Canada And The United States, A Centennial Retrospective

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Harkness and two other leading ministers resigned because the Prime Minister still refused to clarify his nuclear policy. The Canadian ambassador to Washington was recalled to Ottawa “for consultations.” Official business between Canada and the United States was virtually suspended. Diefenbaker, replying directly to the State Department, told a tense House of Commons: ” … I believe in co-operation, in the closest co-operation, but not in the absorption of our viewpoint by any other nation. I believe in the maintenance in spirit and in fact of Canada’s identity, with the right to determine her own policy without extramural assistance in determining that policy.”

These brave protests could not hide the government’s disintegration. On the night of February 5, Parliament put it out of its misery by an overwhelming vote of no confidence, and Diefenbaker called an election.

In the campaign of 1963—perhaps his greatest, considering the odds against him—his lieutenants warned him to play down his anti-Americanism, believing that it would lose more votes than it would win. Diefenbaker listened to their advice and seemed to accept it, but he had not been long on the road before his real feelings leaked out in sarcastic asides and winking innuendoes that the public could easily understand.

While the election was fought on many domestic issues, the basic issue of Canadian-American relations—the old love-hate complex in its most naked form—ran clearly through all the planned and unbelievable confusion. On that one issue Pearson was ready to stand or fall: if elected, he would end the poisonous quarrel with the United States.

The votes counted on April 8, 1963, gave Pearson enough seats to form a minority government. But if the Kennedy administration thought that the Canadian people had thus endorsed Pearson’s attitude toward the United States, it was mistaken. Diefenbaker had lost, but his heavy vote, and the large Conservative opposition in Parliament, showed deep resentment against American meddling in Canada’s business. Moreover, Pearson was preparing to plunge into his own anti-American fiasco.

This was not yet conceivable, to him or anybody else, when he took office. Nor had the character of the new Prime Minister been fully exposed to his people. Among all Canadian statesmen, past or present, Pearson must be judged the most complex, subtle, and solitary. Those who have known him on intimate terms for three or four decades have learned that they hardly know the inward man at all. The bow tie, the rumpled hair, the boyish grin, the gregarious style, and the apparently reckless candor disguise the loneliest man in Ottawa.

They also disguise a political method as devious, and a nature as secretive, as King’s, though much more honest, unselfish, and compassionate. Pearson’s tactics of compromise and endless flexibility are the same. So are his dream of a just society and his almost religious alarm for the future of mankind.

No one knew the real Pearson when he flew to Hyannisport and, in a long talk with President Kennedy, apparently ended the neighbors’ quarrel. But the Liberal government’s first budget, proposing harsh, discriminatory taxes on foreign investment, should have warned Washington that Pearson, for all his lifelong internationalism, instinctively feared the penetrative power of the United States and would curb it if he could.

And Canadians should not have expected that Washington’s habit of genial indifference would suddenly be broken. The Pearson government had just settled into office when the Kennedy administration absentmindedly aimed a lethal blow at the Canadian economy. Its proposed tax on exports of American capital, announced on July 18, 1963, without advance warning to Ottawa, confronted Canada with catastrophe. If, as seemed certain, the tax should prevent Canadian borrowers from raising enough money in Wall Street to cover a gigantic trade deficit, Canada would go broke not in weeks or days but in hours. It was incredible but true that Kennedy’s experts had never thought of these consequences.

Louis Rasminsky, governor of the Bank of Canada, and the one man able to grapple with such a threat, had left Ottawa for a fishing trip in Quebec and heard nothing of the American move. The desperate Cabinet finally reached him by telephone in a remote village store.

By automobile and airplane he hurried to Washington on a weekend when, fortunately, the money markets were closed. If they opened on the following Monday morning without any change in American policy, Canada’s exchange reserves would fall disastrously. Kennedy’s experts quickly saw Rasminsky’s point. The United States, having no wish to cripple its best customer, exempted new Canadian security issues from its tax, and the crisis passed on that harrowing Sunday. For Canada it had been a traumatic experience, for the United States only a brief embarrassment. How much had each learned from it?