SELDOM has any country experienced an unexpected upsurge of prosperity such as Canada is experiencing this year and enjoyed it less. The signs of the boom are everywhere. They are to be seen in the huge projects built, building, and being planned, in the flow of rosy statistics, and in the charts and graphs, which all rise sharply to the right. The gross national product in 1964 was up an astounding 8 percent, to $46 billion after government experts had hoped it might rise 6 percent. Farm income was up 30 percent, exports were up S1.3 billion, and foreign trade broke all records at $17.5 billion. The labor force reached an all-time peak, and unemployment fell below 5 percent.

In all the provinces the forecasts for 1965 are for the continuation of the upward trend, at a slightly slower pace. Ontario expects a 10 percent increase in capital spending. Quebec expects to get a $225 million basic steel industry off the drawing boards and predicts expenditures of more than $500 million in hydroelectric and pulp and paper projects. The Maritimes have big hydro developments in the works, steel plants in the planning stage, and kraft paper mills under construction.

On the western prairies, the world’s biggest potash development has $300 million worth of construction going on in Saskatchewan. The Alberta oil and gas industry is heading for a new plateau. In British Columbia the start of preliminary work on the huge Columbia River project will cause scarcely a ripple on the province’s already heady growth.

Ordinarily, such prosperity would be doubly welcomed because it came so unexpectedly. When the Liberal government of Lester B. Pearson, in its first budget of 1963, decided to extend the country’s onerous 11 percent sales tax to building products and production machinery, it evoked anguished protests from all sides. Though the government held its ground, it did agree to stretch out the full imposition of the tax over the whole year. It was generally believed that this heavy impost would seriously slow the economy, at a time when the United States was enjoying the first flush of its tax cuts. Instead, and for reasons no one can quite explain, the Canadian economy took off. It took off unnoticed because most Canadians had their attention focused elsewhere, on the continuous uproar in the Canadian House of Commons, which was reducing the processes of government to exercises in contrived futility.

Parliamentary logjam

Proceedings of the Canadian House of Commons get much closer attention from Canadians than debates in Congress get from Americans. Interest was riveted more tightly in 1964 because of the possibility that any day might bring another general election, which nobody wanted. While the Liberal Party was able to unseat the sevenyear-old Conservative regime of John G. Diefenbaker in the election of 1963, the party was not able to gain an overall majority. Instead, it took 129 seats in the House of 265; the Conservatives got 95, the New Democratic Party, a mildly socialist group, won 17, and the Social Credit Party, pledged to monetary reform, won 24. This party promptly split into two groups, so that in practice there were live parties in the Commons.

The fragmentation of the House would have been enough to thwart progress, even with a wellorganized legislative program and a well-managed House. Unhappily, the Pearson administration was not able to provide either. Part of Prime Minister Pearson’s trouble arose from his selection of an inexperienced leader for the House, and the appointment of a weak Speaker, who failed completely to keep the opposition under control. The combination of inexperience and ineptitude was fatal. While the country watched with growing impatience, even anger, Parliament seemed to dissolve into endless procedural wrangles and shouting matches, as spokesmen for all parties clamored for the right to speak on every minor issue and point of order.

Vital government business was intolerably delayed by the obstructionist tactics of the opposition.

The government for its part seemed incapable of keeping its own mind made up. By early summer the parliamentary process had reached a point where the Financial Times lamented that the country was functioning with a nongovernment.

The debate over the flag

This was the atmosphere into which the Prime Minister plunged, suddenly and inexplicably, with the proposal to adopt a new Canadian flag. For almost a hundred years, the country got along with a makeshift flag — the Red Ensign of the British Merchant Marine to which the Canadian coat of arms had been added. It had done so because feeling ran so deeply on the flag issue that no general agreement about changing the flag had ever been possible.

Every national convention of the Liberals in two generations has committed the party to the adoption of a “distinctive Canadian flag,” but nobody expected anything to be done about it. The war veterans were insistent upon the inclusion, somewhere, of a Union Jack, which is anathema to all French Canadians, to whom it is a reminder of the British conquests. The German and Slavic minorities tended to go along with the French, though their feelings do not run as deeply. Raising the flag issue has always set Canadian against Canadian.

Prime Minister Pearson not only raised the issue; he submitted his own design of a flag with three maple leaves on a white background. As a design, it aroused no passionate support anywhere, while the Conservatives, after a couple of false starts, rallied around the Red Ensign for a summer-long filibuster. While Parliament debated the flag issue, such important legislation as the Canada Pensions Act, revision of the Bank Act, the Redistribution Act, Health Insurance, Railway Line Abandonment, and other measures were lost in the shuffle.

Eventually the flag issue was sidetracked into a special committee. It threw out the Pearson design and substituted a single maple leaf on a white background with red stripes. Then it brought the issue back to Parliament for more debate. By mid-December, reasonable Canadians would have taken any design just to get rid of the whole annoying issue. But it took imposition of closure to bring the question to a vote, and the aroused passions of the partisans became more heated instead of cooling.

The narcotics scandal

By the time the flag debate ended, however, the government was in deeper trouble over the Rivard scandal, which erupted out of nowhere. Early last year, the Royal Canadian Mounted Police and the Federal Bureau of Investigation combined to break up an international narcotics ring allegedly operated by the New York Mafia. Several Montrealers were arrested and were held for extradition proceedings by the United States government.

