Canada

BETWEEN President Harry Truman’s famous election upset of November, 1948, and the John Diefenbaker upset in the Canadian general election last June, there was one profound difference. President Truman knew he was going to win. Nobody was more surprised at the Conservative victory over the supposedly invincible Liberal regime than the Conservative leader himself.

Perhaps the word “victory” is too strong to describe accurately the Canadian election result. The Conservatives did not emerge with anything resembling a working majority in the House of Commons. They gained 60 seats to bring their Commons membership to 111; the Liberals lost 65 seats to drop from 170 to 105; the Canadian Cooperative Federal Party with 25 and the Social Credit Party with 19 both made small gains. To govern at all, the Conservatives must have at least the passive support of some other group.

Yet if lexicographers argue over the use of the word “victory,” none will dispute that it was a Liberal disaster. Not only was the Liberal Party decimated outside the Province of Quebec, but many of its biggest names were on the list of losers. Heading that group was Rt. Hon. C. D. Howe‚ minister of trade and commerce, who supposedly had the safest seat in Canada. With him were Walter Harris, minister of finance; Stuart Carson, minister of justice; Ralph Campney, minister of defense; Robert Winters, minister of public works. In all, seven cabinet ministers lost their places in the public life of Canada.

Any American who had been watching Canada for the last couple of years would have concluded that the Conservative Party win reflected a rabid and rising tide of anti-Americanism in Canada. He would have been only partly right. Not since the days of the Canadian Pacific Railway promotion eighty years ago has “American” been such a widely used smear word. In the use of it, none was more enthusiastic than Mr. Diefenbaker and the Conservative Party. It is important, however, to emphasize this point: the word was used more as a club with which to assault the Liberal government than to express positive antagonism toward the United States.

PARTY DIFFERENCES

Since the war‚ the difference between the Liberal Party and the Conservative Party in Canada has been focused on two matters of policy. The first was the development of natural resources and the second was in the direction of trade. The Liberals worked diligently to create the sort of economic climate in Canada which would attract capital from the rest of the world to accelerate the development of its resources. Not only would such a capital influx create jobs for Canadians, it would enable Canada to bring in millions of immigrants with which to give the country a population base for an industrial economy.

A balanced budget, steady reduction in the national debt, and rapid growth were all necessary ingredients of Liberal policy. So were enthusiastic drumbeating for GATT (General Agreement on Tariffs and Trade) and the expansion of multilateral trade. The Conservative Party found little wrong with the general statement of Liberal aims. It found everything wrong with their application.

Liberal policy encouraged immigrants from everywhere except from the United Kingdom. Capital flowed in, but it came in an almost uncontrollable flood from the United States.

In season and out, the Conservatives preached more trade with Britain and less with the United States. Why? Because the United States persisted in restricting imports from Canada. It put quotas on Canadian cattle, duties on Canadian wheat, zinc, and copper. It wanted Canadian gas but spurned Canadian oil. It wanted Canadian iron ore but rejected Canadian steel products.

In the past decade, American industry has been much more aware of the opportunities in Canada, particularly in resources development, than the Canadians. Some extractive industries have been granted tax concessions by Washington beyond anything Canadians enjoyed. The phrase “American 10-cent dollars” came into usage almost a decade ago in connection with American purchase of vast Canadian oil and gas reservations. The Conservatives have said that Canadian resources should be owned, developed, and controlled by Canadians, and on this policy they fought with vigor.

CANADA’S ANTI-AMERICANISM

In recent months, several bitter debates in the House of Commons had anti-American overtones. Worst was the debate over the TransCanada pipeline. This was a $400 million Clint Murchison promotion to move Alberta gas to Ontario and Quebec through a 2600-mile. 34inch pipeline. The Texans sold the Liberal government on the feasibility of the line, then defaulted on promises to proceed with it.

Eventually, to get it going, the Canadian government joined with the Ontario government to build a 600-mile northern Ontario link, and finally had to advance $80 million to enable the Americans to build it. The proposal set off such a storm of opposition in the House of Commons that closure was invoked to end the debate.

With the excitement over TransCanada scarcely abated, the BritishFrench invasion of Suez split Canada neatly down the middle. When the Liberal government sent Lester Pearson to New York with a plan to get the United Nations into the act, it won overwhelming approval in isolationist Quebec Province and disapproval in English-speaking Canada, where there was a great deal of support for the British-French position and sympathy for Israel. The Conservatives again had an “American” issue with which to attack the Liberals for deserting the British in the Suez crisis and “being chore boys for Washington.”

These developments came at a time when the United States was embarking on a giveaway program to get rid of its wheat surplus. Canada, with 600 million bushels of wheat backed up all over its West, was faced with loss of cash customers to U.S. free wheat. Here again was a problem in which the word “American” loomed large. For Canada, American surplus disposal policies are seen as long-range disasters. Not only do the immediate gifts of wheat cut out cash sales of Canadian wheat; the customers are tied to buying future wheat needs from the United States.

With the Canadian national income at its all-time high, and with most Canadians riding the crest of a boom, it is doubtful if such issues really cut very deep. Rather, they created a feeling of mild disenchantment with the Liberal government.

