Newfoundland National Convention, 1946-1948: Volume 1: Debates. Volume 2: Reports and Papers. 9780773565128

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THE NEWFOUNDLAND NATIONAL CONVENTION

1946 - 1948 DEBATES, PAPERS, AND REPORTS

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THE NEWFOUNDLAND NATIONAL CONVENTION 1946 - 1948 VOLUME 2 REPORTS AND PAPERS

Edited by James K. Miller and Michael F. Harrington

Published for Memorial University of Newfoundland by McGill-Queen's University Press Montreal & Kingston • London • Buffalo

© Memorial University of Newfoundland 1995 ISBN 0-7735-1246-2 (This volume is sold only as part of a two-volume set. Order number for the set is ISBN 0-7735-1257-8) Legal deposit first quarter 1995 Bibliotheque nationale du Quebec Printed in the Canada on acid-free paper

Canadian Cataloguing in Publication Data Main entry under title: The Newfoundland National Convention, 1946-1948: debates, papers and reports Includes index. ISBN 0-7735-1257-8 (set) ISBN 0-7735-1245-4 (v. 1) ISBN 0-7735-1246-2 (v. 2) 1. Newfoundland National Convention. 2. Newfoundland History - 1934-1949. 3. Newfoundland - Economic conditions. 4. Canada - History - 1939-1945. 5. Newfoundland - Politics and government - 1934-1949 6. Canada - Politics and government - 1935I. Hiller, J. K. (James K.), 1942. II. Harrington, Michael, 1916FC2174.9.N38N49 1994 971.8'03 C94-900802-8 F1123.N49 1995

Contents Establishing the National Convention The National Convention Act, 1946. Results of the June 1946, Election. Dominions Office: Report on the Financial and Economic Position of Newfoundland, June 1946 (Chadwick-Jones Report) Reports by Committees of the Convention and Delegations Report of the Committee on Rules and Procedure Report of the Forestry Committee Report of the Committee on Education Report of the Transportation and Communications Committee Report of the Local Industries Committee Report of the Committee on Agriculture Report of the Fisheries Committee Report of the Committee on Public Health and Welfare Report of the Committee on Mining Report of the Committee on the Financial and Economic Position of Newfoundland (i) Financial Report (ii) Economic Report Report of the Steering Committee Report of Conference of a Committee of the National Convention with His Excellency the Governor in Commission, held at Government House, February 8, 1947 Report of the London delegation, 1947 Report of the Ottawa Delegation: Proposed Arrangements for the Entry of Newfoundland into Confederation Draft Provincial Budget Prepared by J.R. Smallwood, December 1947 Biographical Appendices Appendix A: Members and Officers of the National Convention. Appendix B: Persons Mentioned in the Debates and Reports. Index

1 12 16 53 56 65 75 154 167 181 251 313

369 425 445

447 448 510 522 524 541 547

M.F. Harrington

The National Convention, September 1946

Members of the National Convention, 1946

The Education Committee

Opening Day, 1946

J.R. Smallwood and F.G. Bradley

J.R. Smallwood

F.G. Bradley

P.J. Cashin

W.J. Keough

Chairman C.J. Fox

The Governor inspects an honour guard, Newfoundland Constabulary

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ESTABLISHING THE NATIONAL CONVENTION

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NATIONAL CONVENTION

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The National Convention Act, 1946 21 May, 1946 WHEREAS is has been decided that provision should be made for enabling the people of Newfoundland to examine the future of the Island and express their considered views as to suitable forms of government for the Island, having regard to the financial and economic conditions prevailing therein, and that this provision could most appropriately be the holding of an elected National Convention of Newfoundland; AND WHEREAS is has been decided that the said Convention should have the duty and function hereinafter in this Act set forth; AND WHEREAS it is necessary to provide for the constitution of the said Convention and the election of representatives thereto and the regulation of their proceedings; Be it therefore enacted by the Governor, by and with the advice of the Commission of Government, as follows: 1. [Definitions] 2. There shall be a National Convention, hereinafter called "the Convention", of Newfoundlanders consisting of forty-five representatives elected in accordance with the provisions of this Act together with a judge of the Supreme Court of Newfoundland, appointed by the Governor in Commission, who shall preside over the Convention as Chairman, but who shall not be entitled to vote in the Convention: provided that the failure of electors in any electoral district or districts to elect a representative or representatives, or the death or resignation of any representative or representatives or his or their absence or inability to attend the Convention, shall not, subject to any rules made under Section 4 of this Act, affect the constitution or duty or function of the Convention. 3. It shall be the duty and function of the Convention to consider and discuss among themselves as elected representatives of the people of Newfoundland the changes that have taken place in the financial and economic situation of the Island since 1934, and, bearing in mind the extent to which the high revenues of recent years have been due to wartime conditions, to examine the position of the country and to make recommendations to His Majesty's Government in the United Kingdom as to possible forms of future government to be put before the people at a national referendum. 4. The Convention may establish rules for their government and the attendance of members and the conduct of business and may alter, amend and repeal the same provided that no such rule shall be altered, amended or repealed, except with the assent of two-thirds of all the members of the Convention. 5. The Governor in Commission may provide for the Convention the services of such advisers, officers and servants as may be deemed necessary to aid and assist them in the conduct of their business and the discharge of their functions and may provide for the remuneration of any such advisers, officers and servants. 6. The members of the Convention shall be paid such amounts in respect of allowances and expenses as the Governor in Commission may determine. 7. The Governor in Commission shall, by Proclamation, summon the first meeting of the Convention and thereafter the Convention shall meet at such times and at such place as the Convention shall decide. 8. For the purpose of the election of representatives to the Convention, Newfoundland shall be divided into thirty-eight electoral districts with names and boundaries as set forth in the First Schedule to this Act. 9. Each of the said electoral districts shall be entitled to return one representative to the Convention, except Harbour Main, Grand Falls and Humber, which shall each return two, and St. John's City (East) and St. John's City (West) which shall each return three. 10. Notwithstanding the provisions of this Act relating to the nomination and election of representatives to the Convention, the Governor in Commission may in respect of the electoral district of Labrador appoint to the Convention as representative for the said district a person qualified under

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the provisions of this Act for nomination for such district and in such case no election shall take place in the said district. 11. All compass bearings relating to boundaries of the said electoral districts contained in the said First Schedule are true, except where expressly stated to be magnetic. 12. (1) For the purpose of conducting an election of representatives to the Convention, the Governor in Commission shall appoint a chief electoral officer for the preparation and conduct and course of the said election. (2) The chief electoral officer shall be responsible to the Governor in Commission through the Commissioner. (3) The duties of the chief electoral officer shall be: (a) to direct all returning officers and, in case of incompetency or neglect of duty on the part of any of them, recommend his removal and the appointment of another in his stead; (b) to exercise general direction and supervision over the administrative conduct of the election, with a view to ensuring the fairness and impartiality of all election offices and compliance with the provisions of this Act; (c) to provide returning officers with such ballot boxes, ballot papers, instructions, forms and material as are necessary for holding the election; (d) to report to the Governor in Commission through the Commissioner after the election, any matters arising in the course of an election, an account of which ought, in his judgement, to be submitted to the Governor in Commission. 13. [Election writs] 14. [Duties of returning officers and appointment of elections clerks] 15. [Term of office of election clerks] 16. [Appointment of deputy returning officers] 17. [Appointment of poll clerks] 18. [Malfeasance or neglect of duties by election officers] 19. [Polling stations] 20. (1) Except as in this Act otherwise provided, a person who would be entitled to vote in an electoral district on the day of nomination in such district if a poll were being held on that day may be a candidate for election to the Convention in that district. (2) Except as in this Act otherwise provided, a person entitled to vote in an electoral district may be a candidate in another electoral district if he has, within the period of two years immediately preceding the day of nomination, been ordinarily and bona fide resident in such other district for the continuous period of one year. (3) A person who, in accordance with the provisions of subsection (1) or (2) of this section may be a candidate in the electoral district of St. John's City (East) or in the electoral district of St. John's City (West), shall be eligible to be a candidate in either of the said districts. (4) A person who has been nominated as a candidate for one electoral district shall not be eligible to be a candidate in another electoral district. 21. The respective persons hereunder mentioned shall not be eligible to be elected to the Convention or to sit or vote in the Convention — (a) Members of the Commission of Government during their tenure of office. (b) Persons in full time employment in the public service of the Crown. (c) Every person accepting or holding any office of employment from or under the Government of Newfoundland or any corporation, board or body operating or having the management of any service on behalf of the said Government to which any salary, fee, wages, allowance, emolument or profit of any kind (except service pay of any person referred to in the proviso to Section 46 of this Act) is attached, during the time he is holding any such office or employment unless such person has obtained leave from the Government or from such corporation, board or body: provided that no salary, fee, wages, allowance, emolument or profit shall be paid or given in respect of any such period of

