industry, and party policy encouraged
control by a provincial Crown corporation. The Douglas government
wavered, fearing that it did not have adequate access to capital, opposition from
the federal government and a hostile reaction from the U.S. government. Instead,
policy called for development by private corporations with extensive subsidies
from both the provincial and federal governments, including very low royalties
and taxes (Warnock 2004).
The ccf governments under T.C. Douglas then Woodrow Lloyd, in office
between 1944 and 1964, eliminated a large debt, introduced progressive taxation,
and brought in a range of social policies that greatly benefitted the poor and the
working class. They were known for their strong support of the farming community
and the co-operative movement. But they were not a socialist government. When
it came to development policy, they were hardly different from the formally conservative
governments in Alberta. In crucial sectors both opted for the Canadian
model of state-subsidized capitalism.
END