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About Medford mail tribune. (Medford, Or.) 1909-1989 | View Entire Issue (July 12, 1962)
MEDFORD MAIl'tBIBUNE. MEDFOHD. OREGON THURSDAY, JULY 18. 1962 J Austerity Program Result of Canada's Wild Spending Decade Ci- (Lditori Noit: Tht nadian gortrnmenl it un dergoing caih eriiit thai brought about a dtralua lion of tht dollar and a gtn tral nationwidt belt-light-ening. In tht following dit patch. UPI Corrtipondtnt William Ntrillt rtportt on tome of the factori which cauied Canada't money woet and government plant to overcome them.) ed as far back as the 1957 election campaign when Diet enbaker's conservatives ended 22 years of liberal rule with a strongly nationalistic cam paign that labelled foreign in vestment, particularly from the United States, as excessive and a threat to Canadian sovereignty. Outside confidence in Can ada as an investment market, already shaken by govern- nielli aufrcnnra. uiup" ...... . In British Columbia, mean while, the provincial govern ment, led by Premier W. A. C. December when i government slapped a five to 15 per cent withholding tax on dividends paid to foreign investors and loans raised by Canadians in foreign markets. ultra -free enterprise social credit party, expropriated the British Columbia Power com pany at an arbitrary price and on arbitrary terms. From Que bec came persistent rumors that Jean Lesage's liberal gov. eminent was about to take similar action against its pri vately owned power corpor ations. Foreign investors decided Canada wasn't a good place for money and turned to new fields. However, the outflow of Canadian dollars on conv modily imports, tourist spend ing and dividends continued. Those factors, together with speculation on the dollar in the money market, combined to place a tremendous strain on Canada's foreign exchange reserves. A report on Canada's inter national payments operation in the first three months of the year showed a deficit of $36:1 million, all of it account ed for in exchange operations. The capital inflow that nor mally lightened the situation wasn't there this time. The drain continued through the second quarter and, while final figures are not yet avail able, it is estimated to have cut the exchange reserves by another $400 million. To bol ster the fund, the government austerity program included $1,050,000,000 (B) in foreign financial support through loans, standby credits and cur rency exchange arrangements. The big question now i whether the present program is enough. Some say it will be. Others already have labelled it "too little and too late." Most observers, however, have adopted a "wait and see" atiitude. They say they will know better by fall. By WILLIAM NEVILLE i United Prett International 1 Ottowa - (UPD - A national spending spree which ran un abated for more than a decade lies behind the austerity pro- j gram forced on Canada'in re-! cent days. Since World War II. Can ada has spent far..more abroad than its exports could bal ance. Its international balance nf payments got far out of hand. For most of the postwar period, the nation got away with its excessive spending abroad. Canada was in an in vestment boom and foreign capital poured into the coun try in large amounts. Within the past year, how ever, a variety of factors com bined to discourage foreign in vestment in Canada; True to advance warnings from many sectors, the free-spending of the 1950 s began to take its toll. Now Canadians are faced with a national belt-tightening like they have never known. Lured into a false sense of se curity by assurances from pol iticians that Canada was the land of opportunity with a great new economic upsurge on the horizon, Canadians are hurt and shaken. The biff question now is whether they will be able to take their lumps and recover. Present Measures The "lumps" at this stage more could come if the pres ent program doesn't meet the emergency-include: -A sting to national pride when the Canadian dollar, once worth $1.05 in American mnnpv was ripvalupH tn o Hi. count of 92' i cents of its U.S. counterpart. The suggestions that devaluation could aid Canadian industry against for eign competition doesn't seem to soothe the nation's vanity. -Sharply increased prices for imports, particularly lux ury goods, to which Canadians have become accustomed, but can't get from domestic sup pliers. Devaluation gave prices their first boost; a spe cial import surcharge kicked them even higher. Prime Min ister John Diefenbaker told the nation bluntly to buy Ca nadian until the present emer gency eases. -An equally sharp cutback In the amount of duty-free purchases Canadians can make abroad. With tourist ex emptions cut to a third of their former levels. Canadians were all but forced to do their travelling and buying within their own country-a course that hasn't held much appeal in the free-spending past. -An increase in basic inter est rates and a return to "tight" money. Consumer credit, increasing by leaps and bounds in recent years, seemed in for a definite cut back. -A reduction in govern ment spending, probably in volving items like federal b ti i 1 d i n g s, wharves and bridges that have become standard "pork barrel" fare in recent years. Canadians just went through an election campaign during which they got assurances by Diefenbaker and other gov ernment leaders that things were "never better." But they awoke to an austerity program only six days after they voted. Canada had sufficient warn ing, if it had cared to listen. For more than two years, former Bank of Canada Gov ernor James E. Coyne had gone from service club to service club warning the na tion that it was "living be yond its means" and would encounter serious difficulty if it didn't act. He advocated a cutback in foreign spending and tried lo hold domestic credit within bounds. But he was talking unpop ular talk and it got him into trouble. Last summer, after an unprecedented public row with the Diefenbaker admin istration, he was forced to re sign his SoO.OOO-a-year job as chief of the central bank. Within a year, his warnings had become fact. Many of his proposals had become govern ment measures. Several impartial financial experts say the factors which produced a crisis in 1962 start- Lion, King Kado fed By Missouri Society St. Louis-t'M'-King Kado. two-year-old lion is living in rnval Klvlr. King hat gained about 100 Dounds on diet of fresh meat and vegetables since be-in- taken from an animal trainer uhn was charged with mistreatment of the lion. 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