Canada at the Crossroads
The Empire Club of Canada Addresses (Toronto, Canada), 28 Oct 1971, p. 46-59
Stanfield, The Honourable Robert L., Speaker
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Focus on economic problems for Canada. Basic question: "What is the direction in which our economy must go if it is to provide our workers with jobs, our children with opportunities and our people with an acceptable standard of living?" Major aspects of the question: Canada's place in the world. The direction of the economy within Canada. Effect on Canada of American economic policy. Some suggested solutions: diversification of foreign trade; national and political independence; focus on our own economic, cultural, and social priorities. The function and responsibilities of the government. Confidence.
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28 Oct 1971
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Full Text
OCTOBER 28, 1971
Canada at the Crossroads
CHAIRMAN The President, Henry N. R. Jackman


The Leader of Her Majesty's Loyal Opposition occupies a position in our British parliamentary form of government which is unique in any democratic society. It is a position which ranks second in importance only to that of the Prime Minister. He must be prepared, at any time, to take over the reins of Government, either as a result of an election, or as a result of a defeat of the Government in the House of Commons.

Although Robert Stanfield has tasted power in his own native Province of Nova Scotia, he is no stranger to the role of Opposition Leader.

After a distinguished academic record, which took him through Dalhousie and Harvard Law Schools, where he was a top honours student, he was elected Leader of the Nova Scotia Conservative Party, at the tender age of 34, a time when his Party had no seats in the Legislature and appeared headed for oblivion.

In 1956, overcoming all adversity, he was elected Premier of his Province, a position to which he was reelected to three times, with ever increasing majorities. He occupied that position with great distinction until 1967, when he was elected National Leader of the Progressive Conservative Party.

His career since that time is familiar to you all, and in the contemporary politics of today he has been pitted against Pierre Elliott Trudeau, who some consider to be one of the most colourful and flamboyant political personalities of our age.

In comparing the character of Robert Stanfield with Pierre Trudeau, one is reminded of the comment which one columnist made after the '68 Election.

The story goes that Bob Stanfield and Pierre Trudeau were walking down the street together, and on one side of the road was a destitute widow with four small children, and on the other side of the road was a beautiful blonde in a mini skirt. It is suggested that Bob Stanfield would instinctively show sympathy and concern for the widow and her small children. I will leave it up to the imagination of the audience to guess which of the two women our Prime Minister would go for.

Perhaps the most interesting thing about this story is, that it is not entirely clear whether the incident is supposed to be flattering to Mr. Stanfield. It all depends on your priorities and which of the two reactions you feel best typifies an appropriate style of life.

One recalls what was said of the late Jimmy Walker, who some of you may remember as being the flamboyant Mayor of New York City during that permissive champagne era of the Roaring 20's. It was said that New Yorkers wore Jimmy Walker like a flower in their buttonhole, as in that gay prohibition era he typified that style which Americans felt best represented them. But, when the cold winds of the 1930's blew, New Yorkers turned up their collars and threw away their boutonnieres and began to feel that politics and government was once again a most serious business, and that the style in which something was done was not really as important as what was done.

So, if the wheel of fortune turns and Robert Stanfield is called upon to serve his country, there can be no doubt that his training, his intelligence, but most important of all--his integrity and his humanity, will bring to this high office a man well suited to serve.

For this reason I have the great honour to present to you the Honourable Robert Lome Stanfield, National Leader of the Progressive Conservative Party and Leader of Her Majesty's Loyal Opposition.


Canada at the crossroads. That is a rather provocative title for a speech. But I don't think it exaggerates the importance of the challenge that faces us as we approach 1972.

What are the problems that concern us today?

Any Canadian could make up a list that would include mass unemployment, relationships with the United States and other countries, the difficulties of your export industries, inflation, business uncertainty and the need for an equitable and forward-looking system of taxation. And you will notice that I haven't even included matters such as pollution, the preservation of our environment and all the problems relating to the quality of life which will seriously affect the whole future of our country.

