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HomeMy WebLinkAboutThe Citizen, 1995-02-08, Page 5THE CITIZEN, WEDNESDAY, FEBRUARY 8, 1995. PAGE 5 Inflation — being broke with money The price of admission into the coronation of henry I was one crocard, but Henry II's went up to a pollard. At King John's it soared up to a siskin and by Henry Ill's time it cost a whole dodkin. Richard Condon Ah, inflation. Someone once defined it as "being broke with a lot of money in your pocket." Right now, North American bankers are tugging their pinstripe vests nervously because Mexican economists have devalued their peso. Financial types don't like to see other countries "experimenting" with devaluation. It's the economic equivalent of experiment- ing with heroin. People in the the money business have long memories. They haven't forgotten the bad old days in Europe after World War I. Back in the early 20s if you were German and wanted to buy, say, a loaf of bread, you loaded up a wheelbarrow full of German marks and trundled them down to the baker. Yes, a wheelbarrow. In 1921, the German rate of exchange was 81 marks to the U.S. dollar. Just two years of rampant inflation later, an American dollar would fetch a million marks. That same year, a podgy young American Free trade breaks out all over There is the story told of the prairie community which was suffering a bad drought. The situation became so serious that it was decided to hold a prayer meeting to see if the good Lord would provide some rain. Shortly after the meeting finished it started to rain and it continued doing so for the next week. Things became so water-logged that another meeting was held in the local church. This time the prayer went up, "Oh Lord, can't you take a joke?" I• feel somewhat the same way as the prairie fanners when it comes to free trade. Anyone who has ever attended one of my classes or read one of my articles on the subject knows that I am all in favour of the concept. The fact is, however, that right now I am beginning to wonder if we arc not getting a little bit too much free trade thrown at us. Let me explain. There is no doubt in my mind that, given the small domestic market that we have in Canada, free trade is the way to go. However, we are still learning how to digest the agreement with the United States concluded five years ago and we have hardly begun to come to grips with NAFTA, the agreement that takes in Mexico with Canada and the U.S. Now, as a result of a recent meeting in Miami, attended by the heads of every government in the western hemisphere except Cuba's Fidel Castro, we arc now starting to work towards a free trade agreement involving all these countries. As if that was not enough, we went on to decide to do something about Chile right away. So it was that negotiations will begin shortly to bring that country into NAFTA. by the name of Ernest Hemingway toiled as a reporter for The Toronto Star. In December of 1923 he wrote' a piece about a confidence man on the streets of Toronto who made money by selling worthless European currency for piddling amounts of Canadian cash.• "Only a quarter, gentlemen. Just one Canadian quarter buys this Soviet 250,000 ruble note". Passersby were also offered Austrian 10,000 kronen notes, German 10,000 mark 'notes - each for less than the cost of a decent Toronto breakfast. And, as Hemingway noted laconically "worth 15 cents a trillion before the New York banks refused to quote them any more." But even that pales beside the worse case of monetary inflation the world has ever known. That occurred in Hungary at the end of the Second World War. The basic unit of Hungarian currency was the pengo, as it had been since 1931, when Hungary went off the gold standard and start printing paper pengos. By 1946 one 1931 gold pengo was worth — are you ready? — 130,000,000,000,000,000,000 paper pengos. The Hungarian economy was in free fall. Prices in Budapest were being hiked as often as 10 times each day. When Hungarians woke up the pengo had been abolished, their government had collapsed and their country had become part of the back yard of the By Raymond Canon Obviously one of the things they will have to do is change the name to something more suitable. While it is nice to see that governments can, on occasion, move quickly when they want to, I am a bit hesitant in giving the latest move my whole-hearted endorsement. My reasons for holding back are several. For openers the trade agreement with the United States five years ago caused considerable dislocations in the labour market and we have yet to address them adequately. As free trade came in with what can be considered the second Industrial Revolution, a great many jobs have disappeared which arc not going to be seen again. What this takes is a colossal retraining program and frankly we have not done a very good job of this so far. Far too often we seem to be retraining simply for the sake of retraining and not making sure we are fitting people for jobs that exist or will exist in the near future. As an example let's take something like a tool and die maker. You would think that after a few decades of being short of such workers, we would have done something to alleviate the situation. Yet we still have shortages in this field and continue to attempt to find them in other countries. From a salary point of view there is nothing whatsoever wrong with the job but we have done a poor job of selling it. It is going to take a real effort to get our retraining programs to the point where they arc doing a creditable job. .What has Canada got on its free trade plate at the present time? First. we are still in the initial decade of our monumental agreement with the United States. Second we arc