By Matthew Ehret-Kump
The years following World War II featured the greatest boom in economic progress and quality of life ever experienced in history. Today, the reasons for this acceleration of development of Canada as well as much of the world are largely misdiagnosed by historians and economists who, consciously or not, know nothing of the principled struggle between the American and British Systems and are totally ignorant of basic elementary principles of physical economy.
Previous knowledge of these dynamics was understood clearly by those few who, for good or for ill, have inflected the curvature of universal history, and without such knowledge quickly regained, no hope exists for our current population and its organic leadership to escape the tragic devolution of cultural, economic and intellectual life now pressing upon our future.
The present paper intends to shed light on the sometimes very paradoxical dynamics surrounding the failed Northern Vision and National Development Policy of Canada’s 13th Prime Minister John G. Diefenbaker who led the Conservative Party to its first victory in 22 years in 1957 and remained in power until 1963. The broad scope of his Northern Vision policy would not be permitted to unfold for reasons that none but key officials in London working through Canada’s Privy Council Office and Civil Service would truly know anything about.
While a fuller presentation of those years preceding Diefenbaker shall be left for another report, it is important, here and now, to run through certain key dynamics which shaped the world in which John Diefenbaker was entering when he was elected for a second term as an MP for Lake Centre, Saskatchewan in 1945.
Post War Visions Clash
The years 1945-1957 would be pregnant with seeds of potential as Franklin Roosevelt’s post war vision elaborated in his “Four Freedoms” would nearly become manifest across the world. British colonialism was considered an obsolete relic of the Victorian epoch whose time had finally passed
It was during this period that the optimistic recognition of humanity’s true mission would begin to penetrate to the forefront of general popular understanding. This would be the understanding that human nature was not located within the narrow confines of “limited resources” to be balanced and distributed during a given “state of existence” governed by entropic laws of “diminishing returns” in time and space. Instead, human nature’s true purpose was to be located in the future potential that could be created by breaking out of the boundary conditions imposed by finite resources and leaping to new platforms of scientific and technological development.
With the nuclear age and the frontiers of space quickly opening up to humanity’s sphere of influence, no fixed end point to this progress was assumed by the major part of populations of the world. Could it be that a new hope would finally be realized after centuries of oligarchical suppression?
Alas, another dynamic was pressing against this potential. The reaction of a wounded British Empire would be expressed most vividly in the anti-thesis to Roosevelt’s Vision embodied in Winston Churchill’s nightmarish defence of Empire. After Roosevelt’s untimely death in 1945, Sir Winston Churchill would lay out the Empire’s vision for the post war world beginning with the dropping of atomic bombs on a ready to surrender Japan followed by an Anglo-American alliance organized by a new financial (and often military) re-colonization to be set into motion through Churchill’s Wall Street lackey President Harry S Truman. This process would be amplified by Churchill’s infamous 1946 “Iron Curtain” speech in FultonMissouri, which would usher in the new bipolar age of the Cold War. This new era of geopolitics would begin by inducing former allies to become bitter enemies. In this new world dis-order, the red terror, McCarthyism, and the perpetual fear of nuclear annihilation would organize the culture and geopolitical relationships of all nations, and bring about an absolute schism of nations between the “democratic-capitalist” ideology on the one side and “communist-marxist” ideology on the other. The painful weight of this un-natural schism would shape the unfolding mentalities and policies for the coming decades.
As it would later be revealed, the controlling hand of both the Communist International, as well as western European and American military doctrines throughout the Cold War would always be found in London, evidenced by the likes of MI6’s triple agent Kim Philby, the Socialist Fabians of the London School of Economics, Chatham House’s Royal Institute for International Affairs and Bertrand Russell’s International Institute for Applied Systems Analysis. The latter organization would spread its tentacles throughout MIT, Harvard, the Rand Corporation, and Soviet policy making circles alike. These British Empire networks would lead the call for “World Government” demanding the replacement of the sovereign nation-state system with a one world bureaucracy of “enlightened dictators” enforcing their will through the supranational military apparatus of NATO. Their thinking would be founded upon a radical positivist outlook called “systems analysis”, and “information theory” which would attempt to lock all branches of human knowledge into its cage.
Within this dynamic that found the world often sitting precariously close to nuclear annihilation and death, the pulsing thirst for creativity and life would find various means of expression through different leaders from different cultures the world over, united by a common commitment to natural law, and unbounded progress.
The Power and Downfall of C.D. Howe
The realization of Canada’s potential for growth under the Liberal Party of Prime Minister Mackenzie King would not have occurred except for the brilliant manoeuvring of key strategists such as his “Minister of Everything” C.D. Howe and a small grouping of like minded thinkers, who in various degrees comprehended the anti-human influence of the British Empire within Canada that longed for stagnation and control. Were it not for the collaboration of key leaders in American industry and politics with groups of their Canadian counterparts, it can almost be guaranteed that the stunning growth rates of the Canadian physical economy seen during these post war years would never have been permitted to occur.
The driving force behind the Liberal Party’s success during this period would be the American trained engineer turned politician Clarence Decatur Howe who remained the guiding force behind both PM Mackenzie King and his replacement Louis St. Laurent from 1935 to 1957. C.D. Howe’s admiration of Franklin Delano Roosevelt would not only help re-organize Canada’s industry during the war, but would provide the political economic solution for Howe in ushering in a wave of large scale projects that would define an unstoppable potential for growth, and overthrow the closed system thinking built into the structure of the Canadian political system and its imperial constitution of 1867.
