Xi’s Costly Obsession With Security
How a Quest for Control Threatens China’s Economic Growth
WITH her first war program reduced to a shambles by the Blitzkrieg against the Low Countries and France, Canada lost no time in adjusting herself to the new situation. Indeed, her new war effort, though scarcely three months old, is already producing results. It is basically a Canadian, rather than a British, program -- which is another way of saying that a good part of it relates to North American defense. The siege of Britain now going on has brought home to Canadians the fact that, if British sea power is shattered, the possibility of a German invasion will stare them squarely in the face. Nor is awareness of this danger confined to Canada, as was clearly demonstrated at Ogdensburg on August 17 and 18, when President Roosevelt arranged with Prime Minister Mackenzie King to create a Permanent Joint Board on Defense representing the General Staffs of the Canadian and United States armed forces.
The old program of the first nine months of the war, essentially a British program, crumbled during the weekend of May 24-27. First came a series of cables from England saying that the British could give Canada no further equipment. These were followed forty-eight hours later by appeals for assistance from London. On May 28 the Canadian Navy of seven destroyers sailed from Halifax to help guard the Channel, leaving the defense of Canada's east coast to one or two French submarines. The Dominion also sent 50 million rounds of small arms ammunition, stripping itself to such an extent that for a while training camps were obliged to suspend target practice. The first group of pilots, observers and gunners to graduate under the Air Training Plan sailed for England instead of remaining to act as instructors. Worse than this, London sent word that an invasion of Canada was by no means impossible, and that Ottawa should proceed accordingly. And from within Canada came a legion of questions from a public shocked by Germany's easy victories. Why didn't Canada have more soldiers in Europe? Why wasn't Canada manufacturing tanks and airplanes? Why was the Air Training Plan to attain full momentum only in 1942 when pilots were so badly needed now? By giving expression to these and many similar doubts, Canadian opinion showed that it regarded the nation's war effort as too small and too slow.
The original Canadian war program -- the one pursued from September 1939 to June 1940 -- had five outstanding characteristics. (1) It was British in conception and Canadian only in execution. Of course, Ottawa was always consulted, and consultation frequently led to revision; but throughout Britain held the initiative. (2) The defense of Canada on a serious scale was never contemplated. The Rhine, not the St. Lawrence, was the Dominion's line of defense, and her training and production programs had an overseas objective. (3) All matériel was based on British rather than North American specifications, although this meant depending for parts and machine tools on a country three thousand miles away rather than on the United States next door. (4) Canada's unique contribution to the war was to be twofold: to train pilots recruited throughout the Empire, and to supply certain primary materials such as foodstuffs (wheat, bacon, cheese) and basic metals (nickel, copper). (5) Time was not a vital consideration.
One thing was clear from the outset -- Canada would not send hundreds of thousands of men overseas as she had twenty-five years before. There are credible reports that Britain wanted no Canadian troops whatever; on the other hand, she may have been willing for the Dominions to send one or two divisions as a symbol of Empire solidarity. As for Mackenzie King, the indications are that in September 1939 he too would have preferred to send no Canadian division overseas. Public opinion, however, forced his hand. Mr. King was sincerely convinced that Canada's effort could be more effective in other ways, and this view was shared by others. When one of General Andrew McNaughton's friends congratulated him on his appointment as commander of the Canadian overseas forces, the General replied that he was by no means sure that to accept the appointment was the best way of serving his country. As the winter wore on, it also became clear that the British were placing very few orders for mechanized equipment in Canada. Many Canadian manufacturers went to London seeking contracts, but generally returned home empty-handed and disillusioned. They are fairly well agreed on three things: British military officials realized what was needed for the new type of war but were unable to convince the Cabinet; Britain was not underestimating Canada's capacity to produce -- she simply was not interested in using it; and British manufacturers definitely would not release blueprints, a fact which was confirmed by the Canadian Minister of Munitions and Supply, Mr. Howe, in the Ottawa Parliament on May 22.
