Lethbridge Herald, The (Newspaper) - June 1, 1970, Lethbridge, Alberta
SUNNV FORECAST HIGH TUESDAY 85 voiTTxui NoTIif Herald LETHBRIDGE, ALBERTA, MONDAY, JUNE 1, 1970 PRICE NOT OVER 10 CENTS TWO SECTIONS 16 PAGES Wall Of Wate ipes Out By JAMES NELSON OTTAWA (CP) Setting the Canadian dollar free to set its international exchange value in world mar- kets is likely to have immediate effect on Canadian consumers unless there is a radical market change. Announcing the change in government policy Sun- day niglit, Finance Minister Edgar Benson sold he does rot expect a marked change in the exchange rate. He also said Ihe finance department will use ils foreign exchange funds to moderate day-to-day swings in the exchange value. There could be an impact in time on Canadian em- ployment with imports less expensive and exports costlier, but not right away. The government decided at a Saturday cabinet meeting, on finance department advice, that when foreign exchange markets open today, the government will ease up on its buying of U.S. dollars with Cana- dian dollars. It has been buying U.S. dollars at a rapid rate in recent weeks in order to hold the Canadian dollar below 03.301 cents. This is in accordance with Canada's membership in the International Monetary Fund and a commitment to hold the Canadian dollar within one per cent of 92.5 cents, the par value set by a former finanace minister, Donald Fleming, in 1902. The Canadian dollar was quoted in international exchange markets at noon on Friday al 93.94 U.S. cents. In other words, it cost in Cana- dian money lo buy U.S. What determines the international exchange mar- ket value of the Canadian dollar is the multitude of transactions every day between Canadians and foreign- ers converting one currency to another. Funds Flow In In recent months there has been a big inflow of foreign funds to buy Canadian products and to invest in Canadian entei-prises, including Canadian borrow- ings of foreign funds to finance municipal and pro- vincial governments. For this money lo come into Canada, foreigners have had to buy Canadian dollars with their U.S. dollars or other currencies. This big demand for Cana- dian dollars has forced the value of them up. just like a big demand for mousetraps would force up their price. The government has had to borrow money from Canadians in order to sell dollars and try to keep the international price down. Mr. Benson said Sunday night the government is going to stop buying the U.S. dollars that would be necessary to keep the Canadian dollar within its old limits. This will have some softening effect on Canadian money markets, the experts say, since the federal government will have less need to borrow funds. The coincident reduction of the Bank of Canada's bank rate to seven from VA per cent is also a signal for lower interest rate elsewhere. If money becomes easier lo borrow for new in- dustrial axpansion or for more roads, bridges and the like, this could be an impetus for employment. Prices May Drop j. If the Canadian dollar rises appreciably in foreign exchange markets, imports should be cheaper. Prices of tea, coffee, citrus fruits, and anything else grown or made abroad, might be reduced. The Canadian dol- lar will also go farther for Canadians travelling abroad. But Canadian exports will cost more for foreign buyers. So will Canadian vacations for foreign visitors. Canadians receiving remittances from abroad will get fewer Canadian dollars for them. Mr. Benson said Canadian manufacturers will havo lo "sharpen their pencils" to quote competitive prices at higher exchange rales. Export sales contracts will be harder to negotiate when Canadian raw materials such as wheat, wood and mineral products, will be judged more cannily against world prices by foreign purchasers. International exchange markets quote changes in rates in Hths of a cent. A change of 1-6 could mean on a order. But for a purchase it amounts to less than 17 cents. If the Canadian dollar does find a markedly higher level, and stays there for any prolonged period without government action to cut it back, there could be an adverse impact on job levels in Canada as cheaper imports make inroads on Canadian production. But that remains to be seen. Germany Did It Canada's action is similar to West Germany's free- ing of the deulschmark late last September after it nad been subject to strong upward pressures The pegged rate was four to the U.S. dollar, set in March, .1961. After the rate floated free for about four weeks, the West Germany government rcpcggcci it at 3 CG to the U.S. dollar. Canada pegged its dollar at 92.5 cents in US funds on March 25, lsfi2 after allowing it to float for years. France also