chrisleithner.ca

Leithner Letter No. 47
26 November 2003

If you remove the incentive of ambition and emulation from public enterprises, you suppress progress ... you condemn the community to stagnation and immobility.

The Rt Hon Sir Wilfrid Laurier
Prime Minister of Canada (1896-1911)
Conversation with Sir John Nillison (1905)

There is a grave danger of the development ... of a general tendency to reliance on social aid. ... The inquiry regards [it] with grave disquiet as destructive of personal effort, and self-dependence, and so disruptive of the very basis of initiative, enterprise, and strength of character that must be the greatest resource of any people. ... Service must precede and accompany [aid], to the end that the family itself realises that it, and each of its members, no less than provincial funds, must honestly and sincerely participate in the whole plan, which is the development of initiative, and self-reliance and independence at the earliest possible date, and to such degree and strength as to avoid future dependency.

Charlotte Whitton
Head of the Canadian Council on Child and Family Welfare Report on
Mothers’ Pensions in British Columbia (1932)

We have concluded that we are not justified from an economic viewpoint in maintaining a [government-subsidised merchant navy] by artificial means. It is not the intention of the government to maintain an industry at the expense of the taxpayer.

The Rt Hon Louis St Laurent
Prime Minister of Canada (1948-1957)
Official Statement (9 December 1949)

The Passing of a Remarkable Canadian

Israel Harold (“Izzy”) Asper, OC, OM, QC, was rushed to St Boniface Hospital in Winnipeg, the capital of the Canadian province of Manitoba, at approximately 09.30 on 7 October. He died a short time later. His cause of death, which was not released, was apparently a heart attack. Mr Asper’s death was a dreadful shock to his wife and children (who were at his side when he died) and his many friends. It was also a noteworthy event in Winnipeg, across Canada and in certain other countries (his half-page obituary appeared in the business section of The Australian on 9 October). The Prime Minister, Jean Crétien, said that Mr Asper was “a great personal friend and one of the finest and most able individuals I have ever had the privilege of knowing.” The province’s Premier, Gary Doer, said “Manitoba and Winnipeg have lost [their] greatest champion.” The city’s mayor, Glen Murray, said “I don’t think in Canadian history has any city had a champion like Winnipeg had in Izzy Asper.” All three, together with prime minister-in-waiting Paul Martin, Canadian Alliance leader Stephen Harper and approximately 1,000 other mourners, attended his funeral on 9 October.

The Asper Clinical Research Institute at St Boniface Hospital, the Asper Foundation, the I.H. Asper School of Business and the Asper Centre for Entrepreneurship at the University of Manitoba provide clues about Mr Asper’s achievements. Others appear when one leaves the hospital, turns into Taché Avenue and then crosses the Red River into Winnipeg’s CBD. CanWest Global Communications Corp., founded by Israel and for the past four years run by his youngest son, Leonard, occupies office and studio space on floors 30-33 of the TD Centre (Winnipeg’s tallest building) located at the corner of Portage and Main Streets (the city’s most prominent intersection). The Asper family recently joined forces with O&Y Real Estate to buy the TD Centre for $C69m. From its 30th floor CanWest’s news desk feeds the company’s Maritimes-to-British-Columbia chain of newspapers. Just across Main Street, from the 22nd storey of the Richardson Building, CanWest operates six digital television channels and an analog station; and a few blocks to the west, two floors of the building in Carleton Street formerly occupied by The Winnipeg Free Press house CanWest’s IT services and a call centre for its newspapers.

CanWest, which operates in most of Canada’s television and newspaper markets, is the country’s largest media company. It runs a national television network and publishes Canada’s largest chain of newspapers (which comprises 14 major metropolitan dailies, such as The National Post, The Gazette of Montreal and The Vancouver Sun, and 120 daily and weekly mastheads). It also owns media assets in the Irish Republic, New Zealand and Australia. (In 1992 CanWest bought Network Ten from its receivers, Westpac Banking Corp., and presently holds a 57.5% economic stake and a 15% voting stake in Ten Network Holdings. Asper deserves much of the credit for Ten’s focus upon the 16-39 demographic that has underwritten its return to healthy profitability).

