BACKSTAGE AT OTTAWA

The Housing Outlook Grows Blacker

BLAIR FRASER May 15 1951
BACKSTAGE AT OTTAWA

The Housing Outlook Grows Blacker

BLAIR FRASER May 15 1951

The Housing Outlook Grows Blacker

BACKSTAGE AT OTTAWA

BLAIR FRASER

CANADA is running into a major crisis in housing this year. With the need for new homes as great as ever, and 150,000 immigrants coming to make it worse, the building program has taken a nosedive. The Government is baffled to know what to do about it, because Government policy created the crisis.

Not intentionally, of course. Prime Minister St. Laurent said last February that housing had a priority second only to defense production. He meant it, but he was wrong. In practice, housing has no priority at all, and it’s being paralyzed by the Government’s anti-inflation policy. In taking steps to dry up inflationary credit, Ottawa killed the roots of the housing boom.

Figures don’t show it yet. Canada built a record ninety thousand houses last year and left sixty thousand more unfinished. With this enormous carry-over, 1951’s total of houses completed will probably be high and might even equal the 1950 record. New starts, on the other hand, are never very numerous in the frostbound first quarter, so that figures now available show little change from last year. But a drastic change is coming, and it’ll be visible any time now.

The trouble is, there’s no money for new housing. It’s been cut off by a Government action that seemed to have little connection, a sound anti-inflation move that was applauded in orthodox circles. Some time ago the Bank of Canada lowered the price of government bonds. That set off a chain reaction.

Insurance companies had been lending most of the money for home

building. Ever since the war they had been getting rid of government bonds (of which they had an oversupply when the war ended) and putting their money into mortgages. But after five years of this they’d got to a point where most of them had about enough money tied up in mortgages, and no longer had too many government bonds. They’d have begun to cut down a little this year, even if no change had taken place.

Reduction in the price of bonds made them act faster. They can sell no more bonds now without taking j a loss, so they’re holding on to what they’ve got. That means no money coming out of reserves for mortgages.

Of course they have mortgage money from other sources, but they are not anxious to put it into lowinterest loans under the National Housing Act. Another effect of lowering the price of government j bonds is to raise interest rates. Lending companies can get more for their money, with better security and much less trouble, than the law allows them under NHA.

The shortage of money has been increased, moreover, by the banks’ refusal (at Government request) to lend money for capital development and business expansion. Businessmen, unable to get bank loans, are putting mortgages on their property instead; and, because they need the money for profitable operations, they don’t mind paying a high interest rate.

Results of all this have already become apparent. The insurance companies are pulling out of the National

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Back$fage at Ottawa

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Housing Act so that they can charge whatever the traffic will bear for the money they lend.

* * *

Considered as part of the inflation picture, all this is good news. Cheap money and easy credit are the very foundations of an inflationary spiral. The Government could not reverse its policy on bond prices and interest rates without throwing overboard all hope or even intention of holding down the cost of living.

Considered in terms of housing need, it’s very bad news indeed

Canada has had an increase of about a million families since the war, and has built only three quarters of a million houses. Whatever the shortage of housing was in 1945 it’s greater now by a quarter of a million. And, as 1 said before, we are still bringing in immigrants.

This is why the Government has refused to admit any loss of interest in the housing problem, why the Prime Minister solemnly assured Parliament that housing has “No. 2 Priority.” But the cold fact is that so far, at any rate, the Government has taken no positive steps to give housing any priority at all. Defense production has been taken right out of the framework of the national economy and is financed by Government aid to whatever extent is required. Housing has not been so segregated. It’s still being carried on freely, like any other private operation, and under those circumstances no “priority” is feasible.

This is a grave enough matter by itself. It’s worse when taken as a part of the general program of defense production. Defense plants are going up in various places and whole new villages or suburban districts will be needed to house their workers. Who’s to build these if the ordinary private contractor can’t get the money?

One obvious answer would be to revive Wartime Housing Limited and make the Government a landlord again. On paper the record of Wartime Housing was pretty good—its little homes are now being sold at a fairly good price after earning rent for seven years,

and the Government hasn’t lost any money.

But the people who had most to do with Wartime Housing, especially Dave Mansur’s men at Central Mortgage and Housing who had to clean up after it. are the very men who don’t want it back. They think it was an unholy mess.

An alternative would be to make the defense companies themselves build houses for their staffs, on the same terms as they build the plants. That seems a fairly likely solution to this particular problem. As for the ordinary citizen who wants to build a house —there’s no solution in sight up to now, other than “Let him wait.”

* * *

Ottawa’s been hearing from Washington again about the Extradition Treaty we signed in 1942, and Ottawa’s face is red. We like to be self-righteous about the St. Lawrence Seaway Agreement of 1941, which Congress has not ratified. But Canada has not ratified the Extradition Treaty either, appears to he even more unlikely to do so, and has as weak a defense for foot-dragging, if not weaker.

