Hard Realities

One good fortune Canada has long shared with the U. S.: the world's highest standard of living. Since September 1939 Canadians have watched the necessities of war nibble away at that standard -- first by requiring them to turn in their holdings of foreign exchange, then by a 10% tax on imports, by forbidding the use of funds for travel in the U. S., by imposing stiffer and stiffer taxes on goods and incomes. Last week the standard toppled.

Blond, begoggled James Lorimer Ilsley, Canadian Finance Minister, brought in his so-called "baby budget." which the House of Commons promptly passed. No baby, the budget slapped an immediate embargo on some $50,000,000 worth of annual imports from the U. S. Samples: automobiles, oysters, tobacco, comic strips, fiction magazines, silk fabrics. Other imports, such as trucks and petroleum products, it admits in limited quantities by special permit until Canada feels she can do without them.

To discourage Canadians from buying the banned luxuries, and Canadian manufacturers from making them, the budget imposed excise taxes of 20 to 25% on Canadian production of the same goods. On some of them the tax was prohibitive. e.g., $1,200 on a $1,500 automobile. To help Britain pay for her increasing purchases of war goods in Canada, on the other hand, the budget removed all duties on a long list of British manufactures: cotton and silk goods, furniture, marmalade, soft coal. etc.

By these devices Canada hoped to save $5,000,000 worth of foreign exchange a month, to enlarge her tax revenues and expand her war industries. Like Britain, she was running short of dollars with which to pay for her vast purchases of war goods from the U. S. Her imports from the U. S. are exceeding exports by an estimated $280,000,000 for 1940 -- more than twice as much as in 1939. To settle the balance she will have some $200,000,000 of newly mined gold. By the new import bans, by taxes and by increased tourist trade, Canada hopes to make up the difference without touching her ace in the hole: $800,000,000 of U.S. securities and bank balances.

The new budget was grim news for Canadians, but they did not grumble. It could not be helped. Already their Government was spending nearly 50% of their national income. Already their war effort was costing nearly $80,000,000 a month (the equivalent, considering Canada's wealth, of about $1,000,000,000 a month for the U. S.). Canadians could not begrudge the money spent. Some 45,000 of their sons were serving overseas and their Empire was fighting for its life.

If any Canadian cast an envious eye across the border, he had a grim consolation, knowing that it would not be long before the costs of defense would reduce the U. S. standard of living. For the Canadians were facing one of the hard realities of life, that a people have to pay dearly for their independence whether they fight for it or maintain it without fighting.

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