Israel Asper – who disliked his nickname – was born in Minnedosa, Manitoba (a bit to the north of Brandon) in 1932. His parents were musicians who also owned one local cinema, another in nearby Neepawa and a drive-in between the two towns. In 1946 the family moved to Winnipeg and opened two other cinemas. Whilst in high school Israel started his own newspaper. “It only ran one issue. Then the principal shut it down and I was suspended from school for a week.” At the University of Manitoba Asper studied law and, as evidenced by his editorship of The Daily Manitoban, fancied journalism. In January 2003 he told The Winnipeg Sun: “I never had any ambition, actually. All I wanted out of life was to be a lawyer and go back to Minnedosa and buy The Minnedosa Tribune. ... I thought it would be the best of both worlds – I could be a lawyer by day and write for a newspaper. But the [owners] didn’t want to sell it and there was no room for another lawyer in town. So I [stayed in] Winnipeg and got into corporate law.” He married in 1956, was called to the Manitoba bar in 1957, established himself as an expert in tax law and from 1966 to 1977 was a columnist on taxation issues for The Globe and Mail. He wrote The Benson Iceberg: A Critical Analysis of the White Paper on Tax Reform in Canada in 1970; led the Manitoba Liberal Party from 1970 to 1975; served in the province’s Legislative Assembly from 1973 to 1975; and became a Queen’s Counsel in 1975.

During his time in parliament, Asper advocated the abolition of capital gains taxes, deregulation, fiscal rectitude, “workfare” and other sensible measures. Alas, not since Douglas Campbell’s Liberal-Conservative coalition (1948-1958) has prudent government prevailed in Manitoba. (Come to think of it, no wise politician has governed at Ottawa since Louis St Laurent lost office in 1957. Even better were Mackenzie King and Ernest Lapointe; and best of all by far was Sir Wilfrid Laurier. Each was reared in a classical liberal setting, relied to a remarkable degree upon laissez-faire, emphasised civil relations between Anglophones and Francophones and strove wherever possible to exclude Canada from unfathomable disputes in distant lands). Campbell, bless him, was that rarest and most precious of creatures: the resolutely thrifty politician. Unseated as Manitoba’s Liberal leader in 1961 and retired from the legislative assembly in 1969, until his last breath in 1995 – just a month short of his 100th birthday – he denounced big government and deficits. His major fault was a scheme of subsidised hydro-electric power that has made Manitoba the OECD’s most wasteful consumer of electricity. Campbell’s career nonetheless exemplified the salutary consequences of Manitoba farmers’ frugal stewardship of the province from the early 1920s until the late 1950s; accordingly, he provides an admirable benchmark for today’s consumers and taxpayers. Alas, his standard was not upheld by his successors and by the mid-1970s Asper spied greener pastures.

Asper and CanWest

Peter Liba, Asper’s legislative assistant and a future Lieutenant-Governor of Manitoba, recalls that in 1974 he and Asper discussed their hopeless political prognosis and what they might do with the rest of their lives. Liba saw a notice, placed in the newspaper by the Canadian Radio-Television and Telecomunications Commission, that invited applications to establish an independent television station in Winnipeg. Liba reckoned that his journalistic background together with Asper’s legal and business expertise and fascination with the media would make them natural broadcast moguls. (Australian larrikin John Singleton, one of Asper’s partners in the revival of Network Ten, said that Asper “used to make his money working for media barons. He realised they were not too smart, so in his later years he decided that rather than work for them he would become one.”) The CRTC accepted their application in 1975. Asper then raised $C750,000; bought the equipment of a money-losing station on the American side of the Manitoba-North Dakota border; changed its call letters from KCND to CKND; moved everything to a disused Safeway supermarket in Winnipeg’s south-eastern suburbs and started broadcasting. Those modest beginnings were the genesis of CanWest.

