FEBRUARY 3, 1972
Canadian Independence: Two Viewpoints
TWO ADDRESSES BY
Mr. Jack McClelland,
PRESIDENT OF MCCLELLAND AND STEWART LIMITED, AND PAST PRESIDENT, COMMITTEE FOR AN INDEPENDENT CANADA
Mr. Robert M. Maclntosh, PH.D. DEPUTY CHIEF GENERAL MANAGER, BANK OF NOVA SCOTIA
CHAIRMAN The President,
Henry N. R. Jackman
The preservation of a separate Canadian identity has ben a subject of recurring interest to Canadians throughout our entire history. The debate on this important matter has been complicated by the fact that there has never been any degree of unanimity as to what a Canadian identity really means. Opinions on this have varied depending completely on the perspective of the observer. For instance, our early settlers had a very different opinion as to what constituted a free and independent Canada than did the North American Indians--General Wolfe had a slightly different view of the matter than did General Montcalm.
The Empire Club of Canada may also have played its part in attempting to determine Canada's identity as our Club's early principles spoke of "An Independent Canada within the Empire". Now, this may have meant not only loyalty to King and Country, but some students of history might have interpreted it to have meant unswerving devotion to those principles of religious and political toleration which were enshrined in the British "Act of Settlement" of 1689; confirmed by the Hanovarian Succession to the British Crown in the person of King George I in 1711 and vindicated by the victory of English steel and English valour on Culloden Moor in 1745 when Bonnie Prince Charlie and the Scottish Clans then in the pay of the French King went down to defeat thereby assuring for all time that Britain and her colonies would be ruled by Anglo Saxons rather than by Scotsmen thus preserving our own independent identity.
However, perhaps fortunately or unfortunately, depending on your point of view, the Highland Scots did not remain defeated and their progeny have become so numerous and so taken control of our cultural, educational, publishing and financial institutions that vital decisions effecting the future of our country are now being made not by Anglo Saxons--but by Scotsmen.
The boardrooms of our largest banks are now occupied by descendents of the Clans--McLaughlin, MacKinnon, Mulholland, McNeill, Ritchie, McDougall and now MacIntosh.
They have taken over control not only of our greatest publishing houses, thus permeating the minds of our children, but have now presumed to take over our independence movement itself which was headed by a McClelland who had a partner by the name of Stewart, whose ideological mentor was a man named Gordon, and I am even told that the "Committee for an Independent Canada" has an organizing secretary with the most improbable name of Flora MacDonald.
To debate therefore over the remnants of our Anglo-Saxon heritage, we have two Scotsmen. On my immediate right is Mr. Robert M. MacIntosh, Deputy Chief General Manager of the Bank of Nova Scotia. An academic by training, a Ph.D. from McGill with post-graduate credentials from Trinity College, Cambridge, he was a Professor of Economics at Bishops University prior to joining the Bank of Nova Scotia in 1953 where he progressed through the Economics and Investment Departments to become Deputy Chief General Manager in 1968.
He has contributed numerous articles to the learned press and is well-known to audiences as an expert on the money market, foreign investment and capital flows between nations. He has maintained his interest in the academic world and is now serving as Chairman of the Board of Governors of York University.
On my immediate left, is Mr. Jack McClelland, who despite his youthful appearance, for the past 20 years has been the active head of McClelland & Stewart, and without question, the best known publisher in Canada. Under his leadership, McClelland and Stewart have actively promoted Canadian authors so that they have become literary giants not only in Canada but throughout the world. No man has done as much for publishing in Canada as Jack McClelland, and it is perhaps natural that a man who has spent his entire life in promoting Canada, as seen through the eyes of Canadian authors, would have a very high awareness of what an "Independent Canada" really means. No matter whether or not we agree with his views, Canadians will always be indebted to Jack McClelland for making us more conscious of the potential of our heritage and the richness of our country's literature.
These two gentlemen will each speak for twelve minutes. Mr. McClelland will speak first. After they have finished their twelve minutes they will each have a rebuttal of eight minutes. I will now call on Mr. Jack McClelland.
MR. JACK MCCLELLAND:
Franklin D. Roosevelt once said, "We have always known that heedless self-interest was bad morals; we know now that it is bad economics". Were that great American statesman a Canadian living in 1972, he might expand that message to say that it is not only bad economics, it totally denies the future. Or, to express it quite differently, if we as one of the wealthiest nations in the world can't adjust our system sufficiently to regain our self-respect and some real measure of independence, then God help us and God help mankind.