In retrospect it is all to the good that the British were not more generous. As far back as 1937 it had been agreed that equipment for the Canadian armed forces and matériel fabricated within Canada should follow British patterns. The decision had much to recommend it. Whenever Canada was at war, she would presumably be fighting outside Canada in conjunction with the British. Hence both Canadian and British equipment should be interchangeable. On the other hand, there were two distinct drawbacks. It meant that Canadian industry had to depend for supplies and parts on a country three thousand miles away, whereas by using American patterns its supply line was at all times assured. A greater disadvantage was the fact that identical equipment meant a complete retooling of Canada's factories. Canadian industrial methods and machine tools are American rather than British. To manufacture mechanized equipment on British specifications meant importing new machine tools across three thousand miles of ocean and a complete recasting of established practices, even down to such a detail as threading a bolt the opposite way.
Many of these facts were disclosed, either by direct statement or inference, in the speeches of Mackenzie King and the other ministers in the House of Commons during May and early June. When the heat of debate was over, several things had become apparent. (1) The King Government had done everything the British had asked it to do, and had unsuccessfully sought to convince London that Canada should do more. (2) In one respect, the Government may have done more than the British desired: it sent the First Division overseas. (3) Canadian factories were not turning out mechanized equipment -- tanks, shells, shell casings -- because, in the words of Mr. Howe, "One of our chief difficulties has been to obtain the latest British designs. . . . British industry has not been too willing to part with these designs. . . ." Conservatives have compared the war conduct of Mackenzie King with that of their own leader, Sir Robert Borden, twenty-five years ago. It was largely at Sir Robert's insistence that the Imperial War Cabinet was created, in which the Dominions had representation and where important matters of policy were discussed. Sir Robert, these critics say, had a real hand in shaping British policy, whereas Mr. King merely executed what the British suggested. The comparison is interesting but lacks political realism. Borden was primarily concerned with Dominion autonomy and the Imperial War Cabinet was only a means to this end. That battle has been won and there is no reason why Mr. King should take up the cudgels again. Moreover, if Mr. King felt that the British program was inadequate, how could he have taken the bit in his teeth and announced that Canada was increasing her effort, whether or not the British approved? Given the quiescent war of the winter of 1939-40, he would have had everyone against him. The Conservatives and Imperialists would have accused him of interfering with British plans, the French Canadians would have been distinctly alarmed, and the North American-minded part of the population would have wondered why Mr. King was being more energetic, more British, than the British themselves.
Canada's new war effort, elaborated in June 1940, is along quite different lines. (1) In contrast with the old program it is Canadian in conception as well as execution. (2) It is fully as concerned with home defense as with aid to Britain. Indeed, the speeches of the Messrs. King, Ralston, Power and Howe in the Canadian House of Commons on July 29 and 30 lead one to believe that home defense is slightly the more important of the two objectives. (3) Canada is now producing war equipment on North American patterns, a system to which the Canadian industrial machine is geared and in terms of which it can easily expand by importing machinery from across the border. (4) Time has become of the essence.
Nothing better illustrates the nature of the new war effort than the National Resources Mobilization Act. This law -- passed by Parliament and signed by the new Governor-General, the Earl of Athlone, on June 20 -- conscripts all wealth and man power in Canada and places them at the disposal of the Government. The mobilization of man power began August 19-21 when all Canadians over sixteen years of age were obliged to register. Conscription for military service starts about October 1, when the Dominion will start training 30,000 men per month for periods of one month. Conscription is clearly a home defense measure.
The regular or permanent army, known as the Canadian Active Service Force, consisted of fewer than 4,000 men at the outbreak of war. In the first nine months it expanded to 91,000, and in the next two months, from mid-June to mid-August, to 154,000. At the end of the first year of war, Canada had over two divisions in Britain, and units in Iceland, Greenland, Newfoundland and the Bahamas -- a total of 40,000 men overseas. Within Canada, the Active Service Force numbers 114,000. The Third and Fourth Divisions have reached full strength, but they are obviously being kept for home defense. The reserve army, or Militia, accounts for another hundred thousand men whose training and experience range from good to indifferent. After October 1, conscripts who have completed their thirty-day training will become a part of the Militia. These men may be required to serve for the duration of the war, but by the terms of the Mobilization Act they cannot be required to serve outside Canada unless they express their willingness to do so. From present indications, training will be for short periods and the greater part of the Militia will not be doing permanent duty. Fundamentally, it will be a reservoir of men with various degrees of experience. Last, there are the Veterans' Home Guard Companies, ex-servicemen of the last war under 50 years of age. These are permanent, full-time units used for guarding strategic areas, internment camps, etc. The Home Guard Reserves do similar duty on a part-time basis.
