Neighbours Taken For Granted or Dr. Livingstone (Merchant) I Presume?
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The Empire Club of Canada Addresses (Toronto, Canada), 9 Mar 1967, p. 253-276
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Lawson, Harold R., Speaker
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Text
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Speeches
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A discussion of "the relationship that exists between Canada and the United States, and the possibility of further strengthening the ties that bind our two great nations together." A review with extensive quotes from a book authored in part and edited by the Honourable Livingston T. Merchant entitled "Neighbours Taken for Granted." The purpose of the speaker to "whet your appetite for a fuller reading of his book." The book is a symposium and each of its chapters is written by a different contributor—three Canadians and three Americans. The subjects of the four chapters quoted are as follows: the story of the border that both unites and divides Canada and the U.S.; an explanation of Canada's sense of national destiny; the heart of the financial problem; an opposite view to that taken in the previous chapter. Some conclusions to be drawn with regard to the basic problems discussed. More quotes from other notables. Comments on American investment in Canada, political union, and nationalism. A look at the Treaty of Union of 1707 between Scotland and England. A suggestion by the speaker that the whole matter of the Canadian-American relationship should be studied and discussed objectively.
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9 Mar 1967
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English
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The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
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Full Text
MARCH 9, 1967
Neighbours Taken For Granted or Dr. Livingstone (Merchant) I Presume?
AN ADDRESS BY Harold R. Lawson, PRESIDENT, SOCIETY OF ACTUARIES, PRESIDENT, GLEN FALLS INSURANCE CO. PAST PRESIDENT OF THE EMPIRE CLUB
CHAIRMAN, The President, R. Bredin Stapells, Q.C.

MR. STAPELLS:

To render this Club's recognition of the death of His Excellency, the Governor-General of Canada, and our Honorary President, I call on Mr. John Griffin, President of this Club during the years 1952-1953.

MR. GRIFFIN:

At the request of our President, and in keeping with the traditions of this club, I prepared a brief tribute to the Governor-General. Then I spent two hours last night watching the rebroadcast of the funeral. I realized at once that I had written hollow words, words which failed completely to express what we feel about General Vanier, and which were quite inadequate to sum up the meaning of his life.

It was summed up in a few minutes at the end of the requiem mass. Cardinal Leger gave the blessing in English and French and was then succeeded at the catafalque in turn by an Anglican bishop who prayed in English and French; by an Orthodox bishop who prayed in Greek; and by a Protestant minister who prayed in English. It was all thereEnglish and French, Catholic, Anglican, Orthodox and Protestant-all the unity that General Vanier represented constitutionally and strove for personally.

Perhaps we dare to hope, and God help us if we fail to pray, that his life will become a milestone in our long search for a reluctant nationhood.

General the Right Honourable Georges P. Vanier, P.c., D.S.O., M.C. AND BAR was a great Canadian-a man who loved God, served Canada and honoured the Queen. This was the whole tenor of General Vanier's life-in war and peace, as soldier, diplomat and viceroy. He won great distinction in each of these fields and brought to each of them the courtly grace, the keen insight, the kindly gallantry and the simple goodness whose loss we mourn today. As soldier he commanded the Royal 22nd Regiment in the days, now fifty years ago, when it was building its enduring traditions. As diplomat he became Ambassador to France-one of the premier gifts in the power of the Canadian Government. As viceroy he added new lustre to the enormous prestige of the great office of Governor-General, of which he was the nineteenth incumbent.

The death of a Governor-General in office is a rare thing in Canada and as such it properly calls forth the aweful panoply of a great and solemn occasion of State. It is altogether fitting that this is being observed with the full majesty of our British tradition, but General Vanier is being mourned at a humbler and more personal level. It seems to me that the simple grace, the homely goodness of this truly noble man has called forth the best in us and that even those little men who would abolish the office of Governor-General itself saw in him a shining example of what a Christian man should be. Services have been held, Masses celebrated, prayers of every type said from St. John's to Port Alberni for the repose of his soul. For myself I have never been more sure of anything than that he returned at once to the Father from whom all men come.

Let us pray rather for others. Let us pray that the Government of Canada renders sound advice to Her Majesty the Queen on the appointment of General Vanier's successor. The death of a viceroy in office simulates in some degree the death of the Sovereign. It is a time of danger -a time when all the dissident elements whose bickerings General Vanier tried so hard to still will be in full cry seeking to destroy the things he held so dear.

