James Coyne, Rest In Peace
In the Globe and Mail, Sandra Martin delivers a substantial obituary of James Coyne, one-time governor of the Bank of Canada and father of the well-known Canadian commentator, Andrew Coyne.
James Coyne's famous dispute with Prime Minister John Diefenbaker established the principle that the Bank of Canada would be independent of the government of the day. For a new institution (the Bank was established only in 1934), these events of the early 1960s were a milestone.
To understand the story, however, you have to understand something it's not polite to say in an obituary: namely, that Prime Minister Diefenbaker - always a brooding and vindictive personality - seems to have gone quite clinically crazy in the later part of his government. He was eventually brought down by a revolt of his own cabinet.
Mr. Diefenbaker went back to the electorate in 1958 and won the biggest parliamentary majority in Canadian history at that time. Mr. Coyne began to get into trouble with a series of speeches during the election campaign in which he said that Canadians were living beyond their means, a theme that undermined a Conservative campaign assertion tight money under the previous Liberal government had dried up economic expansion.
Late in 1959, Mr. Coyne’s speeches urged that the flow of U.S. capital into Canada should be slowed so Canadians would have more control over their economy. Mr. Fleming said the governor’s speeches contained “strong political overtones.” The government, Mr. Fleming said, could not “continue to stand idly by when the governor is espousing policies which [do not conform] with the public interest.”
Certainly, the Bank of Canada’s policy of restricting money was offsetting the government’s intent of boosting the economy through budgetary deficits. Such a conflict might have been ironed out privately and if that was impossible, then the governor could have resigned.
But the Conservatives chose not to take this course. Instead Mr. Fleming argued that Mr. Coyne should have brought a proposed $13,000 increase in his pension to the attention of the government. Mr. Coyne countered that Mr. Fleming had a representative at the meeting where the bank’s board authorized the increase and he should have known about Mr. Coyne’s pension.
The prime minister argued that Mr. Coyne had a moral obligation to veto the pension increase, so the Tories introduced Bill C-114 to the Commons on June 23, 1961. It had but one sentence: “The office of Governor of the Bank of Canada shall be deemed to have been vacant immediately upon the coming into force of this act.”
During the debate, Mr. Diefenbaker rose in the House to say that personal attacks were not his style but is it “impugning a man’s integrity to say that he sat, knew, listened and took?”
He also mentioned the pension of former prime minister Louis St. Laurent “who gave devoted service to his country for the greater part of nine years as prime minister.” He, Mr. Diefenbaker noted, was receiving a pension of less than $3,000 a year compared to Mr. Coyne’s $25,000.
“How many people in public life receive a pension of that size? I have been in public life longer than Mr. Coyne. When I retire, no matter how many years from now it may be, I will be in the same position as Mr. St. Laurent.” (Mr. Diefenbaker never retired and served as a member of Parliament until he died in 1979.) The Tory-dominated Commons approved the bill but the Liberal-dominated Senate referred it to a committee where Mr. Coyne got a hearing. Although acknowledging that he had been a troublesome governor, the Senate rejected the bill and Mr. Coyne resigned.
It's fair to say that James Coyne achieved more by that resignation than most central bankers do in all their work. He lived to 102, time to see himself about as fully vindicated as it is given to human beings ever to do.