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leave and provided further that this paragraph shall not apply in respect of any member of any such corporation, board or body who does not give his full time to the business of the same. (d) Every person who fails to comply with the provisions of this Act for the nomination of candidates. (e) Persons not qualified to vote at an election under this Act. 22. The election of any person who is not eligible under this Act to be elected to the Convention shall be void, and if any such person receives a number of votes which would entitle him validly to be declared elected if he were so eligible, such votes shall be disregarded in determining the proper representative or representatives for the electoral district concerned. 23. The Governor shall, by Proclamation, fix the day and place of nomination and the day of polling in each of the electoral districts and the day of polling in each of the electoral districts and may, by the same Proclamation or by different Proclamations, fix the same day or different days for the different electoral districts, and not less than thirty days shall intervene between the day of publication of the Proclamation and the day of polling in any district and the day of polling shall in all cases be the twenty-first day next after the expiration of the day of nomination. 24 to 31. [Nomination procedures] 32. [Method of making returns] 33. [Withdrawal by candidates] 34. [Grant of a poll] 35. [Further duties of returning officers] 36. [Lists of deputy returning officers] 37. [Safe-keeping of ballot papers] 38. [Lists of poll clerks] 39. [Inability of election officials to perform duty] 40 to 41. [Ballot boxes] 42 to 43. [Form of ballot] 44. [Ballot materials property of the Crown] 45. [Indictable electoral offences] 46. Except as in this Act otherwise provided, every person who: (a) is a British subject; (b) is of the full age of twenty-one years on the day of polling; and (c) has, for the period of two years immediately preceding the day of polling, been ordinarily and bona fide resident in Newfoundland; shall be entitled to vote in the electoral district in which he is ordinarily and bona fide resident on the day of polling or, in the case of a person who has in the course of his employment, trade, business, or profession been continuously resident, for a period of two months immediately preceding the day of polling, in an electoral district other than that in which he is ordinarily and bona fide resident, shall be entitled to vote in the electoral district in which he has been so resident in the course of such employment, trade, business, or profession: provided that any person who has served in the naval, military or air forces or the mercantile marine of Newfoundland or of the United Kingdom or any of her allies or in the Newfoundland Forestry Unit in consequence of the 1939-45 war shall be deemed to have been ordinarily and bona fide resident during the period of such service in the electoral district in which he has resided immediately prior to such period of service. 47. The respective persons hereunder mentioned shall not be qualified to vote at an election under this Act. (a) Returning officers and election clerks: provided that the returning officer may vote in the case of an equality of votes between candidates as hereinafter provided. (b) Persons held in custody under warrant of commitment in any penitentiary, prison or gaol. (c) Patients in the Hospital for Mental and Nervous Diseases. (d) Inmates of the Home for Aged and Infirm. 48. (1) The Governor in Commission shall, before the election is appointed to take place, cause to be prepared a list of electors in the manner hereinafter provided:

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(a) The chief electoral officer shall compile or cause to be compiled a list of electors for each of the electoral districts provided for under this Act, from the Census of Newfoundland taken in the years 1945 and 1946. (b) The said lists of electors shall be certified by the chief electoral officer and shall be used for the purpose of the election. (2) Nothing in this section contained shall prevent the taking of the votes under Section 62 of this Act of persons qualified to vote whose names do not appear in the said lists of electors. 49. [Who may be present at a polling station; oaths of secrecy; agents.] 50. [Where election officials shall vote] 51. [Agents] 52. [Arrangement of polling stations and booths. Hours of polling] 53. [Locking of ballot boxes and start of polling] 54. [Who may vote and where] 55. [Oaths required of electors incorrectly entered on list of electors] 56. [Refusal of oaths] 57. [Duties of poll clerks] 58. [Maintenance of secrecy during poll. Offences of election officials and agents] 59. [Electors not normally to show marked ballots to others] 60 to 63. [Voting procedures] 64. [Election officials to conserve the peace] 65. [Prohibition of offensive weapons] 66. [Prohibition of sale of alcoholic liquor on polling day] 67. [Counting of votes by deputy returning officers] 68 to 69. [Counting of votes by returning officers and declaration of election] 70. [Further duties of returning officers] 71. [Misconduct of returning officers and penalty] 72 to 77. [Recounts] 78 to 84. [Legal actions resulting from the election] 85 to 86. [Oaths] 87. [Right of the government to make orders under the act] 88. [Non-compliance with certain forms not to invalidate elections] 89. [Fees and expenses] 90 to 93. [Corrupt practices] 94. [Prohibition of interference with returning officers] 95. [Prohibition of payments to candidates' agents] 96. [Privilege of witnesses] 97. [Election officials not to act as agents] 98. [Penalty] 99 to 134. [Election petitions] 135. This Act may be cited as the National Convention Act, 1946. FIRST SCHEDULE ST. BARBE (1) The District of St. Barbe shall consist of and include all that part of the Island extending from the centre of the mouth of Gregory River Northeasterly to the West Point of Open Bay, in the Strait of Belle Isle, bounded thence by a line running S. 24° W. until it intersects a line running East from the centre of the mount of Gregory River and thence West to the centre of the mount of Gregory River, together with the islands adjacent thereto.

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WHITE BAY (2) The District of White Bay shall consist of and include all that part of the Island extending from Cape St. John Northerly to the West Point of Open Bay, in the Strait of Belle Isle, bounded thence by a line running S. 24° W. until it intersects a line running East from the centre of the mouth of Gregory River; thence by a line running East 41 miles more or less; thence N. 25° E. 171/2 miles, N. 49° E.131/2miles, N. 60° E. 20 miles and N. 64° E. 18 miles more or less, to Cape St. John aforesaid, together with the islands adjacent thereto. GREEN BAY (3) The District of Green Bay shall consist of and include all that part of the Island extending from Cape St. John to Osmonton (inclusive) in the North West Arm of New Bay, bounded by a line commencing at Cape St. John, and running by the Southern boundary of White Bay District S. 64° W. 18 miles, S 60° W. 20 miles, S 49° W. 131/2 miles, and S. 25° W. 171/2 miles, thence South 10 miles, thence East521/2miles, thence North to Osmonton, thence following the centre of North West Arm and New Bay to opposite New Bay Head, together with the islands adjacent thereto. GRAND FALLS (4) The District of Grand Falls shall consist of and include all that part of the Island within the following boundaries, that is to say: By a line commencing at a point at Phillip's Head, Exploits River, running thence West 60 miles, thence South 15 miles, thence West 17 miles, thence South 17 miles, thence in a straight line and passing Northwest of Cormack Lake to the 58th degree of Longitude thence South by said degree of Longitude to the North boundary of the District of Burgeo and LaPoile, at the 48th degree of Latitude, thence following said 48th degree of Latitude to the Northeast corner of the District of Burgeo and LaPoile, thence in a straight line to a point on the 56th degree of Longitude, said point being 17 miles South of the intersection of the 56th degree of Longitude with the 49th degree of Latitude, thence East 29 miles, thence North to the place of commencement at Phillip's Head. LEWISPORTE (5) The District of Lewisporte shall consist of and include all that part of the Island extending from Farewell Head to Osmonton (exclusive) and bounded as follows: Starting at Farewell Head and following the Western Shore of Dog Bay to the head of the said Bay, thence South 46 miles, thence West 34 miles, thence North to the Exploits River, and extending down same till it reaches the North shore of the same at Phillip's Head, thence West to a point bearing due South from the bottom of North West Arm at Osmonton, thence North to the bottom of North West Arm and thence following the centre of North West Arm and New Bay to opposite New Bay Head, together with the islands adjacent thereto, except those included in District of Twillingate, and lying to the Westward of a line drawn North from Farewell Head but excluding any territory within a radius of five miles of the station of the Newfoundland Railway at Gander. TWILLINGATE (6) The District of Twillingate shall consist of and include the Islands of Twillingate and New World Island, and the following adjacent islands, that is: Salt Harbour Island, Ship Cove Island, Trump Island and Black Island adjacent. FOGO (7) The District of Fogo shall consist of and include all that part of the Island extending from Farewell Head to Rocky Point, starting at Farewell Head and following the Western shore of Dog Bay (or Horwood) to the head of the said Bay, running thence South 29 miles more or less to the 49° of Latitude, thence following the same to a point intersected by a line running S. 6° E. from Rocky Point, thence N. 6° E. from Rocky Point, thence N. 6° W. to Rocky Point and including Fogo Islands, and all the Islands lying between a line bearing N. 37° E. from Rocky Point and a line bearing True North from Farewell Head but excluding any territory within a radius of five miles of the station of the Newfoundland Railway at Gander.

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BONAVISTA NORTH (8) The District of Bonavista North shall consist of and include all that part of the Island between Rocky Point and Freshwater Bay near Travers Brook, bounded by a line running S. 6° E. from Rocky Point until it reaches Freshwater Bay one-half mile to the Eastward of Travers Brook, thence following a line through the salt water between the island and the mainland to North of and excluding Greenspond Island, together with all the islands adjacent thereto bounded on the south by the last mentioned line produced Eastwardly, and on the North by a line running N. 37° E. from Rocky Point. BONAVISTA CENTRE (9) The District of Bonavista Centre shall consist of and include all that part of the Island lying between the bottom of Newman's Sound and a point near Traver' s Brook, which is the West Boundary of the District of Bonavista North; bounded as follows: By a line running West from the bottom of Newman's Sound to a point intersected by a line running South from the bottom of Dog Bay, running thence by said line North to the 49° of North Latitude, thence by the degree of Latitude to a point intersected by a line running S. 6° E. from Rocky Point and thence S. 6° E. by the said line to Freshwater Bay, to a point one-half mile to the Eastward of Travers Brook, and thence following a line through the salt water, between the Islands and the main land, to North of Greenspond Island, together with all the islands, including Greenspond Islands, bounded on the Northwest by the last described line and on the Southeast by a line running through Newman's Sound, Northwest of Seal Island, and produced Eastwardly, and all the islands adjacent thereto and including all the territory within a radius of five miles of the station of the Newfoundland Railway at Gander. BONAVISTA SOUTH (10) The District of Bonavista South shall consist of and include all that part of the Island lying between the bottom of Newman's Sound and the bottom of Blackhead Bay, bounded as follows, that is to say: By a line commencing at the bottom of Blackhead Bay running thence S. 50° W. 1 8V2 miles, S. 76° W. 14 miles, West 321/2 miles, to the intersection of a line running South from the bottom of Dog Bay, North 16V2 miles East, to the bottom Newman's Sound, thence following through the salt water and to the Northwest of Seal Island, together with all the islands adjacent thereto. BONAVISTA EAST (11) The District of Bonavista East shall consist of and include all that part of the Island lying between the bottom of Blackhead Bay and South Head, near Melrose, and bounded on the Southwest by a straight line connecting these two points, together with all the islands adjacent thereto. TRINITY NORTH (12) The District of Trinity (North) shall consist of and include all that part of the Island lying between South Head, near Melrose, and George's Brook, in Smith's Sound (exclusive), bounded as follows: By a straight line from South Head to the bottom of Blackhead Bay, thence by a line running S. 50° W. 18V2 miles, S. 76° W. 14 miles, West 4 miles and thence South to and excluding George's Brook, thence following the centre of Random Sound to the entrance of the same; to include Random Island and also the islands adjacent to the said Random Island and the main part of the said District. TRINITY CENTRE (13) The District of Trinity (Centre) shall consist of and include all that part of the Island extending from George's Brook (inclusive) and a point near Hopeall Head, bounded as follows: By a line running North from near George's Brook to the South boundary of the District of Bonavista (South), thence West to a point intersected by a line running South from the bottom of Dog Bay, thence South 20 miles, to the 48° of Latitude, thence East by the same 24 miles, thence South 10 miles, thence East to the Railway Track near Glenview, thence following the East side of the said Railway to and excluding Placentia Junction, thence S. 57° E. 9 miles, thence N. 10° E. to a point whence a line bearing East from near Hopeall Head intersects the same, thence West to the shore near Hopeall Head; together with the islands adjacent thereto, except Random Island and the islands included in the District of Trinity (North).

