The More Things Change: Walter Gordon And Opposition To Canadian Economic Nationalism

For Canadians, the years 1963 and 2025 already seem to have a lot in common.

In both years, there were federal elections in April that saw the Liberals win with a new Prime Minister sworn in who represented change (though in 2025, the new PM was sworn in weeks before the election and the outgoing PM was an unpopular Liberal, not an unpopular Conservative).

In both elections, there were complaints that the US President had interfered in a way that helped the Liberals. In 1963 Kennedy had helped Pearson over the issue of nuclear warheads and the Bomarc missiles meant to replace the Avro Arrow, whereas in 2025 it was Donald Trump who was accused of indirectly electing the Liberals with his “51^st state” comments and his lack of support for Canadian Conservatives and their leader.

In both years, Canadian nationalism was rising. In 2025, the Liberals are being criticized for delaying a full budget (supposedly until 2026 at first, though it is now slated for this fall). In 1963, Pearson promised a federal budget within a speedy 60 days of being sworn in. This rush ended up becoming a major problem for the Liberals – and particularly for the new Finance Minister, Walter Gordon, who almost resigned as a result, and whose reputation was left in tatters.

I have long been a huge fan of Walter Gordon, who is considered the father of Canadian economic nationalism in the 20^th Century (perhaps Sir John A. Macdonald wins the title in the 19^th Century with his National Policy). A few years ago I read Gordon’s 1977 autobiography,Walter Gordon: A Political Memoir. I also read an earlier 1973 biography, Gentle Patriot: A Political Biography of Walter Gordon by Denis Smith, which was written with access to Gordon’s own notes and is eerily similar to Gordon’s own material. Gordon died in 1987.

I just reading the 1999 biography “Walter Gordon and the Rise of Canadian Nationalism” by Stephen Azzi, which is far more critical of Gordon and his policy ideas. Azzi raised the issue of Gordon’s limited understanding of economics and public policy given that Gordon’s prior success and training was in accounting, management, and business. He also described how Gordon picked great people for the right roles, but himself tended to work fast and think that mistakes could be easily corrected later.

Gordon’s business skills meant that he got things done, like raising money, organizing political campaigns and conferences, and ultimately getting the Liberals elected in 1963 after stunning losses in 1957 and 1958. But as Finance Minister, he steamrollered over cautious bureaucrats and ultimately alienated the people in government who actually had to implement policies that had not been fully vetted or thought out.

As a nationalist, Gordon was interested in economics, to a lesser extent in foreign policy and defense, and US/Canada relations, not issues like Canadian culture. He was one of the first people in the Liberal Party to oppose the Vietnam War. Yet, he was very progressive on social policy, particularly in the expansion of the social safety net that took place under Pearson and Trudeau (in large part because of Gordon helping to shift the Liberal Party to the left).

Another similarity between 2025 and 1963 was that in July, President Kennedy introduced a 15% tax on US foreign investments by Americans to deal with the outflow of US currency – not that much different than Trump introducing all sorts of tariffs in 2025 to reduce trade deficits. At that time, Canada was able to get an exception thanks to Gordon and the efforts he spearheaded. After the 1963 budget fiasco, Gordon never tried again to introduce major economic nationalist policies into his budgets, and often compromised to protect industries like Canadian magazines (exemptions for Time and Readers Digest) and maintain Canadian control of banks and insurance.

Canadian nationalism is often inconsistent. There was a huge burst in nationalism in late 2024 (when Trump was constantly referring to Trudeau as “Governor”) but mainly early in 2025 in reaction to Trump’s tariffs and “51^st state” obsession. Canadian nationalism and patriotism comes in waves – more so than the more constant US nationalism and patriotism.

Canadians being averse to displays of nationalism may be in part because we find US nationalism and patriotism so annoying – particularly statements like “where else but in America can a poor immigrant become rich” (well, Canada, Australia, and the UK for a start). Additionally, Canada is a huge country with two languages and mainstream cultures, strong regional identities, as well as a population of people who are immigrants (over 23%) or whose connections to other countries are only one or two generations away.

Canadian nationalism, at least for Anglophones, was historically mostly tied to Britain and the Empire. If the US was bigger and more powerful than us, and dominated this hemisphere, well, the British empire was even bigger and more powerful and dominated the oceans. We saw ourselves as the #2 country in the Empire or Commonwealth, at least of the “White dominions”, ignoring India of course.

