19 March 2013

The Origins of Rentierism in Newfoundland and Labrador #nlpoli

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Over the next four days, SRBP will offer an interpretation of the political underpinnings of the current financial crisis.  This series goes beyond the immediate to place recent events in both historical and comparative, international perspective. 

The first two instalments briefly describe some characteristics of the political system and Newfoundland political history before 1934 and from 1949 to about 1990.  The third post will look at the concept of the rentier state and the relationship between dependence on primary resource extraction and politics at the subnational level (states and provinces).  The fourth post will place recent developments in Newfoundland and Labrador in the larger context. 

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Before 1949, the Newfoundland government’s main source of income was taxation of imports and exports.  The Amulree Commission reported, for example, that the government brought in around $8.0 million dollars in the fiscal year ending in 1933.  Of that, 71%  - $5.7 million  - came from customs and excise duties.  The next largest amount was $700,000 (about 9% of total) that came from income tax while the third largest source of income was postal and telegraph charges totalling slightly more than $587,000.

Newfoundland also had almost no experience of local government before the Commission Government in 1934.  St. John’s was the only incorporated municipality and the city council was quasi-independent of the national government. 

Beyond the capital city, the national government “managed a highly centralized system through the stipendiary magistrates stationed in each electoral district, “in the words of historian James Hiller in his recent note on the Trinity Bay controverted election trial in 1895(FN 1).  The central government also appointed the members of some local  boards to manage education and roads.  The money for all of it came from accounts controlled by St. John’s.

The members of the House of Assembly had enormous control over government and that public money.

Former Clerk of the Executive Council J. G. Channing wrote one of the few studies of public administration in Newfoundland that covers the period before Confederation. (FN 2)  The civil service was small. According to Channing, the entire public service consisted of 608 employees in 1891 and even in 1921, the service was no more than about 1700 people. 

At the time of Confederation, the government employed accountants but didn’t have an economist on staff.  Appointments throughout the public service were determined by some combination of nepotism, sectarianism, and patronage. Channing notes that incoming administrations were known to fire or demote existing employees and replace them with their own clients simply because they could.  In a country with unemployment running between 15% and 30% at times,  government jobs with a steady paycheque carried a great deal of value.

Ministers ran their own departments,  according to Channing.  They could ignore the auditor general with impunity.  Departments handled all aspects of hiring, salaries and benefits, and pensions.  The finance department routinely rubber-stamped

All members of the House of Assembly controlled public spending in their own districts.  W. J. Browne sat in the House in the 192os and 30s and later had a career as a federal politician after Confederation.  In his memoir, Eighty-four years a Newfoundlander, Browne notes that even has a candidate for the incumbent party in the 1923 general election, he was “entitled” to recommend how the government would spend $50,000 allocated for the district in which he was running. (FN 3)

‘’’ Friends of the government’ got the best bargains, “ Hiller wrote of the system as it had existed in the 1890s and before.  members on the government side had a greater leeway. “Centrally important were grants for roads and other public works, administered through the Board of Works, which consisted of a chairman and four other members, one of whom was also a member of the Executive [Council].”

In the complex arrangement of public works spending, the government committed money for roads, wharves and other construction.  In addition, the member of the House could hand out other money based on his own discretion.  Lastly, an MHA could make a “requisition” for additional funds beyond the amount voted by the legislature already.  All that was needed to transform the “requisition” to a order to spend money was the agreement of a single member of the Executive Council.

The effect was, as Hiller has called it, “a highly politicized, highly centralized patronage system.” 

In very broad terms, this was the way the political system functioned in Newfoundland at its most basic level until 1934.  Competitive politics went to sleep during the Commission Government period, but it is out of that old patronage system that the post-Confederation world grew.

-srbp-

The Series

Footnotes

  1. James K. Hiller, “The Trinity Bay Election Trial, 1894: Electioneering and Local Govemment,”  Newfoundland and Labrador Studies, 26, 2 (2011) 1719-1726. 
  2. J.G. Channing, The effects of the transition to Confederation on public administration in Newfoundland,  (Toronto:  Institute for Public Administration in Canada, 1982), pp. 5-6.
  3. W.J. Browne,  Eighty four years a Newfoundlander, (St. John’s:  Dicks and Company, 1981), p. 97.

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