711.42157 Sa 29/402

The Canadian Minister (Massey) to the Secretary of State

No. 30

Sir: I have the honour to refer to your note of April 13, 192744 in which, after reviewing the steps taken in recent years by the United States and Canada to enquire into the feasibility of a St. Lawrence ocean shipway, you stated that the Government of the United States had accepted the recommendations of the St. Lawrence River Commission, appointed by the President as an advisory body, and was accordingly prepared to enter into negotiations with Canada [Page 65] with a view to formulating a convention for the development of the waterway.

Acknowledgment of this communication was made in a note of July 12, 1927, addressed to the Minister of the United States at Ottawa,45 in which it was stated that, as the report of the Joint Board of Engineers46 indicated differences of opinion as to the solution of the engineering difficulties presented by the international section of the waterway, the National Advisory Committee, appointed by His Majesty’s Government in Canada to report on the economic and general aspects of the waterway question, would not be in a position to advise the Government until certain alternative schemes under consideration by the Joint Board, and to be included in the appendices to the main report, had been received and duly considered.

The full report of the Board has now been received, and the National Advisory Committee, which met in Ottawa this month, has reported its conclusions to His Majesty’s Government in Canada.47 The National Advisory Committee concurs in the finding of the Joint Board of Engineers that the project is feasible. It recommends, however, that should the work be undertaken, fuller allowance should be made for future requirements by providing, in addition to 30-foot depth for the permanent structures, 27-foot navigation in the reaches rather than the 25-foot navigation proposed by the Joint Board. While the National Advisory Committee regards the project as feasible from an engineering standpoint, and notes the findings of the International Joint Commission in 1921 as to its economic practicability, it considers that the question of its advisability at the present time depends upon the successful solution of a number of financial and economic difficulties, and upon further consideration of certain of the engineering features as to which the two sections of the Joint Board of Engineers are not as yet agreed. I am instructed by the Secretary of State for External Affairs to inform you that His Majesty’s Government in Canada concurs in these conclusions of the National Advisory Committee.

In your note of April 13, it was observed that the St. Lawrence River Commission had reported that the construction of a shipway at proper depth would relieve the interior of the continent, especially agriculture, from the economic handicaps of adverse transportation costs which, it was indicated, now operate to the disadvantage of many States and a large part of Canada. It was added that the Government [Page 66] of the United States appreciated the advantages which would accrue equally to both countries by opening up the waterway to ocean shipping, and that the necessary increase in United States railway rates due to the war, and the desirability of early development of hydro-electric power, were factors which must have equal application to, and influence upon, the Dominion of Canada.

In view of the implications as to Canadian conditions contained in these observations, it may be well to indicate certain features of the transportation situation in Canada which have a direct bearing upon the St. Lawrence waterway question.

For many years past the improvement of transportation has been the foremost task of successive governments of Canada. At heavy cost, an extensive programme of railway, waterway and harbour development has been carried out, with the object of linking up all parts of the Dominion and providing adequate outlets for foreign trade. Two great transcontinental railway systems have been built up, largely with State aid, and both western and eastern Canada are now reasonably well served by railways, though increasing settlement and increasing production render it necessary for both systems to continue to spend large sums annually in the provision of branch lines. Western Canada is now looking to the early completion of the Hudson Bay route to Europe. This route, which it is anticipated will be available in about three years, will shorten the haul to Europe from the Canadian West by a thousand miles and more, and will also be of substantial benefit to shippers from the Western States. Since that work was projected, the completion of the Panama Canal, by the efforts of the United States, has supplied an alternative outlet for much of western Canada through Vancouver and Prince Rupert; and at the present time the Canadian Government is faced with a strong demand for an additional and more direct outlet to the Pacific for the Peace River country. The St. Lawrence route itself has been progressively improved, and has proved of steadily increasing service.

Partly as a result of the existence of competitive alternative outlets, railway rates in Canada are in general lower than in the United States. The rates on grain, which provides fifty-two per cent of the total traffic of western lines, are now below pre-war level. Material reductions have also been made in another bulk movement of importance to both eastern and western Canada, namely, coal. General commodity rates, which were the subject of the same percentage of relative increase in both countries, due to war conditions, have subsequently been reduced in Canada, in certain instances, to a greater extent than in the United States. In recent months a rate on grain has been established from the head of the Lakes to Quebec which approximates the charges incident to the movement by water by the present Great [Page 67] Lakes-St. Lawrence route, a route which, in Canada, has always exercised a restraining influence on railway rates. As the greater part of Canada’s railway mileage is now owned and operated by the State, the St. Lawrence proposals, in so far as they may possibly affect the revenues of the railways, present considerations as to which Canada’s point of view is necessarily somewhat different from that of the United States.

