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. The
Humane society nf Missouri
took over the ta."k of feeding
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