I have deliberately started with this quotation because I want to stress that I am not anti-American. I admire the American people for the great love, respect and loyalty they feel for their own country. I am not anti-U.S.A. I am not even pro-Canadian, for that would oblige me to condone that peculiar myopia of ours that has almost become a national symbol. No, I am an average Canadian who happens to care about this country. I favour peace. I have no wish to rule or dominate the world for economic or for any other reasons, nor do I wish to be part of such domination no matter how benevolent it is. And just as I don't wish to dominate, I don't intend to be bullied, smothered or owned by any other country. There are some in this nation who feel as I do. I call them Canadians.
When I agreed to participate in this debate many months ago, it was my assumption that our Federal Government would have long since shown us the promised leadership. Most of my associates in the struggle for Canada's future whether they be members of the Conservative, New Democratic or Liberal parties--are highly critical of our Prime Minister for his procrastination. Although I share the frustration, his reluctance underlines one of the truly alarming aspects of the issue.
When the Committee for an Independent Canada met with Mr. Trudeau in July, he spoke openly and frankly. He said that he was fully in accord with the aims and objectives of our organization. He said that he would soon introduce legislation that might please some of us and disappoint others, reminding us that a political party could not always move as quickly or as far as it might choose, for the obvious reason that it must remain in accord with the public. In other words, governments are elected. He urged us to continue our activity and establish a climate that would permit government to take the steps needed to achieve economic independence.
It is said that a politician should be judged not by what he says but by what he does. In my opinion, Mr. Trudeau's words were those of a sincere man. We can expect him to go as far as he thinks he can without rocking the vote.
The foreign-ownership debate--the single most important issue facing us today, if we recognize national unity as an integral part of it--will determine our future. The most reactionary among us must now recognize that fact. I suggest that it is too important to be left to the compromising jungle of party politics.
What can we expect from Mr. Trudeau? In my opinion, at best a dangerous but plausible compromise. We delude ourselves into thinking that a Prime Minister's first concern is Canada, present and future. And we ask him at the same time to function in a system where his first concern must be the re-election of his party.
The time for action is almost past. The threat is now from within. We have brought the Wooden Horse within our gates. Foreign influence has seeped into the very marrow of our society. Greed, self-interest, complacency, confused purposes--values not introduced, perhaps, but certainly encouraged by the presence of foreign capital--have replaced the self-sacrificing determination that built our country. The threat is from within, and the political courage needed to combat powerful vested interests is more than we can expect of any man. Are we then to be victims of our own greed? Possibly.
After travelling across this country for a year and a half debating this issue, I am satisfied that the vast majority of true Canadians seek economic and cultural independence. I am not satisfied that they have a reasonable way of demonstrating this in the next federal election. Just how is the individual voter to indicate concern about the future?
Should we vote for the NDP? Why not! This party is totally committed to economic independence. But in my view, it should not be necessary to vote for a socialist administration to express concern on this issue.
Should we vote Conservative? There is evidence that Mr. Stanfield may now take a more concerned position. That's cold encouragement. It has taken him a very long time to reach this stage. He will probably take even longer to do anything about it.
Should we vote Liberal? I have dealt with Mr. Trudeau's position. Many of his senior Cabinet associates, on the basis of past performance, and indeed on the basis of the historical performance of this party, would have to be dragged unwillingly to an appropriate stance. Mr. Trudeau may do it. He is perhaps the only individual in the country who could. But it would require involvement, commitment, and concern of a nature that one could hardly expect. I have forgotten who Hobson was but ours is a classic Hobson's choice.
I suggest to you that the time has come when we must direct our political leaders. The time has come when nothing less than a national referendum will do. This issue is too crucial to be settled on party lines. Let us find out whether or not Canadians are prepared to pay the price--if indeed there is one to pay--to preserve this country for future generations. I have referred to the threat from within. Let me identify part of it.
