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

No. 1697

Sir: With further reference to the Department’s strictly confidential instruction No. 1016 of October 25, 1937, and the Legation’s despatch in reply thereto No. 1695 of November 1st last15 regarding the proposed St. Lawrence waterway project, I have the honor to inform the Department that I went to see the Prime Minister by appointment late yesterday afternoon and had almost an hour’s talk largely devoted to this subject.

I opened the conversation by referring to the talks that the Prime Minister had with the President on the St. Lawrence question last March and refreshed his memory regarding the draft treaty which Had been submitted informally to the Canadian Government last winter, reminding Mr. King that in deference to his wishes as expressed to the President we had not pressed this matter since the Washington talk, awaiting the outcome of the Provincial election in Ontario. Now that almost a month had elapsed since that election had been held we felt justified in reviving a discussion of the question and hoped that we might count on his full cooperation.

Mr. King said that it was quite true that in his talk with Premier Hepburn on his way down to Washington last March, Hepburn had suggested that he would prefer to defer further discussion of the St. Lawrence until after the Ontario elections which he then intimated would probably be held in the autumn. To be sure, Mr. Hepburn had not made any promise as to what his attitude would be after the elections but had made it plain that it would be useless to expect him to discuss this matter at any rate until after the elections were behind him. Mr. King had hoped that the situation would have been better after the elections than it had been last spring but the contrary appeared to be the case as Mr. Hepburn had lost no opportunity during the election campaign to register his opposition to the whole St. Lawrence project.

I told Mr. King that while this might be true, it seemed to me possibly a significant fact that, at any rate in his earlier speeches delivered before the heat of the campaign, Mr. Hepburn had taken [Page 174] pains to state that while he did not believe that Ontario was faced with a power shortage, if his competent engineers could show him that such a shortage did exist then he would be willing to reconsider the matter. To be sure, during the last weeks of the campaign, when Mr. Rowe16 had made the power question a primary campaign issue, Mr. Hepburn had denied without qualification that any power shortage would exist, but in doing so he had justified his position by pointing to certain power developments which he had in mind. These developments, however, I said, or rather the use of any water resulting from them, would not be possible, as Mr. Hepburn must know, under the existing treaty between Canada and the United States17 without the consent of both parties. In our early discussions Dr. Skelton had told me that he thought perhaps the strongest argument the Canadian Government would have in bringing Mr. Hepburn to terms was the fact that he would be unable to make use of the extra Niagara power resulting from the Ogoki and Long Lac developments unless the consent of the United States was secured and that of course this consent would not be forthcoming for this part of the project only: that Hepburn would have to accept the whole plan or get nothing.

I went on to call Mr. King’s attention to the announcement which had appeared that morning of the resignation of Mr. T. Stewart Lyon as Chairman of the Ontario Hydro Commission and the appointment of Dr. Thomas H. Hogg, Chief Engineer, as his successor. Mr. Lyon had, I remarked, made a speech recently at Lindsay, Ontario, in which he was reported in the press to have expressed himself as opposed to the St. Lawrence power project. The fact that three weeks after this speech had been delivered his resignation should have been accepted and a competent engineer appointed in his place might, it seemed to me, have some significance, particularly when, in addition to Dr. Hogg, Mr. Hepburn had appointed the Honorable William Houck, Member of the Legislature for Niagara Falls, as Vice Chairman of the Commission. The possible significance of these changes, it seemed to me, remembering the talks I had had with Dr. Skelton early in the year, lay in the fact that Dr. Skelton had told me that the competent engineers of the Hydro Commission all seemed to be convinced that Ontario faced a power shortage. This being the case, the appointment by Mr. Hepburn of the Chief Engineer of the Hydro as Chairman of the Commission might, I thought, indicate that he was prepared to admit that such shortage existed and would now perhaps be prepared to discuss methods by which this shortage could be met. The significance of the appointment of Mr. Houck, I thought, lay in the fact that, coming from Niagara Falls, he would presumably be interested in securing [Page 175] further developments in the Niagara Falls section which would, as already stated, not be possible without acceptance of a new treaty.

Mr. King, who admitted that he had been very much preoccupied with other matters recently and had not had an opportunity to study these new developments, seemed to be somewhat impressed by the logic of this argument, and in any case said that he wished to study the matter. In particular he wished to see Dr. Skelton, who was, of course, the one most familiar with this whole St. Lawrence question, having handled it from the beginning. Dr. Skelton would, he felt sure, be the one best able to interpret these changes.

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Mr. King wondered whether there would be anything to be gained by having the New York State Power Authority, either through Mr. Frank Walsh or one of his associates, get in touch with Hepburn and the Ontario Hydro Commission direct. He was, he said, only thinking out loud but perhaps if the need for further power by the State of New York could be brought home to Mr. Hepburn by the New York authorities he might be more disposed to move.

I told Mr. King that while I had no authority to speak on this point I doubted whether, at this point at any rate, it would be advisable to cloud the issue by transferring the conversations from talks between the two governments to discussions between New York State and the Province of Ontario. Possibly at some later date, although on this point again I hesitated to offer an opinion, direct discussions between the New York and Ontario authorities might be advisable. At this time I felt that it might be better to confine the discussions, at any rate as between the two countries, to talks between the two governments. Mr. King agreed and said that it had been merely an idea that had come to him on the spur of the moment.

I asked Mr. King whether he did not agree with me that possibly the strongest argument that could be used with Mr. Hepburn would be that so far as the United States was concerned, the power was badly needed and that this being the case the Government of Ontario would not presumably wish to be the means of preventing the obtainment of such power by the United States. He must realize that had the St. Lawrence basin lain within the territorial jurisdiction of the United States this power development would undoubtedly have been undertaken some time ago, just as had been the case in the Tennessee Valley development and the Bonneville Dam, to mention only two. Of course, had the Province of Ontario not been able to use such power when made available it would perhaps have been asking a good deal of them to agree to pay their share of the expense of the development merely because the power was needed in the United States. But this was not the case: competent engineers of the Hydro Commission, and even members of Mr. Hepburn’s own Cabinet, Dr. Skelton told me [Page 176] last spring, admitted that Ontario would need the power, particularly when it was borne in mind that it would probably be close to seven years after work was started before the power would be available. (The Department will recollect that Dr. Skelton told me early last spring that in talks with Mr. McQuesten, Minister of Roads and Highways in Mr. Hepburn’s Cabinet, and with Mr. Roebuck, formerly Attorney General of Ontario, both of these officials had finally rallied to the viewpoint that Ontario faced a power shortage and that the St. Lawrence development would probably be the best way ultimately of meeting it, particularly since, if the increase in demand for power continued as at present, at the end of seven years even the reserve powers available from the private companies would not prove sufficient to meet the needs of the Province.)

In conclusion, Mr. King told me that he planned to see Dr. Skelton as soon as possible and that he thought that it would be best to have another talk with me after his talk with Dr. Skelton before taking up the matter with Mr. Hepburn or the Ontario authorities.

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Respectfully yours,

Norman Armour
  1. Despatch No. 1695 not printed.
  2. Earle Rowe, leader of Conservative Party opposing Mr. Hepburn’s reelection in Ontario.
  3. Apparently the unperfected treaty signed July 18, 1932, Foreign Relations, 1932, vol. ii, p. 69.