Evening star. [volume] (Washington, D.C.) 1854-1972, 1952-02-10
Canada S Healthy Dollar

At a period when most of the worlds cur
rencieS- are being subjected to abnormal pres
sures and distortions of true values it is both
interesting and encouraging to students of the
pure science of money that the Canadian dollar
has found it's way freely to an official parity
with the American dollar. In some markets as
Q matter Of fact, the Canadian currency COM
nlands slight premium
There are several contributing reasons for
this development, most of them on the Canadian
side of the border but with at least one to be
found on our side. 1fs u
~ In whatever degree there is q flight from
the American dollar, the answer seems to lie
in our sharply expanding budgets and the WIDEN
ing margin of deficit financing being undertaken
In this country. 1t is true that the rearmament
burden in the United States and the large share
OF the free worlds effort which we are sup
porting have forced most of this budget expan-
sion. At the same time our most responsible
authorities on taxation feel that we are close to
q saturation point on the amount of tax revenue
which can be extracted without dangerous con-
sequences to our economic structure. The in
crease in deficit financing is first result and
fear Of initiation is a second.
In direct contrast to this particular circum-
stance is condition of budget surplus in Canada,
running presently at a rate that seems high
enough to provide a cushion for increasing de-
tense expenditures during this fiscal year.
4 Another important reason for the attraction
to Canadian currency has been the discovery
and initial development of great natural re-
sources. Most spectacular of these perhaps have
been the proving of petroleum and gas deposits
in great areas Of the Dominion, principally in
the west and the establishing Of substantial
uranium and iron ore deposits In other parts OF
the country. Foreign capital, largely but not
exclusively American, has been rushing into in
vestment in these fields an added attraction
being absence of capital gains tax in Canada
An aggressive emphasis on increased Industrial
tzation in favorably located centers OF the
Dominion and the removal more than year ago
of exchange restrictions are other factors con-
tributing to the fiscal good health.
While all of these elements are likely to
remain on Canada's side in the immediate fu-
ture there is still another that seems just around
the economic corner. That Is the balancing OF
foreign trade in which the Dominion has been
gradually narrowing the margin by which I'M
ports have exceeded exports. Preliminary hg-
ures for 1851 show that Canadas exports
reached record total slightly above $50 billion
as against imports of just over 81 billion. The
difference of slightly more than $l2l million was
less than half that forecast earlier in the year
and the present trend indicates the gap may
be closed entirely this year.
Those who are inclined to criticize American
fiscal policies are quick to employ this COM
parative situation as supporting their criticisms.
Whether or not this is fully JUSTIFIED, without
giving due weight to many other elements In
volved in our own problems, there is no doubt
that the Canadian record Is good one and
fully deserving of congratulations from this side
of the border.