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TRINITY SOUTH (14) The District of Trinity (South) shall consist of and include all that part of the Island lying between a point near Hopeall Head and Lead Cove, inclusive, bounded as follows, that is to say, by a line commencing at a point near Hopeall Head, running thence East about 8 miles, thence N. 10° E. 9 miles, thence in a straight line to and including Lead Cove. BAY DE VERDE (15) The District of Bay de Verde shall consist of and include all that part of the Island lying between Lead Cove, exclusive, and Lower Small Point, exclusive, bounded as follows: Starting at a point Northeast of Lead Cove, thence by a line running about S. 30° W., 18 miles, thence, in a straight line to the mouth of the main brook running into Broad Cove Pond, thence in a straight line to the outlet of Broad Cove Pond, thence by the magnet in 1925 S. 49° E. to the rear of the United Church at Broad Cove, thence by the magnet in 1925 S. 3° E. to the shore, together with Baccalieu Island, adjacent thereto. HARBOUR GRACE (16) The District of Harbour Grace shall consist of and include all that part of the Island lying between Bristol's Hope, exclusive, and Bishop's Cove, inclusive, bounded Northeast by the District of Carbonear, and Southwest by the District of Bay Roberts, on the Est by the District of Trinity South, and including Harbour Grace Island. CARBONEAR (17) The District of Carbonear shall consist of and include all that part of the Island from Bristol's Hope, inclusive, to Lower Small Point, inclusive, the Southerly boundary of the District of Bay de Verde, being the Northerly boundary, and the Southerly boundary being as follows: Commencing at the bottom of a cove being North of Long Harry, Harbour Grace, to run thence in a straight line to the junction of the old and new road leading to Bristol's Hope at the top of Bear's Cove Hill, thence in a straight line to the centre of the main road to Carbonear at its junction with the Rocky Pond Road, thence following the North side of the said road to its junction with a cart road leading to the old Carbonear Railway Track near the Maiden Ponds; thence following the North of the last mentioned road to the old Carbonear Railway, thence S. 80° W. to the District of Trinity South. BAY ROBERTS (18) The District of Bay Roberts shall consist of and include all that part of the island lying between Bishop's Cove, exclusive, and the District of Port de Grave, bounded on the North as follows: Commencing at a place called "The Scrape" situate between Spaniard's Bay and Bishop's Cove, running thence by the magnet in 1925 N. 28° W. to the Spaniard's Bay Ridge Road, thence N. 77° W. (magnetic) to the District of Trinity South, bounded on the West by the Districts of Trinity South and Trinity Centre, and on the South as follows: Commencing at a point on the shore opposite the Southeast corner of Long Beach Pond, thence to the said corner of Long Beach Pond, and following the South and West shores of the same to a crossroad; thence following the said crossroad and Delaney's Road to the Main Road around Conception Bay, thence in a straight line S. 52° W. to the District of Trinity Centre. PORT DE GRAVE (19) The District of Port de Grave shall consist of and include all that part of the Island lying between Long Beach Pond and Marysvale, exclusive, bounded on the North by the District of Bay Roberts, on the West by the District of Trinity Centre, and on the South by the District of Harbour Main, by a line running approximately due East and West. HARBOUR MAIN (20) The District of Harbour Main shall consist of and include all that part of the Island lying between Marysvale and St. Thomas, bounded by a line commencing on the shore of Marysvale where the river enters the same, thence following the centre of the said river to its outlet from Three Island Pond, thence through the said pond to the mouth of the river flowing into it, thence following the centre of

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the said river to Turk's Gut Long Pond, thence following through the centre of said pond to the Head thereof, thence in a straight line S. 79° W. to the East boundary of Trinity Centre District, thence by said District S. 10° W. about 12 miles, thence by the District of St. Mary's S 57° E. 18V^ miles, thence by the District of Ferryland N. 36° E. 21^/1 miles, thence by the District of St. John's West to the shore near and including St. Thomas. BELL ISLAND (21) The District of Bell Island shall consist of the Island of that name in Conception Bay. ST. JOHN'S EAST (22) The District of St. John's East shall consist of and include all that part of the Island lying between Cuckhold's Cove and a point on the shore of Conception Bay, 1V^ miles East of the mouth of the River running into Portugal Cove, bounded as follows that is to say: By a line commencing at a point on the East side of Cuckhold's Cove, thence running in a straight line to the chimney of the General Hospital, thence in a straight line to the Monument in Mount Carmel Cemetery, thence in a straight line to the southern side of Horwood's Bridge, on the Newtown Road, thence to a point in the centre of Freshwater Road, which is formed by the intersection of a straight line between the south side of Horwood's Bridge and the intersection of the old railway track with Penny well Road, thence following the centre of Freshwater Road and Thorburn Road to the Red Bridge, thence running N. 30° W. (magnetic) to the north side of Windsor Lake, thence following the north shore of Windsor Lake and Round Pond to the junction of the old Broad Cove Road and Portugal Cove Road, thence in a straight line to a point on the shore of Conception Bay, 1 Vl miles East of the mouth of the River running into Portugal Cove, and thence by the seashore to the place of commencement. ST. JOHN'S CITY (EAST) (23) The District of St. John's City (East) shall consist of and include all that part of the Island bounded as follows: By a line commencing at a point on the East side of Cuckhold's Cove, thence running in a straight line to the chimney of the General Hospital, thence in a straight line to the Monument in Mount Carmel Cemetery, thence in a straight line to the Southern side of Horwood's Bridge on the Newtown Road, thence to a point in the centre of Freshwater Road which is formed by the intersection of a straight line between the south side of Horwood's Bridge and the intersection of the old Railway Track with Penny well Road, thence along the centre of Carter's Street and Carter's Hill to Playhouse Hill, thence along the centre of the same to Duckworth Street, thence Eastwardly along Duckworth Street to the top of Beck's Cove, thence down the centre of said Cove to the shore of St. John's Harbour, thence following the same and the seashore to the place of commencement. ST. JOHN'S CITY (WEST) (24) The District of St. John's City (West) shall consist of and include all that part of the Island bounded as follows: By a line commencing at the centre of Beck's Cove, thence following the West boundary of St. John's East (City) to its Northernmost corner in the centre of Freshwater Road, thence in a straight line to the junction of the old Railway Track and Pennywell Road, thence in a straight line to the junction of Blackmarsh Road and the extension of Hamilton Avenue thence in a straight line to the North Side of Syme' s Bridge, thence by the North shore of Waterford River and the Harbour to the place of commencement. ST. JOHN'S WEST (25) The District of St. John's West shall consist of and include all that part of the Island bounded as follows, that is to say: By a line commencing at the Motion Head of Petty Harbour, and running in a straight line to the Northern Gould's Bridge (locally known as Doyle's Bridge), thence following the centre of Doyle's Road to Short's Road, thence in a straight line to a point one mile West of Quigley's, thence in a straight line to a bridge on the St. Thomas Road, said bridge being about three-eighths of a mile to the Eastward of the junction of Clarke's Path with the St. Thomas Road, and thence in the same straight line to the shore of Conception Bay, thence following the seashore to a point 1 Vl miles East of the mouth of the River running into Portugal Cove, thence in a straight line