The National Post (8 October) summarised its growth and development. During the late 1970s, Asper formed CanWest Capital Corp. (a forerunner to CanWest Global Communications); acquired a 40% interest in Toronto-based Global Television; entered Canada’s fledgling pay-TV market and bought a majority stake of CKVU-TV in Vancouver. During the 1980s came the gradual acquisition of the remainder of CKND, CKVU and Global; the purchase by Asper of 94% of CanWest Capital and the emergence of CanWest Communications as the parent company of these various television businesses; and the award of licenses for new television stations in Regina and Saskatoon, Saskatchewan (which were rescinded by the Conservative government at Ottawa but later reinstated after legal appeals). In 1991, the shares of CanWest Global were listed on the Toronto Stock Exchange and a 20% interest in TV3 New Zealand was acquired; in 1992, the 57.5% economic interest in Network Ten Australia was purchased; in 1993, MITV, a regional broadcaster in Halifax, Nova Scotia and Saint John, New Brunswick was purchased and the Global Television Network expanded across Ontario.

Agreement was reached with Télé-Métropole in 1995 to purchase a controlling interest in CKMI-TV (Quebec City) and extend its signal throughout the province. In 1996 CanWest was listed on the New York Stock Exchange. Licenses were also awarded for TV4 (as a second private television network in New Zealand) and Prime TV (a new national cable network in Canada). In 1997, the Global Television Network (Quebec) was licensed to broadcast in English across the province; CanWest’s economic interest in Network Ten Australia was increased to 76% (but the Commonwealth Government subsequently ordered that it return to 57.5%); CanWest and an Irish consortium launched TV3 Ireland as that country’s first private sector national television service (CanWest also acquired a 7% stake in Ulster Television and later increased its to 30%); Asper stepped aside as CanWest’s CEO and became its Executive Chairman (Peter Viner, formerly Chairman and CEO of Network Ten, replaced Asper as President and CEO); and CanWest’s Canadian stations were rebadged as the Global TV Network.

In 1999, Leonard Asper became President and CEO of CanWest Global Communications, and CanWest Entertainment launched an international distribution company based in London. In 2000, CanWest acquired a 70% stake in RadioWorks New Zealand. Also purchased from Conrad Black’s Hollinger Inc. were metropolitan daily newspapers in 14 Canadian cities, more than 120 daily and weekly newspapers in smaller communities across Canada, a 50% (and later a 100%) interest in The National Post and the canada.com and other Internet portals. In 2001 CanWest launched six new digital specialty channels; in 2002 it sold its community newspaper interests in Atlantic Canada and Saskatchewan; and earlier this year it sold 4 small dailies and a number of community weeklies and other publications in Southern Ontario. Also in 2003, CanWest established CanWest News Service and a national news centre in Winnipeg to feed national and international news to its newspapers and television operations in Canada. Finally, CanWest recently launched its first radio station in Canada – 99.1 Cool FM (CJZZ) in Winnipeg.

Asper’s Manitoba

When Asper “learnt that Sam Walton [the founder of Wal-Mart in Arkansas] was dying of cancer he somehow caught up to him by telephone and Walton took the call. They had a great talk about why it was a good thing to operate [away from a major metropolis]. Izzy always quoted Walton, saying it was good to have the time to think and to avoid getting into that whole circus of parties and power trips. They both agreed that in a smaller town you could really deal with core issues” (The Financial Post 8 October). The CanWest News Service (8 October) added “the most important mark [Asper] made in Manitoba was not leaving. Izzy stayed and that was an incredible statement and influence on other entrepreneurs ... that you didn’t have to go to Toronto, Calgary or Vancouver.”

This last point is quite revealing. Despite CanWest’s remarkable growth, Asper’s prodigious philanthropy (at his death he was one of Canada’s most generous benefactors and for decades was a tireless champion of his city and province), and his public spirit (he once proposed that Canada’s capital be moved from Ottawa to Winnipeg), for three-quarters of a century economic developments have been kind neither to Winnipeg nor to Manitoba. According to Historical Statistics of Canada, the share of Canada’s income generated within the province (Series E1-13) fell steadily from 6.9% (1920s) to 4.1% (1970s). Average weekly earnings in Manitoba (Series E326-375) were 7% greater than the Canadian average during the 1930s; in relative terms they then fell steadily, decade by decade, until the 1970s when they were 7% lower than the Canadian average.