Such game changing programs included the construction of the St. Lawrence Seaway, the Avro Arrow program, the Canadian Deuterium Uranium reactor (CANDU) technology, the Trans-Canada Highway, large scale rail, pipelines, mining and vast new heavy industries. Such programs would increase the Canada-USA exports from 42% in 1939 to 60% in 1955, and imports from 66% in 1939 to 73% in 1955. Purchasing power would increase by a factor of three over this period. The three means which C.D. Howe would use to advance Canada’s development during these years would be:
1) The cheap credit provided via loans through the Bank of Canada (nationalized by Mackenzie King in 1937),
2) The investment capital of enthusiastic American enterprise and boosts in trade with America, and
3) The sweeping legal powers granted to him via the invoking of the War Measures Act of World War II and extended during the Korean War.
The War Measures Act would permit a Government of Canada, for the first time in history, to bypass bureaucratic red tape and parliamentary “party politics” for the sake of the development of the nation and the General Welfare. The incredible fact that C.D Howe would manage to use these broad powers long after WW II had come to an end is worthy of a study in and of itself, yet it would be these same broad war powers that would also contribute to the Liberal Party’s downfall in June 1957 under the populist accusations that C.D. Howe was a dictator who disdained parliamentary politics. As far as the second part of the accusation was concerned, it was absolutely true, yet not for the superficial reasons that his accusers intended.
These accusations were amplified during a 1956-57 fight to build the largest pipeline in Canadian history bringing oil from Alberta to Quebec, providing an $80 million federal loan to American contractors to facilitate the process. The resistance in Parliament to the loan was absolute and condemnation of “selling Canada off to the Yankees” echoed throughout the corridors of Ottawa and reverberated deeply in the population through the press.
When C.D. Howe unwisely introduced a bill in parliament which would eliminate the expiration date of his war powers and then repeatedly called for “closure” of Parliament in order to shut down any attempts to contest the pipeline resolution, all hell effectively broke loose. As necessary as such actions may have been at the time, his enemies took the opportunity to stoke the flames of anti-Liberal (and anti-American) sentiment throughout the population. Little beknownst to C.D. Howe, these flames had been carefully lit and fueled by arsonists years before.
The Rise of the CIIA’s “New Nationalism”
When John Diefenbaker would take power in 1957, overthrowing the 22 year reign of the Liberal Party, the flames of anti-Americanism were becoming a raging furnace. This heated sentiment was the product of a strategy instituted by leading British operatives working within the umbrella group of the Canadian Institute for International Affairs (CIIA) to induce an artificial fear of America.
The CIIA would be Canadian version of Britain’s Royal Institute for International Affairs (aka: Chatham House) founded in 1921 with similar IIA branches throughout the Commonwealth. The CIIA had been formed in 1928 as a new incarnation of the Canadian Roundtable and would promote the Empire’s post World War I strategy of dismantling sovereign nation-states using the mechanism of the League of Nations. After the failure of the League in 1940, the CIIA would enforce the new strategy of perverting the United Nations and organize for World Government under new supranational military, banking and regulatory structures.
The first of the two most influential CIIA run Royal Commissions whose design was to reshape Canada for this purpose, was the 1952 Massey Commission report on American infiltration of the Canadian Culture. The report of the Royal Commission on National Development in the Arts, Letters and Sciences would list prescriptive “remedies” to cure Canadian culture of its American influences in media, education and the arts, most of which would be adopted soon thereafter to shape a new synthetic Canadian culture. Among the variety of influential positions help by Vincent Massey would be privy councillor, Governor General (1952-59), High Commissioner to London (1935-46) and leader of the Roundtable Group in Canada. Massey’s counterpart in the Roundtable Movement would be CIIA Honorary Secretary George Parkin de Glazebrooke, head of the Canadian New Joint Services Intelligence Agency which functioned as a Central Intelligence Agency of Canada. Massey himself would serve as vice-president of the CIIA.
The second piece of CIIA sponsored piece of anti-American conditioning would surface during this period in the form of the explosive 1957 Royal Commission report on Economic Prospects for Canada. This sister report was designed to make the case that were Canada not to break away from the vast American investment and economic influence that had developed under the post war Liberal Party, then the loss of sovereignty and absorption into the “American Empire” was inevitable.
The Commission was popularly known as the Gordon Commission, after its chairman Walter Lockhart Gordon who also served as chair of the National Executive Committee of the CIIA while also heading Canada’s largest accounting firm and management consulting company. Other significant figures on the Commission would be Rhodes Scholar A.E. Grauer and Maurice Lamontagne. Lamontagne would rise to prominence as an enemy of Duplessis’ Union National in Quebec and soon become President of the Privy Council (1964-65). Grauer would serve as president of B.C. Electric and its holding company B.C. Powercorp and would soon be locked in a battle with B.C. Premier W.A.C. Bennett over the development of the Peace River in northern B.C..
As the later battles of Dwight Eisenhower and John F. Kennedy against the British Empire’s Wall Street axis would prove, at this time, America’s character as an imperialist nation was not at all determined. In fact, what the masters of the CIIA centered in London’s RIIA/Chatham House truly feared was that Canada would finally become a sovereign national republic as so many countries were choosing to become throughout the world at this time, under the influence of the United States’ leadership political and economic leadership. Canada’s proximity to the British Empire’s historic nemesis, and vital geographical position between the Soviets and Americans, made the threat of losing this valuable geopolitical territory that much greater, especially as the population of Canada was becoming so prosperous specifically due to their collaboration with the Americans.
