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UBC Theses and Dissertations

How far would you go for one Canada? Courtemanche, Joseph Andre 1970

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,UQU .JJAB WOULD YOU. GO. FOR .QNE,-CANADA? . • .-: ,.>y:-. -.JOSEPH ANDRE COURTBI4ANCHE.-.,-. B.Comm. U n i v e r s l t e de Moncton, 1 9 6 9 A THESIS SUBMITTED IN PARTIAL FULFILMENT OP THE REQUIRE 1^NTS FOR THE DEGREE OP MASTER IN BUSINESS ADMINISTRATION i n the Department o f Commerce and B u s i n e s s A d m i n i s t r a t i o n We a c c e p t t h i s t h e s i s as c o n f o r m i n g t o the r p . n n l rftd s t a n d a r d ~ THE UNIVERSITY OP BRITISH COLUMBIA A p h i l 1 9 7 0 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. 1 further agree tha permission for extensive copying of this thesis for scholarly purposes may be granted by the Head of my Department or by his representatives. It is understood that copying or publicati of this thesis for financial gain shall not be allowed without my written permission. i o n Department of The University of British Columbia Vancouver 8, Canada A b s t r a c t T h i s paper covers two r e l a t e d s e c t i o n s . The f i r s t d e a l s w i t h f o r e i g n investments i n Canada and analyses the c o s t and b e n e f i t s of such investments. The c o n c l u s i o n of t h i s s e c t i o n s t a t e s ,that even i f the .cost might be hidden, t h e b e n e f i t s are great and Canada s h o u l d not r e f u s e f o r e i g n investments merely f o r n a t i o n a l i s t i c p r i d e but should welcome.them and e s t a b l i s h laws to make c e r t a i n t h a t these investments (mainly Americans) w i l l produce b e n e f i t s f o r Canadians i n g e n e r a l . The second s e c t i o n . c o v e r s f o r e i g n Investments in.Quebec, and the develop-ment .,of Quebec s i n c e 1 9 6 3 to 1 9 6 9 (the p e r i o d c a l l e d the " q u i e t r e v o l u t i o n " ) . I t a l s o analyses the l a b o r s i t u a t i o n , t h e l a b o r .unions a t t i t u d e toward e s t a b l i s h i n g a p l a n f o r the economy i n order t h a t Quebecois might r e g a i n c o n t r o l of t h e i r economy and c r e a t e new jobs f o r the young g e n e r a t i o n , I then d i s c u s s the p o s s i b i l i t y of i n t e g r a t i n g the p l a n n i n g of the economy of Quebec i n one o v e r a l l Canadian economy. I suggest t h a t Canada should be f l e x i b l e i n e s t a b l i s h i n g a p l a n f o r the Canadian economy s i n c e not a l l r e g i o n s have the same a s p i r a t i o n s . I conclude by s a y i n g t h a t Quebec might s t a y i n the Canadian C o n f e d e r a t i o n i f t h i s p l a n n i n g i f f l e x i b l e and i f French can. become e f f e c t i v e l y the working language i n Quebec, I f t h i s cannot be achieved i n very short p e r i o d of time, s e p a r a t i o n i s I n e v i t a b l e . A c kn o wl e d gme n t I 'would l i k e to express my s i n c e r e a p p r e c i a t i o n to P r o f e s s o r Bernard Schwab, F a c u l t y of•Commerce, U n i v e r s i t y of B r i t i s h Columbia, f o r having accepted the d i r e c t i o n of my t h e s i s work. I a l s o would l i k e to thank my two f r i e n d s , Robert McDonald; and W i l l i a m Young, f o r t h e i r p a t i e n t c o r r e c t i n g of my c o m p o s i t i o n 'and grammatical e r r o r s . Futhermore my a p p r e c i a t i o n extends to P r o f e s s o r Claude pichette", Head of the Economic Department, U n i v e r s i t e de Sherbrooke, f o r h i s f r u i t f u l s uggestions and to the P a r t i Quebecois f o r a l l o w i n g me to use t h e i r economic l i b r a r y . Any mistakes appearing i n t h i s paper are mine, and mine alone, F o r e w o r d I I I "Canada has c e a s e d t o be a n a t i o n , but i t s f o r m a l p o l i t i c a l e x i s t e n c e w i l l not end q u i c k l y . Our s o c i a l and economic b l e n d i n g i n t o the empire w i l l c o n t i n u e apace, but p o l i t i c a l u n i o n w i l l p r o b a b l y be d e l a y e d " . ' ! H e r e i n l i e s the g r e a t e s t C a n a d i a n d i l l e m a . Prom the c o n s t i t u t i o n a l hegemony of G r e a t B r i t a i n we have i n t u r n f a l l e n under the c u l t u r a l and economic hegemony of t h e U n i t e d S t a t e s . And I am a f r a i d t h a t I w i l l be f o r c e d to argue t h a t t h e r e i s n o t a g r e a t d e a l we c o u l d have done about t h a t , nor c o n s i d e r i n g the s a c r i f i c e s w hich would be demanded o f us and the i n c l i n a t i o n s of the C a n a d i a n c h a r a c t e r i n the p a s t , i t does seem t h a t t h e r e i s much we can do about I t I n the f u t u r e . 1 George G r a n t , Lament f o r a N a t i o n , p.86 I n t r o d u c t i o n IV My p a p e r w i l l be d i v i d e d i n t o two p a r t s . The f i r s t w i l l c o v e r f o r e i g n i n v e s t m e n t s i n Canada ( i n g e n e r a l ) and w i l l s t r e s s the economic i m p l i c a t i o n s as w e l l as t h e p o l i t i c a l e f f e c t s o f f o r e i g n ownership o f C a n a d i a n i n d u s t r i e s . The second w i l l c o v e r the economic development of Quebec, t a k i n g i n t o a c c o u n t t h e s e f o r e i g n i n v e s t m e n t s . However, the g r e a t e r emphasis s h a l l l i e on t h e economic p o l i c y or p o l i c i e s o f the Government o f Quebec. S i n c e 1 9 6 2 , the Government of Quebec has been c r e a t i n g i t s own c o r p o r a t i o n s . These i n c l u d e s t e e l m i l l s , mines, h y d r o u t i l i t i e s , s m a l l f a c t o r i e s , e t c . , i n which the government now h o l d s a m i n o r i t y o r m a j o r i t y c o n t r o l . The G e n e r a l I n v e s t -ment C o r p o r a t i o n o f Quebec i s perhaps t h e most i m p o r t a n t s i n g u l a r example. We s h a l l a l s o see how t h e government f i n a n c e s these c o r p o r a t i o n s . I w i l l t h e n c o n c l u d e by f o r m u l a t i n g a p o l i c y of d e v e l o p -ment or p l a n n i n g p o l i c y f o r Canada. T h i s w i l l take i n t o account the f a c t t h a t some r e g i o n s o f t h i s c o u n t r y behave d i f f e r e n t l y and may want t o o r g a n i z e t h e i r c o l l e c t i v e l i v e s i n l i n e w i t h t h e i r own a s p i r a t i o n s . T h i s paper i s an attempt t o shed l i g h t on the problem o f f o r e i g n i n v e s t m e n t s i n Canada w i t h a s p e c i a l o u t l o o k on the economic f u t u r e o f Quebec. One s h o u l d remember t h a t n ot a l l Canadians see the f u t u r e o f Canada w i t h t h e same p o i n t o f view. I b e l i e v e t h a t my i n t e r p r e t a t i o n c o r r e s p o n d s t o t h a t ot the new g e n e r a t i o n o f Q u e b e c o i s . TABLE OF CONTENT Acknowledgment...... •„, . I A b s t r a c t . I I S e c t i o n on Canada F o r e w o r d I l l I n t r o d u c t i o n IV I m p o r t a n c e o f F o r e i g n O w n e r s h i p i n Canada. 1 D i f f e r e n t C o u r s e s o f A c t i o n s Open t o C a n a d a - . 3-The L o s t o f P o l i t i c a l I n d e p endence takes- what F orm? k B a l a n c e o f Payments P o s i t i o n , .6-P o l i t i c a l I m p l i c a t i o n s o f t h i s Economic C o n t r o l ' ' '.. . i 9 Forms o f I n v e s t m e n t <?rd Consequences 10 Wh^t do A m e r i c a n s see i n t h e i r C a n a d i a n S u b s i d i a r i e s , .... .11 D i v i d e n d s Pai d . - . I l l E x t r a t e r r i t o r i a l i t y 15 A m e r i c a n A n t i - T r u s t Laws - »• 16 C a n a d i a n E x p o r t s , . .17 P o l i t i c a l E f f e c t o f A m e r i c a n O w n e r s h i p . . . . . . . . . . 20 R e s e a r c h i n Canada. • .v. ......21 Dependency of Canada on the U n i t e d S t a t e s . . . . . . . 21 L o s s o f T a x a t i o n . .25 F a v o u r a b l e R e a c t i o n f r o m U.S. Government........ 2J? I s i t P o s s i b l e t o E v a l u a t e I f B e n e f i t s O u t w e i g h t h e C o s t s o f F o r e i g n I n v e s t m e n t s ? .27 What R e a l l y - i f the C a n a d i a n P r o b l e m , .32 S e c t i o n on Quebec F o r e i g n I n v e s t m e n t s I n Quebec and E n g l i s h Canadian* C o n t r i b u t i o n t o t h e Economy ).;6 E o r c e s I m p e l l i n g Toward Government I n t e r v e n t i o n i n t h e Quebec Economy. . .1 ,h . 62 V a r i o u s A g e n c i e s and Programs . . . 7 2 Hydro-Quebec, . .. 7ii General Investment C o r p o r a t i o n of Quebec 73 C h a r a c t e r of the C o r p o r a t i o n . . 32 S t r u c t u r e of the C o r p o r a t i o n . ......... 8li A c t i o n of the C o r p o r a t i o n . .86 C o n c l u s i o n ..... . . . 9 1 Sidbec. . . 9 3 S t r u c t u r e . . . . . 9 3 F u t u r e of the C o r p o r a t i o n 9 3 So quern 9 b P r i n c i p a l O b j e c t i v e s of Soquem . .97 C o - o p e r a t i o n w i t h p r i v a t e e n t r e p r i s e a . 9 7 F u t u r e of Soquem..... . . . . . 9 7 Sarep & Soquip.. . 9 9 Resfcf or....,.••..•••••».*«....*•«...«......«..100 I n d u s t r i a l Research Center 1 0 1 I n d u s t r i a l C r e d i t Bureau 1 0 2 Quebec Deposit and Investment Fund.. 1 0 3 Forecast.' 1 0 5 P l a n n i n g the Economy of Quebec 1 0 7 C onelus x o n . . . . . . . . . . . . . . . A . . . . » » . . . . . « » . . . » • . . . . . . . « . . . « « « . . 1 1 3 Appendix 1 Growth of Canadian Gross L i a b i l i t i e s . . , . . . , . 1 1 7 2 Growth of Canadian Gross F o r e i g n A s s e t s , 1 1 8 3 Canadian Net I n t e r n a t i o n a l Indebtedness ,119 k Research and Development E x p e n d i t u r e s , s e l e c t e d 5 Gross L i a b i l i t i e s as a Percentage of Gross N a t i o n a l product . . 1 2 1 6 I n d u s t r i a l S t r u c t u r e of Quebec and Canada. . . 1 2 2 7 P r o d u c t i v e and Non-Productive F o r e s t s , by P r o v i n c e , 1 2 3 8 P r i c i p a l S t a t i s t i c s of Pulp and Paper I n d u s t r y 9 M i n e r a l P r o d u c t i o n of Quebec i n 1 9 b ? 1 2 5 10 Value of Fineral P r o d u c t i o n .. of Canada, by P r o v i n c e . 126 11 . D i s t r i b u t i o n of the P o p u l a t i o n by e t h n i c groups....12? 1 2 L i n g u i s t i c Groups "Making Above *%5000. . . . . . . . 1 2 8 1 2 a The P r i c e of Being wrench . . . . 129 1 3 T o t a l Net Generation of E l e c t r i c Power by Canadian Regions , 1 3 0 1[| L i f e Insurance i n Quebec as of December 3, 1962... . ,131 - 15 Unemployment i n Percentage, Quebec, Canada,Ontario. .132 16 M i d-Canada Development C o r r i d o r , . .133 17 P r i n c i p a l S t a t i s t i c s of the Forty Leading I n d u s t r i e s In Quebec .... 131+ 18 Economic I n d i c a t o r s , Quebec 135 19 Economic I n d i c a t o r s , Canada . . . . . 136 20 C a p i t a l Expenditure by Sector and Annual V a r i a t i o n s Qu. @t)@c»»*»«* ••««««* «#• »*• * »• * * • ••»#X>3T 21 D i s t r i b u t i o n and Growth of Public & P r i v a t e Investment by Region.. 138 22 C a p i t a l Expenditure by Sector and Annual V a r i a t i o n s Canada .139 23 Manufacturing Enployment by Country of Control as a Percentage of T o t a l P r o v i n c i a l Manufacturing QXTDX i 0^ 1*9. jplri^ y" * ••••••••••••••••••••• • • »••«••••• ••••«•••«••••• • 11^ .1 1 I m p o r t a n c e of! F o r e i g n O w n e r s h i p i n Canada C a n a d i a n s have l a t e l y become c o n s c i o u s o f t h e f a c t t h a t t h e y do n o t own most o f c e r t a i n key s e c t o r s o f t h e i r economy. F o r e i g n e r s do. I n 1 9 6 3 , t h e y owned 9 7 p e r c e n t o f t h e c a p i t a l employed I n the m a n u f a c t u r e o f a u t o m o b i l e s and p a r t s , 9?^ i n r u b b e r , 7 3 ^ i n c h e m i c a l s and 77"^ i n e l e c t r i c a l a p p a r a t u s . The c o r r e s p o n d i n g f i g u r e s f o r U n i t e d S t a t e s c o n t r o l were 97 p e r c e n t , 90 p e r c e n t , 51+ p e r c e n t and 66 p e r c e n t , " A l t h o u g h t h e y by no means own more t h a n h a l f o f our e n t i r e economy, t h e y own I n e x c e s s o f a q u a r t e r of the a g g r e g a t e m a n u f a c t u r i n g , m i n i n g , and p e t r o l e u m and t r a n s p o r t a t i o n and p a p e r i n d u s t r i e s . They n e v e r t h e l e s s have a dominant p o s i t i o n i n t h o s e s e c t o r s of o ur economy w h i c h a r e g r o w i n g most r a p i d l y . But.where have t h e s e c a p i t a l i n f l o w s been coming f r o m ? P r i m a r i l y t h e y have come f r o m t h e U n i t e d S t a t e s . I n 196L|-, A m e r i c a n s a c c o u n t f o r 30% of d i r e c t i n v e s t m e n t i n Canada f o r a t o t a l amount o f 12,901 b i l l i o n d o l l a r s . The U n i t e d Kingdom has- been t h e n e x t l a r g e s t i n v e s t o r b u t i t s i n v e s t m e n t s a c c o u n t f o r o n l y 12$. o r 1., 9li.il and o t h e r c o u n t r i e s f o r t h e rem.ain.ing S't o r l , 0 k . M , T o t a l d i r e c t i n v e s m e n t ' i n 196)4. amount t o #15,889 b i l l i o n . Thus " f o r e i g n i n v e s t m e n t " i n Canada r e a l l y means " A m e r i c a n I n v e s t m e n t s " and t h e i r l a r g e I n v e s t m e n t s have g i v e n then? s u b s t a n t i a l c o n t r o l o v e r m q j o r s e c t o r s of C a n a d i a n i n d u s t r y . As f o r p o r t f o l i o Investment* i n 196)4, t h e t o t a l .2 T a s k F o r g e , headed" b y S e v i l l e H. Wat k i n s , F o r e i g n O w n e r s h i p m d t h e S t r u c t u r e o f C a n a d i a n I n d u s t r y , p , 1.1, Append!?:' 23 3 Op» C i t . ,' p. 301, A p p e n d i x 1 2 amount was *9,1J28 b i l l i o n . However one s h o u l d remember t h a t p o r t f o l i o i n v e s t m e n t c o n s i t s o f Investments i n bonds and m i n o r i t y h o l d i n g o f e q u i t y which do n o t r e s u l t i n l e g a l c o n t r o l o f the a s s e t s o f the i s s u i n g c o r p o r a t i o n . I n o t h e r words, p o r t f o l i o i n v e s t m e n t i s f o r e i g n i n v e s t m e n t w i t h o u t f o r e i g n c o n t r o l . One s h o u l d a l s o remember t h a t t o compensate f o r these. Investments i n Canada, Canadians have a l s o i n v e s t e d a b r o a d . I n 1 9 6 k , Canada's l o n g - t e r m i n v e s t m e n t s a b r o a d t o t a l 17.3 b i l l i o n i n c l u d e d i n a g r o s s e x t e r n a l a s s e t s o f $12.2 b i l l i o n . These i n v e s t m e n t s are h e a v i l y c o n c e n t r a t e d i n ; t h e U n i t e d S t a t e s and the U n i t e d Kingdom, w i t h f u l l y 6 0 per c e n t and k I k p e r c e n t so a c c o u n t e d f o r i n 1 9 6 k . £ M. Watkins, Op. C i t . p. 3k7,3b3, see appendix 2 ,3 , 3 D i f f e r e n t C o u r s e s o f A c t i o n open t o Canada Growth i s , of c o u r s e , a dominant theme i n Canada: growth i n our p o p u l a t i o n , i n our economic s t r e n g t h , i n our s t a n d a r d o f l i v i n g as w e l l as growth i n our p o l i t i c a l s t a t u r e . Y e t i t i s t h i s growth, t h i s s t r i v i n g f o r an even u n f o l d i n g p o t e n t i a l w h ich has been at t h e r o o t of the p r e s e n t d i l l e m a . We a r e a young c o u n t r y w i t h a s m a l l s t o c k o f C a p i t a l . We a r e a young c o u n t r y w i t h a p o p u l a t i o n which a s p i r e s to i t s f a i r s h a r e o f N o r t h American abundance, t o i t s u n e q u a l l e d s t a n d a r d o f l i v i n g . I n a sense, we have been f o r c e d t o compete w i t h the U n i t e d S t a t e s i n o f f e r i n g our immigrants and our s k i l l e d workers a comparable s t a n d a r d o f l i v i n g . A c c e s s t o t h e U n i t e d S t a t e s has n e v e r been d i f f i c u l t f o r t h o s e who have come to l i v e i n Canada. P a r t l y as a r e s u l t o f the r e l a t i v e m o b i l i t y o f t h e c o n t i n e n t a l l a b o u r market and p a r t l y as a r e s u l t o f p e c u l i a r h a b i t s o f i n v e s t m e n t we n e v e r have been a b l e t o r a i s e the s u f f i c i e n t s t o c k o f c a p i t a l n e c e s s a r y t o f i n a n c e our p r e s e n t i n t e n s i v e r a t e of growth. To a c h i e v e a n y t h i n g l i k e the f u l l use o f our economic p o t e n t i a l , we have had t o have a v e r y l a r g e c a p i t a l i n v e s t m e n t i n our n a t i o n i n r e l a t i o n t o the s i z e of our p o p u l a t i o n . To a c q u i r e t h i s c a p i t a l we have been f o r c e d t o choose between t h r e e a l t e r n a t i v e s : growth at a pace c o n s i s t e n t w i t b aur d o m e s t i c s a v i n g s ( t o grow s l o w l y ) , growth more r a p i d l y by c u t t i n g back on our l e v e l o r consumption (and l o s e a s i g n i -f i c a n t p a r t o f l a b o u r supply), o r growth more r a p i d by a t t r a c -t i n g f o r e i g n c a p i t a l . ^ We chose the l a s t c o u r s e and the p e n a l t y f o r t h i s c h o i c e , i t i s a r g u e d , i s t h e l o s s o f our economic and p o l i t i c a l i n d e p e n d e n c e . There are t h o s e , i n c l u -d i n g p a r t i c u l a r l y , . W a l t e r Gordon, ( P r e s i d e n t o f t h e P r i v y C o u n c i l , and e x - M i n i s t e r o f F i n a n c e o f Canada) who argue t h a t i t i s now time we, t r i e d the o t h e r two ^ a l t e r n a t i v e s and a t t e m p t e d t o r e g a i n a l i t t l e more o f our n a t i o n a l i d e n t i t y , e c o n o m i c a l l y , c u l t u r a l l y • a n d p o l i t i c a l l y , b e f o r e the p r e s e n t t r e n d towards i n c r e a s i n g A merican ownership makes s u c h a s t e p I m p o s s i b l e . We w i l l f i r s t examine what the p o l i t i c a l i m p l i c a t i o n s o f American ownership a r e , and examine t h e l i m i t a t i o n s o f p r o p o s a l s l i k e Mr,, Gordon's f o r m i n i m i z i n g t h i s c o n t r o l , t h e assumptions on which t h e y a r e b a s e d and t h e r e a l p o s s i b i l i t i e s which Canada has o f ever e s c a p i n g f r o m the d i l e m n a o f f o r e i g n ownership. We w i l l t h e n c o n c l u d e with, a s p e c u l a t i v e argument about why;, i t i s t h a t we s h o u l d c o n s i d e r the p o l i t i c a l a s p e c t s o f f o r e i g n ownership t o b e . o f such s i n g u l a r i m p o r t a n c e . The L o s s o f P o l i t i c a l Independence t a k e s what Form? Canadians have, In f a c t , l o s t a degree o f p o l i t i c a l independence because of t h e A m e r i c a n ownership o f so much o f k E r i c k K i r e a n s , C h a l l e n g e o f C o n f i d e n c e , P. 75-76 5 our Industry, What form does i t take? Tempting though i t may he to Imagine lobbyists for large American firms buying out our best interests from p o l i t i c i a n s in Ottawa,/this sort of influence i s hard to prove and undoub-tedly not as detrimental as the more measurable effect of American ownership. These charges were denied by tory Robert Goates in the Commons: "There is l i t t l e or no evidence that American businessmen are interested in anything but the return they can get upon the capital they have invested. I have been a member of t his House for 10 years and have never been approached by people associated with U.S. industries t e l l i n g me we should do certain things for the United States because they invested money i n certain industries". "I am sure Hon. Members generally can say the same. The U.S. has never encouraged lobbies to force Canada to follow i t s l i n e of thinking in any given situation". 5 The measurable effects occur in the f i e l d s of our balance of payments position, taxation, the concept of e x t r a t e r r i t o r i a -l i t y and our foreign policy. There is not, as Mr, Baldwin correctly points out, a simple one to one relationship between foreign ownership and p o l i t i c a l control.^ 3 Rather, American ownership of Canadian industry and resources helps t° establish an apparatus of potential control. American strength derives from our economic dependency on the United States. It i s only directly in the matter of e x t r a t e r r i t o r i a l i t y that the American government has regularly but largely unconsciously 5 telegram, July 1966 6 0. Baldwin, The.Myths of the Special Relationship, p. 6 made i t s i n f l u e n c e f e l t over the l e g a l s o v e r e i g n t y of the Canadian government and i t has- o n l y been on a very few occasions t h a t the American government has attempted to contravene the s p i r i t of our f o r e i g n p o l i c y through the American ownership of Canadian I n d u s t r y . The M i n i s t e r of Fin a n c e , Mr. Benson put i t t h i s way: " I do not b e l i e v e Canada I s an economic s a t e l l i t e of the U n i t e d s t a t e s . I am sure i t not a p o l i t i c a l s a t e l l i t e . T n i s government I n d e c i s i o n s i t has made has I n d i c a t e d we are not a p o l i t i c a l s a t e l l i t e of the Un i t e d S t a t e s or of any other c o u n t r y , nor do we i n t e n d t o be. We have an independent f o r e i g n p o l i c y . " 7 F i r s t , l e t us c o n s i d e r the e f f e c t which American ownership has on our balance o f payments and see thereby the extent of c o n t r o l which the American government might e x e r c i s e i t i t so wished. Balance of Payments P o s i t i o n F o r the past two decades Canada has maint a i n e d an unusual balance of payments p o s i t i o n w i t h the U n i t e d S t a t e s , Our imports from the U.S. have c o n s i s t e n t l y exceeded our e x p o r t s , u s u a l l y t o the e x t e n t of more t h a t $1 b i l l i o n d o l l a r s per year. To s t a b i l i z e t h i s s h ort run imbalance, Canada has r e c e i v e d i n f l o w s from two major sources: from e x t e n s i v e exports earnings from trade w i t h European and o t h e r f o r e i g n n a t i o n s 7 E. Benson, House of Commons Debates, p.9221 8 F. Benson, Op.Cit.,p. 9222 7 (our earnings from exports almost always exceed our l o s s e s from imports i n our t r a d i n g r e l a t i o n s w i t h these n a t i o n s ) and secondly from the i m p o r t a t i o n of c a p i t a l f o r investment purposes from the U n i t e d S t a t e s . America i s our. b i g g e s t customer thus-our b i g g e s t market. "The U n i t e d S t a t e s took 70 per cent of a l l Canadian; exports i n 1969 compared t o 67 per cent i n 1968". 9 I n s h o r t , i f we were t o experience r e s t r i c t i o n s i n e i t h e r our S a l e s t o the U n i t e d S t a t e s or our purchases from i t , we would experi e n c e a s i g n i f i c a n t change i n our standard of l i v i n g and i n : the a b i l i t y of our economic system t o s u s t a i n a h i g h l e v e l of p r o d u c t i v i t y . But our balance of payments p o s i t i o n v i s - a - v i s the.: U n i t e d S t a t e s c o u l d , I t i s e v i d e n t , a l s o be g r e a t l y a f f e c t e d by r e s t r i c t i o n on the f l o w o f c a p i t a l i n t o Canada f o r Investment purposes or the r a t e at which d i v i d e n d s f l o w out of the n a t i o n to the U n i t e d S t a t e s , I t i s . i n t h i s way the American ownership of C a n a d i a n : i n d u s t r y c o n s p i r e s t o be a most s i g n i f i c a n t f a c t o r p o t e n t i a l l y c o n t r i b u t i n g to a r e s t r i c t i o n of our p o l i t i c a l autonomy, Washington plays a l e a d i n g r o l e i n e s t a b l i s h i n g trends i n the U . S . . s p e c u l a t i v e market. Because of our heavy dependency on American investment f o r balance of payments purposes, we are extremely v u l n e r a b l e t o changes i n mood of American i n v e s t o r s and t o American government a c t i o n s . For i n s t a n c e , 9 the Vancouver Sun, January 10, 1970 a when the President made his Balance of Payment message to Congress on Thursday,. July 19,.1963, proposing an interest equalization tax such that Canadian dividends would not continue to receive preferential exemptions, there was a sharp reduction in the inflow of capital -needed to carry on our current account obligations. The foreign exchange market reacted violently. If Canada had not been able to obtain exemptions by that Sunday in a special message from the United States government then a lack of confidence in the Canadian dollar and the probality of i t s subsequent decline on Monday ( i t has already f a l l e n the year previously to 92 1/2^ when the markets opened, would probably have led to a continued lack of confidence in Canadian investments for a rather 10 extended period. The United States government has also exercised control over the rate at which dividends flow back from foreign investments. Since the early 60's the United States has experienced a net d e f i c i t in its balance of payments position, mainly because of foreign expenditures for the war i n Vietnam, Canada contributes heavily, however, to the American surplus on current account; to the amount of at least $1 b i l l i o n per year since this is the extent of the Canadian d e f i c i t with the United States. The American government for i t s part, however,: has at times wanted Canada to contribute even more 10 0. Craig. The United States and Canada, p.26k to, the f i n a n c i n g o f t h e U.S. b a l a n c e o f pavments d e f i c i t . F o r i n s t a n c e , i n 196a, t h e Department of Commerce o f Washington i s s u e d a d i r e c t i v e t o a l l companies w i t h f o r e i g n s u b s i d i a r i e s r e q u i r i n g them to, a c c e l e r a t e the payment r a t e o f d i v i d e n d s and r o y a l t y and management f e e s . I n t h i s i n s t a n c e , t h e s e s u b s i d i a r i e s were no l o n g e r a c t i n g i n d e p e n d e n t l y , "Behind the f a c a d e , "was", a s i n g l e , d i r e c t i n g a u t h o r i t y g u i d i n g p o l i c y towards the a t t a i n m e n t of an American b a l a n c e o f payments e q u i l i b r i u m " . P o l i t i c a l I m p l i c a t i o n s o f t h i s Economic C o n t r o l The p o l i t i c a l i m p l i c a t i o n s bf s u c h an e x t e n s i v e economic c o n t r o l a r e not d i f f i c u l t t o s e e . The f a c t i s , we have been f o r c e d t o go t o Washington t o save our d o l l a r on more t h a n one o c c a s i o n . . We have been f o r c e d t o go t h e r e i n o r d e r t h a t we c o u l d m a i n t i a n b o t h our s t a n d a r d o f l i v i n g and our r a t e o f growth. We have thus been f o r c e d to go t h e r e i n o r d e r t h a t we might r e t a i n , i t c o u l d v e r y w e l l be argued, a s i g n i f i c a n t p o r t i o n o f our most s k i l l e d but a t the same time h i g h l y m o b i l e l a b o u r f o r c e . A l t h o u g h we a r e n o t the o n l y modern and d e v e l o p e d n a t i o n t o have done so, s t i l l , n o . o t h e r n a t i o n . a p p r o x i m a t e s Canada i n the p e r c e n t a g e o f i t s I n d u s t r y owned by Americans and so no o t h e r n a t i o n , i t might be argued, i s e q u a l l y as dependent. M. Benson p o i n t out t h a t : "the problem of f o r e i g n ownership i s a d e e p - r o o t e d 10 p r o b l e m I n Canada as i t i s i n many o t h e r c o u n t r i e s . I t i s a p r o b l e m w h i c h does n o t have any e a s y s o l u t i o n " . 1 1 However t h i s phenomenon I s n o t u n u s u a l and can be o b s e r v e i n o t h e r c o u n t r i e s . The G l o b e and F a i l p o i n t o u t : "about l 5 p e r c e n t o f F r e n c h i n d u s t r y i s e s t i m a t e d t o be under f o r e i g n c o n t r o l ( h a l f by U.S. I n t e r e s t s ) , compared w i t h b e t w e e n 25 and 30 p e r c e n t I n West •'• Germany, B r i t a i n and- the B e n e l u x C o u n t r i e s " , 12 But t h e l o n g t e r m e f f e c t on o u r b a l a n c e o f payments p o s i t i o n I s i n no way seen t o be b r i g h t e n e d b y t h e i n c r e a s e i n A m e r i c a n o w n e r s h i p o v e r C a n a d i a n i n d u s t r y . Form o f I n v e s t m e n t and Consequences A m e r i c a n c a p i t a l i n Canada has been c h a r a c t e r i z e d by t h e f a c t t h a t i t I s I n t h e f o r m o f d i r e c t i n v e s t m e n t and n o t i n t h e f o r m o f p o r t f o l i o i n v e s t m e n t more c h a r a c t e r i s t i c o f t h e e r a p r e c e e d i n g t h e second w o r l d war* By t h a t , I t i s meant t h a t t h e p r e d o m i n a n t f o r m o f i n v e s t m e n t i s t h e e s t a b l i s h m e n t o f f o r e i g n s u b s i d i a r i e s o r the i m p o r t a t i o n o f " p a c k a g e s " o f c a p i -t a l , m a n a g e r i a l , t e c h n i c a l and s a l e s s k i l l s r a t h e r t h a t s i m p l y c a p i t a l f o r i n v e s t m e n t i n e s s e n t i a l l y C a n a d i a n e n t r e p r i s e s . M. A l f r e d Dubuc, E c o n o m i s t a t t h e U n i v e r s i t e de M o n t r e a l , s a i d t h a t : " I t i s t h e A m e r i c a n s who p r o v i d e C a n a d i a n s w i t h t h e i r t e c h n o l o g y , t h e i r s c i e n t i f i c and t e c h n i c a l competence, 11 E. Benson,.. Op . c i t ., p. 9221 12 Globe and M J l T T F e b r u a r y 21, 1970 11 American i n v e s t m e n t s i n Canada has t a k e n the form o f d i r e c t i n v e s t m e n t s i n s u b s i d i a r i e s , , f r o m which Canadian p a r t i c i p a t i o n i s l a r g e l y e x c l u d e d . . . I t i s t r u e t h a t Canada has b e n e f i t e d e c o n o m i c a l l y from t h i s f o r m o f i n v e s t m e n t by o b t a i n i n g t h e e x p e r t i s e and expe-r i e n c e p r e v i o u s l y a c q u i r e d by t h e American i n d u s t r i e s . But a t the same time t h e m o t i v e s f o r i n v e s t m e n t on the p a r t o f a l a r g e number of'"American d i r e c t i n v e s t o r s has n o t had p a r t i c u l a r l y b e n e f i c i a l e f f e c t s on our b a l a n c e o f payments p o s i t i o n . . What do A m e r i c a n s see i n t h e i r C a n a d i a n S u b s i d i a r i e s ? What th e y f r e q u e n t l y see i n t h e i r C a n a d i a n s u b s i d i a r i e s i s a s a l e s o u t l e t f o r A m e r i c a n p r o d u c t s , m a t e r i a l and m a r k e t a b l e t e c h n o l o g y . The o u t l e t can be e i t h e r one w h i c h d i r e c t l y o f f e r s the American p r o d u c t i t s e l f o r , i n o t h e r c a s e s , a p r o d u c t which, a l t h o u g h assembled i n Canada, was p r o d u c e d w i t h raw or s e m i - p r o c e s s e d m a t e r i a l s and m a n u f a c t u r i n g equipment from the U n i t e d S t a t e s u s i n g p r o d u c t i o n t e c h n i q u e s . w h i e h r n e c e s s i t a t e the payment o f a r o y a l t y f e e t o t h e p a r e n t company. Ame r i c a n b u s i n e s s managers i n Canada f r e q u e n t l y p r e f e r , e i t h e r by h a b i t or by d i r e c t i o n , t o purchase equipment and s u p p l i e s from t h e I? same American s o u r c e s p r e f e r r e d by the p a r e n t company. ^ Thus, t h e : purchase o f an i t e m from, an American s u b s i d i a r y i n Canada i s l i k e l y t o i n v o l v e payment f o r a s u b s t a n t i a l number l i t A. Dubue, N a t i o n a l i s m In Canada, p. 12)4. ' 1 5 V,- Watkins, Op, C i t . "7~pl ~™ 12 of f a c t o r s o f p r o d u c t i o n o r i g i n a t i n g o u t s i d e o f Canada. The s u p e r i o r e n t r e p r e n e u r s b i p and s k i l l o f t h e s e companies may make the development o f p a r a l l e l C a n a d i a n i n d u s t r i e s e x t r e m e l y d i f f i c u l t . F o r i n s t a n c e , one of t h e i m p o r t a n t components o f t h e "'package" b r o u g h t i n by A m e r i c a n d i r e c t i n v e s t o r s i s an a l r e a d y e s t a b l i s h e d market f o r t h e p r o d u c t c r e a t e d by the p r o x i m i t y o f A m e r i c a n a d v e r t i s i n g media t o a l a r g e segment o f the C a n adian p o p u l a t i o n . Most d i r e c t i n v e s t o r s are l a r g e c o r p o r a t i o n s and t h e i r p r o d u c t s are u s u a l l y as w e l l known t o t h e C a n a d i a n p u b l i c as t h e y a r e t o A m e r i c a n s . No s m a l l p a r t of t h e p o p u l a r i t y can be a t t r i b u t e d t o t h e f a c t t h a t more t h a n h a l f o f our p o p u l a t i o n i s w i t h i n v i e w i n g d i s t a n c e o f American t e l e v i s i o n networks and i s r e g u l a r l y exposed t o American p e r i o d i c a l s . •American s u b s i d i a r i e s may be d i r e c t e d , as w e l l r t o s e l l t h e i r s e m i - p r o c e s s e d p r o d u c t s at p r e f e r r e d p r i c e s l o w e r than the normal market p r i c e ( e s p e c i a l l y i f the m o tive f o r Investment In Canada was t h e e x t r a c t i o n of raw m a t e r i a l s ) or t o buy from the p a r e n t company at d i s a d v a n t a g e o u s p r i c e s h i g h e r t h a n the normal market p r i c e . A t p r e s e n t t h e r e i s no adequate l e g i s -l a t i o n i n s u r i n g , - t h a t a r e a s o n a b l e market p r i c e Is used i n e i t h e r c a s e . C l e a r l y such an arrangement n e i t h e r b e n e f i t s our b a l a n c e o f payments p o s i t i o n n o r a s s i s t s i n t h e m a x i m i z a t i o n of revenues f o r the F e d e r a l government -from t a x a t i o n . 