had a floating rale between IMS and 1938. But Mr. Benson indicated lo reporters this new Canadian experience may not be a direct parallel lo Ihe Gorman action te! year. He wnuld say how quickly lu- expects If. rclurii lo a pegged if .it all, in the foreseeable future. The Germans freed Ihe mark uilh the specific in- (ration of letting it find ils own level in international exchange markets, and I hen fixing it there. Mr. Benson said the jm-crmiwm will use ils ex- change reserves to iiio-icrilo any violent I lie dollar U0 expects the dollnr a marked increase." LIMA (AP) A wall of waler roared down on the Peruvian mountain valley city of Caraz today and wiped cut what little had not been destroyed by an earthquake Sunday, two inde- pendent sources reported. An amateur radio operator calling from Caraz estimated persons had been killed in that city, east cf the port city of Chimbote. There was 03 way oC confirming this casualty figure. The radio call said Caraz had been 90 per cent destroyed Sun- day by the quake. The operator said the quake apparently broke a natural dike in one of the icy lakes higher in the Andes, turn- ing loose a torrent of water. FEAll DEAD LIMA (Reuters) At least people are believed to have died in the city of Huraz and untold other's are feared dead in the area after a severe earthquake hit northern Peru Sunday, it was reported here today. The figure was given to the in- fluential daily newspaper El Comercio by Luis Vidal, mana- ger of an important stale devel- opment corporation in the area. The city of Huraz is about 250 miles north of Lima, the capi- tal. The Peruvian Geophysical In- stitute said the quake struck at p.m. EST, with ils epi- centre 211 miles northwest of Lima and 12 miles off the Pa- cific coast from Chimbote. The institutr said the tremor was 7.75 on the open-ended Richter scale, intense enough to cause "grave damage." Communications to many of the towns in the stricken area were cut by the quake and offi- cials still were trying to assess the full extent of the damage. The government launched an immediate full-scale rescue op- eration and began sending food, medicine and clothes lo the stricken area. Unofficial reports said the worst-hit area was a belt run- ning from the Pacific east to the foothills of the Andes Moun- tains north of Lima. ATA Edicts Won't Affect City Schools A directive from (lie Alberta Teachers' Association provin- cial executive that teachers throughout the province refuse to return to work before Sept. 1 without previous negotiations mil not affect the divided school year in Lethbridge. The city ATA local an- nounced today the Aug. 24 starting date is "completely acceptable" since it is a con- tinuation of the school system negotiated here two years ago. "The provincial ATA con- siders Lethbridge to be a model of how to go about doing things said ATA communications consul t a n t Jim Anderson, a teacher at Winston Churchill High School. The provincial and local ATA are insisting that all working conditions be negotiated for their 1970-1971 contracts, under terms of the new Alberta School Act. LIFE BEGINS AT 80 Mrs. Mary Pharis, 80-year-old grandmother and former teacher, realized a life-long ambition Saturday when she graduated-from the Univer- sity of tefhbridge with a bachelor of education degree. Believed lo be the oldest graduand in convocation cere- monies in Canada this spring, Mrs. Pharis receives con- gratulations from Judge t. S. Turcotte, chancellor of the university. Postal Stoppage Hits Vancouver 'It's your broker! Are you in. or OTTAWA (CP) Mediation of the postal dispute is sched- uled to continue here today with no visible signs that any signifi- cant progress was made in solv- ing the bargaining deadlock during lenglhy weekend talks. Mediator A. W. R. Carrothers, who arrived on the job early Saturday, refused late Sunday to say whether a compromise has yet been reached on any of the 12 disputed main items, Which include wages and em- ployment security. However, he indicated that he is not expecting any quick solu- tions, jokingly telling reporters they can expect to be on the job for a while. Mediation sessions begin at 2pm. EDT. Meanwhile, Van- couver became the fourth site of a harassing 24-hour strike and all area post offices and depots shut down for the one-day stop- page. Negotiators for postal workers and their paymaster, the treasury board, met for 10 hours Saturday and eight hours Sunday. At the first meeting, Mr. Car- rotlrers told both sides to keep their lips appar- ently in an attempt to clear', the atmosphere of the many public counter-charges made since ne- gotiations began eight months ago. Postal officials refused even to say in what rooms