Two summers ago, the Canadian dollar was a high-flying schooner, cutting a fancy swath at $1.03 U.S. Uncharted reefs or troubles below the waterline could be averted or ridden out with little fuss. Or so it seemed. Today, the dollar is a much battered punt, buffeted by international forces, victim of some faulty structure, even bad helmsmanship. And the rough ride is not yet over as more downward drift may be inevitable.
The dollar, which tumbled below 87 cents in April and was headed that way again earlier this month (see chart), has become more than an economist’s worry. It’s dipping into Canadian pockets, pushing up a broad range of prices after falling 15 per cent against the U.S. dollar. 32 per cent against the German deutsche mark and 45 per cent against the Japanese yen in two years.
A series of events at home and abroad pounded the dollar as July became August, driving a skittish money market to safer havens of other currencies and that old reliable, gold. As the U.S. dollar hit record lows, dragging the Canadian dollar along, gold zoomed to record highs of $207. The gathering of domestic events: a sluggish Canadian economy, few' foreign market borrowings, an unexpected $93-million June trade deficit. World worries: massive U.S. trade deficits, inaction after the Bonn summit. OPEC’s rumblings on higher oil prices.
The lone reason to cheer about our dollar’s slump is a lower price for Canadian items abroad, better for export sales. It’s a hard-to-prove advantage says Canadian Export Association President Tom Burns, but corporate profits are up. “Industries battered at $1.03 are producing corporate
results today that are a little iess hair-raising than they w'ere.” The 88-cent dollar also makes Canadian exports more competitive with the German or Japanese producers.
To the hard-pressed Canadian consumer, that edge is more than offset by big price hikes at home for goods from countries where buoyant economies mean strong currencies. The Volkswagen Rabbit has jumped 18 per cent to $5,275 in two years, including two boosts on the current model due to currency. Worse off is the Japanese-made Honda Civic, up 31 per cent over two years, including 24 per cent in four increases this model year. Honda glumly predicts another 5 per cent hike on new models in October.
For German appliance manufacturer Braun, the strong mark means its most popular shaver, the Synchrome Plus, costs 25 per cent more than two years ago, its food processor is up 30 per cent.
There is no precise measurement, but every threeto four-cent drop in the Canadian dollar pumps another percentage point into Canada’s consumer price index. That means about one-quarter of Canada’s inflation in the past two years has come from the downward ride. It has been a ride that many analysts say was caused by economic mismanagement. Whatever the final judgment, the federal government has propped the dollar and preached confidence in a series of moves over the past 10 months: Two standby lines of bank credit totalling $4.5 billion; a $750-million bond issue in the U.S.; three bank rate increases amounting to 1.5 percent; massive Bank of Canada intervention, including $351 million spent last month to support the dollar.
Prime Minister Pierre Trudeau’s August 1 televised address, the most recent confidence stoker, met with money market cynicism. “Trudeau’s playing the old game of lip service,” says John Peachey, Toronto Dominion Bank foreign exchange adviser, “saying that Canadians are doing our bit to get the economy going—but he doesn’t say how.”
Only sustained intervention has kept the
dollar from falling to 85 cents and there are furtive glances toward October storm signals. Traders point to the massive Canada Savings Bond campaign, sales tax reinstatement, foreign dividend outflow when the AIB ends, and a travel account turnaround as Canadians head south. If currency measures a country’s health, a seasick Canada has spent the year in bed.
The long-distance runner
You know Donald Matthews is in a room even before you enter. His ample voice and booming haw-haw-haw laugh is audible at 50 paces, around corners, through walls. A presence even in your absence. The good nature disappears
only if a deal’s coming together, business or political, or when he’s jogging.
Here he is pounding down a sidewalk at 7 a.m., three miles a day, plotting his hours, planning his life. Twice defeated for Parliament, past president of the Progressive Conservative Association, multimillionaire at 52, he’s run some distance since 1953 when, with $300 and a Studebaker, he began a construction firm in London, Ontario. Today, he is chairman
of The Matthews Group which last year did $33 million in business and owns land worth $50 million.
These days, his hard hat often hangs on an office peg as he preaches national unity to any group who will listen. The voice barks from the podium: “We’ve moved from a discussion between Canada and Quebec to a discussion involving all the provinces at a logical and sensible pace.” Don’t wait for solutions from elitists because they’re bound to fail, he cautions. “The decision must be political, but the thrust must come from the people of Canada.”