Winnipeg’s contrast with Vancouver is perhaps most startling (Series E248-267): during the 1920s, blue-collar and white-collar occupations in the two cities earned virtually identical incomes; but by the early 1970s and net of the CPI these salaries were 15% lower in Winnipeg than in Vancouver. If Winnipeg owed its phenomenal growth between 1890 and 1920 to the route of the Canadian Pacific Railway, then British Columbia’s biggest city owes very existence to the CPR. The site of its western terminus was chosen in 1885 and within a year a small city mushroomed on that site. Little more than a decade later it had displaced the provincial capital, Victoria, as B.C.’s metropolis. Nourished by the province’s rich lumber and mining industries, Vancouver began to overtake Winnipeg during the 1930s. Since the Second World War, trade with Asia has transformed Vancouver into one of North America’s busiest ports. Today it vies with Calgary as the leading city and business capital of Western Canada.

Since the late 1950s, Manitoba’s governments have done nothing to reverse – and perhaps have entrenched – the province’s relative economic decline. Thanks to Doug Campbell’s legacy, in 1965 Manitoba still possessed the smallest government sector (11% of Gross Provincial Product) in Western Canada; but by 1975 it had the largest (21% of GPP). Since 1975 the government sector has grown further (to 25%) and has usually remained the region’s biggest in percentage terms. According to Winnipeg’s Frontier Centre for Public Policy, “many of Manitoba’s policy challenges like low growth, demographic decline and chronic population outflow are tied to the province’s comparatively oversized public sector and its resultant higher tax burdens. Strong evidence suggests a slimmer provincial government would result in more growth.” If the Manitoba government’s spending relative to the size of the province’s economic pie fell to the Canadian average, it would have to reduce its spending by $C2 billion or increase its economy by $C9 billion. If it fell to the percentage prevailing in Canada’s most robust province, Alberta, then Manitoba’s spending must decrease by $C3.2 billion or its economy grow by $C22 billion (see also the FCPP’s The Size of Government and Economic Growth and three studies from the Independent Institute: The Benefits of Economic Freedom: A Survey, Prosperity and Economic Freedom: A Virtuous Cycle and Economic Freedom and Economic Growth).

Another – less tangible but nonetheless significant – change underscores Winnipeg’s relative decline. During the 1920s, 1930s and 1940s The Winnipeg Free Press (until 1931 The Manitoba Free Press) was one of Canada’s most important newspapers and an international paper of record (see Ramsay Cook, The Politics of J.W. Dafoe and The Free Press, University of Toronto Press, 1963, and Murray Donnelly, Dafoe of The Free Press, University of Toronto Press, 1968). At the turn of the 20th century, thanks to agribusiness and transport, Manitoba became a significant player on the national scene. The CPR was bringing hundreds of thousands of settlers to the Prairies; agricultural production and trade boomed; and the rapid growth of commerce to and from the West made Winnipeg a boomtown and the region’s premier city.

As Winnipeg bulked larger in Canadian politics, so did The Free Press. According to the paper’s history, “two developments at this time were crucial to the continued success of The Free Press and its eventual development as one of Canada’s great newspapers.” The first was its purchase in 1901 by Sir Clifford Sifton, a powerful cabinet minister (he sat for a Manitoba seat) in the Liberal government of Sir Wilfrid Laurier (1896-1911) and one of the business patriarchs of Western Canada. The other was Sir Clifford’s decision in the same year to hire J.W. Dafoe as the newspaper’s editor and E.H. Macklin as its chief business manager. These three men cemented the reputation of The Free Press as the most influential media organ in Western Canada.

The paper’s incompletely liberal editorial record did not diminish its authority. Dafoe consistently and elegantly put the case for low taxes and limited government, decentralised Canadian federalism and the importance of the Prairie Provinces to the country as a whole (the phrase “freedom of religion, freedom of speech and freedom of trade” was famously emblazoned across the top of its editorial page). He supported the reduction of tariffs and the attempt in 1911 (which unseated Sir Wilfrid) to negotiate a reciprocal trade treaty with the United States. In 1919 he published a series of editorials which labelled the leaders of the General Strike as communist revolutionaries under the thumb of the Bolsheviks in the newly-formed Soviet Union. During the 1920s he declined a knighthood and a place in cabinet, applauded the effort to increase Canada’s autonomy vis-à-vis Britain and was one of Mackenzie King’s closest confidante’s in that campaign. Unfortunately, Dafoe also enthusiastically banged the drum for military conscription and the formation of Sir Robert Borden’s win-the-war-at-all-costs government in 1917. Equally regrettably, Dafoe is perhaps best remembered for his naïve faith in the League of Nations and the doctrine of “collective security.” He also misdiagnosed the forces that would eventually lead to the Second World War, and in his later years espoused a more interventionist foreign policy. By the 1960s the paper espoused a statist and big government brand of “liberalism” that was alien to the legacy of Sir Wilfrid Laurier. Alas, these days its editorials seem to exert little influence upon national politics.