The anti-American rhetoric that Diefenbaker would popularly use during his bid for the leadership of Canada must be understood as having occurred within a context heavily shaped by the above factors influencing it. As events would later go on to demonstrate, this anti-American, nationalistic image created by Diefenbaker was selected as a populist means of attaining political power. Diefenbaker’s choice to rise to power on the tide of populist sentiment would later contribute to his own downfall.
The Profile of a Tragic Personality
John Diefenbaker would have the misfortune of being both a devout believer in human progress on the one side, while also a believer in the greatness of the British Empire on the other. In his memoirs Diefenbaker would write:
“I am a Canadian, first, last and always, and to me the monarchy remains a vital force in the Canadian constitution. Not only is it the cornerstone of our institutional life, it remains a highly functional and necessary office… More important are the prerogative powers of the monarch to be consulted, to advise and to warn on all matters of state. The Queen, these twenty four years after her accession to the throne, is perhaps the most knowledgeable person in the world in the fields of Commonwealth and foreign affairs. As Prime Minister, I benefited from her wisdom.”
How an admirer of Abraham Lincoln and defender of progress could hold such views is paradoxical but not incomprehensible. This personality flaw is an important theme amongst many AngloSaxonCommonwealth policy makers and is a simple effect of the naïve belief in a British revisionist history which has falsely attributed every advance of civilization and democracy to the “beneficent fruits of Imperialism”. In actual fact, contrary to British revisionist history, progress, democracy and the increase of the powers of productivity of nations has always occurred in spite of imperialism, rather than because of it.
For the British Empire, an undesirable consequence of its own propaganda is that, on occasion, certain dupes tend to believe it to the point that they actually desire progress and freedom without themselves wanting to be imperialist. When the conditions and opportunities for national improvements and the promotion of the General Welfare present themselves, such personalities tend to jump boldly for them. Understanding this personality type would be necessary to understand John Diefenbaker, and his failure as a leader in a time of revolutionary change.
Hints of a Vision
Diefenbaker’s Conservatives would unseat the Liberals in 1957, coming to power as a minority government. Piercing through the anti-American rhetoric, a sense of substance, of new frontiers and national development could be detected throughout Diefenbaker’s campaign. This was something completely absent from the rhetoric of all those “new nationalists” arising out of the CIIA networks.
Though promises of growth, northern expansion, and social justice were themes throughout these elections, it was not yet clear for anyone how such ideals would be attained, nor even if true intentions lay behind the fiery words which spurned the heart of the electorate to hope. Were such words to take the form of action, then it was understood by Diefenbaker and his collaborators that a new election would need be called immediately in order to win a strong majority.
Diefenbaker’s program for Canada would be crafted with the aid of a tight group of collaborators known as his “brain trust”. Among the most influential of this brain trust was a young economist named Meryl Menzies who would construct a bold agriculture policy, and former head of the Saskatchewan Progressive Conservatives Alvin Hamilton, who would lead the strategy for Northern development alongside Menzies. Other important figures would include George Hees, Donald Fleming, Roy Faibish and Gordon Churchill, all of whom maintained close correspondence with the best minds of industry and science in advancing what would soon come to be known as “the New National Policy”.
The National Policy
On February 12, 1958, the new election campaign was kicked off with a speech which set a firm theme that would spark the frontier spirit of Canadians from coast to coast, and laid out a bold plan crafted by his brain trust. Speaking to a rally of 5,000 supporters in Winnipeg words, a vision unheard and unseen in Canadian history swept across the imaginations of all those attending:
“We intend to launch for the future, we have laid the foundations now, the long range objectives of this party. We ask from you a mandate; a new and a stronger mandate, to pursue the planning and to carry to fruition our new national development programme for Canada. .. This national development policy will create a new sense of national purpose and national destiny.
One Canada. One Canada, wherein Canadians will have preserved to them the control of their own economic and political destiny. Sir John A. Macdonald gave his life to this party. He opened the West. He saw Canada from East to West. I see a new Canada- a Canada of the North. What are these new principles? What are our objectives? What do we propose? We propose to assist the provinces, with their cooperation, in the financing and construction of job-creating projects necessary for the new development, where such projects are beyond the resources of the provinces. We will assist the provinces with their cooperation in the conservation of the renewable natural resources. We will aid in projects which are self-liquidating. We will aid in projects which, while not self-liquidating will lead to the development of the national resources for the opening of Canada’s northland. We will open that northland for development by improving transportation and communication and by the development of power, by the building of access roads. We will make an inventory of our hydroelectric potential.”
“Ladies and gentlemen, we now intend to bring in legislation to encourage progressively increasing processing of our domestic raw materials in Canada, rather than shipping them out in raw material form. We will ensure that Canada’s national resources are used to benefit Canadians and that Canadians have an opportunity to participate in Canada’s development. We have not discouraged foreign investment, but we will encourage the partnership of the foreign investors with the Canadian people… This is the message I give you my fellow Canadians, not one of defeatism. Jobs! Jobs for hundreds of thousands of Canadian people. A new vision! A new hope! A new soul for Canada,”
With this new vision for a transformed Canada, Diefenbaker stormed the campaign trail and beat all expectations by winning every single province in Canada but one. Never before had the Canadian population heard such boldness from a Prime Minister. For most of its history, Canada had been a nation founded upon moderate complacency, while bold risk taking and visionary leaders were for the Americans. Canadians were supposed to be shaped by a British constitution, and not of a revolutionary stock. The British Empire’s satisfaction of having disposed of the troublesome influence C.D. Howe was suddenly made more complicated.