When speaking to this Empire Club in February, 1961, His Excellency said these words: "We are privileged to be members of a great Commonwealth of Nations, unparalleled in history, scattered the world over, autonomous yet united under one Crown. When this Crown graces, as it does today, the head of a Queen, young, radiant, and exemplary, we should count ourselves supremely blessed. How wonderful, how Providential that we should have someone, above class and party, to honour and respect, and above all, to love, because love is the great motive force in human and divine relations."

The viceroy, the Governor-General, exists to represent the Queen in our midst. General Vanier himself was someone, "above class and party, to honour and respect, and above all, to love." You will recall Laurier's famous prediction that the 20th Century would be Canada's Century. We have only 33 years remaining, but if we can capture and put to work the generosity of spirit and the greatness of heart with which General Vanier lived and died, we can still make that prophecy come true.

MR. STAPELLS:

Today we consider the United States of America and Canada through the eyes of a keen Canadian observer.

Gertrude Stein disposed of the geographical history of our great neighbour to the south by saying that "in the United States there is more space where nobody is than where anybody is. This is what makes America what it is."

Theodore Roosevelt summed up the human aspect of our neighbour. "We have room for but one language here, and that is the English language, for we intend to see that the crucible turns our people out as Americans, and not as dwellers in a polyglot boarding house."

That one English language has been developed so that the fact that rural audiences do not care for movies about country themes is Americanized as "Sticks Nix Hicks Pix".

And on neighbours' relations, the great American poet and philosopher Robert Frost wrote,

" 'My apple trees will never get across

And eat the cones under his pines,' I tell him.

He only says, 'Good fences make good neighbours.' "

We welcome Harold Lawson home to his and our Club, not as host as he was during his Presidency in 1959, but as our special guest of honour. Harold's public service to the citizens of this city has been outstanding-in the Board of Trade, the Canadian Welfare Council, the Advisory Committee on Mental Retardation and the Canadian Pension Conference, to mention only the highlights. In the world of business, he is presently writing a new life contract for Glens Falls Insurance Company as its President, having moved from Glen Falls subsidiary National Life here in Toronto. To top that, he is the first Canadian to be President of the Society of Actuaries.

But to give you a T.V. audience warm up, let me quote a few Lawsonisms when he was standing where I stand some seven years ago.

Introducing a speaker from the West

"Our speaker today never heeded the cry, 'Go West, Young Man, Go West!'. He never had the chance, for due to circumstances beyond his control, he was born there."

And switching things around, Harold insisted upon introducing the members of this Club to Dr. Murray Ross.

And as last example of Lawson wit ...

"The biographical material on the Ambassador that I received from the Russian Embassy ended with one terse and strangely reassuring sentence. It simply said this: 'A. A. Aroutunian is married and has children.' May I say to you, Sir, that but for an accident of birth, you might have been a typical Canadian!"

MR. LAWSON:

You can well imagine the nostalgic feelings I have today as I rise to address this famous forum where, like all of our past presidents, I have presided on so many occasions, and on others have been privileged to move the vote of thanks. (The latter, at least, can be dispensed with at this meeting, and, indeed, you well may feel that a vote of censure is more in order when you have heard the provocative things I propose to say.) However, I must hasten to add that warm nostalgia is not my only feeling-there is also present a well-warranted sense of trepidation and of my own inadequacy to handle the subject that I want to discuss with you.

This subject is the relationship that exists between Canada and the United States, and the possibility of further strengthening the ties that bind our two great nations to gether. It is a subject that is very close to my heart since, although I was born a Canadian and brought up in Toronto, I have twice found myself living on the other side of the border (the first time ending up briefly as a citizen of my adoptive country); I have spent my working lifetime in insurance which is truly an international business; I was instrumental in arranging the sale of a majority of the shares of a Canadian life insurance company to United States interests -a deal that appears in the blacklist of a little book called "A Choice for Canada" written by Walter L. Gordon; I am currently president of a United States general insurance company that does business in Canada; and I am president for this year of the Society of Actuaries, an international body with headquarters in Chicago and of which about 80% of the members are Americans. In addition to all this, my elder daughter is married to an American and lives in the United States and my younger daughter was born over there. (As a footnote I should add that my uncle, Frank Lawson, whom many of you know, unpatriotically spends the winters in Florida!)