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to the junction of the old Broad Cove Road with the Portugal Cove Road, thence following the North side of Round Pond and Windsor Lake to a point bearing N. 30° W. (magnetic) from the Red Bridge on the Thorburn Road, thence in a straight line to the Red Bridge, thence following the centre of the Thorbum Road and Freshwater Road to where the Municipal boundary of St. John's crosses the Freshwater Road, thence following the said boundary to the junction of the old railway track and Pennywell Road, thence in a straight line to the junction of Blackmarsh Road and the extension of Hamilton Avenue, thence in a straight line to the south side of Syme's Bridge, thence by the south shore of the Waterford River and the Harbour of St. John's and by the seashore to the point of commencement at Motion Head. FERRYLAND (26) The District of Ferryland shall consist of and include all that part of the Island lying between Cape Race, inclusive, and Motion Head, near Petty Harbour, by a line commencing at Motion Head and running in a straight line to the Northern Gould's Bridge (commonly known as Doyle's Bridge), thence by the Southwestern boundary of St. John's West District to the Southeastern boundary of the District of Harbour Main, and thence by said Southeastern boundary to its junction with the District of St. Mary's, thence S. 15° W. 21 miles and thence in a straight line to and including Cape Race. ST. MARY'S (27) The District of St. Mary's shall consist of and include all that part of the Island lying between Cape Race, exclusive and Big Barachois, in St. Mary's Bay, bounded as follows: By a line commencing at Big Barachois, running thence West 10 miles, thence in a straight line to and excluding Placentia Junction, thence by Districts of Trinity South and Harbour Main S. 57° E. to the West boundary of Ferryland District, thence following the West boundary of said District to Cape Race, exclusive, together with the islands in St. Mary's and Trepassey Bays. PLACENTIA EAST (28) The District of Placentia East shall consist of and include all that part of the Island lying between Big Barachois, in St. Mary's Bay, and Glenview on the Come-By-Chance River, bounded as follows: By a line commencing at the mouth of Big Barachois and running West 10 miles, thence in a straight line to and including Placentia Junction, thence by the West side of the Railway Track to Glenview Station, thence Westerly to Come-By-Chance River, thence following the centre of the Come-ByChance River to its mouth, and thence by the shore to the place of commencement, together with Crawley's Island, Long Harbour. PLACENTIA WEST (29) The District of Placentia West shall consist of and include all that part of the Island lying between Glenview and Rushoon West (inclusive) bounded as follows, that is to say: By a line commencing at the centre of Come-By- Chance River at Glenview, running thence West 4 miles, thence North 10 miles to the 48° of Latitude, thence along the said degree of Latitude 24 miles, thence South 25 miles, thence S. 37° W. IVi miles, S 60° W. 17 miles, S. 48° W. 7 miles and S. 21° W. 5Vi miles, thence in a straight line to and including Rushoon West and including all the islands in Placentia Bay North of Davis and Flat Islands, except Crawley's Island, Long Harbour. BURIN EAST (30) The District of Burin East shall consist of and include all that part of the Island lying between Rushoon West, exclusive, and Chamber's Point, bounded as follows, that is to say: By a line commencing at Chamber's Point and running thence N. 10° E. 16 miles, thence N. 43° E. 17 miles or thereabouts to the South West corner of the District of Placentia West, thence in a straight line by the South boundary of the said District to Rushoon West (exclusive), together with Flat Island and Davis Island, and all other adjacent islands. BURIN WEST (31) The District of Burin West shall consist of and include all that part of the Island lying between Chamber's Point and Devil Brook Head, bounded as follows: By a line commencing at Chamber's

10

NATIONAL CONVENTION

point, and running by the District of Burin East, N. 10° E. 16 miles, N. 43° E. 17 miles or thereabout, to the Southwest corner of the District of Placentia West and thence in a straight lint to and including Devil Brook Head, together with the islands adjacent thereto, except Brunette Island. FORTUNE BAY (32) The District of Fortune Bay shall consist of and include all that part of the Island lying between Devil Brook Head, exclusive, and Deadman's Bight, bounded as follows, that is to say: By a line commencing at a point at Deadman's Bight running thence N. 34° E. 14 miles, thence N. 69° E. 8 miles, thence North to the 48° of Latitude, thence following the said degree of Latitude to the Southwest corner of the District of Trinity Centre, thence South 25 miles, S. 37° W. IVz miles, S. 60° W. 17 miles, S. 48° W. 7 miles, S. 21° W. 5 Vi miles, to the south west corner of the District of Placentia West, thence in a straight line t and excluding Devil Brook Head, together with the Islands of Brunette and Sagona and the other islands adjacent thereto. HERMITAGE (33) The District of Hermitage shall consist of and include all that part of the Island lying between Deadman's Bight and Fox Island (exclusive) bounded as follows, that is to say: By a line commencing at Fox Island and running North until it intersects the 48° of Latitude to the Northwest comer of the District of Fortune Bay, thence by said District of Fortune Bay south 22 miles, more or less, S. 69° W. 8 miles and S. 34° W. 14 miles, more or less, to Deadman's Bight, together with the islands adjacent thereto. BURGEO (34) The District of Burgeo shall consist of and include all that part of the Island lying between Fox Island, inclusive, and Cape Ray, inclusive, bounded as follows, that is to say: By a line commencing at Fox Island and running North until it intersects the 48° of Latitude, thence West along the said degree of Latitude to a point bearing N. 44° E. from Cape Ray, thence following the last mentioned line to and including Cape Ray, together with the islands adjacent thereto. ST. GEORGE (35) The District of St. George shall consist of and include al that part of the Island lying between Cape Ray, exclusive, and River St. George, bounded as follows: Commencing at a point at Cape Ray and running N. 44° E. to River StGeorge, thence following the centre of the said river to its mouth, and thence by the shore to the place of commencement, together with the islands adjacent thereto. PORT-AU-PORT (36) The District of Port-au-Port shall consist of and include all that part of the Island lying between St. George's River and Bluff Head, Port-au- Port, bounded as follows: Commencing at the centre of the mouth of St. George's River, running up the centre of the said river to the Northeast corner of the District of St. George, thence N. 44° E. to Grand Lake, thence following the South and East shore of the said lake to a point bearing East from Bluff Head, thence West to Bluff Head, together with the islands adjacent thereto. HUMBER (37) The District of Humber shall consist of and include all that part of the Island lying between Bluff Head in Port-au-Port Bay and the centre of the mouth of Gregory River, bounded as follows, that is to say: By a line commencing at Bluff Head and running East 75 miles, thence North 12 miles, thence East 17 miles, thence North 25 miles to a point bearing East from the centre of the mouth of Gregory River and thence West to the centre of the mouth of Gregory River, together with the islands adjacent thereto. LABRADOR (38) The District of Labrador shall consist of and include all that part of the Labrador Peninsula forming part of the territory of Newfoundland and separated from the Dominion of Canada by a line drawn due North from the Eastern boundary of the bay or harbour of Blanc-Sablon as far as the

PAPERS AND REPORTS

11

fifty-second degree of North Latitude, and from thence Westward along that parallel until it reaches the Romaine River, and then Northward along the left or East bank of that river and its head waters to their source and from thence due North to the crest of the watershed or height of land there, and from thence Westward and Northward along the crest of the watershed of the rivers flowing into the Atlantic Ocean until it reaches Cape Chidley, together with the islands adjacent thereto. SECONDSCHEDULE [Documents to be used in the election.]

Note: On 19 July 1946, the Commission of Government passed the National Convention (Labrador) Act, to provide for the election of a Labrador representative. On 6.December 1946, the Commission amended the National Convention Act to provide for the appointment of a Chairman who was not a judge of the Supreme Court.

12

NATIONAL CONVENTION

Results of the June 1946 Election The vote was held on 21 June in all districts except St. Barbe (11 July), White Bay (11 July), and Labrador (6 September). District

Name

Number of Votes

Bay de Verde

P. Wellington Crummey

Acclamation

Bay Roberts

Wilfred Dawe Leonard T. Stick William E. Mercer Adrian Dawe Allan Morgan Allan A. O'Keefe

718, elected 353 198 101 88 77

Bell Island

David T. Jackman Maxwell Huchings John F. Flemming

2,045, elected 608 57

Bonavista Centre

Joseph R. Smallwood Kitchener Pritchett

2,129, elected 277

Bonavista East

F. Gordon Bradley Edward G. Cook

1,029, elected 490

Bonavista North

Samuel F. Vincent

Acclamation

Bonavista South

Kenneth M. Brown

Acclamation

Burgeo

Percy Figary Charles L. Clarke Frances Pike

666, elected 551 313

Burin East

Edward P. Reddy Frank Pearce George R. Bartlett Thomas LeFeuvre

1,09 l,elected 730 300 167

Burin West

Daniel Hillier John R. Dixon

Carbonear

Albert E. Penny Graham W. Howell

1,045, elected 761

Ferryland

Alfred J. Goodridge Gregory L. Greene

1,485, elected 817

Fogo

Alfred Watton, Jr.

Acclamation

857, elected 644

13

PAPERS AND REPORTS Fortune Bay

William J. Banfield

Acclamation

Grand Falls

Malcolm M. Hollett Kenneth M. Macdonald James L. Hanniford Norman Munn Phillip J. Ryan Cyril L. Courage Ignatius Robinson John A. Spencer Patrick T. Brown

2,324, elected 1,495, elected 1,076

Green Bay

Roland G. Starkes Sydney T. Jones Cyril C.Pelly Truman S. Short

1,130, elected 345 258 213

Harbour Grace

Colin G. Jones Alfred E. Simmons Michael Jones Thomas Collett

Harbour Main

Thomas H. Kennedy J.A. Hannon JJ. Crawley M. Devereaux Gregory C. Devereaux J. St. John JJ. Terry

1,016, elected 889, elected 780 481 386 313 289

Hermitage

John T. Spencer

Acclamation

Humber

Pierce Fudge Charles H. Ballam William C. Janes Martha Hann Robert K. Prowse

2,73 l,elected 1,624, elected 992 590 459

Labrador

Rev. Lester L. Burry P. Stevenson J. Rockwood L. Brazil P. Bradley

623, elected 114 111 75 61

Lewisporte

Archelaus Northcott Joseph J. Thompson Sydney Wells Douglas Rideout

453, elected 260 180 150

725 271 264 190 170 102

677, elected 663 142 81

14

NATIONAL CONVENTION

Placentia East

Leonard J. Miller Gregory J. Power James P. Verran

1,073, elected 594 584

Placentia West

Dennis L. Ryan James McCarthy

929, elected 622

Port-au-Port

Michael J. McCarthy Michael J. Abbott William B. Hogan

548, elected 445 277

Port de Grave

Joseph P. Fowler Ralph R. Wood Frederick Hussey

536, elected 373 173

St. Barbe

Edgar L. Roberts

St. George's

William J. Keough Temple Butler

St. John's City East

Gordon F. Higgins Edgar L. Hickman Robert B. Job W. Gordon Warren William Roberts William W. Gillies Wickford Collins William J. Frampton George Whiteley

4,998, elected 3,554, elected 3,019, elected 2,584 2,358 1,861 1,604 1,571 377

St. John's City West

Chesley A. Crosbie Peter J. Cashin Michael F. Harrington James A. Gibbs Frances B. Holmes Eric Bowring Richard Cramm Phillip Forsey Richard R. Parsons Joseph D. Ashley George Wilkinson Frank Bennett

5,770, elected 4,685, elected 2,431, elected 2,181 1,743 1,583 1,299 1,076 994 876 517 225