The greatest surprise of all was to be seen in Maurice Duplessis’ Quebec, which had been a Liberal stronghold on the Federal scene since the days of Confederation and Wilfrid Laurier. With the cunning organizing by Daniel Johnson Sr., then minister of Natural Resources under Duplessis’ Union National government, Diefenbaker’s Conservatives were able to win the 1958 elections with 60% of the Quebec vote. Daniel Johnson would become a strong ally of Diefenbaker during a Conference of Commonwealth Parliamentarians in 1950 and would be known as “Diefenbaker’s right hand in Quebec”.
With Daniel Johnson and Maurice Duplessis’ support on the east coast, and British Columbia Premier W.A.C Bennett’s support in the west, Diefenbaker’s Conservatives were able to sweep the March 1958 elections winning 208 out of 265 federal seats. This would be the largest majority government in Canadian history. Throughout Johnson and Bennett’s leadership, both Quebec and British Columbia would lead the world in hydroelectric power development and industrialization.
The Policy Defined
Basing their conception on their limited understanding of the first National Policy of John A. Macdonald in 1878 [See box 2], Diefenbaker’s Brain Trust would first outline the “One Canada” program in a 1957 pamphlet entitled “A New National Policy” which elaborated the Party platform and five key components of the Northern Vision;
1- National Resource Policy
a) Every encouragement must be given to the processing of domestic raw materials in Canada to a much greater degree than exists today;
b) Foreign investment must not be discouraged, but it must be directed to the maximum benefit of Canada
c) Canadian subsidiaries of foreign concerns… should be required to provide a substantial interest in their equity stock to Canadian investors
d)… wherever possible foreign companies should employ Canadian in senior management and technical posts.
2- National Energy Board
To meet the industrial demands of Canada’s future I believe that there is need now for the setting up of a Canadian Energy Board… to the end that the most effective use of the energy resources of Canada in the interests of the public welfare may be assured.
3- Roads to Resources
A National Highway policy should be launched to provide highways for peace and development wherein the Federal Government will make contributions to or share in cooperation with the provinces. The challenge of Communism now and in the years ahead demands that our vast northern resources be made accessible and available to industry, for vast resources undeveloped and hidden in the earth will not fashion or forge the shield of freedom or contribute to the survival of the Free World.
4-Tax Structure to be Revised
I believe that the entire tax structure in Canada needs to be overhauled with a view to providing encouragement to the promotion of primary and secondary industries in our country.
5-A Fair Share for Farmers
We will assure the farmer of his fair share of the national income by maintaining a flexible price support programme to ensure an adequate parity for agricultural producers based on a fair price-cost relationship… Agriculture and its welfare is a basic cornerstone of our policy”.
On top of this program, by 1958 Diefenbaker would announce $75 million for the construction of an advanced industrial-science research city of Frobisher Bay deep within the Northwest Territories that would accommodate 4,500 citizens and their families with all of the comfort of Toronto. His monetary policy would involve tax cuts for small businesses, increasing federal grants for hospital construction from $1,000 to $2,000 per bed, increased payments to provinces by $87 million/year. $286 million would be required to assist Atlantic Provinces in energy development. A major public work would become the century old plan to construct the South Saskatchewan Dam requiring government support totalling $182 million. This project would irrigate 500 thousand acres in the Prairies, and supply 475 million kw/year to power the new Rural Electrification Program and Midwest industrial growth. Sweeping price controls, advanced payments to farmers and parity pricing were also instituted to protect the farmers from foreign dumping as well as stimulate increased production. In all, public works expenditures alone would total $1,185 million according to this first budget.
Diefenbaker’s outlook to Arctic development was not limited to mineral extraction, but also included scientific research. Six components of his science programme would involve:
1) Polar Continental Shelf explorations which would begin in 1959
2) A 10 year program of magnetic survey of the Cordillera and Canadian Shield
3) Completion of the gravity meter shield of the same area
4) The doubling of the hydrographic survey capability
5) The establishment of an Oceanography institute
The Fight for a Canadian Credit System
With a broad vision for the future growth of the nation thus outlined, the problem of financing immediately posed itself. This problem was compounded by several factors at once:
1) The deep recession which had begun in the beginning of 1958 had set in, wrecking havoc on employment, and making private capital scarce for such long term endeavours.
2) The resistance of James Coyne, Governor of the Bank of Canada to any such investment programs
3) The maturation of the first waves of World War II “Victory Bonds” which demanded $10 billion from 1958-68. to pay for World War II.
Before the first budget could be presented by Finance Minister Donald Fleming, the problem of the Victory Bonds had to be resolved. Net expenses would require $1.423 billion, with $1.950 billion required to pay for the first wave of maturing securities for a total of $3.4 billion total that year. From January 1, 1959 to September 1, 1966, $10 billion in Victory Bonds would mature at 3% interest. $400 billion would need to be borrowed from the Bank of Canada for debt payment alone. The problem was absolutely untenable.