In my view, the term “Anti-American” in reference to Canada is overused and abused, but Canadians have often been justified in criticisms or worries about the US, even long after the War of 1812 was past.

Canada gained our sovereignty slowly, with 1931 and 1982 being the final dates, if you ignore that we still have an absentee monarch that we share with over a dozen other countries. Azzi’s book details the beginning of modern Canadian nationalism in the 1950s, and Gordon’s role in it. The last line of the book is that Gordon was the “father of the new nationalism”.

Canadian “new nationalism” and concurrent anti-Americanism rose in the mid-1950s, partly in reaction to McCarthyism and its impact on Canadian trade and other political events, including the death of a Canadian diplomat who was subject to the witch hunt. Diefenbaker was also concerned about the rise of continentalism taking us away from Britain, and the mostly American ownership of the proposed pipeline in the 1957 pipeline debate was part of this.

Gordon was a friend and close advisor to Pearson, and he had worked for both the federal and provincial governments in various capacities since the 1930s. It was his ideas and influence that led to him chairing the 1957 Royal Commission on Canada’s Economic Prospects that brought both Gordon, and the issue of foreign ownership (particularly American ownership and control) to the attention of the public, which dovetailed with other concerns about the US and our relationship or dependence on them, including on defense as well as economic issues.

Interest in foreign ownership and economic nationalism declined under Diefenbaker until the Bomarc crisis that helped to defeat Diefenbaker in 1963. Concerns about foreign ownership increased once the Liberals were elected in 1963 and Gordon was finance minister, but it was not all that important of an issue to most Canadians. After his disastrous budget in 1963, Gordon did little to advance economic nationalism or reduce foreign or US control of our economy. When he left politics in 1968, he had been highly influential in getting the social safety net expanded under Pearson, but seemed to have failed on his agenda to make Canada more independent of foreign ownership and control.

Azzi’s 1999 biography details a lot of what was happening in the Liberal Party and governments under Pearson and Pierre Trudeau. Ironically, it was after Gordon was no longer in Parliament that Canadian economic nationalism peaked, up to the late 1970s with the National Energy Policy (NEP) perhaps being the last program resulting from his influence. Reports written for the government, authored by others like Mel Watkins or Herb Gray, led to foreign investment review (FIRA), and even the Canadian content requirements in TV and radio we still have.

The 1999 biography also links the rise in Canadian economic nationalism from the mid-1960s to the 1970s to “Anti-Americanism” over the Vietnam war, US civil rights issues, and Nixon imposing trade barriers to Canada in 1971 (not much different than Trump’s unilateral trade war in 2025). Gordon was also one of three founders of the Committee for an Independent Canada (CIC), which he largely funded from his own wealth. The CIC had thousands of members (the number is debated) and had the support and involvement of dozens of prominent Canadians – but its key roll was to counter the actions of the NDP “Waffle” group that wanted to link reducing foreign ownership and control of Canada’s economy to the need for socialism. Gordon wanted economic nationalism to exist apart from the NDP and to not be partisan or tied only to the left.

Until the late 1960s, Gordon’s proposals for dealing with foreign ownership or control seemed weak or ill thought out, such as wanting Canadians to own a minimum 25% of companies with foreign investment, which would not give them much power, just more transparency. His ideas became more radical after he was out of politics. Gordon was not an expert on economics or trade, but it was the people he inspired or recruited who went on to find the evidence to create the arguments or intellectual framework for Canadian economic nationalism.

Economic nationalism was in decline by the late 1970s, and the CIC disbanded in 1981, though it was not meant to be a permanent organization, according to Gordon himself. The US started to turn towards neoliberalism, deregulation, and smaller government even under Jimmy Carter, and Pierre Trudeau was considering sectoral free trade (like the Auto Pact) in five industries before he left office in 1984. But where Azzi falls down is essentially ignoring the 1988 Free Trade Election and the creation in the mid 1980s of the Council of Canadians, and the lasting influence of Walter Gordon.

From the point of view of 1999, Gordon seemed to have lost, at least on the issue of economic nationalism. Neoliberalism and globalization seemed to have triumphed, with Clinton in the US working co-operatively with Republicans to limit welfare programs and deregulate Wall Street. In Canada, Jean Chretien and Paul Martin were slashing government programs and spending, downloading things like housing to the provinces, and prioritizing tax cuts when the economy started to improve instead of reversing cuts to employment insurance (EI).

