Canada's Economic Position

Mr. Diefenbaker was introduced by Dr. Cruickshank.

MR. DIEFENBAKER: I begin by saying to you how deeply appreciative I am of the numbers that have turned out here. Only a few moments ago I said to the new Minister of Trade and Commerce, Senator McCutcheon: "There are more here than were present when you spoke. "Well," he said, "they paid four times more to hear me than they have to hear you."

That was something I couldn't get over. But you have mentioned that some transitions have taken place and some changes in recent days; well, reading the press and hearing the radio, some of you might conclude that I am not completely free of troubles, but I came here because I had undertaken to do so and there were arguments pro and con. I came to deal with my country, Canada, and to place before you my views regarding certain issues facing Canada, its economic and also some of its international relations.

Now, somebody told me that having regard to the unanimity of the three papers in Toronto, I was in the position of Daniel in the lions' den. Well, his was an amateur performance compared to mine. Gentlemen: He came out all right in the end; that is what I want to underline at this time.

The Canadian Club was established to strengthen the unity of Canada; the Empire Club, to strengthen our relations with the Empire as it was and the Commonwealth; and the Board of Trade to strengthen the economy and strengthen the business climate of Canada. The events of the last few days remind me that a politician, in an argument with a surgeon and an engineer, expressed himself very well when he said this. They were arguing the question as to which was the oldest profession. The surgeon said, "Of course, it is the medical profession. The operation on Adam's rib produced woman." The engineer said: "We came in before you. Who created order out of chaos?" The politician said: "I win, who created chaos?" That, I think, is a viewpoint generally held by those who in business and otherwise speak of those of us upon whom rest the responsibilities of leadership and I know something of the intolerable pressures that rest on those with responsibility. We will never meet Canada's responsibilities with faint heart and little faith; I have neither and I want to underline that.

Some of you in business say: "Oh, if you could only run government the way you run business." Well, it would be interesting. What would you do in business if every decision that you made, every expenditure that you indulged in had to go before a daily meeting of the shareholders, beginning at two-thirty each day and lasting until ten p.m.; where you are required to answer some questions more or less relevant to the business, some not; when, as a result of our parliamentary system you are in the position where many of your shareholders did not agree with you, you would be required to place the estimates of every department of your business before the shareholders in detail; you would allow them to debate and discuss then a single department for days. That is democracy. That is the operation of the parliamentary system. When I think of another prime minister in the middle east, in the last few days, I think our system is pretty good. We face issues every day, problems of economics, problems affecting every part of the nation and internationally. I am reminded of the college graduate in an Economics course, who went back to his Alma Mater to visit his son who followed in his footsteps and the son showed him his examination and the father was astounded to find that the same questions were on that paper as the ones he had written thirty years before. He went to the head of the department and he said, "What is the idea of this? Is this university not progressing? What lack of progress! Why, you asked the same questions of us students thirty years ago." The dean said, "Yes; the questions don't change but the answers do." That is so in every field of international and national affairs and that is so in the field of national defence, to which I intend to refer shortly.

I come to you as businessmen, to place before you something of the economic situation of our nation, something of our plans for the future, something of the incontrovertible evidence. of the last few months. I place before you what you already know. The Canadian gross national product was eight per cent higher than in 1961. Only three times in the entire post war period has there been the rate of seven per cent exceeded. The rise in productivity, less the rise in prices, was the largest of any industrial area in the free world.