The personnel of the Royal Canadian Navy has jumped from 1,774 men of all ratings to 9,000 (as of the end of July) and from 15 ships in active commission to 113. With the exception of a squadron of seven destroyers, all are small vessels such as mine sweepers, patrol boats, etc. The shipbuilding industry has orders from the Canadian and British navies for small craft to a total value of over 50 million dollars. It is converting three fast passenger vessels into armed merchant cruisers at a cost of 1.7 million dollars and is refitting several Great Lakes vessels for ocean duty. Shipyards and allied activities are employing 14,000 men, the number having trebled between April 30 and July 30.
Canada's greatest war effort, however, is not being made on land or on the water but in the air. This centers around the British Commonwealth Air Training Plan, which can best be described as a sort of a specialized university. Its faculty consists of the Royal Canadian Air Force and civilian flying instructors. After the outbreak of war, the personnel of the R.C.A.F. was divided into two parts: the smaller, only about one-tenth, is either fighting overseas or doing active military air duty at home -- reconnaissance, anti-submarine patrol, aërial protection for convoys, etc. Much the greater part constitutes the faculty and administrative staff of the Training Plan. Elementary flying is taught by civilian members of the Canadian Flying Clubs Association, who are full-time instructors under the supervision of R.C.A.F. officers. As for airdromes and buildings, this part of the program was enormously speeded up after the events of May, and by the close of 1940 construction will be a year ahead of schedule. The original plan called for 26 elementary training schools, 10 air observers schools, 10 bombing and gunnery schools, 16 service, i.e., intermediate and advanced flying training schools (with three airdromes per school), and two air navigation schools, making a total of 96 projects. Construction will be 90 percent completed by November. Meanwhile the total number of projects has been increased to 120.
The procurement of planes has been a heartbreaking task. Elementary training planes have never been a problem -- many are manufactured in Canada and others are easily obtainable from the United States. But to get advanced trainers and twin-engine craft, all of which were to come from Britain, has been quite a different matter. The cessation of shipments in late May threatened to undo the entire Plan. In desperation, Mackenzie King telephoned President Roosevelt, and, by placing the future of the Air Training Plan on a basis of North American defense, finally obtained a quantity of engines and planes in the United States. Subsequently, Mr. Arthur B. Purvis of the British Purchasing Commission directed to Canada a number of Harvard trainers originally ordered by France. Meanwhile, Canada is planning to manufacture twin-engine Avro-Ansons with Jacobs motors imported from the United States.
All these efforts are subordinate to the primary purpose of the Plan -- to train pilots, observers and air gunners. Trainees are recruited by enlistment and although the majority are Canadians, there will be recruits from Australia, New Zealand, and some from Britain. They take a course which totals 25 weeks for pilots, and 26 weeks for observers and gunners. They are then ready to proceed overseas. It was the original intention to plow back the first graduating classes as junior instructors; but so great is Britain's immediate need that they are being sent over in a constant trickle as soon as they are ready. The Air Training Plan was first proposed by the British in September 1939, but the details were not definitely agreed on until December. It began as a billion-dollar proposition, and the British rather naïvely assumed that Canada would pay for all of it. In its present form, the Plan will cost 600 million dollars over three years, and Canada's share will be 350 millions. When it reaches maturity, its permanent personnel of instructors, administrators, etc. -- but not including trainees -- will number forty thousand men.