Reading Walter Gordon and the Rise of Canadian Nationalism, I had a feeling that some things never change. The book is vey critical of Gordon in many respects, particularly for his lack of clear theories on economic issues and his inability to communicate his ideas to the general public. Other than his own flaws as a thinker, policy maker, finance minister, politician, or communicator, there seems to be a lot of the same ideas or forces at work today in opposition to economic nationalism that there were in Gordon’s days from the 1950s to the 1980s.

First is the Liberal Party itself.

Generally, the Liberal Party has been the party of continentalism and free trade, while the Conservatives were the party of maintaining close ties to Britain and of tariffs or protectionism. Even though Sir John A. Macdonald and other Conservative leaders appreciated the potential benefits of free trade – and certainly wanted free trade with the UK and the Empire or Commonwealth – it was the Conservative Party that was afraid that continentalism would threaten Canada’s sovereignty.

The Conservative Party changed in the 1980s, with John Crosbie, and then Brian Mulroney, embracing the idea of a free trade deal with the US, which came up because of the 1985 Macdonald Commission report which revived the idea of a free trade deal. Ironically, Donald Macdonald had once been an acolyte of Walter Gordon but had changed positions. Diefenbaker was likely the last Progressive Conservative (PC) leader to be firmly opposed to continentalism.

The Liberal party had always been the party of free trade with the US, particularly with Laurier and the 1911 election campaign, which saw Laurier end his tenure as PM. Mackenzie King completed negotiating a free trade deal with the US, but never went public with a proposal. The Liberal Party was generally for free trade, but Pearson was a career diplomat and foreign policy expert with no real expertise or knowledge on economics or trade policy, so Walter Gordon was pretty free to promote economic nationalism for most of the years that Pearson was in power (though after the terrible 1963 budget problems, Gordon was too cowed to reintroduce any major policies, and was only Finance Minister until the 1965 election, then left the post in something of a mix-up with Pearson).

Gordon faced apathy or opposition to his economic nationalist views within the Liberal party – particularly from important opponents like Mitchell Sharp, who replaced him in Finance. Gordon also failed to sway the party at a 1966 party convention.

In the 1960s, John Turner was somewhat tepid on Gordon’s ideas, but then in 1988 led the anti-Free Trade Agreement (FTA) fight as Liberal leader. In 1993, Jean Chretien was critical of the FTA and NAFTA agreements, and promised changes to it, but in power did little to get significant changes. Chretien then seemed to accept free trade and globalization and headed up “Team Canada” trade missions. Justin Trudeau was no different and accepted more free trade deals as normal policy.

Mark Carney has at times talked tough on the US-Canada trade crisis, but was low key in most of his direct relations with Donald Trump, other than telling Trump that Canada is not for sale in their Oval Office meeting. Carney is a fairly mainstream economist, so even though he might appreciate the vulnerable position Canada is in and the need to diversify away from over-dependence on the US, it seems unlikely that he will embrace policies Gordon would have advocated.

Another problem Gordon came up against, and we still face today, is Canada’s regionalism – particularly with regard to Quebec and Alberta.

Gordon’s ideas and efforts had their most support in Ontario. Just as Gordon was somewhat blind to the importance of cultural nationalism, he was not able to get much support in Quebec and most of his books were in English only. Quebec nationalists saw the main problem not as dominance by the US, but rather of English Canadians over Francophones and Quebecers. Rather than seeing any decrease in foreign investments as an opportunity to expand ownership and control of business and the economy by Francophones, they saw Canadian economic nationalism as mainly for Anglophones to increase their dominance of Francophones or Quebecers. Conversely, foreign ownership made Quebec less dependent on the rest of Canada and on Anglophones – which was true in the 1988 election where the Parti Québecois (PQ) and Quebec nationalists sided with Mulroney in supporting free trade.

Ironically, in 2025 the Quebec public and politicians were supportive of the federal government, because Quebec is dependent on exports of electricity and aluminum to the US, and aluminum was impacted by specific tariffs.

With provinces other than Quebec and Ontario, their governments generally opposed limits on foreign ownership or investments because they were eager for new investments that would create jobs, particularly in natural resource related sectors of their economies. In 2025, provincial governments generally worked with the federal government to oppose tariffs, though Alberta was an outlier as usual.

