The Ambassador in Canada (Woodward) to the
Department of State
96. Upon instructions of Pres. Truman I called Friday1 on PM St. Laurent and spoke with him about the allocation of estimated costs of the construction of the St. Lawrence seaway and power project.
I said that during mtgs last week of International Joint Commission in Wash, I noted evidence of strong sentiment for reexamination of allocation of costs on St. Lawrence project stemming from desire of both our countries to keep down costs of hydroelectric power. I said that I hoped I was betraying no confidences if I mentioned all 6 commissioners—US and Canadian—seemed to favor reallocation. For these reasons it had appeared possibly to our common advantage to place costs of common works on the canal for eventual amortization by tolls, rather than to keep costs of common works on the power project and thereby increase costs of electricity to potential consumers.
I said when this had been called to the attention of the President,2 he had instructed me to sound out the PriMin on the subject, with assurance that he had no disposition to delay but that we should work things out to best advantage of all concerned.
PriMin replied he did not believe it now feasible to re-examine allocation of costs because to do so would require him to go back to Parliament and reopen whole subject. This he did not want to do although he supposed with govt’s majority, new legislation could be pushed thru Parliament. Furthermore, this was election year in Can and the St. Lawrence a polit issue. His govt had been criticized for already doing too much for central Can (Ont and Que) and it was now concentrating on public work projects in other provinces. He then mentioned projects in Maritimes and BC and his recent appointment of two new members of Cabinet from BC as demonstration of his interest in doing more for provinces outside central Can.
PM stated that only grounds on which he would be willing to consider the reallocation of costs were on basis of 1941 agreement.[Page 2038]
During our conversation, I mentioned that in traffic estimates for the seaway some 80 percent wld be for Amer accounts and that the amortization costs of the Canal would therefore be borne in very large measure by US interests. PM said that this might be true but it was not an argument which he could use in going before Can Parliament.
I also said that Federal Power Comm had before it an application for license submitted by the NY State Power Authority to build US half of power project and that it was possible FPC might take position that it would be contrary to its policy and not in best interests of US to approve license if it felt costs of electricity to be generated would be unduly high owing to construction costs which were not directly connected with power development. PM reaction to this was that in such case whole St. Lawrence project might be delayed another 3 or 4 years.
At end of our talk, St. Laurent stated that in the operation of seaway, Can wanted US to have a voice in fixing tolls.