In spite of all this, I do not have the intimate knowledge of the practical aspects of trade across the border that many of you have, since my business is not involved with tariffs and the other normal complications of international trade. For this reason I have decided not to inflict on you too much of my own superficial views on our relations with the United States but to quote extensively from other sources, in particular a book authored-in part-and edited by the Honourable Livingston T. Merchant. In fact I have stolen the title of this book as the title for my address-"Neighbours Taken for Granted." Should anyone question the propriety of my using someone else's text as the basis of my speech, I can only say that book reviews are popular subject matter for both talks and essays, and you can simply record this occasion as the first one when the guest speaker has delivered a book review to the Empire Club.

Mr. Merchant needs no introduction to Canadians as he has twice been United States Ambassador to Canada and, I might add, on both occasions has addressed the Empire Club. While he might be expected to agree with almost everything I will say, he would disagree with my own estimation that he is one of the greatest living American statesmen. After spending his early years in the investment business, he joined the State Department and served in many capacities, including that of Under Secretary of State, and has undertaken many special diplomatic missions for-his country. In 1961 he won the Rockefeller Award for Public Service and in 1965 he was appointed United States Executive Director of the World Bank. If I do nothing more than to whet your appetite for a fuller reading of his book, which was published under the sponsorship of the Johns Hopkins School of Advanced International Studies, I will have done you no disfavour.

"Neighbours Taken for Granted" is a symposium and each of its chapters is written by a different contributorthree Canadians and three Americans. It is not in any sense a debate, and each of the chapters is more or less independent of the others. Their content can best be described by letting the individual authors speak for themselves.

The first chapter is by Bruce Hutchison, one of Canada's great historians and editorialists, and he tells in vivid language the story of the border that both unites and divides us. His very first sentence is this,

"The border between the United States and Canada3,986.8 miles long without a single fort or gun to protect it-is the most friendly and least visible line of international power in the world."

Somehow these words remind me of a verse I have known for a long time, though I have no idea who wrote it. It goes,

"Three thousand miles of borderline, Nor fort nor armed host

On all this frontier neighbour-ground From east to western coast;

A spectacle to conjure with--A thought to stir the blood! A living proof to all the world Of faith in brotherhood." Very soon Mr. Hutchison makes a point which I think is of fundamental importance to any discussion of this subject, namely that the border is not a natural one or what you might call an act of God, but it is an act of man. He says,

"In truth the border is solely the work of men, and that work was not as easy, quick or early as the current myth assumes. Men finally drew the limits describing two nations only some threescore years ago, after two centuries of war and a century of bitter quarrel frequently close to war."

We read again of the war between England and France and its counterpart between the English and French colonists in America, and then follows an allusion to the American Revolution. Mr. Hutchison points out that the revolutionists' ambition recognized no northern boundary, and at first Canada seemed to be within their grasp. But, he says,

"All these calculations in the Continental Congress ignored the basic Canadian fact. Even Benjamin Franklin, printing revolutionary propaganda in Montreal, had failed to comprehend the mind of Canada. It was French and Catholic; it did not love Britain, but it loved the Protestant American Revolution and its democratic heresies much less."

In due course, as you know,

". . . some 40,000 Americans moved to Canada, settling in Nova Scotia and around Lake Ontario. This migration of the United Empire Loyalists was of little moment to the newborn United States of America. For Canada's future it was decisive. Unnoticed by its midwives, the Revolution had borne a second child. The future Canadian nation, as well as the American republic, had issued from the same fertile womb." Gentlemen of the Empire Club, I must remind you that all of this happened about 180 years ago. Since then even the British Empire has passed away-though not without its proud memories which are perpetuated in the name of our illustrious Club-to be succeeded by the Commonwealth. And what will happen to the Commonwealth if Great Britain joins the European Common Market? Canada, today, is politically and economically as independent of the mother country as is the United States which revolted. We have even torn the last historic symbol from our flag-and replaced it by a leaf from the maple sugar tree!

Let me add just one more quotation from Mr. Hutchison.

"The neighbours (Canada and the United States) were at permanent peace, but for practical economic purposes they had not learned to share the continent to their mutual advantage. Each had built a commercial system stretching east and west, supported by tariffs. The natural north-south flow of business had been partially dammed up but, in time, would spill over these artificial barriers."