13 There a r e o t h e r ways i n w h i c h the F e d e r a l government may e x p e r i e n c e t h e l o s s of t a x e s , t h r o u g h f o r e i g n r a t h e r than C a n a d i a n ownership. T h i s i s p a r t i c u l a r l y t r u e of the m i n i n g and p e t r o l e u m i n d u s t r i e s when Americans i n v e s t h e a v i l y w i t h A m e r i c a n c a p i t a l equipment f o r e x t r a c t i o n , u s i n g a s m a l l l a b o u r f o r c e , of w h i c h the h i g h e s t payed workers a r e l i a b l e t o be A m e r i c a n s . The e x t r a c t e d m i n e r a l may be removed f r o m Canada, t h e r e f o r e and s h i p p e d to t h e U n i t e d S t a t e s f o r p r o c e s s i n g . The e n t i r e economy g a i n s l i t t l e f r o m s u c h an e n t e r p r i s e . The p r o d u c t i o n o f a c e r t a i n type of h i g h q u a l i t y paper p r o v i d e s an i n t e r e s t i n g case i n p o i n t . The t i m b e r i s cut i n f o r e s t s a l o n g t h e New B r u n s w i c k b o r d e r , ground t o a s e m i - p r o c e s s e d s t a t e and s h i p p e d t o Maine f o r a r a t h e r e x p e n s i v e p r o c e s s i n g . The company does t h i s i n o r d e r t o a v o i d American t a r i f f s on the f i n a l p r o d u c t . I r o n i c a l l y , however, we are f o r c e d t o buy t h i s p a r t i c u l a r type of paper from the A m e r i c a n company because i t i s n o t p r e s e n t l y produced i n Canada. .To sum up, then, Canada has a s i g n i f i c a n t s h o r t term b a l a n c e of payments d e f i c i t w i t h t h e U n i t e d S t a t e s w h i c h i s p a r t l y o f f s e d by t h e i n f l o w o f American c a p i t a l i n t o Canada. I n the l o n g r u n , t h i s c a p i t a l c o u l d have two e f f e c t s : i f i t s e r v e s m a i n l y t o e s t a b l i s h s a l e s o u t l e t s f o r American p r o d u c t s , s e r v i c e s or m a r k e t a b l e t e c h n o l o g y t h e n i t w i l l m e r e l y I n c r e a s e Mi our d e f i c i t ; i f i t serves to establish truly Canadian centres of production, /then i t w i l l increase our level of productivity and possible even our sales to foreign nations. Seldom, however, according to the Watkins Report, do "multinational" corporations see the market of their branch plants in i n d i v i -duals countries extending outside of the(economy of that country, since this would probably imply unwanted competition with the parent i n the international market.^ It must be admitted, however, that i t would be unlikely that the Canadian operation would be as e f f i c i e n t and therefore^ could compete. Buti the entire process of production and purchase i s more or less contained within our own economy effecting our long run balance of payments position. Dividends Paid And what about the dividends we are paying out? The fact i s , that although we have, of course, been paying an increasing sum abroad i n absolute terms as dividend payments, i t has been a decreasing percentage of our G.N.P.; from 2.9$ i n the late 1920's and 6.1t$ in the depressed 1930's to 1.9$ in 1957-65. As a percentage available from earnings from exports, dividends to foreign owners have f a l l e n from 16$ in the late 1920's and 25$ in the 1930's to 9$ in 1957-65>. 1 7 Dividend payments to foreign owners have not, then been an increasing 16 Watkins Report, Op.Cit., p. 17 Kierans, E. Op.Git., p.81 p r o b l e m i n our b a l a n c e of payments p o s i t i o n . The r e a l p r o b l e m i s s i m p l y our buying h a b i t s and our commitment t o growth. To m a i n t a i n b o t h i t i s v i t a l , as an e x a m i n a t i o n o f o u r b a l a n c e o f payments p o s i t i o n shows and as our need f o r i n t e n s i v e i n v e s t m e n t f o r growth i n d i c a t e d t o m a i n t a i n a heavy i n f l o w o f American- c a p i t a l . As Mr. I a n MacDonald, C h i e f E c o n o m i s t o f t h e P r o v i n c e o f O n t a r i o , p o i n t out: " i t i s w e l l w i t h i n our power t o change the degree o f f o r e i g n i n v e s t m e n t . At the same time, t h e r e i s one v e r y good reason.why even the most a n x i o u s have h e s i t a t e d b e f o r e a t t e m p t i n g t o change the f o r e i g n i n v e s t m e n t p o s i t i o n . We haye not s u c c e e d e d i n d i s c o v e r i n g how t o have our cake and e a t i t t o o , a l o n g w i t h the added g u a r a n t e e t h a t the s u p p l y of cake w i l l be adequate to s a t i s f y our expanding a p p e t i t e " . 18 S e c o n d l y , t h e F e d e r a l government may not a c q u i r e the same l e v e l o f t a x r e v e n u e s which t h e y would have r e c e i v e d had the p a t t e r n o f i n v e s t m e n t i n c e r t a i n t y p e s o f f o r e i g n i n d u s t r i e s been d i f f e r e n t . E x t r a t e r r i t o r i a l i t y The t h i i r f l a r e a i n which American ownership o f C a n a d i a n i n d u s t r y has p o l i t i c a l i m p l i c a t i o n s i s t h a t o f e x t r a t e r r i t o -r i a l i t y . B r i e f l y s t a t e d , t h i s i n v o l v e s the e x t e n s i o n of the l e g a l j u r i s d i c t i o n o f : o n e c o u n t r y i n t o t h a t of a n o t h e r a t the 18 Ian MacDonald, N a t i o n a l i s m i n Canada, p.179 IS expense of legal sovereignty of the second nation. This is s p e c i f i c a l l y related to American laws governing the control of exports, anti-trust law, taxations, and, as we have already seen,the U.S. balance of payments position. In 1961 proposals were brought before the Committee o f Ways and Means proposing a tax on the subsidiaries of American corporations. These subsidiaries were not, however, American corporate citizens, but, as Kierans points out, Turkish, French or Canadians companies.^ Canada's right, therefore, to set corporate tax rates for large sectors of our industry would have been challenged. If Canada, for example, wanted to set low tax rates to attract c a p i t a l then this measure would have frustrated these efforts. American Anti-Trust Laws American anti-trust laws did extend t h e i r jurisdiction into-Canada. ' This is particularly true of the Sherman anti-trust law and. Section of the Clayton Act, prohibiting monopolies and combines. Canada has also developed similar l e g i s l a t i o n to control monopolies and combines but It i s s l i g h t l y different in nature and application. There is then, the undesirability of permitting any foreign government to determine the relationship between two or more Canadian companies. Futhermore 19 S. Kierans, Op. C i t . , p.81 1? t h e r e i s t h e economic u n d e s i r a b l l i t y o f r e s t r i c t i n g t he ope-r a t i o n o f C a n a d i a n f i r m s i n w o r k i n g , p o s s i b l y , a t a g r e a t e r r a t e o f e f f i c i e n c y i n the C a n a d i a n m a r k e t b e c a u s e t h e i r p a r e n t companies would t h r e a t e n a p a r t i c u l a r norm of economic b e h a v i o u r i n t h e U n i t e d S t a t e s . The b e s t s o l u t i o n t o t h e p r o b l e m o f o l i g o p o l y and m a r k e t c o n t r o l a t an i n t e r n a t i o n a l l e v e l ( t h a t i s , when a number o f l a r g e c o r p o r a t i o n s i n v a r i o u s n a t i o n s are j o i n e d t o g e t h e r t o f o r m one o r a f e w l a r g e and d o minant m u l t i n a t i o n a l c o r p o r a t i o n s ) w o u l d be t h e c r e a t i o n o f a code j o i n t l y a g r e e d upon by t h e a f f e c t e d n a t i o n s . However, t h e e x t e n s i o n o f t h e a n t 1 -monopoly l e g i s l a t i o n o f one dominant n a t i o n t o t h e economies o f n a t i o n s s u p p o r t i n g s u b s i d i a r y m a n u f a c t u r i n g o p e r a t i o n s i s e n t i r e l y I n a d e q u a t e , B u t , " t h e e s s e n c e o f t h e e x t r a t e r r i t o r i a l i t y i s s u e i s n o t t h e economic c o s t s . . , , b u t r a t h e r t h e p o t e n t i a l l o s s o f c o n t r o l o v e r an i m p o r t a n t segment of C a n a d i a n economic i i f e " . ^ C a n a d i a n E x p o r t s The f o u r t h a r e a i n w h i c h f o r e i g n o w n e r s h i p has i m p l i -c a t i o n s a r i s e s f r o m t h e e x t r a t e r r i t o r i a l i t y o f A m e r i c a n l a w o v e r C a n a d i a n e x p o r t s . T h i s , t h e r e f o r e , has d i r e c t i m p l i c a t i o n s f o r our f o r e i g n p o l i c y . C a n a d i a n p o l i c y on t r a d e w i t h Communist c o u n t r i e s i s b r o a d l y t h a t , i d e o l o g i c a l d i f f e r e n c e s n o t w i t h s t a n d i n g , i t i s d e s i r a b l e t o have t r a d i n g r e l a t i o n s 20 W a t k i n s R e p o r t , O p . C i t , , p . l 6 0 , l 6 l , 1 6 2 21 W a t k i n s R e p o r t , O p . c i t . , p . 18 i n non s t r a t e g i c goods and t h a t s u c h t r a d e s h o u l d be a l l o w e d t o d e v e l o p w i t h o u t t o o many impediments. However, American p o l i c y and law i s somewhat d i f f e r e n t . The E x p o r t C o n t r o l A c t o f 191+9 g r a n t s the Department of Commerce the power t o p r o h i b i t e x p o r t from the U n i t e d S t a t e s o f a l l commodities and t e c h n i c a l d a t a u n l e s s a g e n e r a l l i c e n s e g r a n t i n g such p e r m i s s i o n has been e s t a b l i s h e d or a s p e c i f i c ( " v a l i d a t e d " ) l i c e n s e has been i s s u e d by the O f f i c e o f E x p o r t C o n t r o l . When the O f f i c e o f E x p o r t C o n t r o l i s f a c e d w i t h a p o s s i b l e i n f r i n g e m e n t by an A m e r i c a n s u b s i d i a r y , then i t has the American p a r e n t n o t i f i e d t h a t t h e s u b s i d i a r y has e n t e r e d i n t o e x p o r t t r a n s a c t i o n s f o r which the p a r e n t , t h a t , t h e d i r e c t o r s 8c s h a r e h o l d e r s , can.be c r i m i n a l l y l i a b l e . I t i s t h e p o l i c y o f t h e U n i t e d S t a t e s government t o r e s t r i c t t h e e x p o r t o f c e r t a i n k i n d s o f p r o d u c t s t o any communist n a t i o n s . As M« Trudeau, the Prime M i n i s t e r , wrote: "the S t a t e s a r e o f t e n f o r c e s t o y i e l d t o economic and, e s p e c i a l l y t o t e c h n o l o g i c a l laws. ex. As soon as Prance had d e c i d e d t o b u i l d the C a r a v e l l e w i t h A m e r i c a n e l e c t r o n i c s system, th e F r e n c h S t a t e was no l o n g e r f r e e to s e l l the p l a n e as i t wished: "the C a r a v e l l e cannot be e x p o r t e d to C h i n a due t o an American l i c e n c e on the p r e s s u r a t i o n system"". 22 These r e s t r i c t i o n s have s t o p p e d A m e r i c a n s u b s i d i a r i e s from c o n d u c t i n g e x p o r t o p e r a t i o n s on s e v e r a l o c c a s i o n s ; some when g r a i n l o a d e r s s o l d by American s u b s i d i a r y i n Canada t o m a i n l a n d C h i n a l e d the American government t o warn.the p a r e n t 22 P.E. Trudeau, F e d e r a l i s m and t h e F r e n c h Canadian,p 111 1 9 company of t h e c o n s e q u e n c e s ; a g a i n when g r a i n c o u l d n o t be p r o c e s s e d f o r shipment t o Cuba by t h r e e o f our l a r g e s t m i l l e r s , P i l l s - b u r y , R o b i n Hood F l o u r F i l l s and Quakers Oats b e c a u s e t h e y were A m e r i c a n s u b s i d i a r i e s . T h i s was s i m i l a r l y t h e c a s e when J , H e i n z and G e r b e r P r o d u c t s o f Canada a t t e m p t e d t o s e l l goods t o C uba. I n .these c a s e s , h o w e v e r , t h e C a n a d i a n government c o u l d have a c t e d f i r m l y t o c o u n t e r t h i s e x t e n s i o n o f A m e r i c a n c o n t r o l o v e r our e x p o r t c a p a b i l i t i e s . NevertheMss? t h e p o l i c y o f q u i e t d i p l o m a c y makes i t d i f f i c u l t t o t e l l how i m p o r t a n t t h e s e r e g u l a t i o n s may be i n d e t e r r i n g , t r a d e . b y c e r -t a i n C a n a d i a n s u b s i d i a r i e s w i t h c o u n t r i e s p l a c e d under t h e A m e r i c a n t r a d e e m b a r g o . ^ However we s h o u l d keep i n mind t h a t t h e s e a r e j u s t few c a s e s and t h a t i n g e n e r a l A m e r i c a n s u b s i d i a r i e s have done more t h a t t h e i r s h a r e i n e x p o r t i n g . The C h i e f E c o n o m i s t o f O n t a r i o p o i n t out t h a t ; " t h e g r o w t h of e x p o r t s o f C a n a d i a n m a n u f a c t u r e d goods .(which has r e c e n t l y become an I m p o r t a n t i t e m ) i s l a r g e l y t h e r e s u l t o f f o r e i g n i n v e s t m e n t . F o r i t i s t h e forelgm^owned i n d u s t r i e s w h i c h have grown so r a p i d l y i n t h e C a n a d i a n economy". 2 l i H i s s t a t e m e n t would t h e n d i s a g r e e w i t h t h e s t a t e m e n t made e a r l i e r by t h e W a t k i n s R e p o r t s a y i n g t h a t seldom, do " m u l t i n a t i o n a l " c o r p o r a t i o n s see t h e market of t h e i r b r a n c h p l a n t s ' i n i n d i v i d u a l c o u n t r i e s e x t e n d i n g o u t s i d e o f t h e .economy, '23 'Watkins' R e p o r t , O p . C i t . , p. 319 21; I a n M a c D o n a l d , .Op," C i t . n . l S l i 20 o f t h a t country.'"'' P o l i t i c a l E f f e c t s o f American Ownership When s p e a k i n g of t h e p o l i t i c a l e f f e c t s o f the A m e r i c a n ownership of C a n a d i a n i n d u s t r y , the most f r e q u e n t l y advanced argument, however, i s t h a t by e s t a b l i s h i n g a c e r t a i n p a t t e r n of i n v e s t m e n t i n Canada, Americans are d e t e r m i n i n g b o t h our f u t u r e economic and p o l i t i c a l c h a r a c t e r . "The r e a l c o n c e r n s h o u l d be t h a t f o r e i g n i n v e s t m e n t has made i t d i f f i c u l t f o r us t o c o n s t r u c t an economy a p p r o p r i a t e t o our own needs and our own b e s t i n t e r e s t s " . T h i s , i t i s a r g u e d , has l e d t o an economic d i s t o r t i o n of t h e i n d u s t r i a l s t r u c t u r e r e s u l t i n g from t h e c h a r a c t e r of d i r e c t f o r e i g n i n v e s t m e n t , t o the d e r i v a t i v e n a t u r e of t h e a c t u a l i n d u s t r i e s w hich are e s t a b l i s h e d i n the branch p l a n t s e c t o r o f the economy and to the " m i n i a t u r e r e p u b l i c a e f f e c t " o f t h e e s t a b l i s h m e n t o f a s m a l l e r but p a r a l l e d e d i t i o n of the American e conomy.^ And so, i t would be argued, our, economy, and our p o l i t i c s have become l i n k e d t o and p a t t e r n e d on the American model. The argument makes the r e l a t i o n s h i p seem even more s i n i s t e r when we c o n s i d e r the t y p e o f developments i n the American economic s t r u c t u r e w herein American c o r p o r a t i o n s , t r a d e u n i o n s and u n i v e r s i t i e s are b e i n g bound i n t o what i s termed the "new i n d u s t r i a l s t a t e " . 25 see Page 15 26 Ian F a c D o n a l d , O p . C i t . , p.l87 27 Ian MacDonald, O p . C i t . , p.l87 2 1 Research in Canada At the same time, research in Canada, especially industrial research,is comparatively low, while the competitiveness of a nation's industry has come to rest on i t s capacity to lead i n technological innovation, "In a 16-nation survey of public and private spending conducted by the Paris-based Organization for 'Economic .. Cooperation and Development, Canada ranks eighth (after Germany and Sweden) in the proportion of i t s Gross National Product devoted to research - 1.1% compared to the U.S.'s j>.U-%n. 28 An Important source of economic growth in the future w i l l be to nations capable of technological leadership and technical change. Canada has not even retained the autonomy of i t s research and development i n "key sector" industries, frequently reserved by nations for indigenous development. These are usually industries i n the vanguard of s c i e n t i f i c -technological change and have widespread implications for the economy. Dependency of Canada on the united States We would be quite naive to believe, however, that we would be about to free ourselves from the p o l i t i c a l hegemony of the United States by huy^ng back even a significant portion 28 Time, November 28, 1969 ; see also appendix k, p. 120 22 o f t h o s e s e c t o r s of- o ur economy -which have now f a l l e n i n f o t h e hands o f A m e r i c a n I n v e s t o r s , A c c o r d i n g ,to P r i m e M i n i s t e r T r u d e a u , " i t i s more i m p o r t a n t . .-for us t o use our s a v i n g s t o inve-st i n t h e f u t u r e r a t h e r t h a t t o use t h e s e s a v i n g s t o buy up t h e p a s t and t o t r y t o buy out t h e A m e r i c a n c o n c e r n s w h i c h a r e h e r e now". 29 -If o u r i n t e n t i o n s i s t o a v o i d f r e e - t r a d e , we s h o u l d n o t e x p e c t t h a t p u r s h o r t term b a l a n c e o f - p a y m e n t s p o s i t i o n c a n be. s e r i o u s l y , changed.. We. w i l l - c o n t i n u e to' r e q u i r e " s u b s t a n t i a l sums -of. c a p i t a l f r o m some s o u r c e e x t e r n a l t o .our economy i f ; i t l a n o t t o become c o m p a r a t i v e l y i m p o v e r i s h e d . The W a t k i n s R e p o r t c o n c l u d e d t h a t more t h a n 2 0 $ o f t h e r i s e i n C a n a d i a n l i v i n g s t a n d a r d s between 1 9 5 0 and 1 9 5 6 was due t o f o r e i g n i n v e s t m e n t . M e a n w h i l e , o u r f o r e i g n d e b t was 62$ of our G.N.P, i n 19 61+. As we have a l r e a d y s e e n , t h e amount payed out t o A m e r i c a n s as d i v i d e n d .-payments o r p r o f i t s has d e c r e a s e d s h a r p l y as a p e r c e n t a g e o f o u r G.N.P, f r o m 1 9 2 6 t o t h e p r e s e n t . I t would be h a r d t o s a y , as w e l l , t h a t A m e r i c a n d i r e c t i n v e s t -ment-was a d e b i t i n o u r l o n g t e r m b a l a n c e o f p a y m e n t s . p o s i t i o n s i n c e i s i t , f o r t h e most p a r t , I n t h e f o r m o f i r r e m o v a b l e c a p i t a l equipment. R e p a t r i a t i o n o f most o f t h i s equipment would be d i f f i c u l t . The C h i e f E c o n o m i s t o f O n t a r i o , M. I a n MacDonald, p o i n t out t h a t ; "Many Amer Icans-owned f i r m s have p e r f o r m e d b e t t e r i n 29 P.E, T r u d e a u , New Y o r k Time, November 1 9 6 8 3 0 ' W a t k i n s R e p o r t , 1 O p . P i t . , p . 6 0 31 A p p e n d i x 5 32 see pgn-e X*5 23 t h e r e i n v e s t m e n t o f p r o f i t s t h a t have t h e i r C a n a d i a n c o u n t e r p a r t s . T h i s c e r t a i n l y one o f t h e p r i n c i p a l r e a s o n s f o r t h e r a p i d g r o w t h o f A m e r i c a n f i r m s compared w i t h t h e i r C a n a d i a n c o m p e t i t o r s . I n t h e p e r i o d 19'' 6-1961, $5,626 m i l l i o n of a t o t a l &8,980 m i l l i o n o f A m e r i c a n c a p i t a l , o r 63 p e r c e n t , was p r o v i d e d by c a p i t a l i n f l o w , whereas !%3j 3 5 k . m i l l i o n , o r 37 pen c e n t , was p r o v i d e d f r o m the r e i n v e s t m e n t o f p r o f i t s ™ . 33 The most s i g n i f i c a n t f a c t o r i n our b a l a n c e o f payments d e f i c i t w i t h t h e U n i t e d S t a t e s i s o u r p a t t e r n o f p u r c h a s i n g , A m e r i c a n s u b s i d i a r i e s u n d o u b t e d l y c o n t r i b u t e s i g n i f i c a n t l y t o t h i s i m b a l a n c e ; h o w e v e r , one s h o u l d r a i s e t h e q u e s t i o n w h e t e r t h e c o n d u c t o f f o r e i g n - o w n e d companies v a r i e s g r e a t l y f r o m t h e Canadian-owned companies i n t h i s a r e a . B u t we c a n n o t a l t e r t h e c a p a c i t y o f t h e A m e r i c a n g o v e r n -ment t o r e s t r i c t t h e i n f l o w s o f c a p i t a l i n t o o ur economy w h i c h a r e r e q u i r e d t o m a i n t a i n o u r p r e s e n t r a t e o f g r o w t h and p r o s p e r i t y , "we a r e g o i n g t o c o n t i n u e t o need f o r e i g n c a p i t a l f o r Canada d e v e l o p m e n t , and t h e know-how t h a t o f t e n goes w i t h i t " . 3k n o r c a n we r e s t r i c t A m e r i c a n t a r i f f c o n t r o l s o v e r our s a l e s t o t h e U n i t e d S t a t e s , C a n a d i a n e x p o r t s t o the U n i t e d S t a t e s a c c o u n t f o r about 60% of a l l e x p o r t s o r 12$ of our C-.N.P.,-^ A m e r i c a n e x p o r t s t o Canada a c c o u n t f o r about 1% o f t h e A m e r i c a n G.N.P..-^The p a t t e r n o f t r a d e i n r e l a t i o n t o t h e 33 I a n M a c D o n a l d , O p . C i t . , p . l 8 3 , l 8 k 3k L.B. P e a r s o n , P.M., L i b e r a l . D i n n e r , V a n . M a r c h 31,1967 35 The U.S. t o o k 70% of a l l C a n a d i a n .export i n 1969, see p.8 36. G.H. C r a i g , O p . C i t . , p.26k 2k two economies i s h a r d l y one o f i n t e r d e p e n d e n c e ; i t m i g h t b e t t e r be d e s c r i b e d as a d e p e n d e n c y . The above c o n t r o l s c a n be e x e r c i s e d r e g a r d l e s s o f t h e n a t u r e o f f o r e i g n i n v e s t m e n t i n C a n a da. , Mr, Gordon's second m a j o r p r o p o s a l i s i n f a c t r a t h e r s p u r i o u s . I t i s t h a t d i s c r i m i n a t o r y t a x e s be i n t r o d u c e d t o encourage t h e e x t e n s i o n o f 2%f0 o f t h e A m e r i c a n s h a r e s o f A m e r i c a n s u b s i d i a r i e s t o C a n a d i a n i n v e s t o r s . However, t h e " C a r t e r C o m m ission s t a t e s t h a t even m a j o r i t y v o t i n g i n t e r e s t i s n o t a g u a r a n t e e , o f C a n a d i a n c o n t r o l " . I f M r . Gordon i s s e r i o u s l y i n t e r e s t e d i n I n s u r i n g a. C a n a d i a n v o i c e i n t h e d i r e c t ! p n , o f f o r e i g n s u b s i d i a r i e s t h e n he s h o u l d , remember t h a t t h e " p a r t i c i p a t i o n of C anadians as e x e c u t i v e s or d i r e c t o r s on -37 t h e m a j o r n o n - r e s i d e n t c o n t r o l l e d companies i s w i d e s p r e a d " . ' T h i s i s i n s t r i k i n g c o n t r a s t t o the l i m i t e d , p a r t i c i p a t i o n a v a i l a b l e t o C a n a d i a n s i n the e q u i t y o w n e r s h i p o f s u c h c o m p a n i e s . B u t t h e r e i s no g u a r a n t e e t h q t e i t h e r C a n a d i a n s h a r e h o l d e r s o r d i r e c t o r s w i l l choose t h e i n t e r e s t of t h e i r n a t i o n o v e r t h e b e s t i n t e r e s t s o f t h e i r company. The t w o , as we have s e e n , a r e n o t a l w a y s c o m p a t i b l e . I n "Lament f o r A N a t i o n " , M r . G r a n t s a i d t h a t ; "Economic c o n t r o l i s n o t f i n a l l y i n t h e hands of the g o v ernment, and f o r e i g n c a p i t a l i s a b l e t o d e t e r m i n e p o s s i b l e governments by I n c a r n a t i n g i t s e l f as an i n d i g e n o u s r u l i n g c l a s s " 38 37 B r e c h e r & R e i s m a n , Canada-TJ. 3. Economic ' R e l a t i o n s , p. 13.5 38 G. G r a n t , Lament f o r A N a t i o n , p. Ill 3 Those, t h e n s h o u l d be the l i m i t s , to w h i c h we c a n go i n r e d e f i n i n g t h e e f f e c t s o f f o r e i g n ownership on our b a l a n c e o f payments p o s i t i o n . They a r e l i m i t e d and t h e y are e x c l u s i v e of t h e a b i l i t y of the A m e r i c a n government t o c o n t r o l c a p i t a l i n f l o w s and C a n a d i a n i m p o r t s , b o t h fundamental t o t h e p r o s p e -r i t y of the C a n a d i a n economy. L o s s o f T a x a t i o n The s e c o n d d i r e c t p o l i t i c a l e f f e c t of A m e r i c a n ownership of C a nadian i n d u s t r y , t h a t of l o s t t a x a t i o n s , i s n o t i r r e v e r s a b l U n d o ubtedly, Canada c o u l d implement l e g i s l a t i o n t o e n s u r e the improved c o l l e c t i o n of t a x e s from A m e r i c a n s u b s i d i a r i e s . But i t s h o u l d also- be kept i n mind t h a t f o r e i g n s u b d i d i a r i e s c o n t r i b u t e - more t h a t n $800 m i l l i o n i n t a x e s a n n u a l l y . T h i s exceeds the l o s s from u n f o r t u n a t e e x t r a c t i v e p r o c e s s e s many times o v e r . F a v o u r a b l e R e a c t i o n from U.S. Government I t must be s a i d t h a t the U n i t e d S t a t e s government appears, a l l e a s t , t o have a c t e d w i t h c o n s i d e r a t i o n when i n f o r m e d o f the obnoxious e f f e c t s o f the e x t r a t e r r i t o r i a l i t y o f i t s a n t i - m o n o p o l y and e x p o r t laws. When, f o r i n s t a n c e , e x - E x t e r n a l A f f a i r s M i n i s t e r , P a u l M a r t i n , " s t r o n g l y p r o t e s t e d American 26 •assumption of ths r i g h t to d i r e c t the investment or any other-p o l i c i e s of U.S. i n v e s t o r s i n Canada o p e r a t i n g under Canadian •law", the American members o f the IT.3, Canadian Committee on T r a d f * and "Economic A f f a i r s responded w i t h sympathy. A j o i n t communique i s s u e d by the committee s t a t e s : "The U.S. members made c l e a r t h a t the U.S. Government-was not r e q u e s t i n g U.S. c o r p o r a t i o n s to advise t h e i r Canadian s u b s i d i a r i e s to act i n any way t h a t d i f f e r e d .: from t h e i r normal business p r a c t i c e s as regards the r e p a t r i a t i o n of e a r n i n g s , purchases and s a l e s p o l i c i e s , or t h e i r f i n a n c i a l and commercial a c t i v i t i e s " . 3 9 Although, as Mr. Mac-Donald argues, the statement may somewhat i d e a l i z e the a c t u a l s i t u a t i o n , n e v e r t h e l e s s , the American government has not i n s t i t u t e d any p u b l i c l y known a c t i o n s to c o n t r o l the export o p e r a t i o n s of Canadian s u b s i d i -a r i e s s i n c e the statement was i s s u e d i n 1966. • P u b l i c i t y h e l p s , both t o i n s u r e that we are not without the support of p u b l i c o p i n i o n b oth here and i n the U n i t e d S t a t e s and.to reasure the Canadian p u b l i c t h a t the American government i s not exer-c i s i n g a r e g u l a t o r y c o n t r o l over our export p o l i c i e s . However, Canada coul d go much f u r t h e r by attempting to secure American governmental c o - o p e r a t i o n f o r r e s c i n d i n g the a p p l i c a t i o n of the American t r a d i n g w i t h t h e Enemy Act to Canadian a f f i l i a t e of American c o r p o r a t i o n . I t c o u l d do so by p r o v i n g t h a t . t h i s Act prevents some companies from a c t i n g as "good Canadian Cor-porate c i t i z e n s " i n export markets and generates f e a r t h a t Ame-r i c a n . Companies i n Canada w i l l be used to implement American 39. Ian MacDanald, "The Issue That W i l l not Die", Behing the He a d l i n e s , p.13 27 f o r e i g n p o l i c y . I s i t P o s s i b l e t o E v a l u a t e i f B e n e f i t s Outweigh, the C o s t s o f F o r e i g n i n v e s t m e n t s f Do b e n e f i t s outweigh t h e c o s t ? I s h a l l admit at once t h a t I do n o t know1 the answer. Indeed, t h e t h e s i s I want t o 1 a r g u e i s t h a t a c l e a r cut answer i s v i r t u a l l y i m p o s s i b l e . B e s i d e s t h e d i r e c t b e n e f i t s and c o s t s o f d i r e c t f o r e i g n i n v e s t m e n t which can be compared r e l a t i v e l y e a s i l y , t h e r e a r e i n d i r e c t ; b e n e f i t s and c o s t s which may be v e r y i m p o r t a n t but are almost i n c a p a b l e of q u a n t i t a t i v e assessment. The t r o u b l e I s t h a t , w h i l e the b e n e f i t s , e v e n the i n d i r e c t ones, a c c r u e c u r r e n t l y a r e w i d e l y f e l t and a p p r e c i a t e d t h e c o s t s are l a r g e l y d e f e r r e d and some of the i n d i r e c t c o s t s may n o t even be s u s p e c t e d . I t i s i n b r i n g i n g the l e s s o b v i o u s c o s t s and b e n e f i t s t o l i g h t and b r o a d l y a s s e s s i n g t h e i r p r o b a b l e w e ight t h a t t h e o r i t i c a l a n a l y s i s can be o f use. What a l t e r n a t i v e do t h e economic n a t i o n a l i s t s and e m o t i o n a l a n t i - A m e r i c a n s o f f e r ? I t i s u n d e n i a b l e t h a t f o r e i g n i n v e s t m e n t c a p i t a l has speeded up Canada's economic:: growth. What: the opponents of f o r e i g n t a k e - o v e r s seem c o m p l e t e l y u n a b l e t o a p p r e c i a t e 1 , a r e the f a c t s , f i r s t , t h a t t a k e - o v e r s are one o f the ways by which p r o d u c t i v e e f f i c i e n c y i s improved and w e a l t h and income i n c r e a s e d i n a market economy, and second, t h a t w h i l e p r e v e n t i n g or impeding t a k e - o v e r s by f o r e i g n e r s may or may n o t damage the economic i n t e r e s t s o f t h e f o r e i g n e r s i n q u e s t i o n , i t i s p r a c t i c a l l y c e r t a i n t o dartrage b o t h the Can a d i a n s owners o f r e a l a s s e t s or e q u i t i e s and the C a n a d i a n economy as a whole. There i s no e v i d e n c e of s e r i o u s harm t o the C a n a d i a n economy, N o t h i n g i s l o s t by h a v i n g C a n a d i a n i n d u s t r y c o n t r o l l e d from a b r o a d , w h i l e much Is gained f r o m t h e c a p i t a l and t e c h n o l o g y w h i c h the f o r e i g n e r s b r i n g u s. Wit h o u t U.S. c a p i t a l we would n o t be moving v e r y q u i c k l y a t p r e s e n t , and I do not see any p r o s p e c t of moving q u i c k l y , i n the f u t u r e u n l e s s we c o n t i n u e t o a t t r a c t U.S. c a p i t a l . B e f o r e c o n s i d e r i n g w h a t ; c o u r s e s o f a c t i o n Canada c o u l d adapt, i t may be a d v i s a b l e to m e n t i o n c o u r s e s of a c t i o n w h i c h do n o t a p p e a r t o be p o s s i b l e at t h e p r e s e n t t i m e . Our a t t i t u d e towards o u t s i d e c a p i t a l s h o u l d n o t be one of i r r e s p o n s i b l e h o s t i l i t y ; on the c o n t r a r y , i t s h o u l d be welcome on c o n d i t i o n , t h a t i t r e s p e c t law d e s i g n e d ito promote h e a l t h y'national development. The answer h e r e i s not t o chase away f o r e i g n c a p i t a l . The answer i s t o use f o r e i g n c a p i t a l w i t h i n the framework of n a t i o n a l economic development and t o c r e a t e i n d i g e n o u s c a p i t a l and d i r e c t i t toward the key s e c t o r s of the f u t u r e . Many f e a r s are u n d o u b t e d l y based on i m a g i n a r y dangers 2-9 and cannot be s u b s t a n t i a t e d . S u b s i d i a r i e s o f f o r e i g n f i r m s are p e r f o r