BLAIR FRASER July 28 1962


BLAIR FRASER July 28 1962


Luck left the Liberals out of office while crash measures against the money crisis are sealing the Tories' defeat



ON ELECTION NIGHT, when the Conservative collapse in Quebec and Ontario was known but the western returns weren't in yet. a re-elected Conservative minister met a newly elected Liberal.

"Ha ha," he cried jovially, “you poor devils are going to be the largest group in parliament. Boy, am 1 glad it's you and not we who w'ill have to organize a minority government."

He was wrong in his prediction but right in his appraisal — the next six days were Crisis Week in Ottawa. A half-defeated cabinet, furjous, bewildered and dismayed, met in almost continuous session to contemplate tw'o grim alternatives:

1. An austerity program to rescue the Canadian dollar, threatened with collapse by a general loss of confidence at home and abroad. This would be a bitter decision at any time, but never so bitter as now. for it carries a clear admission that the major theme of the government's election campaign ("The nation has never been stronger—they said it couldn't be done but we did it") had in fact been a sham.

2. A program that could be billed, at least, as continued expansion—no more than the inescapable minimum of protection for the dollar; maximum emphasis on public works, national development, and Hon. Alvin Hamilton's fond belief that "never in the history of this country have conditions looked so good." For a rhetorical fantasy of this nature the government knew' it could count on support in parliament from the new' Social Credit wild men from the backwoods of Quebec.

The second alternative was tempting: it was strenuously advocated and carefully considered. Such a program would be politically difficult to oppose, even though it might be impossible to enact. It might therefore be an effective launching pad for an early election campaign. Conceivably it might bring the Conservatives back with a majority, or failing that, with a firm mutual understanding between themselves and Social Credit. Still better, it might bring the thirty Social Credit MPs into some kind of collaboration with the Diefenbaker government and let the regime hang on to office for another four years, without an election.

Its drawback was that it would have ruined the country. The run on the Canadian dollar had reached panic propor-

tions. In the first three weeks of June the foreign exchange fund dropped by approximately four hundred million dollars—more than it had dropped in the first three months of 1962. At this rate, another couple of months would have cleaned out the fund completely, and the rate was increasing.

1 asked a government economist how big the exchange fund has to be. for safety ( it got down almost to five hundred million in 1947. before exchange controls were clapped on ).

"It doesn't matter." he said. "You can't set a precise figure, because the whole thing depends on confidence. If people get really scared, so that everybody at once tries to turn his savings into Swiss francs or L’. S. dollars, then no fund could possibly be big enough. The Canadian dollar would simply collapse."


Exchange control is one way of preventing this, of course—don't let people buy foreign money without a permit. Canada has had these controls in wartime and postwar emergencies, and they worked well enough. But in this emergency there was a difference: no law existed to impose exchange control, and no parliament existed to enact such a law in a hurry. Until July 18, the earliest date the new parliament could assemble, there was no way to stop the run on the dollar by direct regulation.

So the only way to stanch the hemorrhage of capital was by some kind of statement to restore confidence—confidence that there'd be no further devaluation below the 92'/’-cent peg the Bank of Canada was struggling to maintain: confidence that Canada would do something to attract foreign capital again, build up reserves to a safer level, and generally put its financial affairs in order.

Six days after the election, on a gray and lowering Sunday afternoon that ended in appropriate thunderstorms, the prime minister issued the statement. It might almost have been written for him by James E. Coyne, the former governor of the Bank of Canada whom he had dismissed a year ago and made the scapegoat of all our economic ills—taxation of imports, reduction of deficits, slashing of government spending in all directions, as stern a dose of austere orthodoxy as could be contrived


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Caouette doesn't hold the true balance of power. Pearson does

without special legislation. Meanwhile interest rates had already taken a sharp leap upward, with the Bank of Canada’s encouragement. “Tight money” was back again.

It took a while for the meaning of all this to sink in, for the average Canadian. It meant financial soundness would have priority over employment, as the first concern of government policy. It meant no causeway to Prince Edward Island, no twinning of the Welland Canal, no lavish grants to “poor” provinces or “poor” farmers, no National Development Fund or any other grandiose political project, until the Canadian dollar is brought back to a stable value that needs no props.

Specifically, it meant the government had decided not to rely for its parliamentary majority on Réal Caouette and his Créditistes. Indeed, Caouette was stung to instant fury by the austerity program, and threatened to “force an election tomorrow.” It was an empty threat, of course. Social Credit has thirty seats in a House of 265; it holds the balance of power only when the major parties are divided. The true balance of power, for the duration of the financial crisis, lay not with Caouette and Robert Thompson and their little band of currency cranks, but with the only visible alternative to the Diefenbaker government — Lester Bowles Pearson and his “Liberal team.”

