611.42321 SL/8–651

Memorandum of Conversation, by Mr. William L. Kilcoin of the Office of British Commonwealth and Northern European Affairs

secret

Subject: St. Lawrence Seaway and Hydroelectric Project.

Participants: Mr. W. D. Matthews—Canadian Minister
Mr. G. E. Cox—Canadian Embassy
Mr. Charles S. Murphy—Special Counsel to the President
Mr. Dave Bell—White House Staff
Mr. Davis—Department of Commerce1
Mr. Don C. Bliss—US Minister, Ottawa, Canada
Mr. N. S. Haselton—BNA
Mr. W. L. Kilcoin—BNA

This meeting was set up by Mr. Haselton at the request of Mr. Bell of the White House Staff. Mr. Murphy opened the discussions by stating that the recent action of the Public Works Committee in tabling the last joint resolution approving the 1941 US–Canadian agreement for development of the St. Lawrence Seaway and Hydroelectric Project necessitated a review and reappraisal of the situation. He said that the Executive Branch of the Government had not yet established a particular line of approach or position. He felt that informal exploratory discussions with Canadian representatives would be helpful in determining appropriate steps now to be taken and would be helpful to both governments in setting their policies and future courses of action. He asked Mr. Matthews to comment on the present Canadian [Page 912]thinking based on the rejection of the last joint resolution before the House Public Works Committee.

Mr. Matthews stated that significant support from Ontario and a wide section of the press was developing for Canada to undertake the Seaway alone and for joint Ontario-New York development of the hydroelectric resources. The Canadian Government has not deviated from its traditional advocacy of a joint US-Canadian project but if there appears to be no hope for US legislative approval in the near future, it might be necessary to reverse this policy. Parliament is not now in session which eases immediate political pressures, but a position will have to be taken by the Government by the time Parliament convenes on October 9. He stated that a select committee of members of the Cabinet had just been appointed to consider the St. Lawrence Seaway and Power Project and to recommend to the Government the steps it should take now that legislation respecting the project had been tabled by the Public Works Committee of the House. Mr. Matthews had not been advised concerning the membership of this Committee but Mr. Bliss supplied this information. The Committee is comprised of Mr. Howe, who heads the Ministries of Defense Production and Trade and Commerce, Mr. Chevrier, Minister of Transport and Mr. Winters, Minister of Resources. Mr. Bliss emphasized that this was the first time that Canada had officially undertaken to study any alternatives to the joint US-Canadian Project.

Mr. Matthews indicated that if Canada decided to proceed unilaterally on the Seaway, and jointly with New York on the hydroelectric project, new studies and surveys would have to be undertaken (replanning the Seaway would take at least a year), financial and other problems would have to be carefully considered, and it might be several years before the waterways phase of the program could be initiated. In answer to Mr. Bell, he said that Canada had ample financial resources to undertake construction of the Seaway, and although it might constitute some drain on Canadian gold and US dollar reserves, this should not be too serious, as not more than $50 million would be required in any one year. The real problem lies in physical resources—manpower, materials and equipment and the Canadian Government is really concerned over this aspect of the situation.

Problems involved in joint Ontario-New York development of hydroelectric power and Canadian construction of the Seaway were then discussed. Mr. Murphy stated that State rather than Federal development of this power would be a departure from Federal policy but that the President might be prepared to withdraw his objection to the New York State proposal if this was the only way in which the Seaway could be constructed. It was pointed out by Mr. Haselton that if the joint New York-Ontario Hydro scheme was approved, some provision would have to be made to meet legitimate needs of various New [Page 913]England states for hydroelectric power. Mr. Murphy was of the opinion that the Federal Power Commission could insert a proviso protecting the interests of other states if and when the New York application is reconsidered. In so far as treaty obligations regarding boundary waters are concerned, the International Joint Commission, it was agreed, could approve these programs after referral without further recourse to their respective Government. However, Mr. Murphy and Mr. Bell were careful to underscore and stress the point that the U.S. members of the International Joint Commission would have no authority to consider or act on proposals for an all Canadian Seaway and a joint Ontario-New York State hydro project unless directed to do so by the President acting through the Department of State. The inference was clear—U.S. approval and support of the hydro project would be contingent on firm assurances that construction of the Seaway would be undertaken by Canada without undue delay. On balance development of the Seaway is more important to the U.S. strategically and economically than development of the hydroelectric resources of the St. Lawrence. The reverse is true for Canada. Although not directly stated, it was implied by Mr. Murphy that a departure from National Policy in approving a joint Ontario–New York hydro undertaking could only be justified on the basis of our over-riding need for the Seaway.

Mr. Matthews was extremely cautious in estimating when construction of the Seaway might be started providing Canada decided to proceed unilaterally. The impression left was that Canada would not proceed with any great speed and it was indicated that some years might elapse before this project could get under way. He was asked if the United States might be able, if legislative approval is later obtained, to join with Canada in construction of the waterways. He was doubtful whether Canada would agree to our participation if the planning and financing were well advanced. Mr. Bliss strongly backed up Mr. Matthews’ impression that the Canadians, once a decision is made, would want to proceed on their own as a matter of national pride and prestige. Mr. Matthews said that the additional costs to construct an all Canadian route would not be heavy. Tolls would unquestionably be charged but under agreements and in consonance with US-Canadian relations they would be applied equally and without discrimination.

Mr. Cox asked if Senator Moody’s2 proposal to back the St. Lawrence resolution on the Foreign Aid Bill was likely to be considered and accepted by the Senate Foreign Relations Committee. Neither Mr. Bell nor Mr. Davis were in a position to give an opinion. Mr. Cox asked if the bill could be considered in the Foreign Affairs Committee of the House. Mr. Murphy said that under Congressional customs and practice [Page 914]the House Foreign Affairs Committee would not accept a measure which was being considered by another Committee of the House. If a Senate bill, however, contained such a provision, the House Committee could either accept or reject it in conference.

Mr. Davis was strongly of the opinion that the recent action of the House Public Works Committee should not be considered as final. He expected a number of changes in the membership of the Committee and was hopeful that action might be possible in the near future, say within a period of 6 weeks or 2 months. The situation should be much clearer in about a month. He stated that the proponents of the resolution were prepared to carry on the fight and that they were encouraged by the large number who had voted against tabling the last measure. He pointed out that development and distribution of the St. Lawrence Power by the State of New York would be a significant departure from national policy which the Executive Branch might find it difficult to support. If a new joint resolution is introduced, he said that Section 5 would probably be deleted.

After considerable discussion, it was agreed that efforts would be continued to have the joint resolution reported out by the House Public Works Committee, or by the Senate Foreign Relations Committee as a part of the Foreign Aid Bill if this appears preferable or practical. In a month or 6 weeks the prospects or possibilities of favorable committee action could be properly appraised and he indicated that a further meeting should be held at that time. Mr. Murphy agreed to this proposal. This would provide ample time before the reconvening of Parliament to permit the Canadian Cabinet Committee to outline its position and policy on the basis of the latest available information. If a joint resolution is reported out by the Committee, Mr. Davis warned that a protracted fight can be expected on the floor of both Houses.

  1. Assistant Secretary of Commerce Thomas W. S. Davis.
  2. Blair Moody, Michigan.