Canada’s interest in the improved navigation of the Great Lakes-St. Lawrence route would be associated largely with the movement of bulk commodities, such as grain, timber and coal. The movement of package freight by water in Canada is at present of small volume, and Canadian railways, unlike, it is understood, those of the Midwest of the United States, are in a position to handle much more of that traffic than at present is offered.

It is believed that development of the waterway would prove of advantage to Canadian commerce and industry, not merely in the sections directly tributary to the Great Lakes and St. Lawrence, but in the Maritime sections, which would be afforded more direct access to the great interior markets of the continent. It is, however, apparent that the United States would benefit much more from the enlarged navigation facilities, both in extent of use and in margin of saving. The report of the International Joint Commission in 1921, after a comprehensive review of the economic aspects of the project, presented the following conclusions, to which the National Advisory Committee calls attention:

“As to the economic practicability of the waterway, the commission finds that, without considering the probability of new traffic created by the opening of a water route to the seaboard, there exists today, between the region economically tributary to the Great Lakes and overseas points as well as between the same region and the Atlantic and Pacific seaboards, a volume of outbound and inbound trade that might reasonably be expected to seek this route sufficient to justify the expense involved in its improvement.

It finds that, as between the American and Canadian sides of the tributary area, the former contributes very much the larger share of this foreign and coastwise trade, and in all probability will continue to do so for many years to come. The benefits to be derived from the opening of a water route to the sea will, therefore, accrue in much larger measure to American than to Canadian interests, though it is reasonable to assume that eventually the advantages may be more evenly distributed.”

The report of the International Joint Commission continues, in a direct reference to comparative transportation conditions:—

“It finds that the existing means of transportation between the tributary area in the United States and the seaboard are altogether inadequate, that the railroads have not kept pace with the needs of the country, but that this does not apply to the Canadian side of the [Page 68] area, where railway development is still in advance of population and production”.

It will therefore be observed that the transportation situation in the two countries is not identical as to available facilities, extent of use, or rates, and that the economic handicaps to which you referred in your note of April 13th. appear to have more application to United States than to Canadian conditions. In this connection, it may be said that Canadian agriculture is more directly affected by the restrictions on the importation of Canadian farm products which have been imposed by the United States in recent years, with the object, it is understood, of assisting agriculture in those Western States which would share so largely in the benefits of the proposed St. Lawrence Waterway. This situation, and the effects upon the Maritime sections of Canada of United States duties on the products of the fisheries, are among the factors which have contributed to bringing it about that public opinion in Canada has not so clearly crystallized in favour of the waterway project as appears to be the case in the United States.

Reference was made in your note to the early development of hydroelectric power as a factor which must have equal application to and influence upon the Dominion of Canada. The opportunity of developing great quantities of power incidental to navigation is, it is agreed, a special advantage possessed by the St. Lawrence project, and an important consideration in determining its advisability. In this aspect of the project, however, there are again special features in the Canadian situation which it is desirable to make clear. Public opinion in Canada is opposed to the export of hydro-electric power, and is insistent that such power as may be rendered available on the St. Lawrence, whether from the wholly Canadian section, or from the Canadian half of the international section, shall be utilized within the Dominion to stimulate Canadian industry and develop the national resources. With this view the National Advisory Committee expresses itself as in complete accord. The Committee further indicates that, in view of the relatively limited capacity of the Canadian market to absorb the vast blocks of power contemplated by the St. Lawrence proposals, it follows that it is most important, in any arrangement which may be considered, that the development of power on the Canadian side should not exceed the capacity of the Canadian market to absorb it.

The situation presented by the differences of opinion brought out in the report of the Joint Board of Engineers as to the best method of development in the international section of the St. Lawrence has also received consideration by the National Advisory Committee. The Committee considers it greatly in the public interest that a further attempt should be made to reconcile these varying views. Conclusive [Page 69] assurance is necessary as to control of the fluctuations of flow from Lake Ontario, so essential to the interests of the purely national sections of the river and the port of Montreal, and as to the situation of those Canadian communities on the St. Lawrence, which under certain of the present plans might be obliged to live under levees or to rebuild in part. A plan has been presented in the appendices to the report of the Joint Board of Engineers proposing an alternative location of the upper works of the Canadian two-stage plan. It is also considered advisable that opportunity should be afforded for further conference on these alternative proposals between the Canadian section of the Joint Board and engineers representing the Province of Ontario, who have themselves formulated plans dealing with the international section.

