611.42321 SL/9–2751

Memorandum by the Under Secretary of State (Webb) to the President

secret

Memorandum for the President

Subject: Visit of Prime Minister St. Laurent on September 28 to discuss the St. Lawrence Seaway and Power Project.

The St. Lawrence Seaway and Power Project has, as you know, been a continuing problem in our relations with Canada for a great many years. It appears now that the Canadians may try to force the problem to a head within the next few months. Our handling of it, vis-à-vis the Canadians, is very important from now on, not only as far as the project itself is concerned but also from the point of view of Canadian-American relations in general.

The attitude of the Canadian Federal Government towards the St. Lawrence problem has changed markedly over the past year. As far as we can ascertain, the Government was satisfied to cooperate with us in attempting to secure Congressional approval of the joint project, as set forth in the 1941 St. Lawrence Agreement, up to the fall of 1951. Our failure to secure Congressional passage in 1950 of legislation approving the Agreement, however, caused the Canadians to believe that favorable action on the joint project was next to impossible under present conditions. As an indication of their changing attitude, Transport Minister Chevrier delivered an outspoken address in September of that year in which he said that Canadians “cannot sit idly by and wait forever” for the Congress. He said further that when Canada is convinced that no progress can be made on the combined scheme, other means must be found for securing the power and seaway development.

On December 11, 1950, in a conversation with Mr. Webb of this Department, the Canadian Ambassador advised us that although the Canadian Government prefers the joint project it would reconsider its position in the event that favorable Congressional action was not forthcoming this year. When the legislation authorizing the St. Lawrence dual purpose project was tabled in the House Public Works Committee late in July this year, the Canadian Government accepted the defeat as firm evidence that Congress would not approve the project this year. A special Cabinet subcommittee composed of Trade and Commerce Minister Howe, Transport Minister Chevrier and Resources Minister Winters was set up to study alternatives to the 1941 Agreement procedure. This committee has worked out an arrangement with the Province of Ontario, the terms of which we do not yet know, outlining the responsibility of both the federal and provincial governments under a new procedure. Proposals embodying the new [Page 917]procedure will probably be the subject of the Prime Minister’s discussion with you on the 28th.

The Canadian Liberal Government is in a difficult political position with respect to the St. Lawrence issue. The Conservative opposition Party is in power in Ontario and its spokesmen, Premier Frost and Mr. Saunders, Chairman of the Ontario Hydro-Electric Commission, have claimed often and loudly that the Central Government has not pushed the St. Lawrence project with sufficient vigor in Washington. Continued failure to secure Congressional approval tends to lend validity to these charges in the public mind. Mr. Saunders claims that the industrial development of Ontario Province is hindered by lack of low-cost power and predicts a severe power shortage in the years following 1956 unless development of the St. Lawrence can be undertaken within a year. Since Ontario cities, such as Toronto, have been subjected to power brown outs periodically over the last several years, these statements may make considerable impression. While Ontario Province is primarily interested in securing the power, the Federal Government itself is eager to have the seaway. East-west transportation routes are essential if Canada is to be bound together economically. The seaway would provide a ready outlet for the agricultural produce of the prairies. Moreover, the Canadian Government is anxious to facilitate shipment of iron ore from the new Labrador iron ore fields to our steel mills and sincerely believes that both the seaway and power developments are essential to the defense of the North Atlantic area.

For these reasons, the Canadian Government believes that the project must not be stalled indefinitely for lack of Congressional action on the 1941 St. Lawrence Agreement. If the United States cannot participate in construction of the seaway, the Canadians will probably wish to build it themselves. With a substantial budget surplus they foresee no insurmountable financial obstacle. With respect to the power they realize fully that United States approval in some form is required. They feel, moreover, very strongly that if the Administration cannot secure Congressional approval of the 1941 Agreement it should not prevent Ontario and New York from proceeding on their own to develop the power resources of the river. The Canadian Government is firmly of the opinion that Canada has a right to build the seaway itself and to secure development of their share of the St. Lawrence River power and that it would be unjust for us to stand any longer in their way. If the Canadians think that by insisting on Congressional approval of the joint project even after it is a lost cause, our Administration is blocking the project, the Canadian Government will probably react very strongly. Intense resentment caused by such a belief might well spread into other areas of our relationship with Canada and to some extent jeopardize the essential cooperation now existing between the two countries.