St. John's East Extern

Frank D. Fogwill Patrick J. Shea John A. Byrne Eric W. Clarke

Acclamation 828, elected 526

857, elected 628 526 308

15

PAPERS AND REPORTS St. John's West Extern

Albert B. Butt Charles Penny Frank Viguers

1,411, elected 1,148 625

Trepassey - St. Mary's

John J. McCormack

Acclamation

Trinity Centre

Edmund C. Cranford Solomon Drodge Eldred Mercer

772, elected 483 245

Trinity North

Reuben T. Vardy Joseph A. Pearcy Andrew Green Albert T. Pittman Whitefield Laite Frederick A. Day

726, elected 373 272 242 221 140

Trinity South

Charles L. Bailey Carman G. Button Hubert J. Bryant William Stentaford

575, elected 356 268 180

Twillingate

Thomas G.W. Ashbourne John R. Manuel Stanley J. Andrews

535, elected 378 326

White Bay

Isaac Newell P. Pomeroy

2,131, elected 532

16

NATIONAL CONVENTION Dominions Office Report on the Financial and Economic Position of Newfoundland June, 1946 Cmd. 6849 [Prepared by G.W. St.J. Chadwick (Dominions Office) and E. Jones (Treasury)] Report on the Financial and Economic Position of Newfoundland

Section I Introduction 1. In 1933 financial difficulties, combined with the economic effects of the world wide depression, led the Newfoundland Government to approach the United Kingdom Government for assistance. A Royal Commission was appointed to examine into the future of the Island. Its Report (Command Paper No. 4480) recommended that the existing form of constitution should be suspended until such time as the Island again became self-supporting; that a Commission of Government, consisting of three Newfoundland and three United Kingdom members, and presided over by the Governor of the Island, should be created; and that the proceedings of the Commission of Government should be supervised by the United Kingdom Government. The Report having been adopted by the Newfoundland Legislature, the Newfoundland Act, 1933, was passed by the Parliament at Westminster and the new form of Government was inaugurated in Newfoundland in February 1934. 2. The Commission of Government have now held office for over twelve years. During the first half of this period the Island continued in financial difficulties but the war brought with it a period of prosperity which enabled the country to become self-supporting and to build up surplus balances. Under the agreement made with the Newfoundland people in 1933 a pledge was given that, as soon as the Island's difficulties had been overcome and the country was again self-supporting, responsible government would, on request from the people of Newfoundland, be restored. Accordingly, His Majesty's Government in the United Kingdom, having considered the changed financial and economic position of Newfoundland, it was announced by the Secretary of State for Dominion Affairs in the House of Lords on the 11th December, 1945, that steps would be taken as soon as possible to provide machinery whereby the Newfoundland people would be enabled "to examine the future of the Island and to express their considered views as to the form of Government they desire, having regard to the financial and economic conditions prevailing at the time". Briefly, His Majesty's Government proposed that elections to a National Convention of Newfoundlanders should be held in the summer of 1946 and that the Convention so established should review the alternative constitutional courses open to the Island and make recommendations to His Majesty's Government as a basis for a national referendum. 3. It was also proposed that "His Majesty's Government should prepare and make available for the Convention when it meets a factual and objective statement on the economic situation. This would analyse developments in revenue and expenditure since 1934, give particulars of maintaining the various public and social services, review the country's import and export trade, and the main branches of economic activity, and survey the principal lines of policy followed by the Commission of Government, and their financial implications." 4. This Report is the outcome of that proposal. Whilst it follows the lines indicated in the Secretary of State's statement, the aim has been to analyse and measure developments in the economy since 1934, which may have caused a permanent change in the economic and financial structure of the

PAPERS AND REPORTS

17

country. This task was rendered more difficult because of the economic distortions caused by war, the influence of which is still being felt, and of the sparsity, and in certain cases the complete absence, of relevant statistical indices. 5. In reading the following analysis, the general character of the Newfoundland economy and the geographical features of the Island should be borne in mind. Geographically, Newfoundland presents complex administrative and distributive problems. Roughly equal in area to Ireland, its population is for the most part dispersed in small settlements round the coastline, relatively few of which have any connections with the interior of the Island or with each other. There are in all some 1,300 small settlements or outports, and apart from the capital, St. John's, with a population of 63,000 there are at present only three towns in the country with more than 5,000 inhabitants. The population has continued to expand steadily and returns from the census taken in 1945 show a total population of some 316,000 as compared with 285,000 in 1935. Climatic conditions, the dispersal of the population and the very nature of the terrain necessarily restrict communications. There is a trans-insular railway system with a limited number of branch lines, but the road system is regional and is confined principally to the areas directly connected with the larger towns and settlements. Isolated areas rely almost entirely on shipping for their needs. The conditions described above impose a heavy burden on the central government and lead to a duplication in administration such as would be avoided in a more centralised community. The pronounced seasonal changes tend also to impose restrictions on the Island's economy, the two principal primary industries, fishing and logging, being governed above all by climatic conditions. The fishing season in its various phases extends from March to November; pulp and paper operations form a more or less continuous cycle, felling taking place in the woods in the summer months; the hauling of timber in the winter; and the driving or floating of logs in the spring. Consequently, the Island's two most important primary industries suffer from an inability to provide continual employment, and this in turn leads to a considerable mobility within the available labour force. 6. The extent to which the Newfoundland economy is dependent on the fishing industry is best illustrated by the figures of employment obtained from the 1935 Census. Of the gainfully occupied males at that date, over 60 per cent, worked in primary industries, and of these three-quarters were engaged in catching, curing and handling fish. Only 6.7 per cent, were occupied in manufacturing, and less than 6 per cent, in agriculture. The importance of the fishery is further enhanced by the fact that, owing to the Island's low manufacturing and agricultural output, nearly all goods consumed in Newfoundland have to be imported. In normal conditions, therefore, the size of the national income is in the main determined by returns from exports -especially exports of fish. It is this preponderant dependence on the outside world for the sale of a single product which chiefly explains the Island's economic and financial difficulties in the past. 7. This survey opens at a time when Newfoundland was at the lowest ebb of one of the worst depressions in her experience. In brief the country, following the financial crisis of 1930-32, was suffering from widespread unemployment, it was in acute financial embarrassment, its administration was disorganized and, generally, dire poverty prevailed throughout the Island. 8. The task confronting the Commission of Government was formidable. The immediate amelioration of suffering had to accompany and indeed take precedence over the positive reconstruction of the economy; day to day administration had to include a thorough reorganisation of the Civil Service; public finance had to be placed on a sounder basis without causing further distress, and the whole task had to be accomplished without the stimulus of a general recovery in exports. 9. World war brought to the Newfoundland economy the stimulus which peace-time trade failed to bring. After the fall of France she became a key point in the North American defence system. The extensive building of air, land and sea bases, leading to a large demand for Newfoundland labour, generated a rapid growth in the national income, a growth sufficiently large to make Newfoundland's public accounts balance for the first time in twenty years. When the defence projects neared completion and the artificial priming of the economy began to slacken, the fishing industry revived under the stimulus of large contracts placed by U.N.R.R.A. and as a result of allocations by the

NATIONAL CONVENTION

18

Combined Food Board, the prosperity was thus kept at the high level attained in the early years of the war. 10. This Report therefore falls naturally into two phases, pre-war, and war-time; periods of deficit financing and surplus financing in public accounts; of unemployment and full employment in the labour market; of passivity and activity in external trade. The prosperous years enabled the Government to carry out social and public measures for improving health, welfare, education and public utilities, which the country could not afford in the years of depression, and a higher standard of living was attained. 11. Yet if the war gave Newfoundland financial prosperity, this should not detract from the significant contributions which the Island made in sending some 10,000 men overseas to fight in the armed forces or to work on war projects; in lending over twelve million Canadian dollars free of interest to the United Kingdom at a time of acute dollar shortage; in bearing a heavy loss in shipping, and in providing defence bases on her own territory to the United States and Canadian Governments. Section II Public Revenue and Expenditure (i) General 12. The history of public finance in Newfoundland between the two wars is that of a continuous series of unbalanced budgets. During the 1914-18 war a period of prosperity was enjoyed owing to the high price of codfish. The fall in prices after the war led to a sharp decline in revenue, and from 1920 onwards current revenue fell short of current expenditure year by year. The deficits ware met by borrowing from abroad and within twelve years the public debt was doubled. Even in the prosperous years of 1929 and 1930 further borrowings had to be made in order to balance the budget, and when the full effect of the world depression was felt in 1931 and the price offish fell, the country was faced with bankruptcy. The average annual budgetary deficit from 1920 to 1932 was $2 million, the average revenue being $9.2 million per annum and expenditure $11.2 million. Consequently the Royal Commission appointed in February, 1933, reported in October of the same year that the Island was in extreme difficulties and in imminent danger of financial collapse. 13. The Commission of Government assumed office after considerable improvements in financial administration had already been brought about by successive Controllers of the Treasury appointed from the United Kingdom, but as had been expected by the Royal Commission, the series of budgetary deficits was not broken since the volume of revenue was still severely limited by the low yield of the fishing industry. A system of Grants-in-Aid from the United Kingdom Exchequer, however, prevented the further rapid growth of the national debt, and when the budget was compiled each year, the difference between estimated expenditure and revenue was balanced by such Grants-in-Aid. This policy was pursued as long as a budget deficit was in the offing. In addition borrowings, mainly for self-liquidating projects, were made from the Colonial Development Fund. 14. The course of total revenue and expenditure from 1934 onwards was as follows:TABLEI REVENUE AND EXPENDITURE ($ million) Year ending:30th June 30th June 30th June 30th June 30th June 30th June 30th June

1935 1936 1937 1938 1939 1940 1941

Revenue*

Expenditure**

Deficit (-) or Surplus (+)

