Free Money

Canada last week set the Canadian dollar completely free. By cabinet decision, all foreign-exchange controls were abolished and Canada became the first controlled-currency country to abandon money restrictions imposed during and after World War II.*

Canadians may now spend their money anywhere--to travel, to buy & sell, to invest in stocks and private businesses in the U.S., in French champagne, Brazilian coffee or Russian caviar. Canadian businessmen can trade their goods in any country and convert foreign currency at home. Foreign investors, whose prewar investments have been frozen in Canada, can now get them out.

The decision to end currency controls clearly reflected Canada's current prosperity. Her budget surplus is already more than $600 million, far beyond the expectations of government experts, who predicted it would total only $30 million for the fiscal year. Canadian inflation has been kept within tolerable limits by tight credit restrictions rather than direct price controls. As a result, Canada's economy is regarded abroad as one of the soundest and most orthodox in the world. Proof of her reputation was the fact that the Canadian dollar, one of the world's few free currencies, last week was riding a five-year high of 98 U.S. cents in the foreign-exchange markets.

The clinching factor in Canada's decision to drop all currency controls was the fat U.S. dollar balance, built in part by heavy U.S. investments in Canadian development. The country's U.S. dollar reserves are now brimming over the $1,680,000,000 mark, more than three times what Canada had on hand in 1947, when she put the lid down on U.S. travel and imports. "We are sufficiently sure of our ability to pay our bills," said Finance Minister Douglas Abbott. "We don't need protective measures."

* Among the belligerents, only the U.S. kept its currency free.

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