The solution to this problem could not be found within the confines of any monetarist thinking dominant in Canada at that time. A creative change was required, and a concept outside of the space defined by the problem was demanded. This would be a feat that Diefenbaker and his brain trust would accomplish with the Conversion Loan of 1958. This solution would demand Federal loans to finance the conversion of those maturing bonds to the tune of $6.4 billion and transform the debt incurred to win World War II, into productive debt that would be “self-liquidating” in the financing of Canada’s development! During a radio announcement of July 14, 1958, Diefenbaker would outline his view of the role of credit within a developing system;
“This, the largest financial project in our history, offers an opportunity to all holders of victory bonds which were purchased as an act of patriotic faith during the war years, to re-invest them for the greater development of greater Canada. These monies that were advanced during the days of war, and which contributed to the victory, we now ask to be made available to speed the pace of peaceful progress and the program of national development… The action we are taking will make it possible for our nation to embark on a new era of peacetime prosperity far and beyond anything we have ever known. I sincerely believe that great objectives can and will be attained by the faith and enterprise of all our people. To that end, your Government believes that the steps we are taking are necessary in order to create the climate in which this can come to full fruition…
In saying that a major result of this new load is to make other necessary funds available for immediate participation by the federal government in the development of resources, I need hardly remind you that such participation is not, by any means, an end in itself. Its chief objective is, of course, to provide essentials such as access roads, railroads, and energy sources and the business climate which will attract private investment to newly developing and lesser developed regions in our country, in amounts many times in excess of the government investment. It is confidently expected that the debt refinancing which we announced today will clear the decks for greatly increased private investment in our future, just as surely as it will do so for government investment.”
This would be the first self-conscious idea in Canadian history where a National Bank would be used for the purpose of generating anti-inflationary credit driven by a greater national mission in a time of peace. Up until this point, this principle had been first successfully expressed under the 1st and 2nd National Banking system of Alexander Hamilton and Nicholas Biddle, Abraham Lincoln’s Hamiltonian credit system of “greenbacks” during the Civil War, and Franklin Roosevelt’s use of the Reconstruction Finance Corporation during the New Deal. Nothing could induce such fear in the British Empire than witnessing its own prize colony in North America adopt an outlook and mechanism for carrying it out whose nature was to bring it to a truly sovereign status alongside Britain’s mortal enemy.
Sadly, the full fruition of this policy would not be permitted to come into being.
The Coyne Affair
Diefenbaker and his finance minister would require full cooperation from the Bank of Canada in order for the New National Policy to succeed. Since the Bank of Canada (unlike the Federal Reserve in the United States) was made a 100% publicly owned entity after its nationalization in 1937, it was reasonable for either man to believe that it would be a cooperative instrument in the national mission. What they didn’t realize however, was the role that such British agents were playing within the top echelons of Canada’s Civil Service in undermining nation building strategies. In the case of the Bank of Canada’s Governor James Coyne, Diefenbaker found an enemy that would publicly battle his policy to the point of creating a national scandal resulting in Coyne’s dismissal in 1961.
Coyne, an Oxford trained Rhodes Scholar was an early disciple to the synthetic New Nationalism expounded by the likes of Vincent Massey and Walter Gordon. As a nationalist, he believed and preached publicly for policies that would choke American industry from access to the Canadian markets during a speech in 1958, Coyne would expound his views:
“We are now, at one of the more critical crossroads in our history, perhaps the most critical of all, when economic developments and preoccupation with economic doctrines of an earlier age are pushing us down the road that leads to loss of any effective power to be masters in our own household and ultimate absorption in and by another…”
While vigorously touring Canada, calling for lines of foreign investment to be cut off in the defence of Canadian sovereignty, and demanding the nation learn to live off of its own resources, Coyne never proposed how his propositions would be accomplished. In fact, being a devout monetarist, Coyne worshipped the “balanced budget”. Extolling a policy of “tight money”, Coyne believed that the recession could only be ended if Canada would only cut the budget, and pay its debts. Commenting on Coyne’s ideology, Diefenbaker remarked in his Memoirs:
“Our economic projections indicated that unemployment would remain a serious problem until at least 1961. Coyne was content to assume that the level of demand would be adequate for sustained growth if our economic policy embraced the goal of “sound money”. He apparently belonged to the economic school which had considered that the only way out of the great depressions was to have more depression and the only way to cure unemployment was to have more unemployment.”
By the time Coyne was in control of the Bank of Canada, the “Harris Doctrine” had already been created by the previous Minister of Finance which held that there were two sovereignties in Canadian economics: the Government and the Bank of Canada. This policy of dual jurisdiction of sovereignty would give Coyne the confidence to resist the government, and criticize its fiscal policy until the expected demand for his resignation struck.
The Coyne affair would eventually result in a train wreck for Diefenbaker. Of all of the absurd policies Coyne represented which ran against the intention of his administration, Diefenbaker chose to use Coyne’s acceptance of a pension increase from 13 to 25 thousand dollars. While the pension increase was certainly slimy, it followed legal protocol, giving Coyne the moral upper hand in the public inquiries that would ensue. Who it was that advised Diefenbaker to fire Coyne on this populist basis is still not known, but the effect of this choice would haunt Diefenbaker during the coming months, as Coyne would be elevated by the mass media to the status of a folk hero fighting as a David against Goliath.
Instead of stepping down as per the request of both the Cabinet and the Bank’s Board of Directors, Coyne held a press conference revealing that he was being unlawfully prosecuted by Diefenbaker in order to take the blame for any failure in economic policy up until this point. A protracted fight between Coyne and the government ensued with a bill even passing in parliament forcing his replacement. Fleming would comment on the situation: “Coyne had declared war on the government… his actions were part of a clearly calculated attempt to build up controversy”.