At midsummer, the Montreal lawyer representing the American government went to the Mounted Police to complain that he was being subjected to intolerable pressures to agree to the release on bail of the main accused, Lucien Rivard. He charged that the executive assistant of the Minister of Immigration had offered him a $20,000 bribe, and that the special assistant to the Minister of Justice and the parliamentary assistant to Prime Minister Pearson had both tried to influence him on behalf of the alleged gangster. The Mounties investigated and sent a secret report to the Minister of Justice.

A Conservative Member of Parliament got hold of the report and broke the story in the House of Commons. The accusations were denied, and everybody involved resigned pending an investigation by a

royal commission.


Then new peccadilloes kept erupting to embarrass Pearson. A Cabinet minister from Montreal admitted ordering thousands of dollars’ worth of furniture from a Montreal store which became involved in a bankruptcy investigation. The minister had made no arrangement to pay for the furniture until dunned by a bank following the bankruptcy. In late January, Pearson fired another Cabinet minister from Quebec for reasons he refused to disclose.

Conservative troubles

Under different circumstances, these scandals might have triggered a general election and upset the Liberal administration. However, none of the parties in the House of Commons wanted or could afford an election. The Conservatives were in as deep trouble within their party as the Liberals were in the government. Diefenbaker’s intransigent opposition to the Pearson flag had driven a deep wedge between English and French Conservatives. The French, under Quebec leader Leon Balcer, had bolted the party on the flag vote. Mr. Balcer demanded that the party call a leadership convention to get rid of Diefenbaker. In February the national executive of the Conservative Party met in Ottawa, and by the narrow margin of two votes, rejected the demand.

How deeply the Conservative disenchantment with Diefenbaker is shared by the electorate is impossible to say. The polls for the past year have shown little gain being made by any party. The difficulty of the Conservatives is that they must go with Diefenbaker because they have nobody else around whom his detractors can rally.

’The deep division within the Conservative Party has been most fortunate for the Liberals. Pearson’s flag gambit undoubtedly solidified the Liberal following in Quebec and among the younger voters elsewhere. The Liberals are confident that they will sweep Quebec at the next election, despite the scandals which exclusively involve Quebec French Canadians. But there are no indications that the party has made any gains in the West or in rural Ontario, where it must gain to win.

Yet the record of the Pearson administration has not been all that bad. It was able to renegotiate the treaty to develop the power resources of the Columbia River to the satisfaction of both the American government and the government of British Columbia, no minor miracle. It obtained an agreement with all ten provinces on a formula to amend the Canadian constitution. Hitherto such amendments have been submitted to the British Parliament, to the embarrassment of both countries. It also obtained agreement with the provinces to divide taxation revenues more equitably, and to institute a national social security scheme. It pushed through a workable plan to integrate the three armed services into a single force.

Friction eases to the south

Perhaps most important of all, relations with the United States have been put back on a friendly basis. The Canadian government has eased off its pressure on the oil industry to increase exports to the United States, although it has not retreated from its determination to reduce the S500 million annual automotive trade deficit.

Early in the new year, it was able to announce the successful conclusion of an agreement for a limited free trade area in automobiles between the two countries. The agreement was not received with excessive enthusiasm in Canada, but it did indicate a willingness on the part of both governments to seek reasonable solutions to vexing common problems. For Canada, the importance of the agreement lay in the fact that it was able to put sufficient pressure on the American owners of the Canadian auto plants to make any sort of agreement possible. Having discovered that pressure can be successfully exerted, the government can be expected gradually to extend the process to other industries with huge investments in Canada.

Water resources

Completely lost to sight in the parliamentary uproar was the quiet emergence of a great new issue, not only for Canadians but Americans as well. That issue is water. The Columbia River development focused attention on the electric power aspects of Canadian water resources. But the vigorous though losing fight put up by local residents to save the beautiful St. John River in New Brunswick from the power developers is a different straw in the Canadian wind.

A more forceful group has opposed the whole Columbia concept. They wanted the course of the river reversed to serve Canadian needs alone, with as much emphasis on recreation and irrigation as on power. Similarly, in the new $150 million South Saskatchewan River Dam, great attention is being paid to the development of recreational facilities for the people of Saskatchewan.

Water thus is coming to have a value of its own, at a time when there is a serious shortage all over the United States. The shortage is particularly acute in the Great Lakes basin and along the St. Lawrence Seaway, where low water may drastically cut traffic this year. The two countries have asked the International Joint Commission to study the problem. It is significant that its terms of reference exclude study of the diversion of north-flowing rivers in Ontario or Quebec into the Great Lakes. If, as, and when such diversions take place, they will be done by exclusively Canadian decisions.

From the Yukon to Mexico

American engineers, viewing the vast water resources of northern Canada in juxtaposition to their own critical water needs, have recently started agitating for a continental water policy. The great N.A.W.A.P.A. Project—the North American Water and Power Alliance — has Washington sitting up and paying attention. A preliminary study indicates that it would cost about a hundred billion dollars to bring water from the Yukon and northern Canada down to the Great Plains, California, and Mexico.

Most of the water in question belongs to Canada. The government recently pointed out that, like all other Canadian water, it will be held for development in Canadian interests. Only what is surplus to Canadian needs will ever be made available to the United States, and then only on terms favorable to Canada.

Even though this policy has been enunciated by a Liberal Cabinet minister, there should be no doubt left that on this question all Canadian politicians will speak with a single voice.