When I hear Canadians speak darkly of Canada's future, I say the seven per cent compares to five per cent in the U.S., from three to six per cent in the major industrial areas of Europe, from four to five per cent in the common market countries and in Sweden and Japan, and only one per cent in the United Kingdom. These are things that you know of. These are things that show economic progress. Indeed, insofar as employment is concerned, we are making better progress than any other comparable nation in meeting the challenge of unemployment. One hundred and seventy thousand more people were working than in 1961, an increase of 2.8 in the labour force. That seems modest, but it has only been exceeded once, since 1949. The income of Canadians increases year by year; it rose six per cent in 1962; wages and salary six per cent higher than the preceding year; corporation profits are estimated to be up ten per cent; new investment in Canada increased ten per cent. More housing units were completed last year than the year before. Investment in new machinery and equipment up ninety per cent. These are facts. These are things that Canadians as a whole have reason to be proud of. In the export field, perhaps the most vital single segment of the economy, there has been a steady, even a spectacular improvement. Canadians came through a crisis in foreign exchange similar to that of 1947. At the same time, our exports have been rising. Our exports in October and November, 1962, over the year before, showed an increase in less than two months of $121 million. That is not enough. We must go on. But, it does show this, that Canada is advancing. When we read in other parts of the world the fact that our economic development has slowed up, let me point this out, let me say to you, that the trends have been carried into 1963. The first eleven months of 1962, iron ore exports increased eighty-three per cent; crude petroleum seventy-two per cent; aircraft production increased, exports of aircraft, by thirty-four per cent; aluminum thirty-two per cent; machinery twenty-four per cent, that is non-farm machinery. So I can go on, Canada, your country, my country. Then the Canadian dollar today strongly standing against anything such as occurred last year; the reserve position a good deal higher today than it was last spring. The reserves behind the Canadian dollar today stand at two thousand six hundred and fifty million dollars. We have still to repay three hundred million. By contrast, the amount was one billion one hundred million last June. Furthermore, the reserves are being built up, reserves in the form of foreign loans arranged but not yet transferred. Quebec's $300 million loan from the U.S. Trans-Canada Pipe Line's $100 million issue in the United States. Strong, confident Canada. The gain in reserve in January, one thousand two hundred and fifty million dollars. What, I ask you gentlemen, is this? We are going ahead. We have reason to be proud. We have to go still more. It requires on the part of Canadian businessmen everywhere and labour and agriculture that joining together which is so necessary to all of us in co-operation, not to downgrade Canada. Gentlemen, lift Canada up. Don't carry the message to all parts of the world that things here are economically difficult.

What about the Commonwealth? What about the attitude in this connection? What about our trade abroad? Great changes have taken place in Europe. The European common market came into being. Britain didn't join. She could have at the time. She offered afterwards. Mr. Macmillan spoke for the British people and promised that there would be safeguards of the Commonwealth trade to see that unnecessary injustice would not be done. They kept her out. I am sorry for Britain, but she took her stand on behalf of the Commonwealth. Britain today faces her darkest hour economically. From all parts of this Commonwealth, we have to stand with the other members of the Commonwealth.

I proposed at the Prime Ministers' Conference in London, in the month of September, that whatever happened in Brussels, that an invitation should go to the Commonwealth members, to the Six, the European Free Trade Association, to the United States and to Japan and to all like-minded nations, to join together in a conference to bring about multilateral trade. I know what they said about it. They said the idea hadn't been thought out. Well, I had worked it out for a period of time, seven months. I presented it. It wasn't acceptable at the time. The purpose was to advance the strength of the Commonwealth to permit the Common Market to proceed with its own expansion. After the passage of the United States Trade Expansion Act, I placed it before the President of the United States and he accepted it and he said he would join with me in placing this before the nations. It was accepted by those nations. The members of the General Agreement on Tariffs and Trade agreed to hold a ministerial meeting, which I hope will be held early this spring. Then, on the 29th of January, in the House of Commons, I proposed a meeting among Commonwealth countries, before this GATT Conference and just a moment ago I had placed before me a speech delivered today in the British House of Commons by the Prime Minister of the United Kingdom, and he said this: "We have, therefore, proposed a meeting of Commonwealth Trade Ministers shortly before the time of the forthcoming ministerial meeting of GATT which it is hoped will take place in early summer. It is ir. line with the recent statement of Mr. Diefenbaker in the Canadian Parliament and, I think, with the thinking of all Commonwealth Prime Ministers." Bringing together, joining together, maintaining the sinews of our defence economically; no matter what the situation may be internationally, Communism remains unchanged. Today, it is fearful of the tremendous nuclear deterrent of the U.S. Never before was it so necessary that the free world co-operate in these trade negotiations. I for one, speaking for this country, having placed this before the Commonwealth Prime Ministers' Conference, again the other day, asking for a meeting of the representatives of the Commonwealth before this GATT Conference, believe that we shall have attained, through the instrumentality of these several meetings, something of a new relation internationally, of a new concept of co-operation among like-minded countries, democratically minded, to the end that we and those countries, the countries of South America and Africa too, all those who believe with us in the democratic process, will join with us in bringing about the achievement of a new era in international trade, something that has been dreamed of for generations, something which now, more and more, is going to be achieved because of the present exigencies of our international position. Now, sir, I spoke with the members of that organization in September.