The financial phases of the project have been reviewed by the Committee. It is pointed out that for many years Canada has been engaged in improving the navigation of the St. Lawrence river, both above and below Montreal, and in providing navigation facilities across the Niagara peninsula. At the same time, the United States has been similarly engaged in deepening inter-connecting channels of the Upper Lakes, and in providing suitable works at Sault Ste. Marie. Towards the common object, Canada has made particularly heavy contributions. It has expended over thirty millions on the ship channel which has made possible ocean navigation on a large scale to the port of Montreal, an expenditure by which the proposed St. Lawrence project will directly benefit. The Dominion has spent fifty millions on canals and channel improvements between Montreal and Lake Erie, in which improved navigation United States shipping has had equal use and advantage. To the present, Canada has spent eighty-seven millions on the Welland Ship Canal. In view of these facts and of the very heavy financial burdens imposed by the war, by the railway obligations arising out of the war, and by the necessity, since the war ended, of finding the large sums required for needed public works throughout the Dominion, it is considered that it would not be sound policy to assume heavy public obligations for the St. Lawrence project.

The National Advisory Committee has reached the conclusion that it is possible to work out a method by which provision could be made for the construction of the waterway on terms which would be equitable to both countries and would take adequate account of the special factors in the Canadian situation to which attention has been directed. Several methods have been considered, but the plan which chiefly commends itself to the Committee is, in brief, that Canada should consider providing for the construction of the waterway in the sections wholly Canadian, that is, the Welland Ship Canal and the works in the St. Lawrence below the international boundary, and [Page 70] that the United States should consider undertaking the completion of a 27-foot waterway to the head of the Lakes, in addition to meeting the entire cost of the development, under joint technical supervision on lines to be agreed upon, of the international section of the St. Lawrence, both for navigation and for power. The construction of the wholly Canadian (Welland and St. Lawrence) sections, and, if the United States should see fit, of the upper lakes works, would, on this plan, be given precedence of the international section, because of the necessity alike of providing for further consideration of the engineering problems involved in the international section and of permitting reasonable absorption of the power developed on the Canadian side.

In support of this view, the following statement is submitted by the Committee, based on expenditures by both countries on the present through waterway, and on the estimated cost of the presently recommended scheme, with 27-foot navigation, a new United States lock at Sault Ste. Marie of the same dimensions as proposed for the St. Lawrence shipway, and the development, on the St. Lawrence, of such power as is incidental to navigation:—


Present works:
St. Lawrence ship channel $30,000,000
St. Lawrence and Welland Canals 50,000,000
Lock at Sault Ste. Marie, Ontario 5,560,000 $85,560,000
Proposed works:
Welland Ship Canel $115,600,000
Wholly Canadian section, St. Lawrence shipway, 27-ft. navigation and development of 949,300 h. p. 199,670,000 $315,270,000
Total for Canada $400,830,000

United States

Present works:
Dredging St. Clair & Detroit Rivers. $17,536,000
Locks at Sault Ste. Marie, Michigan 26,300,000 43,836,000
Proposed works:
International section St. Lawrence shipway 27-ft. navigation and initial development of 597,600 h. p. $182,157,000
To complete development—additional power 1,602,000 h. p. 92,090,000
Upper lake channels to 27-ft 65,100,000 339,347,000
Total for United States $383,183,000
[Page 71]

In bringing these conclusions of the National Advisory Committee to the attention of the Government of the United States, His Majesty’s Government in Canada desires to add that there are phases of the question, particularly as regards the development of power, as to which it is necessary to take account of the special concern of the two provinces of Canada bordering on the waterway. The relation between navigation and power involves certain constitutional difficulties, of which, in accordance with the wishes of the Governments of Ontario and Quebec, the Government of Canada proposes to seek a solution by reference to the Courts. With this preliminary difficulty in process of solution, the Government of Canada will be in a position, upon learning from the Government of the United States whether in its view the procedure above outlined affords an acceptable basis of negotiation, to consult with the Provinces of Ontario and Quebec on the aspects of the problem with which they may be concerned, and thus to facilitate an understanding being reached between all concerned as to the methods and means by which the project could be undertaken.

It is the hope of the Government of Canada that, in any such further consideration of the waterway question, opportunity may be found for reaching a comprehensive settlement of all outstanding problems affecting the Great Lakes and the St. Lawrence, including the preservation of the waters properly belonging to the St. Lawrence watershed, of which the present discussion indicates the paramount importance.

I shall be obliged if you will be good enough to inform me at your convenience, for transmission to His Majesty’s Government in Canada, of the views of the Government of the United States on the representations which are outlined above.

I have [etc.]

Vincent Massey
  1. ibid., p. 487.
  2. ibid., p. 489.
  3. Report of Joint Board of Engineers on St. Lawrence Waterway Project, Dated November 16, 1926.
  4. Printed in St. Lawrence Waterway Project (Ottawa, F. A. Acland, 1928), pp. 18–21.