The second chapter was written by Norman Smith, the editor of the Ottawa Journal and one of Canada's most thoughtful and articulate writers, and he undertakes to explain Canada's sense of national destiny. At the outset he says,

"What the Indians and Eskimos thought of their destiny before Captain Jacques Cartier nosed his ship into the Gulf of St. Lawrence is not hard to guess: They were too busy surviving to think of destiny, let alone to record their thoughts. So, too, for the early whites; they were hewing wood and drawing water under circumstances that left little time for thought for the morrow. Perhaps we have reversed that position: Instead of working at our destiny, we're talking about it." Mr. Smith covers some of the same history that Mr. Hutchison did and then gets to the unvarnished facts of that great Confederation which we celebrate this year. I like his reference to Professor Frank Underhill, who warned against the intoxicating (but false) doctrine of the "Immaculate Conception of Confederation." He spends much time, as is proper, on the French-English problem and describes the study undertaken by the B and B Commission. The Commissioners agreed unanimously that

"Canada is passing through the greatest crisis in its history.... The state of affairs established in 1867 is now for the first time being rejected by the French Canadians of Quebec.... If it (the crisis) should persist and gather momentum, it could destroy Canada.... Unless there are major changes the situation will worsen with time, and it could worsen much more quickly than many think."

In the third chapter, Michael Barkway, the well-known and highly regarded editor of the Financial Times, gets to the heart of the financial problem. I will quote him only briefly as the basic facts are well known. Mr. Barkway says,

"Canada has regularly earned a surplus with overseas countries. But it is never enough to cover its colossal deficits with the United States. In every year from 1946 through 1964 Canada has been in deficit with the United States, both in merchandise, trade and in 'invisible' transactions.... The cumulative deficit over nineteen years came to more than $20 billion, an average of well over $1 billion per year.

"Exchange transfers from overseas surplus have covered, on the average, almost 48 per cent of the current account deficit with the U.S., leaving just over 52 per cent to be covered by movements of capital from the U.S. The inflow of U.S. capital has averaged well over $500 million a year since 1946. From 1951 through 1961, it was consistently over $1 billion. Canada's net long-term indebtedness to the United States is more than double what it was in 1955. From $8.7 billion in 1955, it had already reached $16.4 billion in 1962, and is now considerably nearer $20 billion.

"...of the long-term U.S. investment in Canada, 63 % consists of direct investment in U.S.-controlled enterprises. This gives American firms control over 45% of Canadian manufacturing, over half of mining and smelting, and nearly two-thirds of petroleum and natural gas, including refining.

". . . U.S. firms controlled, as long ago as 1960, 44 per cent of the 'large manufacturing concerns', Canadians only 39 per cent."

In conclusion, he says,

"Independent sovereignty, particularly for a nation like Canada which has never been based on economic logic, always exacts a price, always demands economic and financial direction such as the wishful-thinking laissezfaire economists deplore even to this day. It cannot be maintained without conscious and deliberate national exertion."

In the very next chapter of the book, the first United States contributor, Ivan B. White, whom so many of us know and respect as the recent U.S. Consul General in Toronto, takes the opposite point of view from Mr. Barkway and comes as close to engaging in debate as any contributor to the book. He says,

"The hundreds of thousands of Americans associated in one manner or another with the vast complex of Canadian-U.S. financial and commercial relationships would like to see both a strong Canada and a friendly Canada. If they believed that inward-looking, restrictive measures on their activities in Canada would really serve these objectives, some would accept such a regime with good grace. To many, however, a strong and friendly Canada would be one where the realization of its economic potential was in full swing, where its younger citizens could look forward to the same educational, employment and living standard opportunities as their southern neighbors, and where the Canadian citizen body had regained its identification with and confidence in Canada's destiny."

What does Mr. White mean by all this? He says, in part,

"The most recent statistics showed a per capita GNP of $2,260 and a per capita national income of $1,688 for Canada in 1964; corresponding figures for the United States were $3,241 and $2,655 respectively.... Why is it ... that an average family of four in Seattle enjoys an annual income some $2,000 greater than an average family of identical size in Vancouver, a few miles away? That same question can be raised concerning the relative economic position of families in, say, Ontario and Michigan. And is this wide disparity really necessary?

"When a young Canadian engineer takes his immigration visa and beads south, he is not following the Beverly Hillbillies to California-he is en route because of a better-paying job, with better prospects for advancement and with a firmer foundation for an adequate education for his children. When a Canadian electrician employed by, say, Canadian General Electric, finds that his fellow unionist in the United States is receiving perhaps 25 per cent more pay for the same job, his unhappiness is not directed at the fact that his employer is 99 per cent instead of only 75 per cent American-owned. A Toronto business-machine accountant attending the annual convention in Detroit of his international professional organization and discussing the $1,500 annual salary differential with his American counterpart has thoughts on his mind other that whether American banks should be permitted to operate in Canada on a reciprocal basis."