Well, naturally, there is one problem in their minds at the moment and I will speak of that immediately, saying that in no way are there any overtones of partizanship. I place before you the situation as I see it.

What of the defence situation? I can merely outline it in a matter of five or six minutes. There have been changing concepts of defence. They become the order of the day. In a little more than four years; the United States and Britain have changed their minds again and again about weapons. Since 1950, over three billion dollars worth of weaponry has gone into obsolescence and some of it never came into production because too often the rule has been if it works, it is obsolete. Changing, changing concepts. Britain has scrapped her Victor bombers, built at a vast cost. She scrapped her Blue Streak missiles. She scrapped that missile for the Skybolt, which the United States was going to supply, a missile carried by their aircraft. Well, at Nassau, those things changed and the United States pointed out that it would be quite impossible to produce the Skybolt. Some four million dollars have been spent on it. The President was willing to go ahead, I am informed, provided Britain and the United States would each put up around $100,000,000; but it was gone. They had their plans in Britain. When men and women say to me, "Why not a finality in this matter?", my answer is the changing situation. I wish some of you carried the responsibility. I wish some of you realized that all is not black and white, that in this field there is change, and at that meeting in Nassau, the United States and Britain agreed to a multilateral agreement being attained or hoped for in the Atlantic Alliance. What was the change? Was it aircraft? Was it bombers? The United States said: We are going to rely on the Polaris missile, to be fired from a submarine. No agreement has yet been arrived at in that connection. That will come before the conference in May of the NATO nations, who will meet in Ottawa. The whole concept of NATO is a partnership embracing all eighteen nations, who make their decisions individually and also collectively. You talk to me about finality, why the decisions of today are wrong tomorrow. What about the United States with its B-52 and B-47, these great aircraft, they are phasing out of existence. Now, the reliance is on Polaris. They asked us at that meeting in Nassau that we should expand, all of us within NATO, our conventional forces. Then they say, "Why not get finality?" I say what if Britain changes completely now as a result of what has been placed there at this very moment and debates taking place in the British House of Commons? What about air bases in the Mediterranean? The United States abandoning her bomber bases there. What about Turkey? What about Italy? What about those great missiles that they have, those missile sites? Ignore them. Why? Because there is a change. With the development of the intercontinental missile, no longer can you be sure; no longer can you have any warning even. With intercontinental missiles travelling at fabulous rates of speed, what can bombers do against them? Nothing. What can Bomarc do against them? Nothing. Bombers and Bomarcs are for the purpose of meeting, within a small area, a bomber attack. These great changes are taking place. Instead of having bases on land, as I said a moment ago, the policy is changing to having bases on the sea. The day of the use of the bomber is phasing out. What about our situation? As far as our NATO forces are concerned, we received certain responsibilities and undertook them under NATO and provided the F-101 Interceptor. Those changes will have to be reviewed now, reviewed by the NATO nations. When I am told that these Bomarc sites are present to protect Toronto and Montreal, I say they are designed to protect the Strategic Air Command of the United States, which represents our only survival. The Bomarc, as I said a moment ago, is completely ineffective against Intercontinental missiles. The other day, Mr. McNamara, the Secretary of War of the United States, said in effect that the Bomarcs could no longer be considered as effective. Then he used these words: "They will be continued only because of the amount already expended on them." Our expenditures in Canada, fourteen million dollars on them.

Now, what about the days ahead? Insofar as NATO is concerned, we have carried out our commitments and are not in default in any particulars. We have available an ever-increasing number of these aircraft for the strikereconnaissance role. How are they to be used? Are we to have the same role in the days ahead? That will be decided in the month of May when this meeting takes place. Whatever the decision may be, Canada, as always, with their allies there in Europe, will stand with them, for them and at no time in any weaker condition or position than they are in.

