The Minister in Canada ( Armour ) to the Secretary of State

No. 1212

Sir: I have the honor to refer to the Legation’s confidential despatch No. 1104 of January 5, 1937, and previous correspondence concerning the St. Lawrence–Niagara Falls Treaty, and to report that I had a conversation this morning with Dr. Skelton on this subject. Dr. Skelton said that the talks with the Ontario officials had taken place last week as arranged. Mr. Thomas B. McQuesten, Minister of Highways [Page 170] for the Province of Ontario, and Mr. T. Stewart Lyon, Chairman of the Ontario Hydro Electric Commission, were the two officials who had been sent by Mr. Hepburn12 for the purpose.

Dr. Skelton said that he felt that distinct progress had been made in that these officials, and apparently Hepburn himself, were very much more favorably inclined toward the whole St. Lawrence–Niagara Falls Treaty than had been the case a month ago. They had come to realize that while the power available from the private companies would tie them over for two or three years, by that time they would require the extra power furnished by Niagara Falls and the Ogoki. And a few years later, say within eight or ten years, they would be ready to use the power from the St. Lawrence development.

Dr. Skelton did not wish to be over-optimistic. He expected that Ontario would still wish to indulge in a certain amount of “horse trading”. They felt that New York State had been able to secure better terms from our Government than the Province of Ontario from the Dominion Government, and Dr. Skelton was inclined to think that perhaps there was something in their argument. Also, there were still certain members of Mr. King’s Cabinet who were not entirely favorable to the plan, particularly those interested in the financial and transportation angles and certain of the members of the Cabinet who feared the French-Canadian reaction in the Province of Quebec. As a matter of fact Mr. King was, as stated, at that very moment taking up the question with the Government in Council meeting.

As to the possibilities of being able to put the treaty through at this session of Parliament he was somewhat fearful. First of all they would have to work out the details of the treaty. And, also, if a new agreement were to be made by the present Government with the Province of Ontario to replace the Bennett–Henry agreement, covering the financial division, this would take time. Dr. Skelton had explained to the members of the Government the urgency from the American point of view; that is to say that we felt it almost essential to present a treaty to our Senate during the present session of Congress, even though it might be too late to secure ratification by the Canadian Parliament during this session. Mr. King was planning to sail for England about April 20th and that left roughly six weeks only in which to deal with the matter. However, they would do their best, but it would require a good deal of pressure on the various members of the Government so fully occupied with other questions. In order to expedite matters Dr. Skelton had suggested to the Prime Minister that he appoint a subcommittee of the Cabinet to deal with the St. Lawrence question. If Mr. King acted on this suggestion he thought that the Ministers who would presumably be chosen would be the Ministers [Page 171] of Transport, Public Works and possibly Finance. There will also probably have to be a representative of the French-Canadian group. (Mr. Cardin, the Minister of Public Works, is a French-Canadian and would, it would seem, presumably meet this requirement.)

Dr. Skelton told me that they had been very much interested in studying the draft treaty which I had brought up with me from Washington.13 He said that they were all “full of admiration for the fine piece of drafting represented by the new treaty”. In general, he felt that it offered a very good basis for discussion. There were, it was true, certain points with which they were not quite in agreement, notably with regard to the powers of the Commission, but he felt that the question had been dealt with very fairly and repeated that he felt the draft constituted an excellent beginning. I shall not fail to report to the Department any further developments, but I felt it important that this despatch should be in the Department’s hands, if possible, before the arrival of the Prime Minister. In this connection I wish to call the Department’s attention to a despatch from the Consulate General in Toronto dated February 24th last, on the subject of “The Ontario Government and the Hydro Electric Power Issue: Attitude on St. Lawrence Project”, two copies of which I note were forwarded to the Department,13a one for the files of the Commercial Office and the other for the Division of Western European Affairs.

This despatch is of particular interest not only as bringing out certain new facts but as confirming points discussed during the recent conversations in Washington between officials of the Department, the Federal Power Commission and the New York Power Authority, at which I was present. I have in mind particularly a conversation which an official of our Federal Power Commission had on February 19th last with Dr. T. H. Hogg, Chief Hydraulic Engineer of the Hydro Electric Power Commission of Ontario, at the office of the Power Authority in New York, as well as the conversations that took place on January 30th in New York between officials of the New York State Authority and the Ontario Government. The Toronto despatch also bears out certain remarks Dr. Skelton made to me some days ago regarding Mr. Hepburn’s change in attitude, which he attributed perhaps more to Mr. Hepburn’s desire to be independent of the Beauharnois Company than prompted by the more constructive and statesmanlike motive to place the Province of Ontario in a position to meet the power shortage which those competent to judge felt was bound to come unless measures were taken along the lines of the St. Lawrence development.

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Dr. Skelton confirmed what I had already heard from the Prime Minister’s Secretary, that Mr. King in responding to the President’s invitation to come to Washington had decided to proceed via Toronto, and for that purpose would leave Ottawa tomorrow, Wednesday night, arriving in Toronto early Thursday morning and spend the day there, leaving the same night for Washington. While Dr. Skelton did not say so, I take it for granted that one of the objects the Prime Minister has in mind in going to Toronto is to talk over this whole question with Mr. Hepburn and his colleagues. Dr. Skelton stated that the question is being dealt with in Cabinet Council today, which will enable Mr. King to present to Mr. Hepburn the considered view of the Dominion Government. The talks with Mr. McQuesten and Mr. Lyon last week presumably put Mr. King up to date on the attitude of Mr. Hepburn, and it is therefore safe to assume that when Mr. King reaches Washington he will be in a position to give the President and the Secretary a far more definite statement with regard to the Canadian Government’s position than anything we have hitherto had since the question was revived.14

Respectfully yours,

Norman Armour
  1. Mitchell F. Hepburn, Premier of Ontario.
  2. Not printed.
  3. Not found in Department files.
  4. No record of discussions of this project by Mr. Mackenzie King while in Washington has been found in Department files.