What on Earth Has Happened to Canada?

The relative decline of Winnipeg and Manitoba prompts another question: what has become of Canada? Once called the “Switzerland of the North”, as late as 1968 it was the world’s second-richest country. Today, in terms of GDP per capita ($29,300), it ranks ahead of Australia ($27,500) and Britain ($26,400) but just below the G7 average ($30,100) and well behind the U.S. ($35,200). Accompanying – one is tempted to say causing – Canada’s relative economic decline has been the rise of many and various interventionist schemes: high taxes, big deficits, growing debt, nationalisation of “key” industries, attempts to control consumer prices, regulation of investment, regional development and transfer payments from the wealthier provinces to the poorer ones (such as Manitoba). Alas, these policies have done nothing either to enrich the country as a whole or to narrow the gap between its wealthy and not-so-wealthy areas. (As in Australia, so too in Canada: no social program ever fails – it is simply “underfunded.”)

For as long as Canada has existed, Canadians have compared themselves to Americans (see, for example, S.F. Wise and R.C. Brown, Canada Views the United States: 19th Century Political Attitudes, University of Washington Press, 1980). But for the past 30-40 years they have done so in a curious and disturbing way: their point of reference is invariably the disastrous set of social policies enacted since the 1960s (see in particular Charles Murray, Losing Ground: American Social Policy, 1950-1980, Basic Books, 2nd ed. 1995, ISBN: 0465042333 and Eric Schansberg, Poor Policy: How Government Harms the Poor, Westview Press, 1996, ASIN: 0813328241) and their conclusion is invariably that, whether it takes the form of the subsidisation of unemployment, medical expenses or university academics’ standards of living, Canadian governments have always intervened in the market more extensively than their American counterparts. That was true for the quarter-century after 1970, but it is arguable today – and was certainly not true in the more distant past. The Canadian and the American, in other words, are quite alike in one respect: each is appallingly ignorant of his own history. On both sides of the border, misconceptions and costly mistakes have sprung from that ignorance.

Many Canadians probably know (or could venture a reasonable guess) that in the mid-1990s Canadian governments were about seven percentage points of GDP larger than American governments. Few, however, know that Canadian and U.S. governments were of similar size in 1970 and that until the 1960s Canadian governments were smaller than their American counterparts. Despite their neighbours’ incessant and boisterous rhetoric about “freedom,” in order words, for most of the century after Confederation in 1867 Canadians enjoyed smaller governments and a greater degree of economic liberty.

To redress their ignorance and rediscover their classical liberal heritage, Canadians should read The Government Generation: Canadian Intellectuals and the State, 1900-1945 (University of Toronto Press, 1986, ASIN: 0802066046) by Doug Owram, Globalization and the Meaning of Canadian Life (University of Toronto Press, 1998, ISBN: 0802042201) by William Watson and The Socialist Wind from the South by Martin Masse. To do so is to recognise that in 1900 the typical Canadian was a staunch individualist in the classical liberal mould. Indeed, according to Masse “the real interventionists and socialists at heart are the Americans, and ... the real Canadian tradition is one of rugged individualism being slowly frittered away under the overwhelming influence of American collectivism. ... The anti-Americans among us have a point: we should protect ourselves from the nasty winds coming from the south. But they are wrong about the rest. The Canadian identity that should be cherished and the Canadian tradition that should be upheld are based on individualism, small government and the free market.”

During the first decade of the 20th century, academics (particularly in the fledgling social science departments of the country’s few universities) noted the old age pensions and workers’ compensation schemes in Europe and other parts of the British Empire and wondered “why Canada was so far behind other jurisdictions.” The main reason, says Owram, was that the Dominion Government of Sir Wilfrid Laurier interpreted the 19th century British constitutional tradition “in more anti-statist terms than ... any other government in Canadian history.” It is true, for example, that Laurier’s Liberals introduced old age pensions; critically, however, their scheme was voluntary, the state subsidised only the plan’s administrative costs (which Sir Wilfrid ensured would not be burdensome), the pension was paid only at age 70 – and at that time the average life expectancy in Canada was less than 60 years. Accordingly, between 1908 and 1927 only 7,713 annuities were issued.

