711.42157SA29/1291½
The Minister in Canada (Robbins) to the Under Secretary of State (Phillips)
[Received July 23.]
My Dear Bill: Pierre Boal66 has talked with me regarding your conversation in connection with your desire to effect certain changes [Page 975] in the St. Lawrence treaty, provided it is practicable to do so, before it is re-submitted to the Senate. I would like to report to you the situation as we see it with regard to the agreement between the Province of Ontario and the Dominion government. This agreement was concluded on July 11, 1932, but to be effective it has to be ratified both by the Dominion government and by the Legislature of Ontario. Neither of these bodies have approved the agreement, in fact it has never been submitted to either of them, so that from the standpoint both of the Dominion and of the Province it is not now binding. In the course of the provincial election campaign, Hepburn, recently elected Premier of Ontario, expressed the belief that (1) the Ontario Hydro-Electric System now had 1,000,000 excess horsepower over actual needs, due to the several purchases of power sites by the Henry administration; (2) the Hudson Bay route had been developed at much expense as an alternative trade route, although it was evidently a failure; (3) the Canadian government was operating the Canadian National Railway at a weekly deficit of $1,000,000, borne by the taxpayers; (4) the Canadian government had recently guaranteed a loan of $60,000,000 to the Canadian Pacific Railway to keep it out of bankruptcy; (5) the present is no time to add the heavy cost of the St. Lawrence waterway development. His principal criticism of the treaty, therefore, is, by inference in (1), (2), (3), and (4), and specifically in (5), that it is not timely. As will be seen from the enclosed editorial from the Montreal Gazette,67 those newspapers which are opposed to the treaty have attempted to show that this meant that Hepburn is unalterably opposed to the treaty in principle. I do not believe that this is the case.
I think that Hepburn will be disposed to follow his national Liberal leader in regard to policy toward the treaty if it should become necessary for the Liberal party to take a position. I do not think that Hepburn will take any steps to ratify the Ontario–Dominion agreement, and anticipate that if he were asked to do so by the Dominion government he would probably either refuse outright on the ground of timeliness, or insist on changes being made which would be to the advantage of the Provincial government. If it appeared that favorable action on his part would result in any political advantage to the Conservative Dominion government, it is probable that he would endeavor to delay the treaty by not allowing his Legislature to ratify the Provincial agreement until too late for the Conservatives to get any credit from it. At the same time, he might be reluctant to appear to block a potential source of large employment. On the whole, I am inclined to think that he would be guided in his actions largely by the policy of the Liberal party. It might be convenient to Mr. King, however, to have him so block or retard matters that the ultimate [Page 976] decision and credit for any treaty that was arrived at would fall to the lot of a Liberal government next year. In either case, the Liberal party has been favorable to the seaway project in the past and I think it likely that they would hesitate to turn it down after we had ratified. It might be wise to sound Mr. King on his attitude toward the treaty before making any final decision as to whether to press for changes to the treaty with Mr. Bennett. “We have not ventured to do this lest some rumor reach Conservative circles, and if it were to be done it would best be done by someone not connected with our Government, such as Mr. Craig68 or Professor Shotwell.69
Finlayson70 recently told me that he thought many of the Government supporters here were rather relieved that we had not ratified the treaty, since they felt that support for the waterway from the west and central west had considerably died down as a result of the depression, whereas the Opposition remained as strong as ever. The Prime Minister could have forced the treaty through, he felt, had we ratified at the time the matter was before the Senate, and he would have done so. While I believe that the Conservative party as a whole has never been more than lukewarm toward the treaty, some allowance must be made for the tendency to “make the best” of our failure to ratify. I am inclined to think that if we ratified the treaty without any changes which would be deemed significant here, the interest of the west and central west would revive sufficiently to make ratification here possible. The difficulties which would result here from any important changes would be as real for Mackenzie King, were he in power, as for Mr. Bennett.
I gather from everything I hear that with the Ontario situation as it is, there is every likelihood at the moment that even if we renegotiate the treaty, the local arrangements of the Prime Minister with Ontario would have to be revised, perhaps extensively, but Finlayson remarked that he felt that the Dominion had driven rather a hard bargain with Ontario so that some revision would be fair. The Prime Minister could hardly put a treaty through that was not based on some local arrangements with Ontario. He may feel, however, that just before elections next year it would be convenient to have a treaty ratified by us to present which could be represented as favorable to Canada. If this was blocked by the Liberals they would have to explain to the west. He may feel that at that time the Liberals will not consider it advisable to block the treaty.
From our point of view I suppose that it would be advisable to proceed in such a way that there would be no call for the Liberals to [Page 977] oppose the treaty, either provincially or nationally. I would say that it would probably be best to wait until the excitement surrounding Hepburn’s election has died down somewhat and until some of his election utterances have passed into the background before having the matter of revision of the treaty openly discussed here. I would imagine that if anything can be done with the treaty by the Conservatives, it could best be done this autumn or early in the winter. In the meantime, of course, I see no harm at all in discussing the matter with Herridge on a confidential basis with a view to discovering possible grounds for an agreement on new terms.
Yesterday I saw Finlayson and sounded him on the matter of the Prime Minister’s possible visit to Niagara. The Prime Minister is still out of town but I believe Finlayson will endeavor to get some information for me on the subject as soon as he returns, which should be toward the end of this week.
With best wishes and sincere regards [etc.]
- Pierre de L. Boal, First Secretary of Legation in Canada.↩
- Not attached to file copy of this letter.↩
- Charles Patton Craig, Executive Director, Great Lakes-St. Lawrence Tide Water Association.↩
- James Thomson Shotwell, Professor of History at Columbia University.↩
- William Finlayson, K. C., Minister, Department of Lands and Forests, Province of Ontario.↩