the talks were taking place in a dowi1 town Ottawa ho'.el. Seen and Heard ABOUT TOWN J.JARDLY off the surgical stretcher from an emer- gency appendectomy, Andy Fletcher smoking a fat cigar and wishing for a "big nip" of scotch Betty Gat, voting delegate to the Ca- nadian Union of Public Em- ployees annual convention drawing the comment from Mayor Rod Sykes of Calgary that "If Mayor Anderson had not settled that strike with local 70 pretty soon I was going to head south to help OTTAWA (CP) The Canadian dollar was adrift on international money markets today for the first time in eight years. The move, announced Sunday to take effect immedi- ately, was in response to extreme demand for Canadian dollars. The government had decided Saturday that the weeks of pressure were intolerable. Initial reaction was mixed. But banks, playing safe, were discouraging conversions of American dollars to Canadian until later today when a uniform rate be- comes more evident. The opening New York quote was 96.5 for the Canadian dollar in U.S. funds. PEGGED SINCE 1962 The Canadian dollar has been pegged by international agree- ment since 1962 within frac- tional margins on either side of 9254 U.S. cents. Freed, the Ca- nadian dollar should rise in value. For Canadians generally, the move will have no immediate impact at home, although trav- ellers abroad will find their Ca- nadian mioney goes a little fur- perhaps 1.06 or so for a U.S. dollar instead of 1.08. But finance Minister E. J. Benson hinted Sunday night at some relaxation of domestic re- straints on spending and credit to offset any depressing effects on the economy. He promised a statement on credit conditions to Parliament today. In the first such restraint-re- laxing move, the Bank of Can- ada today dropped its largely- symbolic bank-interest rate to seven per cent from sig- nal to commercial bankers and financiers to keep interest rates down. SECOND DROP It was the second drop of that size in four weeks, and reflects a decline in short-term borrow- ing rates among It also is designed to discourage an in- ward flow of foreign investment funds. Depending how far the Cana- iian dollar rises above its present exchange rate on the markets, the move to a floating rate would tend to make Cana- dian export gacds more expen- sive, while imports into Canada would be cheaper. However, Mr. Benson made clear that federal monetary au- thorites would stand ready to intervene to keep dealings in Canadian funds orderly and to make sure the dollar does not go up too far in relation to U.S. funds. Too great a rise, for example, might make imports so cheap that they would become substi- tutes for domestic products in Canadian markets, depressing production and costing more jobs. Mr. Benson also indicated the floating exchange rate Mill be on E. J. BENSON administers agreements fixed exchange rates. TO BE PEGGED AGAIN By that comment, Mr. Benson suggested that once market forces have revalued the Cana- dian dollar at a settled rate it would be established as a new pegged rate. This pattern was established last year by West Germany. The finance minister, an- nouncing the move following Prime Minister Trudeau's re- turn from a Pacific torn- Friday night and a cabinet meeting Saturday, would not say what the government regards as a proper valuation of the Cana- dian dollar in international transactions. OTTAWA (CP) Finance Minister Edgar Benson said today that freeing the Canadian dollar from international ex- change controls will make it un- necessary for the government to introduce its planned consumer credit controls. He announced in his March 12 budget that the government would introduce legislation to require minimum down pay- ments and limit the repayment term on leans for consumer pru- chases. But he said in a Commons statement today that, with the dollar floating free, sufficient new restraint will be put on the economy to make consunyr credit controls unnecessary. He also said oilier aspects of federal government economic policy are being reviewed in light of the new exchange situa- tion. Mr. Benson announced Sun- day night the freeing of the Ca- nadian dollar from its 92.5-cent peg in terms cf U.S. dollars. The Canadian dollar bounced up to 96.5 cents en (lie New York foreign exchange market today, though there was apparently lit- tie trading at that figure. LOAN RATE LOWERED Mr. Benson reviewed the floating exchange announce- ment, in his Commons statement also tLd downward adjust- ment of the Bank of Canada rate for temporary loans to the chartered banks, to seven per cent from He recalled that in Ms March budget speech he had eirjoha- sized the need to restrain total spending in ihe economy in order to