With regard to United States-Canadian financial and commercial relationships, Mr. White says,

"We are talking about an annual two-way movement of goods across the border totalling $9 billion, of direct investment in Canada by United States firms of $13 billion, of U.S. long-term portfolio investment in Canadian securities of $7 billion. We are talking about a Canadian investment in the United States, direct and portfolio, which on a per capita basis is even larger.... The magnitude of the U.S. direct investment in Canada . . . arises in large part from the fact that 19 million Canadians occupy a land area equivalent to that of the United States or Brazil and that this area contains resources in minerals, petroleum, natural gas, timber, and agricultural land disproportionate to the small Canadian population and to the volume of domestic savings and investment."

"This happy relationship (between the countries), which had prevailed for some decades, received a jolt with the publication in 1957 of the Final Report of the Royal Commission on Canada's Economic Prospects. This report focused attention on the magnitude of U.S. direct investment in Canada and contained a number of allegations concerning inadequate Canadian participation in ownership, unsatisfactory Canadian participation in employment, performance contrary to Canadian best interests, and absentee control of business activity, all of which cast a shadow of doubt on what had been in the experience of Americans in Canada a happy and mutually beneficial relationship. Fortunately, these allegations have since 1957 been subject to wide inquiry by a number of organizations. This research pointed to the conclusion that many of the premises established by the Royal Commission were either unproved or disproved.

"Nevertheless, the Final Report has been an important conditioning factor in Canadian thinking and in Canadian attitudes toward American-owned enterprise in Canada. During the 1963-65 period, these attitudes have been reflected in discriminatory measures relating to differentials in the withholding tax and depreciation provisions and in the proposed treatment of Americanowned banking operations."

In the interest of brevity, I will skip the chapters by General Charles Foulkes and James B. Reston, but let me say a word about the witty and pungent chapter in which Dean Acheson quotes Prime Minister Pearson. Mr. Pearson, it appears, has described the people of Canada as "essentially Canadian", but, says Mr. Acheson, "he unhappily does not enlighten us further". "The French Canadians," writes Mr. Pearson again, "possess a culture which is French both in its' source and in its quality. Yet they are completely Canadian. After the original Indians and Eskimos, they were the first Canadians." Mr. Acheson adds,

"What he says about the culture of the 'first' Canadians after the 'original' Canadians is doubtless justified by what we might call political license. Undoubtedly the French voyageurs brought with them to Canada the French ideas and Catholicism of the sixteenth and seventeenth centuries. Their descendants still speak a form of French related to that currently used in literate France, as the language of the less-penetrated portions of the southern Appalachian Mountains is related to that spoken today in literate England. But if there have been French Canadian contributions to French culture, they have had scant recognition in French scientific or literary journals, in French music, or in French galleries." Mr. Acheson's chapter does contain one five-word sentence which I think is most important, and I give it to you:

"By Canada, one means Canadians."

This concludes my "book review", but what conclusions should we draw with regard to the basic problems which produced all this discussion? The case for negative thinking has been stated definitively by Walter Gordon-on several different occasions and in several different capacities-and, judging from a recent announcement by the Prime Minister, we can look forward to its being stated again. In his book, "A Choice for Canada", Mr. Gordon said,

"In my view, complete economic union with the United States would be a disaster for Canada. We would be swallowed up. . . . Moreover, in the kind of circumstances that would be created as a result of economic union, it is highly unlikely that Canada would continue to exist for very long in any real sense as an independent political entity. This raises an entirely new perspective. To most people, there are some values which are more important and fundamental than economics. The fact is that the vast majority of Canadians is not prepared to surrender its political independence. I say this categorically. We believe, many of us believe, that economic independence and political independence go hand in hand.... Some may call this nationalism, and so it is. It is a proper respect, loyalty, and enthusiasm for one's country, and a legitimate optimism and confidence about its future."

That is one point of view. On the other hand, former U.S. Ambassador to Canada, Livingston T. Merchant, and Former Canadian Ambassador to the U.S., Arnold D. P. Heeney, concluded their recent official report on "Principles for Partnership, Canada and the United States" by saying: "In conclusion, we find the evidence overwhelmingly in favor of a specific regime of consultation between the two governments. We are also convinced that there are large opportunities for mutual advantage in the extension of the partnership of our two countries. Not only is the relationship unique but Canadian-American mutual involvement and interdependence grow daily more evident. For our part we are satisfied that the process can be as mutually rewarding as it is inevitable."