According to Sir Wilfrid, “the role of government [is] ... not to force action in any one direction but to remove barriers to man’s own efforts to undertake personal and social improvement. ... Man must be free to seek his own improvement and be responsible for his own destiny.” Watson notes that tentative departures from the Laurier government’s laissez-faire principles were attempted by its young minister of labour. But Mackenzie King’s efforts to settle a strike by threatening legislation against the Grand Trunk Railway were quashed by the prime minister, who regarded them as “a very unfortunate and dangerous precedent.” Further, King’s 1910 reforms to the Combines Investigation Act were denounced by a caucus member in unequivocal terms: “as a Liberal of the old school ... I regret very much ... to hear a young Liberal approach the subject of state control in so light-hearted a manner because I recollect the fact that the progress of true Liberalism has been associated in the history of England with the diminution of state control.” Importantly, however, King’s disagreements with his prime minister and political hero were infrequent. According to Owram, King “retained his belief in the preferability of leaving the individual alone to work out his own destiny, wherever possible.”

Canada’s Glorious Years

Unlike the Progressive Era in the U.S., in Canada the decades before and after the First World War were marked by a revulsion against the state’s power. The inter-war governments of Mackenzie King (1921-26, 1926-1930, 1935-1940) abandoned the Dominion’s wartime economic powers and to the greatest extent possible returned the country’s domestic affairs to provinces, municipalities and markets. It therefore cut taxes and expenditures and repaid debt aggressively. As a result the Liberal government’s budget of 1929, $C385m, was less than that of the Conservatives in 1914. Even so, Stephen Leacock, a sometime economist and full-time humorist at McGill University in Montreal, stated in The Proper Limitations of State Interference (an address to the Empire Club of Canada delivered on 6 March 1924) “we are moving towards socialism. We are moving ... nearer and nearer with every bit of government regulation, nearer and nearer through the mist to the edge of the abyss over which civilisation may be precipitated to its final catastrophe. ... What I am saying, then, if I might put it in simple, almost prosy, business-like speech, is this – that we need to get back to a sane capitalism.” When he wrote those words, Canadian governments spent approximately 11% of the country’s GDP (versus 17% in the U.S.). According to Watson, “with the important exceptions of mothers’ pensions and old age pensions ... minimum wage legislation was the sole evidence of a welfare state in Canada in the 1920s.”

The Great War, then, did not give rise to leviathan government in Canada. Nor (thanks to the British North America Act, in this respect a sturdier document than the U.S. Constitution) did the Great Depression generate as much big government in Canada as it did in the U.S. King, in the words of his ablest biographer, Bruce Hutchison, regarded the Crash of 1929 and the slump of 1930 as “a passing adjustment, a stern but necessary purge of an inflated world economy” (he did not foresee the catastrophic errors of the Federal Reserve and Bank of England that turned the slump into the Great Depression). As opposition leader in 1930, King denounced as unconstitutional the Conservatives’ provision of funds to the provinces in order to finance unemployment relief – and for good measure denied that there was an unemployment problem to finance. In 1931 and 1932, he ridiculed the proposition that the state could cure a depression by creating and spending money; condemned the Tories’ “wild extravagance;” demanded lower taxes and a balanced budget; and lauded the gold standard. In 1933 and 1934 he denounced as “mad experiments” the New Deal measures being enacted across the border. He also offered a penetrating analysis of socialism as the doctrine on the left that begat the bureaucratic, centralised and unworkable state apparatus that Canada’s Tories were trying to erect on the right. “Socialism and Toryism [were thus] sisters under the skin, both moving towards the same dead end.”

