Basic HTML Version
havoc with Prime Minister Pierre
Trudeau's "War on Inftation" of
1969. Canada cut back as America
declined. The money supply was
reined in sharply, but the inflation
psychology was not broken. Prices
continued to rise.
Worse still, continued inflation
kept interest rates in Canada high, as
lenders hoped to ensure themselves
against the declining value of
money. Speculators and foreign
capital invaded Canada to reap the
bigher rates. Worried about the
confusing situation, the federal
government took the
fateful step to float
the Canadian dollar
on the currency mar–
kets in May 1970.
Over a year later, in
August 1971, U.S.
President Richard
Nixon closed the
gold window . He
devalued the U .S.
dallar
twice
in 1973.
The day of reckon–
ing was here at last.
In neither country
could government
fine tune or bail out economies
exposed to the crosswinds raging in
the interconnected world economy.
The OPEC oil embargo of 1973-74
from the short Arab-Israelí war
exposed Canada's hidden economic
weaknesses to the full gaJes. These
weaknesses were rooted in geogra–
phy and culture, politics and
resources, all intertwined witbin the
very structure of the Canadian
nation-state.
The Gathering Clouds
Canada was still, by the 1970s, too
much a branch-plant economy,
based on the United States. The
nation was content to live off high
foreign investment and resource
sales. The motivation to capitalize
on scientific research and develop–
ment was lacking.
"To get it marketed I've got to
go soutb of the border!" many
Canadian entrepreneurs declared in
frustration. There have been nota–
ble exceptions, but Canadian talent
has tended to move to the United
States with its vast market and
investment potential. Also, in spite
of federal grants for technical edu–
cation, there was still
a chronic shortage of
skilled workers.
Another problem:
The provi nces are
supreme in educa–
tional poliey, a re–
flection of the multi–
culturalism and di–
versity Canadians
prize.
Regionalism,
the
vast geograph ic divisions of Cana–
da, has played its part. Th.; spectac–
ular opening of the St. Lawrence
Seaway systetn in 1959, for exam–
ple, permitted foreign vessels to
carry goods up and down tbrougb
the heartland of Nortb America.
Yet it helped decimate once-thriv–
ing Atlantic ports and terminals
like Halifax, Nova Scotia, and
Saint John, New Brunswick.
Federal-provincial bickering,
spurred by regionalism, also helped
sap tbe vitality of Canadian busi–
ness. Resource wars broke out in
tbe 1970s between Ottawa and the
energy-producing provinces out
West. To protect manufacturing
plants in Ontario and Quebec, tra–
ditional locomotives of the Cana–
dian economy, the Westerners were
forced to sell oil at federally con–
trolled domestic prices.
"Sell us your gold at $35 an
ounce," snapped irate Western
Canadians, "and we'll bold down
the price of oil!"
Tbe federal government retaliated
with tbe National Energy Program
of 1980, a revenue-sbaring pressure
move sweetened by a belated
attempt to "Canadianize" tbe oil
industry. The Westerners' resource
boom- after ducking bigh interest
rates, the world oil glut and the
recession- finally ground toa halt.
A
chronic farm crisis
accounts
for a little-publicized part of Cana–
da's economic disorders. In a truly
balanced economy, industry and
agriculture are compatible. Tbe
Canadian climate, however, often
militates against the continued suc–
cess of small farmers.
The U .S.-inspired
world wheat glut of tbe
1960s didn't help.
Wheat prices were
actually
lower
in 1970
than they had been in
1949! Worse, tariffs to
protect Canadian man-
~
u facturing usually
e¡
~
mean higher costs for
S
~
the farmer-tractors,
a:
combines , fertilizers
~
3'
and fue!. Attempts to
g
d t
stabilize the price of
grain favored the auto-
~
mated, mechanized
~~.
farm operators. Thus, _
~ =
agribusiness tended to
~
squeeze out the small
~
17