The Liberal opposition under Lester B. Pearson and the mass media colluded with Coyne to shape popular opinion against Diefenbaker. By the time Coyne officially stepped down in July 1961, a reported 60% of the 76% of the population that had heard of the affair sided with Coyne, and only 9% sided with Diefenbaker. Coyne was even named “newsmaker of the year for 1961” by the Canadian Press. It is undoubtedly the case that the drop from 208 to 116 federal seats in the 1962 elections would be the effect of this scandal. With the majority now lost, Diefenbaker’s minority government was susceptible to a vote of no-confidence triggering a snap election at any moment.
The multiple crises and absurd public relations disasters arising out of the breakdown of U.S.-Canadian relations following the Coyne affair compounded the crisis in the public’s faith in its government to the point that the elections of 1963 resulted in Diefenbaker’s fall from power. This process contributed to the failure of the full intention of the “conversion loan/credit system” plan of 1958. Much of the Northern Vision’s steam was lost during the period following the Coyne debacle as more and more energy was consumed in putting out diplomatic and economic fires set by the general dynamic of the Cold War.
Diefenbaker’s Fallout with Kennedy
It is perhaps one of the greatest misfortunes that two men so dedicated to the cause of human progress would find themselves so deeply at odds with each other as John Diefenbaker and John Kennedy. Indeed Robert F. Kennedy would say that “my brother really hated only two men in all his presidency. One was Sukarno [president of Indonesia] and the other was Diefenbaker”.
The factors contributing to this schism are manifold, and it will be the purpose of another report to investigate more in depth all of those variables both economic, military and philosophical that fed the break between the two leaders during this important period of world history. For the time being it is worth mentioning, if only summarily, several of the key points of US-Canada conflict:
1) Diefenbaker’s reneging on his earlier commitment (with Eisenhower) to host nuclear warheads upon the American made Bomarc missiles that had replaced the Avro Arrow missile delivery system (see box 1)).
2) Canada’s refusal to participate in trade embargos with communist China and Cuba as per the demands of Kennedy.
3) Kennedy’s refusal to tell Canada about its decision to enact a blockade on Soviet entry to Cuban waters, and Diefenbaker’s refusal to acknowledge the nuclear threat posed during the Cuban missile crisis of 1962. This would be followed by his rejection of the US demand that Canada activate its NORAD forces for potential war with the Soviets. Minister of Defence Douglass Harkness would ignore the Prime Minister and move the Canadian military into position anyway.
4) Diefenbaker’s refusal to join the Organization of American States (OAS), and Kennedy’s 1961 speech in Ottawa calling for Canada to join even after being refused by the Prime Minister.
Subjectively, both Diefenbaker and Kennedy derived their sense of mission and commitment to progress from opposing historical perspectives. Where Kennedy’s identity was firmly grounded in the superiority of the American system of republicanism, Diefenbaker derived his identity from the belief in the superiority of the British system.
Objectively, the global tension caused by the Cold War’s policy of Mutually Assured Destruction defined the behaviour and necessarily neurotic mindset of many leading military figures, and statesmen during this period. The fact that civilization could be annihilated at any given moment would weigh heavily upon every decision made during this time, making disagreements and mistrust between nations that much more existential in nature. Such problems between the USA and Canada during this period were not lacking, and historians agree that never have relations sunk to such lows as they had during the interval of 1960-62.
Certainly, if these men had a better sense of the factors driving the environment in which they were operating during this time, the powerful collaboration of Canada and the USA based on a continental perspective of nation building, vectored around vast water and energy projects pursued by JFK such as the North American Water and Power Alliance would have shaped the course of history in a very different way. But that was not to be.
Iago’s Ghost Haunts North America
The fact that top advisors trusted by both men during this time were simultaneously British Agents is also an important fact to bear in mind. While Kennedy had suffered such scoundrels as National Security advisor McGeorge Bundy, campaign advisor George Ball, CIA director John Foster Dulles whispering in his ear, and attempting to shape his perception of reality, Diefenbaker was also not lacking in his share of Iagos. From the Rhodes Scholar and Justice Minister Davie Fulton, and his group of “technocrats” who would go on to reform the Liberal Party under Trudeau to Diefenbaker’s trusted Clerk of the Privy Council R.B. Bryce, Diefenbaker would lament years later of the problem:
“I have often been asked why I appointed those people to Cabinet who had so vigorously opposed my leadership. Abraham Lincoln, who had included several in his cabinet who had been strong and bitter antagonists, was asked why he had done so. He is reported to have replied to the effect that he liked to have them around so he could see what they were doing. Unfortunately I trusted my colleagues.”
Due to the sage guidance of the likes of Dwight Eisenhower, Eleanor Roosevelt, Gen. Douglas MacArthur and President De Gaulle, JFK soon lost his naïve faith in many agents working within his Cabinet evidenced by his firing of CIA director John Foster Dulles in 1962. Although not having the benefit of many of such positive influences, in later years, Diefenbaker would illustrate his awareness of subversive agents infesting the upper levels of the Civil Service who had worked to undermine his administration from within:
“The Civil Service is there to advise on, but not to determine policy. A minister is there to see that government policy is carried out within his department… That said, had I been returned to office in 1965, there would have been some major changes made. It became obvious as soon as we were out of office in 1963 that there were quite a number of senior people in the public service, about whom I had not known, who had simply been underground, quietly working against my government and waiting for the Liberals to return to power”
The Success and the Tragedy.
While the Diefenbaker government would fall in February 1963 after a vote of “no confidence” by the Liberals under Lester B Pearson, and many of the institutions that were created under the Conservatives were soon undone, it cannot be said that Diefenbaker’s New National Policy was a complete disaster.