1. Ignorance. It persists despite the Gordon Report, the Watkins Report, the Wahn Report, a form of the Gray Report. We have had the report of the Inter-Departmental Committee for the Ontario Government. We've heard from the Science Council of Canada that unless the trend is reversed, the proportion of our work force involved in manufacturing will continue to drop and we will become mainly suppliers of raw material to North America, and more startling perhaps, that only 15 % of our scientists and engineers are engaged in research compared to 35% in the U.S. We have had repeated warnings from the Committee for an Independent Canada. Ignorance is one of the great threats. Ignorance and obfuscation. A statement by Professor Safarian of the U. of T. that the growth of foreign ownership is diminishing was widely quoted by newspapers with the implication that the threat may be passing. What bloody nonsense! Of course the rate is diminishing. At the levels that have now been reached, what else could it possibly do? Professor Safarian and others like him suggest that ownership is not the crucial issue. Of course it is, when the U.S. government chooses to use so-called free enterprise companies or multi-national corporations as an instrument of its economic and political policies. It has done so in the past. It will do so again.
2. Regional disparity and the resultant lack of national unity. Most of our Premiers are concerned with short run problems and with the voters in their own provinces. That's their mandate. They are reluctant to take a statesmanlike position in terms of Canada's future as a whole. And in that role they will continue to act as auctioneers of our independence. There are solutions to the problem of regional disparity, but there is little evidence that we are about to apply them. This devil-take-the-hindmost local approach is persistently applied despite the certainty that regional disparity can never be solved without economic independence. This country cries out for a national industrial strategy. Only that and the reduction of foreign control will assure jobs for the future.
3. Our business community. By financing election campaigns, it is the business community that indirectly chooses governments and indirectly determines the policies that will be followed. In a country where 75 % of the major corporations; 60% of the manufacturing industry; 60% of the mining industry; 85%0 of the smelting and refining; 90% petroleum; 95% automobile and automobile parts; 90% rubber, 75% chemical; 75% electrical apparatus; 90% computer and 90% of the corporations employing more than 5,000 people are foreign-owned, is it surprising that what is best for Canada's long term future is not necessarily the prime concern of business or of government? And don't expect senior executives of the more than 8,500 American subsidiaries now operating in Canada to speak out in favour of economic independence. When they do, expect them to join the ranks of the unemployed.
4. Our international unions. Who will have the courage to lead the fight for union autonomy from within the ranks of labour? In many ways the power of the American unions is as equally a persistent threat to Canada's future as that of foreign-owned business. In theory, it is flattering that the fee for hiring, for example, the Thunder Bay Symphony Orchestra is the same as for hiring the New York Philharmonic. In practice it is a bit confining for Canada.
5. Our financial community. There are a number of things that bother me about our financial institutions. It troubles me that a substantial proportion of the foreign takeover in the last several decades has been financed by Canadian money. It's easier and safer, perhaps, to lend money to the subsidiary of an American corporation than to its Canadian counterpart, but that doesn't make it right. I'm not critical of the institutions themselves so much as I am of the system. It is easier to raise money in New York than it is in Toronto. That doesn't mean it is in the public interest. I am not opposed to foreign capital or foreign investment, by the way. I am opposed to uncontrolled foreign investment and to foreign control of our critical industries.
6. Another serious threat is the Canadian organization that isn't. A Canadian phenomenon! It is standard practice in this country for a corporation to be styled John Doe Limited. Its competitor, foreign-owned, will be styled John Doe (Canada) Limited. To the average citizen which one is Canadian? Surely it would be a moderate step to insist that these companies be called John Doe Limited (U.S.) or (U.K.) or whatever. But far more of a misnomer may be an organization such as the Canadian Chamber of Commerce. It recently came out in favour of free trade with the United States. If this is a Canadian organization, one may question its judgment. If it is a U.S.-dominated Canadian organization, then there may be something more sinister at work. How Canadian is the Chamber? I have asked before and I ask again. What about the Canadian Manufacturers' Association? How Canadian is it? I do know that the Canadian Book Publishers' Council is substantially dominated by subsidiaries of foreign-owned corporations. It would be naive to expect that its policies are necessarily those that are the best for this country. And yet what would the unsuspecting public believe? I don't question the integrity of these organizations. I do think we should know exactly who is talking to us. We are not only surrendering our right to self-determination, we are handing over the weapons.
I have touched on a few of the internal threats. The common motive behind them seems to be either self-interest or concern for the status quo. There are those, fortunately, who may feel there could be a more serious purpose in our being here. That we may have a duty to husband our nonrenewable resources; that we have some obligation to the future. I call them Canadians.
I would like to stress that my remarks today have not been made as an official spokesman for the Committee for an Independent Canada.