It is an easy thing to wave the flag of patriotism. Who does not feel a thrill of pride as he sings, "O Canada, our home and native land?" (But the other day I read in a Toronto paper that in the future it may be "O Canada, our home, notre pays." If I stay away much longer, I will not want to return for it will be a different Canada I would return to.) Who does not feel a bond of kinship with the minstrel who sang, "Breathes there a man with soul so dead, who never to himself has said, this is my own, my native land?" (Note that the minstrel did not say "mon pays".) So far as they go these sentiments of loyalty and love for the home of our fathers and the place of our birth are among the noblest emotions that can beat within the breast of man. (In this way I am proud of the fact that I was born within a block of the National Life's home office building, on a spot now commemorated by a parking lot.) This sort of patriotism is natural and good.

But patriotism can easily degenerate into nationalism and nationalism is bad-no matter what Walter Gordon says. In a speech a few weeks ago Senator McCutcheon said that nationalism is good; it is chauvinism that is bad. It is a matter of semantics. The kind of nationalism I am referring to is bad. It has been the root of many of the world's troubles over the long and bloody centuries of the past, and it is so today. We see it in Africa; we see it in Asia; we see it in Europe; and, God forgive us, we see it advocated in North America too. It is reflected in such shibboleths as "Canada for Canadians," "Buy back Canada," "Down with foreign control," and "Buy Canadian." This is just-balderdash! A few years ago Mr. R. D. L. Kinsman, then President of the Canadian Exporters' Association, said in an address to the Empire Club,

"Of course, if one is asked if one is against buying Canadian, it is difficult to answer. It is like the question about 'have you stopped beating your wife?' Not being in favor of buying Canadian is like the clergyman not being against sin-on the surface. What makes the slogan-if it is one-so dangerous is that it implies-or should imply -that the British should buy British and the Japanese, Japanese. Or do the proponents naively assume that we can blandly slash our imports without immediate retaliation to cut our exports. What makes it an unhappy slogan is that it seems to betray a wrong state of mindnot the state of mind that built either this province or this country. It is negative thinking which betrays an attitude of defeat, instead of positive thinking, with the will to win."

Why, in the name of all that's reasonable, are we in this twentieth century still fighting the American Revolution and the War of 1812? By our segregationist policies we hurt no one but ourselves. Why is it that a dollar is worth a dollar in Niagara Falls, New York, but only ninety-two cents in Niagara Falls, Ontario? Why is it that a motor car costs a certain amount in Niagara Falls, New York, and some twenty per cent more in Niagara Falls, Ontario? Why is it that people and goods can move freely from New York to New Jersey but have to go through immigration and customs to get from New York to Ontario? Why is it that someone in Philadelphia can borrow or sell securities in New York and nothing is said about it, but if someone in Toronto does the same thing he is accused of being unpatriotic and of upsetting the balance of payments? The answer to these questions is not to be found in geographic or other natural conditions. The answer in every case is that man on this North American continent, in his infinite folly, decided to make unnatural rules for purely nationalistic reasons and persists perversely in making life more difficult for himself.

Let us get to the heart of the problem that bothers my friend Walter, and as I hasten to a conclusion, I will try to underline five basic points.

1. American investment in Canada is necessary.
2. Much of this investment must be direct, or in equity form.
3. This type of participation in Canada's economy will not necessarily, or even likely, lead to political union.
4. Even if political union should ultimately come about, it would not be bad or morally wrong.
5. Nationalism is not the highest form of patriotism.

In his great speech to the annual meeting of the Board of Trade in this City a few weeks ago, Mr. J. V. Clyne, Chairman of MacMillan Bloedel, Ltd., said,

"While we could and should do more, we cannot conceivably generate within Canada all the money needed now and in the immediate future to maintain the scale of prosperity to which we have become nationally accustomed, much less to pay for all our new and elaborate welfare plans and improvements in national living standards."

Even Walter Gordon has said,

"The ready availability of foreign capital has meant a more rapid development of the Canadian economy than would otherwise have been possible. We have been able to import machinery and equipment for new resource developments and the expansion of our factories. Moreover, the foreign capital that has come here for direct investment has been accompanied by technological, scientific, and managerial 'know-how', all of which could not have been supplied by Canadians themselves, at least to begin with. To the extent that such capital has been invested in new resource developments, it has usually been associated with assurance of markets without which the developments could not have been justified."