9.6 9.8 11.0 12.3 11.2 12.6 16.2

11.6 13.0 13.0 14.1 15.3 17.4 15.8

-2.0 -3.2 -2.0 -1.8 -4.1 -4.8 + 0.4

PAPERS AND REPORTS 30th June 1942 3 1st March 1943 3 1st March 1944 3 1st March 1945 31st March 1946

23.3 19.5 28.6 33.3 33.4

16.1 15.8 25.2 26.3 29.1

19 + 7.2 + 3.7 + 3.4 + 7.0 + 4.3

* Excluding Grants and Loans. ** Including debt servicing but excluding loans and gifts to H.M.G. The table above shows that up to June, 1940, there was a slow growth in revenue, partly as the result of deficit financing, and a slightly greater growth in expenditure, chiefly as the result of "special" and "reconstruction" schemes. The cumulative deficit for the six years ending June 30, 1940, was about $ 18 million; this was met in the main from Grants-in-Aid amounting to $11.3 million; from loans from His Majesty's Government of $4.5 million, and from the floating of an internal loan of $1.5 million. 15. After remaining at an average level of $12 million per annum during the three years ending March, 1940, current revenue, under the impetus of wartime developments, rose to over $16 million in 1940-41 and thereafter climbed year by year to reach a level of $33.4 million in 1945-46. Parallel with the increase in revenue there was a growth of internal lending in the form of war loans and the purchase of Savings Certificates. The Government could now afford to expand its normal and reconstruction expenditure, but even after repaying certain outstanding debts and servicing the National Debt, the yield from taxation and borrowing was high enough to bring about a budget surplus year after year. The result of almost six years of wartime financing was to yield a cumulative surplus of about $26 million, to which must be added $6.5 million from public borrowing. Out of this total of $32.5 million some $12.3 million was lent to the United Kingdom, $0.5 million was provided as a free gift for the setting up of a Spitfire Squadron, and the remainder was allowed to accumulate as Bank deposits. 16. The sudden change from budgetary deficits to budget surpluses was due almost entirely to the growth in the national income arising from large scale spending by foreign governments on defence projects. Deficit financing was on too limited a scale to bring about a similar improvement in the economy, for expenditure was related to prospective revenue, and so long as exports were passive no large increase in revenue could be expected. In total, the deficits from 1934 onwards were roughly equivalent to the burden of servicing the external national debt. Sums over and above this had to be spent in bringing about a diminution in unemployment and a rise in the national income, but the simple nature of the economy, and its extreme reliance on external demand for its primary products provided little opportunity for an expansionary budget policy. It required a vast scale of expenditure on war purposes to create a prosperity sufficient to outbalance the depressed export industries and to yield a revenue large enough to exceed current internal expenditure and the interest on the national debt. Later, the growth of revenue was helped by the recovery of the export industries and by the fact that the financial cost of the war to Newfoundland was small. Aggregate expenditure for war purposes throughout the period of hostilities amounted to less than 8 per cent, of total public expenditure. A short account of the Newfoundland war effort will be found at Appendix A. (ii) Direct and Indirect Taxation 17. The means of obtaining revenue throughout the pre-war and wartime years was that of (a) direct taxation on incomes, and (b) indirect taxation through the imposition of customs and excise duties. The pre-war years saw little change in the proportion which these two traditional sources of revenue bore to each other. At the outbreak of war some 70 per cent, of revenue was still being derived from customs duties. But the emphasis during the war was on direct taxation and, as will be seen from the following table, revenue was increasingly drawn from this source:-

20

NATIONAL CONVENTION TABLE 2 Income and Excess Profits Taxes

Fiscal Years

1918 to 1940 1941 1942 1943 (9 months) 1944 1945

Percentage of Total Revenue

$ million 16.6

7.5

2.1 3.2

13.0 13.6 11.6 26.6 28.8

2.3 7.6

9.6

The major changes in both forms of taxation are discussed in the following paragraphs. (a) Customs Duties: The only increases in customs duties to be introduced by the Commission of Government were imposed during the war when duties on 26 luxury items were raised. The emphasis lay rather in reductions in the rates on various essential commodities. A special wartime customs duty of IVi per cent, ad valorem was imposed in November, 1940, on all goods except those imported from the British Empire, excluding Canada. Exemptions from this duty were made from time to time in the case of necessities and the tax was finally removed in April, 1946. In all duties on 206 items were reduced and some 24 items were put on the free list during the twelve years under review. The net result (see Table 3 below) was to reduce the average rate of duty from 36.5 per cent, to 25.5 per cent. TABLE 3 Year

Value of Imports

Aggregate and Net Import Duties

Average rate of Duty per cent.

1933/34 1939/40 1943/44 1944/45

16.3 28.4 46.6 57.0

5.9 7.7

36.5 27.2 25.6 25.5

11.9 14.5

(b) Income Tax: The increase in revenue from direct taxation was achieved by increasing the rates and scope of the tax Acts and by improving the inspection of tax returns. Between the years 1931 and 1939 there were no changes in the rates of taxation either on personal income or on the income of corporations. The first increase took place in 1940 and further increases occurred in the following two years, but no changes have taken place since 1943. The rates were raised by the imposition of super tax and surtax rather than by a stepping up of normal tax rates. Since 1931, when the exemption limits for married and single persons were lowered to $2,000 and $1,000 respectively, no steps have been taken to tax earnings below these levels, principally because a major part of revenue was derived from indirect taxation, but to some extent also because of the physical difficulties of tax collection. A tax on excess profits of business corporations was first imposed on profits made in 1941, the rates being increased in the following year: provision was also made for determining the standard profits of new businesses and of undertakings depressed during the standard period. On profits in excess of the standard the tax is now 25 per cent, on the first $5,000 of excess profits plus 50 per cent, on the balance, but the total of Income Tax and excess profits tax may not exceed 42 Vi per cent, of taxable income. Apart from taxes on individuals and corporations, special taxes have been applied to Fire and Life Insurance Companies, Banks and Trust Companies and Personal Holding Corpora-

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21

tions, whilst in 1942 a withholding tax was imposed on dividends, interest, etc., paid to non-residents. In the same year residents were compelled to complete Ownership Certificates when presenting for payment bearer coupons, interest cheques or dividend cheques, and the certificates were then checked against the taxpayer's declaration of income. The introduction of the Ownership Certificates showed that prior to 1942 taxpayers had not in all cases declared their investment income. As a result returns were adjusted on the basis of the information gained and considerable revenue was collected in respect of back years. The only change made in the Death Duties Act since it was revised in 1934 was the addition of a surtax of 10 per cent, to duties on estates of less than $5,000 and of 25 per cent, on estates of over $5,000. Revenue from this source has remained at a relatively low level. From the following table it will be seen that almost 70 per cent, of the revenue collected by the Assessor comes from taxes on corporations, the bulk of the remainder being derived from taxes on individual incomes. TABLE 4 DISTRIBUTION OF DIRECT TAXATION 1945 (Nearest $ thousand)

Individuals Corporations: Income Tax Excess Profits Tax Insurance Companies Bank and Trust Companies Non-resident Dividends, etc. Rents Personal Holding Corporations

4,035 2,622

Amount Collected

Per Cent.

2,221

23.1

6,657

69.5

156 327 183 32 14

9,590

1.6 3.4 1.9 0.3 0.21

100.0

Between 1940 and 1944 the number of tax payers increased from 3,000 to over 10,000 although, as has already been stated, taxes were not extended to cover the lower income groups. No figures are available of the numbers paying tax within different ranges of income, but it is evident that the number of persons in the middle and upper income groups has grown considerably during the war. Part of the increase in revenue can be explained by the greater numerical strength and efficiency of Tax officers, (c) Liquor Profits: Another substantial source of revenue in recent years has been the profits of the Board of Liquor Control. Before the war annual revenue from liquor profits was below half a million dollars; in the three years from 1943 onwards it averaged over one and three quarter millions. The increase was due to greatly increased sales and, to a lesser extent, to the imposition of heavier duties. (iii) National Debt and Liquid Assets 18. As soon as the Newfoundland Act, 1933, had been passed by the United Kingdom Parliament, steps were taken by His Majesty's Government in the United Kingdom, in collaboration with the Newfoundland Government, to effect a reduction in the burden of the public debt. Part of the debt was redeemed and almost the whole of the remainder was converted into a new sterling stock bearing interest at 3 per cent, and guaranteed as to interest and principal by His Majesty's Government in the United Kingdom. The annual outgoings for the debt service were thus reduced to $3,100,000 a reduction of over $2 million on the provision made for this purpose in the Budget. During the war the Commission of Government took advantage of the higher receipts to liquidate certain outstanding