The wheels of Canadian industry have likewise been turning much faster since June. The speeches of the ministers in the House on July 29 and 30 contain innumerable figures for those who want to know how many yards of cloth have been woven, how many barracks have been constructed, and how many ships are on the ways.[i] Some of the production figures seem a bit optimistic. Thus Mr. Howe stated that by late July Canada was turning out 600 mechanized units per day (trucks, gun-towing vehicles, ambulances, etc.). To anyone who knows the Canadian automotive industry, this seems high. However, there is no doubt that the industrial machine is proceeding at a faster and faster tempo, and that each month production increases in almost arithmetic proportion.
The Government's industrial policy is sound. Contracts are being let on a basis of efficiency and not of graft. Ottawa has developed a satisfactory policy of coöperation with industry. Factory expansion is sometimes financed by exempting the manufacturer from the war profits tax; more frequently the Government itself furnishes the capital for expansion: to date, the British and Canadian Governments have financed such expansion to the extent of nearly 175 million dollars. The Canadian Government has, in addition, created seven government-owned corporations: four are for manufacturing planes, shells, rifles and instruments; another for procuring machine tools; and two for purchasing vital war commodities. These corporations are staffed entirely by businessmen and are responsible only to the Minister of Supply. This is Ottawa's answer to the problem of how to get private industry to work for the Government without subjecting it to constant hampering and threats from politicians.
The new budget, presented to the House on June 24, has made the average citizen realize the intensity of the new war effort. A married man with an income of $3,000 per year and no dependents has seen his Federal income tax, which now includes a flat two percent national defense tax on gross income, jump from $36 to $195; a man similarly situated but with an income of $5,000 a year finds his tax increased from $144 to $555. An excise tax on new automobiles rises in geometric proportion from 10 percent on cars valued at less than $700 to 80 percent on those valued at over $1,200. The only cheer the Minister of Finance, Mr. Ralston, could offer was that Canadians of the lower and middle income groups were still paying far less in war taxes than their cousins in Britain. Thus a married man with an income of $3,000, assuming he lives in Ontario, pays a total Federal and provincial income tax of $208, which is only about 30 percent of the $704 paid by his equal in Britain.
For the first time in her history, Canada has a billion-dollar budget. "Regular" (or "ordinary") expenses are estimated at 448 millions and war expenses at 700 millions, making a total budget of 1,148 million dollars. However, the Finance Minister warned that war expenditures might be increased, depending on world conditions, and that this item alone might reach a billion dollars. But taking the total of 1,148 millions, he estimated that 760 millions would come from taxation and other sources, leaving a deficit of 390 millions to be met by borrowing. To this must be added a credit of 200 million advanced by the Government to finance British purchases in Canada. Thus there is an over-all deficit of 600 millions. Since under present conditions Canada cannot borrow abroad, Canadians must pay in taxes or lend their Government nearly 1.4 billion dollars in the fiscal year 1940-41. The national income for the present fiscal year is estimated at not less than 4.5 billion.
Both the incidence and nature of the new taxes show that the Government plans to kill several birds with one stone. By decreasing the nation's purchasing power, the income and national defense levies will help prevent inflation of prices. The cost of living has remained virtually stationary -- in August 1939 the index stood at 83 and in June 1940 at 86 -- at a time when general business activity is the greatest in history -- during the first ten months of the war the index of the physical volume of business was ten points above the 1929 level. With more people having more money to spend, prices during the second year of hostilities would inevitably have soared had there not been the steep rise in taxes. Further, the new income tax rates show that the Government has heeded the recommendation of the Royal Commission on Dominion-Provincial Relations that the rich be taxed less severely and the middle-income groups less lightly. Under the new rates, taxes on the $3,000-$5,000 income group have been increased 400-500 percent, but on incomes of $50,000 and over, less than 50 percent. Lastly, by placing a greater emphasis on the income tax, the Government is taxing people in the industrial parts of the country, who are benefiting most by the war boom, while the farmer on the prairies, who is not making much money out of this war, pays little or no income tax.
Other taxes reveal other objectives. The stiff tax on automobiles is an attempt to discourage sales in order to allow industry to concentrate on trucks and other war equipment. On the higher priced cars -- none of which are made in Canada -- it is also a measure to conserve foreign exchange. A new 10 percent tax on all imports, except those entering under the British preferential tariff, is also admittedly a measure to conserve foreign exchange.
