A Warning from Canada
The trade agreement with Canada Which was concluded in Ottawa last week should give pause to those joyful optimists who have so quickly forgotten the gap in the balance of overseas payments. It would have been impossible to find a better moral basis for agreement than that which existed in this case. Yet it was only possible after long negotiations to conclude an agreement which will run until March 31, 1948, under which Britain will pay increased prices for livestock products, take smaller quantities of reconstruction materials, export more to Canada and find a balance of $145,00o,000 by drawing $45,000,000 from the Canadian credit and providing $too,000,000 in United States dollars. It is not a very palatable bargain either for Britain or for Canada. Certainly an agreement which is due for renewal in three months will not do much to achieve that long-term agricultural stability which Canada so badly needs. But there was no other way. The Canadian need for dollars has become so insistent that this was the least that could be done. The British shortage of dollars is so acute that a drain on this scale could not be consented to for more than a limited period. Every dollar of the Canadian credit must be paid back, and every United States dollar provided must come out of a reserve which is already much too small for safety. By the time the agreement comes up for review it may be possible to see whether dollars are going to be made available under the Marshall Plan for the purchase of Canadian goods for Europe. That would put off the evil day for a few months, and perhaps for a few years. But in the end only an increase in British production and exports, far exceeding anything which has taken place so far, can right the balance and put our trade with Canada on a firm commercial basis.