¹ Sharp, Mitchell, “Canada-US Relations: Options for the Future,” International Perspectives (bimonthly publication of the Department of External Affairs), special issue (Autumn 1972).Google Scholar

² For a discussion of the potential for conflict arising from this head-office influence, see Isaiah A. Litvak and Christopher J. Maule, “Canadian-US Corporate Interface and Transnational Relations,” in this volume.

³ For an empirical analysis of the impact of capital flows on national policy, see Caves, Richard E. and Reuber, Grant.L, “International Capital Markets and Canadian Economic Policy under Flexible and Fixed Exchange Rates, 1951–1970,” in Federal Reserve Bank of Boston, Canadian-United States Financial Relationships (proceedings of a conference held in September 1971), pp. 9–36.Google Scholar

⁴ The view that the Interest Equalization Tax was inadvertently applied to Canada can be found in Gordon, Walter, A Choice for Canada (Toronto: McClelland and Stewart, 1966), p. 72.Google Scholar A contrary view is taken in Wright, Gerald, “Persuasive Influence: The Case of the Interest Equalization Tax,” in Axline, W. Andrew, Hyndman, James,Lyon, Peyton, and Molot, Maureen, eds., Continental Community? Independence and Integration in North America (Toronto: McClelland and Stewart, 1974).Google Scholar

⁵ Smith, Denis, Gentle Patriot: A Political Biography of Walter Gordon (Edmonton: Hurtig Publishers, 1973), p. 197.Google Scholar

⁶ According to Canadian statistics, the deficit was $1,092 million in 1962 (Dominion Bureau of Statistics, The Canadian Balance of International Payments, A Compendium of Statistics From 1946 to 1965 [Ottawa: Queen's Printer, 1967], pp. 20–21).

⁷ Bank of Canada Governor Louis Rasminsky summarized the Canadian position on a number of occasions, for example, in the Bank's 1964 annual report: “Canada has a large current account deficit with the United States which exceeds our imports of capital from that country. When all of Canada's borrowings and other imports of capital from the United States have been used to pay for our net imports of American goods and services, there remains a balance owing to the United States. This is paid for out of our net earnings from trade with other countries, out of the proceeds of our current gold production, and out of our capital imports from other countries. If the United States took steps to cut its exports of capital to Canada sharply below the level needed to finance the deficit which remained after we had used all the non-American sources of finance referred to, we would be faced with a severe loss of reserves and with the inevitable need to cut our current account deficit. Since the whole of this deficit is with the United States and about 70 percent of our imports come from that country, the impact of whatever steps we took would necessarily fall very largely on the United States, and that country would not have succeeded in improving its payments position” (Bank of Canada, Annual Report of the Governor To The Minister of Finance for The Year 1964 [Ottawa, 1965], p. 8).

⁸ Interviews with Canadian negotiators, 3 September 1971 and 11 January 1972.

⁹ Interview with US official, 5 April 1972.

¹⁰ The communiqué is reprinted in Canada, House of Commons, Debates, 9 March 1966, p. 2348.

¹¹ Interviews with Canadian and US officials, 20 October 1971 and 5 April 1972.

¹² Globe and Mail (Toronto), 18 February 1966.

¹³ Smith, p. 341.

¹⁴ Interview with US official, 6 April 1972.

¹⁵ Interview with Canadian official, 20 October 1971.

¹⁶ Even after the announcement of the Canadian exemption from the Interest Equalization Tax, for example, borrowers did not feel free to return to the New York market until the first half of 1964.

¹⁷ Caves and Reuber, pp. 28–29.

¹⁸ Interview with Canadian official, 3 April 1972.

¹⁹ In his annual reports of 1965, 1966, and 1967, Bank of Canada Governor Louis Rasminsky referred to the influence of the reserves accord on Canadian monetary policy. In his 1965 report the governor stated: “The fact … that monetary policy did have to take account of important external factors, including the reserve agreement with the United States, provides a clear reminder of one of its important characteristics, namely its influence on international capital flows which may in certain circumstances be a limitation on its use” (Bank of Canada, Annual Report of the Governor to The Minister of Finance For The Year 1965 [Ottawa, 1966], p. 6).

²⁰ “Statement by the Minister of Trade and Commerce dated September 19, 1968, announcing guidelines for Canadian incorporated companies, other than financial institutions,” contained in Bank of Canada, Annual Report of the Governor to The Minister of Finance for The Year 1968 (Ottawa, 1968), p. 72.

²¹ Forward market dealings could have served the Canadian authorities as a means of escaping the constraint of the reserves limit.

²² Interviews with Canadian and US members of the committee, 4 July 1969 and 6 April 1972.

²³ Interview with US member of the committee, 5 April 1972.

²⁴ Interview with Canadian member of the committee, 20 October 1971.

²⁵ For a more detailed discussion of formal and informal Canadian-US consultation during this period as well as some discussion of the reasons behind Canadian reluctance to participate in highly institutionalized mechanisms of joint policy coordination, see Maureen Appel Molot, “The Role of Institutions in Canada-United States Relations: The Case of North American Financial Ties,” in Axline et al.

²⁶ Canadian-American Committee, Recent Canadian and US Government Actions Affecting US Investment in Canada (Washington: National Planning Association; and Montreal: Private Planning Association of Canada, 1964).

²⁷ Interview with Canadian official, 20 October 1971.

²⁸ A prominent businessman who reinforced this impression by his public utterances was W. E. McLaughlin, chairman of the Royal Bank, which is Canada's largest chartered bank.

²⁹ Bank of Canada, Annual Report of the Governor to The Minister of Finance For The Year 1965, p. 10.

³⁰ See footnote 19 above.

³¹ Ball, George W., “Interdependence: The Basis of US-Canada Relations,” address to the American Assembly, Arden House, New York, 25 April 1964.Google Scholar

³² Interviews with Ontario officials, 17 September 1973 and 15 January 1974.

³³ Interview with Canadian official, 11 January 1972.