The ability of a government to collect taxes and to borrow from its citizens depends on the general prosperity of the country. As already indicated, business conditions in Canada are the best on record. Indices of business activity, tax receipts, retail sales all tell the same story. Unemployment has dropped by a hundred thousand and by the end of 1940 Canada will have no unemployed employables. Hog raising will have the best year in its history: since January 1940, Britain has taken 5.6 million pounds of Canadian bacon a week at a price considerably above the world level. Dairying, at least as far as cheese is concerned, also benefits by a special agreement with Britain. The pulp and paper industry has so many orders, because of the increased demand from the United States and the shutting off of Scandinavian supplies from world markets, that even bankrupt mills are reopening. Newsprint production for July was 332,689 tons, a new high record. Steel is working three shifts a day and seven days a week. Textiles and construction have gained enormously from government orders. These flourishing conditions are not, however, universal throughout the Dominion. The apple growers of Nova Scotia and British Columbia -- to cite an instance -- have had a wretched year. The wheat farmers of the Prairie Provinces have also been having their troubles, as will be explained in greater detail presently.
Canada is a country whose prosperity depends not only on a healthy volume of internal trade, but on foreign trade as well. Whereas in the United States less than one-tenth of the nation's annual production must be sold abroad, in Canada the proportion is about one-third. For a country so dependent on foreign markets, she has made out exceedingly well during the first year of the war. This is due to the fact that 80 percent of her foreign trade is with Britain and the United States, and another 10 percent with the Empire. For the twelve months ending in June 1940, Canada's exports (gold excluded) of 1,062 million dollars and imports of 926 millions -- were, taken together, the greatest of any year since 1929. Although the totals are impressive, there have, of course, been dislocations within the different items of trade. Nor do the sums just cited represent an immediate cash return, for Ottawa is financing a part of British purchases within Canada. In normal years four-fifths of Canada's foreign trade is with Great Britain and the United States. Unfortunately, this trade is not balanced: two-fifths of her exports go to Britain and two-fifths to the United States, but only one-fifth of her imports come from the former while three-fifths come from the latter. This situation has naturally produced serious foreign exchange problems. Since Britain buys more from Canada than she sells, the latter has had to finance Britain in some of her purchases in the Dominion. In 1939-40 Canada provided the British with 100 million dollars (Canadian) by repatriating government bonds of that amount held in Britain. Credits for Britain, and possibly repatriation, will continue during the second year of the war.
More acute is the exchange problem with the United States. Canada has a favorable balance of trade with all countries which in recent years has averaged 375 million dollars annually. But her trade with the United States is distinctly unfavorable: in the twelve months ending in June 1940, Canada bought 630 million dollars worth of merchandise in this country and sold but 377 millions. In addition she had to pay interest and amortization on 4 billions of debt held by Americans. To offset this she depends on sales of newly mined gold (nearly 200 million dollars worth last year) and the expenditures of American tourists. Obviously she must hence guard her American dollars carefully, particularly since the rising tempo of business within Canada means greater imports from the United States. For, as Canadian industry expands, it consumes more coal and petroleum, the greater part of which comes from this country, and requires more steel, half of which is imported from the States in the form of semi-manufactures.
During the winter of 1939-40, Ottawa hoped that the exchange problem would not become too acute. She gambled on two possibilities. The first was a business recovery within the United States, for Canadian exports across the border increase or decrease in almost identical proportion to the rise and fall of American business activity. Unfortunately, the upswing of late 1939 in the United States did not hold and Canadian sales have not been as great as expected. The second gamble was on a good tourist season. But absurd rumors within the United States that a wartime Canada was not a safe place for travel, and the general effect of the new passport regulations instituted by Washington, dashed these hopes. Consequently, the Foreign Exchange Control Board proceeded to tighten its regulations. One measure we have already seen: a tax of 10 percent on all imports except those entering under British preference. Another was to limit Canadian travel in the United States to business purposes only. This action is quite defensible, but it has provoked regrettable reprisals. Because New England hotel owners lost many of their Canadian tourists this summer, some of them have abetted a whispering campaign against American travel in Canada. They are not likely to be moved by the argument that Canada is withholding exchange from her tourists so that she can buy more oil and steel from the United States.
