611.4231/10–2947

The Ambassador in Canada (Atherton) to the Secretary of State

restricted
No. 5596
[Extracts]

Sir: I have the honor to report that Canadian public opinion, particularly as reflected in the press, has reached probably an all time high in favoring a closer integration of the economies of Canada and the United States. Economic union between the two countries is taken as a natural parallel development with intimate military ties existing since early in the late war and close political collaboration as now manifest at the UN. Sentiment favoring economic integration is [Page 128]a logical outgrowth of the growing realization that Canada’s prewar international trade position founded on the triangular exchange of commodities with the United States and the United Kingdom is no longer valid, and there has been widespread acceptance of Finance Minister Abbott’s doctrine that the solution of Canada’s present external economic difficulties calls for “radical and wholesale changes” in the Dominion’s position as a world economic power. The changes adumbrated clearly imply Canada’s secession from the Empire trading unit in so far as Empire ties interfere with Canada’s development as an independent North American nation.

It is well known that for some time Canadian Government departments have been studying as a long term solution to Canada’s trade difficulties the expansion of the Dominion’s economy along lines complementary to that of the United States. Such expansion is said to involve, first, the intensified development of natural resources, both for export to the United States and for supplanting raw material imports from the United States (such as Alberta coal and Labrador iron ore) and, second, a greater interchange of finished products between North American companies with emphasis on increased exports to the United States. While trade restrictions may prove to be necessary in the short term to conserve a dwindling United States dollar supply, the long term solution is founded on trade expansion, probably to be promoted in the first stages by Canadian participation in an American aid program for Europe under a kind of “peacetime Hyde Park Plan”.1

The new “national policy” for a “directed economy” is widely supported in the press and, with minor exceptions, apparently has the popular backing of the Canadian people.

[Here follows a summary of press comment on Canadian-American trade relationships.]

In brief, it may be said that Canada today more than ever before appears ready to accept virtual economic union with the United States as a necessary substitute for the multilateralism of the Atlantic triangle now believed to have disappeared for an indefinite time to come, if not permanently, and as a desirable corollary to American–Canadian cooperation in other fields. Such metamorphosis of thinking is a far cry from the pre-war Tory principle of “No truck or trade with the Yankees” and the French Canadian opposition to ties with the United States because of the latter’s “godless imperialism”.

Respectfully yours,

Ray Atherton
  1. Reference is to a statement made at Hyde Park, New York, by President Roosevelt and Prime Minister Mackenzie King on April 20, 1941, which announced agreement on plans for economic coordination during the war emergency. For text, see Department of State Bulletin, April 26, 1941, pp. 494–495.