THE CANADIAN campaign against foreign investment has not been going terribly well, and the government now proposes a significant escalation. The specific target is American money in the Canadian oil fields and American control, as Canadians see it, of their resources. Earlier Canadian legislation established special incentives discriminating in favor of Canadian-controlled oil companies. Now a further bill would enable oil companies in Canada to force out foreign--that is, American--shareholders.

Before you leap to one side or the other of this quarrel, you might pause for a moment to reflect that it is not, at bottom, a collision between Canadians and Americans. It is an unresolved and commonly unacknowledged collision between two Canadian traditions.

One of them is the nationalist tradition, now ascending in pitch. The other, less well advertised but stronger, is purely financial and ignores the national boundary. Canadian investors tend, for example, not to put their money into specifically Canadian oil companies but instead to buy shares of Exxon or Mobil and leave it up to them to drill where the prospects are best. Very often prospects have been best in Canada, and that's why the American companies control more than three-fourths of the Canadian oil and gas industry. Much the same thing has happened in other industries--automobiles, aircraft and computers, among others.

The result is derided by the Canadian nationalists as a branch-office economy. That's what they want to change. But how? In a country as open as Canada, the government has no way to force its citizens to invest locally. The cycle continues: individuals' investment moving southward to American capital markets, corporate investment moving northward--drawn, you might note, not only by hot oil prospects but by a rich market and a superior labor force.

The Canadian government, responding to the nationalists, can and evidently will do a good deal to discourage the northward flow. But the southward flow continues. That helps explain why the Canadian dollar has been falling again recently, and interest rates are even higher than here. The Canadians have been trying, particularly in oil and minerals, to use government-owned corporations to replace American investment. That's a common response to a self-inflicted capital shortage, but hardly a very promising one. The sense of frustration in Ottawa seems to be increasing. Before American companies can come to an accommodation with the Canadians, the Canadians will have to come to an accommodation with themselves.