Today, however, my concern is primarily with economic problems. The economy isn't everything. But it is only if we have a healthy economy that we can hope to attack in any meaningful way the problems associated with the quality of our life and our environment.

I think we can sum up the economic challenge that faces us in one question. What is the direction in which our economy must go if it is to provide our workers with jobs, our children with opportunities and our people with an acceptable standard of living? That is the fundamental question we must answer.

It is a question that is especially urgent now. We are in a pivotal situation, and that situation has two aspects both of which we must consider closely.

The first of these concerns the place of Canada in the world today. The second involves the direction in which our economy is heading here at home.

These are both major subjects. And while I shall not ignore the internal challenge, I want to put my emphasis today on the first question--that of Canada's place in the world.

I do not intend to go over the events of the past 2 1/2 months following the announcement of President Nixon's new Economic Policy. The facts are clear. The Nixon package, including the surtax, the DISC programme and the other tax relief proposals for U.S. industry together constitute a severe threat to the Canadian economy, and particularly to that branch of it that is concerned with the production and export of manufactured goods to the United States.

There is surely no need to stress the dangerous situation in which we have been placed. When a country derives one-quarter of its Gross National Product from foreign trade, does two-thirds of that business with one other country, and sends more than four-fifths of its manufactured exports to that same country, it is obviously in trouble when that country decides to curtail imports.

In the past, we have been cushioned against the full impact of United States trading decisions. It was assumed in Ottawa that our two countries were involved in a very special relationship. And Washington very often acted as though this were the case. So, even though we occasionally complained that we were being taken for granted, we lived with the comfortable feeling that, regardless of what else might happen, the United States would always consider our interests as well as its own.

It was a comfortable assumption. But, as we now see, it was false. Our past complacency blinded us to the fact that we are not only as vulnerable as others to American actions. We are the most vulnerable of all.

Far from being given special consideration, it is obvious now that Canada is out in the cold as far as a special privileged relationship with the United States is concerned. In fact, seldom in recent times have relationships between our two countries been cooler than they are at present.

We may all have our own ideas as to where the blame for that situation may lie. I would simply say here that it is one thing to negotiate firmly with the United States about matters of substance in which our interests may diverge from theirs. It is quite another thing for Canada to give the impression that it is going out of its way to insult a good friend and neighbour.

It is perfectly legitimate, for example, for Canada to improve its relations with the Soviet Union. It is inappropriate--it is stupid--for Canadian spokesmen to use a Soviet platform or to encourage Soviet leaders to use a Canadian platform, to attack the United States.

The sheer closeness of our two countries and the intensity of our mutual interaction combined with the disparity between us in terms of wealth and power--all these things guarantee there will be problems in U.S.-Canadian relations without anybody having to do anything to deliberately worsen the situation. To do so is to act irresponsibly toward the people of Canada.

I am emphatically not saying that we have to toady to the United States or to any other government. There are times when we must express our disagreement and express it clearly. And one of these times is right now, in connection with the Amchitka nuclear test.

I am by no means downgrading the other tests that have been made recently by the Soviet Union and China. It would be hyprocrisy to denounce one and not the others. But beyond the moral question, the Amchitka blast is of immediate concern not only to Canadians on the West Coast, but also to all Canadians who are concerned with the environment. I think therefore we have the right as well as the duty to make our opinions heard.

I welcome new Canadian initiatives in international affairs. I welcome them as long as they involve some substantial results as well as colourful style.

There is nothing wrong with an independent stance by this country. But I would suggest that any government that wants to display its independence by loose talk and lecturing should have some idea as to what the consequences of its actions might be, and some contingency plan for coping with those consequences.

I would further suggest that there is little to be gained and a good deal to be lost if we give the impression of thumbing our nose at old friendships while we are in the process of looking for new ones.

To the extent that any government does this, in spite of all the apparent movement it is losing ground for its people, not gaining it.

