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35
and the necessity of financing Canadian ex-
Since Canada is dependent on imports from
ports to Europe largely on credit, compelled
the US, Canada has no choice under present
Canada to take emergency action to build up
payments difficulties but to increase its de-
the dwindling reserves of US dollars. There-
pendence on the US market. It is recognized
fore in November 1947 the Canadian Govern-
that this increases Canada's vulnerability to
ment announced a dollar conservation pro-
economic conditions in the US but the neces-
gram with the twofold purpose of restricting
sity of balancing trade on a bilateral basis
expenditures in US dollars by means of import
outweighs this consideration. Furthermore,
restrictions and exchange controls, and of in-
the government feels that Canada cannot af-
creasing earnings of US dollars by expanding
ford additional aid to European nations by
exports to the US. The success of this pro-
granting more export credits than at present,
gram has been marked. In 1948, the value of
and Canadian exports are largely of goods not
Canadian exports to the US increased 45 per-
easily marketed in Latin America.
cent and the value of imports from the US
The following table demonstrates the effec-
was reduced 9 percent. Canada's exchange
tiveness by the end of 1948 of the govern-
position was further aided by the expenditure
ment's trade policy:
of ECA dollars in Canada to the amount of
nearly $600 million in 1948. Canadian hold-
ings of gold and US dollars increased by De-
CANADIAN TRADE
cember 1948 to $998 million (including a $150
Trade with the US, UK, and other countries
million US loan), more than double such hold-
as a percentage of total Canadian for-
ings a year previous.
eign trade (based on dollar value)
The Canadian-UK trade pattern has also
been readjusted since the war. In spite of
Exports (%)*
Imports (%)
ECA aid and a Canadian loan, Britain's dollar
difficulties have precluded as high a level of
buying in Canada as formerly, especially since
alternative supplies have become available to
1998
the UK in the sterling area. British bulk pur-
US
37
39
50
61
77
69
chase contracts for agricultural commodities
UK
37
28
23
18
7
11
have been cut in variety as well as in quantity
Other
of products purchased. The effects of this
countries
26
33
27
21
16
20
curtailment in British buying have been felt
Total
100
100
100
100
100
100
by segments of the Canadian economy, and
the Canadian Government is attempting to
*Includes re-exports.
bring UK-Canadian trade nearer to a balance
by encouraging increased importation of UK
Sharply increased exports to the US and de-
products. Failure in some cases of the UK
creased imports from the US in 1948 reduced
to $283.6 million the deficit in the trade bal-
to deliver (e.g., in the case of textile orders),
ance with the US compared to $981.1 million
plus consumer resistance to high UK prices in
in 1947. The reverse trend was evident in
many lines as a buyer's market approaches,
1948 Canadian-UK trade with decreased ex-
have made this readjustment somewhat diffi-
ports and increased imports, and the surplus
cult, but progress is being made. (See Table
with the UK was $389.2 million compared with
below.) In 1946 Canada made a loan of $1,250
$564.3 million in 1947.
million to the UK to stimulate purchases. By
April 1948, Canada found it necessary to
Canada's foreign trade position deterio-
rated in the first six months of 1949. The
freeze the balance of $235 million of this loan
over-all surplus from merchandise trade is
remaining to be drawn; in January 1949, this
considerably lower than in the comparable
unused portion was unfrozen with the provi-
1948 period, largely owing to a rise in imports
sion that $10 million could be drawn monthly.
from the US. This growing trade deficit with
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"ocrText": "SECRET\n35\nand the necessity of financing Canadian ex-\nSince Canada is dependent on imports from\nports to Europe largely on credit, compelled\nthe US, Canada has no choice under present\nCanada to take emergency action to build up\npayments difficulties but to increase its de-\nthe dwindling reserves of US dollars. There-\npendence on the US market. It is recognized\nfore in November 1947 the Canadian Govern-\nthat this increases Canada's vulnerability to\nment announced a dollar conservation pro-\neconomic conditions in the US but the neces-\ngram with the twofold purpose of restricting\nsity of balancing trade on a bilateral basis\nexpenditures in US dollars by means of import\noutweighs this consideration. Furthermore,\nrestrictions and exchange controls, and of in-\nthe government feels that Canada cannot af-\ncreasing earnings of US dollars by expanding\nford additional aid to European nations by\nexports to the US. The success of this pro-\ngranting more export credits than at present,\ngram has been marked. In 1948, the value of\nand Canadian exports are largely of goods not\nCanadian exports to the US increased 45 per-\neasily marketed in Latin America.\ncent and the value of imports from the US\nThe following table demonstrates the effec-\nwas reduced 9 percent. Canada's exchange\ntiveness by the end of 1948 of the govern-\nposition was further aided by the expenditure\nment's trade policy:\nof ECA dollars in Canada to the amount of\nnearly $600 million in 1948. Canadian hold-\nings of gold and US dollars increased by De-\nCANADIAN TRADE\ncember 1948 to $998 million (including a $150\nTrade with the US, UK, and other countries\nmillion US loan), more than double such hold-\nas a percentage of total Canadian for-\nings a year previous.\neign trade (based on dollar value)\nThe Canadian-UK trade pattern has also\nbeen readjusted since the war. In spite of\nExports (%)*\nImports (%)\nECA aid and a Canadian loan, Britain's dollar\ndifficulties have precluded as high a level of\nbuying in Canada as formerly, especially since\nalternative supplies have become available to\n1998\nthe UK in the sterling area. British bulk pur-\nUS\n37\n39\n50\n61\n77\n69\nchase contracts for agricultural commodities\nUK\n37\n28\n23\n18\n7\n11\nhave been cut in variety as well as in quantity\nOther\nof products purchased. The effects of this\ncountries\n26\n33\n27\n21\n16\n20\ncurtailment in British buying have been felt\nTotal\n100\n100\n100\n100\n100\n100\nby segments of the Canadian economy, and\nthe Canadian Government is attempting to\n*Includes re-exports.\nbring UK-Canadian trade nearer to a balance\nby encouraging increased importation of UK\nSharply increased exports to the US and de-\nproducts. Failure in some cases of the UK\ncreased imports from the US in 1948 reduced\nto $283.6 million the deficit in the trade bal-\nto deliver (e.g., in the case of textile orders),\nance with the US compared to $981.1 million\nplus consumer resistance to high UK prices in\nin 1947. The reverse trend was evident in\nmany lines as a buyer's market approaches,\n1948 Canadian-UK trade with decreased ex-\nhave made this readjustment somewhat diffi-\nports and increased imports, and the surplus\ncult, but progress is being made. (See Table\nwith the UK was $389.2 million compared with\nbelow.) In 1946 Canada made a loan of $1,250\n$564.3 million in 1947.\nmillion to the UK to stimulate purchases. By\nApril 1948, Canada found it necessary to\nCanada's foreign trade position deterio-\nrated in the first six months of 1949. The\nfreeze the balance of $235 million of this loan\nover-all surplus from merchandise trade is\nremaining to be drawn; in January 1949, this\nconsiderably lower than in the comparable\nunused portion was unfrozen with the provi-\n1948 period, largely owing to a rise in imports\nsion that $10 million could be drawn monthly.\nfrom the US. This growing trade deficit with\nSECRET"
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