trying to figure out how to make the agreement with Mexico work to our advantage. In the space of a few weeks we have set the groundwork for a similar agreement with the Pacific Rim countries, a western hemisphere arrangement with the immediate Union of Soviet Socialist Republics. Here in Canada? Well, our dollar's pretty flimsy, but at least we haven't set any inflation records. Not yet anyway. Well, perhaps that's not quite true. Canada is probably responsible for the most inflated expense account ever submitted. Back in 1921, while Hemingway was scribbling for The Star in Toronto, a rather more famous journalist by the name of Gene Fowler was submitting his expense account for a newspaper assignment that had taken him through much of Canada. Fowler was a feature writer for: The New York American, and he liked to live high on the hog. While in Canada, he had stayed at five star hotels, ate at the best restaurants and travelled by private coach on the CNR. He couldn't tell his editor that, of course. So Fowler turned on the creative juices. He submitted expenses for polar bear parkas, snowshoes, rifles, and Eskimo guides. He even claimed that he'd had to buy a second- hand dogsled, plus a team of experienced huskies to haul it. The newspaper auditor returned the expense account because it failed to balance. Fowler went to work inventing more expenses. He claimed that his lead dog had died, and he'd had to pay out $100 for a tombstone. Closer, but the auditor said the books still didn't quite balance. Exasperated, Fowler submitted his final expense: "Flowers for the bereft bitch: $1.50." prospect of fitting Chile into NAFTA. All this for a country that can't even get its debt under control. Have we perhaps bitten off more than we can chew? It would also be to our advantage to concentrate more on exporting to other countries and not have so many of our proverbial eggs in the American basket. Three-quarters of our total trade, both exports and imports is with the United States and this nukes us exceedingly dependent on U.S. prosperity for our own standard of living. A reduction of this percentage is not going to come easy but we have to make the effort. As it stands now, we can thank the Americans for their high level of current prosperity since it is our exports to that country, more than anything else, which is bringing down our high level of unemploy- ment. We sometimes can't stand our American friends but what would we do without them? We like to hear from our readers! The Citizen welcomes letters to the editor. They must be signed and should be accompanied by a telephone number should we need to clarify any information. Letters may be edited for content and space. A view from my backyard By Janice Becker Heritage Week brings thoughts, of conflicts old, new and long forgotten With the week of Feb. 20 to 26 being designated Heritage Week, reminding us of our ancestry and that of those around us, perhaps it is time to remember those who have struggled over the centuries to maintain the traditions and rites of their homeland. Battles to maintain a sense of identity can be easily recalled from the 20th century, as we have witnessed the tragedies in Rwanda, the former Yugoslavia, the breakaway Soviet Block nations, Palestine and Israel, Northern Ireland and South Africa, just to mention a few. Whether these struggles are relatively new, less than five years in duration, or ones which have lasted centuries, we must remember the hardships which have been faced by people of all nations at various times throughout their history. Travelling back more than 250 years, there was an attempt to eliminate a specific race of people which is not often spoke of today because, we managed to survive and even thrive in new countries. That group was the sometimes rebellious Scots (of which I claim ancestry; I was a MO/icor). Coming to a head in 1745, the British decided to clear much of the Highlands of Scotland because the people refused to swear allegiance to the new King of England. Those who protested the most soon found themselves on ships to Canada, Australia, the United States and other New World locations, if they were amongst the lucky. Over the following 100 years, many more Scots fled or immigrated from their native land, finding a tough existence in some cases, but soon calling the new country home. They were among the first to settle in many regions of eastern Canada, before migrating into Southwestern Ontario, clearing roads and farmland along the Great Lakes. As one of the so-called co-founding peoples of Canada, along with the French, we must remember our heritage which is entrenched in many of the communities of this country. However, we should also rejoice in the traditions of the Native American Indians who generously opened their land to the Europeans (with much less conflict than was experienced by our neighbours to the south), the Eastern Europeans who helped settle the west, the Asian who migrates to our west coast and people from every nation in the world who have brought their hopes, dreams, customs, folklore and religions to Canada to enrich our communities and hopefully find a better life for themselves and their families. In a time when confrontation and bloodshed seem to be the prevailing methods for settling difficulties arising from ethnic co-existence, maybe we can remember to greet our neighbours with decent human courtesy, as one person to the other. We should celebrate the differences in Canadians which make our country the unique place it is and hope that one day, the people of strife-ridden countries of the 20th century will find a new homeland as many displaced Scots did in the 17th, 18th and 19th century. Arthur Black International Scene