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WHJBY REEPRESS, WEDNESDAY. MAY 16, 190, PAGE 7 PAGE SEVN SECRET DEAOLING Porhaps rvo got an overly suspicious mmàd but I can'lt help thinldng that somowhere in thone negotiations for the Canada-U.S. free trade deal, the Mulroney governinent agreed to maintain a high levol for the Canadien dollar vs the Amorican.i Without sncb an agreement, it Booms totally unexplain- able why the Canadien dollar is being no rigidl maintained above the 85 cent lovel at the exponse o our export industries,. interest rates, the national dobt, etc. Virtually everbody oxcopt Bank of Canada governor John Crow, and finance mnnster, Mike Wilson, thinka the éanadian dollar is overvalued and the country is being driven into a recession because of it. Most oconoiiste believe the dollar should ho in the 70-80 cent range. In 1985, when the free trade negotiations began, our dollar was at 72 cents. Currency exchange rates aren't mentioned in the agree- ment, of course. The Canadien public was already doeply divided over free trado and any open agreement te tie our currency to the Americans would have been painted saa soUl-ont. Considoring how volatile the. 1988 election turned out to be, a currency doal would have dooxned the agreement. But exchange rates have just as mucli of.an impact on trado as tanffs and hence it ishard to imagine that some undisclosed "comitnients" were not reached. If youre importing sometbing that you want, it makes no difféence wbether you pay ton per cent duty or a ton per cent excbange difference. oence a 78-cent dollar plus ton per cent duty would ho exactly the saine as an 85-cent dollar. Right now weRve got both and were hurting.. Border- communities in particular are suffiering as thousands of Canadians flood across the border te buy chapr goode in the U.S. Everybody, thougb, is suffering under artificially high interest rates tbat are necessary te keep foreign money from leaving the country. So while Aniericans get fat on our 15 per cent interest rates, Canadien businesses are driven into bankruptey. Exporters in particular bave been burt because higb interest increases their costs, and the higli dollar makes their products lbas competitive abroad and makes foreign goods more competitive bore. -The impact of exchange rates could not posibly have been ignored by the negotiators for tbe free tradeagreement. In 1985 wben negotiationsý began, a lot of Anierican businessmen were complaining bitterly that our 72-cent dollar was giving us an unfair advantage. Without an agreement or "understanding" on exchange rates - secret,- tacit, implied, covert, or otherwise - tbe. rest .of the agreenment could be subverted by ether country simply by devaluing their currencies. Hence there must bave been sucb an agreement, and we are currently suffering the consequences. How lse can you explain John Crow's admission last week that hoe was wrong in lowering interest rates back in January. When the dollar began te slide, hoe had te raise interest rates even higher to keep the dollar at the 85-cent level. Why didn't ho stick te bis guns and lot the dollar drop somewbere dloser te, its real value? What's so special about that 85-cent level unless there is a secret agreement te maintain that value? The remîlt is a vicions circle. Hfigher interest rates weaken the economy still further whicb roduces confidence which re .uia even higher rates te attract znonoy which keeps the Crow's explanation te the Parliaxnentazy Finance Conuittee lest week was that "the economy did not tnrn ont te ho as weak as we tbought." How much weaker does ho want it? It is already so woak in the. oyes of the world that it takes a five per cent differential between Canadien and American interest rates te attract new capital. The result on the govorninont is that their deficit reduction plans which were based on declining interest rates are right out the window. Every one per cent rise in our interest rates adds another $1.5 billion onte the deficit which woakens the economy, etc. etc. The standard argument of both Mr. Crow and Mr. Wilson that we'ro figbting inflation bas worm pretty thin - high interest rates are obviously not reducing what little inflation wo have, and soniehow I cant imagine that John Crow is so blind tbat ho would stick te such a spuioa argument unlesa thore woro other reasons that ho wasnot at liberty te discuss. If inflation is a problem, thon more direct means such as wae and price controls wil work far botter. But when the Caaie1 au2curr'Asoitin(w khoa n one of%ý ,W NEW NURSES' RESIDENCES AT THE ONTARIO HOSPITA, 1923 These buildings were officially opened by Mrs. W.J. Hanna, wife of the founder of the hospital,. on Ang. 15, 1923. The residences were named after Neomi Barker and Lena Davis, nur-ses wbo died during the First World War. They served as nursei? residences until 1963 when the new residence was opened on Gordon Street. One of the old residences was deniolished a few years ago, and the other has been clooed because of structural, probleins. WhItly AreMvo. photo 10 YEAR8 AGO from the Wednesday, May 14, 1980 edition o! the WilDY FREZ PRESS " Eastbourne Beach residenta have built their own bridge te replace one destroyed ini a atorm, when tho town and conservation anthority would not rebuild it. " James Smyth was honored for 50 years of service te the Knigbts o! Columbus. " Councillor Gerry Enim is opposed to a sex education course in Whitby schools. " Town of Whitby taxes increased by $74 this year. 25 YEAIRS AGO froin the Thnrsday, May 13, 1965 edition of the WITDY WEEIKLY NEWS *Ail copies of this edition have been bat. 125 YEARS AGO from the Thursday, May 11, 1865 edition of the WHITBY CHRONICLE *SheriffNelson G. Reynolds is president of the Ontario Cricket Club in Wihitby. " Joseph Newberry is Whitby's bill poster who will distributo and post advertising on fences and walls. " Levi Fairbankcs is offring bis stallion Black Hawk Chief for breeding purposes. " The Ontario Turf Club will ho holding its spring horse races on its tack near Lynde Croek in June. "X7 1 ------------- ý âal-r - - - - - - - - - - - 1