As the foreign ownership debate raged on, the new nationalist pariah became “hollowing out” – the erosion of head offices, and legions of supporting professional jobs, because of foreign takeovers. It reached a peak in the past decade as foreign buyers invaded the mining sector, snatching away icons such as Inco and Falconbridge. The debate will only intensify as the Chinese, with their model of state-owned champions, make greater inroads into Western Canada.
Toronto on top
From the 1970s, Toronto has ruled financial markets as home to the dominant stock exchange and the five major banks. The 1976 election of a separatist government in Quebec only accelerated those trends. The most critical exodus was not the head offices but the flood of talent down Highway 401 to Toronto from Montreal.
The most important movements have always been the people shifts – from the postwar influx of skilled immigrants like Messrs. Stronach and Munk, to the Atlantic Canadians who flocked to Fort McMurray to build the oil sands, and to Saskatchewanians who founded great energy companies in Calgary. Then, there is the exodus from Hong Kong and mainland China, making Vancouver the most vital city on the Pacific Rim. And now, we are seeing a potential for human talent to travel from the ravaged industrial towns of Southern Ontario – perhaps to Saskatchewan, now resurgent in its potash, canola and energy riches.
Quebec fought back against the Toronto rush with its blueprint of Quebec Inc., nurturing homegrown industry by backing its own entrepreneurs with names such as Desmarais, Marcoux, Péladeau and Dutil. The most heroic was an urbane accountant named Laurent Beaudoin, who married the boss’s daughter and built Bombardier from its roots as a snowmobile maker to a homegrown manufacturing champion, with a presence in the global market for commuter aircraft.
The 1970s changed the game in another profound way by ushering in the new age of energy. Headlines were dominated by the emerging Organization of Petroleum Exporting Countries, the Arab oil embargo and the price of oil rising to heights of $35 (U.S.) a barrel. This big global story empowered the energy-rich West and particularly Alberta. Energy became the centrifugal force in Confederation as it set off the political battle, still raging, over the spoils of hydrocarbon wealth, the impact of the petro-dollar and environmental activism.
Turf wars between prime minister Pierre Trudeau and Alberta premier Peter Lougheed escalated to an angry peak with the federal national energy program, a takeover coup by Ottawa that threw energy companies and Albertans into apoplexy. Coming at the time of global recession and collapsing oil prices, it still stokes resentment among Albertans not even born in 1980.
Western alienation was further fed by the creation of Ottawa’s energy giant Petro-Canada, which was granted automatic access to vast resource rents. The era saw the emergence of Smiling Jack Gallagher, a brilliant Calgary entrepreneur, whose exploitation of Ottawa’s policies made Dome Petroleum the vehicle of Canadian dreams, only to collapse under debt and slumping prices.
Through it all, Canada’s history was following a dramatic arc from a commercial empire on the St. Lawrence, when trade moved along eastern rivers, to the age of the transcontinental railway, to the modern wealth carriers, the spider web of oil and gas pipelines that are pushing, controversially, to the Pacific and the Gulf of Mexico.
The precursor of Keystone XL and Northern Gateway was the Mackenzie Valley pipeline proposal, which provided a dress rehearsal in energy ambitions arrayed against native bands and environmental groups. Ottawa punted the decision to an inquiry led by Justice Thomas Berger who, after exhaustive hearings in the late 1970s, recommended the project be delayed. The Mackenzie Valley pipeline, like the national energy program, never went away, having been reintroduced and re-shelved. Pipeline debates are recurring wounds in the Canadian psyche, like winter and the Maple Leafs dashing even the faintest hopes.
During the 1970s, the country divided along East-West fault lines, between the Toronto-Ottawa axis and the Calgary-Edmonton corridor. Each side needed the other, as the West developed from eastern capital, and taxes and royalties flowed to Ottawa for big social schemes. In this regional exchange, the consistent winners were the major five banks. Their grip tightened in the big bang of deregulation, which allowed commercial banks to enter investment banking as well. They shrugged off the crash of 1987 as a one-day wonder and survived the challenge of the trust companies, which took on too many real estate loans and had to be rescued by government and subsumed into the banks.Report Typo/Error
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