slow down rising costs and prices. The budget, he said, provided, for significant easing of the re- straints that had been in effect prior to it. This easing was to have been partially offset by consumer credit controls. But the finance minister told the Commons Monday the rate of price increase has been slowed, and the gross national product increased in the first three months of this year by 1.7 per cent over the final three months of 1970. If the Canadian dollar now rises on international exchange markets for any extended pe- riod of time, he added, that would tend to impose a further measure of restraint. This would not be appropriate, he said. Princess Visits Red Country Martial Law Proclaimed temporary. Canada would resume "as soon as circumstances pcnr.it" its -obligations to the Interna- tional Monetary Fund, which BELGRADE (Reuters) Princess Margaret arrived here today with her husband, the Earl of S'nowdon, on a seven- day visit to Yugoslavia, the first member of the British Royal Family lo visit a Communist country. Starving Persons Search For Food, Water Police For Montreal Bombings swings in lo go up. bul, "noi. WO DE JANEIRO (fleulers) an estimated 200000 starving persons surging lo- ward coastal towns searching for food and waler, the 4lh Army in northeastern Brazil has been ordered to carry food and supplies to (he drought- strickcn refugees. Siarving peasants already have looted shops and food stores in several ulterior towns stretching almost from Rio de Janeiro to the coaslal (own of Fortaleza. 1.000 miles north of here, licfugccs from the area have even been reported "eachine Sao Paolo, At least six freight trains nav.s been looted for food near Fortaleza in Ceara state, one of the worst-hit areas. Medicine Hat Child MEDICINE HAT (CPl _ Three-year-old Scott Flaig of Medicine Hat was killed Satur- day when struck by a car on a oowntown street. Police said no charges were laid and an inquest has been or- dered. MONTREAL iCP) Police said Sunday that "pure and simple terrorism'1 was the ap- parent reason behind Ilic five dynamite time bombs that ear- lier in Ihe day rocked the wealthy, mainly English-speak- ing suburb of Westmounl. "We don't have any clues as lo (he particular reasons behind these bombings oilier than pure and simple lon'rvisni." a mem- bsr of liie pnlicc squad said in an interview. Seven bombs, five of which exploded, were placed in West- mounl before dawn Sunday and police searched into Ihe'night for oilier explosive devices that might have been planted in (he vest-end suburb. Three persons, one of them a nine-year-old girl, were treated at hospital for cuts and shock resulting from the bombings. Two of the bombs were placed in empty houses and one police investigator said tlu's confirmed Ilia belief that terrorists were involved. "It seems that these people are not out after anyone or any- thing in particular. They jur.t want lo scare Mir. public .it large." "he squad, a combined unit of RC.MP, provin- cial and municipal police, was formed after a wave of terrorist bombings struck Montreal in ma. Two large homes belonging in financiers, an office building, n. vacant house and a stone re- taining wall running alongside a streel were damaged by the blasts. Quebec Premier Robert Hour- rassa described the attacks as "a last futile gesture of despair by fanatics of a dying cause." He promised in an interview thai his newly-elected Liberal government will "clamp out llm of movement dcd- ir.'itrd ti (ho spread of chaos." ihe homes damapcd were I hose of Peler Brn.ifman, chairman of Ihe Great West Saddlery a n d son of Allan B ro n f in a n, vice-president of Distillers Corp.-Seagrams and R. McCnaig, a part- ner in a brokerage house of Doherty. Roadhouse and Me- Oiiaig Ltd. PHNOM PENH (.AP) Plagued by public resentment and a torrent of rumors, Gen. Lon Nol's Cambodian govern- ment today proclaimed martial law, without a full explanation cf what it means. Diplomatic sources said the purpose was to formalize what is already going on and to warn critics of the government to keep quiet. United Stales artillerymen meanwhile lined up 23 bouil- zers and fired more than 2.000 shells into a suspected North Vietnamese staging area across the Cambodian border Sunday in one cf the biggest artillery attacks cf Ihe Vietnam war. alloouisls JJi Rescued From Camnore Peak CANMORE 'CD An niv fario couple was rescued Sst' unlay aficr spending fix hours on the side of Heart Mountain after their balloon was forced down by air turbulence. The Calgary mountain rescue team brought Stan Shelldrig, 32. of Smilhville, Oni., and his wife, Joan, :ii. lo safely. Heart Mountain is 10 miles east of Canmoro and about miles west of Calgary.