m i n g v e r y w e l l by C a n a d i a n s t a n d a r d s . I t i s o f t e n s t a t e d t h a t American c o r p o r a t i o n s are used or c o u l d be used, as i n t r u m e n t s o f p o l i t i c a l c o n t r o l by t h e U.S. government. I t h i n k we can r e j e c t t h i s h y p o t h e s i s and l e t s a y t h a t what f o r e i g n c a p i t a l does i n Canada i s a m a t t e r f o r the Government t o d e t e r m i n e . I t i s t h e n up t o the Government of Canada t o s t a t e t h e r u l e s o f t h e game. The second f e a r o f t e n e x p r e s s e d i s t h a t f o r e i g n ownership w i l l c r e a t e a charge a g a i n s t the c o u n t r y - i n the form o f repayment o f de b t and payment of i n t e r e s t and dividend-. While r e c o g n i z i n g t h a t any i n f l o w o f c a p i t a l c r e a t e s a debt, we s h o u l d p o i n t out t h a t the i n t e r e s t s and d i v i d e n d s p a i d abroad has c o n s t a n t l y d i m i n i s h e d . I n t e r e s t d e c r e a s e d from 6.li% i n the d e p r e s s e d 1930's t o 1.9$ i n 1965. D i v i d e n d s have f a l l e n from 25$ i n t h e 1930, t o 9$ i n 1965. T h i r d l y , i t has been s u g g e s t e d t h a t t h e c r i t e r i a under w h i c h t h e s e f i r m s o p e r a t e are n o t i n the b e s t n a t i o n a l economic i n t e r e s t of Canada - t h a t the n a t i o n a l economic g o a l i s s e r v e d by an o r g a n i z a t i o n w hich would be p r e p a r e d t o s a c r i f i c e n a t i o n a l i n t e r e s t t o i t s o v e r a l l c o r p o r a t e advantage. Here, a g a i n , I t i s the r e s p o n s a b i l i t y of t h e government t o see t h a t t h i s does not happen. The government must s t a t e what c r i t e r i a are t o be f o l l o w e d t o make sure t h e n a t i o n a l i n t e r e s t i s s e r v e d . R e c o g n i z i n g the p o s i t i v e c o n t r i b u t i o n of f o r e i g n c a p i t a l irO see p. 15 t o Canada's economic development does n o t , o f c o u r s e , mean we must n o t s e e k g r e a t e r domestic p a r t i c i p a t i o n i n the ex-p a n s i o n o f the economy. C a n a d i a n s w i l l r e a p a l a r g e r s h a r e o f t h e p r o c e e d s of i n d u s t r i a l development t o t h e e x t e n t t h a t t h e y p a r t i c i p a t e more f u l l y i n the c r e a t i o n and ownership o f C a n a d i a n i n d u s t r y . The p r o p o r t i o n o f new development w h i c h we can c a r r y out w i t h C a n a d i a n - r e s o u r c e s i s d e t e r m i n e d f i r s t by the r a t e o f growth and s e c o n d l y by how, and how much, Canadians w i l l choose t o devote t h e i r r e s o u r c e s t o i n d u s t r y -b u i l d i n g p u r s u i t s . I t w i l l n o t be i n c r e a s e d by k e e p i n g out f o r e i g n c a p i t a l . On t h e c o n t r a r y , i t w i l l be d i m i n i s h e d . Any r e d u c t i o n o f f o r e i g n funds i n t o C a n adian e n t e r p r i s e would- r u n the r i s k o f s l o w i n g - u p Canada's development, w i t h a l l the well-know c o n s e q u e n t i a l r e s u l t s . The s u r e s t way t o a c h i e v e g r e a t e r Ganadian ownership i s t o f o s t e r , n o t impede,. our economic development; and t h e n t o eneourage t h e .use o f the p r o c e e d s from t h i s growth i n expanding our own c a p i t a l r e s o u r c e s and d e v e l o p i n g ; new a r e a and e n t e r p r i s e . And h e r e we s h o u l d c o n s i d e r s e r i o u s l y the p l a n f o r the Mid-Canada Development C o r r i d o r , or" P l a n f o r t h e Second Canada. A l t h o u g h t h i s i s y e t a b o l d c o n c e p t , i t s sponsors want i t t o h a r d e n i n t o something more. The P l a n seeks the development o f a s-:eaoHd Canada by C a n a d i a n s . G e o g r a p h i c a l l y , i t s c o v e r s a c o r r i d o r 200 t o 500 m i l e s wide span n i n g k,000 m i l e s from c o a s t t o c o a s t ; f i n a n c i a l l y , the 31 t a g i s f o u r t o f i v e b i l l i o n d o l l a r s . I t c a l l s f o r t h e c r e a t i o n o f new t r a n s p o r t a t i o n r o u t e s , new p o r t s , c o m m u n i c a t i o n l i n k s , new c o m m u n i t i e s , new i n d u s t r i e s , i n v o l v i n g t h e t o t a l i n v e s t m e n t m e n t i o n n e d above p h a s e d o v e r 2 0 t o 2 ^ y e a r , some i f 2 0 0 a y e a r . I t s t r e s s e s t h e n e c e s s i t y f o r i n c e n t i v e s t o b r i n g i n d u s t r y a n d p e o p l e I n t o t h e a r e a . The s t u d y c o n c l u d e s t h a t C a n a d a ' s f u t u r e i s i n s e p a r a b l y l i n k e d w i t h t h e d e v e l o p m e n t o f m i d - G a n a d a , now p r i m a r i l y u n d e r d e v e l o p e d a n d r i c h i n m i n e r a l , f u e l , f o r e s t , w a t e r and t o u r i s m r e s o u r c e s . I t s t a t e s the b e l i e f t h a t t h e a r e a h a s t h e p o t e n t i a l to s u p p o r t m i l l i o n s o f p e o p l e , a n d t h a t t h e c o s t s o f d e v e l o p m e n t w i l l be f a r o u t w e i g h e d by t h e r e t u r n s t o be g a i n e d f r o m optimum u t i l i z a t i o n o f t h e c o u n t r y ' s r e s o u r c e s ' And as a c o n c l u s i o n one s h o u l d remember t h a t f o r e i g n o w n e r s h i p i s p a r t and p a r c e l o f t h e g r o w i n g t r e n d t o w a r d t h e l a r g e m u l t i n a t i o n a l c o r p o r a t i o n . T h i s i s a f a c t o f l i f e w h i c h , i f a c c e p t e d and u s e d p r o p e r l y , c a n b r i n g g r e a t b e n e f i t s . Whether or n o t i t i s u s e d w i s e l y i n t h e e c o n o m i c programme o f t h e n a t i o n d e p e n d s u p o n t h e e x t e n t t o w h i c h t h e G o v e r n m e n t d e f i n e s t h e r u l e s o f t h e game. I n t h e f i n a l a n a l y s i s , i t d o e s n o t m a t t e r v e r y much who owns t h e c a p i t a l - - I t i s t h e u s e t o w h i c h i t i s p u t t h a t c o u n t s , and t h i s i s a f i e l d i n w h i c h t h e G o v e r n m e n t c a n be t h e d e t e r m i n i n g i n f l u e n c e . I l l V a n c o u v e r 5 u n , S e p t . 13, 1969 & M o n e t a r y T i m e , M a r c h 1969 see A p p e n d i x 16, • , 1 32 What r e a l l y i s t h e C a n a d i a n Problem What, th e n , o f the most common argument, t h a t the economy, the c u l t u r e and t h e r e b y the p o l i t i c s of Canada are becoming not o n l y i n c r e a s i n g l y p a t t e r n e d on t h e A m e r i c a n model, but p e r c e p t a b l y i n t e g r a t e d i n t o i t ? " I t i s almost as i f t h e n a t i o n ^ ^ t a t e : i n . g e n e r a l arid the C a n a d i a n n a t i o n i n p a r t i c u l a r were viewed as s i m p l y one p o s s i b l e c o n f i g u r a t i o n o f human e n e r g i e s w hich may or may n o t be t h e most a p p r o p r i a t e way of h a n d l i n g t h e v a r i o u s f o r c e s and problems c r e a t e d by the modern environment''. U'd B r i t i s h or frenchmen do n o t have t o keep t o r t u r i n g t h e m s e l v e s i n the t w e n t i e t h c e n t u r y by a s k i n g q u e s t i o n s about the n a t u r e of t h e i r i d e n t i t y or how t h e y can d i s t i n g u i s h t h e m s e l v e s . That was a l l ' r e s o l v e d i n the m i d d l e ages, Canadians are n e v e r g o i n g t o be l e f t t o t h e m s e l v e s enough i n t h i s w o r l d t o d e v e l o p n a t i o n a l c h a r a c t e r i s t i c s as c l e a r c u t as t h e s e . They l i v e i n an age o f u n p a r a l l e l e d i n t e r d e p e n d e n c e and nowhere i s t h i s i n t e r d e p e n d e n c e more advanced t h a n i n the f i e l d o f the economic growth. The growth of huge t e c h n o s -s t r u c t u r e s b i n d s not o n l y c o n t i n e n t a l economies t o g e t h e r but even the c o n t i n e n t s t h e m s e l v e s i n t o a m u tual a l l i a n c e f o r the s h a r i n g of new t e c h n o l o g i g a l knowledge and advanced methods o f p r o d u c t i o n . Canada has c o n t r i b u t e d l i t t l e t o t e c h n o l o g i c a l advancement, y e t few o t h e r n a t i o n s have b e n e f i t t e d f r o m i t more than she h a s . I t i g n o r e s b o r d e r s and much more t h a n the k2 P. R u s s e l , N a t i o n a l i s m i n Canada, p.3b7 t r a d i t i o n a l c o n c e p t o f f r e e and u n h i n d e r e d i n t e r n a t i o n a l t r a d e m o d i f i e s and homogenized f o r m e r l y d i s t i n c t i d i g i n o u s c u l t u r a l p a t t e r s , v a l u e s a r e changed and new demands i n terms of a t t i t u d e s are imposed on t h e e n t i r e p o p u l a t i o n . Canadians f r e q u e n t l y t e r m the i m p o s i t i o n of t h e s e new p a t t e r n s of c u l t u r e " A m e r i c a n i z a t i o n " . I f we a r e Japanese we r e g r e t t h e u s u r p t i o n o f the t r a d i t i o n a l norms and v a l u e s o f t h e o l d e r ; i f we a r e F r e n c h we t r e m b l e a t l e "d e f i a m e r i c a i n " . Y e t Canadians Cannot r e a l l y even p r o t e s t a t t h i s " c h a l l e n g e " t o t h e i r t r a d i t i o n a l c u l t u r a l p a t t e r n s because they are p a i n f u l l y aware o f the l a c k o f a n y t h i n g t o c h a l l e n g e , o f a n y t h i n g w h i c h c o u l d be t h r e a t e n e d . What they sense t o be c h a l l e n g e d i s the o n l y r e a l l y d i s t i n g u i s h a b l e and t a n g i b l e bond i n common, and t h a t i s n o t h i n g more t h a n the p o l i t i c a l s o v e r e i g n t y , t h e l e g a l " f o r e i g n e s s " f o r m t h e U n i t e d S t a t e s . The c u l t u r e i s N o r t h American, l e t n e v e r attempt t o a s s e r t o t h e r w i s e . " A l l C a n a d i a n t h i n k t h a t m o d e r n i t y I s good, so n o t h i n g e s s e n t i a l d i s t i n g u i s h e s Canadians f r o m A m e r i c a n s . When they o b l a t e t h e m s e l v e s b e f o r e " t h e American way of l i f e " ; t h e y o f f e r t h e m s e l v e s on the a l t a r of t h e r e i g n i n g Western Goddess". 1+3 But because of the u n q u e s t i o n e d dominance of the U n i t e d S t a t e s on t h i s c o n t i n e n t , t h i s i s e n t i r e l y more than s a y i n g t h a t German c u l t u r e i s European. Even the growing i n t e r -dependence between the n a t i o n s o f t h e E u r > ° P e a n Economic Community c a n n o t be a n a l o g i z e d t o t h e degree o f c u l t u r a l 1+3 G. Gr a n t , Op. C i t . , p.51+ 3¥ i n t e g r a t i o n between Canada and the U n i t e d S t a t e s . Not a l l v a l u e s and norms a r e s h a r e d , o f c o u r s e , but Canada resemble the U n i t e d S t a t e s much more t h a n any o t h e r n a t i o n . I t i s , t h e n , perhaps t h i s l a c k of a d i s t i n c t i v e c u l t u r a l c h a r a c t e r i s t i c s which makes the p a r t i c u l a r p a t t e r n of i n v e s t m e n t pursued by Americans seem more complete and f r i g h t e n i n g t h a n do l a r g e l y s i m i l a r p a t t e r n s of c o r p o r a t e a c t i v i t y i n many o t h e r but c u l t u r a l l y d i s t i n c t d e v e l o p e d n a t i o n s . I t i s n o t t h a t i t i s u p s e t t i n g our chances o f d e v e l o p i n g a unique Canadian c u l t u r e which i r k s us - we a r e l a r g e l y happy w i t h whatever c u l t u r a l p a t t e r n s we now have- nor i s i t r e a l l y "Americanism" b u t more c o r r e c t l y " t e c h n o s t r u c t u r e " w i t h C a n a d i a n f e e l t h r e a t e n e d . L a c k i n g , a t l e a s t i n E n g l i s h Canada, an i d e n t i t y of any s i g n i f i c a n t s o r t s , " I n Canada o u t s i d e of Quebec, t h e r e i s no d e e p l y r o o t e d c u l t u r e , and t h e new'changes come i n the form of an i d e o l o g y ( c a p i t a l i s t and l i b e r a l ) w hich seems t o many a s p l e n d i d v i s i o n o f human e x i s t e n c e . " kk C a n a d i a n s , s e n s i t i v e t o the American t h r e a t , c l i n g d e s p a r a t e l y t o t h e i r n a t i o n a l s o v e r e i g n t y . In f a c t , W a l t e r Gordon, E r i c K i e r a n s , and the Watkins R e p o r t are a t t e m p t i n g to defend a d y i n g economic l i b e r a l i s m , b ased on a t r a d i t i o n a l model of s m a l l f i r m s i n a s i t u a t i o n o f f a i r l y a c t i v e c o m p e t i t i o n as mueh as they a r e d e f e n d i n g Canadian p o l i t i c a l s o v e r e i g n t y . T h i s i s h a r d l y t h e i r p r i m a r y o b j e c t i v e (the new n a t i o n a l i s m kk GL Grant:,» Pp.. C i t . , p. k.3 of the E r i c K i e r a n s - W a l t e r Gordon a x i s w h i c h would use the f e a r of A m e r i c a n c o n t r o l f o r the Canadian economy as t h e i d e o l o g i c a l t o o l f o r p u l l i n g F r e n c h - and E n g l i s h - s p e a k i n g Canada t o g e t h e r ) , y e t i t i s i m p l i c i t l y p r e f e r r e d as an economic model i n comparison t o t h e o l i g o p o l i s t i c c h a r a c t e r of t h e impending N o r t h American t e c h n o s t r u c t u r e . Perhaps n o t by i n t e n t i o n , t h e i r recommendations do n o t s i g n i f i c a n t l y d e c r e a s e t h e p o t e n t i a l i t y o f American p o l i t i c a l hegemony, y e t t h e y do s e r v e t o a r r e s t somewhat more e f f e c t i v e l y the growth o f " t e c h n o s t r u c t u r e " . The p o l i t i c a l e f f e c t s o f f o r e i g n ownership are a t worst o n l y an a l t e r n a t i v e means of e x t e r n a l c o n t r o l by the U n i t e d S t a t e s . But i t i s , n e v e r t h e l e s s , r e w a r d i n g f o r Can a d i a n s , p e r h a p s , t o unburden themselves of the d i s r u p t i n g e f f e c t s of t e c h n i c a l and economic change f r o m a l r e a d y p r e v a l e n t p a t t e r n s o f b e h a v i o u r by r a i s i n g t h e c r y of " p o l i t i c a l d o m i n a t i o n " I n much the same way and f o r much the same r e a s o n t h a t t h e F r e n c h c r y out about the d i s i n t e g r a t i o n of the o l d v a l u e s and customs. I t i s , i n e i t h e r c a s e , e a s y t o i n c a r n a t e t h e e v i l s o f t e c h n o c r a c y i n an image of Ame r i c a , p r e s e n t l y on the f o r e f r o n t o f such change. I am a f r a i d , however t h a t an o b j e c t i v e e x a m i n a t i o n of the f a c t s o f e x t r a t e r r i t o r i a l i t y and o v e r t American c o n t r o l over our e x p o r t p o l i c i e s l e a d s one t o co n c l u d e t h a t i t i s much a do about n o t h i n g . Whatever c o v e r t c o n t r o l the U n i t e d S t a t e s w i s h e s t o e x e r c i s e , i t can do q u i t e kS P. R u s s e l , Op. C i t . , p.369 e f f e c t i v e l y w i t h o u t r e f e r e n c e t o t h e o p e r a t i o n s o f i t s s u b s i d i a r i e s I n Canada. A t v e r y r e a l c o s t s the a l t e r n a t i v e of much g r e a t e r economic and p o l i t i c a l independence i s open t o C a n a d i a n s . What we s h o u l d argue i s t h a t n e i t h e r "Mr*. Gord©n?ts~- p r o p o s a l s of the recommendations o f t h e Watkins r e p o r t p r o v i d e any r e a l a l t e r n a t i v e s t o p o l i t i c a l c o n t r o l . The o v e r t I n j u s t i c e s which t h e y d e f i n e a r e at b e s t o c c a s i o n a l i n s i g h t s i n t o t h e deeper economic, and' p o l i t i c a l d o m i n a t i o n under which we r e s i d e . A t worst t h e y are r a t h e r i r r e l e v a n t . D e s p i t e Mr. Gordons's r e v e l a t i o n s about p r e s s u r e f r o m p r i v a t e American C o r p o r a t i o n s which he e x p e r i e n c e d w h i l e s e r v i n g as M i n i s t e r o f F i n a n c e , I would c o n c l u d e t h a t t h e r e Is n o t h i n g s i n g u l a r l y dangerous, p o l i t i c a l l y , I n the p r e s e n c e of American c o r p o r a t i o n s i n Canada. Perhaps i t i s c o r r e c t t h a t W a l t e r Gordon i s so g e n u i n e l y o b s e s s e d w i t h t h e f a c t t h a t Canada i s l o s i n g i t s s o v e r e i g n t y t h a t h i s measures would i n s u r e i t s l o s s . By d i s c o u r a g i n g American i n v e s t m e n t we. w o u l d ' v o l u n t a r i l y i m p o v e r i s h i n g Canadians and g a i n n o t h i n g . To seek c a p i t a l e l s e w h e r e i s t o take o n l y the f i r s t s t e p i n an extended walk. And i f i t i s t o be a t a l l s i g n i f i c a n t I n f r e e i n g Canada from t h e p o l i t i c a l d o m i n a t i o n o f the U n i t e d S t a t e s i t must be c o o r d i n a t e d w i t h major changes i n t h e t r a d i n g p a t t e r n s and the s e a r c h f o r t e c h n o l o g i c a l 37 advancement. To an e x t e n t , i t would r e q u i r e becoming something o t h e r than N o r t h American, a change i n the v a l u e s , b e l i e f s and p a t t e r n s of behaviorar. Canadian s h o u l d r e c o g n i z e the r e a l i t y - of t h e i r economic dependence on the U n i t e d S t a t e s . They s h o u l d n o t , however, waste t h e i r time on h a l f - b a k e d a t t e m p t s t o f r e e t h e m s e l v e s f r o m th e use of t h i s dependency as an i n s t r u m e n t o f American p o l i t i c a l c o n t r o l . : C a n a d i a n s are s t i l l a l l o w e d a wide measure o f autonomy; i n t e r n a l l y to i n s u r e a b e t t e r e x i s t e n c e and e x t e r n a l l y t o a s s e r t t h e i r w i l l on even t h o s e i s s u e s which d i r e c t l y a f f e c t t h e U n i t e d S t a t e s . P a r t l y because Canada'has d e v e l o p e d i t own p a r t i c u l a r problems -b i l l n g u a l i s m - monarchism- p a r l i a m e n t a r i a n i s m - and p a r t l y because A m e r i c a n c u l t u r e ( not Canadian) has undergone some s i g n i f i c a n t changes In t h e p a s t decade - Canadians have now a c h i e v e d , perhaps, enough c u l t u r a l i d e n t i t y to a t t r a c t p e o p l e t o t h i s n a t i o n f o r o t h e r than s t r i c t l y economic r e a s o n s . I t may be t h a t Canadians can compete w i t h t h e U n i t e d S t a t e s on o t h e r t h a n economic terms, perhaps, l i k e t h a t o t h e r N o r t h American m i n o r i t y , the Jews, th e y c o u l d r e s i s t d o m i n a t i o n by b e i n g b e t t e r at c e r t a i n t h i n g s t h a n the dominant m a j o r i t y . I f Canadian are committed t o b e i n g C a n a d i a n , t h e y have ' the freedom to experiment w i t h t h e i r p o l i t i c a l autonomy. I f the C a n a d i a n p e o p l e , and more e s p e c i a l l y i t s p o l i t i c i a n s , w i s h to c o n t r o l t h e i r economy,. d i r e c t i n g i t i n the i n t e r e s t s of the 36 b i n a t i o n a l S t a t e , t h e y have o n l y to d e s i n g a p p r o p r i a t e p o l i c i e s and have t h e w i l l to implement them. They s h o u l d remember, however, t h a t t h e r e i s a p r i c e t o pay f o r e v e r y t h i n g . Canada c o u l d , however, i f i t w i s h e s , r e l y l e s s h e a v i l y on f o r e i g n Investments t o d e v e l o p Canada, The Canadian government c o u l d p r o v i d e t ax exemptions on d i v i d e n d s r e c e i v e d by Canadianson money I n v e s t e d i n Canada. I t c o u l d , i n o t h e r words, encourage and m o t i v a t e Canadians t o i n v e s t i n Canada i n s t e a d o f abroad. As mentionned e a r l i e r C a n a d i a n s had $>12.2 b i l l i o n i n v e s t e d abroad i n 19b'-!. These domestic s a v i n g s c o u l d have been c h a n e l l e d p a r t l y i n t o Canadian I n d u s t r i e s i n Canada. The R e p o r t of t h e R o y a l Commission on T a x a t i o n , p o p u l a r l y know as t h e C a r t e r R e p o r t , c r i t i s i z e s the p r e s e n t t a x system: "the f i s c a l system has n o t been used as e f f e c t i v e l y as i t c o u l d have been used t o - encourage Canadian ownership and c o n t r o l of C a n a d i a n i n d u s t r y . " The Commission p r o p o s e s t h a t C a n a d i a n i n t e r e s t r a t e s s h o u l d be i n c r e a s e d a l i t t l e I n comparison w i t h U.S. i n t e r e s t r a t e s . I t appears t o b e l i e v e t h a t f o r q u i t e modest Canadian c o s t s i n h i g h e r i n t e r e s t r a t e d , c a p i t a l i n f l o w s may be m a i n t a i n e d w h i l e d i r e c t Investment i s r e d u c e d . They a l s o b e l i e v e t h a t i t v i l l i be c o m p a r a t i v e l y e a s y t o s h i f t around the m i x t u r e o f f i n a n c i a l a s s e t s p r e f e r r e d by Canadians, I n c r e a -s i n g s u b s t a n t i a l l y t h e i r h o l d i n g s of e q u i t i e s . 39 The White Paper, " P r o p o s a l f o r Tax Reform", p u b l i s h e d by t h e Government o f Canada i n 1969, a n a l y s e s d i f f e r e n t ways to m o t i v a t e Canadians to keep t h e i r money i n Canada, The government has n e g l e c t e d , i n t h i s paper, t o propose a s o l u t i o n t o the p r o b l e m o f c a p i t a l o u t f l o w s . I t c o n t i n u e s t o a b i d e by t r a d i t i o n a l " l i b e r a l " c o n t i n e n t a l i s t a p p r o a c h to such I s s u e s , I t h i n k t h a t the government s h o u l d be more e x p l i c i t i n de a r i r t g w i t h t h i s problem. Does i t want Canadian c o n t r o l o f t h e economy? To me I t appears n o t t o . I f i t d i d , the g o v e r n -ment would p r o v i d e : l e g i s l a t i o n t o c o n t r o l t h e investments o f - l i f e i n s u r a n c e companies., mutual f u n d s , e t c . . I t would be v e r y i n t e r e s t i n g t o know how much money t h e s e companies take out o f Canada e v e r y y e a r . • The government s h o u l d t h e r e f o r e e s t a b l i s h a c e r t a i n c o n t r o l on the o u t f l o w of c a p i t a l o u t s i d e o f Canada and s h o u l d , by way of t a x exemption, encourage and m o t i v a t e Canadians to i n v e s t i n t h i s c o u n t r y . Only by g i v i n g them h i g h e r r e t u r n on t h e i r c a p i t a l i n v e s t e d can Canadians be m o t i v a t e d t o l e a s e t h e i r money i n Canada. By so d o i n g , Canada would use i t s domestic s a v i n g s t o d e v e l o p i t s i n d u s t r i e s and would r e l y l e s s on f o r e i g n , i n v e s t m e n t s . Introduction kO As you must know by now, Quebec is entering a decisive phase of i t s p o l i t i c a l history. For the past few years, there has been a p o l i t i c a l , educational and economic revolution i n Quebec. Recent discussions on Quebec's p o l i t i c a l v i t a l i t y have led to a complete reappraisal of the postulates by which the decisions in the matter of economic policy are determined. In their desire to assume an ever-increasing role in the formula-ting of industrial investment po l i c i e s , the Quebeeois soon came to realize the confining dependence imposed upon them by the integration into the North American economy. Short of smothering the dynamism and determination shown by Quebec over the last decade, I beleive acknowledgment of these forces at work w i l l help define the objectives which may, and should, be retained by a l l those who participate i n the organization of Quebec's economy. The legitimate desire of Quebec to affirm i t s identity and become "Maltre chez, nous" cannot be separated from the. absolute necessity of providing i t s people with l i v i n g standards comparable to those available to the entire North American Con-tinent. It Is said that the average standard of l i v i n g of Quebec is kO^ below or more to one in the United States, and 2t}% inferior, to that of Ontario. 1 1 Raymond Barbeau, La liberation economique du Quebec, p.21 i l l I f Quebec does n o t p r o v i d e i t s p e o p l e w i t h the same s t a n d a r d o f l i v i n g , i t c o u l d o t h e r w i s e l o s e t o o t h e r a r e a s o f N o r t h America, the most dynamic elements o f i t s p o p u l a t i o n . There i s an i n t i m a t e l i n k between t h e Quebec and t h e N o r t h American economies and h e r e l e t me say t h a t we are Q u e becois l i v i n g i n N o r t h A m e r i c a , Whether we l i k e i t o r n o t , our economy i s l i n k e d w i t h t h a t o f the N o r t h American c o n t i n e n t . I f we do n o t a c c e p t t h a t , we a r e b e i n g u n r e a l i s t i c . T h i s i n t i m a t e l i n k causes c o n t i n o u s t e n s i o n on t h e l o c a l i n d u s t r i a l market; I t demands modern methods o f p r o d u c t i o n , management and m a r k e t i n g . The s p e e d w i t h which our n e i g h b o r s a p p l y t e c h n o l o g i c a l d i s c o v e r i e s t o i n d u s t r y l e a v e s Quebec w i t h no a l t e r n a t i v e b u t to i n t e g r a g e i t s e l f i n t o t h e v e r y h e a r t o f t h i s e v o l u t i o n . T h i s means t h a t I t has t o i n d u s t r i a l i z e I t s e l f t o a g r e a t e r e x t e n t and o r g a n i z e p r o d u c t i o n t o compete on e x t r a - t e r r i t o r i a l m a r k e t s . The e x t r e m e l y r a p i d t e c h n o l o g i c a l p r o g r e s s o f t h e p a s t two decades has amply demonstrated t h a t an economy, b a s e d m a i n l y on h e a v i l y manpowered i n d u s t r i a l p r o d u c t i o n and e x p l o i -t a t i o n o f n a t u r a l r e s o u r c e s , I t c o n t i n u o u s l y t h r e a t e n e d by unemployment. The development o f a u t o m a t i o n t e c h n i q u e s , and the g e n e r a l u t i l i z a t i o n o f h i g h - p e r f o r m a n c e m a c h i n e r y f o r t h e e x p l o i t a t i o n of n a t u r a l r e s o u r c e s , have r e d u c e d i n e x o r a b l y the 2 volume o f employment by m a n u f a c t u r e r s and p r i m a r y i n d u s t r i e s . 2 see appendix & h2 T e c h n o l o g i c a l development,, so v i g o r o u s i n t h e U n i t e d S t a t e s , t h e r e f o r e , r e q u i r e s c o n t i n u o u s r e s t r u c t u r a t i n g o f t h e e n t i r e p r o d u c t i o n s y s t e m . ' Quebec has shown i t s e l f p a r t i c u l a r l y v u l n e r a b l e t o t h i s e v o l u t i o n . The v e r y i m p o r t a n t r o l e p l a y e d by Quebec I n t h e m a n u f a c t u r i n g a r e a w h i c h c o m p r i s e s l e a t h e r , f u r n i t u r e , c l o t h i n g , w h o l e s a l e and r e t a i l h a r d w a r e , as w e l l as i t s o b v i o u s weakness i n t he m a k i n g o f d u r a b l e goods and i n d u s t r i a l equipment f o r mass p r o d u c t i o n , have l e d t o the f o l l o w i n g c o n c l u s i o n ; t h a t a t e c h n i c a l r e n o v a t i o n i n i n d u s t r y c a u s e s a r e d u c t i o n i n manpower r e q u i r e m e n t s and, on t h e o t h e r hand, exposes such i n d u s t r y t o c o m p e t i t i o n from r i c h e r a r e a s , where manpower a p p e a r s of l e s s e r i m p o r t a n c e i n o v e r a l l p r o d u c t i o n c o s t s , T h i s new t e c h n o l o g y w h i c h t h r e a t e n s e n t i r e s e c t o r s • o f Quebec's p r o d u c t i v e i n d u s t r y , i m p l i e s two -complementary c o r r e c -t i v e s t e p s ; f i r s t l y , Quebec w i l l ' have t o d e v e l o p p r o d u c t i o n of•' e q u i pment goods t o r e p l a c e employment l o s s b e c a u s e of automa-t i o n w i t h i n t r a d i t i o n a l i n d u s t r i e s , and i n o r d e r t o p l a c e i t s e l f I n t h e v e r y m i d d l e o f s u c h e v o l u t i o n , Quebec, t h e r e f o r e - , w i l l h a v e - t o be f u l l y aware o f t h e most r e c e n t t e c h n i c a l a d v a n c e s . S e c o n d l y , i t f o l l o w s , t h a t Quebec w i l l have t o d e v o t e much more e n e r g y t o r e s e a r c h for:-new p r o c e s s e s , new m a n u f a c t u r i n g methods, i n . o r d e r t o p r o p e r l y o r i e n t a t e I t s I n d u s t r i e s and m a x i m ize b e n e f i t s o b t a i n a b l e t h r o u g h t t e c h n i c a l p r o g r e s s . 2a A n n u a l r e du Quebec, p. 627, A p p e n d i x 17 k3 The s i z e of. Quebec's own market n e c e s s i t a t e s , however, t h a t we d i r e c t our i n v e s t m e n t endeavors toward p r o d u c t i o n o f s p e c i a l i z e d equipment, because N o r t h A m e r i c a n c o m p e t i t i o n demands p r o d u c t q u a l i t y c o u p l e d w i t h lower c o s t s t h r o u g h mass p r o d u c t i o n . Upon the wisdom of our c h o i c e o f s p e c i a l i z a t i o n s h a l l depend the s u c c e s s o f our i n v e s t m e n t s . R e s e a r c h , however, s h o u l d g i v e us a s s i s t a n c e i n making our s e l e c t i o n . T h i s o r i e n t a t i o n c o u l d n o t be p o s s i b l e w i t h o u t a s p e c i a l e d u c a t i o n a l e f f o r t , aimed a t g i v i n g us a b a s i c competence i n the t e c h n i c a l , a d m i n i s t r a t i v e and s c i e n t i f i c f i e l d s . Such e d u c a t i o n a l endeavor i s w e l l under way. But i s i t f u l f u l l i n g our t r u e r e q u i r e m e n t s ? Quebec has always s u f f e r e d f r o m a c h r o n i c l a c k o f q u a l i f i e d t e c h n i c i a n s . As f a r as b u s i n e s s i s c o n c e r n e d , have we p r o p e r l y a p p l i e d our i n v e s t m e n t knowledge i n o r d e r t o r e a p the g r e a t e s t r e t u r n f r o m our e d u c a t i o n a l program ? T h i s i s the framework w i t h i n which the Government o f Quebec p l a n s t o f o r m u l a t e i t s i n v e s t m e n t p o l i c y . The p a t h i s n o t an easy one, as i t i m p l i e s v a r i o u s elements o f u n c e r -t a i n t y , b u t i t w i l l d o u b t l e s s be the most p r o d u c t i v e i n the l o n g r u n . Today, i n o r d e r t o a c c e l e r a t e the e x p l o i t a t i o n of i t s n a t u r a l r e s o u r c e s and t o d e v e l o p and c o n t r o l I t s own economy, the Government of Quebec has e s t a b l i s h e d d i f f e r e n t economic i n s t i t u t i o n s which w i l l be the p r i n c i p a l t o o l s t o r e g a i n c o n t r o l o f i t s economy i n t h e l o n g r u n . I t would be f o o l i s h t o assume t h a t t h i s e f f e c t i v e c o n t r o l c o u l d be a c h i e v e d i n a s h o r t p e r i o d . I n t e r v e n t i o n by the p r o v i n c i a l government, however, w i l l become so i m p o r t a n t t h a t p r i v a t e e n t e r p r i s e s w i l l no l o n g e r be a b l e t o i g n o r e i t . S i n c e the b e g i n n i n g o f the " q u i e t r e v o l u t i o n " i n I960, the government has n a t i o n a l i z e d a l l p r i v a t e e l e c t r i c i t y companies and a s t e e l company. I t has a l s o e s t a b l i s h e d a Quebec M i n i n g " E x p l o r a t i o n Company, a Quebec D e p o s i t and < Investment Fund, a F o r e s t r y E x p l o i t a t i o n Company, a P e t r o l e u m E x p l o r a t i o n Company, and, as the f i n a l s t e p , i t has e s t a b l i s h e d the G e n e r a l Investment C o r p o r a t i o n o f Quebec w h i c h c o n t r o l s e n g i n e e r i n g , e l e c t r i c a l m a t e r i a l , food p r o d u c t s , t e x t i l e s , wood p r o d u c t s , f e r t i l i z e r s , r e a l e s t a t e and o t h e r companies. Futhermore, t o a s s i s t Quebec's i n d u s t r y , t h e government has c r e a t e d an I n d u s t r i a l R e s e a r c h C e n t r e whose aim Is t o e x p l o r e the i m p l e m e n t a t i o n o f new d i s c o v e r i e s i n s m a l l companies as w e l l as l a r g e c o r p o r a t i o n s . O b j e c t i v e l y c o n s i d e r i n g t h i s wide range o f s t e p s which have e f f e c t i v e l y s e t up a degree o f government c o n t r o l o v e r the economy, one might c o n c l u d e t h a t Quebec's i s a s o c i a l i s t i -c a l l y - I n c l i n e d government. T h i s s i t u a t i o n , however, e x i s t s k5 n o t because the government p u b l i c l y o r p r i v a t e l y espouses a s o c i a l i s t p h i l o s o p h y , but because i t Is p r a g m a t i c a l l y f o l l o w i n g the d i r e c t i o n o f p r o v i n c i a l p u b l i c o p i n i o n . 