During these decades, government in Canada was smaller than in the U.S. partly because King, prime minister continuously from 1935 until 1948, was in most matters very cautious. It was also partly because one of his political bases was in Quebec (whose voters at that time viewed government intervention in education, hospitals and welfare with admirable suspicion) and the other was on the Prairies (whose disproportionately agricultural voters stoutly opposed preferences and subsidies to Eastern industry). Finally, and as Owram and Watson show, King was cautious about the growth of government partly because his outlook and actions on most matters were, despite his occasionally and increasingly Fabian rhetoric, essentially classically liberal. When he returned to office in 1935, King retained a diluted but nonetheless marked bias towards orthodox economics, and was in no particular hurry to implement his “New Liberalism.”

King regarded President Roosevelt “with public adulation and privately with a mixture of admiration, amazement, scepticism and some merriment. He thought many of Roosevelt’s policies quite crazy [and] looked on much of the New Deal as mere political hokum.” Hutchison recounts King’s recollection of a wartime meeting with FDR.: “I said to Roosevelt last time we met, how do you expect to go on spending all these billions out of deficits? The President said, well, Mackenzie, my family has held French securities since before the Revolution and they’re still paying interest; why can’t we do the same?’ At this revelation of Roosevelt’s economic adolescence, King raised his hands in a gesture of friendly despair. It was hard, he confessed, to see what would come out of this dizzy sort of financing.”

Equally importantly, during the 1920s and 1930s Canada’s external relations were commendably limited and non-interventionist. The Dominion, according to King, was “not inclined to organise or join in crusades on other continents. ... We are not asking and will not receive any help from outside in meeting [our] difficulties and we are unlikely to have any surplus of statesmanship or good fortune to bestow elsewhere.” On the eve of war in 1939 he affirmed that “the idea that every twenty years this country should automatically and as a matter of course take part in a war overseas ... to save, periodically, a continent that cannot run itself, and to these ends risk the lives of its people, bankruptcy and disunion, seems to many a nightmare and sheer madness.” In that year Dominion, provincial and municipal governments consumed 19.5% of Canada’s GNP; in the U.S., the corresponding levels of government consumed 22.5%.

Jack Pickersgill, a Winnipeg-born historian who worked in the Prime Minister’s Office from 1938 to 1952, recalled in My Years with Louis St Laurent: A Political Memoir (University of Toronto Press, 1975, ISBN: 0802022154) that in 1943 King was extremely reluctant to introduce family allowances. The Prime Minister “said no Canadian government would dare to start providing family allowances. ... He felt family allowances would be a greater threat to national unity than any other measure he could think of except [military] conscription.” Watson chronicles the long debate about family allowances during the late 1920s and early 1930s, with much opposition expressed and nothing enacted, and staunch opposition continued into the 1940s. Similarly, after the end of fighting in Europe in May, 1945 and a comprehensive Liberal victory at the polls in June, King’s Liberals trod the path of intervention very cautiously and half-heartedly. In April 1946, for instance, after making a formal pre-budget presentation, the forerunner of the Canadian Labour Congress “was sharply rebuked by Finance Minister [James] Ilsley for its costly demands. ... Ilsley [stated] that the government’s priorities were for reducing taxes, balancing the budget, and retrenchment.” In 1948, when King left office, Canadian governments consumed 24.6% of the country’s GNP. In the U.S. the equivalent figure was 35.2%.

King’s successor, Louis St Laurent, was also no enthusiast of the leviathan state. Donald Creighton wrote in The Forked Road: Canada 1939-1957 (McClelland & Stewart, 1976, ASIN: 077102360X) that “St Laurent was not an advocate of the welfare state in any serious sense.” In his memoirs, Pickersgill tells how it took a three-year campaign to persuade the prime minister that self-employed fishermen should be eligible for unemployment insurance. St Laurent objected that the measure “would not be actuarially sound” (which was true) and that “it might prompt costly demands from other groups” (which of course it did). In his memoirs (Mike: The Memoirs of the Right Honourable Lester B. Pearson, Quadrangle Books, 1972, ASIN: 0812902998), Lester Pearson (Liberal prime minister 1963-1968) criticised St Laurent’s refusal to build the South Saskatchewan dam. St Laurent declined because the dam had not passed a cost-benefit test. St Laurent also won the hostility of many artists (and applause from classical liberals) because he took six years to act upon the recommendation of the Royal Commission on National Development in the Arts, Letters and Sciences (commonly called the Massey Commission) to establish the Canada Council. According to Watson, St Laurent opposed “subsidising ballet dancing.” When “Uncle Louis” lost office in 1957, Canadian governments consumed 24.5% of the country’s GNp – very slightly less than when he took office. In the U.S. the equivalent figure had grown to 37.3%.