The development of the South Saskatchewan Dam dramatically increased the agro-industrial productivity of the Prairies while the Agriculture Rehabilitation and Development Act revolutionized Canadian agriculture. And while the design of the modern northern city of Frobisher Bay would never become reality, over 4,000 miles of roads were created in the Northern provinces and territories under the “Roads to Resources” program. The Pine Point Railway was also completed along with the advancement of the Trans-Canada Highway.
From the standpoint of social justice, under Diefenbaker, aboriginals were finally given the right to the vote. The Canadian Bill of Rights of 1960 became the first and only constitutional document in Canadian history founded on principle before legality or utilitarianism and advanced the protection of the individual far beyond anything that had come before. The fact that Diefenbaker would attempt to reconcile this new principled law of the land with the absolute power vested in the provinces set out in section 92 of the imperial BNA Act of 1867, left the Bill of Rights without the means of becoming a reality.
While many factors can be attributed to the failure and sabotage of the New National Policy and Northern Vision, none is more important than the complete lack of understanding Diefenbaker suffered regarding the true essence of empire which defined the context in which he operated. His passion would often govern his reason and thus both would perpetually be corrupted by this mistaken belief that there could be a reasonable justification for “the divine right of kings” and the British system’s superiority over that of the American system.
Diefenbaker’s populism would also serve to sabotage his own agenda in ways he never could have imagined. In leaping into power on a wave of anti-Americanism, he could not refute the Coynes, Gordons, Fultons or other “New Nationalists” both in government and the press who accused him of not presenting to the public those means by which a full development strategy for his vision could become possible. Both Diefenbaker and his opponents alike understood that without broad American investment, and without the successful conversion of WW II Victory Bonds into new development bonds, then his plans could not come to fruition.
Believing the parliamentary system to be superior to the republican system, Diefenbaker mistakenly gave undo flexibility to members of his own party to vote as they saw fit, and attempted to bring every policy measure to a vote in parliament before becoming law. This behaviour would be in stark contrast to the C.D. Howe method of statecraft under the 1935-1957 Liberals. C.D. Howe had long made his disdain for parliamentary democracy known to all and used the “presidential” authority of the war measures act as the primary driver of Canadian development, bypassing the circus of parliamentary partisanship and unprincipled bickering as much as possible while keeping the Civil Service and members of his party on as tight a leash as possible. Diefenbaker’s commitment to parliamentary “democracy” would give his enemies both within and without of government every opportunity to sabotage his policies at every turn.
For all of his failings, the pure substance of the Diefenbaker vision was well illustrated in his final appearance during the 1963 election campaign:
“I just want to leave one thing with you. You have had a government in Canada this past six years that has a simple philosophy, an old philosophy. That’s to build Canada. Not by worshipping statistics, but by watching for areas and people that need help- that’s the One Canada, One Nation basis. Our task for the net two or three hundred years is going to be moving from the south into the north, so that future generations will know that we have not forgotten the principles upon which this nation was founded and which generation after generation have had to stand together to protect”
The Palace Revolution in the Liberal Party
When the Diefenbaker administration fell in 1963, the Liberal Party that returned to power under Lester B. Pearson was a far cry from that which had fallen in 1957. During the interim of Diefenbaker’s government, the Liberal Party was to be re-organized directly by Walter Lockhart Gordon, the British Foreign Office’s agent working through the CIIA.
During this period, Gordon would prove to become the most powerful man in the Liberal Party and the controller of Prime Minister Lester B. Pearson. Gordon would lead the cleansing of all C.D. Howe Liberals and transform the Party from the pro-American machine it had been since WW II into a radically anti-American, anti-progress colony under British financial control. The recommendations that Gordon had made in his 1957 Royal Commission Report on Economic Prospects for Canada, especially those regarding restricting American investments and ownership of Canadian industry, would now, for the most part, be fully supported.
In his memoirs, John Diefenbaker noted the irony of Walter Gordon’s radical promotion of Canadian nationalism on the one side, yet hatred of the policies pushed by Diefenbaker which would provide the actual means of attaining those nationalist ends which Gordon apparently desired:
“One of the ironies of recent Canadian history is that Walter Gordon, a man whom I only met for a few minutes when he delivered to me his Royal Commission Report, has stated that he decided to do everything in his power to make Mr. Pearson Prime Minister because he hated me and feared that my policies would wreck Canada!” (FN: p. 202, Diefenbaker Memoirs)
Gordon went much further in his attacks on Diefenbaker when, after declaring his commitment to overthrow the Conservative government, he said that the Tory leader “does remind me of Hitler who was far more dangerous” (FN: p.71 Gordon Rise of New Nationalism).
Lester B. Pearson, also a Rhodes Scholar and former assistant in London to Vincent Massey in the Canadian High Commission during WW II, would become the vehicle Gordon would select to oversee the transformation of the Liberal Party and the purging of pro-development Liberals who would resist the isolationist monetary policies of Gordon. One of those who would suffer the purge was Henry Erskine Kidd, General Secretary for the Liberal Party who would refer to the process led by Gordon as “a palace revolution”.
Under Pearson, Gordon would become Finance Minister from 1963 to 1965 and then President of the Privy Council from 1967 to 1968. Although Gordon’s attempts at reforming the Canadian economy during that time frame would fail, creating an eventual rift between himself and Pearson, the damage was done to the Liberal Party and the Canadian national spirit alike. The population became jaded to bold visions of progress, and the political structures became crusted with layers of bureaucratic machinery that would increasingly hide the anti-human ideologies of population control and world governance from both the population and even the policy-makers who would apply many of those destructive programs which would only begin to take full force by the following decade. The wound was made large enough and the white blood cells weakened to the point that the infection could take over without much effective resistance.
