THE MOOD of the Canadian literary scene these days is uneasy. Twenty years ago that sentence could not have been written, as there wasn't much that could be called a literary scene. There were a few poets who knew each other and reviewed each other's work in the handful of little magazines that existed at the time. Most novelists worked in isolation, unknown to their potential readers, who, afflicted by a condition since indentified as the "colonial mentality," ignored Canadian work in favor of foreign imports. Newspapers gave space to authors infrequently and then largely on the Ladies' Page, where they were sometimes glimpsed as guests of honor at tea parties. If you were a poet, you did well to sell 200 books; if a novelist, a thousand, It's not surprising that most young writers dreamed of leaving the country for greener fields: London, New York. "Canadian author" was an oxymoron: everyone knew that you could not be a real author and a Canadian, too.

All that changed in the '60s.Early in the decade, poets such as Leonard Cohen and Irving Layton caused enough waves to make poetry publicly visible. If you said you wanted to be a writer, people no longer said "A what?" Young writers, unable to break through the cautious conservatism of the few established houses, formed their own publishing houses -- like House of Anansi, Oberon and Talon Books, to name some still in business -- and found, to their surprise, that there was a market waiting for their experimental work. Many of these houses were nationalist, in practice if not in theory, and literary nationalism became a hot media topic. At the end of the '60s the novelists, who had been taking a back seat to poetry, emerged in large numbers. Sales of a "successful" book of poetry had jumped from 200 to 5,000 or more; sales of a "sucessful" novel were to make a corresponding leap during the '70s. In 1969, a best-seller was rated at 5,000 copies. In 1979, 20,000 or 40,000 copies in hardback was not out of the question. The Canadian paperback industry, nonexistent in 1970, now has three major houses -- Bantam Seal, Paperjacks Pocketbooks and Macmillan of Canada. Although Canada's paperback sales can never match those of the States (the effective English-speaking market is about 15 million people), the business is holding its own. This rapid and enormous increase in per capita readership has never been fully explained; nevertheless, it's a matter of record.

Why then the unease? The writers themselves -- poets and serious fiction writers -- are dismayed by a relatively new factor. Once upon a time, every writer in Canada was a "literary" writer. We were willing to give space to indigenous books we considered serious, but we imported our junk. Some voices -- mine among them -- deplored this; if there must be junk, we said, let it be our own junk. Now we have it. The schlock market in Canada is booming.One out of every four books bought in the country is a Harlequin Romance (Harlequin, it should be said, is a Canadian company), and writers of thrillers, disaster novels and sexcapades burst forth each season. Publishers are not deploring this trend; but writers are feeling squeezed. Soon they think, there may no longer be a place for the well-written, thoughtful criticism of society we have come to think of as the modern novel.

There's another maggot in the cheese. For the last two or three years, the retail book trade in Canada has been engaged in the equivalent of a gas-price war. Blame for its inception is usually pinned on Jack Cole, renegade owner of Cole's Books, but now the two major competing chains; Smith's and Classics -- as well as Eatons and Simpsons, the two largest department store chains -- are into the act. When a book hits the best-seller list, one chain or another will begin by discounting it. The others follow suit, and the price is driven down until finally the book is being sold below cost. Neither the publisher's profit nor the author's royalties are affected -- but the end result is to drive small independent booksellers to the wall, and it's the small independents who have traditionally supported first novelists and quality fiction. Some writers fear that if the chains gain much more than their current 46 percent of the business, they will start dictating to publishers, merely by indicating in advance of publication what they will stock and what they will not. Nobody, not even the chains, seems to like this practice; however, nobody seems to be able to stop it, and though there are dark murmurings about England's Net Book Agreement, a law which prohibits the discount of a hardcover book until one year after its publication, few feel that the current government would be favorably disposed to a law that would mitigate against cheaper prices to the consumer.

But a people gets, finally, the literature it deserves, and judging from the reviewing situaton, disaster novels and Harlequin romances may be the judgment upon Canada of the great book reviewer in the sky. Twenty years ago, the critics were undoubtedly better than much of the material they had to deal with, bulldozers addressing themselves to flea squashing. Now the reverse is true. There are good reviewers, true, and a first novel in Canada, unlike its counterpart in the States, is certain to get mentioned. But by and large, reviews in the popular media read as if they're written by people who don't know why they're doing this and are exasperated that they have to. There's little theory and not much sense of the relationship between a work of art, its subject and its audience.

In fact, even to say "work of art" requires some courage these days. Canada's philistinism, submerged during the '60s in a deluge of trendy love beads, has bobbed to the surface again, and the wave of book bannings in smalltown high schools is only one sympton. It's all right to say that you're writing thrillers and your ambition is to make a million dollars. But if you say that you're a serious writer and your ambition is to create a work of art, heads will be shaken and fingers pointed. We're a solid, straightforward people up here. We don't go for pretension.