The StarPhoenix (Saskatoon), Thursday, June 7, 2007
Lost sovereignty predictable result of currency union
by W. H. (Bill) Loewen and David Orchard
Special to The
Following is the opinion of Loewen, founder and
former CEO of Comcheq, a Canadian supplier of payroll
services and the Chairman of TelPay Inc., and Orchard,
author of The Fight for Canada: Four Centuries of
Resistance to American Expansionism.
The editorial, Time to consider benefits of move
to one currency (SP, May 29), argues that a rising
dollar helps make the case for a common North American
The writers declared that our dollar "has been driven
up by an almost insatiable demand for natural resources
as a result of the Asian economic explosion," and stated
that, "Over the past couple of weeks, Opposition
politicians have been howling about the number of
Canadian companies (especially in the resources sector)
being taken over by foreign interests."
There are many negative effects on Canada of a high
dollar. Farm income, income from natural resources and
from any other product valued in U.S. dollars all
decline as the loonie rises. The result is lower incomes
for Canadian workers and farmers, lower corporate
profits, more unemployment and reduced government
However, we disagree utterly with The SP's proposed
solution of throwing our dollar, and our sovereignty,
out with the bathwater.
A key factor that drives up the value of the loonie
is the flood of foreign takeovers of Canadian companies.
When foreign companies buy Alcan, Molson, Inco, Hudson's
Bay, Terasen Gas, Labatt, the Montreal Canadiens and
other Canadian companies, it increases the demand for
and the value of our dollar because the purchases are
made in Canadian currency.
We should lower our dollar's value by buying back our
corporations rather than selling them.
"The rising dollar is a reflection of the underlying
strength of the Canadian economy," boasts Prime Minister
In fact, the current up-tick is far more likely to be
foreign private equity funds buying up Canadian dollars
in anticipation of taking over companies such as Bell
Canada Enterprises and Stelco, rather than a sign of
their confidence in our economy.
If Opposition politicians are "howling," it is with
good reason. More than 12,000 Canadian companies have
been taken over since the 1989 Canada-U.S. Free Trade
Agreement. Since January 2006, foreign takeovers of some
$156 billion have been consummated.
There only are a handful of widely held Canadian
companies now listed on the Toronto Stock Exchange --
surely an abnormal situation for a sovereign nation.
If this doesn't bother The SP, it bothers many
Canadians including Dominic D'Alessandro, CEO of
Manulife, who said recently: "I believe ownership
matters a lot. It matters not only for economic reasons,
but, more importantly, for our sense of self-esteem and
pride in our country."
Canada's reaction to a rising dollar is the opposite
to what Japan did through its many years of prosperity
after the Second World War. It lowered the value of its
currency by buying foreign bonds and other assets,
enabling it to continue to export profitably. China is
now doing the same.
Canada, instead, is selling more of its assets, with
the resulting increase in the value of the dollar. The
road to prosperity is found by selling your products,
not your assets.
The SP complains that the West "already knows the
regional devastation that can be caused by a central
decision" and tells us that, "With the correct tools,
Canada's regions might be in better shape if a decision
on which Canada has a say is made in Washington, than if
the decisions are made in Ottawa."
This is the old argument of both western Canadian and
Quebec separatists, who will be pleased to see their
demand for a common currency with the U.S. picked up by
a major western Canadian newspaper.
Those tempted to buy this idea could ask North or
South Dakota or Montana about their power and influence
in Washington before agreeing that Canada should throw
away the sovereignty and economic independence of one of
the world's oldest democracies. The entire population of
the West could fit into one U.S. state, and amount to
less than three per cent of the American population,
with all the clout in Washington that goes with such a
Adopting a joint currency with the U.S., which is in
rapid decline, would doom Canada to a similar destiny.
Argentina's disastrous experience with tying its
currency to that of the U.S., which led to economic
breakdown, is a cautionary example.
If Canada conducts itself wisely, the future, as
former prime minister Wilfrid Laurier suggested, would
belong to us.
If we give up the economic tools to govern ourselves,
we lose not only the flexibility to respond to changing
economic conditions but the independence necessary to
fulfil the dreams of those who've given their sweat,
tears and, in some cases their blood, for the dream of a
true north strong and free.
Instead of "having the courage" to follow The SP
editors to Washington and permanent colonial status, we
need the greater courage to stand on our own.
W.H. (Bill) Loewen, CM, FCA, is the founder and
former CEO of Comcheq, a Canadian supplier of payroll
services, and the Chairman of TelPay Inc. He lives in
Winnipeg and can be reached at tel 204-957-2820,
David Orchard is the author of The Fight for Canada:
Four Centuries of Resistance to American Expansionism.
He farms at Borden, SK and can be reached at tel