LIBERAL BLUNDERS

A disgruntled young Liberal said after the election: “The election result is a repudiation of the cult of the gross national product.” His reference was to the fact that, since the war, no other country has paid so much attention to the advice of professional economists as Canada has. Nothing has beguiled Canadian economists like the gross national product. Upon its projected rise and fall depended the level of corporation taxes, the norm of social services, the fiscal thinking of finance ministers.

This rigid adherence to Sometimes doctrinaire economic rules made political trouble for the government. The same tight-money policy that put the Canadian dollar at 5 per cent premium over the U.S. dollar created pockets of business stagnation. The house-building boom became, overnight, a depression for building trades and all the businessmen who supply them.

The farmers were antagonized by government refusal to grant loans of farm-stored grain. The old-age pensioners were irked by a niggardly increase of $6 a month in their pensions. The steel industry was irritated by the way in which a tariff board report recommending a mild steel tariff was suppressed. All this was done in the name of controlling inflation and was politically embarrassing to the Liberals.

Certainly there was an undercurrent of domestic discontent in the country. Yet normally it alone was something that the Liberal Party might have ridden out. This time, however, the Liberals had grown overconfident and slothful. The party organization had been allowed to starve to death in Manitoba and to get into inept hands in Saskatchewan and Quebec. Operating on the principle that the electors would never vote against prosperity, the Liberals raised no issues, sent the prime minister on a baby-kissing tour of the country, and took reelection for granted.

DIEFENBAKER’S TRIUMPH

As the campaign proceeded, it was apparent that the Conservative Party was making some headway, though everybody underestimated the effectiveness of John Diefenbaker. A Saskatchewan lawyer, Mr. Diefenbaker had made several tries for the Conservative leadership and failed. The main opposition to him in the party came from Quebec Conservatives who took a dim view of his strong agitation in Parliament for a Canadian Bill of Rights.

Mr. Diefenbaker, nevertheless, succeeded to the Conservative leadership last winter when he was elected to replace the ailing George Drew. He gained the solid backing of politically potent Premier Leslie Frost of Ontario. With Frost‛s organization working there, Diefenbaker went on a nonstop barnstorming tour across Canada and back. An imposing figure personally, though with a rather bombastic oratorical style, he hammered hard at Liberal coziness with the United States, played the “Canada First” theme in every speech, and was particularly critical of Liberal taxation policy and resources management.

Diefenbaker’s best gimmick was a series of one-minute television spots which got the public interested in him. That led to increased crowds at his meetings. He actually outdrew Prime Minister Louis St. Laurent, and where he made his greatest appeal — in Ontario and in the Maritimes — the Conservatives made their greatest gains. The election proved to be a great personal triumph for John Diefenbaker.

Unfortunately, he led a very weak slate of candidates into the election. That has been reflected in the difficulty he had in finding enough able men in his group of 110 to fill the available cabinet posts. But to the Canadian people, Diefenbaker made sense in a quiet sort of way. They had grown a little weary of the Liberal world-savers, more than a little bored with Liberal preoccupation with the United Nations, and dissatisfied with the seeming lack of vigor with which Ottawa rebuked Washington for wheat giveaways and the like.

As John Diefenbaker takes hold of the reins of government, he enjoys the same sort of good will that was Dwight Eisenhower’s during his first term. Domestically there will be an easing of the hard-money policy. Canadian tax laws will be overhauled and taxes mildly reduced. There will be small increases in social security benefits.

“CANADA FIRST”

Eventually, when the new government can work out a formula, positive measures will be taken to reduce Canadian dependence upon trade with the United States. Soon after the election, Diefenbaker said he hoped to divert 10 per cent of Canada’s imports from the United States to Commonwealth countries. In England, the reaction was that $160 million in additional annual exports would substantially worsen the Uninted Kingdom’s own inflationary problem. With the Commonwealth countries operating with full economies, there is some question of their being able to supply more of the sort of imports Canada can use.

The easiest way to cut American imports, of course, is by customs duties. Higher protection for basic industries like steel might be one method of reducing the flow. Or it might even be possible to slow the shipment of iron ore to the United States to force increased purchases of semi-processed Canadian steel.

But while Conservatives talk about the Commonwealth, their real concern is at home. Their goal is to encourage Canadians to become the owners of Canadian industry and Canadian resources. To reach that goal the new government must do three things: first, create a desire in Canadians to own their own industries and resources; second, adopt tax measures which will encourage a full flow of Canadian capital into Canadian industry and resources; third, acquaint American owners of Canadian branches with the aims and desires of Canada and enlist the coöperation of the Americans in achieving them.

The Conservatives will certainly try to devise measures to force American companies partially to Canadianize their northern branches. The process would involve making room for Canadian equity capital and places for Canadians on boards of directors. This may come as a shock to many American companies who treat their Canadian operations as branches of American regional offices.

On basic world issues, there will be no change in Canadian attitudes. In matters of mutual defense‚ Washington need have no fear of losing Canadian coöperation. But Washington will learn that the days of easy relationships, of taking things for granted north of the border, have gone — for a while at least. If Ottawa is forced to go along with American ideas, its reluctance will be made known. Certainly when American domestic policies are harmful to Canada, the protests from the Conservative government will be more shrill and more sustained than ever before.