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Chapter 9

Discord, 1955–1968: The Breakdown in the Consensus

9 February 1950 Speaking in Wheeling, West Virginia, US Senator Joseph R. McCarthy claimed that there were 205 communists working in the State Department, the first of his many attacks on communism in government. McCarthyism came to mean the persecution of the innocent by unproven allegations. Canadian officials distrusted McCarthyism, though they shared the American concern over communist subversion.
8 May 1956 The pipeline debate began in the House of Commons. For one month, parliamentarians debated plans to allow a largely American-financed company to build a pipeline from Alberta to Ontario. Tempers erupted in the House of Commons, as the opposition attacked the government for trying to curtail debate on the bill and for expanding American economic power in Canada. The debate damaged the image of the Liberal government and contributed to its defeat in the election of 1957.
26 July 1956 Egypt nationalized the Suez Canal. In the fall of 1956, Israel, Britain, and France invaded Egypt. The US and Canada believed that the situation did not call for the use of force. The UN General Assembly adopted Lester Pearson’s proposal for a peacekeeping force to end the Suez Crisis. Pearson won the Nobel Prize for his work, but many older, English-speaking Canadians were unsettled by the crisis, believing Pearson had abandoned Britain to side with the United States.
10 January 1957 The preliminary report of the Royal Commission on Canada’s Economic Prospects (Gordon Commission) was tabled in the House of Commons. The commission sparked the first widespread and critical consideration of foreign investment in Canada.
4 April 1957 Canada’s ambassador to Egypt, Herbert Norman, committed suicide. Norman had been a communist in his youth, but there was no indication that he had been anything but a faithful and trustworthy servant to Canada since becoming a diplomat. In 1950, a US Senate subcommittee pried into his past, questioning his loyalty. The Department of External Affairs had cleared Norman, but he came under investigation from a US Senate subcommittee again in early 1957. Rather than again suffer innuendos and interrogations, Norman chose to end his own life, jumping from a seventh-floor apartment in Cairo. Norman’s suicide generated a wave of anti-Americanism in Canada.
1 August 1957 Canada and the United States announced the establishment of the North American Air Defence Command (NORAD). The home defence squadrons of the Canadian and US air forces were integrated under an American commander and a Canadian deputy, with headquarters at Colorado Springs.
15 June 1961 Prime Minister John Diefenbaker tabled the Report of the Royal Commission on Publications (O’Leary Commission) in the House of Commons. Throughout the 1950s and 1960s, Canadian magazines struggled for survival against their American competitors. The government had appointed the commission to recommend measures to prevent the collapse of the Canadian magazine industry. The O’Leary Report made two main recommendations. First, the government should discontinue the tax deduction for advertising aimed at the Canadian market placed in foreign periodicals. Second, the government should stop the entry into Canada of periodicals containing advertising aimed at the Canadian market. The Diefenbaker government had taken no action by the time it was defeated in 1963. In 1965, the government of Prime Minister Lester Pearson implemented the recommendations in modified form.
16 October 1962 Aides told President John Kennedy that US intelligence had discovered Soviet missiles in Cuba. Kennedy blockaded the island. Prime Minister John Diefenbaker, fuelled by a hatred of Kennedy, refused to let the United States fly nuclear fighters to Arctic bases, to arm Bomarc missiles on Canadian soil, or to place Canada’s NORAD forces on alert. The Cuban Missile Crisis ended peacefully on 28 October when Kennedy agreed to withdraw US missiles from Turkey in exchange for a Soviet pledge to remove the missiles from Cuba. Afterward, Kennedy remained outraged at Diefenbaker`s actions, seeing him as an unreliable ally.
5 February 1963 At the climax of the Defence Crisis, Diefenbaker’s Progressive Conservative government was defeated in the Commons. The government had agreed to take nuclear weapons from the United States, but then had hesitated. The US State Department issued a press release making it clear that Canada had not kept its commitments. The defence minister resigned, and the opposition parties combined to topple the government. Lester Pearson’s Liberals won the election of 8 April 1963 and formed a minority government.
13 June 1963 Finance Minister Walter Gordon presented his first budget to the House of Commons. The Gordon budget included a 30 per cent tax on foreign takeovers of Canadian firms and tax incentives to encourage foreign companies to sell shares to Canadians. Under attack from the business community, and lacking support in Cabinet for his proposals, Gordon was forced to withdraw the takeover tax. The budget damaged relations between Ottawa and Washington.
16 January 1965 Pearson and Johnson signed the Auto Pact, an agreement that allowed free trade on cars and car parts for companies that manufactured the same proportion of vehicles in Canada as they sold in the country. As a result of the agreement, the Canadian automotive industry thrived.
15 February 1968 The report of the Watkins Task Force was tabled in the House of Commons. Chaired by economist Mel Watkins, the task force had been appointed on the insistence of Cabinet minister Walter Gordon. The Watkins Report recommended that Canadians accept a high level of foreign investment but work to reduce its costs. As a founding member of the Waffle Movement, Watkins later proposed more radical measures to reduce foreign investment in Canada.