I regret to say that this is precisely what has been happening to Canada in recent years.

To my mind, that is a reckless way to run a foreign policy.

The simple fact is that Canadians and Americans have to live together and cooperate with each other on this continent. We cannot afford to be at daggers drawn. Such a situation would be uncomfortable for the Americans. It would be tragic for us.

The fact is too that right this minute we are living through a difficult and potentially dangerous period in our relations with the United States.

What must we do? There is no easy answer.

I have been calling for some time--it goes back to 1968--for a greater effort to diversify our foreign trade. I continue to call for such efforts. And these must include serious negotiations with individual countries and with groupings such as the European Economic Community. Every step we take to diversify our trade is a step in the right direction. Everything we can do to buy from and sell goods to the widest variety of countries is a strengthening of our own position.

But let us be realistic too. Let us understand that, given the facts of power, of geography and of history, we are intimately and inevitably linked with the United States.

We can and we must retain our political independence. We can and we must determine our own economic, cultural and social priorities. But we can do this and we must do this in the context of a continent where the dominant country is the United States.

In other words, we can and we must develop policies that are pro-Canadian without being anti-American.

There are some people around who tell us this cannot be done. There are some people in Canada who claim that the only way we can assert ourselves in Canada is to put someone else down.

If that were true, it would be a sad commentary on Canada and on Canadians.

I have nothing but contempt for that position.

I have contempt for it because it is the same thing as saying that we Canadians have nothing worth preserving in our own right.

I have contempt for it because such a negative position is completely unworthy of a nation such as ours.

I have contempt for that position because it is an insult to Canada.

To me, Canadian nationalism is a positive thing. It means pride in what we have achieved rather than disparagement of others.

It means a recognition of the challenge we have to build on our past traditions to create a society of tolerance, mutual understanding and enthusiastic co-operation between those of different languages, different backgrounds and different cultures.

It means our right to set our own priorities in the fields of economic, social, cultural and environmental development for the good of our citizens today and our children tomorrow.

It has been said that what matters most are a people's knowledge that they have done great things in the past and their hope to do greater in the future. We in Canada have accomplished great things in knitting together half a continent. And we are capable of doing much more. We have a common destiny, and our challenge is to fulfill that destiny.

That is what Canadian nationalism means to me. And in that sense I am proud to be a Canadian nationalist.

And that is why I am so concerned about what we as Canadians must do to ensure the survival of our country.

The Prime Minister said a couple of weeks ago that we have a wide choice of options in our future relations with the United States--all the way from total war to total integration with the United States.

He didn't mention the obvious fact that either one of these extremes would mean the disappearance of Canada. But in my case, as far as I am concerned, the reasoned range of choice is much narrower.

There are at least two things that we must preserve and enhance. One is economic prosperity, the other is national independence. Neither can be ignored. Nationalism is an empty slogan unless it is based on a healthy economy. For its part, prosperity must be tied to a national dream.

We have built up in Canada traditions and a way of life that are worth preserving. We are working out a quality of life which, hopefully, will be uniquely Canadian as well as North American in its characteristics. We are a different people from the Americans, and we intend to remain so.

That is our challenge: To balance these two priorities, prosperity and independence, in a way to maximize them both; to live in dignity and friendship with our American neighbours and with the rest of the world. To do all these things, we must now at least turn our minds to the task of working out our relationships, and especially our economic relationships, with the United States and with other countries with whom we are tied by friendship, by tradition, or by trade. For too long, we have simply been drifting. It is time to choose our direction.

There is no magic formula. There never has been, although at one time things were simpler.

At one time, we were the pivot in the so-called North Atlantic triangle, involved in a unique three-way relationship with Britain and the United States. That triangle has become a much more complicated figure, and our part has shrunk in proportion.

At one time, we were the eldest daughter of a Commonwealth family that was a major force in world affairs.