[Page 918]

The Department has been informed by Ambassador Woodward that the Prime Minister’s proposal to you will include the following principal points:

(1)
The Canadian Government to build and finance the seaway on the Canadian side.
(2)
Hydro-electric power in the international section of the St. Lawrence River to be developed by Ontario Province and New York State, if New York participation is approved by our Government.
(3)
Both the seaway and power aspects of the project to be begun as soon as the necessary clearances have been obtained and financing arranged.
(4)
Tolls to be the same for United States and Canadian shipping.
(5)
Opportunity for United States participation in the project to be maintained as long as possible.

In order to anticipate the opposition, we are informed that the Prime Minister would like to make some arrangement with you quickly so that he may announce it in the Speech from the Throne opening Parliament on October 9. If we are unable to accept his proposal or some mutually agreeable variation of it, it is probable that he will make some reference to the St. Lawrence in any case at that time. The State Department’s Legal Division has prepared a paper on some of the legal and constitutional questions which are involved in the Prime Minister’s proposal and a summary of their findings is attached hereto as Tab “A”. A brief biographical sketch of the Prime Minister is attached as Tab “B” and a simplified artist’s drawing of the proposed project is included as Tab “C”.1

As far as our relations with Canada are concerned, the State Department would like to see this Government go along with the Canadians as far as possible in their new proposal. We believe that the Canadians have been exceedingly patient in waiting for Congress to act these many years and that their present proposals would benefit both countries.

However, the Department realizes fully that there are many other government departments concerned in this matter and that domestic political factors and constitutional problems of first rate importance must also be considered. In any case, however, we believe that this Government should avoid putting the Canadians in a box in which it appears to them that they cannot get the project either through Congressional action or through cooperation with the Administration. If the Canadians were to gain this impression it would probably injure our relations with Canada more than any other single incident which has occurred during this century.

Accordingly, it is recommended that the proposal be received sympathetically and that you tell the Prime Minister that you will endeavor [Page 919]to work it out from the United States side in the light of the constitutional and political problems which exist. It is further suggested that you tell him that naturally no conclusion has yet been reached as to the necessity of procuring Congressional approval for a proposal such as he has suggested.

James E. Webb
[Annex]

Conclusions to State Department Legal Opinion Concerning Alternative Methods for Construction of the St. Lawrence Seaway and Power Project

1.
Under Articles VIII and III of the 1909 Treaty Concerning Boundary Waters between the United States and Canada, the International Joint Commission, United States and Canada, has authority to approve “uses, obstructions, and diversions” in the St. Lawrence River, affecting the natural level or flow of boundary waters, with the authority of the United States or the Dominion of Canada within their respective jurisdictions. Such approval can be conditional. Approval by the two Governments and the International Joint Commission of a project does not constitute an international agreement; it merely authorizes the respective projects for the approval of which application is made.
2.
Under the terms of Article I of the 1909 Treaty, the United States has the right to use, on terms of equality, the Canal which Canada contemplates building on the Canadian side of the Boundary.
3.
Under Article VIII of the 1909 Treaty, Canada is entitled to equal right in the use of the boundary waters for power purposes.
4.
Accordingly, it would be within the Executive power to enter into an agreement with Canada containing assurances in harmony with paragraphs (2) and (3).
5.
In the view of the Department, however, the Executive could give no assurance that power would continue to be developed in the manner indicated by the project.
6.
Also, an agreement between the Power Authority of the State of New York, “a political subdivision of the State of New York”, and the Ontario Hydro-Electric Commission, an agency of the Province of Ontario, for the purposes indicated, would be contrary to the provision contained in Article I, section 10, of the Constitution, that “No State shall, without the Consent of Congress … enter into any Agreement or Compact with another State, or with a foreign Power”. It seems clear that under this provision what a State may not do, its political subdivisions may not do.
  1. Tabs B and C not printed.