1*6 Foreign Investment in Quebec ^~ s • English-Canadian contribution to the Economy Due to a present lack of available s t a t i s t i c s i t is impossible to evaluate the tot a l amount of foreign investment in Quebec. One should keep i n mind that the majority of Quebecois, government o f f i c i a l s , professionals, economists, and labor unions, consider that a l l investments which are not purely Quebecois, are foreign investment. This means that i f a company with a head office in Toronto invests In Quebec, the money i t brings into the province i s considered foreign investment, even though i t does not have the same p o l i t i c a l implications as American or French investments. Until today, Quebec has not kept any s t a t i s t i c s on i t s commercial balance with foreign countries or with other provinces. It did not take any accurate account of capital coming in or going out of Quebec. Thus, i t can only estimate the amount of capital coming i n every year by keeping an eye on what investment has been done during the year. Another method which could be adopted i s to divide the total investment in Canada by twenty five per cent. An observer said that Quebec; " w i l l have to wait two more years at least before one can know the s t a t i s t i c s more or less complete on the commercercial balance of Quebec for the f i r s t time, we w i l l know with precision what Quebec buys, and s e l l s to foreign countries and to each of hi the other Canadian p r o v i n c e s . However, we w i l l have to wait t e n more years to f i n d out e x a c t l y the amount of c a p i t a l coming In end going out of Quebec whether they be from d i r e c t investments, s e r v i c e s , or I n v i s i b l e t r a n s a c t i o n s " . 3 We can, t h e r e f o r e see t h a t v i r t u a l l y n o t h i n g i s knows about the value of exports and imports by t h a t segment of the s e r v i c e s i n d u s t r i e s which i s e x t e r n a l l y o r i e n t e d . While no p r e c i s e s t a t i s t i c a l d a t a e x i s t s on Quebec's e x t e r n a l c a p i t a l p o s i t i o n , a number of l e a r n e d s t u d i e s have been made, a l l of which c o n f i r m the P r o v i n c e ' s dependence on o u t s i d e c a p i t a l . The well-known economist, now L i b e r a l p a r t y l e a d e r of Quebec, Mr. Robert Bourassa, estimated t h a t the net annual f l o w of c a p i t a l i n t o Quebec i n the l a s t decade has averaged f.$00 m i l l i o n s . ^ T h i s estimate agrees w i t h t h a t of the Canadian- Manufacturers A s s o c i a t i o n which s t a t e s t h a t p r i v a t e c a p i t a l Investment i n Quebec has remained f a i r l y c o n s t a n t , at around $600 m i l l i o n s a year, f o r the past t h r e e y e a r s . 5 Newsweek c o r r o b o r a t e s the h i g h degree of American c o n t r o l p o i n t i n g out t h a t i t i n c l u d e s more t h a t 9 0 $ per cent of Quebec's manufacturing and resource I n d u s t r i e s and 6 0 per cent of i t s s e r v i c e i n d u s t r i e s . * As f o r Mr. Marchand, the F e d e r a l M i n i s t e r f o r R e g i o n a l Development, he value the t o t a l amount of f o r e i g n Investment i n Quebec as h i g h as :|10 b i l l i o n s , ? 3 l a " P r e s s e , A p r i l 1 9 , 1 9 6 8 li Pimanche-Matin, March 3, 1 9 6 8 5> F i n a n c i a l Time, January 5 , 1 9 7 0 6 Newsweek, February. 2 6 , 1 9 6 8 7 S o c i a l l s m e 6 8 , no. l i t , p. 31 k 8 ( I t seems, however, t h a t Mr, F a r c h a n d w o u l d have t a k e n t h e a v e r a g e f o r e i g n Investment' I n Canada on or a b o u t $30 b i l l i o n s and would have d i v i d e d t h i s amount by t h e p o p u l a t i o n o f Que-B bee on o r about one t b i r d o f t h e C a n a d i a n p o p u l a t i o n ) . The Dean o f Commerce o f t h e d r i v e r s ' t e du Quebec.at T r o i s - R i v i e r e s e s t i m a t e s t h a t t h e p r e s e n t p r o p o r t i o n o f f o -r e i g n i n v e s t m e n t ( m o s t l y A m e r i c a n ) i n Quebec i s J0fo of t h e a o v e r a l l t o t a l . H i s s t a t e m e n t i s v e r i f i e d by r e l i a b l e and w e l l f o u n ded e s t i m a t e s t h a t p l a c e A m e r i c a n e q u i t y i n t e r e s t i n Cana-d i a n n a t u r a l , r e s o u r c e s and m a n u f a c t u r i n g companies a t some IQffo and 60< o f t h e t o t a l r e s p e c t i v e l y . 1 0 I n a s t u d y p u b l i s h e d i n 1 9 6 3 , P r o f . Raymond B a r b e a u d e s c r i b e s an even l a r g e r d e g r e e of f o r e i g n c o n t r o l . He c o n -c l u d e s b y s a y i n g t h a t F r e n c h - C a n a d i a n p a r t i c i p a t i o n i n l a r g e t r a n s p o r t , c o m m u n i c a t i o n , m i n e s , f o r e s t and c o m m e r c i a l e n t i t i e s was m i s c r o s c o p d c i f e x i s t i n g a t a l l . I n g e n e r a l p r o v i n c i a l con . 1 1 t r o l w o u l d n o t e x t e n d t o more t h a t 5% o f t o t a l I n v e s t m e n t s , The Canada O o m i t t e e i n I t s s t u d y r e v e a l s t h e same f a c t s . The r e p o r t s t a t e s t h a t " i t i s p r o b a b l e t h a t F r e n c h C a n a d i a n s l i v i n g i n Quebec own and / o r about f e w e r t h a t .and 1 0 $ r e s p e c t i v e l y o f t h e P r o v i n c e ' s n a t u r a l r e s o u r c e s companies and i t s m a n u f a c t u r i n g f i r m s " 1 2 8 S o c i a l ! sine 6 8 , no. I k , p . 3 1 9 Le H o u v e l 1 i s t e , F e b r u a r y 2 2 , 1 9 6 9 10 Andrew B r i c h a n t , O p t i o n - C a n a d a , p. 20 1 1 Raymond B a r b e a u , O p T C i t . , ~p7T^ 12 Andrew B r i c h a n t , O p . C i t . , p . 2 0 Ii 9 f o r the f o r e s t i n d u s t r y , f i g u r e s p u b l i s h e d by the M i n i s t r y of F o r e s t r y show t h a t 70$ of f o r e s t concessions which are e c o n o m i c a l l y v i a b l e f o r e x p l o i t a t i o n are i n the hand of f o u r f o r e i g n companies; C o n s o l i d a t e d C o r p o r a t i o n L t d . , Canadian I n t e r n a t i o n a l Paper Co., Domtar Company, and P r i c e 13 Company. This i s one o f the p r i n c i p a l i n d u s t r i e s of Quebec 2 s i n c e i t covers 350,000m or 58$ of the surface area of Quebec and account f o r 25$ of i t s Gross N a t i o n a l Product. Another of Quebec»s p r i n c i p a l n a t u r a l r e s o u r c e s which i s e x p l o i t e d almost e n t i r e l y by f o r e i g n e r s , i s i t s m i n e r a l s , A book, "Le Colonial!sme au Quebec", p u b l i s h e d i n 1 9 6 6 by M. Andre D'Allemagne show t h a t : "the value of the mining p r o d u c t i o n i n Quebec was 3 7 3 6 , 0 0 0 , 0 0 0 In 1967 1 5 , and ac c o r d i n g t o the Economic Research C o r p o r a t i o n , i t should more than t r i p l e i n the next 20 y e a r s . The Quebec mining i n d u s t r y i s c o n t r o l l e d by 50 f i r m s . Only s i x of them are French-Canadian and they are not the most important nor the more v i a b l e . The French-Canadian r e p r e s e n t a -t i o n at the d i r e c t i o n of mining and t r a n s f o r -mation i s n e g l i g i b l e .......we can than say that 70 t o 80 per cent of our mining i n d u s t r i e s are d i r e c t e d from the e x t e r i o r of Quebec, and t h a t they answer to foreign, i n t e r e s t s " , 1 6 I t Is obvious from a l l the above r e p o r t s and s t u d i e s t h a t Quebec wh i l e r i c h i n resources i s d e s p a r a t e l y s h o r t of c a p i t a l and must r e l y on f o r e i g n e r s t o develop i t s economy. 13 F e d e r a t i o n L i b e r a l s , du Quebec, Pour une p o l i t i q u e Que-b e c d l s e , p.30 • ~h Anttuaire du Quebec p . 5 0 1 , fr. Appendix 7 fr 8, p.12,3 ^12)0. 15 - f i g u r e s brought t o date, Ann, du Quebec, p.$6k fr App, 9 klO 16 Andre D'Allemagne, Le. C o l o n i a l ! s i n e au Quebec, p.51+. Even though French-Canadians do n o t • p a r t i c i p a t e a c t i v e l y i h t h s development of Quebec's n a t u r a l r e s o u r c e s , t h e y c o u l d s t i l l - ' - p a r t i c i p a t e - . a c t i v e l y i n the f i n a n c i a l market-or f i n a n -c i a l i n s t i t u t i o n s of the p r o v i n c e . Here too, however, they are conspicuous by t h e i r absence. The French-Canadians, i n 1966, c o n s i s t i n g of 30. kC of- the t o t a l p o p u l a t i o n of Canada, c o n t r o l l e d o n l y 96$ of the t o t a l a s sets of• the c h a r t e r e d banks, E n g l i s h speaking Canadians c o n t r o l l e d the other 9 k . 0 k ^ . This f a c t c o u l d have'some important consequences f o r the deve-lopment of Quebec since the French-Canadians could be d e p r i v e d of sources of c a p i t a l e s s e n t i a l f o r the development of the p r o v i n c i a l economy. The two French-Canadian c h a r t e r e d banks In the same year, 1966, (Canadian N a t i o n a l 8c P r o v i n c i a l banks) had. loaned 0.6$ .of t h e i r .assets t o the- Government of Quebec, and -the s i x other E n g l i s h banks even though, t h e i r a s s e t s may b e : g r e a t e r had loaned o n l y 0 . 3 $ of t h e i r a s s e t s . 1 The Importance of the Insurance Companies and t h e i r p a r t i c i p a t i o n i n the Quebec's economy must not be n e g l e c t e d . The t o t a l premiums paid i n 196,5, r e p r e s e n t s 3 7 . 2 $ of the t o t a l pre 1:9 miums p a i d i n Canada. Of the amount p a i d i n Quebec, French-Canadian companies account f o r only 1 8 . 2 $ of the t o t a l premium The t o t a l premiums c o l l e c t e d i n 1965, l a s t year of a v a i l a b l e s t a t i s t i c s amounted to ^ 7 2 2 , 5 0 0 , 0 0 0 . T h i s d e p r i v e s 17 Rosaire F o r i n , F a u t - i l c o n f i e r a New York I ' A v e n i r des Canadiens franc,aTs ?, p. 16 ,17,k7 I 1.8'. Ro s a i r e Morin,"0pTCit. p . k 8 1.9 R o s a i r e ^ o r i n , Op.Cit. p . k 9 3c appendix l k , 20 Ro;Saire F o r i n , O p . C i t # 5 l 21 O f f i c e d'Information et de P u b l i c i t y , Gonnaissance du Quebec, p.65 51 Quebec o f c a p i t a l b a d l y needed f o r e x p a n s i o n . I t i s n e e d l e s s t o s ay t h a t the p e r c e n t a g e i n v e s t e d by E n g l i s h f i r m s i n Quebec i s r e l a t i v e l y s m a l l . Even-the money i n v e s t e d does n o t to f a v o r F r e n c h - C a n a d i a n s e n t e r p r i s e s b u t r a t h e r t h e l a r g e r c o r p o r a t i o n s . These companies had the f o l l o w i n g p e r c e n t a g e o f t h e i r a s s e t i n v e s t e d i n Quebec: Crown L i f e 1.7$ ( 1 9 6 3 ) Dominion L i f e 5.0$ ( 1 9 6 3 ) Canada L i f e 6.3$ ( 1 9 6 5 ) G r e a t West L i f e 5 . 0 $ ( 1 9 6 5 ) C o n f e d e r a t i o n L i f e 9.5$ ( 1 9 6 5 ) I m p e r i a l L i f e 5 . 0 $ ( 1 9 6 5 ) 2 2 As f o r the Sun L i f e Co, one of the most i m p o r t a n t i n s u r a n c e companies l o c a t e d i n Quebec, i t s t o t a l a s s e t s i n September 1 9 6 5 were $ 61+1,000,000 o f which $8? m i l l i o n s were I n v e s t e d i n Quebec. One s h o u l d keep i n mind, however, t h a t t h i s company 23 c o l l e c t s $ 3 0 m i l l i o n s a y e a r i n Quebec i n premiums. Wi t h r e g a r d t o M u t u a l Funds c o n t r o l l e d by E n g l i s h C a nadians, the same s i t u a t i o n emerges. They do n o t i n v e s t i n F r e n c h - C a n a d i a n s companies. They had i n v e s t e d as o f December, 3 1 , 1 9 6 5 , o n l y 0.01+ o f t h e i r as-sei-fcs i n F r e n c h - C a n a d i a n e n t e r -p r i s e s , or m e r e l y 390,000 s h a r e s on a t o t a l o f about 88 m i l l i o n s s h a r e s . 22 R o s a i r e M o r i n , Op. p i t . , p.1+9, 5 0 23 R o s a i r e M o r i n , Op. C i t . , p. 5 0 21+ Magazine McClean, ( F r e n c h v e r s i o n ) December 69,. p.80 52 The above i n v e s t m e n t c o n d i t i o n s s u p p o r t t h e c o n c l u s i o n s o f P r o f e s s o r J.G-. L o r a n g e r , economist a t the T J n i v e r s i t e de M o n t r e a l , who found t h a t about 80 p e r c e n t o f the Quebec f i n a n c i a l i n s t i t u t i o n s a r e not c o n t r o l l e d by F r e n c h - C a n a d i a n s . T h i s a c c o r d i n g t o P r o f . L o r a n g e r has r e s u l t e d i n b o t h t h e p a s t and the p r e s e n t i n r e s t r a i n i n g g o v e r n m e n t a l i n s t i t u t i o n s and Quebec-bases e n t e r p r i s e s from f i n d i n g the b a d l y - n e e d e d c a p i t a l t o f i n a n c e new p r o j e c t s o r t o expand t h e i r p r e s e n t f a c i l i t i e s . R e c e n t l y , a c o n t r o v e r s y has begun on the s u b j e c t o f the growing r e s i s t a n c e t o o f f e r i n g Government o f Quebec and Hydro-Quebec 's bonds on E n g l i s h C a n a d i a n money m a r k e t s . It. has s t i r r e d up a r e v e a l i n g p o l e m i c between the former P r e m i e r of Quebec, Jean Lesage, and h i s one-time c h i e f economic a d v i s e r , 26 Jacques P a r i z e a u . P a r i z e a u , the H n i v e r s i t e de M o n t r e a l e c o n o m i s t , has d e s c r i b e d a s e r i e s o f b a c k s t a g e power s t r u g g l e s between s u c c e s s i v e Quebec c a b i n e t s and a s y n d i c a t e o f in v e s t m e n t houses c o n t r o l l e d by a f i r m i n T o r o n t o . He charg e s t h a t bond u n d e r w r i t e r s w i e l d so much i n f l u e n c e i n Quebec C i t y t h a t t h e y f o r c e d s e v e r a l major r e f o r m s d u r i n g t h e Lesage A d m i n i s t r a t i o n and h e l d up others f o r y e a r s . R e f e r r i n g to a r e c e n t Hydro-Quebec debenture i s s u e t h a t f a r e d p o o r l y i n E n g l i s h Canada, he c l a i m s t h a t Bay S t r e e t f i n a n c i e r s a r e s q u e e z i n g the Quebec Government more than e v e r , f o r p o l i t i c a l m o t i v e s , 25 Jean-Guy L o r a n g e r , S o c i a l i s m e 68, p#52 , P r o f e s s o r L o r a n g e r d i d not, mention the amount i n d o l l a r s o f f i n a n c i a l i n s t i t u -t i o n s c o n t r o l l e d by f o r e i g n e r s . 2.6 M. P a r i z e a u r e s i g n e d as the Government's top economic a d v i s e r l a s t September t o j o i n the e x e c u t i v e i n the P a r t i Q u e b e c o i s . 53 Recent Hydro-Quebec bonds,, he n o t e s , have been s o l d l a r g e l y on i n t e r n a t i o n a l markets and t o Quebec's own f i n a n c i a l i n s t i t u t i o n s s p e c i a l l y the D e p o s i t and Investment Fund (which i n v e s t c o n t r i b u t i o n s f l o w i n g i n t o the Quebec P e n s i o n P l a n ) . An I m p a r t i a l s t a t e m e n t i s s u e d by "La P r e s s e " announce t h a t : " I n 1968, the Quebec D e p o s i t and Investment Funds bought 52.7$ o f bonds i s s u e by t h e P r o v i n c e and Hydros Quebec, a g a i n t \i0% the p r e c e d i n g y e a r " . 27 The M i n i s t e r o f F i n a n c e o f Quebec, M. D o z o i s , has announced t h a t i n 1968, The Government of Quebec and Hydro-Quebec had borrowed 56ii m i l l i o n s from t h e f o l l o w i n g m a r k e t s : #135 m i l l i o r B f r o m the U n i t e d S t a t e s f l 2 l t m i l l i o n s f r o m Germany I it5 m i l l i o n ? i n E u r o - D o l l a r s $260 m i l l i o n s i n Canada From the 260 m i l l i o n s i s s u e i n Canada, the Quebec D e p o s i t PA and Investment Fund bought 11+2 m i l l i o n s . A $20 m i l l i o n i s s u e was f l o a t e d on t h e E u r o d o l l a r market i n November 1969 and on December 2, 1969, Quebec has r a i s e d |50 m i l l i o n on the New Y o r k market w i t h bonds y i e l d i n g 9.88 p e r c e n t . A C a n a d i a n p u b l i c i s s u e announced on J a n u a r y 1970, a l s o f o r |50 m i l l i o n ended up m o s t l y i n the p o r t f o l i o s o f t h e Quebec D e p o s i t Funds, the C a i s s e P o p u l a i r e movement and o t h e r F r e n c h C a n a d i a n I n s t i t u t i o n s . ' 27 l e j o u r n a l La P r e s s e , March 13, 1969 28 l e j o u r n a l Le S o l e i l , May 1, 1969 29 l e j o u r n a l Le DeVOlrj- January 20, 1970 I n a r e c e n t s t u d y done by " l e D e v o i r " i t s f i n a n c i a l c o r r e s p o n d e n t shows t h a t f o r t h e p a s t t h r e e y e a r s , Quebec bond i s s u e s i n Canada are s o l d 95^ i n Quebec, He went on t o s a y t h a t l a r g e E n g l i s h - C a n a d i a n F i n a n c i a l I n s t i t u t i o n s , i n g e n e r a l , even t h e one i n M o n t r e a l , show d i s d a i n f o r Quebec's bonds. He t h a n c o n c l u d e t h a t t h e r e i s a c o n s t r a s t w i t h A m e r i -">,0 can f i n a n c i e r s , where Quebec's bonds a r e a l w a y s w elcome. J P a r i z e a u c o n t i n u e s bv s t a t i n g t h a t the T o r o n t o i n v e s t -ment community n o t o n l y f e e l s d u t y - b o u n d t o b l o c k t h e I n d e p e n -dence of Quebec, b u t attemps t o d i c t a t e t o t h e p r o v i n c e i n v a r i o u s p o l i c y a r e a s . He c o n s t r a s t t h i s " p r o v i n c i a l a t t i t u d e " w i t h the r e a l i s m o f U.S. I n v e s t o r s who see g r e a t p o t e n t i a l f o r g r o w t h i n Quebec and who do n o t c a r e a b o u t t h e p o l i t i c a l l a n d s -c a p e , F r . P a r i z e a u d i d n o t m e n t i o n any names and c a r e f u l l y a v o i d e d any r e f e r e n c e s t o o f f i c i a l c o r r e s p o n d e n c e or documents 31 he h a n d l e d as a k e y p u b l i c s e r v a n t / but he made t h r e e c e n t r a l a l l e g a t i o n s ; Quebec's a c c e s s t o t h e C a n a d i a n money mar k e t has been m o n o p o l i z e d f o r decades by a T o r o n t o - b a s e d f i n a n c i a l s y n d i c a t e , w h i c h has f i n a l s a y cn a l l Quebec d e b e n t u r e s by agreement among a l l t h e i m p o r t a n t investment, h o u s e s . T h i s s y n d i c a t e t u r n s t h e market f o r Quebec bonds on and o f f l i k e a w a t e r t a p t o a p p l y p r e s s u r e on t h e p r o v i n c i a l c a b i n e t t o take a s t a n d p o i n t a p p r o a c h t o a v a r i e t y o f i s s u e s . - — T h i s s y n d i c a t e t r i e d t o p r e v e n t t h e n a t i o n a l i s a t i o n o f t h e Quebec hydro-power u t i l i t e s i n 1962, 32 h e l d up t h e c r e a t i o n of t h e Quebec G e n e r a l i n v e s t m e n t 3 0 Le D e v o i r , J a n u a r y 2 0 , 1970 31- t h e l a w p r o h i b i t s t he d i s c l o s u r e of c o n f i d e n t i a l government documents by p r e s e n t o r r e t i r e d o f f i c i a l s 32 the money xv'as borrowed on the Few v o r k market-55 - - - C o r p o r a t i o n f o r two y e a r s , d e l a y e d t h e e s t a b l l s h m e n t o f t h e d e p o s i t fund f o r f o u r y e a r s , b l o c k e d c o n s -t r u c t i o n o f a p u b l i c s t e e l " m i l l a t Be cane our and f o r c e d the Government t o w a t e r down s e v e r a l r e f o r m p r ograms. 3 3 ' P a r i z e a u went on t o s a y t h a t a t v a r i o u s t i m e s t h e Cana-d i a n I n v e s t m e n t h o u s e s have demanded " d r a s t i c t e r m s " or have s i m p l y s t o p p e d s e l l i n g Quebec bonds t o " t e a c h t h e Government a - l e s s o n " . "We d on't buy f o r e i g n b onds", he q u o t e s a T o r o n t o d e a l e r as • t e l l i n g h i m . Mr. L e s a g e , t h e e x - P r e m i e r , I s s u e d a g e n e r a l d e n i a l o f P a r i z e a u ' s c h a r g e s . He s a i d t h a t Quebec bonds were u n d e r -w r i t t e n f o r many y e a r s by a s y n d i c a t e s headed by a. T o r o n t o b a s e d f i r m , A.E. Ames and Co L t d o f T o r o n t o , i n c o l l a b o r a t i o n w i t h t h e Bank o f M o n t r e a l and the M o n t r e a l b r o k e r s Leve3que and B e a u b i e n . He d e n i e d t h a t o t h e r C a n a d i a n I n v e s t m e n t houses had p r o m i s e d i n w r i t i n g t o s e l l Quebec bonds o n l y w i t h the s y n d i c a t e s ' s p e r m i s s i o n , b u t r e v e a l e d t h a t when he was P r e m i e r 35 he f o u g h t an a t t e m p t t o b r i n g «bout s u c h an a r r a n g e m e n t . -- One should- a s k h i m s e l f why E n g l i s h Canada has d e c i d e d w i t h t h e c o l l a b o r a t i o n o f E n g l i s h - s p e a k i n g Q u e b e c o i s t o b l o c k t h e p r o g r e s s of Quebec. I t seems r a t h e r o b v i o u s t h a t b e i n g a p r l v i l i g e d c l a s s , E n g l i s h - Q u e b e c o i s , see a l l p r o g r e s s i n 3 3 Jac-ques P a r i z e a u , Le Pes song de I ' H l s t o i r e ( 1 9 6 3 - 7 0 ) _ _ d e c e r t a i n e s manoeuvres~d' un s ' y l ^ I c , ' a t ~ f i n a n c i ' e r en vue de c o n s e r v e r son empire au Quebec, Le D e v o i r , Peloruary~ 2"7T9 7 0 G l o b e & M a i l , F e b r u a r y 7 , ' 1 9 7 0 3l+. J a c q u e s P a r i z e a u , O p . C i t . 3 5 J a c q u e s P a r i z e a u , O p . C i t . & l e D e v o i r , J a n u a r y 2 3 , 1 9 7 0 56 Quebec as a d e g r a d a t i o n o f t h e i r own p o s i t i o n w h i c h w o u l d wean i n s h o r t r u n t h e a b o l i t i o n o f t h e i r s p e c i a l s t a t u s s i n c e n a t i v e s w i l l want t o occupy k e y p o s i t i o n s i n t h e b u s i -n e s s and f i n a n c i a l i n s t i t u t i o n s . How c o u l d t h e above s i t u a t i o n a r i s e ? Prom l o o k i n g a t t h e - f i n a n c i a l s i t u a t i o n i n Quebec, one c a n f i n d d i f f e r e n t e x p l a n a t i o n s . The newspaper "La P a t r i e " d i d an i n v e s t i g a t i o n i n 1965, t o f i n d o u t who were t h e most p o w e r f u l men i n t h e f i n a n c i a l l i f e o f Quebec, The answer came out t h a t the E n g l i s h m i n o r i t y ^ t r a d i t i o n a l l y h o l d s t h e key p o s i t i o n s i n t h e f i n a n c i a l l i f e o f Quebec, The f i n a n c i a l , c o r r e s p o n d e n t went on t o s a y t h a t : " t h e 10 most p o w e r f u l b u s i n e s s m e n who seem t o be t h e f i n a n c i a l and economic e l i t e o f Quebec a r e a l l E n g l i s h - s p e a k i n g , They a r e a l l d i r e c t o r s o f t h e l a r g e c h a r t e r banks and o f the most i m p o r t a n t b u s i n e s s : e n t e r p r i s e s o f t h e c o u n t r y a l l o f them a r e E n g l i s h - s p e a k i n g C a n a d i a n " . 37 F u r t h e r m o r e , a c c o r d i n g t o s t a t i s t i c s f r o m t h e B i l i n g u a -l i s m and B i c u l t u r a l i s m Commission o f the F e d e r a l Government, M. M a r c e l Masse, Quebec M i n i s t e r of I n t e r - G o v e r n m e n t a l A f f a i r s , t h e E n g l i s h - s p e a k i n g - w h i c h forms l e s s t h a n 15$ o f Quebec popu-l a t i o n i n c l u d e s 30$ f o r p e o p l e m aking $5*000. a y e a r and o v e r , 61$ m aking between $10,000. and $l£,Q00. and 77$ making 000 38 and o v e r . He went on t o say t h a t even i n M o n t r e a l , E n g l i s h 36 A p p e n d i x 11 3? La. P a t r i e , J u l y 7 t o l 5 , 1965 3-8- A p p e n d i x 12 ^ 12A , Le D e v o i r J a n u a r y 9, 1970, T i n e , Decem-b e r 26, 106~9 57 Canadians are so c o n f i d e n t t h a t more t h a n one t h i r d o f a l l companies use E n g l i s h e x c l u s i v e l y as t h e w o r k i n g language, i n o r d e r t o c o r r e c t t h i s s i t u a t i o n i n the economic s e c t o r , says Masse, th e Government o f Quebec w i l l have t o t a k e i n t o hand the p r o m o t i o n of F r e n c h C a n a d i a n s . The S t a t e or the Government of Quebec w i l l have t o p l a y t h i s r o l e s i n c e i t i s the o n l y i n s t i t u t i o n w i t h any r e a l power which F r e n c h S p e a k i n g c i t i z e n s e f f e c t i v e l y c o n t r o l . ^ On the o t h e r s i d e of the medal, the p i c t u r e seems b r i g h t e r s i n c e Americans are h e l p i n g Quebec i n i t s development. M. P e t e r R e g e n s t r e i f , E c o n o m i s t a t the U n i v e r s i t y o f R o c h e s t e r , shows I n a r e c e n t s t u d y t h a t Canadians a r e p u l l i n g t h e i r money out o f Quebec, opening t h e door t o g r e a t e r A m e r i c a n i z a t i o n of t h e P r o v i n c e by b o l d e r U.S. businessmen. He t h e n went on t o say t h a t Americans t e n d t o r e g a r d the p r o v i n v e as a r e l a t i v e l y s a f e p l a c e i n comparison w i t h r e a l l y t r o u b l e d a r e a s of t h e w o r l d . Americans he s a y s , have one answer t o q u e s t i o n i n g as t o t h e i r r e a s o n s f o r i n v e s t i n g i n Quebec: " i t beats Venezuela".^" One can t h a n c o n c l u d e t h a t the Quebec economy i s becoming even more A m e r i c a n i z e d i n t h e p r o c e s s . However one s h o u l d n o t r e j e c t f o r e i g n i n v e s t m e n t s p u r e l y on emotionalrgrQundst-'One - shbiild. t ake i n t o account t h e b e n e f i t t h e y can b r i n g t o the e n t i r e p o p u l a t i o n s p e c i a l l y i n Quebec where unemployment i s so h i g h . ( t h e l a s t f i g u r e s a v a i l a b l e were f o r O c t o b e r 1 9 6 9 with 7.9$ f o r Quebec 39 l e j o u r n a l l e Devoir' , January 9, 1970, p.3 I4.O l e j o u r n a l Le S o l e i l , January 2 0 , 1 9 6 9 Newspaper M o n t r e a l S t a r , January 18, 1969 58 and 3.3$ f o r O n t a r i o ) The r e c e n t s t u d y made by p r o f . Andre Renauld, economist at t h e U n i v e r s i t e de M o n t r e a l , p r o v e s t h a t a f t e r a l l f o r e i g n - o w n e d b u s i n e s s e s produce a t a h i g h e r r a t e t h a t n a t i v e e n t e r p r i s e s . T h i s s t u d y showned t h a t f o r e i g n - o w n e d b u s i n e s s produce a t a h i g h e r r a t e , F r e n c h - C a n a d i a n s f i r m s a t a much l o w e r r a t e (33$) and E n g l i s h C a n a d i a n s Companies at a l e v e l somewhere between the two. R e n a u l d t h e n s a i d t h a t •the' r e a s o n s f o r t h e t h r e e l e v e l s of p r o d u c t i v i t y were not f u l l y known but t h a t p o s s i b l e r e a s o n s would i n c l u d e a c c e s s t o d i f f e r e n t , forms o f c a p i t a l and v a r i o u s economic p l a n s adopted by the management of t h e i n d u s t r i e s . He t h an c o n c l u d e d by s a y i n g t h a t s o c i a l , c u l t u r a l and l i n g u i s t i c s f a c t o r s c o u l d be i m p o r t a n t i n e x p l a i n i n g the d i f f e r e n c e . There s h o u l d n o t be any d i f f e r e n c e s i n l e v e l of p r o d u c t i v i t y , t h e o r i c a l l y , s i n c e i n a w o r l d o f p e r f e c t c o m p e t i t i o n , f i r m s w i t h l e s s p r o d u c t i v i t y would d i s s a p e a r . However, t h e y do n o t . I f the l e s s e f f e c t i v e f i r m can go on and e x i s t , the e x p l a n a t i o n must l i e w i t h f a c t o r s o t h e r t h a n p r o d u c t i v i t y . ^ " 2 So whatever happens p o l i t i c a l l y to Quebec, the s p e c t r e o f f u r t h e r A m e r i c a n i z a t i o n of the economy looms e v e r l a r g e r . B u s i n e s s Abroad Magazine c o n c l u d e i n an. a r t i c l e on Quebec w i t h the f o l l o w i n g s t a t e m e n t : " C e r t a i n l y , p o l i t i c a l u n r e s t has n o t d e t e r r e d U.S. I n v e s t o r s i n t h e P r o v i n c e of Quebec,... U.S. i n d u s t r i a l money r s p o u r i n g i n as n e v e r b e f o r e " . ii3 i i i l e j o u r n a l l e D e v o i r , January 12, 1970 kZ l e j o u r n a l l e D e v o i r , November 10, 1969 L.3 B u s i n e s s Abroad, I n t e r n a t i o n a l Trade Review, A p r i l 1969, p. 25 5 9 C o n t r e v e r s i . e s on s.merloan i n v e s t m e n t i n Quebec, t h e n have j u s t begun. And i f the a l l e g a t i o n s o f Mr.. .Par.izeau p r o v e t o be t r u e , i t c a n be e x p e c t e d t h a t i n . t h e y e a r t o come Quebec w i l l d e a l more ' w i t h A m e r i c a n s -than w i t h E n g l i s h - C a n a d i a n s . ^ " One must not r e f u t e t h e p o s i t i v e c o n t r i b u t i o n of f o r e i g n c a p i t a l t o the economic development of Quebec, however, I t does no t mean, , t h a t . Q u e b e c o i s s h o u l d not t r y t o p a r t i c i p a t e more a c t i v e l y t o t h e e x p a n s i o n o f t h e i r own economy. T h i s p a r t i c i -p a t i o n w i l l n o t be i n c r e a s e d by r e j e c t i n g f o r e i g n c a p i t a l . On t h e c o n t r y r y , I t would be d i m i n i s h e d . Any r e d u c t i o n o f f o r e i g n f u n d s i n Quebec i n d u s t r i e s c o u l d r i s k t o s l o w down t h e economic d e v e l o p m e n t o f Quebec and c o u l d b r i n g about an i n c r e a s e i n unemployment. I t s h o u l d then r e c o g n i z e the b e n e f i c i a l e f f e c t s of f o r e i g n i n v e s t m e n t s . And has e x p r e s s by p r o f , Raymond V e r n o n , p r o f e s s o r o f B u s i n e s s A d m i n i s t r a t i o n i n H a r v a r d : .".in g e n e r a l , s u b s i d i a r i e s o f i n t e r n a t i o n a l f i r m s have a. p e c u l i a r f e e l i n g o f t h e i r s i t u a t i o n - o f b e i n g a f o r e i g n e r and t o t h e i r v u l n e r a b i l i t y o f c r i t l s i s m and t o t h e h o s t i l i t y of t h e r e g i o n a l s u r r o u n d i n g . I t i s why, s u b s i d i a r i e s o f such a group seem t o be t h e b e s t member o f t h e r e g i o n a l b u s i n e s s c o l l e c t i v i t i e s and : have t h e b e s t b e h a v i o r p a t t e r n . . U s u a l l y t h e y seem s e n s i b l e s t o the f o r m a l r e q u i r e m e n t s o f n a t i o n a l l e g i s l a t i o n and obey t o t h i s , l e g i s l a t i o n t o a p o i n t v e r y seldom meet by n a t i o n a l f i r m s " . 1[5 till ( o f t h e p e r s d n n a l c o n t a c t s I had d u r i n g my r e s e a r c h , most o f the p e o p l e , i f not a l l , seem t o show an i n c l i n a t i o n t o d e a l w i t h A m e r i c a n s and a t e n d e n c y t o r e f u s e t o have any-t h i n g t o do w i t h E n g l i s h - C a n a d a . The g e n e r a l a t t i t u d e i s t h a t i t i s p o s s i b l e t o d e a l on an e q u a l f o o t i n g w i t h A m e r i c a n s w h i l e i t i s n o t w i t h E n g l i s h - C a n a d i a n s ) 45 R o b e r t W i n t e r , L a p r o p r i e t e etrange.re de l a . C o r p o r a t i o n • Mul t i n a t 1 ona 1 e , spe"ech~, J u l y 10^ ~ T%TT~ ' P • k- " 60 > . v r Recently i n an interview on the language issue i n Quebec, M. David Rockefeller, President and General Manager of the Chase Manhattan Bank, said that investors going to foreign countries must respect the.^culture, the language and the customs of the host country.^ 5 In the last analysis, i t has.no importance to know who ,owns the c a p i t a l , what is more important i s how i t i s used.In this last point the Government of Quebec should play a key role. It has the p o l i t i c a l power i f i t has the courage to assert; i t . There i s l i t t l e except Quebecois' own timidity to prevent them from laying down law and rules to require foreign subsidiaries here to act i n Quebec's interest. There i s only one way to conterbalance foreign control: i t i s to be more ingenious than him. It i s not a p o l i t i c a l a f f a i r , but derives rather from economic productivity. If the Government: of Quebec wants these foreign investors to act in the interests of the population of Quebec, i t should lay down immediately the,ground rules for t h e i r investment, This could avoid future conflict on this subject. Quebec should f i r s t define i t s development policy and the p o l i t i c a l and economics conditions of i t s application. In order to do thi s , i t should analyse the economic dependency ef Quebec toward k6 le journal La Presse, October 11, 1969 61 the C a nadian and the American economies. T h i s can be a c h i e v e d by l e a r n i n g of t h e c a p i t a l i n v e s t e d i n the d i f f e r e n t s e c t o r s and by d o i n g a complete a n a l y s i s o f i m p o r t s and e x p o r t s on t h e n a t i o n a l and i n t e r n a t i o n a l scene. Knowing a l l these d i f f e r e n t f a c t o r s , Quebec s h o u l d t h e n p r o c e e d t o e s t a b l i s h t h e p l a n by w h i c h i t wished t o d e v e l o p i t s economy and s h o u l d a s s o c i a t e f o r e i g n i n v e s t m e n t w i t h the government i n o r d e r t o a t t a i n t h e g o a l s p r e v i o u s l y set.. T h i s s h o u l d be t h e case i n c e r t a i n s key s e c t o r s o f the economy where s p e c i a l i z a t i o n i s needed f o r Quebec t o compete on the i n t e r n a t i o n a l market. 