The Commonwealth is still important. But we would be deluding ourselves if we thought that we could today exclusively define ourselves either economically or politically in that institution.

At one time, in the 1930s and before, the National Policy made some sense for a country that was building up its industry on the basis of a combined programme of high tariffs and Empire Preference. That day has clearly gone.

We are now in a world of large-scale industry requiring huge markets for its products. We are now in a world of trading blocs competing with each other for control of those markets. And it is a lonely world for us because we have no automatic allies in the trade battles that are being waged.

And, of course, our own self-contained market is far short in numbers of what is required to support a highly developed manufacturing sector. We have passed the point of being able to muddle through--we have to make some very serious decisions if we are to support our own industry.

You may well ask how we managed to get into this position. I believe that we have drifted into it because of a complacent feeling on the part of government that we needn't have any long-term policies or that some vague form of multi-lateralism was enough. But whatever the reason, and whatever the excuses that may be given, that is the position we are in.

With reference to our immediate problem with the United States, I suggested last August, and I suggest here today that it would have been appropriate--and it still would be appropriate--for the Prime Minister of Canada to deal personally with the President of the United States. It isn't a matter of going cap in hand to beg for pity. It's a matter of telling Mr. Nixon what he obviously doesn't know, and that is that Canada is the United States' best customer and best supplier both. It's a matter of telling him that it is in the interest of both our countries to have a healthy flow of trade. It's a matter of telling him that while we shall be hurt more by any drastic cutback, there will be serious repercussions in parts of his own country too.

There is room for personal diplomacy. There is also room--more than that, there is an urgent need--for the development of long-term policies in connection with our relations with the United States and with other countries.

The Government has told us that it is seriously considering this question right now. I believe that this problem is too fundamental to be settled on an ad hoc basis in any backroom in Ottawa. This discussion should involve all interested Canadians. It should be the subject right now of a great public debate. All opinions should be heard, and the results should not be taken for granted. This does not mean any abdication of leadership. On the contrary, the political leaders of Canada should, from the start, take a most active part in such a debate.

My own approach, as I hope I have made clear, is to strike a realistic balance between political independence and economic co-operation. This must involve the elaboration of a long-term Canadian industrial strategy. First, we must determine the areas of manufacturing where we have the greatest potential advantage in continental and other international trade. Then we must work to encourage those areas, and especially those involving secondary manufacturing where the fight against unemployment will, in the last analysis, be won or lost. It may be that the major weapon in this strategy will be tax incentives. Perhaps we shall find others. But it will have to be a strategy, not imposed by government on the economy, but one that is worked out in co-operation with business and with labour.

Above all, we must remember that whatever success we have in the realm of international trade will depend on the success of our internal economic structures.

That is why, if Canada is at the crossroads in international trade, it could also be at the crossroads in terms of the whole thrust of its economic policies.

We have reached a point where we must decide whether our first priority must be government activity or whether it must be on individual incentive; individual effort and individual imagination to promote the healthy growth of our economy.

Either we rely on individual and group initiative to provide the thrust for our economy or we don't. If we believe this--and I do--then we must encourage it.

I believe that the emphasis must now be placed on individual incentive. I am not going to downgrade the importance of government activity in this complex and interrelated world. But there comes a time and there comes a place where government must realize its own limitations.

Big government will not disappear. That is obvious. But there must be a realization that the purpose of any government, large or small, must be to serve the people, not to serve itself.

It is not the function of government to stifle initiative; it is its function to encourage initiative.

It is not the function of government to do away with the incentives that encourage people to contribute to the economy. It is the function of government to make sure that incentives work.

Above all, it isn't the function of government to become the major growth industry of the nation. It is the function of government to encourage balanced economic growth throughout the economy. If a government cannot achieve that, whatever its political stripe, it is worthless, and it should be replaced.

The major ingredient in internal economic development as well as in external economic co-operation, is confidence. If there is no confidence within, the result is stagnation, inflation and uncertainty. Without confidence outside, the result is confusion, mistrust and loss of trade possibilities.

