alternatehistory.com

February 14, 1967

Canadian Bank Act threatens US-Canada relations

While the divide in North America widens as a result of Canadian demands for compensation for contaminated land, another crisis is looming. The current finance minister, Mitchell Sharp, has reintroduced a measure that would control foreign banking in Canada. The measure would affect the operations of the Mercantile Bank, a subsidiary of Citibank and the only US-based bank currently operating in Canada. [1] The measure limits ownership of banks by a single entity or corporation to 25%, which would require that Citibank divest 75% of its share in Mercantile Bank.

Mr. Sharp’s measure comes as Canada experiences a surge in economic nationalism on its 100th birthday. Inspired by “A Choice for Canada” [2], a book written by former Canadian minister of finance and Minister without Portfolio Walter Gordon [3], Canadians are increasingly wishing to put distance between themselves and their powerful southern neighbo(u)r. In his book, Mr. Gordon expresses the belief that nationalism is good for Canada. [4] He calls for limits on the level of American investment in Canadian industry, which he sees as a threat to the nation’s sovereignty and economy. The book’s success has put political pressure on Prime Minister Pearson to do something about the issue. Three weeks ago, the Prime Minister announced the creation of a committee to examine the influence of foreign ownership on Canadian industry.

If the measure passes, the stage appears set for retaliation. For example, the US could respond by restricting Canadian banking in the US, ending Canada’s oil import quota exemptions, and by limiting natural gas imports. But Canada could also respond in a number of ways, including ending special trade deals like the recent free-trade Auto Pact. [5]