62 F o r c e s i m p e l l i n g toward government i n t e r v e n t i o n I n t h e Quebec Fcono m y I n d i s c u s s i n g t h e r e a s o n s b e h i n d the Quebec g o v e r n m e n t » s i n t e r v e n t i o n i n t h e p r o v i n c i a l economy d u r i n g t h e p a s t d e c a d e , i t I s i m p o r t a n t t o remember t h a t b o t h u n i o n membership and g e n e r a l p u b l i c o p i n i o n t e n d t o blame unemployment on p r i v a t e i n d u s t r i e s . The g o v e r n m e n t , w h e t h e r L i b e r a l o r U n i o n N a t i o n a l e , t h e r e f o r e , aware o f t h e p o s s i b l e p o l i t i c a l c o n s e q u e n c e s i n e l e c t i o n s , had t o a c t f i r m l y i f i t w i s h e d t o r e m a i n i n power. One m a j o r f a c t o r c a u s i n g t h e a r o u s a l o f t h i s p u b l i c p r e s s u r e on t h e government l i e s i n t h e economic c o n d i t i o n o f t h e Q u e b e c o i s t h e m s e l v e s . W h i l e most o f Canada s u f f e r s f r o m i n f l a t i o n , Q u e b e c » s p r o b l e m i s s t a g n a t i o n . .Through i t has o n l y 29$ o f Canada p o p u l a t i o n , Quebec has n e a r l y kO$ o f the unemployed. T h e r e i s , f u r t h e r m o r e , a d w i n d l i n g i n f l o w o f t h e c a p i t a l i n v e s t m e n t needed t o c r e a t e j o b s . A r e p o r t p u b l i s h e d by "Le D e v o i r " shows t h a t Quebec a c c o u n t s f o r k'3.k% of t h e unemployed i n Canada as -of August'1 5 , 1969. T h e " t o t a l unemployed i n Canada was a t t h a t time' 318,000 and out o f t h i s number, Quebec had 138, obo. 1 1 7 Unemployment c e r t a i n l y i s r e l a t e d t o t h e economy's d i f f i c u l t y i n s u p p l y i n g s u f f i c i e n t new*' j o b s t o e n a b l e t h e k7 Le Devoir,November 1969, A p p e n d i x 15 63 great number of a v a i l a b l e young people t o enter the labour f o r c e . According to Professor Claude Masson, economist at l ' U n i v e r s i t e L a v a l , Quebec w i l l need to create k00,000 new jobs f o r i t ^ young labour force before 197k.^"Quebec, f' he says,"has a very youthful population. More than kk$ of Quebecois are l e s s than 20 years of age, and 58$ are under t h i r t y . In 1971, the f i r s t group w i l l amount to 2,800,000 • ),c or l | k . 3 $ of the t o t a l population". The Connection between unemployment and the language b a r r i e r does not leave the Quebec government i n d i f f e r e n t . That these two f a c t s are r e l a t e d eannot be denied by anyone who f a i r l y OD nsiders the s i t u a t i o n . The people of French language and c u l t u r e do not have the same opportunities as to those of the E n g l i s h language t o l i v e t h e i r l i v e s , t o r a i s e t h e i r c h i l a r e h or to r e a l i z e t h e i r own p o t e n t i a l -and to do t h i s by r e t a i n i n g t h e i r own language and c u l t u r e i n any part of Canada. The second f a c t that seems equally c l e a r i s that Canada has not w i t h i n the l a s t hundred years considered s e r i o u s l y enough what i t might do ,- through law and government p o l i c y and I n d i v i d u a l endeavour, to make eq u a l i t y of economic and c u l t u r a l opportunity/ as r e a l and as meaningful f o r Canadians of French o r i g i n as i t i s f o r English-speaking Canadians. - The consequences of f a i l i n g now could be serious since current t h i n k i n g i n Quebec considers what has been done i n t h i s respect during the l a s t k8 l e journal l e S o l e i i , A p r i l 17, 1969 k9 l e journal l e S o l e i i , A p r i l 17, 1969 6!i few years i s too l i t t l e and, what is more important, as too late. As far as internal conditions in Quebec are concerned, the most important general factor i s the poverty of French-Canadian individuals and families resulting from improper income distribution, onerous family expenses attributable to higher costs for raising children, and to considerable unemployment in the community. As" for the Quebec Labour Unions, Confederation des Syndicate Nationaux, F e d 6 r a t i o n des mravailleurs du Quebec, Union des Cultivateurs, they t e l l the government what kind of economic reforms they want implemented. They ask for the nationalization of key-sectors, the integration of the forest industry under the umbrella of the State, and the establishment of an overall plan for the economy. The Canada Comlttee gives a resume of what the Unions want; "the Quebec Government w i l l have to exercise i t s 'powers on the •general direction of the economy ("dans 1»orientation economique"), the rationalization of marginal industries', the development on the secondary industrial sector, etc.. The Government of Quebec w i l l have to promote an economic policy that i s clea r l y favourable to i t s pppulation and more demanding vis-a-vis c a p i t a l i s t interest, for i t i s no longer enough to seem to be governing in the people's best Interest i n this f i e l d . This Government, sp e c i f i c a l l y , w i l l have to derive out o f the exploitation bf natural resources the maximum benefits on r o y a l i t i e s that i t can reasonable expect to obtain." 5 0 50 Andrew Rrichant, option Canada, p.35 % 36 65 Labour u n i o n s on a l l s i d e s appear t o have one common goal} t h i s i s t h e c r e a t i o n of a s y s t e m a t i c a l l y r a t i o n a l i z e d economy and s o c i e t y . The government i s t h e n a s s u r e d t h a t i t has f u l l s u p p o r t o f l a b o r f o r the a c t i o n s t a k e n t o r e g a i n c o n t r o l o f t h e economy. An example o f the thought o f the Quebec t r a d e u n i o n s i s g i v e n by the P r e s i d e n t o f the l a r g e s t t r a d e u n i o n i n Qxiebec. A t th© c l o s i n g o f one c o n g r e s s , M. M a r c e l P e p i n has d e c l a r e d : "We have s u p p o r t e d t h e n a t i o n a l i z a t i o n o f t h e p r i v a t e hydro companies and we w i l l s u p p o r t a l l n a t i o n a l i z a t i o n s which seem n e c e s s a r y t o u s . We t h i n k t h a t i t i s i n d i s p e n s a b l e i n t h e economic dependency i n which we f i n d o u r s e l v e s , f a c e d w i t h f o r e i g n c a p i t a l t a k i n g o v e r our n a t u r a l ; r e s o u r c e s and e n t r e p r i s e s , t h a t the S t a t e s h o u l d i n t e r v e n e and c r e a t e by means o f t h e G e n e r a l Investment C o r p o r a t i o n o f Quebec, companies which w i l l be e q u i p p e d w i t h u p - t o - d a t e t e c h n i q u e s and c a p a b l e o f mass p r o d u c t i o n . On t h i s p o i n t , t h e r e i s a g e n e r a l agreement among the p o p u l a t i o n : i t i s a n e c e s s i t y . However, d i v e r g e n c e o f o p i n i o n appears as to what s t a t u s t h e s e companies s h o u l d have. We r e s t a t e our p o s i t i o n h e r e . We b e l e i v e t h a t i t i s a key p o s i t i o n i n our econony and t h a t t h e S t a t e , even though i t can c a l l on p r i v a t e e n t r e p r i s e , musi however keep the major p o s i t i o n by b e i n g the major s h a r e h o l d e r . Many b e l i e v e t h a t F r e n c h w i l l not bocome the working language i n Quebec u n l e s s t h e r e i s a major change i n p r o p e r t y ownership. T h i s means c o n t r o l by the S t a t e . H i s t o r y and d e s t i n y seem t o t e l l us t h a t t h i s w i l l n e v e r be a c h i e v e d u n l e s s t h e S t a t e e x p r o p r i a t e s or n a t i o n a l i z e s e n t e r p r i s e s and e s t a b l i s h e d c o l l e c t i v e ownership o f the major means o f p r o d u c t i o n which i n r e t u r n c o u l d i n f l u e n c e s m a l l e r ones i n 51 C o n f e d e r a t i o n des S v n d l c a t s IMationaux, M o n t r e a l , 1966, p. 30 Proc^s-VeFbtaT 66 f o r c i n g them to use French as the working language. This thought was w e l l stated by M. Charles B. Neapole, President of the Montreal and Canadian Stock Exchanges, who said t h a t : "Quebec cannot achieve i t s goal of "Maitre chez nous" unless the people of Quebec become owners of resources and manufacturing i n d u s t r i e s i n t h e i r province". 52 He than went on to remind the Quebec people that they possess the f i n a n c i a l strength to be t h e i r own masters, but that t h i s strength must be channelled i n t o equity ownwership "rather than mortgages". This could come through the c a p i t a l and savings o f Quebec's own people which are not now invested i n e q u i t i e s , e s p e c i a l l y i n the ownweship of e s t a b l i s h e d and new Quebec - based companies. The Quebec Nation, has, a f t e r over 100 years of p a s s i v i t y awoken to the f a c t of i t s own c o l l e c t i v e existence and of i t s c o l l e c t i v e f u t u r e . The -"Canadian debate" has been going on, i n t e r m i t t e n t l y , f o r almost two centuries .-- ever since the French and E n g l i s h communities began to l i v e and develop together i n one country and, at the same time, sought to preserve t h e i r own i d e n t i t i e s of language and cul t u r e . In the l a s t decade the debate has taken on a new dimension and v i t a l i t y . Quebec has undergone a remarkable transformation, 52 newspaper the Gazette, A p r i l k, 1968 53 i b i d 67 n o t o n l y by g r e a t i n d u s t r i a l development but w i t h a changed s o c i a l o u t l o o k t h a t i s p r o g r e s s i v e and s e l f - c o n f i d e n t . Q u e b e cois w h i l e s t i l l c o n c e r n e d w i t h m a i n t a i n i n g , t h e i r c u l t u r a l i d e n t i t y , a r e a l s o d e t e r m i n e d t o a c h i e v e economic p r o g r e s s and t o p a r t i c i p a t e f u l l y i n the d i r e c t i o n and c o n t r o l o f Quebec development. But the economic i n f e r i o r i t y o f Quebec ben e a t h b o t h the U.S.A. and E n g l i s h Canada a l l o w s us t o p r opose the h y p o t h e s i s t h a t Government i n t e r v e n t a t i o r t w i l l d e v e l o p more r a p i d l y i n Quebec t h a n i n o t h e r p a r t s o f N o r t h A m e r i c a , as l o n g as Quebecois a r e n o t i m p l i c a t e d i n t h e ownership and t h e d i r e c t i o n o f c a p i t a l i s m and where t h e o n l y v a l i d arm t h a t t h e y posess I s t h e , " S t a t e " * As Mr. Dapeau, Mayor o f M o n t r e a l , once p o i n t out; "we command l e s s , much l e s s t h an one t e n t h o f the economic a c t i v i t i e s o f Canada and even i n Quebec, where we form more t h a n 80$ o f t h e p o p u l a t i o n , we- b a r e i l y c o n t r o l one f i f t h o f a l l e n t e r p r i s e s o f a l l kinds.. A n o t h e r r e v e a l i n g f a c t o r , the b u s i n e s s - newspaper, the F i n a n c i a l P o s t p u b l i s h e s e v e r y .year a l i s t c o n t a i n i n g a l l the names of P r e s i d e n t s , d i r e c t o r s , and Manager of t h e l a r g e i n d u s t r i a l and commercial f i r m s i n Canada. I t i s a k i n d o f m i r r o r r e f l e c t i o n the b u s i n e s s w o r l d Of Canada. However, on about 9,000 names, we f i n d o n l y 300 t o Ip00 . F r e n c h - C a n a d i a n names or a p e r c e n t a g e o f 3.3. to l i . i i % . " B h The s o c i a l advance w i l l , t a ke p l a c e more r a p i d l y h e r e s i n c e t h e n a t i o n a l q u e s t i o n i s l e s s i m p o r t a n t t h a n f o r Canada i n g e n e r a l . Quebecois do not have t o f i n d a d e f i n i t i o n of 5 l l Raymond Barbeau, O p . C i t . , p.79 68 themselves; the u n i t y of t h e i r language, of t h e i r r e l i g i o n , of t h e i r c u l t u r e i n a wide sense of the word, was never broken because Quebec never became a m e l t i n g pot. Thus Quebec i s of a d i s t i n c t i v e l y cohesive s o c i a l s t r u c t u r e . The a t t i t u d e of the m a j o r i t y i s expressed by M. Rene L e v e s q u e , : e x - M i n i s t e r of n a t u r a l r e s o u r c e s and c u r r e n t l y P r e s i d e n t o f the P a r t i Quebecois, who emphasized.: "We are Quebecois, : What t h a t means f i r s t and foremost-and i f need be, a l l t h a t I t means- i s that we are a t t a c h e d t o t h i s one c o r n e r of the e a r t h where we can be c o m p l e t e l y o u r s e l v e s ; t h i s Quebec, the o n l y p l a c e where we have the unmistakable f e e l i n g t h a t "here we can be r e a l l y at home". "Being o u r s e l v e s i s e s s e n t i a l l y a matter of keeping and d e v e l o p i n g a p e r s o n a l i t y t h a t has s u r v i v e d f o r three and h a l f c e n t u r i e s " . "a_t the core of t h i s p e r s o n a l i t y i s the f a c t t h a t we speak French. E v e r y t h i n g e l s e depends on t h i s one e s s e n t i a l element and f o l l o w s from i t or leads us i n f a l l i b y Ijack t o i t f . 55 These two c o n d i t i o n s , the s t a t e of economic dependency and the recourse to govermental i n t e r v e n t i o n t o c o r r e c t t h i s i n e q u a l i t y , and t h i s c o l l e c t i v e w i l l of being themselves lea d s one to b e l i e v e t h a t l i f e i n Quebec w i l l have a new roundness, which w i l l , be three d i m e n s i o n a l , i n s t e a d of the photographic f l a t n e s s seen by observes u n t i l a few years ago. Nothing w i l l be s t a t i c , but moving. 55 Rene Levesque, Option Quebec, R 19 69 If Quebec wants t o develop I n an economic and s o c i a l d i r e c t i o n d i f f e r e n t from the r e s t of Canada, i t i s apparent t h a t the i d e a of Canadian u n i t y w i l l be U t o p i a n even i f Prime M i n i s t e r Trudeau succeds i n c r e a t i n g a b i l i n g u a l Canada. I t has o f t e n been s a i d t h a t French-Canadian S o c i e t y d e l i g h t s i n t h e o r i e s but i s l e s s e n t h u s i a s t i c about p o s i t i v e a c t i o n ; i t bubbles w i t h p l a n s when i t should be b u i l d i n g f a c t o r i e s . The Government of Quebec, however, w i t h the support o f p u b l i c o p i n i o n , and o f tr a d e unions, has opted f o r development meaning t h a t ; " o p t i n g f o r development i m p l i e s acceptance of the id e a t h a t i t i s more important t o maximize the r a t e of Economic Development than to c o r r e c t S o c i a l i n e q u a l i t i e s . I f the r a t e of Economic Development i s r a p i d , i n e q u a l i t y can be t o l e r a t e d and c o r r e c t e d w i t h time. I f the r a t e of develop-ment f a l l s because of inadequate i n c e n t i v e s , the p r a c t i c e of d i s t r i b u t i v e j u s t i c e becomes a s h a r i n g of poverty" 5 6 The Head o f the Economics Department of the U n i v e r s i t e de M o n t r e a l points out t h a t : "the c u r r e n t o p i n i o n i s the one t h a t says t h a t the government should borrow i n a l l s i t u a t i o n s where there i s unemployment; i t should not take i n t o account the i n t e r e s t r a t e s i n c e the f i n a n c i a l r e t u r n on s o c i a l investments i s at a l l times s u p e r i o r to the i n t e r e s t r a t e " 57 Some Quebec o i s , h owever, e s p e c i a l l y E n g l i s h - s p e a k i n g 56 A m e r i c a n U n i v e r s i t i e s F i e l d S t a f f , J.W. Rowes, V o l X I I I , n o 5 £7 Commerce ed~.ann.5B~^ Vues S e r e i n e s s u r l'Economie Quebecoise O t t o Thur , p.21}. 70 i n d i v i d u a l s and i n s t i t u t i o n s seem to t h i n k t h a t i f t h e r e c o u l d be a change of government t h e p r o c e s s o f t h i s g o v ernmental i n t e r v e n t i o n c o u l d be s t o p p e d . L e t us be r e a l i s t i c , however, and say t h a t c u r r e n t o p i n i o n r e q u i r e s t h i s i n t e r v e n t i o n t o r e g a i n c o n t r o l o f t h e economy. The t r e n d s t a r t e d i n I 9 6 0 w i t h t h e L i b e r a l P a r t y and even i f t h i s p a r t y were t o r e g a i n power^ i t would c o n t i n u e t h e same p o l i c i e s . A f t e r h i s e l e c t i o n as l i b e r a l l e a d e r i n J a n u a r y 1970, M. B o u r a s s a has e n d o r s e d the same p o l i c y o f government i n t e r v e n t i o n when he s t a t e d ; " t h e r e seems t o be a new d i r e c t i o n f o r the Quebec o f tomorrow;'the d i r e c t i o n of a g r e a t e r p a r t i c i -p a t i o n t o i t s own economic, s c i e n t i f i c and s o c i a l development under the u m b r e l l a o f the S t a t e " . 58 I f t h e t h i r d p o l i t i c a l p a r t y , the P a r t i Q u e b e c o i s , would come t o power, i t w i l l t a k e e x a c t l y t h e same stand ; "the Government o f Quebec w i l l have t o e x e r c i s e i t s powers on the g e n e r a l d i r e c t i o n o f t h e economy (and on) i n d u s t r i a l and commercial e n t e r p r i s e s , s a v i n g and f i d u c i a r y i n s t i t u t i o n s , a l l t h e i n t e r n a l i n s t r u m e n t s o f development and i n d u s t r i a l i z a t i o n , as w e l l as (have) the power t o manage the movements and the i n v e s t m e n t s o f our c a p i t a l " , " t h e economic growth of Quebec (must be a c c o m p l i s h e d ) t h r o u g h the c o l l e c t i v e m o b i l i z a t i o n o f our r e s o u r c e s and t h r o u g h making the S t a t e the moving f o r c e b e h i n d t h i s growth". 59 Sometimes one wonders which p o l i t i c a l p a r t y , the U n i o n R a t i o n a l e (the p r e s e n t government), the L i b e r a l P a r t y or the 58. l e j o u r n a l l e D e v o i r , January 2 9 , 1970 59 Andrew B r i c h a n t , Op. G i t . , p. 1+2 7 1 P a r t i Quebecois came f i r s t w i t h the i d e a of government I n t e r v e n t i o n . They take the same p o s i t i o n and use the same words, however, 1 t h e y do not f o r g e t t o change commas or semicoloms, f o r tsar o f b e i n g a c c u s e d of p l a g i a r i z i n g from the p l a t f o r m o f one o f t h e o t h e r p a r t i e s . Because of the h i g h p e r c e n t a g e o f unemployment, the language b a r r i e r , p u b l i c o p i n i o n , and l a b o r u n i o n p r e s s u r e s , t h e r e f o r e , I do not f o r e s e e any change i n p o l i c y even though a n o t h e r p o l i t i c a l p a r t y would g a i n power. M a j o r i t y o p i n i o n seems to d e s i r e and r e q u i r e government i n t e r v e n t i o n i n the economy s i n c e e v e r y one b e l e i v e s t h a t i t i s t h e o n l y way t h a t Quebec p e o p l e w i l l r e g a i n c o n t r o l of t h e i r economy and w i l l be a b l e t o work i n t h e i r l a n g u a g e : F r e n c h , One must keep i n mind, however, t h a t F r e n c h Canadian c u l t u r e i s not j u s t the spoken language; i t i s a l s o the o v e r a l l m e n t a l i t y and t h e b e h a v i o u r o f a whole g r o u p . "Culture**, o r " i n t e l l e c t u a l p e r s o n a l i t y " , i s made up o f many t h i n g s : r e l i g i o n , p o l i t i c s , e d u c a t i o n , t r a d i t i o n s , memories and a s p i r a t i o n s . 72 V a r i o u s A g e n c i e s and Programs D u r i n g the l a s t few y e a r s , the Government o f Quebec has d e v e l o p e d a v a r i e t y o f new a g e n c i e s and programs i n o r d e r t o p a r t i c i p a t e a c t i v e l y i n the c u l t u r a l and economic development of the P r o v i n c e . The f i r s t s t e p i n t h i s d i r e c t i o n was ta k e n i n 1963 when the government n a t i o n a l i z e d p r o v i n c i a l hydro u t i l i t i e s . S i n c e t h a t time i t has c r e a t e d the G e n e r a l Investment G o r p o r t a i o n of Quebec, a S t e l l Company, a Quebec F i n i n g Company, a F o r e s t r y Company, a P e t r o l e u m E x p l o r a t i o n Company, a Quebec D e p o s i t and Investment,Funds, an I n d u s t r i a l R e s e a r c h C e n t r e . As a f i n a l s t e p , the Government o f Quebec l a u n c h e d such i n d u s t r i a l a i d programs as the " F i n a n c i a l A s s i s t a n c e program f o r F a s t - G r o w t h I n d u s t r i e s " and the "Program t o s t i m u l a t e the Development of C e r t a i n s I n d u s t r i e s " . I n o r d e r t o promote the c u l t u r a l development o f i t s p o p u l a t i o n , f u r t h e r m o r e , i t has c r e a t e d a T h e a t r e and C o n c e r t C e n t r e i n Montreal and ev e r y y e a r has sponsored d i f f e r e n t t h e a t r e group v i s i t s t o s m a l l v i l l a g e s i n a l l p a r t s of the P r o v i n c e . Knowing t h a t mass media are i m p o r t a n t to the p o p u l a t i o n i n many ways, i t has c r e a t e d "Radio-Quebec", a Quebec N a t i o n a l F i l m Board, a Quebec Bureau o f I n f o r m a t i o n and P u b l i c i t y , and i t has e s t a b l i s h e d i n d i f f e r e n t c i t i e s around the w o r l d , Quebec 7 3 Houses, i n o r d e r t o promote the c u l t u r a l and economic development o f i t p o p u l a t i o n . I f the p r e s e n t t r e n d c o n t i n u e s , one can than see t h a t the Government of Quebec w i l l I n t e r v e n e more and more i n the c u l t u r a l and economic development o f the p o p u l a t i o n . 7h The mf?.In s u b j e c t o f t h e e l e c t o r a l camp.iin i n 1962, i n Quebec was t h e n a t i o n a l i z a t i o n of h y d r o - u t i l i t i e s . The L i b e r a l pq.rty, i n power s i n c e I960, was s s k i n ? , a. c l e a r mandate from, t h e p o p u l a t i o n s u p p o r t i n g t h i s p r o p o s e d a c t i o n . W i t h t h e b a c k i n g o f t h e t r a d e u n i o n s and g e n e r a l p u b l i c s u p p o r t t h e p a r t y was r e t u r n e d t o power. A f e w months l a t e r i n 1963,- t h e government n a t i o n a l i z e d most o f t h e h y d r o - u t i l i t i e s i n Quebec. T h i s a c t i o n was t a k e n f o r the r e a s o n t h a t , t h e ^government t h o u g h t t h a t , i t was t h e o n l y way t o promote t h e i n d u s t r i a l i z a t i o n o f Quebec. The .$300 m i l l i o n d o l l a r s needed f o r t h e n a t i o n a l i z a t i o n was b o r r o w e d on the Hew Y o r k m a r k e t w i t h o u t any d i f f i c u l t y . S i n c e t h a t t i m e , t h e government has expanded t h e h y d r o f a c i -l i t i e s and i n 1968, t o t a l i n v e s t m e n t was about $ 3 . 8 b i l l i o n s . Hydro-Quebec has s i n c e become one of the most I m p o r t a n t h y d r o - e l e c t r i c p r o d u c e r i n Canada. " W i t h 1.7 Kw i n s t a l l e d p e r p e r s o n " t h u s t 1 : "Quebec l e a d s the w o r l d ' s I n d u s t r i a l i z e d c o u n t r i e s i n t h e p r o d u c t i o n o f e l e c t r i c e n e r g y . I t i s a l s o by f a r t h e l a r g e s t e l e c t r i c i t y p r o d u c e r I n Canada, a c c o u n t i n g f o r k$% of t h e C a n a d i a n Hydro e l e c t r i c p o t e n t i a l " 60 By a n a l y s i n g t h e s t a t e m e n t s of .the P r e s i d e n t of H y d r o -Quebec, one can see t h a t t h i s c o r p o r a t i o n has p l a y e d and w i l l p l a y an I m p o r t a n t r o l e i n t h e economic development of Quebec. 60 Quebec Land o f O p p o r t u n i t y , M i n i s t e r s de 1 ' I n d u s t r i e , p.21 A p p e n d i x 13 75 The P r e s i d e n t of Hydro-Quebec t h i n k s t h a t i t i s t h e o b l i g a t i o n of the government-owned c o r p o r a t i o n s and a g e n c i e s t o p a r t i c i p a t e t o t h e economic development o f Quebec and t h a t t h e y s h o u l d 61 be r e a d y t o put the p r i c e i f needed. F o r example, t h e P r e s i d e n t o f Hydro-Quebec, M. Roland G i r o u X j t h i n k s t h a t Hydro-Quebec, the Government o f Quebec, and a l l o t h e r g overnmental a g e n c i e s who g e t p u b l i c funds sho u l d s e t up the p r a c t i c e 0£*huyIngT s u p p l i e s i n Quebec i n o r d e r t o s t i m u l a t e the c r e a t i o n o f new e n t e r p r i s e s and t o c o n t r i b u t e t o t h o s e a l r e a d y e x i s t i n g , t h e r e b y c r e a t i n g employment f o r Quebec's p o p u l a t i o n . F o r him the main p r i o r i t y i s to c o n s e r v e and t o m u l t i p l y jobs i n Quebec and he i s r e a d y t o pay the p r i c e i f n e c e s s a r y . M. G i r o u x says he i s : " r e a d y t o pay a bonus so t h a t p u r c h a s i n g can be done i n Quebec when p o s s i b l e . T h i s bonus must be of a sum l a r g e enough t o o b t a i n t h e desir e d r e s u l t : the c r e a t i o n of jobs f o r Q u e b e c o i s " . 62 Must we a c c e p t p a y i n g more because our f i r m s , e n t e r p r i s e s are l e s s p r o d u c t ! v e s t h a t i n f o r e i g n l a n d ? Yes:, he says: "we must a c c e p t f o r a c e r t a i n time a c e r t a i n degree of i n e f f i c i e n c y or a degree of l e s s p r o d u c t i v i t y , s i n c e i t i s the p r i c e t h a t we must pay t o become more e f f i c i e n t and more p r o d u c t i v e i n the f u t u r e " . 63 A l t h o u g h Quebec i s r i c h l y endowed w i t h w ater power r e s o u r c e s , the Government take s g r e a t i n t e r e s t i n o t h e r s o u r c e s 61 Commerce, Hydro-Quebec, Jan. 1970, p.29 62 I b i d . , p.29 63 I b i d . , p.30 76 o f e n e r g y . Hydro-Quebec i s p r e s e n t l y c o n s t r u c t i n g a n u c l e a r power s t a t i o n a t G - e n t i l l y , h a l f - w a y between Quebec and M o n t r e a l . A t c o m p l e t i o n i n 1971, the c e n t r a l r e a c t o r w i l l have an i n i t i a l o u t p u t o f 250,00 Kw and w i l l have c o s t Hydro-Quebec #106 m i l l i o n . Hydro-Quebec, f u r t h e r m o r e , i s b u i l d i n g a c o m p r e h e n s i v e e n e r g y r e s e a r c h c e n t r e , w h i c h w i l l be t h e f i r s t o f i t s t y p e i n N o r t h - A m e r i c a . T h i s c e n t r e w i l l a v o i d t h e c o s t o f h a v i n g t o r e l y h e a v i l y on E u r o p e a n e s t a b l i s h m e n t s f o r e s s e n t i a l d e v elopment work. The c e n t r e w i l l c o s t *35,000,000 and a t i t s o p e n i n g i n t h e summer o f 1971, i t s h o u l d employ 200 r e s e a r c h e r s and t e c h n i c i a n s . I n t h i s l a b o r a t o r y , r e s e a r c h e r s w i l l be a b l e t o do a l l k i n d s o f r e s e a r c h f o r b e t t e r methods and t o t r y a l l k i n d o f e l e c t r i c a l m a t e r i a l s up t o 1,500,000 v o l t s Kw. C u r i o u s a t i t m i g h t seem, F r e n c h - C a n a d i a n s were c o n s i d e r e d i n c o m p e t e n t i n t h e s e f i e l d s b e f o r e 1962, and n e v e r had a c h a n c e o f g e t t i n g ahead. They had t o e x i l e t h e m s e l v e s t o F r a n c e t o l e a r n a b o u t n u c l e a r e n e r g y i n t h e i r own l a n g u a g e , s i n c e e v e r y t h i n g was done i n E n g l i s h a t t h e A t o m i c E n e r g y o f Canada i n O n t a r i o . They c o u l d n o t , f u r t h e r m o r e , h o l d k e y p o s i t i o n s i n t h e h y d r o u t i l i t i e s companies s i n c e t h e t o p management was a f r a i d t h e i r r e s p e c t i v e companies w o u l d go i n t o b a n k r u p t c y . One can t h e n c o n c l u d e t h a t the n a t i o n a l i z a t i o n o f the 77 hydro u t i l i t i e s , the c r e a t i o n o f an energy r e s e a r c h c e n t r e , and the c o n s t r u c t i o n of a n u c l e a r power s t a t i o n w i l l a l l o w F r e n c h - C a n a d i a n s t o absorb t h e u p - t o - d a t e t e c h n i q u e s i n the d i f f e r e n t f i e l d s and t o work i n t h e i r own l a n g u a g e . 7 8 G e n e r a l I n v e s t m e n t C o r p o r a t i o n of Quebec Our c e n t u r y i s c h a r a c t e r i z e d t o a l a r g e e x t e n t by t h e d e v e l o p m e n t and I m p l a n t a t i o n of s i z a b l e economic e n t i t i e s i n the f i e l d s o f f i n a n c e , commerce and I n d u s t r y w i t h o u t t h e t o t a l e l i m i n a t i o n o f s m a l l and medium s i z e b u s i n e s s e s . B e c a u -se o f t h e i r economic i m p o r t a n c e s u c h l a r g e e n t i t i e s a r e t h e d r i v i n g f o r c e b e h i n d economic d e v e l o p m e n t . Our c e n t u r y i s a l s o one o f r e s e a r c h . D i s c o v e r i e s b r o u g h t about by r e s e a r c h o u t d a t e p r o d u c t i o n t e c h n i q u e s f a s t e r t h a n b e f o r e . T h i s so t o speak, l e a d s t o t h e i m p l a n t a t i o n o f t h e l a r g e economic e n t i t i e s m e n t i o n n e d e a r l i e r b e c a u s e t h e y a r e a b l e t o s e a r c h f o r and s u p p l y e x t r e m e l y wide markets,,, I n t h i s way, t h e s e s u b s t a n -t i a l e n t e r p r i s e s may v e r y r a p i d l y d e p r e c i a t e t h e i r i n v e s t -ments and implement new t e c h n i q u e s p r o v i d e d by r e s e a r c h , Quebec' economy, o f c o u r s e , does n o t escape t h e s e i n f l u -e nces and development p r o c e s s e s w h i c h f o r c e a g r e a t number o f i n d u s t r i a l o r g a n i z a t i o n t o i n t e g r a t e o r t o d i s a p p e a r . A c c o r -d i n g t o t h e Economic C o u n c i l o f Quebec; " t h e e x p a n d i n g p r o c e s s e s of e n t e r p r i s e s , w h i c h i n p e r f e c t c o m p e t i t i v e c l i m a t e means the t a k e - o v e r of s m a l l I n d u s t r i e s by l a r g e r u n i t s o r by t h e f u s i o n among t h e m s e l v e s , has p r o v o k e d u n t i l t o d a y , f o r Quebec, t h e l o s s o f many o f I t s e n t e r p r i s e s as soon as t h e y became m a t u r e " , 6I4. . As f o r t h e l a r g e r e n t e r p r i s e s i n Quebec, most i f 6k , C o n s e l l d ' O r i e n t a t i o n Bconomique du Quebec, Documents de • base en vue de l a p l a n i f i c a t i o n , septembre 1962 7 9 not a l l are controlled by English Canadians and Americans. The Quebec economy has always been organized and exploited by non Quebecers. These foreign interests quite often act against the Interest of the Province'. In a study done on this subject by the Interministerial Gomittee the members came out with the following conclusions; "Foreign firms",the study reports* rt respond to a need of their mother country; they exploit l o c a l resources for their interest which quite often may not coincide with the objectives of the economy of Quebec" 6 5 To remedy this state of a f f a i r s , the Government of Quebec created a mixed corporation: the General Investment Corporation of Quebec, in 1963. The aim of the G.I.C.Q. i s to play an i n i t i a t i n g role which would allow industry, In properly selected key sectors, and depending upon i t capa-b i l i t i e s and resources, to establish a solid internal basis and eventual international expansion. The creation of such an enterprise, the f i r s t of i t s kind in North America, and an Institution s t i l l unique on the continent, brought many problems to the Government. The Government had to ask i t s e l f whether this Europe-inspired approach was appropriate i n our Canadian and North-American context and i f the company could find a meaningful place within the existing industrial and financial structures. The experience so far j u s t i f i e s an affirmative answer to such 65 Rapport du comite interministerlel d'etude sur le reglne rentes du QueBec, vol i i , mai 196k 80 q u e r i e s . The r e a c t i o n o f f i n a n c i a l I n s t i t u t i o n s t o t h e f i r s t i s s u e o f s h a r e s was e n c o u r a g i n g and the f i v e m i l l i o n d o l l a r s s u b s c r i b e d by the p r o v i n c i a l government e a s i l y s t i m u l a t e d the .investment of s i x t e e n more f r o m the p r i v a t e s e c t o r t o work at the same ends as the p u b l i c money. The c o r p o r a t i o n s h o u l d become one o f the g r e a t d e c i s i o n - m a k i n g c e n t r e s , an o r g a n i z e r and s u p p l i e r o f abundant human and f i n a n c i a l r e s o u r c e s f o r t h e P r o v i n c e . I t i s o b v i o u s , however, t h a t G.I.C.Q. cannot be i n t e r e s t e d i n a l l e n t e r p r i s e s whose development demands i n t e g r a t i o n i n t o l a r g e r b o d i e s , because i t would t h e n become a mere conglo m e r a t e of s m a l l e n t e r p r i s e s , each v u l n e r a b l e t o . t e c h n i c a l changes. . I t might be n e c e s s a r y f o r the Government of Quebec to c r e a t e o t h e r i n s t i t u t i o n s s i m i l a r t o G.I.C.Q. but w orking w i t h i n d i f f e r e n t f i e l d s . Under p r e s e n t c o n d i t i o n s , G.I.C.Q, must i m i t a t e , the s t r a t e g y o f l a r g e i n d u s t r i a l e n t i t i e s and c o n c e n t r a t e i t s i n v e s t m e n t endeavors i n p r e c i s e s e c t o r s , where Quebec e n j o y s e x c e l l e n t e x p e r i e n c e and t e c h n i c a l advantages. I n t h i s way, i t s h o u l d d i r e c t the d e s t i n y o f t h r e e or f o u r l a r g e s p e c i a l i z e d and p r o g r e s s i v e e n t i t i e s . T h i s would r e s u l t i n Quebec g a i n i n g a v o i c e i n i n d u s t r y . I n o r d e r t o e n j o y the advantages o f mass p r o d u c t i o n , 81 and t o make r e s e a r c h work w o r t h w h i l e , t h e companies w i l l have t o be o f a f a i r l y l a r g e s i z e . The markets and the a c t i v i t i e s must, t h e r e f o r e , e x t e n d beyond the b o r d e r s o f Quebec. The o b j e c t i v e o f c o n c e n t r a t i o n c o u l d be I n m e c h a n i c a l i n d u s t r y . I t a l s o seems t h a t Quebec's f o r e s t r y w e a l t h I s a f a v o r a b l e s e c t o r which c o u l d d e v e l o p i n t o a s i z a b l e i n d u s t r y . A g a i n , t h e importance o f the i n t e r n a l market s h o u l d j u s t i f y • an i n t e r e s t i n the food i n d u s t r y . Some i n f l u e n c i a l government o f f i c i a l , however, t a l k a l s o about g o i n g i n t h e e l e c t r o n i c s i n d u s t r y . They would l i k e t o a c q u i r e C a n adian M a r c o n i Co. I l l u s o r y , however, i t may seem t h a t Quebec c o u l d one day e x e r c i s e : c o m p l e t e c o n t r o l over a l l s e c t o r s of i t economy, i t i s n e v e r t h e l e s s w i t h i n i t s c a p a b i l i t i e s t o c r e a t e c o n d i t i o n s f a v o r a b l e t o i t s economic growth by f o r m i n g a s m a l l number of l a r g e dynamic e n t e r p r i s e s , which would become the d r i v i n g f o r c e mentioned as b e i n g i n d i s p e n s a b l e t o our s o c i e t y . 