I started with a quote from an American. Let me end with a quote from a Canadian. Our Prime Minister says,
"The government has no business in the bedrooms of the nation". Peter Newman says, "The U.S.A. has no business in the boardrooms of our nation". I wish Mr. Trudeau would adjust his priorities.
MR. ROBERT MACINTOSH:
If I may, Mr. Chairman, I would like to open my remarks on a personal note. My colleague on the platform today, Jack McClelland, is in one of his capacities a founding member of the Committee for an Independent Canada, which represents a spectrum of opinion which I do not agree with and propose to argue against today. In another of his capacities, he is a distinguished Canadian publisher who, according to his own statements in the past, has encountered some financial difficulties in the publishing business. I would just like to say that my critical remarks on his views should not take away in any sense from my respect and admiration for his achievements as a Canadian publisher. Any Canadian who reads books must know that he has frequently brought to market authors who would not otherwise have been heard, at his own financial cost, and we can only hope that his recent great successes in the publishing world will assure his further contributions to Canadian life and culture.
It so happens that Jack McClelland's industry is one which I would put special emphasis on in trying to arrive at an appropriate Canadian policy towards foreign ownership. On more than one occasion in the past I have said that all forms of cultural communication in this country should benefit from special protective measures against the pervasive influence of American thought and culture. The printing and publishing industry, television, the theatre arts, and other related fields of creative endeavour, are the means through which Canadians share a common experience in our national life. The only available alternative is word of mouth, which is not an effective medium for transmitting ideas and values from coast to coast. So you would not catch me in an argument with Jack McClelland on this score, except that I might go further than he would do in some areas of the publishing and broadcasting industry in order to offset the very considerable economic advantage which American firms have.
But when you get away from the media, it is my contention that foreign cultural influences do not travel on the back of foreign ownership of business and industry, by and large. In our search for national identity and "independence", we have to make sure that we are identifying real problems, because if we fix our attention on non-problems, we will clearly produce illusory solutions. I find it very hard to see how the indigenous culture of Shawinigan or Sudbury is particularly affected by the fact that the major industrial firms in those communities are majority owned in the United States. Quite a few economists and sociologists write about the foreign ownership subject as though there were some identifiable connection between foreign ownership and political and cultural life in this country. Oddly enough, no one has ever undertaken a study to show how this takes place if at all. Does anyone imagine for example that the recent provincial elections in this country were influenced to any degree at all by American pressure to do one thing or another? Anyone who has been around as long as Jack McClelland and I have been, surely knows that the younger generation is far more stridently nationalistic than it has ever been before in our history. If our national life has been so subverted by foreign ownership, how come the young people are not all craven admirers of American foreign policy or whatever? The process of achieving cultural maturity and identity is a long one, which has come to us over a considerable period of time from the days when we were a colonial dependency to the present time when we are on the threshold of being our own selves. But I contend that foreign ownership has little or nothing to do with the issue.
Indeed, my chief complaint against Jack McClelland is that he does not read his own authors carefully enough. In Pierre Berton's splendid history of the C.P.R., we read with astonishment of the machinations which went on between an American railway consortium and the government of the day. Who could imagine such events taking place today without the most violent political reaction? Since it would hardly be fair to criticise John A. Macdonald without balancing the ledger, let me refer you also to Joseph Schull's biography of Laurier, published by another firm. Only seventy years ago, Wilfred Laurier, as Prime Minister of Canada, sent a delegation representing this country to London and Washington to participate in the negotiation of the Alaskan panhandle controversy, which determined the borders of British Columbia, the Yukon and Alaska. He found himself quite unable to act, since the matter was settled for him by the Secretary of State of the United States and the Foreign Minister of Great Britain. Could anyone conceive of a controversy say over the question of territorial waters being settled by the international great powers with our government represented by some sort of dormouse? The idea is too ludicrous to pursue. Yet we are told on all sides, even in the Ontario Government's report of the Interdepartmental Task Force on Foreign Investment, that our independence is eroding away and that something must be done. This is simply the purest nonsense, yet it has almost become a motherhood issue with a very wide segment of the population and consequently in all major political parties.