A businessman with a message. It’s about the last direction he predicted for his life. “I never thought of myself as being a business person. Indeed, it took me quite a while in my adult life to really come to the conclusion that senior business executives were good citizens.” Understandable after a boyhood in a Brantford, Ont., trade union household where CCF leaders, not capitalists, visited. He grew up distributing election pamphlets for a civic politician father who told him to put country first, family second and job third.
“The chores that have given me the greatest sense of satisfaction and accomplishment have been those jobs I’ve done
for the community,” says Matthews. It’s a view backed by former Ontario premier John Robarts, co-chairman of the Task Force on Canadian Unity. Last year, Robarts asked him for names to organize Ontario hearings. Matthews produced a list of one: himself.
“You don’t have to conscript Donald,” says Robarts, “it’s something he does even though he’s got enough business interests. Involvement is a real part of his
life.” That includes being Ontario president of the Council for Canadian Unity since 1974, as well as short-term roles such as chairing the York University study this summer into the first report of the Confederation Advisory Committee to Ontario Premier William Davis.
At five-feet lO'/Tinches and a lean 175 pounds, ideas on business, unity and politics pop in Matthews’ head like PingPong balls tossing inside a bingo game cage. It was one such idea that started him thinking about forming his own business when he worked for the city of London. Ont., after graduating as a civil engineer from Queen’s University in 1950. He convinced the city engineer that a main trunk sewer and treatment plant were essential to open up serviced land for building lots. A special city council meeting called to hear his presentation saw his idea as so outlandish it didn’t even come to a vote. Government, he concluded, was the wrong vehicle for development. He took his $300 savings, sold his Studebaker for $700, borrowed $4,000 from his father who mortgaged his house, gathered $20.500 from eight friends and started Matthews Construction Limited.
Two years after his first $3,500 water-
main job, he won a $600,000 tunnelling .contract in Sarnia, Ont., and attracted late teamster boss Jimmy Hoffa on the phone from New York City demanding $5,000 for protection on the nonunion job. Matthews hung up on Floffa and hung tough through threats to his family, a suspicious fire and a cable-hacking incident which halted work for a week.
Through the 1950s he created firms, bought others, obtained and developed land and, in the 1960s, began building houses. In 1969, he cancelled the charters of his eight firms and formed The Matthews Group, today active in planning, developing, aggregate quarrying and sales, house-building and heavy construction, all in Ontario. Controlled by Matthews and his family, including six children ranging in age from 16 to 27, the firm’s $50 million in land assets include 385 acres bought in 1976 with S. B. McLaughlin and Associates in Mississauga for $70,000 an acre, and 1,500 acres in London worth $25,000 each.
But a job, as his father told him, isn’t everything and even as he built his business he was drawn to politics, in 1957, campaigning for London friend Ernie Halpenny, later secretary of state in the Diefenbaker government. Defeated himself in 1968 in London East, he began planning to run for the national post of Progressive Conservative Association president. Key to that 1971 victory was John Robarts who plowed his way across Ontario by snow-slowed train, arrived late on a stormy Saturday at Ottawa’s Chateau Laurier Hotel, visited Quebec delegates with Matthews Sunday morning. and walked the halls, one hand on Matthews, the other grabbing any delegate within reach until balloting began.
For the next 2Vi years, Matthews continued to run his business while organizing party structure and workers across Canada. Losing again in the 1972 federal election, defeated as president in 1974, Matthews knows his time in politics is past. National unity issues will continue to keep him busy, but he’s looking at the redirection of cities as the “long-range project that may well use up the rest of my reasonable endeavors in this world.”
A sprained ankle has meant restricted jogging and, because jogging's such a great place to think, thoughts about the future of cities are just getting under way. “Out there jogging, no telephones or other interferences with thought processes, I exercise, have a shower, eat breakfast and I’m ready to face the world . . .” He pauses, eyes lighting up with incipient laughter, and adds, “. . . with vigor.”
Throwing his head back, he lets loose a haw-haw-haw laugh, and paces the room so the next idea won’t bump up against the last. And if you were down the hall and around the corner, you'd know Donald Matthews was in there, with another idea a-borning. RODERICK MCQUEEN
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