6.6 A r e s e a r c h done j o i n t l y by l e s C a i s s e s P o p u l a i r e s and 1 • T J n i v e r s i t e L a v a l , show t h a t Quebec p e o p l e send an average o f 35.8$ o f t h e i r annual budget on f o o d . L a S i t u a t i o n Bconomique des F a m i l i e s Canadiennes F r a n c h i s e s , C e n t r e de r e c h e r c h e s s o c i a l e s de l ' U n i v e r s i t e L a v a l , p.5 67 l e j o u r n a l l e D e v o i r , November 26, 1969 82 C h a r a c t e r of the C o r p o r a t i o n C o n s i d e r i n g t h a t t h i s c o r p o r a t i o n w i l l have t o o p e r a t e i n a c l i m a t e o f f r e e - e n t r e p r i s e , t h e government c r e a t e d a "mixed c o r p o r a t i o n " , c o n s i s t i n g b o t h p r i v a t e i n v e s t o r s h o l d i n g s h a r e s , and the Government o f Quebec and i t s p u b l i c d epartments. I t d i f f e r s f r o m European S t a t e C o r p o r a t i o n i n t h a t I t i s a mixed c o r p o r a t i o n . The European C o r p o r a t i o n s are e i t h e r c o n t r o l l e d e n t i r e l y by t h e Government^ f o r example l a " S o c i e t e R a t i o n a l e d ' I n v e s t i s s e m e n t s de B e I g i q u e " , or may be "mixed c o r p o r a t i o n s " ..like t h o s e i n P r a n c e . I n t h e F r e n c h c a s e , the s h a r e h o l d e r s a r e o n l y Government, departments, c i t i e s , d e p o s i t funds, and N a t i o n a l i z e d banks. Such a "European type c o r p o r a t i o n " was not c r e a t e d by the Government o f Quebec f o r many r e a s o n s . F i r s t l y , p r e s s u r e s c o u l d have been made on t h e government to t a k e o v e r d y i n g companies w i t h o b s o l e t e equipment when unemployment was g o i n g t o r e s u l t from the s h u t t i n g down o f such companies. S e c o n d l y , m u n i c i p a l a d m i n i s t r a t i o n s c o u l d have asked f o r the c r e a t i o n of new e n t e r p r i s e s i n t h e i r c i t i e s , i f the company were w h o l l y g o v e r n -ment owned. I t c o u l d , f u r t h e r m o r e , not have been c o n s i d e r e d as a good p a r t n e r f o r p r i v a t e e n t e r p r i s e s s i n c e N o r t h American businessmen do not p r a i s e h a v i n g w h o l l y government e n t e r p r i s e s as t h e i r c o m p e t i t o r s . The C o r p o r a t i o n do not have any " s p e c i a l s t a t u s " , and does not b e n e f i t e from t ax exemption. I t i s s u b m i t t e d t o f r e e 83 c o m p e t i t i o n and must pay t a x e s l i k e any o t h e r e n t e r p r i s e . L i k e any o t h e r f r e e e n t e r p r i s e , c r i t e r i a of e f f i c i e n c y and p r o f i t g e n e r a t i n g are u t i l i z e d t o judge i t s a c t i o n s . Thus C . I . C . Q , must prove i t s u c c e s s on the b a s i s of the c l a s s i c a l c r i t e r i a o f the b u s i n e s s w o r l d . 81+ S t r u c t u r e o f t h e C o r p o r a t i o n The c o r p o r a t e s t r u c t u r e of t h e company i s t h a t o f a c o r p o r a t i o n i s s u i n g s t o c k . The number o f D i r e c t o r s was i n c r e a s e d f r o m twelve, at i n c e p t i o n , t o s i x t e e n by P r o v i n c i a l enactment of August 12 , 19&7 which m o d i f i e d G I G 1 s c h a r t e r . As p r o v i d e d by i t s c h a r t e r , d i r e c t o r s are a p p o i n t e d as f o l l o w s e i g h t are e l e c t e d by s h a r e h o l d e r s o t h e r t h a n the Government of Quebec and C a i s s e s P o p u l a i r e s ; t h e s e two b o d i e s each a p p o i n t f o u r r e p r e s e n t a t i v e s . CIG's c h a r t e r s t i p u l a t e s t h a t t h e Government of Quebec, whatever i t s p a r t i c i p a t i o n i n t h e C o r p o r a t i o n ' s c a p i t a l , may n o t a p p o i n t more t h a n f o u r o f t h e s i x t e e n d i r e c t o r s ; t h i s p r e v e n t s any p o s s i b l e governmental c o n t r o l , t h e r e f o r e a l l o w i n g the Board a b s o l u t e management of i t s a f f a i r . The f o u r d i r e c t o r s r e p r e s e n t i n g the C a i s s e s P o p u l a i r e s a r e a p p o i n t e d by the Quebec T r u s t Company, f o l l o w i n g an agreement t o t h a t e f f e c t w i t h the C a i s s e s P o p u l a i r e s . A p e c u l i a r s t r e n g t h o f G.I.C.Q. comes p r e s i s e l y from i t s a b i l i t y t o o f f e r a complete spectrum of f i n a n c i a l a s s i s t a n c e , from d i r e c t f i n a n c i n g t o m a j o r i t y or m i n o r i t y e q u i t y p o s i t i o n s . I t i s thus a b l e to d e l i n e a t e an i n t e r v e n t i o n program f u l l y adapted t o the s p e c i f i c needs o f t h o s e who approach i t . The v e r y s t r u c t u r e o f G.I.C.Q., where the f i n a l a u t h o r i t y r e s t s i n the Board of D i r e c t o r s answerable o n l y t o the s h a r e h o l d e r s , p r o v i d e s a guaran of i m p a r t i a l i t y i n the assessment o f a l l r e q u e s t s f o r f i n a n c i a l a s s i s t a n c e . 8 6 A c t i o n of t h e C o r p o r a t i o n The C h a r t e r o f t h e c o r p o r a t i o n s t a t e s the two f u n c t i o n s t h a t the Government wants i t t o p l a y i n the development o f Quebec's economy: a) t o i n t e g r a t e i s o l a t e d or f r a g m e n t o r y i n d u s t r i e s to make them v i a b l e , t o c r e a t e new i n d u s t r i e s , and t h u s t o reduce unemployment. b) to b r i n g the p o p u l a t i o n o f Quebec t o p a r t i c i p a t e to the development o f t h e s e e n t e r p r i s e s by i n v e s t i n g i n the ^ . 6 8 c o r p o r a t i o n . I t i s t h e n i n the G i l . C . Q . ' s i n t e r e s t t o p a r t i c i p a t e i n t h e r e g r o u p i n g of Quebec i n d u s t r i e s w hich show p r o m i s i n g p o s s i b i l i t i e s o f i n t e g r a t i n g t h e i r m a n u f a c t u r i n g p r o c e s s e s , t o t h e i r m u t u a l advantage. G.T.C.Q., f u r t h e r m o r e , has d e v o t e d more t h a n a t h i r d o f i t s t o t a l a s s e t s t o t h e l a u n c h i n g o f new v e n t u r e s w i t h i n i t s f i r s t few y e a r s of e x i s t e n c e . T h i s i m p o r t a n t e f f o r t s h o u l d be u n d e r l i n e d b o t h because o f i t s impact on the i n d u s t r i a l development o f Quebec and because 6 9 of i t s consequences f o r G.I.C.Q. i t s e l f . i t i s i n d e e d g e n e r a l l y much e a s i e r t o t a k e o v e r e x i s t i n g companies than to e s t a b l i s h new ones. I t must be f i r m l y k ept i n mind t h a t such new companies cannot become p r o f i t a b l e b e f o r e o p e r a t i n g f o r some y e a r s . Such d i f f i c u l t i e s are normal and s h o u l d be 70 t a k e n i n t o a c c o u n t i n the c o r p o r a t i o n ' s ' p l a n n i n g . I t s h o u l d 6'8 A n n u a i r e du Quebec 68-69, p.733 6;9 S o c i e t e G e n e r a l e de F inane erne nt du Quebec ,R.Ann.1966, p.9 70 p e r s p e c t i v e s e c o n o m i q u e s , l e D e v o i r , January l i p , 1970 87 create, when j u s t i f i e d and within i t s means, new companies despite the unavoidable problems and dangers involved. In a r e l a t i v e l y short time, G.I.C.Q. was able to build a industrial complex with over 8,500 employees in the beginning of 1968 and with a sale volume of $lk0 millions at the end of 1967. 9 1 The G.I.C.Q. has the character of a holding company with a majority or minority participation. I f i t i s a family type company, i t wished to hold the majority of the shares mbt to say th© t o t a l . However the management prefer 72 to control at least $-Q% of the shares of i t s associates. When i t decides to acquire shares from a company, however, the most important point considered is the efficiency of the present "management", since i t delegates management respon-s a b i l i t i e s to the management of each firm; thus i t operates a decentralized company having access to the same research and management opportunities. As of December 31, 1968, the Corporation subsidiaries and associated companies were as follow: jo of Control pate acquired Mechanical - Engineering: Marine Industries Ltd 60.k subsidiaries* Porano Ltd 60*0 Volcano Ltd 60.0 Societe de Montage Automobile Inc. 100.0 71 Forces, Hydro-Quebec , S.G.F, p.kb 72 S Q C l e t e G e n e r a t e de F i n a n c e m e n t du Quebec, C o n f e r e n c e a P a r i s , May 6, 19bb, Jean Deschamps, p. 10 October 1965 July 1963 October 1963 November 196k 88 V a l c a r t i e r I n d u s t r i e s Inc F o r e s t r y Group; S o g e f o r L t d S u b s i d i a r y : J.B. Dube L t d Maki C o r p o r a t i o n A l b e r t G i g a i r e L t d Donahue L t d Others jo o f c o n t r o l 50.0 100.0 100.0 99.9 100.0 10.3 up t o 30.0 73 D a v i d L o r d L t d 100.0 L a S a l l e K n i t t i n g L t d 97.5 Bonnex i n c . , 50.0 C e g e l e c I n d u s t r i e I n c . 50.0 Sofobec L i m i t e d 100.0 S.L.F. H o l d i n g s L i m i t e d 25.0 The E l e c t r i c a l M a n u f a c t u t i n g Co L t d . 30.k Mon t e l I n c . 30.0 Date a c q u i r e d December 1966 August 1963 Oc t o b e r 1966 Oct o b e r 1966 1968 November 1967 Ja n u a r y 1970 May 196k O c t o b e r 196k 1968 F e b r u a r y 196k November 196k November I96lr Antornatec I n c . 1 8 . 0 7k The t o t a l amount of i n v e s t m e n t , a s o f December 31, 1968, was $26,756,966 and a f i n a n c i n g amount o f #5,973,02k. W i t h a v e r y s m a l l amount o f c a p i t a l the C o r p o r a t i o n has been a b l e t o t ake c o n t r o l o f c e r t a i n Companies. S i n c e the C o r p o r a t i o n i s an inves t m e n t company, i t s f i n a n c i a l s t a t e m e n t s are not c o n s o l i d a t e d w i t h t h o s e o f i t s s u b s i d i a r i e s which are o p e r a t i n g companies. 73 F i n a n c i a l Time, J a n u a r y $ 1970 7k S o c i e t e G e n e r a t e de Finaneement du Q u e b e c , r a p p o r t a n n u e l , 1966,19b?7 1969 89 The C o r p o r a t i o n i s busy f o r m i n g a s m a l l n u c l e u s f r o m which i t w i l l d e v e l o p management and m a n u f a c t u r i n g p r o c e d u r e s w h i c h c o u l d become p r o f i t a b l e f o r i t s s u b s i d i a r i e s . I t a l s o seeks a s s o c i a t i o n w i t h companies w h i c h have a l r e a d y demons-t r a t e d t h e i r I n t e r e s t i n a p p l i e d r e s e a r c h . I n C e g e l e c , i t Is a s s o c i a t e d w i t h two F r e n c h companies, l a Compagnie G e n e r a l e d ' E l e c t r i c i t e and i t s s u b s i d i a r y , l a Compagnie G e n e r a l e d'Automatisme. A s i m i l a r s i t u a t i o n e x i s t s w i t h Noranda and w i t h Ug-ine-Kuhlman which p r o v i d e d the manufac-t u r i n g p r o c e s s o f some p r o d u c t s . I n a n o t h e r t y p e o f a g r e e -ment, Ma r i n e I n d u s t r i e s u t i l i z e s the m a n u f a c t u r i n g r i g h t s f o r N e y r p i c t u r b i n e s and A l s t h o r n a l t e r n a t o r s . As o f F e b r u a r y 1965, Soma I n c . s i g n e d an agreement w i t h R e n a u l t and Peugeot managements f o r the e s t a b l i s h m e n t of an a u t o m o b i l e assembly p l a n t i n Quebec. The c r e a t i o n o f t h i s a u t o m o b i l e p l a n t has g i v e n employment t o l a b o r of r u r a l o r i g i n ; a t p r e s e n t , some 350 p e o p l e work f o r Soma, I t c o n t r o l s and work c l o s e l y w i t h two Americans news-pa p e r s , the E v e n i n g and Sundy B u l l e t i n o f P h i l a d e l p h i a and the Garnet Newspapers I n c . of R o c h e s t e r , the Donahue B r o t h e r s L i m i t e d . F u r t h e r m o r e the Donahue Company has e s t a b l i s h e d a new s u b s i d i a r y w i t h the c o o p e r a t i o n o f t h e New Y o r k Times; "the M a l b a i e Paper Co L t d " , By t h e e s t a b l i s h m e n t o f t h i s 90 new subsidiary, the New York Times agreed to purchase 35,000 tons of newsprint annually. Hundreds of new jobs were created in these new ventures, while the expansion of existing companies was providing many more. G-.I.C.Q. has thus f u l f i l l e d , within i t s limited means, the task entrusted to i t by the National Assembly of Quebec when i t approved i t s charter: to stimulate and promote the formation and development of industrial undertakings i n Quebec, so as to broaden the basis of i t s economic structure, accelerate i t s growth and contribute to f u l l employment. 91 Gonelusion The General Investment Corporation of Quebec, G.I.G.Q., can now be considered as a v i t a l factor i n Quebec's economy. A modern province needs considerable and costly substructures i f i t is to base i t s social and economic development on solid foundations. The needed prosperity is unfortunately not automatic and i t must be helped along through a variety of i n i t i a t i v e s . Industry has given an equally encouraging response. The p o s s i b i l i t y of close, friendly co-operation with the private sector has been clearly demonstrated i n the establish-ment of new undertakings as well as i n the purchase of existing ones. It shows the demand for a "mixed corporation" l i k e G.I.G.Q.; i t also demonstrated that the State and the private sector both profit from this presence and that they can adjust themselves to a variety of needs and circumstances. Nor must we forget the formation of a general management group which has shown i t s mettel on the f i r i n g l i n e , without benefit of similar experience in Quebec for the French-Canadians. The knowledge accumulated by the general management and the Board of Directors is therefore unique. Such human resources-and. these are the rarest and most precious of a l l - should 9 2 be g i v e n t h e o p p o r t u n i t y t o c o n t i n u e and expand t h e i r work. To c o n c l u d e , a l l I c a n s a y i s t h a t t h e Government o f QuAbec has s u c c e e d e d i n c r e a t i n g t h e l a r g e s t F r e n c h - C a n a d i a n m a n u f a c t u r i n g group i n e x i s t e n c e t o d a t e and t h a t a c o r p o -r a t i o n l i k e G.I.C.Q. s h o u l d have an i m p o r t a n t p l a c e among t h e economic i n s t i t u t i o n s w i t h w h i c h a modern S t a t e must be p r o v i d e d t o I n s u r e c o n t i n u e d p r o s p e r i t y o f i t s p o p u l a t i o n 93 SIDBBC S i d e r u r g i e Quebecoi.se A f t e r years of, indeei siveness, the Government of Quebec went ahead w i t h a p r o j e c t of c r e a t i n g a S t e e l Corporation,, On December 2 7 , 1 9 6 3 , the Government bought 9 0 $ o f the s h a r e s of Dominion S t e e l .and Goal C o r p o r a t i o n L t d (DOSCO) f r o m Hawker Sid.del.ey,. Canada, L t d , and on August 2 2 , 1 9 6 9 , t h e government bought the remaining shares from DOSCO, SIDBEC was born., 1 -S t r u c t u r e of the C o r p o r a t i o n SIDBEC i s a mixed c o r p o r a t i o n w i t h an a u t h o r i z e d c a p i t a l of 1 1 , 0 0 0 , 0 0 0 common shares, and 9 , 0 0 0 , 0 0 0 d e f e r r e d d i v i d e n d s shares, A s p e c i a l law has a u t h o r i z e d the Government of Quebec to buy 5 , 0 0 0 , 0 0 0 d e f e r r e d d i v i d e n d s shares f o r an amount of $60 , 0 0 0 , 0 0 0 payable i n f i v e annual payments of #12,000 ,000 from 1968 to 1 9 7 3 . These were up to the present the only 76 shares Issued, I t i s , however, expected t h a t a f t e r a r e o r g a -n i z a t i o n o f the company, common shares w i l l be i s s u e d to r a i s e c a p i t a l needed f o r the expansion, : Future of the C o r p o r a t i o n U n t i l now, very l i t t e has been p u b l i s h e d on t h e c o r p o r a t i o n , 75 the p r i c e p a i d to take c o n t r o l of the 2,960,036 shares e x i s t i n g was $32,560,9I4.6 ( e x c l u d i n g broker* and t r a n s f e r f e e s ) PersOnnal l e t t e r from SIDBFC, February 1 2 , 1 9 7 0 76 I b i d , , February 1 2 , 1970 " 9k I n a s p e e c h a t t h e Chamber o f Commerce o f M o n t r e a l on F e b r u a r y 10, 1970, t h e P r e s i d e n t o f SIDBFC, M. P a u l G i g n a c , f o r s a w m a s s i v e i n v e s t m e n t t o expand up t o 1973. These i n v e s t m e n t s w o u l d r e q u i r e about $90 t o | 95 m i l l i o n and c r e a t e between 1,000 t o 1 ,500 a d d i t i o n a l j o b s t o t h e p r e s e n t employment o f 2,500 p e r s o n s . The p r i n c i p a l i n v e s t m e n t s w o u l d c o n s i s t o f a new e l e c t r i c s t e e l m i l l w i t h a . t o t a l c a p a c i t y o f 600,000 t o n s p e r y e a r . T h i s p r o j e c t s h o u l d be co m p l e t e b y September 1971, and r e q u i r e $30 m i l l i o n s . The se c o n d i n v e s t m e n t would be t h e e x p a n s i o n o f a f a c i l i t y e x i s t i n g i n M o n t r e a l f o r the p r o d u c t i o n of m e t a l b o a r d s . I t s h o u l d be c o m p l e t e i n 1970 and w i l l r e q u i r e an i n v e s t m e n t of &k m i l l i o n s . F u r t h e r m o r e an e l e c t r i c s t o v e f o r 200,000 t o n s w i l l be b u i l d a t the e x i s t i n g f a c i l i t y i n M o n t r e a l , SIDBFC w i l l have a l s o t o i n v e s t between $20 and $25 m i l l i o n s f o r the m o d e r n i z a t i o n o f i t s equipment and s h o u l d be a b l e t o e x p l o i t i t s own mines i n about t h r e e o r f o u r y e a r s . The a c t u a l p r o d u c t i o n o f SIDBFC i n 1969 was 5k0,000 t o n s and t h e p r e s i d e n t f o r e c a s t s 750,000 t o n s f o r 197k. By t h e end o f 1973, he went on t o s a y , Quebec w i l l have a c o m p l e t e l y i n t e g r a t e d s t e e l i n d u s t r y . P e r h a p s more I m p o r t a n t t h a n t h e amount o f p r o d u c t i o n i s t h e v i a b i l i t y o f the i n d u s t r y . One s h o u l d keep i n mind t h a t the n a t i o n a l i z a t i o n o f of t h e S t e e l ;.Co i s a l s o an i m p o r t a n t f a c t o r f o r the p r o m o t i o n of F r e n c h Canadians s i n c e as the P r e s i d e n t p o i n t e d o u t : "a t the b e g i n n i n g , we had the language p r o b l e m s i n c e we must say t h a t i n DOSCO, the h i g h management was F n g l i s h - s p e a k i n g and u n i l i n g u a l " 77 F u r t h e r m o r e the Quebec S t e e l i n d u s t r y (SIDBFC) w i l l p l a y an i m p o r t a n t r o l e i n the c r e a t i o n and the e x p a n s i o n o f s e c o n d a r y i n d u s t r i e s i n the P r o v i n c e s i n c e t h e government c o u l d always s e l l them-products at a lower p r i c e i n o r d e r t o a c c e l e r a t e the e x p a n s i o n o f t h e i r f a c i l i t i e s . 77 Le D e v o i r , L » E x p e r i e n c e DOSCO-^IDBFC, F e b r u a r y 7,1970 96 SOQUEM S o c i e t e Q u e b e c o i s e d ' ' E x p l o r a t i o n K i n i e r e The e x p a n s i o n o f t h e m i n i n g i n d u s t r y i n Quebec and t h e g r o w i n g i n f l u e n c e t h a t t h i s I n d u s t r y c o u l d have on t h e economy has made t h e Government o f Quebec more and more c o n s c i o u s of the f a c t t h a t i t w a s n e c e s s a r y t o c r e a t e new t o o l s t h a t w i l l d e r i v e h i g h e r b e n e f i t f r o m t h i s i m p o r t a n t r e s o u r c e s t o t h e p o p u l a t i o n o f Quebec E v e r y b o d y knew t h a t one o f t h e weakness o f t h e m i n i n g i n d u s t r y i n Quebec d e r i v e s f r o m t h e e x p o r t o f raw m a t e r i a l s o u t s i d e o f Quebec, so t h a t t h e e f f e c t on t h e economy i s n e g l i g i b l e a s l o n g as a c e r t a i n amount i s n o t ' t r a n s f o r m e d i n Quebec. I n 1920, t h e m i n i n g p r o d u c t i o n v a l u e of Quebec was #28 m i l l i o n s , i n 1955 i t went up t o $388 m i l l i o n s , and f i n a l l y jumped o v e r t h e $700 m i l l i o n s b r a c k e t I n 1965 f o r a t o t a l 78 sum o f S736 m i l l i o n s i n 1967. C o n s i d e r i n g t h a t i t was g o i n g t o I n c r e a s e r a p i d l y o v e r t h e y e a r t o come and t h a t i t was e x p l o i t e d b y f o r e i g n i n t e r e s t s , the Department of N a t u r a l R e s o u r c e s f o u n d e d i n November 1965 t h e Quebec M i n i n g C o r p o r a t i o n (SOQUEM) w i t h a v i e w t o p r o s p e c t i n g and d e v e l o p i n g t h e p r o v i n c e ' s m i n e r a l r e s o u r c e s . 78 A n n u a i r e du Quebec, 6 8 - 6 9 , p.562 h see a p p e n d i x 9 & 10, 97 P r i n c i p a l O b j e c t i v e s of SOQUEM; 1) t o do m i n i n g e x p l o r a t i o n 2) t o e x p l o i t , alone or w i t h o t h e r s companies, m i n e r a l d e p o s i t s found by h e r or b y o t h e r s 3) t o p a r c i c i p a t e i n the e x p l o i t a t i o n of m i n e r a l d e p o s i t s , by s e l l i n g them or t o t a k e a p a r t i c i p a t i o n i n t h e m i n i n g r i g h t s s o l d . ' ' SOQUEM's main goal i s t h e s y s t e m a t i c and s c i e n t i f i c e x p l o r a t i o n of the P r o v i n c e of Quebec, and to do t h i s , i t sh o u l d c o - o p e r a t e w i t h p r i v a t e e n t e r p r i s e . C o - o p e r a t i o n w i t h p r i v a t e e n t e r p r i s e s So f a r the r e l a t i o n s o f SOQUEM w i t h p r i v a t e e n t e r p r i s e have been e x c e l l e n t . I t s h a r e s twenty-one j o i n t programs w i t h f i f t e e n l a r g e companies. These e n t e r p r i s e s b r i n g t o Quebec an i m p o r t a n t c o n t r i b u t i o n r e g a r d i n g t e c h n o l o g y , know-' how, f i n a n c i a l a s s i s t a n c e , and t h e y show t h a t c o o p e r a t i o n can be o b t a i n e d between a state-owned e n t e r p r i s e and p r i v a t e e n t e r p r i s e i n the e x p l o r a t i o n and e x p l o i t a t i o n of m i n e r a l r e s o u r c e s . F u t u r e of SOQUEM SOQUEM i s now c o n s i d e r e d one of the most im p o r t a n t 7 9 A n n u a i r e du Quebec, p. 1.56, 5 5 8 * 5 5 9 98 m i n i n g e x p l o r a t i o n companies i n Quebec, and t e n y e a r s from now, c o u l d be l e a d i n g the m i n i n g a c t i v i t i e s i n Q u e b e c . ^ In c o n c l u s i o n , one s h o u l d t h i n k t h a t i f the P r o v i n c i a l Government wants t h e m i n i n g i n d u s t r y t o . b e n e f i t t h e .p o p u l a t i o n of Quebec, t h e main t a s k of t h e Department o f N a t u r a l R e s o u r c e s s h o u l d be t o i d e n t i f y and e v a l u a t e m i n e r a l s e x p o r t e d from Quebec. Then i t s h o u l d t r y t o e x p l o r e . t h e p o t e n t i a l i n t e r i o r and e x t e r i o r markets of t h e s e m i n e r a l s as f i n i s h e d p r o d u c t s , i n o r d e r to s t i m u l a t e such m i n i n g companies t o d e v e l o p the m i n e r a l r e s o u r c e s i n Quebec i f p o s s i b l e . By d o i n g so i t c o u l d c r e a t e employment f o r the p o p u l a t i o n o f Quebec. 80 A n n u a i r e du Quebec. P. 1.56, $5&*c5<9 99 SAREP & 50QUIP S o c i e t e A c a d i e n n e d e R e c h e r c h e Petroli£re S o c i e t e Q u e b e c o i s e d ' I n i t i a t i v e P e t r o l l e r e I n December 1966 , Hydro-Quebec i n a s s o c i a t i o n w i t h T exaco E x p l o r a t i o n Company s e t up a j o i n t company t o p r o s p e c t f o r and. d e v e l o p o i l and gas d e p o s i t s o f f the M a g d a l e n I n l a n d s i n t h e G u l f o f t h e S t L a u r e n c e . SAREP was t h e n g i v e n by t h e Quebec Government a p r o s p e c t i n g p e r m i t t o c o v e r an a r e a o f Q - l 32,697,300 h e c t a r e s . Knowing t h a t I t s h o u l d do more t o f i n d and d e v e l o p o i l and gas d e p o s i t s , t h e Government c r e a t e d i n November 1969, a S t a t e C o r p o r a t i o n , SOQUIP. The p r i c n i p a l o b j e c t i v e s o f t h e c o r p o r a t i o n a r e ; 1) t o e x p l o r e t h e t e r r i t o r y o f Quebec i n o r d e r t o f i n d Quebec's p o t e n t i a l i n o i l 2) t o e x p l o i t n a t u r a l gas and o i l j o i n t l y w i t h p r i v a t e e n t e r p r i s e . "2 T h i s government c o r p o r a t i o n has the same power as t h e Quebec M i n i n g C o r p o r a t i o n (SOQUEM).' I t can do some p r o s p e c t i n g , d e v e l o p t h e d e p o s i t and p a r t i c i p a t e w i t h p r i v a t e e n t e r p r i s e i n a l l I t r e s e a r c h i f i t w i s h e s . 81 A n n u a i r e du Quebec, p.559 82 l e ' Devoir','" '".'No vember 28, 1969, p J p 1 0 0 REXPOR S o c i e t e de R e c u p e r a t i o n e t d ' E x p l o i t a t i o n F o r e s t l e r e du Quebec The Government o f Quebec f u r t h e r m o r e c r e a t e d i n 1969 a R e c u p e r a t i o n and E x p l o i t a t i o n F o r e s t r y Company. (REXFOR) l i s p r i n c i p a l r o l e w i l l be t o r e c u p e r a t e and e x p l o i t wood t h a t c o u l d be l o s s on p u b l i c l a n d . F u r t h e r m o r e i t has t h e power t o p r e p a r e exchanges of t e r r i t o r i e s w i t h l a r g e f o r e s t r y companies i n o r d e r t o be a b l e t o f u r n i s h a t a l o w e r p r i c e wood needed by t h e p a p e r m i l l s i n Quebec, INDUSTRIAL RESEARCH CENTER I n 1969, t h e Government went on w i t h a p r o j e c t o f c r e a t i n g an I n d u s t r i a l R e s e a r c h C e n t e r . I t s p r i n c i p a l r o l e w i l l be r e s e a r c h I n a p p l i e d s c i e n c e s , t o d e v e l o p new p r o d u c t s , new i n d u s t r i a l or s c i e n t i f i c m a c h i n e r y , and t o c o l l e c t and p u b l i s h t e c h n i c a l and i n d u s t r i a l i n f o r m a t i o n . The c r e a t i o n of s u c h a c e n t r e s h o u l d h e l p s m a l l and medium companies w h i c h a r e n o t a b l e t o do r e s e a r c h l i k e l a r g e c o m p a n i e s . I t i n i t i a l b u d g e t w i l l be $20 m i l l i o n f o r t h e n e x t f i v e y e a r s w i t h a p o s s i b i l i t y o f i n c r e a s e i f needed 83 Communique, M i n i s t e r e de 1 ' I n d u s t r i e , e t du Commerce, Que be 8 i | I b i d . , p. 3 , J a n u a r y 13, 1970 102 INDUSTRIAL CREDIT BUREAU This bureau was created i n I 9 6 0 , i n order to a c c e l e r a t e the c r e a t i o n and the e x t e n s i o n , In Quebec, of companies having i n t e r e s t i n e l e c t r i c equipment, e l e c t r o n i c s , c h e m i c a l s , i n d u s t r i a l machinery and aerospace a c t i v i t i e s . Two p r e r e q u i s i t s e x i s t : 1) companies must u t i l i s e advanced technology or produce a product not manufactured i n Quebec 2) t h i s product must be able t o supply an I n t e r n a t i o n a l market "5 Furthermore, companies cannot l o c a t e In areas where the new r e g i o n a l development i n c e n t i v e s of the F e d e r a l Government apply, and companies must show w i l l i n g n e s s to employ Quebec U n i v e r s i t y g r a d u a t e s . ^ The t o t a l subsidy or grant can go as h i g h as $5,000,000 and the share o f the c a p i t a l Investment by the company must be at l e a s t equal t o the subsidy. F u r t h e r loans can be gran-ted f o r the purchase of l a n d , the purchase or e x t e n s i o n of b u i l d i n g s , and. the" a c q u i s i t i o n of machinery, t o o l s , or equip-ment. These l o a n s , however, are a v a i l a b l e to a l l companies and not only to' the s p e c i a l i s e d companies mentioned above, 55 Programme d'Assistance F i n a n c i e r e a 1 ' I n d u s t r i e de P o i n t e , Mlnis*t<*re -Te" 1' induItTrTe et an Commerce, QjTeDec" 19o"9~7~pTT 36 F i n a n c i ? 1 P p s t , September 20, 1969,. p . 52 103 QUEBEC DEPOSIf AND INVESTMENT FUND To help i n the financing of i t s agencies or ventures, the Government of Quebec created in January 1966 a Deposit and Investment Fund. This fund can receive money from different government agencies and administrate i t . The principal source of the fund comes from the Quebec Pension Plan which is not integrated in the Canada Pension Plan. It was also able in December 1969 to establish a plan with the principal trade unions in Quebec, the Confederation des Syndicats Nationaux with 225,000 members, to administrate i t s membership fees for construction workers; i t ' i s expected that the other syndicates of this union w i l l soon follow the example. As Mr. Pepin, President of the Union, point out: "If workers become more conscious of what they can do c o l l e c t i v e l y on the economic side to help each other, the future of Quebec w i l l be bright. I hope that this conscious movement made by the construction workers w i l l be followed soon by other syndicates" 87 The amount transfered to the Quebec Deposit and Investment 88 Fund by the construction workers was •I$60 millions. The Fund can buy and hold government bonds, guarantee bonds, municipal fr school board bonds, as well as others. 