Inexorable Trend

In Parliament, on editorial pages and in private discussions, a great debate is in progress about the heavy flow of U.S. investments into Canada. Most Canadians welcome the foreign capital, regarding it as an essential loan for national development which the rich young country will eventually pay off. But some fear that foreign investors are gradually gaining too much control over the Canadian economy. Last week the government's Bureau of Statistics shed some light on the issue by publishing a 93-page blue book reviewing Canadian economic trends in the quarter century from 1926 to 1954.

Fears of foreign economic domination of Canada are largely dispelled by the government's survey. Although big U.S. investments are coming into the country, Canada's international debtor position is steadily improving. In 1926 Canadians owed $6 abroad for every $1 of their external assets. Today the external debt has shrunk to about $2 for every dollar of assets outside the country.

Optimists about Canada's economic future have long expected that it would follow the same pattern as the U.S., where foreign capital, largely from Britain, primed the nation's industrial development and was eventually bought out almost 100% by American investors. The same trend has already begun in Canada, the Bureau of Statistics survey showed. Canadian ownership of government bonds and of stocks in Canadian railways, utilities, banks and insurance companies has grown markedly since 1926.

With Canadians taking over an evergrowing share of these relatively conservative investments, U.S. investors have tended in recent years to plunge on more speculative enterprises. The recent inflow of American capital has mainly gone into Canada's oil industry, mining and new manufacturing plants. But here too, the inexorable trend toward local ownership is already under way. In the past ten years, Canadian investors have increased their stock holdings in U.S.-controlled companies operating in Canada by more than 25%.

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