Canada And The United States, A Centennial Retrospective

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All these things, and a growing suspicion of American motives, were in Diefenbaker’s mind as he welcomed President Kennedy to Ottawa on May 16, 1961, a date that both statesmen were to remember with bitter regret.

Unaccountably, a young President who always did his homework and prided himself on the “style” of his administration grossly bungled his first approach to his admiring neighbors. In an eloquent ceremonial speech he strongly urged Canada to join the Organization of American States. The Canadian government had already been considering this proposal, and was at the point of a favorable decision, but immediately abandoned it, for fear of seeming to be dominated by Washington’s pressure.

Unaware that his public manners were resented, Kennedy met the Diefenbaker Cabinet to discuss private business. He carried with him a half-page memorandum written by Walt Rostow of the White House staff and titled “What we want from the Ottawa trip.” It was only a harmless check list to refresh the President’s memory. Among other things, it reminded him to “push” again for Canada’s entry into the O.A.S. After an inconclusive conversation the meeting broke up, but Kennedy forgot to take the Rostow memorandum with him.

Someone discovered it lying on a sofa and gave it to Diefenbaker, who staggered his officials by refusing to return it to its owner, Canada’s honored guest. Instead, he locked it up for future use.

The President and his advisers had long forgotten the memorandum when Livingston Merchant, retiring as United States ambassador to Canada, paid an official farewell call on Diefenbaker on May 4, 1962. Merchant was dumfounded to hear the Prime Minister accuse the President of interference in Canadian affairs, and incredulous to learn that “an offensive document” left by Kennedy in Ottawa would be used, if necessary, in a Canadian election then pending.

This threat, without precedent in Canadian-American relations, was reported at once to Washington. Hot with rage, but avoiding a public brawl, the President instructed Merchant to give Diefenbaker a way out of his folly. In diplomatic doubletalk, which both men understood, the Ambassador told the Prime Minister that he had decided not to report the incident, since it would certainly end Kennedy’s dealings with Diefenbaker.

The counterthreat succeeded. Though Diefenbaker required all the arguments he could find for his election, he did not publish the “offensive document.” The Canadian people heard nothing of it for some time; they had no reason to suspect that a promising personal friendship between Washington and Ottawa was finished for good. Nor did they hear the Washington gossip that Kennedy’s check list had referred to Diefenbaker, in a scribbled marginal note, as an “s.o.b.” The President denied this piquant addition to the story. “I couldn’t have called him an s.o.b.,” he said among his intimates. “I didn’t know he was one—at that time.”

The results of the Ottawa affair, much larger than personalities, were not long delayed; but for the time being the 1962 election campaign diverted Canadian voters not merely from a backstage international feud but even from their most urgent domestic business. Diefenbaker’s sorcery on the platform hid all the real issues of policy, pushed Pearson, now leading the Liberal party, into the background, and raised the oldest cry of governments in trouble—“Canada First.”

None of this mattered much. What did matter was a sudden withdrawal of American money from Canada after investors had been frightened by the government’s latest budgetary deficits. The Bank of Canada watched its dollar reserves falling and saw that the nation had reached the brink of insolvency. Before election day the government was forced to devalue the Canadian dollar to 92½ United States cents, though it had previously rejected any manipulation of the exchange rate as “a gigantic financial speculation with no assurance of success.”

Even this public admission of a monetary disaster could not quite destroy Diefenbaker. He lost his huge majority of 1958 but, leading the largest group in the new Parliament, had enough strength to carry on a minority government. It appealed for credits to the International Monetary Fund, to the British government, and, with unconscious irony, to the government of the United States, which Diefenbaker had been so long criticizing in public and detesting in private. Would Kennedy seize this opportunity to humiliate Diefenbaker? Or would he see that Canada was more important than its temporary Prime Minister?

There could be only one answer to this question. Ample credits were supplied by the fund and by American and British banks. The Canadian government imposed emergency tariffs and some slight cuts in expenditure, patriotically labelled as a program of “austerity.” Thus the crisis passed. But a far worse crisis, and an open quarrel between the neighboring nations, already had begun.

It originated in the Canadian government’s decision, back in 1958, to install American Bomarc missiles at two bases north of the Toronto-Montreal metropolitan area—and its announced intention to equip them with nuclear warheads. This policy, still not acted upon at the end of 1962, was accepted by Canada’s defense department but not by Howard Green, its newly appointed Minister of External Affairs.