88 Le Devoir, December 18, 1969 After two years of operation, the fund had assets of $1+18,600,000 as of December 31 , 1 9 6 7 . " This fund so far has authorized the government to go on with project which might have otherwise been postponed. One important point is to see the cooperation between this labor union and the government. . I would rather say that very seldom would trade unions rely on the government to adminis-trate their fund. One could conclude that i n the years to come this investment fund w i l l stimulate the Quebec economy and w i l l allow the government to go ahead with the project even though' there, is a tight money policy. 89 Annuaire du Quebec, p.-151+ & 731+ io5 FORECAST The Quebec economy i s s u b j e c t t o the same i n f l u e n c e as the economies of the U n i t e d S t a t e s , Canada and O n t a r i o , but owing t o a d i f f e r e n t economic s t r u c t u r e , the r e s u l t s are n o t the same. The s i t u a t i o n w h i c h p r e v a i l e d i n Quebec d u r i n g 1969 c o u l d h a r d l y be d i s c r i b e d as i n f l a t i o n a r y . Quebec's c o n t r i b u t i o n t o the p r e s e n t i n f l a t i o n i s v e r y s m a l l 90 i n d e e d . I t i s s i m p l y s u b m i t t i n g t o an i m p o r t e d i n f l a t i o n . There I s no r i s k o f a l a b o u r s h o r t a g e p u s h i n g p r i c e s , Quebec Is f a r from e x p e r i e n c i n g f u l l employment. I t i s o b v i o u s t h a t t h e economy i s n e i t h e r o v e r h e a t e d nor.booming and t h a t the r e s t r a i n t s imposed by t h e f e d e r a l government were based on a n a t i o n a l average t h a t does not n e c e s s a r i l y r e f l e c t the s i t u a t i o n i n e v e r y p a r t o f the c o u n t r y . Thus, the f e d e r a l government's economic p o l i c i e s may at time- and t h i s i s what i s h a ppening now- run c o u n t e r t o what may f a v o u r the s o l u t i o n o f r e g i o n a l problems. Any measure d e s i g n e d t o t i g h t e n c r e d i t , and t h e r e b y lower demand, a g g r a v a t e s the employment s i t u a t i o n i n Quebec w i t h o u t a p p r e c i a b l y c h e c k i n g p r i c e i n c r e a s e s . I t i s d i f f i c u l t t o r e c o n c i l e the common good and the I n t e r e s t of each of the p r o v i n c e s . However, i t i s c e r t a i n 9 0 L a P r e s s e , Dec. 9,1969, M. J.P.Beaudry, Quebec's M i n i s t e r of I n d u s t r y and Commerce 106 t h a t a s e l e c t i v e a p p l i c a t i o n of f e d e r a l government measures - o r , b e t t e r s t i l l , a s e r i e s o f compensatory measures f o r the l e s s f a v o u r e d r e g i o n s , would c o n t r i b u t e t o a s o l u t i o n . The d e f e r r a l o f t a x i n c e n t i v e s d e s i g n e d t o a t t r a c t c ommercial i n v e s t m e n t t o m u n i c i p a l i t i e s w i t h p o p u l a t i o n i n e x c e s s of 5 0 , 0 0 0 i n O n t a r i o , A l b e r t a , and B r i t i s h Columbia was a s t e p i n bhe r i g h t d i r e c t i o n , but t h i s was a v e r y s m a l l s t e p and c l e a r l y n o t enough. I t I s d i f f i c u l t t o f o r e s e e at the p r e s e n t time e x a c t l y how the economy w i l l f a r e i n the y e a r s t o come. as t h e r e a r e too many unknown- q u a n t i t i e s . I n view o f the p r e s e n t s t a t e of the economy, the Quebec p u b l i c s e c t o r 90a s h o u l d implement an e x p a n s i o n a r y p o l i c y , i . e . , i n c u r a budget d e f i c i t t o promote economic growth. Not o n l y would such a p o l i c y be a heavy burden i n the p r e s e n t c o n t e x t , but, more i m p o r t a n t s t i l l , i t . would r u n c o u n t e r t o t h e measures t a k e n by t h e f e d e r a l government as p a r t of i t s p o l i c y t o combat c y c l i c a l f l u c t u a t i o n s . 90a see appendix, 20, 21 , 22, 1 0 ? p l a n n i n g t h e Economy of.Quebec The s o c i o - e c o n o m i c c o m p l e x i o n 'of Quebec has been r a d i -c a l l y ' ' t r a n s f o r m e d i n t h e p a s t t w e n t y y e a r s by the I n v a s i o n o f modern i n d u s t r y . I f Quebec wants t o e x e r c i s e c o n t r o l o v e r I t s d e v e l o p m e n t , i t must p o s s e s s t h e d e c i s i o n - m a k i n g power and t h e n e c e s s a r y t o o l s t o do i t , ' I t .must n o t l o o k somewhere e l s e t o o b t a i n t h e s e t o o l s ; i t must e s t a b l i s h them by i t s e l f , And t h e way o f d o i n g i t , i s t o f o r m u l a t e , a f l e x i b l e p l a n f o r i t s f u t u r e d e v e l o p m e n t . The P l a n n i n g and Development B u r e a u ' c r e a t e d r e c e n t l y by t h e Government o f Quebec i s l a y i n g t h e f i r s t g r o u n d r u l e s f o r t h e d e f i n i t i v e phase o f t h e p l a n n i n g o f the economy. I t i s I m p o s s i b l e t o abandon the development o f t h e economy t o t o t a l " i m p r o v i s a t i o n . The c o n s t r u c t i o n of t h e new s o c i e t y must be p l a n n e d and t h i s p l a n n i n g s h o u l d ' b e o r i e n t e d t o w a r d c e r t a i n s p e c i a l i s e d I n d u s t r i e s f o r e a c h r e g i o n . T h i s s p e c i a l i s a t i o n p e r s e c t o r w i l l a l l o w Quebec to e x p o r t t o o t h e r c o u n t r i e s , By d o i n g t h i s , Qiiebec w i l l t h e n be a b l e t o u t i l i z e f u l l y t h e na-t u r a l and human r e s o u r c e s o f F r e n c h - C a n a d i a n S o c i e t y . The Quebec'Government s h o u l d , -however, remember t h a t t h e i n c r e a s e I n t h e G r o s s N a t i o n a l P r o d u c t ^ l a i s n o t t h e o n l y human p h i l o -sophy a d m i s s i b l e as t h e f o u n d a t i o n o f the economic d e v e l o p m e n t of a n a t i o n b u t t h a t a l s o o f i m p o r t a n c e I s t h e s a t i s f a c t i o n ' o f i n d i v i d u a l , c o l l e c t i v e , m a t e r i a l , s p i r i t u a l , and c u l t u r a l human n e e d s . 91 Le Quebec se donne van C o n s e i l de p l a n i f i c a t i o n s o c i o - e c o n o -mique, M o n t r e a I - M a t I n , November 12, 1969 92a A p p e n d i x ,19".ft 19 f o r " Economics I n d i c a t o r s o f Quebec ^Canada 108 To make up on the l o s t t i m e , the d i r e c t I n t e r v e n t i o n j o f the S t a t e w i l l be needed i n most o f the s e c t o r s o f the economy. W i l l I t be p o s s i b l e t o i n t e g r a t e the p l a n n i n g of t h e economy i n one o v e r a l l C a n a d i a n economy ? W i t h an u n d e r s t a n d i n g o f t h e l i n k s t h a t e x i s t between, the economic, the p o l i t i c , the s o c i a l and the c u l t u r a l , i s one c a p a b l e o f a f f i r m i n g t h a t the Quebec N a t i o n w i l l be a b l e t o s u r v i v e as a N a t i o n i n o n l y one economy ? W i l l the p l a n n i n g o f Ottawa l i m i t t h e autonomy o f Quebec t o o much ? S i n c e Quebec does n o t have any c o n t r o l over the money market, i n t e r n a t i o n a l commerce or t a r i f f b a r r i e r s , and s i n c e a l l of these p l a y an i m p o r t a n t r o l e i n n a t i o n a l economic o r i e n t a t i o n and growth, how w i l l i t be a b l e t o a c h i e v e e f f e c t i v e p l a n n i n g ? A c c o r d i n g to Mr. E r i c K l e r a n s , F e d e r a l M i n i s t e r of Communications, s i n c e Quebec cannot c o n s t i t u t i o n a l l y have a say on the monetary p o l i c y o f Ottawa, and s i n c e t h e s e f e d e r a l p o l i c i e s sometimes work a g a i n s t the i n t e r e s t of Quebec, the F e d e r a l Government must c o n s u l t Quebec i n the f u t u r e . T h i s absence o f c o n s u l t a t i o n and c o o r d i n a t i o n i n the p a s t has d u p l i c a t e d many o f o t h e r p o l i c i e s e s t a b l i s h e d by b o t h governments. A good, and even i n c r e d i b l e , example o f 92 Ottawa d o i t c o n s u l t e r Quebec s u r l a p o l i t i q u e m o n e t a i r e , Le D e v o i r , June 11, 1961i 109 t h i s m a l c o o r d i n a t i o n was r e v e l e d by t h e F e d e r a l Government's attempt w i t h i t s r e g i o n development p o l i c y t o d e c e n t r a l i z e t h e economy by o f f e r i n g g r a n t and t a x i n c e n t i v e s t o i n d u s t r i e s w i l l i n g t o e s t a b l i s h themselves i n u n d e r - d e v e l o p e d r e g i o n s . At the same t i m e , t h e P r o v i n c i a l Government has n o t i n s i s t e d on t h e d e c e n t r a l i z a t i o n s i n c e i t s f i r s t p r i o r i t y i s unemploy-ment. Some of th e s e g r a n t s , sometimes as h i g h as 33 l/3$» a l l o w e d by t h e f e d e r a l government cannot be used w i t h e f f i c i e n c y by Quebec's i n d u s t r i e s . N e e d l e s s t o s a y the d e s i g n e d zones o f each government do n o t always c o r r e s p o n d t o one a n o t h e r . Who s h o u l d then d e c i d e on p r i o r i t i e s o f development p o l i c y ? A c c o r d i n g t o the L i b e r a l p a r l e m e n t a r y l e a d e r , ft. P i e r r e L a p o r t e , i t Is up t o Quebec t o d e f i n e i t own p r i o r i t i e s . ^ The f a c t t h a t t h e r e are two c u l t u r a l groups i n Canada i s an element of d i s t i n c t i o n . I t g i v e s Canada i n d i v i d u a l i t y but a l s o poses problems, s i n c e b o t h c o l l e c t i v i t i e s do not see w i t h the same eye t h e i r r e s p e c t i v e p r i o r i t i e s . F o r e i g n c a p i t a l cannot be the o n l y source of i n v e s t m e n t f o r Quebec. Quebec must c r e a t e a f i n a n c i a l s t r u c t u r e c a p a b l e o f p a r t i c i p a t i n g a c t i v e l y I n the i n d u s t r i a l i z a t i o n o f each r e g i o n . The o n l y way t o c r e a t e t h e t y p e of economy which Quebecois want i s t o b u i l d i t t h e m s e l v e s . The o n l y adequate r e s p o n s e t o the problem i s to s e t up a l a r g e - s c a l e p u b l i c i n v e s t m e n t f u n d . To s e t up t h i s p u b l i e Investment fund they 93 Le D e v o i r , November 6 , 19&9 110 w i l l hove t o b r e a k some o'f. t h e i r p r e s e n t g r o u n d r u l e s . A t p r e s e n t Q u e b e c ' s i n v e s t m e n t r e s o u r c e s a re c h a n n e l l e d m a i n l y t b r o u g h t t h e r e s e r v e s o f c o r p o r a t i o n s o r t h r o u g h i n s u r a n c e o r t r u s t f u n i s . The p r i n c i p l e t h a t t h e d i s p o s a l o f t h e s e r e s e r -v e s i s , w i t h i n l e g a l l i m i t s , t h e e x c l u s i v e p r e r o g a t i v e o f t h o s e who manage t h e compan i e s c o n c e r n e d w i l l have t o be b r o k e n . These r e s e r v e s a r e , i n f a c t , t h e s a v i n g s o f the Quebec p e o p l e , and t h e y s h o u l d be u s e d t o d e s i g n an economy I n t h e i n t e r e s t o f the Q u e b e c o i s , The g o v e r n m e n t s h o u l d t h u s r e q u i r e t h a t a s u b s t a n t i a l p r o p o r t i o n o f t h e s e r e s e r v e s be t r a n s f e r r e d t o a p u b l i c i n v e s t m e n t f u n d p e r h a p s by r e q u i r i n g t h a t a p r o p o r t i o n o f r e s e r v e s be I n v e s t e d i n t h e bonds o f t h e . f u n d . . I f , one d a v , Q u e b e c o i s r e a l l y d e c i d e t o be " M a l t r e c h e z s o l " , t h e p u b l i c s e c t o r w i l l have to be p o w e r f u l e n o u g h , e ven s t r o n g e r t h a n t h e p r i v a t e s e c t o r so t h a t t h e p u b l i c s e c t o r w i l l be a b l e t o g i v e t h e " d i r e c t i o n o f the e c o n o m i c , s o c i a l and c u l t u r a l d e v e l o p m e n t . To o b t a i n t h e s e o b j e c t i v e s , t h e S t a t e w i l l - h a v e t o show a l e a d e r s h i p and t a k e c o n t r o l o f t h e f i n a n -c i a l i n s t i t u t i o n s or l a r g e e n t e r p r i s e s who work a c t u a l l y a g a i n s t t h e i n t e r e s t o f Q u e b e c , as m e n t i o n n e d e a r l i e r by M. P a r i z e a u In " F o r e i g n I n v e s t m e n t i n Q u e b e c " , / ' x I n Quebec , t h e S t a t e and t h e p r i v a t e e n t e r p r i s e c o m p l e -ment one ea ch o t h e r . Howeve r , i f some I n d u s t r i e s I n t h e p r i -v a t e s e c t o r work aga in ' s t h e I n t e r e s t o f t h e communi t y and. i f t h e y 9li" r e f e r - t o s e c t i o n of t h i s t h e s i s abou t f o r e i g n i n v e s t m e n t i n Quebec I l l do n o t want to adapt t o F r e n c h language atmosphere, h a v i n g F r e n c h as t h e w o r k i n g language f o r t h e i r b u s i n e s s i n Quebec, the Government s h o u l d not h e s i t a t e t o i n t e r v e n e . And as a f i n a l s t e p toward t h e p l a n n i n g o f it-s economy, the government s h o u l d b e g i n p r e s s u r e to encourage the m e r g i n g o f s m a l l or medium companies, th u s a l l o w i n g them t o expand on the i n t e r n a t i o n a l market. By i t s i n d u s t r i a l i n c e n t i v e s scheme, the government.could b r i n g about the c r e a t i o n o f i m p o r t a n t new i n d u s t r i e s such as e l e c t r i c equipment, e l e c t r o n i c s , c h e m i c a l s , i n d u s t r i a l m a c h i n e r y and a e r o s p a c e a c t i v i t i e s . The government Should t r y to c r e a t e the t e c h n i c a l s k i l l s needed f o r s u c h e n t e r p r i s e s , b y c o n s t a n t l y k e e p i n g i n t o u c h w i t h t h e changes i n e d u c a t i o n i n o t h e r more advanced c o u n t r i e s . I t s h o u l d , f u r t h e r m o r e , o r g a n i z e e f f i c i e n t l y and r a p i d l y i n d u s t r i a l r e s e a r c h c e n t r e s i n o r d e r t o a c c e l e r a t e the i n n o v a t i o n and the c r e a t i o n o f p r o d u c t s which are e s s e n t i a l to the e x p a n s i o n o f e n t e r p r i s e s . Thus,Quebec needs to b u i l d a s e c t o r made up o f a l i m i t e d number o f h i g h l y e f f i c i e n t , c o m p e t i t i v e and r e s e a r c h - i n t e n s i v e i n d u s t r i e s . As the Government o f Quebec p o i n t o u t : I n v e s t o r s s h o u l d remember t h a t "Quebec i s not an o r d i n a r y p r o v i n c e among the o t h e r s , and Quebeoois f u l l y i n t e n d t o behave l i k e a p e o p l e master o f i t s own d e s t i n y . . . F r e n c h - l a n g u a g e Canadians p r o p e r l y c o n s i d e r t h e Quebec Government as the p r i m a r y i n s t r u m e n t f o r t h e i r c o l l e c t i v e f u l f i l m e n t the guarantee t h a t t h e y w i l l endure, the symbol of t h e i r u n i t y . I n s h o r t t h e y are determined t o a s s i g n i t r e s p o n s a b i l i t y f o r t h e i r s o c i e t y ' s p o l i t i c a l growth"95. 95 A n n u a l r e du Quebec, L9ed, p.25 112 I n c o n c l u s i o n , t h e n once a g a i n the q u e s t i o n a r i s e s o f the e x t e n t t o which i t i s d e s i r a b l e t h a t the economic f u n c t i o n s of government s h o u l d s t r e t c h ? As t o the n e c e s s i t y o f s t a t e a c t i v i t y i n some form t h e r e can be no doubt. P r o d u c t i o n , exchange, d i s t r i b u t i o n a r e a l l s o c i a l p r o c e s s e s ; t h e y c o n c e r n the whole of s o c i e t y and must be brought under s o c i a l c o n t r o l . I n the m i d d l e o f t h e e i g h t e e t h c e n t u r y F o s t e s q u i e u l a i d down the p r o p o s i t i o n t h a t t a x e s i n v a r i a b l y i n c r e a s e w i t h the growth o f l i b e r t y . H i s t o r i c a l l y t h i s has been v e r i f i e d . The development of freedom i n government and i n d u s t r y has meant the r e a l i z a t i o n of s e l f - r e s t r a i n t by t h e i m p o s i t i o n o f r e g u l a t i v e l a w s . But t h e modern s t a t e has gone f u r t h e r t h a n t h i s . I t has r e a l i z e d the n e c e s s i t y o f t a k i n g an a c t i v e p a r t i n modern i n d u s t r i a l l i f e , f o r t h e : e q u a l i z a t i o n of the terms of c o m p e t i t i o n , t h e r e d r e s s o f g r i e v a n c e s and the f u r n i s h i n g o f p u b l i c u t i l i t i e s , e i t h e r because i t c o u l d do i t b e t t e r or because i t was t h e o n l y agency c a p a b l e o f a c t i n g . To c o n c l u d e t h i s s e c t i o n on Quebec, I would l i k e t o p o i n t out t h a t the s t a n d p o i n t of t h i s t r e a t i s e has been one of moderate i n d i v i d u a l i s m , n o t f r i g h t e n e d o f f by the'bogey of s o c i a l i s m , i f a t any p o i n t t h e i n t e r f e r e n c e o f government seemed d e s i r a b l e or n e c e s s a r y f o r the Quebec p e o p l e t o e o n t r o l t h e i r economy and to be a b l e to work i n t h e i r l anguage. CONCLUSION 113 F o r b e t t e r or worse , Quebec and Canada are l i n k e d t o the most p o w e r f u l economic g i a n t the w o r l d has e v e r known. R e c e n t l y , some p o l i t i c a l p a r t i e s have put f o r w a r d the t h e s i s t h a t Quebec s h o u l d seceed from Canada, some o t h e r p a r t i e s advocate t h a t i t s h o u l d s t a y I n Canada. I t i s t o o e a r l y to say w h i c h t h e s i s w i l l w i n the a p p r o v a l of the p e o p l e of Quebec. I would say , however, t h a t w i t h i n t h r e e t o f i v e years the q u e s t i o n w i l l be d e f i n i t e l y answered. Whatever comes out o f t h i s c o n f r o n t a t i o n , the whole p o l i t i c a l and economic system of Canada w i l l n e v e r be the same. Changes w i l l occur i n Canada. Fven the Quebec Trade Unions are s t u y i n g the p r o b l e m . I n a l e t t e r sent t o h i s 225 ,000 members i n J a n u a r y 1970, M. M a r c e l P e p i n , P r e s i d e n t of the l a r g e s t t r a d e u n i o n i n Quebec, the C o n f e d e r a t i o n des S y n d i c a t s N a t i o n a u x , sees the problem of the s e p a r a t i o n of Quebec as f o l l o w s ; " t h e q u e s t i o n about Quebec s e p a r a t i o n w i l l become acute few y e a r s from now. P r e s e n t l y the o n l y o b s t a c l e , and t h e r e i s no o t h e r one, i t i s the economic q u e s t i o n . That nobody t h i n k s t h a t we w i l l s t a y I n Canada t o p r o t e c t F r e n c h m i n o r i t i e s i n o t h e r s p r o v i n c e s ; t h a t nobody t h i n k s t h a t t h e r e are some F r e n c h - C a n a d i a n s who want t o promote b i l i n g u a l i s m " f r o m c o a s t t o c o a s t " and t h a t i t Is why we want t o s t a y C a n a d i a n . At t h a t i n s t a n t where the economic q u e s t i o n w i l l d i s a p p e a r , n o t h i n g w i l l h o l d u s , E n g l i s h - C a n a d i a n s w i l l want t o make c o n c e s s i o n over c o n c e s s i o n . I t w i l l be too l a t e . I even t h i n k i t i s too l a t e now". 96 F r e n c h - s p e a k i n g Canadians do n o t f e e l t h a t sense of 96 L e t t r e aux --'i l i t a n t s , M a r c e l P e p i n , J a n u a r y 1970 l l i l -p a r t n e r s h i p which i s a c o n d i t i o n o f C o n f e d e r a t i o n . T h i s s i t u a t i o n must be remedied i f the b a s i s of Canadian u n i t y i s to-be s t r e n g t h e n e d . The pro b l e m i s t o - d e v e l o p a n a t i o n a l i d e n t i t y , a Complex t o common g o a l s , common v a l u e s and common symbols a c c e p t a b l e t o a l l segments o f the p o p u l a t i o n . The p r i m a r y ends of government a c t i v i t y s h o u l d be d i r e c t e d towards -the economic sp h e r e . In the economic development and e m a n c i p a t i o n , Quebec must be more than a mere p a r t i c i p a n t , i t must be a c r e a t i v e a g e n t . Thus w i t h r e g a r d to p l a n n i n g , a c c e l e r a t e d growth, c o n t r o l o f the,dynamic s e c t o r s , the p r i n c i p a l i n v e s t m e n t d e c i s i o n s , i n Quebec the. government must undertake t h e s e r e s p o n s i b i l i t i e s u s i n g the a p p r o p r i a t e means. To d i s c h a r g e t h e r e s p o n s i b i l i t i e s , the " S t a t e o f Quebec" needs a l l the power, a l l t h e i n s t r u m e n t s which a f e d e r a l system can bestow on i t w i t h o u t c e a s i n g t o e x i s t . The Government o f Quebec b e l i e v e s t h a t the most s e r i o u s p r o b l e m i n Quebec a t t h e moment i s t h a t of unemployment, r e g i o n a l d i s p a r i t i e s and s o c i a l i n e q u a l i t y . The f i g h t a g a i n t s employment I s the number one p r i o r i t y and not i n f l a t i o n , even i f Canada has every i n t e r e s t i n k e e p i n g p r i c e i n c r e a s e s wi t h i n l i m i t s c o m p a t i b l e w i t h i t s c o m p e t i t i v e p o s i t i o n on i n t e r n a t i o n a l markets. The Government o f Canada, s h o u l d , t h e r e f o r e , a l s o r e c o g n i z e t h a t t h e p r o v i n c e s s h o u l d have the c o n s t i t u t i o n a l powers r e q u i r e d t o enable them t o embark upon r e g i o n a l economic development programmes. The f i r s t q u e s t i o n t h a t comes up r e g a r d i n g the aims o f 115 economic p o l i c i e s bears on t h e i r u n i t y or d i v e r s i t y i n Canada. In the p a s t , Quebec has avocated the need f o r d i v e r s i t y and taken I n i t i a t i v e s which gave a p a r t i c u l a r bent to economic measures implemented by the P r o v i n c e . C e r t a i n o p i n i o n s voiced r e c e n t l y S t r e s s the importance of d r a f t i n g an economic p o l i c y f o r Canada as a whole. Before g o i n g any f u r t h e r , we must f i n d out j u s t what t h i s p r o p o s i t i o n means, because i f i t favours a m o n o l i t h i c and u n i f o r m economic p o l i c y f o r Canada, i t w i l l be r e j e c t e d by Quebec. The two main c u l t u r a l groups, behave d i f f e r e n t l y and organize t h e i r c o l l e c t i v e l i f e i n l i n e w i t h t h e i r own a s p i r a t i o n s . I simply cannot b e l e i v e t h a t a p o l i c y based on a s i n g l e standard and designed t o s o l v e economic problems on a u n i t a r y b a s i s has any chance of success. Nor i s i t by f o l l o w i n g a m o n o l i t h i c Canadian p o l i c y t h a t we can expect c o - o p e r a t i o n from people i n v a r i o u s r e g i o n s , from d i f f e r e n t , s o c i a l , economic groups and from the numerous o r g a n i z a t i o n engaged i n t h i s f i e l d . • Advocacy of d i f f e r e n t economic p o l i c i e s , a d a p t e d t c r e d n d i -t i o n s In v a r i o u s p a r t s of the c o u n t r y can be r e c o n c i l e d w i t h the common d e s t i n y of a l l Canadians and Quebecois and t h e i r government as w e l l as w i t h an o v e r - a l l p o l i c y which r e s p e c t s p r o v i n c i a l and r e g i o n a l economic p o l i c i e s and takes In t o account the environment t h a t i n s p i r e d them. In t h i s r e s p e c t , I f e e l i t i s important to . make c e r t a i n d i s t i n c t i o n s and I would l i k e to submit the f o l l o w i n g p r o p o s i t i o n s : The establishment of g e n e r a l o b j e c t i v e s f o r s o c i o -economic development should be the j o i n t r e s p o n s a b i l i t y of a l l 116 government s e c t o r s i n Canada. The Canadian Government has always m a i n t a i n e d t h a t i t i s c h i e f l y r e s p o n s i b l e f o r economic p o l i c i e s ; however, i n view of the growing problems c r e a t e d by these p o l i c i e s , I t h i n k i t i s i n c r e a s i n g l y o b v i o u s t h a t t h e Government o f 0>rtsda s h o u l d take a p p r o p r i a t e measures and a c c e p t t h e c o - o p e r a t i o n o f the p r o v i n c e s . I a l s o would l i k e t o p o i n t out t h a t the f e d e r a l and p r o v i n c i a l governments s h o u l d have j o i n t r e s p o n s i b i l i t y as r e g a r d s to s o c i a l i m p l i c a t i o n s o f economic measures; these i m p l i c a t i o n s a r e becoming i n c r e a s i n g l y o b v i o u s i n p r e s e n t c o n d i -t i o n s where economic p o l i c i e s a r e d e s i g n e d t o c o n t r o l I n f l a t i o n a r y p r e s s u r e s , r u n n i n g the r i s k o f s w e l l i n g f u r t h e r t h e r a n k s o f t h e unemployed, e s p e c i a l l y i n Quebec. n e v e r t h e l e s s .'it is* a p p a rent t h a t Qu&bec i s now d e v e l o p i n g f u l l y a r t i c u l a t e d i n d u s t r i a l programs w i t h a v a r i e t y of new a g e n c i e s and programs. The i d e a i s t o guarantee t h a t the m a n a g e r i a l e l i t e be men of F r e n c h c u l t u r e h a v i n g F r e n c h as the w o r k i n g language, i n s u c h a scheme the c o n t i n u a n c e of C o n f e d e r a t i o n i s s i m p l y a q u e s t i o n of c o n v e n i e n c e , i f F r e n c h C i v i l i z a t i o n can be p r o t e c t e d as a p r o v i n c e , w i t h i n C o n f e d e r a t i o n , then a l l w e l l and good. I f I t cannot be, t h e n s e p a r a t i s m becomes a n e c e s s i t y . 120 A p p e n d i x k R e s e a r c h and Development Expend! t u n e s , s e l e c t e d c o u n t r i e s T o t a l n ot i n c l u d i n g G-o verntnent % d e f e n d non p r o f i t s s p a t i a l , e t c o r g a n i z a t i o n I n d u s t r y I n s t i t u t i o n s T o t a l e x p l o r a t i o n (a s a • percenta^ ~ o f ~ l W ? ) ~~ J 'oT^lI^ 0^ 3"*^) t o t a l - * U.S.A. 0 . 7 2.3 O.k 3.U. 1.3 22,7 (1963-61}.) U.K. 0 . 6 : 1 .5 0 . 2 2.3 l . k 2 . 3 (196k-65) N e t h e r l a n d s 0 , 5 1.1 O.k 1.9 1 . 8 O.k (196k) F r a n c e 0 .6 0.8 0 . 2 1,6 0.9 l . k (1963) Sweden 0 . 2 1,0 0 , 3 1.5 1 .0 0 . 3 (196)}) J a p a n 0 . 2 0 , 9 0 , 3 l . k 1.3 1.0 (1963) Germany 0 . 2 0.9 0 . 3 1.1+ 1.2 1.5 (196k) ' Canada 0 . 5 0 . 5 : 0 . 3 1.3 1.0 0.7 (1965) B e l g i u m 0 . 1 0 . 7 0 , 2 1.0 1,0 0 . 1 (1963) Norway 0 . 2 0,k 0 , 2 0 . 7 0 . 6 — — j !963)_ _ . _ _ „ _ * Those a p p r o x i m a t e s t a t i s t i c a l c o m p a r i s o n s are i n C a n a d i a n d o l l a r and. d o n ' t t a k e a c c o u n t o f d i f f e r e n c e i n r e s e a r c h c o s t s I n d i f f e r e n t c o u n t r i e s source*. A c c o r d i n g t o f i g u r e s f r o m CFCD, Department of I n d u s t r y and Economic C o u n c i l of Canada e s t i m a t e s (see Economic C o u n c i l o f Canada, F i f t h A n n u a l R e v i e w , p . k 3 ) t a k e n f r o m MEMORANDUM s u b m i t t e d by t h e C o n f e d e r a t i o n des S y n d i c a t s N a t i o n a u x t o t h e Government o f Canada, " F e b r u a r y 1970, p. k l . appendix 6 122 INDUSTRIAL STRUCTURE OF QUEBEC AND CANADA LABOUR FORCE S o u r c e ; La S i t u a t i o n economique du Quebec, a v r l l 1 9 6 8 123 ^ o j a u ^ c t l v e and . Hon-Fro d u c t i v e ^ F o r e s t s by P r o v i n c e P r o v i n c e , o r T e r r i t o r y P r o du c 11ve N on- pro 6uc11ve ( i n s quare mi 1e s ) f o r e s t s f o r e s t s T o t a l a r e a o f f o r e s t s •Newfoundland 3 3 , 3 6 2 5 3 , 9 3 0 87 ,792 P . E . I . 313 121 931+ Nova S c o t i a ' 1 5 , 0 8 0 1,191+ 16,271+ New B r u n s w i c k 2 2 , 8 3 ? 4I.2 2)+,329 Quebec 220 ,625 1 5 7 , 5 0 0 378 ,125 O n t a r i o 161+, 563" 9?,17l+ 261,71+2 •Manitoba 5 3 , 1 8 9 61+, 632 122,821 S a s k stchewan 5 0 , 2 3 9 67,1+99 117,738 A l b e r t a 116 ,572 l + l , 023 157 ,595 B r i t i s h C o l u m b i a 2 0 8 s l 4 l l ' 59 ,227 267,63-3 T o t a l P r ovi nc e s 892 ,2k6 51+2, 71+2 1,1+3,4,988 Yukon l i 2 , 1 0 0 39 ,100 3 1 ,200 N. .W. T e r r i t o r i e s 33 ,600 161 ,000 19)4,600 C an ad a. 967,9)46 71+2,81+2 1,710,78.3 s o u r c e : A n n u a I r e du Quebec 6 8 - 6 9 , p.5l5 A p p e n d i x 8 P r i n c i p a l S t a t i s t i c s of Pulp and Pape r I n d u s t r y by P r o v i n c e , 1965 - Wo pro v i n c e T 5 s t a b l i 3 b m e Cost of m a t e r i a l s nts and S u p p l i e s $ t 000 S e "11 I n e value f a c t Try Value-added by manufacture Newfoundland 2 30 ,819 7k ,115 37,802 P F I - - - -Nova S c o t i a k 1 8 , 2 5 9 k 0 , 3 0 k I 8 , k l 2 N e w Brun s wic k 10 72 ,375 l k l , 0 8 2 56 ,531 Quebec' 5? 336 ,6kk 775 ,920 383,898 O n t a r i o 37 2k9, 0U5 57k ,6k7 289 ,938 Fan.Sask,Alb. 7 21 , kk3 5 2 , 0 k l 27 ,k23 B r i t i s h Columbia 15 195,820 k k 6 , 3 0 7 228 ,395 Canada 132 92) 4 , ko6 2,10k ,k25 l , 0 k 2 , 3 9 9 Source: Annuaire du Quebec 68-68, p.521 1 2 5 A p p e n d i x 9 M i n e r a l P r o d u c t i o n o f Quebec In_1967 V a l u e $ 8,533,kit? 1 ,933 ,313 1 , 0 6 9 , 2 7 0 6 k ,800 2 , 6 2 7 , 0 0 0 151,355 ,859 l 3 , 3 3 2 , 3 U k 1 3 5 , k 7 k , 3 3 9 6 ,575,733 3 , 1 7 0 ,3 30 31 , 6 2 5 , 8 9 3 586,695 2 ,328 ,LOG , 'j01,k00 7 0 , k 0 k , 2 9 1 S u b s t a n c e M e t a l l i c * S i l v e r 3 i s m u t h 0 9dnnum C o b a l t Ootumrium Goppe r I r o n I r o n Ore Molybdenum N i c k e l G o l d L e a d Setend urn ' T e l l n r i um Z i n c T o t a l N o n - m e t a l l i c : 1: I n d u s t r i a l m i n e r a l s ; A s b e s t o s M a g n e s i t i c d o t o m i t e and b r u c i t e F'eld s p a r L i t h i u m Ochre and i r o n o x i d e P y r i t e Q u a r t z and i n d u s t r i a l sand Sulphur-Soap s t o n e and r a i c T i t a n ! u m d I o x i d e and o t h e r t l t a n i u m P e a t (moss and humus) T o t a l 2; B u i l d i n g m a t e r i a 1 s : S l a t e and sh a t e B u i l d i n g l i m e Cement Gran:" t e O t h e r p r o d u c t s 3 and. and <r,r a ve 1 T o t a l Grand T o t a l source-. A n n u a i r e du Quebec, p.56k k 3 k , k 8 3 , 6 k k 1 3 8 , 3 2 - 3 , 8 k 9 3,kkl,k05 2 6 k , 5 2 7 266,226 28,000 1 ,530,566 3 , 3 5 0 , 0 0 0 6 k k , l 8 k 229,000 2 3 , 7 0 k , k 2 0 2 ,315 ,000 7 , 1 3 ° , 2 3 k 3 , 5 k 8 , ° 0 0 k l , 3 0 k , 5 3 9 5 3 , 176 ,k75 3 , 0 0 0 2 k , 3 5 0 , 0 0 0 W7ol77i98 736,033,019 A p p e n d i x 10 V a l u e of M i n e r a l P r o d u c t i o n of C an a d a, bv p r o v i n c e , 19 i n t h o u s a n d of d o l l a r s P r o v i n c e 1966 v a l u e i 1 9 & 7 1 value i Newfoundland 22k,020 6,1 p £, Ci 839 5.9 P . E . I . 2 ,757 0.1 1,704 0.1 N. S c o t i a • 3 5 A 1 7 2 .2 7 9 , 3 8 0 1.8 N. B r u n s w i c k 90 ,221 2.3 89 ,363 2,1 Quebec 759,6^2 1 9 . 2 736 ,033 16 .7 O n t a r i o 957,358 24.1 1 ,192 ,773 27 . 1. Manitoba 179 ,241 4 .5 l 8 b , 5 9 2 4.2 :S as k a t c h e w a n 349 ,304 8.8 aAq ate, 3 .4 A l b e r t a 846 ,679 21.3 996,834 22. 7 B r i t i s h C o l u m b i a 330,843 3 ,3 360 ,830 8,2 Yukon •11,976 0.3 9 ,700 0 ,2 N.W..T. 1 1 1 , 2 2 0 2.8 115 .072 ' 2,6 CANADA 3 ,969 ,178 100.0 4 , 3 9 3 , 5 7 9 100 . 1) p r e l i m i n a r y e s t i m a t e s s o u r c e : A n n u a i r e du Quebec, p . p o 2 A p p e n d i x 11 D i s t r i b u t i o n o f t h e P o p u l a t i o n by e t t a ^ _ j ^ o i j y ^ s B r i t i s h 7 1 996,661+ ( 43 .3€ ) 567 ,057 (10 ,8€ ) F r e n c h 5,5)4.0,346 (30,4^) 4 , 2 m , 354 (80 .6$ ) German 1,01+9,559 ( 5 .3€) 39 ,457 ( Q.7<) I t a l i an 450,351 ( 2 .5€ ) 108 ,552 ( 2.1#) Othf=rp 3 ,201 ,282 (17.5<) 302,791 ( ZM) T o t a l 1 8 , 2 3 8 , 2 4 7 (100 ,0^ ) 5 ,259 ,211 (100 .0$ ) Census Of Canada, I 9 6 l , D.B.S,. 128 A p p e n d i x ' 1 2 L i n g u i s t i c Groups m a k i n g above $ 5 0 0 0 . L i n g u i s t i c Group-L e v e l ->f S a l a r i e s Fumber 1 9 8 8 8 F r e n c h 3 1 E n g l i s h 69 5 , 0 0 0 t o 6 , 4 9 9 6 , 5 0 0 t o 7 , 9 9 9 8 , 0 0 0 t o 9 , 9 9 9 1 0 , 0 0 0 t o 1 1 , 9 9 9 1 2 , 0 0 0 t o 1 4 , 9 9 9 1 5 , 0 0 0 fr. above 7 8 6 2 5 3 4 4 3 4 4 ^ 1 3 6 8 • 9 9 4 872 i Jo 25?? 199? \$% 75?? 31?? 85?? Q5% L i n g u i s t i c Groups S a l a r i e s jn^Quebec ~~ - ( M o n t r e a l n o t I n c l u d e d ) i i n ^ u l s t i c Group L e v e l : o f S a l - T r i e s Number * 4 3 4 2 F r e n c h 7 0 E n g l i s h 3 0 5 , 0 0 0 t o 6 , 4 9 9 6 , 5 0 0 t o 7 , 9 9 9 8 , 0 0 0 t o 9 , 9 9 9 ' 1 0 , 0 0 0 t o 1 1 , 9 9 9 1 2 , 0 0 0 t o 1 4 , 9 9 9 1 5 , 0 0 0 %>, above 170L 1309 773 266 1 5 3 132 3 2 < 7 6 ^ 6 l < 42<£ 2 3 ^ 18<£ 24^ 39?? 58?? 65?? 77% T o t a l 1 0 0 100?? 100°*? 100?? 100?? 100?? T o t a l 100 ioo€ 100?? 100?? 1 L i n g u l s t i c G r o u p s o f S a l a r i e s I n M o n t r e a l L i n g u i s t i c Or-L e v e l , o f S a l a r i e s Number 7 6 1 3 < , 0 0 0 t o 6 , 5 0 0 t o 8 , 0 0 0 t o 1 0 , 0 0 0 t o 1 2 , 0 0 0 t o 1 5 , 0 0 0 *-6, !i99 7, c'99 o 0 0 9 l i / ' 9 9 °99 11 ab vc 2 6 5 5 1 9 4 6 i ^ 7 5 9 3 5 2 5 F r e n c h E n g l I s h T o t a l 3 7 "63 1 00 49?? \y\jt 1 0 0 g 4 3 1 5 9 0 / 100?? 