Beyond all the other challenges of which I have been speaking, there is one that goes to the heart of the matter; That is the challenge of confidence. Confidence in oneself; confidence in the society, confidence in the government and in the men who run it. That is the challenge of our day; and it is up to Canada to rise to that challenge as she never has before. The stakes are too high to do otherwise.

Mr. Stanfield was thanked on behalf of The Empire Club of Canada by Mr. Winfield McKay.

EDITOR'S NOTE: The United States of America, which traditionally had a surplus on its international trading account, for the first time in almost a century showed a deficit in 1970. Their overall balance of payments deficit was aggravated by the large export of U.S. dollars to foreign countries in the form of direct investment, foreign aid and defence expenditures. The resulting rapid buildup of U.S. dollars in the hands of foreign central banks represented a threat to the world monetary system, which was based on the U.S. dollar as the principal reserve currency.

In August of 1971, the United States imposed a 10% surcharge on a wide range of imports, allowed its own currency to float free from gold, and imposed a wage and price freeze designed to curb domestic inflation and make American exports more competitive. President Nixon's "new economic policy" was designed in part to effect an upward revaluation in world currencies against the U.S. dollar.

Canada, on the other hand, which normally had a trading deficit with the United States, experienced in 1970 a huge surplus of $1.3 billion largely resulting from the benefits of the automotive agreement, increased export of oil, natural resources and manufactured goods. Canada's foreign exchange reserves increased accordingly. With approximately one quarter of Canada's Gross National Product resulting from foreign trade, two-thirds of which was with the U.S.A., the American initiatives, particularly the 10% import surcharge, caused a great deal of concern among Canadians. Relations between the two countries became strained.

The Government took the position that Canada should have been granted a blanket exemption from the surcharges on the ground that Canada's dollar was already floating and in line with the U.S. dollar; that Canada had not raised tariff barriers against U.S. goods; and that the high degree of integration between the two countries made Canada's case unique. A ministerial delegation unsuccessfully pressed these points with Washington.

At the time of this speech the Government's popularity according to the Gallup poll was at its lowest ebb since the 1968 General Elections, and the Progressive Conservatives, and their Leader, appeared to be on the ascendancy. Many observers felt that Prime Minister Trudeau's diplomatic initiatives with Communist Countries, the diplomatic recognition of the People's Republic of China and the official visit of Premier Kosygin of Russia to Canada only the week before, unnecessarily aggravated the difficult negotiations which were taking place between Canada and the United States.

Six days after this speech was given, the Progressive Conservatives moved a motion of censure against the Government over the handling of our relations with the United States.

Fully eight of the addresses in this volume deal with some aspect of Canadian-American relations. Mr. Stanfield's views on this subject are followed by the addresses of Mr. David Lewis, M.P. (page 60) and the Honourable John Turner (page 71) who represent the views of the two other major political parties. The American balance of payments difficulties and the consequent effect on U.S. Canadian economic relationships are discussed from the American point of view by Dr. Pierre Rinfret (page 106) and Mr. David Rockefeller (page 124), and from the Canadian point of view by Mr. Earle McLaughlin (page 344). The difficult question of U.S. control of the Canadian economy is dealt with by Messrs. Jack McClelland and Robert Macintosh (page 205) and Mr. Peter Newman (page 229) as well as by the other speakers mentioned above.

See also Editor's notes on page 136 and page 227.

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Canada at the Crossroads

Focus on economic problems for Canada. Basic question: "What is the direction in which our economy must go if it is to provide our workers with jobs, our children with opportunities and our people with an acceptable standard of living?" Major aspects of the question: Canada's place in the world. The direction of the economy within Canada. Effect on Canada of American economic policy. Some suggested solutions: diversification of foreign trade; national and political independence; focus on our own economic, cultural, and social priorities. The function and responsibilities of the government. Confidence.