Hard News

Throughout eight long weeks of election campaigning, Canada's Prime Minister John Diefenbaker, 66, insisted that "steady growth and expansion is the climate of Canada today." Anyone, such as Opposition Leader "Mike" Pearson, who pointed to vanishing exchange reserves or fleeing foreign capital, was dismissed as a "crier of gloom and doom." Last week, barely six days after he squeaked back to power with a wobbly minority government, Diefenbaker abruptly turned about to announce that Canada's foreign exchange reserves had dwindled so alarmingly that he had been forced to call on the 'U.S., Great Britain and the International Monetary Fund for a massive, $1.05 billion line of credit to shore them up. At the same time he decreed an austerity program designed to cut foreign imports and lure back foreign capital.

Crying Fraud. On nationwide TV, Diefenbaker insisted that the crisis had just blown up "in very recent days." But his measures were forced by the fact that gold and dollar reserves had dwindled almost $400 million in the previous three weeks, and a total of nearly $1 billion in the past six months. Canadian skeptics looked at the long list of specific imported items on which graduated surcharges were scheduled to be collected, and detected signs of prior planning.

In Ottawa it was clear that someone had begun laying the groundwork in early May. Washington was so well braced that Canadian representatives were able to sew up the credits ($300 million from the International Monetary Fund. $400 million from the Export-Import Bank, $250 million from the Federal Reserve Bank of New York, $100 million from the Bank of England) just two hours after they arrived at IMF headquarters.

Diefenbaker's opposition disputed the claim of instant crisis. "In fact," said Pearson, "the present emergency began to develop early this year." Social Credit's Real Caouette, the funny-money oiator who led his creditistes to a surprising 26 seats in French-Canadian Quebec, put it in blunter fashion. "Diefenbaker knew it months ago; for the campaign, he was hiding those things," he said. "He ought to resign." Diefenbaker indicated that he would not call Parliament into session until September, so that noisy debates would not worsen the crisis. Opposition leaders might grumble, but they knew that the country was in no mood for more electioneering. Besides, at the moment other politicians were content to have Diefenbaker stuck with the crisis.

Depending on Outsiders. There was also a natural rallying around the government in a time of national crisis, and most Canadians reluctantly had to admit that Diefenbaker's action was generally correct, even if overdue. Said A. T. Lambert, president of the Toronto-Dominion Bank: "Canada recognizes that we have been depending too much on outsiders to do too much for us and that we must depend more on our own efforts. A U.S. Treasury Department spokesman figured that Canadian dependence on its own efforts would cost the U.S. $350 million in trade and tourists if it lasted a year, perhaps only one-third that much if the measures are short-term as promised. Last week, as Canada began its belt-tightening, the Canadian 92 1/2-c- dollar showed its greatest strength in six weeks.

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