In my opinion the Committee for an Independent Canada is preoccupied with questions of form rather than questions of substance. The substantive issue is whether or not it is within the power of Canadians to control their economic and political destiny, insofar as any country in today's world can be said to have such autonomy. Foreign ownership is not an end in itself, and for that reason I call it a question of form rather than substance. What the nationalists are looking for is not domestic ownership as such, but the benefits which are supposed to flow from domestic ownership as opposed to foreign ownership. It is rather important that we do not confuse means with ends. Our ultimate objective is to increase the well-being of all Canadians, within the context of a free and democratic society, and not simply to change the ownership of assets for its own sake. Quite a large number of nationalists talk as though the achievement of a higher degree of domestic ownership is itself the object of the game. Of course this is not true, because what they are really looking for is to use a higher degree of domestic ownership as a means to some other end. It therefore is incumbent upon those who make the foreign ownership question such a big issue to show exactly how our ultimate objectives will be better achieved by concentrating on this issue.
On the big economic issues which affect the welfare of all Canadians, control rests in the sovereign power of governments to make laws. All individuals and corporations then must live within the framework of the law, and this applies just as much to foreign owned corporations as to domestic ones. One of the difficulties which leads to much confusion in this controversy over foreign ownership is the use of the word "control". Sometimes it is used loosely to mean control over major weapons of economic policy, such as fiscal and monetary policy. At other times it is used in the context of our international trade and tariff negotiations. But most of the time it is a hazy concept which refers to all the activities over which corporate executive officers have to make decisions. The image is of a small group of men with no sense of responsibility who open plants here or close them there, who diddle the Department of National Revenue here or deny charitable donations there, who select their export markets with a view to pleasing their foreign parent and so forth, on and on.
To show how false this image is, we might take a moment to look at a couple of industries which have a very high degree of foreign ownership, namely the petroleum and automobile manufacturing industries. In the case of the petroleum industry, Canada has certain national policies which attempt to balance the interests of our western provinces, where the people wish to see increased exploration, development and production of oil and gas against the interest of eastern consumers who want to buy at the lowest possible prices. In fact we have chosen to draw a line through the Ottawa Valley which permits the importation of oil from the Middle East to supply the Quebec market. Whether or not we decided to export more oil and gas to the United States will be partly determined by decisions of the National Energy Board and the Alberta Conservation Authority with respect to the adequacy of petroleum reserves for our future, and partly determined by the success of our trade negotiations with the United States to achieve our objectives. We cannot of course make unilateral decisions in these matters, because we must negotiate with the U.S. government which has political and economic interests of its own to protect, and we must also balance our own political considerations internally. But my point is that none of these issues is settled at the level of foreign ownership.
Similarly, in the automotive industry we have had a new industrial policy since 1965 which has gone a considerable way towards improving Canada's position. However, this has not been done without creating fairly serious political and economic problems with the United States, which tends to be heavily influenced by the protectionist attitude of American labour more than it does by the desire of the automotive companies to keep production within the U.S. While foreign ownership is perhaps a marginal factor in the question, the real questions as to the location of industry in the North American market are being settled at the summit level of government negotiations.
To take another example where the circumstances are somewhat different, the Canadian pulp and paper industry is very largely domestic owned. When the United States recently imposed a surcharge on fine paper and lumber, additional difficulties were imposed on an already struggling industry. But here again ownership had nothing to do with the question, but rather questions of conflicting national economic policies.
As J. K. Galbraith said not long ago in Toronto, the only way to get away from the influence of the American economy would be to float our half of the continent off somewhere else. When the Americans embark on an expansive fiscal and monetary policy, which may in fact be inconsistent with our requirements in Canada, it is very difficult indeed for us to withstand the spillover effects on our interest rates, our exchange reserves, the value of the dollar, and indeed our whole trading and balance of payments position. It is at this level where the real problems exist, and we will always have to fight hard to hold up our end in negotiations with our powerful neighbour. But our negotiating strength will not be enhanced by fixing on relatively peripheral problems which are apt to carry an emotional wallop which can lead to retaliation.
I do not deny for a moment the sincerity or good intentions of the Committee for an Independent Canada. In fact they speak for a very large and growing number of Canadians. Walter Gordon has used the phrase "troubled Canada". I don't think anyone looking at us from abroad would consider that adjective particularly apt to describe our circumstances. I would think "fortunate" is a more appropriate word.