Walter Gordon had spent years working with the Canadian business elite, and was seen as being too closely tied to the interests of Bay Street and Toronto, particularly by people out West. Yet, Bay Street disagreed with his ideas – which were not just for economic nationalism but generally in favour of a bigger and more activist government.

Another key group that came out and opposed Walter Gordon’s economic nationalism were Canadian economists, who of course tended to follow the mainstream theories of 20^th century Anglo-American economics going back to Adam Smith, though with Keynesian theories dominating from the 1940s-1970s.

Economists tend to look at models where there are equilibria between supply and demand and ultimately what takes place is the most efficient allocation of resources. Economics is quite different from finance. In finance, risk is part of the equation. A company’s stock is not just a matter of how much profit it made last year, or is projected to make this year, but also factors in risks. When companies make plans or strategies, it includes provisions for risks.

When the Mulroney government negotiated a free trade deal in 1988, it contemplated only the gains from being part of a bigger market with some barriers removed, and that Canada would benefit from greater efficiencies. The arguments for free trade assumed that the much larger and more powerful US would never abrogate the deal and then use its market power to force Canada into a more subservient position, or to put barriers back up after we had dismantled our ability to prosper without open access to the US.

Gordon’s economic nationalism was based on his professional life and experiences, including a stint working on Wall Street before returning to Canada. Gordon felt there were inherent differences between Canadians and Americans, and particularly between Canadian business methods and culture.

Azzi constantly criticizes Gordon for not having had well thought out and consistent theories on economics, or evidence supporting his ideas. Of course, economists have theories that usually call for free markets and less government interference, and the evidence they produced at the time generally did not show that foreign owned businesses were a problem in terms of how much they exported compared to Canadian owned firms. Only in the late 60s were some non-mainstream Canadian economists able to make the case supporting Gordon’s concerns.

Gordon hated being called a protectionist, but in the book and in Gordon’s time, there really were no major advocates for what is now called neo-mercantilism. Gordon had no knowledge of how non-English speaking countries like Japan and Korea limited foreign investment and protected their market in order to develop and be better able to compete against the richer countries of the Western world – many of which had themselves used protectionist, neo-mercantilist policies to develop.

Friedrich List wrote a book in 1841 explaining how Britain had become an industrial giant, not just because of the industrial revolution but through protectionism. The US followed protectionist policies starting with the ideas of Alexander Hamilton, and it was certainly protectionist in using high tariffs against Canada and Britain, particularly in Sir John A. Macdonald’s time – the era of McKinley that Trump seems to admire and copy.

Under Pierre Trudeau, the federal government created PetroCanada and the Canada Development Corporation (CDC), both of which have their roots with Walter Gordon. Canada used to use crown corporations to achieve economic goals. The CBC, Air Canada, and CN were all government owned in Gordon’s day, then privatization started under Brian Mulroney, and continued under Chretien.

In the 2025 election, Mark Carney proposed at least one new Crown corporation that is to be called “Build Canada Homes”, to deal with the housing crisis, yet has been strangely silent about creating any other crown corporations. Carney said that Canada’s old relationship with US “is over” but has not really said what we can do differently to be more independent of the US for exports and imports, or to change the way our economy might function with less dependence on the US.

Since the 1960s, the world has seen how Japan, then South Korea, then most recently China, developed their economies not through free trade and neoliberal open doors to free flows of capital, but through neo-mercantilist policies. Trump’s complaints that China is a non-market economy actually ring true, but those neo-mercantilist policies are partly the approach Trump himself wants to follow, at least in part.

China used high tariffs and currency manipulation to develop, but there were other tools that that helped it catch up with Western technology and productive capacity. China limited foreign investment, and required American and Western companies to take on Chinese partners, and to transfer technology to China. Foreign companies in China also had to work with Chinese suppliers, and this also meant transferring technology and expertise to get parts locally that were up to the standards of companies like Apple.

Neo-mercantilism works. But when a country has used neo-mercantilism to get to the top, like Britain in the 1840s, or the US in 1945, then actually free trade works in their favour.

This is Canada’s problem. In the 1950s (when Walter Gordon started to raise the issue of foreign ownership and US dominance over Canada’s economy), and in the 1980s when Mulroney pushed for free trade, and even today, Canadian economists are following economic theories that work for these “winners” who have become advanced economies with competitive advantages and access to large amounts of capital. These strategies do not work for other countries, which risk ending up becoming suppliers of raw materials and importers of high value added goods.