This transition would also bring various neo-Malthusian ideologues and technocrats into powerful positions of the Liberal Party, first within the province of Quebec during the “Quiet Revolution” and then on the federal level, with the rise of Walter Gordon’s “New Nationalism”. This transition would sow the seeds for the next stage in the imperial paradigm shift with the 1968 “Cybernetics Revolution” of Fabian Society asset Pierre Elliot Trudeau and his colleagues Gérard Pelletier, Jean Marchand and René Lévesque.
ICBMs and the death of the Avro Arrow
Today, John Diefenbaker is most popularly remembered as the man who killed Canada’s Avro Arrow in 1959. The Avro was the world’s first supersonic jet, and the Canadian made engineering genius that created these machines was the envy of the world. Due to the existence of this aerospace program’s success, Canadian engineers filled the majority of the positions in NASA under Presidents Eisenhower and Kennedy. While it is a tragedy that such a program met the sad fate which it did, the circumstances of its demise under Diefenbaker’s watch must be understood not only as having occurred within the context developed in the main report, but also within the framework of the same geopolitical tension that brought them into existence in the first place.
Today, historians rarely mention the important fact that the Avro jets were the creation of a contract for the US military in order to deploy nuclear warheads upon enemy territory within the quickest possible time frame. With the advent of Intercontinental Ballistic Missiles (ICBMs), the speed of warhead delivery dramatically outpaced Avro’s potential, making their production obsolete for that purpose. Without the continued American contracts, and since no other contracts from other nations were forthcoming, the means were no longer available to continue the program. On February 20 1959, Diefenbaker announced Avro’s discontinuation.
To the shock of all, 14,525 personnel were disbanded at once, all designs, blueprints, models and pictures were destroyed and the only Avro jets in existence were immediately cut down into scrap metal.
 The Beastmen Behind the Dropping of the Atomic Bomb by Leo Wolfe, 21st Century Science and Technology, vol 18 no. 1, p. 22
 Cara Spittal, The Diefenbaker Moment, University of Toronto Thesis, 2011
 American capital invested into Canada would increase from $6.9 billion to $13.5 billion during this period
 The fight would erupt when it became evident that B.C. Electric would attempt to sabotage Bennett’s vision of developing northern B.C with revenue from the Columbia River Treaty. Bennett would oversee B.C. Electric’s takeover by the province.
 Spencer Cross, Who We Fight episode 3: The Organization Children LaRouchePacTV, 2012, www.larouchepac.com/node/20935
 Under a parliamentary system, no minority government will do for any government which hopes to achieve anything, since any mandate proposed by that government could be overthrown by a coalition of opposition parties, and the government could easily fall at any time via a vote of “no confidence” and new elections spontaneously called
 Albert Gervais, Daniel Johnson: A Short Biography, pg. 18
 : Carrigan, Canadian Party Platforms, pg 226-232
 Diefenbaker, Memoires vol.2, p. 286
 Diefenbaker, Memoires vol 2 pg. 270
 Peter Newman, Renegade in Power, pg. 303
 It is interesting to note that CIIA affiliated economist and Walter Gordon ally Wynne Plumptre was the only official from the Ministry of Finance’s office attending the Feb. 15 board meeting that voted on the pension increase. Plumptre neglected to inform either the Minister of Finance or Deputy Minister of Finance of the occurrence.
 Past Imperfect, p. 131
 Past Imperfect, p.136
 Canadian wheat sales to China skyrocketed from $12 million dollars in 1959 to $137.3 million in 1962. Breaking “trading with the enemy” laws, the USA attempted blocking the use of equipment vital for wheat exports leased from American firms when Diefenbaker threatened to go on radio and say that the USA was attempting to run the Canadian economy. JFK acquiesced and trade proceeded..
 Diefenbaker, Memoirs, p.49
 Diefenbaker, Memoirs, p.53
 Azzi, Walter Gordon and Rise of Canadian Nationalism, McGill-QueensUniversity Press, 1999, pg. 7
- John Kendle, The Round Table Movement and Imperial Union, University of Toronto Press, Toronto and Buffalo, 1975
- Stephen Azzi, Walter Gordon and the Rise of Canadian Nationalism, McGill-Queen’s University Press, 1999
- Peter Newman, Renegade in Power: The Diefenbaker Years, McClelland and Stuart Ltd., Toronto/Montreal, 1963
- John Diefenbaker, One Canada: Memoirs vol 1 and 2, Macmillan of Canada, Toronto, 1976
- Philip Isard, Northern Vision: Northern Development During the Diefenbaker Era, Thesis to University of Waterloo, 2010
- Cara Spittal, The Diefenbaker Moment, Thesis to the University of Toronto, 2011
- Daniel Macfarlane, The Value of a “Coyne”: The Diefenbaker Government and the 1961 Coyne Affair, University of Ottawa, 2008.
- Carroll Quigley, The Anglo-American Establishment, Georgetown University, New York Books in Focus, 1981
- W.L Morton, The Kingdom of Canada, McClelland and Stewart Ltd., Montreal, 1970
- Blair Fraser, The Search for Identity: Canada Postwar to Present, Doubleday Canada Ltd., Toronto, Ontario, 1967