MR. JACK MCCLELLAND:
I wish I could ask Walter Gordon to get up and supply some of the answers but I'll try to do my best. I want to thank Mr. MacIntosh for his kind remarks about Jack McClelland--publisher. I want to reciprocate by saying that I am most impressed by the pre-eminence that he has achieved in his chosen fields. As a matter of fact, I have studied his public utterances for the last year and I really think he's an economic nationalist in disguise, at least he is becoming one. The fact of the matter is that he is a banker first and he really won't listen to what the economic nationalists are saying. He attacks them for what he thinks they should be saying but that's because he is a banker first and a banker must automatically reject anything that may appear to be rocking the financial community. As a matter of fact, though, I don't want to say anything unkind about bankers in general today. My release on bankers, whereby I plan to withdraw their passports and their travel permits will not be made public until after I've retired my last bank loan.
Mr. Macintosh sees little or no connection between foreign ownership and our political or cultural life. I'm going to come to that one, but first I want to answer one question. He says if our national life has been so subverted by foreign ownership, why are our youth not craven admirers of American foreign policy? Mr. Macintosh, for the very good reason that the U.S. business, military and political leaders have managed to alienate almost the total thinking youth throughout the world including the youth in the United States. There's a message behind that and I think what the nationalists are saying is that "let's turn off right now". We are said to be two to four years behind the United States technologically, marketing developments in lifestyle. Let's turn off now and avoid the tragic mistakes that that great country has made. We can only do so by diminishing their influence.
He refers to Pierre Berton. I guess I should re-read, or read Pierre Berton more carefully particularly his great book The Smug Minority which I think should be mandatory reading for all members of our business and financial community. However, he was referring to The Last Spike and in that book, Pierre points out that it was American money that substantially built the Canadian Pacific and further, there were Americans, most of the leaders, most of the builders, the men who lead this great operation were Americans but Pierre makes another point which I think Mr. MacIntosh may have missed and that is that the Canadian Pacific was at all times totally an instrument of Canadian domestic policy. Our government made the rules and those rules were adhered to. One of the major complaints of the economic nationalists today is that we have almost a total absence of any rules governing foreign ownership in this country. He talks about the automobile industry and the fact that the location of plants in North America will be settled at the Summit. I'd like to look for a minute at that summit. As a matter of fact, I consider the automobile industry to be more important than an extra mile of territorial water. But there are six parties involved really represented in the negotiations. The owners on both sides of the border and they're both Americans so the score is two nothing. Then, we look at labour and our labour in this case is American controlled so that the score becomes pretty close to four to nothing. And, because the governments substantially represent business and labour, it seems to me that the score pretty well becomes six to nothing. But that's not my real message about the car industry. I don't really know why Mr. MacIntosh mentions it because it, if anything, is the classic example of the threat of foreign ownership.
In the thirties, we were the second largest producer of automobiles in the world. Today, where do we rank . . . seventh, maybe eighth. Now why is this? Size? Sweden hasn't found that an insurmountable problem. We are large enough to achieve the necessary economies of scale in this country. Is it technology? We're told often it's technology. My God, we can hire the technology. That is such a stupid argument. Is it management?
You know, in Thunder Bay, Max Saltzman compared, as a result of some research that had been done two Canadian industries on these points: efficiency, profitability, wages, and competition or competitiveness by international standards. The two industries were the steel industry and the rubber industry. The steel industry won hands down on every count. The steel industry is Canadian owned; the rubber industry is substantially American owned. So it isn't management. Why is it? Do Canadians want U.S. cars? Nonsense. Look at the cars we're importing from Europe and from Japan at the present time.
In my opinion, there is only one answer and that is ownership. We made this tragic error when, forty years ago. We should learn from these lessons. I don't by the way, suggest that we should take over the car industry. I suggest that we should learn from our lesson. But if research showed that it would benefit Canada as a whole ten years from now, to take over this industry, then I guess I would favour it. I don't consider ownership to be the only key to economic independence. It's just one of many important ones. I don't prefer Canadian owners to American owners per se. I prefer them because they are here and they are responsive to Canadian laws, to Canadian aspirations. They're concerned with Canadian problems. That is the main advantage whereas American firms in Canada now are responsive to U.S. laws and we learned that very clearly in 1968 with the mandatory guidelines. With one stroke of the pen, the President of the United States welded the independent businesses into one the single most powerful economic force in the world and almost brought Canada to its knees and could have in fact done so had it not been for their benevolence. They, of course, got their pound of flesh.