Under the Extradition Treaty negotiated and signed nine years ago, embezzlement and fraud would be extraditable offences. This means that the racketeering brokers now peddling worthless stocks to American citizens by long-distance telephone from Toronto could be lugged home and put in jail.

On the other hand, it could also mean that reputable Canadian brokers might become liable to prosecution, without even knowing it, through failure to comply with some obscure American regulation governing the sale of securities. Therefore, whenever the Extradition Treaty comes up for ratification by Parliament, it’s always greeted by a burst of apprehensive opposition from both sides of the House.

Canada is holding out, and will probably continue to hold out, for the principle of “double criminality” in extradition law — a feature omitted from the present treaty but sure to be in before the treaty is ratified. Under that principle a man can be extradited only for acts which are violations of the law in both countries.

iaw in ootiz countries. The United States would have no

objection to this stipulation, if Canada vould tighten up her securities and exchange regulations enough to forbid ihe kind of barefaced fraud that is now being carried on by Toronto bucketshops. “We’ll accept double criminality,” they say, “if you’ll pass a law that says stock-market fraud is a crime.”

Ottawa agrees with this point of yiew, but unfortunately the regulation of securities and exchange is a provincial matter. So far, attempts to persuade the provinces (especially Ontario) into harsher steps against stock frauds have been fruitless.

With renewed pressure from Washington this spring, Ottawa has come to feel that something will have to be done. Canada is getting a bad name throughout the United States as a baven for racketeers—several newspapers have lately sent reporters to Toronto for long, blistering, and wholly factual stories about the crooked operations tolerated there. There may be an approach to Premier Leslie Frost, whose reputation for good sense and co-operation is very high in Ottawa, regardless of politics. Should that fail, Ottawa may consider amendment of the Criminal Code to make some of the ftock-market rackets a federal offense.

* * *

Austin Cross, columnist for the Ottawa Citizen, the Financial Times and dozens of smaller papers, likes to use his columns for roasting people he doesn’t like. Naturally this makes him something less than popular with his victims, who Include a large and growing number of top civil servants.

Not long ago Austin wrote a magazine piece entitled, Have We A Stooge Press? His answer was a definite “yes.” Practically everybody in the Press Gallery, except Austin, is a tame cat fed on Government cream. If by any strange accident we happen to stumble on a story unflattering to the Government we suppress it; but this seldom happens because we all spend our time playing gin rummy and waiting for the Government hand-outs to be brought over by Government press agents.

Soon after this appeared, Hugh Boyd, of the Winnipeg Free Press, met a friend of his, a civil servant who had suffered Austin’s wrath on previous occasions.

“Congratulations,” the friend said. “I see you’ve been decorated, too. Welcome to our select company.”

Hugh was puzzled: “Decorated?

What do you mean?”

“Why, you’ve won the Austin Cross.”

* * *

Speaking of being a stooge, I got a letter not long ago from a Progressive Conservative friend. He said: “I am writing this in the hope that you may convince me, if you care to, that I am still justified in arguing that you are not a Government propagandist.”

What annoyed him was the “bland and quite unsupported statement in the issue of April 1 that ‘St. Laurent is the man supremely qualified to lead Canada in a time of crisis. No one else in any party could equal him.’ It almost carries one back to Julius Caesar—you remember:

We petty men

Creep under his huge legs and peep about

To find ourselves dishonorable graves.”

He went on to say that the argument would have had some force if I’d meant only that “St. Laurent as a French Canadian well regarded by English Canadians could command a greater common effort.” That of course is precisely what I did mean.

But, while he conceded some validity to this point, my Conservative friend went on to make a case against St. Laurent as “the man in a crisis” on any other ground:

“Since he became Prime Minister there have been, as I recall, only three matters that were in any way testing: 1, the Combines fiasco; 2, the Korean incident; and, 3, the Wheat Agreement.” And he went on to recall that in none of these did Prime Minister St. Laurent show up with any great brilliance.

I think all these points are well

taken. St. Laurent is very much liked by his colleagues, his staff, his followers, even by the Opposition. Personally he is charming. But even his most devoted adherents do not maintain that he is politically adroit, or that the positions he takes are always right. On the contrary, his capacity for getting his foot in his mouth is often the despair of his friends.

The thing that makes St. Laurent “supremely qualified” is that he is trusted to a unique degree by both the major ethnic groups in Canada. If we must—God forbid-—go to war again,

if we must face again the corroding, disrupting issue of raising troops for overseas, nobody could possibly hold the country together as well as Louis St. Inaurent.

Should the climate change, and Canada enter a period of calm, there are plenty of arguments for changing the Government. It’s been there a long time and it does take its power for granted nowadays. But the international barometer is still falling, the outlook for peace still dim. In those circumstances, I think we’re lucky to have the leadership we’ve got. ic