Like in the 1950s, the plan for Canada’s economic future in 2025 seems to be doubling down on natural resource exploitation and exports. Branch plants in autos or EV batteries are not seen as being viable if the US market is cut off or protected by high tariffs – even the 10% standard tariff rate that Trump seems to be imposing on the UK, returns Canada to the pre-1965 Auto Pact situation where factories in Canada have to mainly serve the domestic Canadian market.

Before 1965, Canada had at times been the country with the third highest auto production on the planet, behind only the US and UK, but that was before Europe and Asian countries had rebuilt, or developed sufficiently enough to become exporters themselves. Current Canadian car assembly plants do export some cars to markets other than the US, just as we did when there was the Commonwealth preference, but Canada now has to compete with lower wage countries like Mexico, Korea, China, and Eastern Europe.

Building more pipelines has become a political issue – even though the Trans Mountain Pipeline (TMX) is not yet at capacity. Perhaps Trump will revive the Keystone pipeline expansion. The Liberal government is not opposing more pipelines, and in fact campaigned in favour of them. But is building pipelines the best we can do? Global demand for oil will likely drop if countries continue to shift to electrification and reduce GHG emissions. On the supply side, Venezuela, Iran, and Russia could are subject to sanctions or otherwise producing below capacity, so supply from these countries could increase and push down prices. Canada is not a low-cost producer of oil, unlike Saudi Arabia.

Canada’s economy was seen as booming in the 1950s. With immigration and the Baby Boomers being born, the country was growing. Canada’s natural resources and manufactured goods found buyers in a world when many industrialized countries were still recovering from the bombing and destruction of World War Two. Others were behind the Iron Curtain but still needed food, and others were colonies that were just getting independence and had little manufacturing capacity of their own.

Canada had the 3^rd or 4^th highest GDP per capita around 1960, behind the US, Switzerland, and sometimes New Zealand. Despite being poorer than our rich neighbour, Canada had a head start in the 1950s, which we seem to have squandered. I blame high immigration for our declining GDP per capita, but cutting immigration alone is not a strategy for success.

Too little seems to have changed in Canadian politics since the 1950s and ’60s when it comes to how we should run our economy and compete in the world. Unfortunately, there is nobody with the stature of a Walter Gordon urging us to take back control of our economy from multinationals and foreign owners. Japan only got where it did because it has Toyota and Honda as independent companies owned and headquartered in Japan, instead of being branch plants for General Motors (GM) and Ford. Same goes for Korea and Hyundai and Kia.

Even if Toyota and Hyundai made all the cars they sell in the US in their US branch plants, Japan and Korea will still have the head office jobs, the profits, and production capacity at home. Canada could potentially end up with no auto industry, like Australia, because we didn’t cultivate cutting edge Canadian owned manufacturing companies.

Like other New World colonies, Canada started out with resources, and people, but little or no financial capital. Canada was happy to import foreign capital to develop our economy, or even encourage it, even long past the point where we should have. Walter Gordon seemed to get this right, but was only partly able to alert Canadians to the risks.

The last similarity between now and the 1950s is that people are more interested in bread and butter economic issues, particularly when inflation or unemployment is high, than about long term trends and who owns and controls our economy. Canadian nationalism, and particularly Canadian economic nationalism, has had peaks when events have made Canadians aware that our neighbours are not like us or might be adversarial to our interests. Outside of those peaks, we get complacent.

Canadian nationalism tends to be weak. Unlike Japan, Korea, or other countries, we have not been occupied by an enemy army or lost a war and land, as is happening in Ukraine today. As a “nation of immigrants”, nor do Canadians share a common linguistic, racial, or ethnic identity. Because our culture (in English Canada anyway) has been so dominated by American or British culture, our sense of history and connection to the land are weak.

It may be the case that Trump and MAGA policies in the US will disappear after the 2028 election, but we are living through a historic turning point. Canadians should recognize that if we never want to become the “51^st state”, we cannot just muddle through but rather have to change our relationship with the US – and even the rest of the world – by taking control of our economy. We can create lasting economic advantages by controlling our own economy, and particularly by having large Canadian based and owned corporations that compete on the basis of things other than natural resources or commodities, much as Japan and Korea were able to do after they were decimated by the World Wars.