Affection and Strong Misgivings

What, then, has happened to Canada? What was once a Duke of Edinburgh country has since the late 1950s degenerated into a Prince of Wales country (see in particular Oh Canada! by Adam Young). When Canadian élites argue that big government is the Canadian tradition (as they have done virtually without exception since the 1960s) they betray their bias that that tradition is synonymous with the erection of an intrusive welfare state.

A member of British Columbia’s Legislative Assembly, in the midst of a constitutional debate, put this point nakedly on 21 October 1992: “across Canada, Canadians [are saying] ‘This is what we’re about. This is why we’re different. This is what we want to say as a statement of our values in our constitution.’ I think it’s really important for me to be specific about the social union, for people who have not read the agreement. The social union talks about comprehensive, universal medicare. Surely that’s a Canadian value. Surely that’s something that every Canadian is proud of and is prepared to say ‘yes, that’s our value.’ Adequate social programs, high-quality education, protecting the rights of workers to organise and bargain collectively and protecting, preserving and sustaining the integrity of the environment for present and future generations – surely those are values of a modern society. As Canadians we would be proud anywhere in the world to say: ‘this is what we stand for.’ At a time when we are pressured by international economic pressures, when we need to preserve our sovereignty as a country and very clearly say that these are our values and this is what we stand for, it’s worthwhile having that in the constitution.”

The British North America Act of 1867 facilitated the economic development of the northern half of the continent and enabled Canada’s two founding peoples and migrants from many lands to live together in peace, liberty, steadily increasing prosperity and (for the most part) harmony. These salutary things occurred precisely because during Canada’s first ninety years the Dominion and provinces remained small enough to fit inside the Constitution. Alas, since the late 1950s Canada’s élites have utterly bastardised governments into instruments of economic warfare; and in the 1980s and 1990s they enshrined plunder into the Constitution.

One of the purposes of history is to distinguish what does from what does not promote human liberty, harmony and prosperity. Today’s Canadians would therefore do well to recognise that for ninety years after Confederation their forebears affirmed and successfully practised the idea that a free people must be self-reliant and cannot depend upon the state. If Canadians can re-establish this essential link with their ancestors, then perhaps they can reclaim that fundamental part of their history that the Diefenbaker, Pearson, Trudeau, Mulroney and Chrétien governments have so comprehensively erased. “Until recently”, as William Watson summarises, “individualism – not socialism – defined Canadians.” They may or may not decide that their classical liberal heritage merits resuscitation: but it is unquestionably a fundamental part of their history.

From the 1940s to the 1980s, Bruce Hutchison was one of Canada’s most perceptive and eloquent journalists. In 1952, members of the British Columbia Legislative Assembly were so outraged by one of his editorials that they came within a few votes of summoning his publisher before the bar to apologise. Hutchison responded by reprinting the editorial on the front page – just in case anyone missed it the first time – and for good measure wrote a follow-up that congratulated the parliamentarians for averting their “ridiculous” censure (Bruce Hutchison, The Unfinished Country: To Canada with Love and Some Misgivings, HarperCollins, 1986, ASIN: 0888945124). The offending editorial was one of a series that won the National Newspaper Award for 1952. In 1943, his book The Unknown Country: Canada and Her People (Greenwood, 1942, 1977, ISBN: 0837194512) won the Governor General’s award for non-fiction.

With a world war raging in distant lands, Hutchison wrote from the relative solitude of Vancouver Island that “we Canadians can probably claim the distinction of being the most rugged surviving individualists. ... The best Liberals, in their hearts, still believe in free trade, the play of natural economic forces, the sanctity of enterprise and the evil of monopoly. They behold on all sides precisely the opposite... but they hope that a better day will dawn, that the world will come to its senses, trade again, reduce government interference, abolish monopoly.” Canada’s calamity is that this hope presently beats in so few Canadian hearts. Its greatness is that it once did in so many. Israel Asper of Winnipeg is a potent reminder, one who will be sadly missed, of that greatness.

Chris Leithner


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