2j4 731; ioo€ 2H 77% 1009? 17% o3% 100^ 17% 3 10 100?? 1 t h e l i n g u i s t i c ' group i s d e t e r m i n e d \,-t t h e mother taor..v. o r , i f i t i° n o t F r e n c h O r - E n g l i s h , by t h e - o f f i c i a l l a n g u a g e spoken most f r e q u e n t l y . source:- he D e v o i r , Dec ember 13,1969 p 'go 9j t h i r d book p u b l i s h e d by t h e R o y a l h " l l i n g u s l i s m f r a w the " 7 - ^ e r a l C-o"arn^4- ,"3-- c .T9_69 t aken fro^n the : ~,ri>ri c ^ i on on A p p e n d i x 12 A. THE P R I C E OF BEING FRENCH 129 F r a n c o p h o n e s Anglophones S a l a r y k5,000 t o :*6,k99 16,500 t o 17,999 •43,000 t o | ; 9 f 9 9 9 $10,000 t o <*11 , 9 9 9 ^12,000 and o v e r 63€ 7j 194 Time C h a r t Source? Time, December 26, 1969 page 3 , f r o m t h e Commission on R l l i n g u a l l s m and. 3 i c u . l t u r a . l i s m A p p e n d i x 13 T o t a l Net G e n e r a t i o n of E l e c t r i c Power by C a n a d i a n R e g i o n , 1965-6? T o t a l P r o v i n c e m i l l i o n s o f Ewh A t l a n t i c 1965 8,33k' 1966 9,050 1967 9,873 Quebec 1Q65 56 ,029 1966 6 2 , 9 6 0 196? 63,325 O n t a r i o 1965 k 5 , l 5 ? 1966 k 8 , k 2 k 1967 51,991 P r a i r i e s 1965 l k , 7 l 5 1066 1.6,16k 1967 17 ,635 B r i t . C o b } 1965 I 8 , k l 8 1966, 21 ,037 1967 21,505 Canada- • 1965 I k 3 , l 6 l 1966 157,683 1967 1.6)4., 879 1 I n c l u d e s Yukon and N o r t h w e s t T e r r i t o r i e s 2 F i g u r e s r e v i s e d as t o t o t a l f o r Canada o n l y s o u r c e : A n n u a i r e du Quebec 63-69 , p.582 131 A p p e n d i x I k L i f e I r ^ u r a n c e I n Quebec as of December 31 , 1962 M a t o f the s e v e n t e e n l a r g e s t companies H i l l i o n M e t r o p o l : t m L* f e Sun L i f e Lend m L i ^ e A s s . P r u d e n t J a l o f A m e r i c a M u t u a l L'f'~ A s s u r a n c e G r e a t - W e s t L i f e Grown L ' f e C o n f e d e r a t i o n L i f e Canada L i f e P r u d e n t i a l o f -England M a n u f a c t u r e r s L i d e T o t a l of E n g l i s h Companies A s s u r a n c e - V i s D e s j a r d i n s I,«Industrielle L»Alliance L e s p r e v o v a n t s La S o c i e t e d e s A r t i s a n s I,a L a n r e n t i e n n e T o t a l o f • F r e n c h - C a n a d i a n Companies T o t a l o f t h e s e v e n t e e n companies of D o l l a r s 2 2 5 ' 6 2023 -Q ? 6 8 ! i 5 701 6 2 3 57-3 ' 3 7 7 k39 3 6 1 2 7 1 9700 919 833 k26 29k 29k 280 iOko 7 6 . i C 23.9% 100.0# T o t a l o f a l l Companies 16936 s o u r c e : R a p p o r t du S u r i n t e n d a n t des A s s u r a n c e s du Quebec, 1962, t a k e n f r o m S o c i a l i s m e 68, p.70 133 A p p e n d i x 16 LEGEND pos 8 i b l e major g r o w t h c e n t r e p o s s i b l e e x t e n t i o n t o e x i s t i n g t r a n s p o r t a t i o n r o u t e c o r r i d o r a r e a p r l p c *2"I S t a t i s t i c s of the F o r t y heading I n d u s t r i e / ^ i n Quebec ••j I n d u s t r y S e l l i n g Value of f a c t o r y Sjiipj^errb ~ i n thousand of d o l l a r ? Pulp nnd Paper 773,197 Smelting and r e f i n i n g 8 7 1 , 2 3 3 Petr-danm r e f i n i n g 3 7 1 , 8 7 7 S l a u g h t e r i n g and meat packing p l a n t s 250 ,471 Women's c l o t h i n g f a c t o r i e s 269 ,084 A i r c r a f t and p a r t s 1 9 8 . 9 7 9 Tobacco products 200 ,154 Cotton yarn »- c l o t h , Men ' s c l o t h i n g f a c t o r i e s 444,222 Svntbe'tl c t e x t i l e m i l l s " 1.32,654 Miscall.aneo ' i s food 1 7 0 , 9 5 4 B a k e r i - a 1 4 9 , 3 0 3 I n d u s t r 1 a l chemIca1a 131 ,734 Shoe f a c t o r i e s 1 0 7 , 954 M i s c e l l a n e o u s machinery and equipment 213 ,392 D a i r y p l a n t s " 3 0 7 , 7 2 8 M e t a l stamping p r e s s i n g and c o a t i n g 144,384-Communications equipment 136 ,81? P r i n t i n g and p u b l i s h i n g 112,062 E l e c t r i c wire and cable 126 ,231 Wire and wire products 116 ,418 Household f u r n i t u r e 132 ,95? Pharmaceuticals and medicines 112 ,313 S o f t d r i n k s ' 8 6 , 93,3 Sawmills (except s h i g l e m i l l s ) 1 3 1 , 1 8 4 K n i t t i n g m i l l s (other than h o s i e r y ) 1 7 9 , 0 2 6 Sash and door and p l a n i n g m i l l s 53 ,794 P r i n t i n g and bookbinding 85 ,739 F a b r i c a t e d s t r u c t u r a l metal i n d u s t r y 91 ,952 Breweries 77 ,336 S h i p b u i l d i n g and r e p a i r 138 ,583 C h i l d r e n ' s c l o t h i n g 72 ,195 D i s t i l l e r i e s 64',804 F r u i t and vegetable earner and p r e s e r v e r s 6 9 , 4 6 6 Copper and a l l o y r o l l i n g , c o a t i n g and ex t r u d i n g 95 ,522 P u b l i s h i n g o n ly " 4 0 , 4 5 6 P l a s t i c s and s y n t h e t i c r e s i n s 6 8 , 1 9 2 T o t a l , l e a d i n g I n d u s t r i e s 6 , 8 4 4 , 7 8 5 source: Annuaire du Quebec 6 3 - 6 9 , p.62? 135 A p p e n d i x 18 ECONOMIC INDICATORS QUEBEC #'000,000 1965 1966 (jros«? P r o v i n c i a l P r o d u c t at M a r k e t P r i c e s ^ 1 ' lJi.,263 l5 ,367. P e r s o n a l Income 1 0 ,555 1 1 , 320 (11 P e r C a p i t a P e r s o n a l Income v ••' 1,357 2, 045 (I) S a l a r i e s , Wages and S u p p l e m e n t a r y Income v ' 7,719 -•' * 767 C a p i t a l E x p e n d i t u r e T o t a l 3 , 2 0 5 . 7 3 , !-i46,6 — - M a n u f a c t u r i n g S e c t o r 5li-9.5 686.2 V a l u e o f S h i p m e n t s - M a n u f a c t u r i n g I n d u s t r i e s 9,492 10 380 R e t a i l S a l e s T o t a l 5 , 515 857 Consumer p r i c e I n d e x (Montreal) ( 1 9 6 1 - 1 0 0 ) 106,7 109. 9 P o p u l a t i o n (June 1 s t ) ( 1 0 0 0 ) 5 ,685 5, 7,P,i L a b o u r Force(»000 ) i^L, ^ 2, 116 Employment T o t a l ('000) 1,912 2, ol 6 Non-farm Employment ( ' 0 0 0 ) 1,796 1, 910 Unemployment Rate /? 5 . U !i .7 (1-) R e v i s e d i n a c c o r d a n c e w i t h t h e new n a t i o n a l a c c o u n t i n g s y s t e m (2) Does n o t i n c l u d e income o f Q u e b e c o i s r e s i d i n g a b road (-"-) E s t i m a t e d s o u r c e * Bureau de l a Recberehe Ec onem* que, M i n i s t e r s de 1 *.In-d u s t r i e e t du Commerce , Q.u,-bec, f r o m P r i v a t e and P u b l i c I n v e s t m e n t s i n Canada (61-205) * ?':"anuf a c t u r i n g I n d u s t r i e s (31-2.05); R e t a i l Trade ( 6 3 - 2 0 5 ) ; C a n a d i a n S t a t i s t i c a l R e view ( 1 1 - 0 0 3 ) ; P r i c e s and P r i c e I n d e x e s ( 6 2 - 0 0 2 ) ; L a b o u r F o r c e (71-001) D .3.S.. 135a 196? 1963 1969 1966 1967 1966 1963 1969 T O T -L ^  y 0 ci ,c 16 ,311 19 ,830 11.2? \ 7..?* 7.6# 8.6# 13 ,139 14,263 1.5,600 1 2 . 0 11 .2 3 .6 9.4 2,239 2,406 2,607 1 0 . 1 0 3 7.5 8 , 4 9,672 10,).! 0 5 11 ,400 13.6 10.3 7.6 C\ !\ 3,21^ . 0 3 ,300.3 3 , 4 6 7 . 6 7 . 5 — 6 . 7 2.7 5.1 604, 6 537 .3 613 .1 2 4 . 9 —11.9 —•2.9 h.h 10,946' 11 , 3 3 4 12,184 9 , 4 5 . 5 3.5 n a .6,271 6,460 6,372 6 .2 7.1 3 . 0 6 . 4 114. 2 118.1 121,8 3 . 0 3 .9 3 .4 5,363 5 , 927 5,984 1.7 1,5 1 . 0 1 . 0 2,196 2 ,227 2 ^ 2 ^X, 4 . 6 3.3 1,4 2.9 2, 080 2 ,082 2,132 5 . 4 3.2 0.1 1 ,966 1 ,961 2,025 6.3 O O * J 0.3 3 .3 5 . 3 6 .5 6 .9 A p p e n d i x 19 ECONOMIC INDICATORS CANADA $•000 ,000 G r o s s N M t i on a 1 p r o d u c t a t F a r k e t P r i c e s ^ * 1965' 1966 5 4 , 8 9 7 ' 61,421 (1) (p) p e r s o n a l Incoms 4 0 , 4 9 3 4 5 , 5 9 6 P e r C p " t a P e r s on a.l I nc one ^ * ^  2, 061 c , ~ / V, Sad a r I e s, Vage s .and s upp1emen t a r y I n c one * 23,131 31, 9 0 7 0 ap i t a1 Fx p e n d11 u r e T o t a l 1 2 , 8 6 5 1 5 , 0 9 0 - - - T / a n u f a c t u r i n g S e c t o r 2,340 2 ,914 V a l u e of S h i p m e n t s - M a n u f a c t u r i n g I n d u s t r i e s 33 ,389 36 ,923 R e t a i l S a l e s T o t a l ( 1961 - 1 0 0 ) 20 ,954 22 ,416 Consumer p r i c e I n d e x 107 ,4 1 1 1 , 4 P o p u l a t i o n (June 1 s t ) (*000) 1 9 , 644 2 0 , 015 L a b o u r F o r c e ( ' 0 0 0 ) ? , 141 7 ,420 Employment T o t a l ( t 0 0 0 ) ' 6,362 7,152 If o n - f a rm Fm p 1 o ym e n t (' 0 0 0) 6,268 6 , 6 0 9 Unemployment R a t e % 4 . 0 3.6 (1) R e v i s e d I n a c c o r d a n c e w i t h t h e new n a t i o n a l a c c o u n t i n g system (2) Does n o t I n c l u d e Income of C a n a d i a n s r e s i d i n g a b road (-"-) E s t i m a t e d s o u r c e ; B u r e a u de l a R e c h e r c h e Economlque, F ' n l s t e r e de 1 » I n -d u s t r i e e t du Commerce, Quebec, f r o m P r i v a t e and P u b l i c I n v e s t m e n t s i n Canada (6.1-205); M a n u f a c t u r i n g ; I n d u s t r i e s (31-205): R e t a i l Trade ( 6 3 , 2 0 5 ) ; N a t i o n a l A c c o u n t s (13 - 001 ) ; C ana.dI an S t a t i . s t i ca 1 R0 v i ew (11- 003 ); p r I c e 3 and P r i c e I n d e x e s ( 62-002 ) ; Labour F o r c e (71-001)D.B,3,. 136a 196? 1063 1969 i 9 6 0 1965 1967 1966 1968 TsEL. 1969 19553' 65,6031- \ 1 , 454 ?3,280 11.9^ 6 . 8 ^ q ffo 5o,ioi n' c o C n » - > ' 60,835 12.6 Q Q j m J 9.9 10. 6 2 ,455 9 6^b 9 flQ] 10.5 7 .8 3.1 3.9 •33 Oy\~ 33,493 43,100 13 .2 10.6 9.1 1 2 . 0 15 , 3 2 2 15 , 6 7 3 17,356 17.3 1 ^ 2.3 10.7 2,218 2 , 6 7 2 2 4 . 5 --13.0 — 1 2 . 5 2 0 . 5 33,533 40,649 43,535 9 , 0 • h 1 7 . 1 23,735 25,411 2 7 ,205 7.0 6.1 '6.8 7.1 115 . k 120 .1 125 .5 ' 3 . 7 3.6 4 . 1 - 4.5 20 ,405 20,744 21,061 1.9 1.9 1 .7 1 .5 7,69k • 7 * S1- 9 8,163 3.9 3.7 2 . 9 3 . 1 7 3 7 O 1 , . J 7,537 7,779 4.2 3.2 <2 .1 3,2 6, 320 6,95'2 7,2!.i6 5 .4 3.2 2.5 3 6 k.l 4.8 4-7 137 A p p e n d i x 20 CAPITAL EXPENDITURE BY SECTOR AND ANNUAL VARIATIONS QUEBEC SECTOR 1965 1966 1967 1968* ( m i l l i o n s o f d o l l a r s ) Primary I n d u s t r i e s ' and C o n s t r u c t i o n 231 , 6 257.5 251.6 242.1 Manufacturing 549.5 686.2 604.6 587.3 P u b l i c u t i l i t i e s 740 . 5 772.3 706,5 662 . 4 H o u s i n g 565.1 545.9 5 6 9 . 3 624.7 •Trade ,Finance and. Commercial S e r v i c e s 387.8 5 0 9 . 0 407.1 358.0 Government Departments and I n s t i t u t i o n a l S e r v i c e s 731.2 675.7 67i i . 9 825.8 3,205.7. 3 , 4 4 6 , 6 3,2140 3 , 3 0 0 . 3 ^-Preliminary -;H;. ^ i d - y e a r r e v i s e d f o r e c a s t s Bureau de l a Recherche Economique, M i n i s t e r e de 1 « I n d u s t r i e et du Commerce, Quebec, from D.B.S. (61-205) 137" 1966 1967 1968 1969 share of each 1969*** TC^ 1966* 1967 1968 s e c t o r i n 1969 ~ C — f % % ~~ir^TmTTH~c^£) " 2) 1-3.8 11 . 2 — 2.3 — 3.8 0.7 1.7 7 . 0 613.1 34 Q — 2 . 9 25.3 17.7 679 . 2 4 .3 3.5 — 6.2 2 .5 1 6 . 3 19 ,6 679.3 -«*- 3 4 . 3 9.7 8.7 5 4 . 6 19 .6 350.5 31 . 3 — 2 0 . 0 — 12 .1 - 2 . 1 •—7.5 10 .1 901.? - 1 — 1 . 6 — 0.1 22.1+ 9 .2 75, 9 2 6 . 0 3 , 4 6 7 . 6 7 .5 — 6.7 2.7 5.1 167.3 1 0 0 . 0 138 A p p e n d i x 21 D i s t r i b u t i o n & Growth of P u b l i c P r i v a t e I n v e s t m e n t by R e g i o n P e r c e n t D i s t r i b u t i o n P u b l i c P r i v a t e 1?67 1968 1969 196? 1968 1 9 6 ° ' Quebec 21 .0 2 5 , 0 26 .0 79 ,0 7 5 , 0 7k.0 O n t a r i o 2 2 , 0 2 3 . 6 . 2 0 , 5 78 , 0 76.k 7 9 . 5 P e r c e n t o f Canada Quebec 2 0 . 7 2 3 . 6 2 k . 3 21,1 2 0 . 3 13.8 O n t a r i o 3 6 . 2 37 .3 3 5 .k 3 7 .k 3 k . 6 3 7 . 5 A n n u a l P e r c e n t a g e Growth Quebec —- 0 .1 22.k 9 .2 — 8.k — 2 , 5 3.7 O n t a r i o 9 .9 10.7 0.7 — 0 . 2 1.0 21 ,1 P.5k s o u r c e ; N a t i o n a l I n d u s t r i a l C o n f e r e n c e B o a r d , New Y o r k , V o l V I , no 1, L o o k i n g f o r w a r d i n Canada 139 A p p e n d i x 22 IAPITAL EXPEND ITITRE BY SECTOR AND _ANNuAL VARIATIONS CANADA SECTOR 1965 1966 1967 1968* P r i m a r y I n d u s t r i e s 2 ,020 2 , k l k 2 ,k96 2,397 C on s t r u c t". on H ou s 1 ng TOTAL P r e l i m i n a r y • M j f 3 _ 7 r p . g r r e v i s e d f o r e c a s t s Manufacturing 2,31+0 2,91k 2 ,53k 2,218 P u b l i c U t i l i t i e s 2 ,k23 2,926 3,1*4-5. 3,263 2,133 2,131 2,352 2,3kk Trad e, Finanee 9>* C o m m e r c i a l S e r v i c e s 1 ,269 ' 1,52? 1,53k l , k i ; l Q Government Departments h I n s t i t u t i o n a l S e r v i c e s '.2,680 3,123 3 , 2 6 l 3 ,502 12,865 15 ,090 15,322 1.5,678 s o u r c e : Bureau de l a Rec h e r c h e Kconomique, MinisteOre de 1 ' T n d u s t r i e e t du Commerce, Quebec, f r o m D.B.S. (61-205) 139a 1966 1967 1968 1969 Share of each 1969*-: 196$ 1966 196? 1963 s e c t o r i n 1969 'of ~ ' t I P " ( m i l l i r -ns) % 2,1+16 19 .5 3.1+ — l+.o 0.8 . 19 13 . 9 P 67? 2) !.,5 — 1 3 . 0 —12.5 ' 20.5 1+51+ 15.1+ a ?,kn ' 9 .•> I 20, 8 7.5 3 . 9 9 .1 299 20,5 2 . 2 . 7.8 2 0 . 9 111-, 6 1+11+ 13 .3 1 ,7 2° 20.3 0.5 19 . 3 280 1 0 , 0 3,71.1+' 16 .7 It. 3 7.1+ 6 ,1 212 21.1+ 17,356 1 7 . 3 1.5 2.3 10.7 1,678 100, 0 I IkO append! f a c t u r i n j g T5nplo ymen t by C o u n t r y of C o n t r o l a s a p e r c outage o f t o t a l P r o v i n c i a l M a n u f a c t u r i n g E m p l . C a n a d i an P o r e i gn C o n t r o l i e d E mployment c o n t r o l l e d P r o v 1 v, c 6 drip 1 o ymen t U.S. U.K. O t h e r T o t a l T o t a l Quebec 75.95' - 16.82 6 .35 0.75 29 .05 100.0 O n t a r i o 62.39 30.71 6.10 0.79' 37.61 100.0 Canada 70.48' : 22.5k 6.16 0.82 29.52 100.0 page 49 The € o f C a n a d i a n and F o r e i g n c o n t r o l l e d M a n u f a c t u r i n g E^iP 1 oyment Tn eacthHi?i' ;b^^ " P r o v i n c e P r o v i n c i a l io P r o v i n c i a l % o f t o t a l , o f t o t a l employment ClmatTfan" .Quebec-O n t a r i o C a n a d a employment 33.63 47.03 1.00.0 35.9.0 41.25 100.0 U.S. 25.12 64,15 100.0 T o t a l • F o r e i g n e r c o n t r o l l e d 27,4-3 100.0 page 5 l Quebec O n t a r i o Canada . P r o v i n c i a l Employment I n M a n u f a c t u r i n g i n 1961 by - Cou.frtry~of~Gontr(31 ~~ ~ C a n a d i a n c o n t r o l l e d F o r e i g n c o n t r o l l e d employment T o t a l employment U.S. ' U.K. Other T o t a l Empl. 323,350 71,610 27,051 '3,739 102,400 425,730 371,505 182,889 36,376 4,70? 223,972 595,477 891,539 285,074 77,878 10,405. 373,357 1,264,94-6 s o u r c e t R e g i o n a l A s p e c t o f F o r e i g n Ownership In M a n u f a c t u r i n g I n Canada, D. M i c h e l Roy, U n i v e r s i t y o f Waterloo,1 9 6 7 -;H>-(ir.i Quebec f o r e i g n c on t r o l l e d • employment 24'/? (Onta-r i o 38^) o f t h e " t o t a l . 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MORIN, Rosaire, F a u t - i l confier a New York l'Avenir des Canadiens Prangais, Realites et perspectives Economiques, "Editions de" 1'Action Nationals, Montreal 1966 MYERS, Hugh B., The Quebec Revolution, Harvest House, Montreal, 1968 " : : " ~ PARTI QUEBEC0IS, , Le R61e de l'Etat dans l'Economie, document de t r a v a i l , Congr^s du Pa r t i Quebecois,' Montreal 1969 PICHETTE, Claude, Le ROle et le Gomportement de i-Unite Economlque Preponderante, Universite de Sherbrooke " RAY,' Michael D., Regional Aspect of Foreign Ownerships of M a n u f a c t u r i n g in Canada, University of Waterloo. 19b7 RENAULD, Andre, Institutions Economiques Canadiennes, L i b r a i r i e Bauchemin Limitee, Montreal , 196k ' ~ '. • RUSSEL, Peter, Nationalism.in Canada, McGraw-Hill Co, Toronto, 1966 UNDERBILL, • Frank, The Price of Being Canadian, University of Toronto, 1967 SAFARIAN, A.E., Foreign Ownership of Canadian Industry, McGraw-H i l l , Toronto 1966 Schreiber, Jean-Jacques, Le Defi American, Editions Denoel, Paris 1967 ~ ^ "* TRUDEAU, Pierre E., Federalism and the French Canadians, Macmillan of Canada, 1968 VALIERBS, Pierre, Negres blanc d'Ameriques, Editions Parti-Pris, Montreal 1968 •Magazines, 'Journals .and.•• Letters ACTUALITE ECONOMIQUE , Les Mouvements Internationaux de Capitaux; Ie Dossier Canadien, Oct-Dec 196k,, B. Bonin; Les Investisse-ments Aimiricains sont-ils devenus une menace?Avril-Juin 1965, Jacques Parizeau; La limitation des Investissements Directs Americains au Canada , Jan. Mars 1966, B. Bonin. ' ~ 1U3 AFFAIRES, les, TJn Quebec fo r t par l a planification, May &june 1967, Francois Oauthier, Faculte d'Administration, Univer-site Laval. AMERICAN ECONOMIC REVIEW, Canadian-American Economic Relations; Efficiency and Independence, May 1964,E. Black ~™ AMERICAN UNIVERSITIES FIELD STAFF, Vol XIII, no 5 BUSINESS ABROAD, In Quebec Province i t ' s vive la difference A p r i l 1969 ' BUSINESS OTJARTKLY, Foreign Ownership: Is Canadian Concern Sense or Sentiment: Spring 1961i, C. Cretzianu; Canada's Economic Independence"; Fact Versus Myth, Summer 196~7T~W.McLaughlin BUSINESS WEEK, U.S. Money Roils Up a Storm: U.S.-Canadian Ruchus; Here's What's Behin i t ; Canada Wants U.S. Capital But not U.S. Control,May b, 66; Canada Hints aVControl of UT"S. Investment; a 25 Year Look Ahead by a Royal Commission Sees Continued Prosperity;"But It also Warns of the Need to Keep Foreign-Meaning American-Investment from Dominating the Boom. January 19 ,59; U.S. Business i n Canadian Garb; U.S. Owned Companies are Going CsuTadian- in Policy, Products, Personnel- to Meet New Conditions, lugust 8 ,59; CanaSaTs (Ireat Debate: The 'Nation'is Experiencing an Economic~^0p8"urge; But Canadians Have Worries, Too; Growing "AmerTcanizatlon'1 and the Future of Confederation, May 22,65"; U.S. Companies Face Guidelines in~Canada, A p r i l 9,66 CANADIAN BANKER, Foreign Capital - Boon or Bane? Autumn 65, A.C. B a i l l i e ; Task Force on Foreign Ownership and the Structure of Canadian Industry, Summer 6b, D.W. Slater; A Canadian Attitudes Toward Outside Investors, Spring 6l , O.W. Currie CANADIAN BUSINESS, Foreign Capital in Canada - National Asset or L i a b i l i t y , November 57> E.F. Beach; Debate ^ oh Fo'reTgrl - Control of Canadian Companies Becoming Less One-Sided, August 63, F. Flaherty; Take-Over Tax Affair Left N.Y. Business Community Uncertain About Future Investments i n Canada, August 63 CANADIAN FORUM, Dilemma of Foreign Investment, Feb.56, A.E. Safa-rian, GordonTs Canadian!sm, Aug.65,E.Black. CANADIAN IMPERIAL BANK OF COMMERCE, The United States Balance of Payments program Vls-a-Vls Canada, letter,Apr.May 68 CANADIAN JOURNAL OF ECONOMICS AND POLITICAL SCIENCE; Benefits of Foreign Investment in Canada May 66, R.G. Penner. CANADIAN SATURDAY NIGHT, U.S. Investment- Threat or Blessing, August 6 2 , E.Highe • . Ihli COMMERCE, C e r t l f i c a t de Bonne C o n d u i t e , May 66; Quelques i n d i c a t i o n s 3ur l a c o m p t a b i l i t e economique du Quebec , Nov. 69, D a n i e l G-. - Dupont ;~~yues S e r e i n e s s u r l'Economie Q u e b e c o i s e , E d i t i o n A n n u e l l e 69, Otto Thur; Qu en e s t l a p T a o i f i c a t i o n Quebecoise ? Fe v . 68, Yves R o l a n d . R o l a n d G i r o u x , P r e s i d e n t Hydro-Quebec Jan.?0. S o c i e t e G e n e r a l e de Pfhancement, Av r . 6b, Claude ' Beauchamp CITE LIBRE, Le M a n i f e s t o , v o l XV, no 67, Mai 6k, M y t h o l o g i e Economique e t R e a l l t e Canadienne Jan.66, A. R o s s m g e r ECONOMIC RECORD, C o u n t r y o f Ownership and Performance of t h e f i r m , Mar.68 EXECUTIVE, U.S. C o n t r o l I n Canada May 65; What Do You T h i n k o f F o r e i g n F i r m s i n Canada ? Apr.64 j who w i l l S t a n d f o r Canada? Dec. 65. ~ " — — - ^ FORCES, L a S o c i e t e G e n e r a l e de Financement du Quebec, P r i n t e m p s -ete 196b, Jean Deschamps INDUSTRIAL CANADA, Some G u i d i n g P r i n c i p l e s o f Good C o r p o r a t e B e h a v l p u r f o r S u b s i d i a r i e s i n Canada o f F o r e i g n , May 66*, W i n t e r R.; The Q u e s t i o n of More Canadian Ownership; t h e P r o p o s i t i o n That They Should Share the Ownership of T h e i r C anadian S u b s i d i a r i e s With Canadian I n v e s t o r s i s Met w i t h Mixed F e e l i n g s by Foreign-Owned Companies. May 6k, A.T. F r a s e r ; F o r e i g n Ownership o f C a n a d i a n Companies Encouraged by E s t a t e Taxes, Oct. 6b. * ™~ : • ~" FORTUNE, The C a n a d i a n T r o u b l e s of U.S. Business;. W i l l the U.S. Dominate Canada's Economic F u t u r e ? J u l y 57 " MANAGEMENT REVIEW, U.S. Investment i n Canada: A C a n a d i a n View-A b s t r a c t , Dec.oTj" ' ECONOMIST, Who's Master- I n Canada? Apr 16,66 MAINTENANT, Un Canada L i b r e , no.76, mai 68, J.G. L o r a n g e r MACLEAN, U.S. I s n ' t B u y i n g Up Canada-Canadians A r e S e l l i n g and L i k i n g i t , Apr.6*1";" ~F7 McDiarmid; What - I f A n y t h i n g - I s Wrong W i t h U.S. Ownership? June 6k, F.G. Newman: How the U.S. g o u l d R u i n Canada, May 67, B. F r a s e r , Who R e a l l y Owns Canada? June 66; Comment F u i e n t Les C a p i t a u x , F r e n c h V e r s i o n , Dec.69 MONETARY TIME, A P l a n f o r the Second Canada, The Mid-Canada Development C o r r i d o r , March 69; What~The U.S. C o n t r o l means to Canada Feb.68, J . Meyer; Bor r o w i n g Back Canada, .June 67 J . Meyer 1 NEWSWEEK, Quebec's growing d o l l a r drain,Feb.28,68 PARTI PRIS, Quebec Economique, Jean-Guy Loranger, L'Option-Quebec, G.Dufour, h G. D o s t a l e r , V o l 5, No 6, March 145 QuEEN'S QUARTELY, Foreign Control of Canadian Industry,Spring 66, W.Cordon RELATIONS, Evolution Economique depuis 10 ans et Probiernes Actuals-, Economie^Quebecf No 3411, Dec,69, Jacques Parizeau; La Vie Economique et Sociale du Quebec, no. 309, Oct,66 ROYAL BANK OF CANADA, the, The Province of Quebec, let t e r June 66 SOCIALISMS 68, L*Imperialisms' Americain au Quebec, Analyse des Donnees Recentes, no 14, Jean-Guy Loranger REVUE DU CENTRE D'ETUDE DU QUEBEC, No3, Essai sur le Probleme Economique Canadien Francals, Mai 69, Institut d'Sconomie Appliquee, Pierre Harvey TIME, Quebec ,A Battler of Style, Jan 70, B.& B.: Ljberte, Fraternite, Inegalite, Dec.69 Newspapers DIWANCHE-MATIN, Importance du Capital Etranger dans l'Economie DU QUEBEC, 3,3,60, Robert BOurassa FINANCIAL POST, Free Nation or S a t e l l i t e of U.S., March 60,W.Gordon; How Much of"~0"ur Industy and" Unions "Fore'ign-Owned?, May 1165; What Can Canadians Do"~About Growing Foreign Ownership? Oct 3°,65i Why Kierans Says We Are Economic Vassals: How We could Change. Feb.5,66, E.Kierans; Where Will Canada Draw the Line? Feb.12,66, M.Sharp; How to Be Good Citizens', March 19,66; What ""winters Told the .Subsidiaries"on "Lines nApr.9,66; Scotttpef ends t"He Role of Foreign Subsidiaries (in Canada) Apr.30,66, K.E. Scott; Man in the Middle, A p r i l 8,67, W. Gordon; Buying Back Canada i s Really Borrowing Back, May 13,67, W. McLaughlin; Watkins Pricks"' Myth of Capital Shortage, Feb.2k,65, Nankivell N. ; How a U.S. Subsidiary Can Become a Citizen, a Truly Canadian .Company, Nov Hi"59, H.L. Lank; Buy American Trend Strong Tn : Subsidiaries, Jan 29,66, O.K. Nash, How U.S. Capital Surges Into Canada," Oct. 15,66, C.K. Nash; U.S. Subsidiaries Here Notch Up Sales Record, Dec. 31,66; Who Owns Canada Does Matter, Jan. 11)., 67; You Should Welcome Us Chase Manhattan Bank Advises Fev. 25,67; What U.S. Could T~"o" to Our Banking Agencies, Jan. 28, 67 O.K. Nash; Why Chase Boss Urges U.S. -Canada Free Trade;March Ii,6' D. Rockefeller; "Canadianlzation" Urged for U.S.-Owned Com-pattles, March 4,67; Canadian -Subsidiaries of U.S. Firms tfe Spend More, June 10,67; U.S. Firms May Take Out More Money From Canada, June 17,67;"~Why U.S. Subsidiary "Not Good TsTock Buy',' July 1,67, O'DonohueT Trouble May be Coming in "Export" of U.S. Laws Here to Force Cash Repatriation"" Jan. 6, 6b,Solomon; US. Gives Us Special Status, Jan.27,08, "c."Baxter; Long Arm of U.S. Policy (""ah Reach into Canada to Control Subsidiaries, Feb. 2ii , 6b ' 146 FINANCIAL TP'S, January 5, 1967, p . l GLOBE"AND WAIL, November 12,69 LA PATRIE, Qui sont les dix GRANDS de la finance au Quebec, semaine l e r au 1 j u i l l e t 1965, Conrad Langlois LA PRESSE LIBRE, December 12 & 19,69 LA VOIX DE L'EST, November 27, 69 LE DEVOIR, La Situation Economique du Quebec ne preoccupe pas le Financier Americain, Jan.7,70, Robert Bourassa; Pourquoi les Americains dominent-lls .1'economie? Comment les Canadieris'FranQais s o r t i r o n t - i l s de leur situation d'infe-r i o r i t e , Oct. 14,69, Gerard F i l i o n ; La Productivity des Entreprises Etrangeres est d'environ 33% superieur au Quebec, Nov. 10,69, Andr6 Renauld; L'Eeonomie du Quebec est-elle en etat de crlse? Oct. 24,69, Jacques Parizeau; Le Defi de Laporte aux "Quebecois; Batir une societe de Concertation, Jan 7,70, Pierre Laporte; Perspective Economique 70, Jan 14,69; L'Hydro- emprunte %$0 millions a 9.5^, Jan 20,70; L'Eeonomie Quebecolseau Seuil de 1970, Jan,17,70; Le Quebec n'a jamais s o l l i c i t e d'emprun^ au Canada pour nationaliser 1' electrioiteTJ Jan 23,70, Jean Lesage; Les Dessous de 1'Histoire (I96"3-1970): De certaines Manoeuvres d'un Syndic at Financier en vue de Conserver soil" Empire au Quebec, Pev. 2,70^ Jacques Parizeau; r j n ~ m l n i s t 6 r e de I'Avenir au Quebec; celul des communications, Les Fondements d'une Politique des Communications, Jan 7,70, Andre Charbonneau; S a t e l l i t e ou Pays Original dans La Famille des Nations, Nov 14,69, Claude Ryan; Ottawa he saurait monopoliser l e s juridictions a cause de ses r?8=gsources, Fev. 10,70, Marcel Masse; Nomme Secretaire "a L'Office de Planification et de Development,Fev.11,70; and 11,6,69/ 3",1,6b/ 20,2,6b/ 22,2,65/. LE NOIJVELLISTE, February 22, 69 LE SOLEIL, May 1,69; Jan 20,69; A p r i l 17,69 LA TRIBUNE, March 17,67 JOURNAL DE MONTREAL, Oct.17,69 MONTREAL-MATIN, Nov 12,69 MONTREAL STAR, April 23,69;Feb.17,68; Jan.18,69 QUEBEC-PRESSE, Jan.25,70 LA PRESSE, Les Americains plutOt que les milieux anglo-saxons mehaceraleht ~le~Quebe-c, Apr "4, 6b, Roland Dugre; Pour"~Sa*uver lii-7 le Pays, les Canadians Anglais doivent eontinuer d'investir - p, au Quebec, May 11,60, M.Francois Oleyn. Eeole de Commerce, University O f Western Ontario; & 8,15,69; 10,12,68; 12,9,69; 11,10,67; 19 ,3,69; 1*719,68; 11,9,69; 10,11,69; 2,It,68. THE GAZETTE, A p r i l , 2k,68 TORONTO DAILY STAR, Build Canada of Tomorrow with f a c t s of today, Feb. 5 ,68. ~ WALL STREET JOURNAL, Yankee Go Home; Canadians Ready Ways to Gut U.S. Dominance of Nation""! Industry, July 12,66 ^ Speeches Address by the Minister of Trade and Commerce, to the Canadian Manufacturers' Association, Montreal, June "5~66.. Mentions need for new foreign investment i n Canada. Role of foreign-owned subsidiaries i n the Canadian economy. R, Winter Address to the Vancouver Canadian Club, March 28,67, "Canada's Great Future", W. Gordon Address by the Minister of Trade and Commerce, to the 20th International Banking Slimmer School, Kingston," Aug. 2k,67. Discuss the present and future importance of foreign investment In Canada. Outlines ways in which Canada must respond to the challenges and problems of foreign investment. R. Winter Address by the M i n i s t e r of Trade and Commerce, to the Kennedy Round Trade Opportunities Seminar, Toronto", Qct.k-,67", Mentions foreign subsidiaries in Canada. Looks forward to greater participation of foreign subsidiaries in Canada's export sales. Address by the Minister of Finance, to the Chamber of Commerce, Quebec, Nov. 8,67, Mentions Canada's need for foreign c a p i t a l " M.Sharp Les Realisations du Federalisme Canadien,Federation L'berale du Quebec, M o n t r e a l , Jan.2b,6b, Hon. Maurice Sauve Situation Economique du Quebec, Conference de presse, Jan.13,70, M i n i s t r e de I'Industrie et du-Commerce, Quebec, Jean-Paul Beaudry Une Societe batie pour 1'Homme , Confederation des Syndicats Nationaux, Congres Oct. 6b, M. Marcel Pepin, President •• 0tfv#£raie*it '-Sources Annuaire du Quebec,68-69, Centre d'Information Statistique, Government du Quebec, Editeur O f f i c i e l du Quebec 11+8 A p e r c u p r e l i m j n a i r e s u r i a s i t u a t i o n economique du Quebec , dans V o l I V , No It, l l v r a i ^ o r T d u lie t r i m e s t r e 1965, Gov, du Quebec A p e r c u de l a S i t u a t i o n Economique au Quebec, M i n i s t e r e de L 1 I n d u s t r i e e t T d u Commerce, Gov. du Quebec," 1969 C a n a d i a n B a l a n c e o f I n t e r n a t i o n a l Payment 1963-65 and I n t e r n a t i o n a l I n v e s t m e n t s P o s i t i o n , AuguaE 1967, D.BrSTT. ""C"a"t. no b720TJ C a n a d i a n B a l a n c e of I n t e r n a t i o n a l Payments, a Compendium o f S t a t i s t i c s f r o m 191+6-657 March 1967 ', D.B.S. ( C a t . No 075^5) C o n n a i s s a n c e du Quebec 6 7 , O f f i c e d ' I n f o r m a t i o n e t de P u b l i c i t e du Quebec, G o v t , du Quebec C t e j o n e t u r e economique du Quebec en.1966, dans V o l V, No k, M a r c h 67, M i n i s t e r e de 1 ' I n d u s t r i e e t du Commerce, Gov. du Quebec C o n s e i l d ' O r i e n t a t i o n economique du Quebec, Documents de base en vue de l a P l a n i f i c a t i o n , septembre 1962, Gov. du Quebec " C r o i s s a n c e e t S t u c t u r e Economique, Andre R a y n a u l d , p o u r M i n i s t e r e de 1 ' I n d u s t r i e e t du Commerce, Gov. du Quebec, 1961 La - P r o p r i e t y S t r a n g e r e e t l a C o r p o r a t i o n M u l t i n a t i o n a l no 67/2k D i v i s i o n de 1 1 I n f o r m a t i o n , M i n i s t e r e des A f f a i r e s E x t e r i e u r s , F e d . Government, 1967 L a S i t u a t i o n Economique au Quebec en 1968, B u r e a u de R e c h e r c h e Economique M i n i s t e r e de Commerce e t de 1 ' I n d u s t r i e , Gov.du Quebec Le F e d e r a l i s m e e t l ' A v e n l r , L e t r e s H o n o r a b l e L.B. P e a r s o n , P.M. Imprimeur de l a R e i n e , Ottawa 1968 L e s I n d u s t r i e s C h i m i q u e s e t P e t r o l i e r e s du Quebec, M i n i s t e r e de 1' Indus t r i e " ~ e t du Commerce", Gov. du Quebec 1968 Les S t a t i s t i q u e s Economiquesdu Quebec^ M i n i s t e r e de 1 ' I n d u s t r i e e t du Commerce, Gov. du Quebec, 1967 M i n i s t e r e de I ' A g r i c u l t u r e e t de l a C o l o n i s a t i o n du Quebec, R a p p o r t a n n u e l 1967/6b, E d i t e u r o f f i c i e l du Quebec M i n i s t e r e des R i c h e s s s e s N a t u r e l l e s , R a p p o r t A n n u e l 1968/69, Governement du Quebec P r o p r i e t y e t r a n g e r e e t s t r u c t u r e de 1 ' I n d u s t r i e C a n a d i e n n e , R a p p o r t du groupe d ' e t u d e s Ad hoc s u r l a s t r u c t u F e de 1 ' I n d u s t r i e c a n a d i e n n e P r e p a r e pour l e B u r e a u du C o n s e i l P r i v e , J a n v i e r 68, Imprimeur de l a R e i n e , Ottawa 149 ' Programme d ' a s s i s t a n c e f i n a n e i & r e a.1«Industrie de P o i n t e , M i n i store""de 1»Industrie e t du Commerce, Gouv. du Quebec 19b9 Quebec Land o f O p p o r t u n i t y , M i n i s t e r e de 1 ' I n d u s t r i e e t du Commerce, Gouv. du Quebec I960 Quebec P e r s p e c t i v e s Economiques, M'-nist&re de 1' I n d u s t r i e e t du Commerce, Gouv. du Quebec 1969 Rap p o r t du Comite d'Etude s u r l e s I n s t i t u t i o n s F l n a n c i e r e s 1969 Jacques P a r i z e a u , M i n i s t e r e des F i n a n c e s , Gouv. du Quebec Rapport du Comite I n t e r m i n i s t e r i e l d' etude s u r l e regime des rentes,. du Q u e l l e , v o l " I f , " ^ ^ ' " ~~ ' Regards s u r I ' I n d u s t r i e Q u e b e c o i s e , Brochure 1 , 4,6,11 , 1 2 , 1 5 , M i n i s t d r e " t 3 T e ~ l ' I n d u s t r i e eft du Commerce, Gouv. du Quebec S o c i e t e G e n e r a l e de Financement du Quebec , Rapport A n n u e l 1968 Statement by t h e M i n i s t e r o f Trade and Commerce, on F o r e i g n C a p i t a l i n Canada , House o f Commons Debated*-, Jan. 2b, 1966,p, 384,5 Statement by t h e M i n i s t e r of Trade and Commerce, on G u i d e l i n e s f o r C a n a dian S u b s i d i a r i e s of Foreign"~Companles, House o f Common Debates, March 31,1966 p.3643 Statement by t h e M i n i s t e r o f F i n a n c e , on F o r e i g n Investment i n Canada, House o f Common Debates, May 29, I9t>9 p .9221-922k — Statement by t h e M i n i s t e r of F i n a n c e , on Review o f F i n a n c i a l R e l a t i o n s Between Canada_and u\s"7HoiTs"eo'f~1LT5mmon~iye'batea, January 27, 1066 p. 321-7" ~" Statement by t h e M i n i s t e r of F i n a n c e , on A p p l i c a t i o n and I m p l i c a t i o n of U.S. G u i d e l i n e s o h ~ l j T r e c t ~InvestmiTitr~ln Canada, House of Commons Debates, F e b r u a r y 2, 1966, p.617-20 J o i n t Canada-United S t a t e s M i n i s t e r i a l Committee on Trade and Economic A f f a i r s ~ H e l d i n Montreal, June 20-22, 1967, Department o7~Tr'ade" and Commerce P r e s s R e l e a s e . S t a t i s q u e s , Bureau de l a - S t a t i s t ique du Quebec, Dec. 1969, Volume V I I I , no 3 

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