The Liberal “shadow cabinet” had its own emergency meeting at the same time the government met, and mapped out its own crisis strategy. On the assumption that the government's austerity plans would need special legislation by the new parliament, the Liberals laid down a general course of action: Give the government any support it needs for urgent emergency measures; take no share of the blame for either the emergency measures themselves or the situation they're designed to correct; once the emergency is met, put motions of nonconfidence as often as possible, and force the Social C'rediters either to join in defeating the government or to identify themselves as merely Tories in a thin disguise. (They were said to have got a lot of money, during the election campaign, from the old Union Nationale treasury in Quebec.)

Theoretically, of course, there was nothing to prevent the Diefenbaker government from hanging on for years, getting Liberal support for some measures and Social Credit support for others. As the prime minister recalled on election night, Mackenzie King managed to operate a minority government for a normal, uneventful fouryear term between 1921 and 1925, supported by the western Progressives against the beaten Conservatives. Why couldn't Diefenbaker do the same?

The difference is one of morale. Mackenzie King led a victorious party that fell a few seats short of absolute triumph, and formed a working partnership with another victorious party

against a common foe. Diefenbaker leads a beaten party, a party that suffered eighty-seven losses and made only one gain, and was then instantly confronted with the crisis that it said did not exist. It looks beaten, it feels beaten, and nobody is afraid of it any more —whereas Social Credit looks victorious, feels victorious, and glories in the thought that many people are very much afraid of it indeed. The only thing that could kill Social Credit's élan just now would be an alliance

with the beaten Tories, not only because they are Tories but still more because they are beaten.

This matter of élan is all-important. It's hardly an exaggeration to say that the only certain effect of a political campaign is not on the voters at all. but merely the encouragement it gives (or fails to give) to a party's own campaign workers.

This year the two major parties put on the most exhaustive and exhausting. the most extensive and expensive

election campaigns in Canada's history. Each party leader traveled something over nine thousand miles, madesomething over two hundred speeches and shook heaven knows how many thousand hands. They traveled by plane, train, boat, auto and horsedrawn wagon — Lester Pearson went through one Ontario village on a fire engine. They must have spent at least ten million dollars between them, on these and kindred activities and on TV and radio time.

It was a highly skilled operation and in both parties it was fairly successful, as a means of building up the workers' clan. Each leader had his good days and his bad, but on the whole both did well—a reporter traveling with one of them tended to acquire the opinion that his man, whoever it was, was winning. If we have another election campaign this year the same operation, perhaps scaled down a bit in cost, will undoubtedly be carried out. But the irony of it is this: neither leader can say for sure that his efforts influenced, directly, a single vote.

On the last day of the campaign I asked Lester Pearson when it was that he began to think (as in fact he did think) that he was winning the election. He answered without hesitation: “At the Winnipeg meeting.”

It was indeed the great grandfather of political rallies—a huge hall packed to the rafters, with an overflow in a smaller hall behind. It was a crowd that needed no warming up, a crowd that cheered Pearson oftener than once a minute as he made one of his best speeches. He was exhilarated, as well he might be—every facetious remark brought instant laughter, every switch to a serious vein brought instant gravity and attention. It was a great meeting.

But in the event, the Liberals didn't win a single seat in Winnipeg, and only one in the whole of Manitoba. The Conservatives lost a few to the New Democratic Party which, a few miles farther west in Regina city, was having its head chopped off—Party Leader Tommy Douglas was beaten in his own town.

Perhaps the sharpest contrast of the whole campaign, and certainly the one that most annoyed the prime minister, was between the Diefenbaker and Pearson meetings in Edmonton. The Diefenbaker rally was a dud—small crowd, low enthusiasm, dull speech, general gloom. That was the night Charles King of the Southam newspapers stung the prime minister into a temper tantrum by reporting that “the Diefenbubble burst in Edmonton.” Pearson, a few nights later, had an excellent meeting—not quite up to the Winnipeg standard, but well above the campaign's average for either leader. The result? All three Edmonton seats, and all but two of the seventeen in Alberta, remained Conservative. The Liberals didn’t win a single one.

At the other end of the scale, the worst period in the Liberals’ whole campaign began with the rowdy Diefenbaker meeting in Vancouver, and reached a dismal climax when Premier Joey Smallwood commanded the Rotary Club of St. John's. Newfoundland. to muzzle Finance Minister Donald Fleming.

