CANADIAN WHEAT BULK PURCHASE SCHEME FAILURE

Press, Volume LXXXVII, Issue 26396, 14 April 1951, Page 6

CANADIAN WHEAT BULK PURCHASE SCHEME FAILURE

(Bv

BRUCE HUTCHISOH,

Spacial Corrttptm&tt in Canada of th» "CIwMIMH Sctencn Monttif*) I

.(Reprinted by Arrangetnent.) ’ I

For its first big experiment in State ’ trading, Canada is paying a high price in money, a higher price In political •embarrassment. At this result the i United States Government, having objected to the experiment from the beginning, probably is not surprised. On August I, 1946, the Canadian . Government began 'to sell 'wheat to 1 the British Government at 1.55 dollars , a bushel. This price, on 160,000,000 , bushels a year, was fixed for two years. In the two last years -of the four-year agreement the price was established by negotiation at two dollars. ’ In entering this deal, which has been called the largest wheat gamble in history, the Canadian Government and the leaders of the major farm or'anisations expected to incur no losses. They assumed that the world wheat price would be no higher and might be lower than the average price received in the four.years of the con.taact Like many others, they miscalculated the world market and did not foresee world-wide inflation. As a result, the wheat farmers of Canada received far less from Britain than they would have received if they had sold in the free world market The losses thus accruing are variously ' estimated, but the lowest figure mentioned is 330,000,000 dollars, which, in the Canadian economy. Is big money. Now the farmers ask the Government , to compensate them for the losses. Farmers Shy at Offer The Government has agreed to pay them 65,000.000 dollars, which the farmers consider a completely inadequate sum. The figure offered by tne Government has a curious origin, reflecting the Government’s desperate search fos, a formula which would extricate it from a political dilemma. In the contract Britain, getting its wheat cheap, agreed to “have regard to” world prices in making final payments. This, ifiany farmers interpreted sfc meaning that Britain would pay them the difference between the contract and the world price. Britain flatly refused to pay more than the contract price. The Canadian Government suggested that Britain use what was left of its Canadian loan, the Sum of 65,000,000 and hand this j over to the farmers. Again Britain re- j "used. But the sum « 65,000,000 dollars thus pulled out of the hat was ’ finally offered by the Government to , ths farmers. ' ( The political history of Canada con- , firms the Government’s obvious reluc- ( tance to antagonise the western farm < vote. Out of the wneatgrowing prairies have come many farmers* movements to shatter established party lines in ( Parliament. If the-, Government re'used to pay , the farmers some compensation now, it. might risk heavy losses in the next CenAml Elec*ion. It is not clean however. that 65,000,000 dollars will pre-

vent this danger. The farmers, thialfe | Ing themselves defrauded, are ”*Ol equally angry with the British MMh Canadian Governments. i ■ Mwntain State* Preteet /J j Outside the prairies various newQ:] papers are objecting to any payn3W I to the farmers on the ground that wMEK] went into the gamble on their own jgjf I count and have no right to drag Mg taxpayers in to pay their losses. ,jg The United States GovernnjwjW quietly objected to the wheat deal wk I the beginning because it seemed. Mgl violate the spirit if not the letter I the Geneva trade agreements, wWM •, forbid discriminatory trade. CaMg j by selling wheat cheaply to Bntgß was discriminating against wheat exporters. This discrimination was never dwfefT | but vias justified by Britain’s eunwM economic plight and Canada’s need w a stable market for one of its exports. igM Those in Canada who objected totaM deal warned that State trading of sort was likely to produce >rirf«gJ among the nations undertaking it jiKd ' They argued that if a private i loses money he may blame an teW personal tiling called the market some other priva'e trader. His trouctw. do not become points of friction >; tween governments. But the govßytS ment losing money on a deal, is to blame the. government which tp profit. Friction Is Obvloqs In the present case the Iricttoa, tween Ottawa and London is onvww though not proclaimed, of courf® ggjj public statements. The Canadien ernment thinks the British eminent should h-’ve paid some pensation to the farmer?, and to Jgs end Canada was prepared to money to Britain. Ottawa down by London. London replies it fulfilled the letter of thMMWg,. and that it is uo to the CanaqlaMJ^t: ernment to deal with its own as it chooses. .igit'' The rients and wrongs of ment will be argued at length Canadian Parliament, and bitterness among the farm The argument has spread far Ottawa across the prairies ana SS"«ge every gathering of farmers stove of the country store. deal has struck down to the grate «VBE;. of Canadian politics out west. ■ Whatever the other results it is considered certain that WM dian Government will not i another bulk selling orices. wish Britain or any , try. Afte- its orient losses—financial, but political— it l.rs / to eamble in wheat or anyth— l a£ain ’