Now, I want to refer back . . . there are many aspects to this and there isn't time but I want to refer back to the connection between foreign ownership and culture. If I felt that culture was simply a matter of reading a Layton poem, singing a Vignault song or watching Jalna on TV, then I might agree with Mr. MacIntosh but culture happens to be my business. What foreign ownership does to this country is first and the Science Council has indicated this, it strips us of our engineers, our scientists because the great research is not being done here. It strips us of leadership. The decisions are being made at head office. We all know that. If . . . these things are absolutely essential, the designers, the people who provide the technology, they're absolutely essential to a viable human culture.
Finally, foreign ownership strips us of self-respect; it strips us of ambition, of pride; it strips us of jobs and perhaps that's most important of all. It's interesting that in the year from June from 1970 to 1971 that two-thirds of the jobs lost in Ontario in manufacturing were jobs lost from foreign owned plants. Some of them closed for reasons that I would consider dubious but whether they're dubious or not I ask Mr. MacIntosh to consider whether or not it would be easier for him or for me to fire two hundred people in Sandusky, Ohio or two hundred people in East York. I think the question answers itself.
MR. ROBERT MACINTOSH:
Well, Mr. Chairman, Mr. McClelland began by quoting the great American FDR so I will start this concluding remark by quoting a great Canadian. I'm drawing from something which I got second hand from remarks from Professor Safarian to whom I'll come to in a moment.
Harold Innes once said that the risk of being an economist in Canada was that you might die of laughter. Jack McClelland accused Professor Safarian who is the Dean of Graduate Studies at the University of Toronto and a very emminent economist of being a proponent of ignorance and obfiscation. Well, the difficulty I find about that is that Professor Safarian is the one economist who has done some really serious work on the question of the behaviour of the foreign owned subsidiary in Canada and the nationalists are fond of quoting all sorts of people in the Watkins report, of whom Professor Safarian was a member but they never sight his data and you can go through the literature, Kari Levit's book or any number of books but they do not talk about the facts and Professor Safarian is the one person who has done a serious study of the behaviour of the foreign corporation here. So, I contend that to accuse him of ignorance is the reverse of the truth.
Now, Mr. McClelland says that foreign ownership is the single most important issue facing Canadians today. I can't agree with that. I think the single most important issue facing Canadians today at the economic level is the problem of full employment without inflation and I think, if you want to talk about politics that's where the votes would lie.
At the political level, I think I see the most important problem is maintaining unity with French speaking Canada and here again you don't find many French Canadians in the CIC for the very reason that the view in Quebec is a very different view from the view in Toronto about the nature of the foreign ownership problem and that's significant because he talks about curing regional disparity. The fact is that the political environment is one in Canada in which you have to balance the interests of Ontario and the central Canadian, the St. Lawrence Valley market with the regional parts of our country which are heavily dependent on resource industries and to talk as though there were some magical solution to the regional problem in obtaining a greater degree of domestic ownership is to fly straight in the face of the clearly evident views of the provincial premiers outside the St. Lawrence Valley.
Mr. McClelland says that we can't leave the issue of foreign ownership to party politics. Well, he would like to have a referendum. I would like to see someone write the question that is going to be on that referendum. Are You In Favour Of Canadian Independence? Yes, I am, a hundred per cent vote. Are You In Favour Of Less Foreign Ownership? Ah, I don't know what you would get on a vote like that but, you know, the parliamentary system in this country, the whole nature of our democratic organization is not going to be set aside by a referendum on an issue. We have a referendum every time we have a general election and the general election will tell you where the votes lie and if Mr. McClelland finds that the Prime Minister is having difficulty arriving at a foreign investment policy, well he might. There are balancing interests in this country which must go beyond the narrow views of the Committee for an Independent Canada and he has to think of the West and he has to think of the Maritimes and he has to think of all these things in arriving at a political policy and this is true of all of our political parties and it isn't done in a vacuum.
Now, Mr. McClelland speaks of the proportion of labour in manufacturing industry having levelled off and perhaps declining slightly. One of the favorite myths of people throughout history has been that if you have a job where you make something with your hands, it's a real job but if you're in service trades and you only push papers it's not a real job. I'll guarantee you that there isn't a single person in this room today and that includes the learned gentlemen from the press who make their living in a manufacturing sense in the sort of sense in which he means it. The service trades are growing very fast in Canada. Nearly all of us are in . . . everyone in this room is in the service. So much for you, you don't really have jobs or justifiable jobs. You know, if a growth in the percentage of manufacturing is such a great thing, is it not also true that a growth in agriculture would be even better? Agriculture is highly labour intensive It's free of pollution. It means independent entrepreneurs. It certainly involves a lot of the things which I think a Committee for an Independent Canada want. The proportion in the labour force in agriculture has gone down from twenty per cent to seven per cent for very good reasons and I don't think that one can arrive at an economic policy by saying that you can have X percentage in manufacturing. We have a very high rate of growth in the service industries in Canada for a very good reason because this is where it's at.