If present conditions continue, exchange will probably become tighter rather than freer. It could be loosened by an American loan to Canada; but our Neutrality Act now prohibits this. It was because of loans during the last war that the exchange problem ceased to exist. Canada, to be sure, did not borrow in this country, but Britain did, and Canada could always get the necessary dollars in London. If no loans are forthcoming, the best Canada can hope for is an American business recovery which will quicken the flow of her exports southward.
There is one further aspect of Canada's international economic relations -- the perennial problem of wheat. The Canadian prairie West, even more than our cotton South, is a region that depends on one crop, and like the South it must sell most of that crop abroad. The crop year which ran from August 1, 1939 to July 31, 1940 (thus coinciding almost exactly with the first year of the war) was one of the best in the last decade. Factors in this prosperity were the government-guaranteed price of 70 cents a bushel for Number One Northern, the pegged price (after May 17) on the Winnipeg grain exchange, and the largest foreign sales in recent years. But the outlook for the future is disquieting as concerns both the foreign market and conditions at home.
Canada's best foreign market for wheat is the United Kingdom, which, during the two crop years preceding the outbreak of war, took almost 60 percent of all Canadian wheat and flour sold abroad. From August 1939 through May 1940, Britain took 68 percent. One of Canada's next best markets was Western Europe -- Scandinavia, the Low Countries and France -- which accounted for 20 percent of all sales during the same two years and 17 percent for the war period. But these countries are now under German control and subject to the British blockade. As long as this situation continues, Canada has lost one-fifth of her foreign markets. Nor is the outlook bright for the remaining markets. On August 2, Ottawa announced a British purchase of 100 million bushels of Canadian wheat at an unspecified price, but probably about 85 cents. Not only is this the greatest single transaction in wheat history, but, assuming the present international situation remains fixed, it is probably more than half of all the wheat Canada will sell during the crop year just beginning.
The problem on the home front is not only one of selling wheat. This year it is also one of finding enough storage space for wheat. On July 31, Canada had a record-breaking carry-over of 300 million bushels, of which 233 million were stored in Canadian elevators. To this must be added 10 million bushels of other grains. Since the capacity of all Canadian elevators is 424 million bushels, the theoretical maximum available for the new crop is about 180 million bushels. The new harvest will yield 560 million bushels. Where will it be stored? There is only one answer -- on the individual farms. Thus the Government's new wheat policy calls for compensation to the individual farmer for constructing storage bins. It also provides that the minimum guaranteed price -- 70 cents on a bushel of Number One Northern delivered at Fort William-Port Arthur or Vancouver -- shall cover all such wheat a farmer delivers and not merely the first five thousand bushels as formerly. However, because of restricted elevator space, he can deliver only eight or ten bushels per acre seeded until wheat begins to move from the terminal points. Another new provision is the imposition of a processing tax of 15 cents per bushel on all wheat processed for human consumption in Canada. The tax is estimated to yield about 8 million dollars and will become part of the revenues of the Wheat Board. The grain exchange at Winnipeg will remain open and the pegged prices will continue.
When Canada went to war last year, she had one great aim -- to aid Britain. This is still an important objective, but to it has been added another -- the defense of Canada. It is not that Canadian loyalty to Britain has in any way diminished, but that Canadians have become more conscious of a loyalty to their own North America. The necessity for home defense has, for the first time, made the Dominion's war effort begin to approximate something akin to a total effort, the first program having in reality been a policy of limited liability.
Home defense has entailed conscription, an even greater political hurdle in Canada than it is in the United States. In Canada conscription has odious connotations: to the French-speaking part of the population it recalls the attempt made in 1917 to impose universal military service by force and the desultory civil war that followed; in the English-speaking areas it revives animosities engendered by the feeling that Quebec failed to carry its share of the national burden. This time conscription was instituted with relatively little opposition. To be sure, Camilien Houde, the Mayor of Montreal, raised the banner of revolt in a press interview given on August 2. But Quebec did not follow. Four days later, Houde was arrested by the Federal authorities and bundled off to an internment camp.
