Backstage at Ottawa

Talk of a "planned depression" in the U. S., which might help prices here. And how the CCF stole the show in l’affaire Dionne


Backstage at Ottawa

Talk of a "planned depression" in the U. S., which might help prices here. And how the CCF stole the show in l’affaire Dionne


Backstage at Ottawa

Talk of a "planned depression" in the U. S., which might help prices here. And how the CCF stole the show in l’affaire Dionne


ACCORDING to Ottawa experts the Canadian cost of living is near its postwar peak By the end of this month they expect the index to be about 135. Toward the end of the year they think it may hit a high of about 140, then level off or even slip a bit.

This is not an official forecast—officials don’t go out on such shaky limbs. But it’s better than a guess. A year ago the same experts predicted a May, 1947, index of 133. It turned out to be 133.1, so they know what they’re talking about.

They’re assuming that when we hit the peak price control will be off all large items except rent. Rent control is expected to last through 1948, if Parliament will pass another act and the courts will continue to sustain it. Other price ceilings, with some few exceptions, will likely have been scrapped. * * *

ONE REASON for expecting an early end to price control is that Finance Minister Douglas Abbott doesn’t like it. He is very definitely a free enterprise man. Also, he thinks it’s sound politics in the long run to face the inevitable quickly, let the voters have their indignation now and not on election eve.

Also, he’s a lawyer and as a lawyer he’s not too sure how long price control can last. How long is an “emergency”? No longer than the courts are willing to recognize it. Sooner or later somebody would be prosecuted by the Wartime Prices and Trade Board for selling above the ceiling, and would plead that he had violated no valid law. Sooner or later some court would uphold him—and bang would go the price-control system, just like NRA.

Looking at it from that point of view, rent control is the safest bet for the long pull. The housing shortage is still desperate—it’s easier to prove an “emergency” there than anywhere else. Parliament would be more likely to give unanimous support to rent control than to controls in general. And even the most rarefied and suprapolitical Bench might hesitate to ignore a unanimous Parliament.

However, there are other and quite different reasons to expect the end of price ceilings.

All along it’s been realized that we can’t maintain a price level far below the American — the natural relation is the other way round. Since OPA died a year ago the American cost-of-living index has zoomed away above ours—at the moment it’s 158. But Americans think it’s about to break, and break rather hard. Some of them think the downturn will begin before this gets into print.

True, this prediction isn’t new. Some pessimists thought the Americans would be having a depression last winter, then by spring, then by summer. But even optimists are ready to concede that they might have one by fall.

Fairly conservative predictions are that the American index will have slid down to about 145 by the end of this year. Ours by then should be about 140. But American prices, except food, were a good deal lower than ours before the war, so the actual living costs in the two countries will really be about even.

At that point the Canadian decontrol process will have been completed according to plan. Ottawa’s idea from the beginning was to have our index go up a steady grade while the American index went through its parabola, so that Canadian prices going up would finally meet American prices coming down.

* * *

THERE’S more than mere pessimism in the prediction that the United States is headed for a small-scale depression this fall. A good many people think it’s more than economic destiny— it’s part of the political strategy of the Democratic Party.

According to recent gossip seeping in from Washington, Democrats generally, and the White House in particular, are very worried about the rocketing cost of living in the U. S. They are worried, too, about the destitution of Europe and the imminent bankruptcy—but the domestic worry comes first.

They have observed that every time a big new loan or gift to some overseas country is announced,

American prices tend to take another jump. The last announcement of purchase of wheat for Germany sent the Chicago wheat market up the full allowable 10 cents in one day’s trading.

If the United States goes full speed ahead in a program to bail out Europe, the Democrats reason, it will put new demands on American supplies and send American prices up still further. The boom would get completely out of hand, and probably end in the customary bust - just about the time of the election campaign in the fall of 1948.

To avert this catastrophe the Democrats think it would be smart to have a little depression now, let the boom flatten out, put an end to the seller’s market, bring back long-forgotten things like bargain sales, courteous clerks and workers who would rather not be fired. There would be uncertainty, the stock market would take a few tumbles, merchants would be stuck with expensive inventories, there might even be fairly severe unemployment. But the price curve would be brought reasonably close to horizontal.

Then, before the spiral of deflation could gain momentum, Washington would resume its lending, or buying for overseas donations. Business would pick up again but this time with more common sense. If the Democratic timetable worked out to exact perfection, the U. S. would be just coming to the crest of another wave when the voters turn out to pick a president in ’48.

This is not as hardhearted toward the destitute countries as it may appear. They, too, were suffering acutely from high American prices—their costly U. S. loans were not buying more than two thirds of what they’d hoped to buy. Some of the debtor nations had decided, on their own account, to call a halt.

France is entitled to 110,000 tons of C.uban sugar this year, under fhe international ration allotment. So far she hasn’t bought a pound of it— not enough dollars. Britain had a tight enough budget last year, but this year it’s even tighter; the British Treasury has allotted just so many dollars for food purchases in all North America, and will take whatever goods those dollars will bring, no more. If prices go up, the volume of British purchases will go down, and vice versa.

So, although they’d like to get help from the United States, they’d benefit by anything that would puncture the American inflation. And the same, of course, goes for Canada.

Canada has one special interest in Washington’s economic plans. No matter what we do the Canadian economy Continued on page 47

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is tied very closely to the American. If the Democratic strategy appears to be working out well then the fall of 1948 would be a good campaign period for a Canadian Government, too.

* * *

Ludger Dionne’s scheme for importing cheap labor was chiefly embarrassing to the Liberals—chiefly, but not solely. It caused some blushes among the Progressive Conservatives, too.

As you may remember, the CCF led the attack on the Government over the Dionne affair. M. J. Coldwell initiated a full-dress debate on the matter which rolled the Liberal Government right across a barrel. Progressive Conservatives took some part in the debate, but merely to say, “Me, too”—for ibis occasion the CCF functioned as official opposition.

It wasn’t by accident or sloth, it was by deliberate choice that the Conservatives lost the initiative. So here’s what happened;

Three days before the CCF assault Progressive Conservative strategists

proposed exactly the same plan of action to their own party. They thought, rightly, that the Government had been caught bending. They were pretty sure the CCF intended to make an issue of it, and they wanted their own party to move quickly and strike the first blow.

At first the suggestion was welcomed. But then an old guardsman rose with a serious objection.

He had a near relative, also an M.P., who was in the lumber business. He wasn’t sure, but he thought the lumber trade was planning to import some D.P.’s, too. In that case, dear old Jce would be in the same boat as Dionne. Surely the party wouldn’t want to attack something that might turn out to involve dear old Joe?

The old guardsman carried his point, and the project was dropped; the CCF was left with a clear field.

Ironically enough, the Tories found out later that dear old Joe would not have been embarrassed anyway—the lumbermen’s plan was quite different from Dionne’s, and attacked by no one. But meanwhile, thanks to the zeal of his devoted relative, the Progressive Conservative party had demoted itself. ★