The difference of opinion arises with respect to direct, or equity, investment. Mr. Gordon says,

"(It has not) been sensible for us to welcome so unquestioningly so much foreign capital for direct investment in resources and in Canadian-owned businesses in a form that cannot be repaid. This has meant the surrender to absentee owners of far too much control over the day-today workings of the Canadian economy. Moreover, this type of capital tends to increase at a rapid rate quite apart from any additional inflows. It does this because a substantial proportion of business profits are usually retained and reinvested in the enterprise. The capital that comes in the form of direct investments means larger payments to foreigners over the years, and thus will be a heavier burden on our balance of payments than if it had come in the form of borrowings."

Then, in a wild flight of fantasy, Mr. Gordon says,

"It is not always appreciated that, on the average and over a period of time, the charges payable in the form of dividends on an equity investment are considerably higher than the charges payable in the form of interest on debt investment. According to recent studies, it can be assumed that an average equity investment in Canada earns at least 9%, whereas a debt investment by foreigners in Canada has yielded about 51/2 %."

His calculations are completely unrealistic. Some of us once owned some stock in a Canadian life insurance company. It yielded between one and two per cent, not 9 % or even 41/2 %. Our company wanted favourable access to the U.S. market. An American fire and casualty company wanted to market life insurance and acquire certain "knowhow". We sold our stock to the American company on a basis that has benefited Canada in several ways that I haven't time to go into now-with no important disadvantages. To say that we could have solved the problem by borrowing money from the American company at 51/2 % just isn't relevant. Incidentally, Walter Gordon did not point out that some of the principal shareholders in the American company in question are Canadians, nor that any Canadian branch of any American company is more subject to foreign influence than is a subsidiary in Canada.

As Mr. Clyne said in his Board of Trade speech,

"Capital is an international resource and it functions best when it is allowed to flow freely across international boundaries. . . . the government should be reminded, whenever it is necessary, that building artificial barriers against the movement of capital is a narrow and parochial way to protect our sovereignty."

Nothing in history suggests that closer economic ties with the United States, or a large degree of direct investment in Canada, would necessarily lead to political union. It has never happened to any other country to my knowledge. Parliaments are elected by the people, not by corporations. The European Common Market has not led to full political union of the nations involved-in fact we see just about as much nationalism as ever. Free or preference trade between the nations of the British Empire has not led to closer political ties-rather we have seen the member nations tending to drift apart. Even a common currency, which is approximately what has existed in the sterling bloc, has not led to political unions. Even if we did have closer political ties with the United States, would it be so bad? We are the same sort of people; we have the same background; we have both seceded from the Mother Country; the circumstances that divided us took place nearly two hundred years ago. There is far less difference between a Torontonian and a New Yorker than there is between a New Englander and a Texan. There is also much to be said for certain features of the American governmental organization, as Mr. Clyne pointed out a couple of weeks ago.

The example of Scotland has always intrigued me. There is a foreign country if there ever was one, with a language that practically no one can understand. It has a history of bloody warfare with England that makes any fighting ever done on this continent look like a pillow fight. And yet these two warring nations, Scotland and England, have been joined together in political or parliamentary union for 260 years and have enjoyed peace and freedom from currency and tariff barriers. But who can say that the Scots have been absorbed or have not preserved their distinctive national traits and culture?

Some of the interesting provisions of the Treaty of Union made in 1707 were:

(a) England and Scotland were to be one kingdomGreat Britain.
(b) The flags were united.
(c) The two countries were to be taxed in the same way.
(d) They were to have equal rights in trade.
(e) The laws and courts were to remain separate and distinct as they were before union.
(f) There was to be one Parliament, with Scottish representation in it.
(g) The same currency, weights and measures were to be used in Scotland as in England. Canada, as Dean Acheson said, means Canadians. When we talk of what is good for Canada, we should be thinking of the greater good of Canadians. Sometimes I wonder if the flag-waving politicians have the real interests of the people, of humanity, in mind. An article in Maclean's Magazine a couple of years ago-deliberately provocative, I admit-had this to say about union:

"The prices Canadians now pay for manufactured goods would decline by the amount of our tariffs, or fifteen to twenty per cent; our wages and salaries would gradually climb to the American level, about forty per cent higher than now. Canadian plants would take their place in a new pattern of regional production, or be assigned major roles in the production of certain models or lines. The huge Ford plant in Oakville, for example, might turn out cars for the New York and Ontario markets. American union would end the old and agonizing debate among politicians and business men over whether Canada should welcome or reject U.S. investment in this country, whether we should welcome the establishment of U.S. subsidiaries here, or try somehow to scrape up the cash needed to buy back U.S.-owned companies. With North America one nation, rich and underdeveloped Canada would become the glamour area for investors, the magnet for enough dollars to finance the important jobs we cannot finance now. And, of course, Canada would develop a regional culture like the South, the Mid-West and New England. As a compensation, instead of losing its best-educated young people to the U.S., Canada would not only keep these, but greatly increase the supply. Only one figure need be quoted in this connection: In Canada's educational system, a child has only one-fourth the likelihood of getting a university education that his American counterpart has."

The world today needs more union and less schism. We must remember that there is a Greater Patriotism. Sometimes this truth is more clearly observed in wartime. During World War 11, when the fall of France was imminent, Churchill offered full political union to the French. Talking about Churchill's attitude to this whole question of international one-ness, there is an eloquent and revealing passage in that recent and fascinating book, "Harold Nicolson, Diaries and Letters, 1930-1939."

The date is June 14, 1939, three months before war broke out. Nicolson is attending a private dinner party in honour of Winston Churchill and the guests include the Walter Lippmanns. I will quote a few sentences:

"Winston is horrified by Lippmann saying that the American Ambassador, Joe Kennedy, has informed him that war was inevitable and that we should be licked. Winston is stirred by this defeatism into a magnificent oration. 'No, the Ambassador should not have spoken so, Mr. Lippmann; he should not have said that dreadful word. Yet supposing (as I do not for one moment suppose) that Mr. Kennedy were right in his tragic utterance, that I for one would willingly lay down my life in combat, rather than, in fear of defeat, surrender to the menaces of these most sinister men. It will then be for you, for the Americans, to preserve and maintain the great heritage of the English-speaking peoples. It will be for you to think imperially, which means to think always of something higher and more vast than one's own national interest."

In my opinion, the Queen of England (and Canada) expressed with unmatched eloquence the spirit that should prevail in matters of this kind when she said, during her visit to Quebec in 1964,

"The problems of today will founder in disorder if we do not know how to lighten them with fraternity and humanity. Let the dialogue continue and it will tend to unify all men of good faith. A dynamic state should not fear to reassess its political philosophy. That an agreement worked out a hundred years ago does not necessarily meet all the needs of the present should not necessarily be surprising."

Gentlemen, I am not advocating union with the U.S. That would be both premature and presumptuous. I have tried to paint a background for consideration of some of the aspects of our relationship with our great neighbour to the south. I have quoted extensively from persons with representative viewpoints who are all much more expert than I am. All I suggest is that the whole matter should be studied and discussed objectively. The report of a Committee headed by Walter Gordon is predictable. He has already written it. I would like to see men of the stature of Ambassadors Merchant and Heeney appointed and empowered to make another, deeper, more far-reaching study, with the possible result of coming up with a plan for partnership which could be implemented over, say, a generation, to the benefit of all and the detriment of none. Some day that little verse I quoted at the outset might be brought up to date, like this:

"Three thousand miles of borderline, Nor toll nor custom post

On all this frontier neighbor-ground From east to western coast;

A universal currency -

A thought to stir the blood!

A living proof to all the world Of faith in brotherhood.

Thanks of the meeting were expressed Mr. Justice Alexander Stark.

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Neighbours Taken For Granted or Dr. Livingstone (Merchant) I Presume?


A discussion of "the relationship that exists between Canada and the United States, and the possibility of further strengthening the ties that bind our two great nations together." A review with extensive quotes from a book authored in part and edited by the Honourable Livingston T. Merchant entitled "Neighbours Taken for Granted." The purpose of the speaker to "whet your appetite for a fuller reading of his book." The book is a symposium and each of its chapters is written by a different contributor—three Canadians and three Americans. The subjects of the four chapters quoted are as follows: the story of the border that both unites and divides Canada and the U.S.; an explanation of Canada's sense of national destiny; the heart of the financial problem; an opposite view to that taken in the previous chapter. Some conclusions to be drawn with regard to the basic problems discussed. More quotes from other notables. Comments on American investment in Canada, political union, and nationalism. A look at the Treaty of Union of 1707 between Scotland and England. A suggestion by the speaker that the whole matter of the Canadian-American relationship should be studied and discussed objectively.