Insofar as NORAD is concerned, that is the North American Defence, I have mentioned the situation of the Bomarc. We will proceed with the negotiations to provide for the ready availability, with ready access to the weapons in case of need while, at the same time, we will insist that Canada's sovereignty and her rights as a nation shall be upheld at all times.

That represents, in the shortest possible form, an answer to a problem that will take a great deal of discussion. Any decisions before May would be premature because defence concepts and nuclear weapons and their nature is changing.

Mr. President, if we do not obtain agreement on disarmament, there is no victory possible in the event of nuclear war. We know that. Lincoln said, "I pass through difficult times. I know what people will say. Why does he not take this stand or that. Great decisions are made on one's knees," said Lincoln. How easy it would be to take another stand. We have endeavoured, we have done our part; we have advanced along the road to disarmament. We have maintained our defences, secure and definite. At the same time, we have done everything we possibly can to mobilize the feelings and the hearts of mankind everywhere, to bring about a degree of disarmament without which there can be no peace. I do not mean that Khrushchev is going to strike intentionally, because he is fearful of the result of the United States and its overwhelming nuclear deterrent power; but, that does not rule out mistakes. As far as NORAD is concerned, in North America we are negotiating, as I said, with the purposes in mind to which I referred, as far as NATO is concerned. Decisions now may well be changed in the light of what takes place at that meeting in May. That is why throughout the period of the last year and half we have been placing ourselves in a position where, if need came, action would be taken while, at the same time, we have refused to be pushed into a position where action taken might, as in so many other nations, turn out to be wrong. Our integrity, our security must be maintained and I want you to know that it has been.

Now, sir, what about the days ahead; what about my country and your country? Are we going to become prey to separatism? Are we going to break this country up into nine provinces and one state within the state? I look back to my boyhood days in East York, when only two per cent of the population here was other than British origin, and I was so classed. I see that changes have taken place. Men and women come from all the nations of the world. This Canadian Club, this Empire Club, the Board of Trade, what a contribution they make. Cartier said: "It will be impossible to carry out Confederation on account of differences in race and religion." It is precisely on account of the differences in race and local interest that the federal system should be established.

What about the future, the five-year plan for development, politically the gathering together of the provinces on some matters, bringing them together on a matter affecting them all? I do not believe Confederation is not a success, but if we want a richer national experience, a stronger spirit of Canadianism, a common dedication to the task ahead, we have to try to repatriate our Constitution and bring it back to Canada. We have not succeeded. We call together a consultative conference where these matters can be discussed, the scope of the conference is to be of the fullest breadth, not only the Constitution, but the problem of adequate representation in the public service and other government agencies. Bring them together; let us examine bi-.culturalism; let us round out Confederation, just as you, as President of the Canadian Club and those associated with you have done so much for your country and mine. Let us round out Confederation, preserve the traditions of our country, maintain the spiritual treasures of this land to assure to all people mutual respect and understanding. That was my hope. In that little, dusty school in East York, I looked forward to the day of mixed origin, that we would be able to have equality without discrimination, to preserve freedom in private enterprise and to assure a better life for all. Mutual accord. Let us define Canadianism in all its greater and vital aspects. Let us enrich the values of bi-culturalism.

Mr. President, I, for one, see one Canada, not a state within Canada, a state within a state. It is one of the things that this organization must carry to all parts of our country, while respecting and strictly upholding the fundamental equality of those two founding races. We have in 1963 and 1964 and 1965 and 1966, before our one hundredth anniversary, the challenge to bring about in this land one Canada.

Sir, we shall maintain our defences, our material defences; but, above everything else, we have got to maintain the strength and the power of this spiritual wealth, without which material wealth means nothing.

We are proud of our contribution internationally. We will continue, in collaboration with our friends, to maintain the integrity and security of our country. We will carry out our obligations internationally and we shall with Confederation. I am a Canadian. I know that this land, in the next one hundred years, will be a land true to the traditions of the past, that all of us will be able to say, as did the Fathers of Confederation: "They built it better than they knew."

THANKS OF THE MEETING were expressed by Mr. Palmer Kent, Q.C., the President of the Empire Club of Canada.