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Is that a Diefenbuck?
by Susan Eskdale

Diefenbaker, Prime Minister of Canada, had many interesting policies that he put in place. Perhaps the main policy, which resulted in the eventual downfall of the Conservative Government, was the standarisation of the Canadian dollar at 92.5 cents.

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Right Honourable John Diefenbaker became the leader of Canada in 1957 with a minority government. It was not until March 31, 1958 that Diefenbaker won the right to rule, with the largest ever-Conservative majority in Canada’s history. The support was spread evenly throughout Canada and sent a strong message for change. During Diefenbaker’s term in office, he would make many decisions and policies that would provide reason for Canadians to either love him or hate him, depending on the issue.

Perhaps one of the most notable things in his tenure as Prime Minister was his economic policy that sent the Canadian economy into a tailspin of violent proportions.

John Diefenbaker wanted to bring about changes to Canada to make it stronger and more economically competitive. His philosophy on reducing unemployment was to increase tariffs and increase Government spending. The disastrous result was a devaluing of the Canadian dollar. The increased tariffs were unpopular, especially with our trading partners to the south, the United States. The world saw Canada as heading towards major financial difficulties if the economic situation was not rectified soon.

In 1962, the Prime Minister, decided the best policy would be to peg the Canadian dollar at a rate of 92.5 cents U.S., with the thought that the currency would not be further devalued and would restore Canada’s failing economy. Importers condemned the idea while exporters were enthusiastic supporters of what was to become know as the Diefenbuck. The Liberals were quick to point out the prospect of price increases for the Canadian consumers resulting from the Diefenbaker policy. The Liberals would use the Diefenbuck as a visual aid to bring down the Conservative Government in the election held later that year, in 1962. The Liberals printed up a large number of fake dollar bills that had a likeness of Diefenbaker, with the monetary value of 92.5 cents. While it served as a joke, it also served to remind Canadians of the economic policy that had nearly destroyed their economy.