22

NATIONAL CONVENTION

pre-war loans totalling about $4.75 million. To achieve this $3.5 million was raised by fresh borrowing and $ 1.25 million was contributed from current revenue. Concurrent with the reductions in debt there was a steady growth in Exchequer balances (see Appendix C, Table I). By the end of March, 1946, Government liquid reserves stood at about $28.7 million compared with a negligible working balance throughout the pre-war years, and by the same date the National Debt (after allowing for changes in exchange rates) was below the pre-war level. Thus, during the twelve years under survey, Newfoundland's total National Debt was reduced, the annual cost of servicing it had fallen, and the Island's reserves were considerably increased. (iv) Bank Deposits and Insurance Transactions 19. The increase in Government reserves was accompanied by a substantial growth in the private and business deposits held by the Canadian banks functioning in Newfoundland. Deposits of individuals (i.e., excluding Government deposits), which had remained practically unchanged at $30 million during the five years before the war rose thereafter to a level of $90 million at the end of 1945. (See Appendix C, Table 4.) During the same period loans to the public remained at their pre-war level. A further indication of changes in income was the number and value of insurance policies issued by the many Canadian Insurance concerns operating in Newfoundland. From Appendix C Table 5 it will be seen that the number of policies in force and their value increased between 1935 and the end of 1944 by 60 per cent, and 62 per cent., respectively. 20. As already pointed out, it is apparent that the considerable improvement in Newfoundland's financial position has been largely due to fortuitous extraneous influences. The construction of defence bases brought about a recovery which peace time trade and public expenditure failed to achieve, but such an expansion was artificial and should not hide the fact that the long-term prosperity of the Island ultimately depends on a flourishing export trade. Nevertheless the war helped to place the finances of the country on a sound credit basis and Newfoundland will enter the post-war era with considerable balances in hand. Section III The Public and Social Services (i) General 21. Expenditure in Newfoundland to-day is three times as high as expenditure in 1934. Most of this growth is due to the high cost of maintaining the public and social services and is the outcome of a policy calculated to improve and expand these services. The responsibilities assumed were undertaken in answer to the urgent needs of a country desiring a better standard of living, and it was to be expected that a large part of any increase in revenue would go towards these purposes. 22. Expenditure on the public and social services covers current costs of maintenance and capital expenditure. In certain branches, such as health, the effects of both kinds of expenditure are treated together; in others, such as the fisheries, capital investment by the Government, known better as "Reconstruction Expenditure", has formed a new avenue of spending, the effects of which are discussed separately. The latter type of expenditure arose from a decision taken in 1936 by the Commission of Government, with the approval of the United Kingdom Government, to prepare a long term reconstruction programme and to allocate special sums for this purpose in the annual Newfoundland Estimates over and above the normal budgeting requirements of the country. The various reconstruction schemes, which were calculated to involve expenditure amounting in all to roughly $8 million, were destined to cover five main fields, namely, the fishing industry; the forest, mining and other industries; agriculture and land reclamation; education; and public health and welfare. The outbreak of war caused considerable dislocation in the plans originally embarked upon by the Commission, but special sums continued to be set aside annually in the Estimates. The cost of reconstruction measures under departmental headings is set out in Appendix C, Table 3. Further reference is made in Appendix B to the Commission of Government's post-war reconstruction schemes.

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(ii) Colonial Development Fund 23. Many of the reconstruction schemes had their origin in advances made to the Newfoundland Government from the Colonial Development Fund. The sums voted from the Fund by way of loans or free grants included loans for the development of the fisheries, principally to encourage the construction of schooners and of small boats and the erection of bait depots; a loan for the development of land settlements; loans for the improvement of existing communications and for the construction of new roads, railway and wharf facilities; and miscellaneous loans for the development of timber resources in the Labrador, and for the promoting of game. Two small free grants were also made to assist the Geodetic Survey and the Co-operative movement. In 1940, following the passing of the Colonial Development and Welfare Act (which does not apply to Newfoundland), all the unliquidated loans advanced to the Newfoundland Government from the Colonial Development Fund were converted into free grants, with the exception of two advances previously made in connection with railway development and for the encouragement of timber production in Labrador, which were held to be of a self-liquidating character. Monies drawn from the Colonial Development Fund were used as follows: TABLE 5 ($ thousands)

471 482

Fisheries Land Settlement Road and Railways Miscellaneous Total

2,324

306 3,583

(iii) The Social Services 24. The increase in the annual costs of maintaining the social services at given periods over the last twelve years can be seen from the following table: TABLE 6 COSTS OF MAINTAINING THE SOCIAL SERVICES ($ millions) Year

Public Health

Relief and Welfare

Education*

1934/35 1937/38 1941/42 1943/44 1944/45 1946/47**

0.6 1.0 1.3 2.0 2.4 3.1

1.6 1.6 0.8 0.9 1.0 1.3

0.7 1.1 1.4 2.0 2.4 2.9

Miscellaneous Services

Total

—

2.9

0.03 0.05

3.73 3.55

0.1 0.4 0.7

5.0 6.2 8.0

* Including teachers' salaries. ** Estimated. Except in the case of relief and welfare, and of certain minor miscellaneous services, the increased expenditure was in the main directly attributable to the Government's various social rehabilitation measures, which have resulted in a steady expansion in the number of hospitals, institutions and schools available to the community; in the personnel required to operate them; and consequently in

24

NATIONAL CONVENTION

increased demands for supplies and materials of all descriptions. (a) Public Health: Between 1934 and 1945 sums amounting to approximately $2,500,000 were spent on the construction or extension of Government hospitals and institutions. Prior to 1934 there were five Government operated hospitals in Newfoundland, all of which were situated in St. John's. In addition there were four institutions to which the Government made grants, and three hospitals operated by private companies. Shortly after the Commission of Government assumed office, they put into effect a plan for the construction at strategic points around the coastline of a number of cottage hospitals, each containing accommodation for from twelve to twenty-five patients. Between the years 1935 and 1945 a total of 13 such hospitals were completed, and 4 additional nursing stations were opened. Other major plans for the rehabilitation of the health services included the extension of the present Tuberculosis Sanatorium and the addition of a new wing to the General Hospital in St. John's. Since the start of the war further clinics and medical facilities have been made available to the public and a Merchant Navy Hospital, which was primarily a war time project, has also been put into operation. More recently the Commission have been in negotiation with the Canadian Government with a view to taking over from the latter certain hospitals which were constructed in Newfoundland during the course of the war by the Canadian Armed Forces, and early in 1946, three institutions having a total accommodation for 700 patients, were acquired by the Newfoundland Government. The effects of these measures are summed up in the following table: TABLE 7 Year

Medical and Hospital Personnel

Patient days of treatment

Beds available in Government Institutions

1935 1938 1941 1944 1945

356 556 617 876 1,031

360,000 412,000 489,000 554,000 568,000

1,016 1,390 1,550 1,680 2,419

Apart from major reconstruction measures, professional services to the sick poor have been increased and the activities of the District Nursing Service have been considerably developed. Whilst in 1936, the first year for which figures are available, 26,000 cases were treated by district nurses, the number had risen to 40,000 in 1945. Through school medical inspection services increased attention has been paid to the health of children: a venereal disease clinic has been in operation since 1936, and a travelling X-ray unit has been attached to the Department of Public Health for the purpose of carrying out surveys of the incidence of tuberculosis, and to advise on preventive measures. The training of nurses and midwives; the inspection of foodstuffs; campaigns for immunization of the population - and especially of children - against communicable diseases, and the work of travelling clinics and hospital ships are other services which have been considerably expanded during the last twelve years. In the opinion of the medical authorities in Newfoundland it remains a fact however, that despite the increase in general health facilities which has taken place since 1934, hospital accommodation and the other services available to the public are not yet sufficient to cover the needs of the whole population. All types of hospital are in fact regarded as falling considerably below the requirements regarded as minimum standards for institutional treatment. (b) Relief and Welfare: The Department of Public Health and Welfare is responsible for the administration of old age pensions; allowances to widows, orphans and infirm persons; and relief measures for the casual sick and able bodied unemployed. The annual allowance to old age pensioners, of whom there are at present some 3,000, amounted when the Commission of Government assumed office, to $50 per head. It has since been increased, and now stands at $120 per annum for man and wife and $72 per annum for man or widow. The standard of allowance payable to widows, orphans

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and the infirm is based on a simplified form of means test and varies from $40 to $60 for widows, with an additional $48 per annum for each child under 16 years. The average number of persons in receipt of such allowances during the past twelve years was 7,800. Whilst the above mentioned services have steadily expanded, expenditure on able bodied relief showed a marked decline between the outbreak of war and the close of the financial year 1944/45, unemployment between 1940 and the later date having been reduced to negligible proportions as the result of the work offering at the Canadian and United States Military Bases, and of the increased demands for Newfoundland fish products. The absence on war service overseas of some 10,000 men of employable age was also a factor in reducing the potential figure of unemployment. Prior to 1934 the payment of relief to unemployed persons was made in kind instead of in cash, and the goods received represented, generally speaking, a maximum value of $ 1.80 for each person per month. This system was continued by the Commission of Government with periodic improvements in the standard of the foodstuffs issued, until 1942, when it was decided to make direct cash grants to persons qualifying for this assistance. These now amount to $4.00 per head per month throughout the Island, with the exception of St. John's and Bell Island where the rate is somewhat higher, (c) Education: Education in Newfoundland is, with few exceptions, based on the denominational system, and the population is divided roughly in a proportion of 33 per cent. - 33 per cent. - 26 per cent, as between Anglican and Roman Catholic Churches and the United Church of Canada, the Salvation Army accounting for some 5/6ths of the remainder of the community. Policy is initiated through the Educational Council, of which the Commissioner for Education is Chairman, and the Secretary of the Department Vice-Chairman. The executive officers of the Department, who are also the official representatives of their respective denominations in the Department, are the other members of the Council. The school curriculum at present in use was adopted in 1935 and is based upon recommendations submitted by a Curriculum Commission established by the Government in 1933. Under a recent amendment to the Education Act of 1927, which is the authority for the present educational system, provision has been made for the allocation of grants to local Boards of Education for the payment of teachers' salaries. Grants are now based on pupil enrolment and on the number of classrooms instead of on the adult population of each denomination per district. The amending Act also provides for the payment of minimum salaries to teachers in accordance with an established salary scale. In 1942 the Commission of Government passed an Act providing for the free and compulsory education of children between the ages of seven and fourteen; and in 1943 a further Act was introduced providing for the setting up, under local Boards of Education, of "common" or inter-denominational schools, and for their absorption into the present public school system. The annual recurrent costs of maintaining the educational services have risen from a little over $700,000 in 1934-35 to an estimated total for the financial year 1946-47 of just under $3 million. Expenditure first began to rise steeply from 1937 onwards when long term plans for the improvement of the educational services were begun. Following a slight lessening of activity during the early war years, maintenance costs from the start of the financial year 1943-44 again showed a rapid increase. The overall rise in current charges is attributable to two main factors: first, the Government's school reconstruction programme, and secondly, the decision arrived at by the Commission of Government in 1944 to revise their form of contribution to the cost of teachers' salaries. The direct outcome of the school reconstruction programme was to increase the number of teachers and of pupils attending school, and to impel the Government to make larger annual grants to local Boards of Education. The cost of materials supplied to schools also rose proportionately. Expenditure on teachers' salaries, which had already risen as the result of war bonus awards which became payable from 1941 onwards, was further increased in the financial year 1944-45. The expanding liabilities of the Government in the matter of salaries and of grants to denominational and other educational bodies will be seen from the following figures:

national coonvention

a

TABLE 8 Year

Salaries, Grants, etc. $ 696,000 1,094,000 2,350,000

1935/36 1941/42 1946/47 (Estimated)

