27 FEBRUARY 1948, Page 6



IT is obviously not possible to learn all about Canada in a short visit, but four things are at once apparent. First, that the Cana- dian people, like their Government, have a deep feeling for Great Britain—which, indeed, they have proved by their most generous help during and since the war. Secondly, that they are very dependent indeed upon their great neighbour, the United States ; if prices and wages rise there, then Canadian prices and wages cannot remain un- affected. The Canadian authorities can cushion some of the effects of price rises in America (and most skilfully have), but they cannot for long isolate the conditions between the two countries, whose price structures are inevitably linked. Thirdly, that our manufac- turers have got a great chance to develop their export business. But if they do not immediately exert themselves to take advantage of this, other people will fill the gap and our opportunity will be lost. Fourthly, that Canada is particularly fortunate in the permanent officials who are responsible for the financial and economic adminis- tration of the country at the present time.

Canada has got a past to be proud of and a future to dream about, but a very difficult present. As regards the past, her ability to expand her industrial production enabled her to make an immense contribu- tion to the war effort. Since the war her assistance to Britain in the way of free gifts and loans has been exceedingly generous. Although in size she is even larger than the United States, her national income and her population are less than one-tenth, and yet her share in the British Loan was one-quarter of the total. As regards the future, her prosperity would seem to be assured ; she has got mineral resources, vast forests, a rich soil and, above all, an enterprising and stable people who are prepared to work hard and are unlikely to be diverted by any doctrinaire political views. But her present position is very difficult ; she is so short of dollars that she has got an adverse balance of payments which proportionately is nearly as great as our own. This is due to entirely different causes. Unlike us, she has not suffered a loss of foreign investments ; the terms of trade have not gone against her and her production has expanded enormously.

Her difficulties are due to the fact that she has lent us so much without getting any return that she has run short of the means to pay for her purchases from the United States. She did this partly out of a generous wish to assist her best friend and partly out of enlightened self-interest so as to retain the market of -her best customer. Unless we can pay her more adequately in goods or in dollars she will have to restrict her sales to us in order to avoid a drastic reduction in her own standard of living. Fifty years ago over half Canada's imports came from Great Britain and less than a third from the United States. Now three-quarters of her imports come from the United States and only one-tenth from Great Britain. Canada cannot continue sending us vast quantities of food and raw materials unless we can send her far more in return. She is only too willing and anxious to get British goods, but they must be the things she wants and not the things some of our manufacturers think that she ought to want. And they must be at prices and of quality com- parable with those available in the United States. At the present time the sort of textiles that she used to buy from us in large quantities before the war, and would like to buy from us now, are about 25 per cent. dearer than the price at which she can buy the United States. Unless we can do these things it is inevitable that she will alter her pattern of trade and send her goods far more to the States. At the present time there is such a demand for her agricultural products that she could solve her very acute short-term problem by diverting these exports from us to the United States and getting dollars in return. She will do everything she can to avoid this because of the acute difficulties it would make for us and because she wants to retain our market for the time when she will not be able to sell her goods to the States.

If we are to retain our trade with Canada, so vitally important for us, we have got to exert ourselves to supply her with the goods she must otherwise obtain from America. We have in our favour a great deal of goodwill. There is a very real wish to buy British goods in preference to those of any other country ; but it must not be for- gotten that American exporters have great advantages—geographical propinquity, similarity in advertising technique and the affinity of taste of near neighbours who visit each other a great deal, read the same papers and listen to the same wireless. Canada's devotion to Britain is unquestionable, and has been proved by her most generous help in the last few, years, but we should not under- estimate the possibility of her being drawn more and more into the American orbit. There appear to be three different points of view in Canada on the matter. There is a comparatively small group who would like to join up with Canada's rich and powerful neighbour. At the present time this group is not influential, but it might become so if the material advantage became very great or if we were unwise enough to strain Canadians' loyalty by forcing a choice upon them. Then there is the second group, that believes that the right policy for Canada is to concentrate upon developing the Empire in whose power and prosperity she will automatically share. This group appears to be declining in importance, and does not seem to represent the present trend of public opinion. Then there is the third section, which represents the Government's view, and which is far the most important and appears to be growing all the time. It believes that the time has now come for Canada to stand upon her own legs and develop as Canada and not as part of the British Empire or part of America. It is most anxious to remain in the closest possible partnership with Britain, but it is not interested in the Empire ; it does not want to surrender any sovereign rights to a decision by a conference'of the Dominions.

The present Government has been in power for a very long time ; so there is an inevitable swing of the pendulum against it. On the other hand, it appears to have no formidable opponents. The Conservative Party, which is the official Opposition, does not seem to be gaining in the country ; indeed, it seems to find it difficult to discover adequate grounds on which to differ from the Conserva- tive (or anyway anti-Socialist) policy of the Government. The latter is a staunch supporter of private enterprise and the maximum free- dom from all avoidable restrictions. There is some apprehension that the C.C.F. (the Socialist Party) may become the official Opposi- tion, and so the alternative Government L.this prospect appears to be remote, as it numbers only 29 compared with 67 Conservatives and 124 Liberals. The C.C.F4 is led by Mr. Coldwell, one of the most able Parliamentarians and a man of of moderate views, who probably realises that at the present time there is no real prospect for Socialism and perhaps not much general interest in it. Canada is continually expanding and developing her vast resources, so that there are great opportunites for everyone to rise to the top. Moreover, about one-third of the House of Commons is elected by the French Canadians from the province of Quebec, who are temperamentally anti-Socialist.

The Government's policy can be conveniently divided into long- term and short-term policy at home and abroad. Its short-term policy at home is to meet shortages of American dollars by drastic but temporary cuts in the purchase of American goods. It has succeeded in doing this without literally departing from its policy of non-discrimination. Its short-term policy abroad is to do every- thing in its power to help Britain to recover—and, indeed, it has taken considerable risks in order to implement this. Its long-term policy at home is to develop the manufacturing industries ; to retain the vast supplies of wood-pulp and basic metals and process these at home instead of sending them to the United States to be manu- factured there. In this way it hopes to develop the country's own resources and employ Canada's own labour more profitably. Its long-term policy abroad is the promotion of multilateral trade. It wants to sell in Europe, and particularly to England, because of Canada's very close links with us and because we have always been the best market for her goods (which, indeed, we could hardly do without and survive). It wants to buy in the United States, both because Canada sells U.S.A. a lot of goods- (some years she has taken nearly as much as ourselves, and she always pays) and because Canada can get things from the States which she cannot get any- where else, including winter vegetables and, most particularly, vital supplies of steel and oiL In other words, the Canadian Government wants to promote world trade because it realises that Canada can prosper only in a rich, freely-trading world.

Canada, which is much richer than Australia and New Zealand put together, and has immense possibilities of further development, has a very great attachment to Great Britain. She always wants to give us preference and to put herself out a long way in order to help us. She will want to come to our aid when we are in difficulties as she has so generously done in the past. But if I have at all understood the outlook and feeling of the mass of the people, it is, I believe, imperative that we should always treat her as a close friend of equal standing, and that we should never put her in the position of having to choose between us and the United States. If we fail to understand her, and particularly if we assume ties to the Empire which do not exist or ask her to do anything which would strain her relations with her great neighbour, then we shall be taking a very serious risk.