The Coyne Affair

The Tory government of Canada last week fired the man responsible for the country's tight-money policy. But he refused to go. In a move unprecedented in Canadian history, suave, scholarly James Coyne, 50, governor of the Bank of Canada and manager of the country's money supply for 6 1/2 years, announced that "the Minister of Finance on behalf of the government requested that I resign at once."

Coyne's position is somewhat analagous to the chairman of the U.S. Federal Reserve Board, in a government job that is meant to be independent enough to act as a check on injudicious political tampering with finances. "Under such circumstances," he said, "I cannot and will not resign quietly." As Coyne told the story, he was first ordered to resign because the Cabinet was "upset" over the $25,000 pension unanimously voted him by the bank's board of directors 16 months ago. Obviously, said Coyne, this was not the reason, since the Cabinet waited so long to indicate its disapproval. The real dissatisfaction with him, said Coyne, was the fact that the government was "preparing certain programs which were apparently thought to be of such a nature that I would oppose them." Until he found out what those programs were, he would not quit.

No Scapegoat. The Coyne affair showered political sparks all over Ottawa's Parliament Hill. Liberal Opposition Leader Lester Pearson called for an emergency debate in the House of Commons. Hitherto opposed to Coyne's high interest rates and his stubborn insistence that Canadians are living beyond their means, Pearson suddenly came to the governor's defense. He challenged Finance Minister Donald Fleming to prove that Coyne had blocked a single government program. "We will not support the government in any attempt to use the governor as a scapegoat for their own faults," he cried.

Fleming, who is about to bring in the government's new budget, insisted: "Mr. Coyne's continuation in office would stand in the way of a comprehensive, sound and responsible economic program. The government's policy is expansionist. The policies advocated by Mr. Coyne are restrictionist--restrictive of trade, of production, of jobs."

No Tight Money. Under Canadian law, it will take an Act of Parliament to fire the governor, and Fleming announced that he would introduce the necessary bill "shortly." It will almost certainly pass--and with it the nation's tight-money policies. In New York last week the Canadian dollar slipped to par with the U.S. dollar for the first time since 1956.

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