Conscription has been possible for several reasons. Today, unlike 1917, compulsory service is fundamentally a matter of home defense and, as such, has gained much wider acquiescence in French Canada. Second, the most potent force in forming French Canadian opinion, the Catholic Church, gave national registration its blessing. On August 2 -- the day of Mayor Houde's interview -- Archbishop Villeneuve urged all French Canadians to obey the new law and register. Also, the Quebec provincial legislature had already come out in support of the national conscription of men and wealth by a vote of 53 to 13. But most important of all was the astute way Mackenzie King handled the matter. In his knowledge and understanding of French Canada, Mr. King has no peer. He presented a conscription bill with the one necessary proviso that made it politically possible: conscripts were exclusively for home defense. There are seventy-odd French Canadian deputies in the House of Commons and one might expect some opposition on so crucial a measure. Yet the bill was passed by a vote of 202 to 2. It is a significant commentary on Quebec's confidence in Mr. King and its appreciation of the gravity of the situation.
Hitherto the Canadian General Staff has given little attention to North American problems. This is not said in criticism. Until June of this year they had always conceived their task as one of fighting as an ally of Britain outside Canada. During the course of the summer, small but responsible groups of Canadians realized the necessity of getting the Defense Department to begin thinking in North American terms. But how would Canadian opinion react to the idea of a military pact of mutual assistance with the United States? And how would American opinion receive such a proposal? For a few alert observers to anticipate these problems was one thing, to create a general consciousness of their vital importance was something quite different.
It was the meeting of Mr. King and Mr. Roosevelt at Ogdensburg on August 17 and 18, and the subsequent creation of the Permanent Joint Board on Defense that gave public opinion in both countries an awareness of the issues at stake. The first meetings of this Board, of which the joint chairmen are Mayor La Guardia of New York City and Colonel Oliver Biggar of Ottawa, were devoted to a consideration of defenses along the east coast of the continent. There have been hints, however, that subsequent discussions will extend to the economic sphere and that a loan may be made in order to ease the supply of Canadian dollars available for purchases in this country.
To Canada, the lone belligerent among the nations of the Western Hemisphere, Ogdensburg came as good news. There is only one cloud on the horizon. Canadians are wondering to what extent the policy announced at Ogdensburg will, within the United States, be regarded as a national policy and not merely Mr. Roosevelt's policy. Two things will reassure them. In the first place, the American Army has always taken the position that an attack on Canada is equivalent to an attack on the United States. For it is axiomatic that such an invasion, possibly up the St. Lawrence valley, would merely be the prelude to an assault on the industrial heart of this country. Secondly, the isolationists in Congress, who have been so quick to interpret every move of the Administration as another step towards our involvement in the European war, have had little or nothing to say about the Ogdensburg agreement. Obviously, the defense of Canada is, for the United States, too vital a matter to be made an issue of party politics.
Meanwhile, the pundits in both countries are hard at work. In Canada they are trying to decide whether or not Ogdensburg will mean a weakening of the Imperial tie and the further development of Canada as an autonomous North American nation. Those in the United States are speculating as to whether the new joint defense policy is merely the first step leading to our large-scale support of Britain. Naturally, at the present moment no one can know what train of events was set in motion at Ogdensburg. The only thing of which we may be sure is that the agreement reached there has a revolutionary significance. It is not called an alliance; yet that is what it is, for an understanding between two General Staffs to trade information and bases is about as close an arrangement as one can imagine. Confirming this view is the fact that the name of the Joint Board on Defense is prefaced with the word "Permanent," suggesting that this is to be no mere emergency committee but an established long-term institution. Ogdensburg not only opens a new chapter in the history of Canadian-American relations; it marks an unprecedented departure from the traditional foreign policy of the United States.
[i]Hansard or House of Commons Debates, July 29 and July 30, 1940, 2237 ff and 2260 ff.