Pearson was up in Prince George, making an evening speech after his one-day incursion into the Yukon, when he heard about the Diefenbaker “riot." and his reaction was immediate dismay. As a matter of fact it wasn't much of a riot. There were a few individual fist fights between young Progressive Conservatives and the even younger “unemployed" picketers (many of them too juvenile ever to have looked for a job. let alone held one). Nobody was hurt, except in single combat, anti no innocent by-

stander was threatened. It was possible even at the height of the uproar to walk unimpeded into the heart of any scufile on the floor, and take notes on what the combatants were shouting at each other.

However, it looked bad and indeed it was bad. The prime minister of Canada was being shouted down by a handful of young punks, while almost nine thousand people who wanted to hear him speak weren’t able to. He himself behaved admirably—went doggedly on with his address, revising as he went along to pour extra scorn on these destroyers of free speech. There is not the slightest doubt that most people in the hall, regardless of their politics, were in full sympathy with him and against the hoodlums who were insulting him.

When this episode was followed by the much graver riot at Chelmsford, near Sudbury, where not only the prime minister but even his wife was

physically jostled, the Liberals’ gloom was Stygian. To make it worse, the Chelmsford rioters really were Liberals—or at least, they were anti-Tory mining union men who had volunteered to work for the local Liberal candidate. And then came the muzzling exercise by Joey Smallwood, the undeniably Liberal premier of Newfoundland.

Pearson was sorry afterward that he hadn't instantly, flatly repudiated Smallwood's preposterous order. Perhaps he would have done so if the question had come immediately. But he first heard of the Smallwood episode at midnight of an exhausting, elevenspeech day, and he wasn’t asked about it until morning. Twenty years ot civil service discipline, plus nine years of cabinet solidarity, had conditioned him to hold his tongue about other people's misdeeds—to the reporter who asked him what he had to say, he answered, “Nothing, not even a no-comment."

The effect of all this on the Liberal campaign was clearly visible. For the first time the Liberals felt, looked and sounded defensive—for the first time they had to admit, in private if not in public, that the Tories were in the right and their own men in the wrong. Local candidates were embarrassed about it. and said so. There is no way of measuring the loss of voltage that took place, but it could be felt.

And yet nobody can show, today, that either the riots or the Smallwood affair lost the Liberals any votes at all. The Conservatives were almost wiped

out in Vancouver, where only unbeatable Howard Green survived. They lost one of their two seats in Newfoundland. And in Toronto, the persecuted Donald Fleming came within seven hundred votes of defeat in his own riding.

Obviously, then, whatever it may do for party workers’ morale, the most elaborate election campaign gives a party strategist no real clue to how people are going to vote. What about the people? Do they get any clear indication, from these costly exercises in mass communication, what the state of the nation is, or what any party really intends to do about it?

The answer is no. they don't.

No Conservative speaker ever gave the voters the slightest inkling of the financial storm that broke on the very morrow of election day. They all rang variations on the theme, “You've never had it so good.” Liberals who said the opposite were mere “merchants of gloom and doom,” unpatriotically running down their great nation.

But the Liberals didn't come much closer to reality in their own speeches. They painted a dismal enough picture of the “Tory mess,” and they always conscientiously noted that their first task would be to clean it up, and that this would take a while. But they never said frankly and clearly that the only possible way of clearing it up was to go through a fairly austere period, and that all their social security plans would have to take second place to the harsh needs of the financial crisis. No voter would have suspected, if he had nothing but campaign speeches to go by, what a hard prospect faced the nation no matter who won the election.

Altogether it seemed a high price to pay for the elevation and maintenance of party workers’ clan. The cost in money is a well-kept secret, but it must have been staggering—a chartered aircraft for each leader, at a reputed cost of a thousand dollars a day; first-class traveling expenses for staffs of about a dozen apiece; fleets of hired automobiles at every stop, not to mention the cost of radio and television appearances, newspaper advertising, batteries of telephones, squads of clerical help, and (in Leamington, Ont.) free bubble gum for the neighborhood children.

More important, though, was the cost in effort. Both party leaders, one of whom would have to face the gravest peacetime crisis since the Great Depression of the thirties, ended the campaign in a state of exhaustion. I never saw a man look nearer to physical collapse than the prime minister, his face putty-grav and glistening with sweat, as he walked out of the hall after that riotous ordeal in Vancouver. Pearson is in better physical shape than Diefenbaker, but if anything he suffers even more from the strain of campaigning, for a very simple reason — he finds travel very fatiguing, w hereas Diefenbaker finds it restful.

Even once in four years, a campaign on this scale is more than the country can afford. Twice in one year it becomes preposterous. One national gain we can look for. if another election does come this autumn, is an end to the extravaganzas of ? half-truth, hokum and hullabaloo that we have just come through. ★