To be very specific, the banking industry in Canada now employs about fifteen hundred specialists in the computer sciences--that's highly skilled programmers, analysts, managers with those kinds of skills. These jobs didn't exist five years ago or seven years ago. They're not in the hardware game. They're not in the manufacturing game and behind them is another fifteen hundred people from the software companies and the manufacturers who are all working in this rapidly growing area and to suggest that people ought to be in manufacturing but not in these jobs is to take a very primitive view of the economy.
Now, whether the business community makes or unmakes governments is a proposition that I throw out to your attention. I don't believe that it can be shown that the money advanced by business for political parties is capable of swinging elections. If this were true, there would be a clear correlation between the money available to political parties to spend and the results of elections which is certainly not the case. There's plenty of evidence on that subject and on that score I would like to remark something Jack didn't say but it's very relevant to what he said.
In Kari Levit's book quoted in the Ontario government study it said quote, "the indigenous entrepreneurial class has been increasingly stultified and converted into a complacent class of managers acting on behalf of the absentee decision-makers" unquote. Well, that's the purest nonsense. The fact is, in this country we now have an upcoming business class which is far, far better than any we've had before. At York University, if I may be chauvinistic, we are now turning out one hundred and fifty MBA's a year who simply weren't there ten years ago and this aim is true of many other business schools and related professions and we have a very much improved level of skills in the managerial class who are beginning to take over management in this country and this process is only on the threshold.
Finally, I would like to, since I'm running out of time, I think, just add a word about the habit of talking about takeovers. The CIC never talk about the reverse takeovers. Since we got onto the subject of the CPR, I'll close on that note. A few years ago the majority control of the CPR returned to Canada. Fifty-five percent or so of this stock is now owned in this country. I'm truly surprised that the CIC didn't hold a parade because this should have realized their objectives. We could have had Mr. Gordon carrying the flag. And, as a matter of fact, the subject passed by unnoticed even in the Toronto Daily Star because of the fact that they're not interested and the reason that they're not interested is because it's irrelevant. Thank you.
Messrs. McClelland and MacIntosh were thanked on behalf of the Empire Club of Canada by G/Capt. R. C. A. Waddell, D.S.O., D.F.C.
EDITOR'S NOTE: For the past several years the extent of foreign (principally U.S.) control of Canadian industry and resources had become an increasingly controversial issue in Canada. A number of reports, some commissioned by the Government itself, had brought the issue to the forefront.
In the summer of 1970, Prime Minister Trudeau assigned Revenue Minister Hubert Gray, then a minister without portfolio, to head up a task force to study the pervasive influence of foreign ownership and to recommend policies to ensure its responsiveness to Canadian economic goals. In November of 1971 a summary of what purported to be the Gray Report appeared in the Canadian Forum Magazine without the Government's authorization or any statement on the Government's part that it represented Government policy.
According to the published version, the Gray Report recommended the establishment of a screening agency with very broad powers to review, not only foreign takeovers, but existing foreign controlled companies, even if they were not planning major new investments, and "major new investments abroad by Canadian based multi-national companies."
The Federal Government's policy announced in May of 1972, rejected most of the Gray proposals and settled for giving the Cabinet the right to approve or forbid takeovers of firms operating in Canada with assets of more than $250,000 or sales over $3-million per year. The Minister of Industry, Trade and Commerce in making his recommendations to Cabinet was to be given flexible powers to insist that proposed take-overs provide "significant benefit to Canada" in terms of jobs, economic expansion and compatability with Canadian industrial strategy. Foreign investors would still be free to start new enterprises. Licencing and franchising agreements would continue unimpeded and there would be no policing of foreign-controlled corporations already operating in Canada or Canadian multinational corporations operating abroad.
Generally speaking, the Government's policy was welcomed by those who favoured a less restrictive policy towards foreign investment and was considered a disappointment to those such as the Committee for an Independent Canada who favoured a more nationalistic or "pro-Canadian" approach.