Expenditure on the maintenance and repair of school buildings and on the provision of supplies alone amounted to $205,000 for the year ending March 21st, 1946, and the average monthly salary of teachers advanced from some $40 in 1936 to $85 in 1944. Prior to 1938, direct expenditure by the central Government on the construction or extension of school buildings and on the provision of equipment for schools had been of a low order. As part of the Commission's general reconstruction scheme a school building programme was, however, begun in 1938, and total expenditure had by March 31st, 1946 amounted to $1,875,000. The following figures indicate developments in the educational field between 1936 and 1945: TABLE 9 Year

Classrooms

Teachers

Pupils

Percentage average of daily attendance

1936 1939 1942 1944 1945

1,604 1,776 1,865 1,950 2,047

1,726 1,889 2,014 2,114 2,227

60,000 65,900 66,100 67,600 69,000

66 68 67 72 73

(d) Local Government Service Prior to the passing of the Local Administration Act in 1937, the only municipal body in Newfoundland was the St. John's Municipal Council. Under the Act of 1937 provision was made for the setting up of local councils. In 1941 the Government decided to grant financial assistance to newly created local authorities on a dollar for dollar basis, the Commission subscribing one dollar for every dollar collected by a local council in rates, taxes, etc., up to a maximum of $3,000; an additional 50 cents on every dollar raised by any such authority above $3,000 and up to $10,000, and a further 20 cents for each dollar raised above that figure. The first local council to be set up under the Act was formed in 1938, and by March, 1946, ten such bodies were in existence. With a view to encouraging the growth of the movement the Commission decided in 1944 to appoint an officer to deal with Local Government matters and at the same time announced their intention of making special grants to local councils for approved reconstruction projects. Expenditure by the Commission on local Government Services since 1942 has amounted to some $230,000. (iv) Public Services 25. The course of expenditure on the Public Services is set out in Appendix C, Table 7. The rise in expenditure is for the most part the direct outcome of reconstruction schemes covering the fisheries, communications and public institutions, but the impact of war on the Island, and the annual strengthening of the postal, customs, firefighting and Ranger services were also responsible for the increase in the current costs of maintenance which, between 1934 and 1945, rose from $1V^ million to over $5 million. Some items, such as the provision of civil and war pensions, have shown little tendency to expand, whilst in others, notably the postal and customs services, maintenance expenditure has doubled during the last twelve years. The most important changes have, however, occurred

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in the Departments of Natural Resources and Public Works, and the following paragraphs deal in somewhat greater detail with developments involving both recurrent and capital expenditure in these fields. (a) Public Utilities Between the years 1934 and 1940 sums amounting to over $1,800,000 were advanced from Colonial Development monies for road construction and reconditioning. The Commission, as part of their road reconstruction programme, expended between the years 1938-45 more than $4,900,000, overall expenditure thus amounting to more that $6V^ million. Estimated expenditure during the financial year 1946-47 is calculated to exceed $1,600,000. Since the Commission took office 250 miles of new highroads have been constructed, 200 miles have been reconstructed, and nearly 100 miles paved. In addition 210 concrete bridges have been built. At the present time, the Department of Public Works is responsible for the maintenance of some 2,200 miles of main and secondary roads as compared with 875 miles in 1934. The number of public buildings and institutions with which the Department is concerned has also increased considerably, and expenditure on the upkeep of public wharves and lighthouses continues to expand. (b) The Fisheries Since 1934 much attention has been paid by the Government and by fishing interests to the modernisation of the industry and to the improvement of the standards offish products generally. An analysis of the size and distribution of Newfoundland's overseas markets will be found in Section V below, and the following paragraph briefly describes the extent of the Government's assistance to the rehabilitation of the industry prior to the introduction of the postwar fishery development programme (as to which see Appendix B). Reconstruction measures undertaken by the Commission of Government between the years 1934 and 1945 included the construction of 14 bait depots and of a number of breakwaters at important fishing outports; the subsidization, with assistance from Colonial Development monies, of boat building; the provision of a bait intelligence service; participation with other interested Governments in a joint investigation into the habits of herring in waters close to Newfoundland; the construction of a fishery research vessel, and the extension of the existing Fishery Laboratory. In addition to the above measures the Government, in co-operation with the fish trade, have made considerable annual grants, amounting over the last ten years to nearly a million dollars, to the Newfoundland Fisheries Board, a statutory body which, created in 1936, was given wide powers by the Commission over the marketing of Newfoundland fish and fish by-products. Excluding the Government's post-war plans, fishery reconstruction measures undertaken between the years 1934 and 1945 led to expenditure of over $3,000,000. (c) Agriculture and the Co-operative Movement Advances from the Colonial Development Fund to the Newfoundland Government included a loan of $494,000 for the encouragement of land settlements, and of $18,600 for the creation of beaver and game reserves. In addition, advances from revenue for reconstruction purposes between the financial years 1937-38 and 1943-44 amounted in all to $1,940,000 making a total expenditure on schemes for the development of agriculture of a little under $2V5 million during the period in question. The principal objective of the Commission in the agricultural field was to find some means of combining the industry with, or of encouraging it as an alternative to, the fishery, in order to ensure as far as possible that the people should not be wholly dependent on the fluctuations of any one industry. During 1934 an experimental land settlement scheme was begun with the object of providing employment for one hundred families, all of whom were at that time in receipt of Government relief. By the end of 1938 five land settlements containing 171 families were in existence. This figure had grown by the end of 1944 to eight settlements in which 236 families were living. At that date the total of cleared agricultural land amounted to some 1,500 acres, and all the settlements, which had hitherto been in receipt of Government assistance, had become financially independent. The total cost of the scheme, including monies advanced from the Colonial Development Fund, amounted to just under $1 Vi million. In addition to this major project, the Commission's reconstruction schemes also covered th establishment of a Demonstration Farm and Agricultural School, the importation of livestock and poultry, and the loaning of pure bred stock for breeding purposes. A further measure was the encouragement of land clearing, the Government

28

NATIONAL CONVENTION

contributing in goods the value of $25 per acre cleared. Following the receipt in 1936 of a grant from the Colonial Development Fund for the services of a co-operative expert, the Commission lent encouragement to the co-operative movement as a measure of reconstruction in connection with their general land settlement policy. There are today 120 Co-operative Societies in Newfoundland as compared with 1 in 1934. Membership is now over 10,000 and assets owned by the various Societies amount to a little over $800,000. (d) Shipbuilding With a view to encouraging shipbuilding, and in order to increase the number of small cargo vessels in the local carrying trade, the Commission in 1942 opened a shipbuilding yard and between this date and the beginning of 1946 had built and launched ten wooden diesel engined vessels of 350 tons. These vessels are now in operation in the local, Canadian, West Indies and United States trades under the management of the Newfoundland Railway, and two of them are to be fitted with refrigeration space for the fish and fruit trades. In addition the Government have also build two specialised fishery vessels at the same yard. The total cost of this scheme, including the lay-out of the yard, amounted to just under $2 3/4 million. The Commission have, however, now decided that the yard cannot in peacetime be operated governmentally on an economic basis, and they are at present engaged in offering the buildings, plant, and machinery for sale in the open market. Apart from direct participation in the shipbuilding industry, the Government have also undertaken to increase the bounties payable to private builders, the subsidies having now been advanced to $90 and $70 a ton on vessels of not less than 20 and 12 tons respectively, subject to such vessels being used in the fisheries of Newfoundland for a period of at least five years. (e) The Newfoundland Railway Between the years 1923 and 1934 the Newfoundland Railway, with which are included the dockyard and Railway operated steamship services, incurred an overall deficit amounting to approximately $4,340,000. Treasury grants-in-aid to this amount were made from time to time by the Government, but the required monies were found in most cases from loan funds and not from the current revenue of the Island. From the financial year 1934-45 onwards, the operating expenses and earnings of the Railway were as follows: TABLE 10 Year

Operating Expenditure**

1934/35 1935/36 1936/37 1937/38 1938/39 1939/40 1940/41 1941/42 1942/43* 1943/44 1944/45

2,725 2,890 2,991 3,577 3,414 3,595 4,516 6,719 7,487 11,617 13,194

Farmings

(Figures in 000' s of dollars) 2,695 2,847 3,024 3,503 3,110 3,512 5,015 8,167 7,713 11,734 12,668

Deficit (-) Surplus (+)

+

30 43 33

-

304

74 83 + 499 + 1,448 + 226 + 117 - 526

* Nine months. ** Includes interest and principal repayments of loans from United Kingdom Funds but not charges for interest on capital or depreciation. Excluding Government subsidies to the Railway for the carriage of mail, etc., grants-in-aid during the eleven accounting years ended 31st March, 1945, amounted to $4,434,000. This sum included

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29

grants of $782,000 to make good losses on operations; additional working capital of $1,265,000; and advances for renewals, etc., totalling $2,386,800. In addition, the surplus on operations in the years 1940-41 to 1943-44, and the proceeds of the sale of discarded assets, amounting in all to $2,396,000 in the period to 31st March 1945, were retained by the Railway and expended on capital renewals and improvements. In addition to the sum of $2,286,869 devoted to capital account over the ten years in question the United States Defence Supplies Corporation in 1941 arranged a loan to the Newfoundland Railway of $2,100,000 repayable over 15 years at 2Vi per cent, interest. This loan is being devoted to the purchase of equipment and rolling stock, and at the end of the financial year 1944-45 the sums actually drawn amounted to $1,941,847. The net amount outstanding was $1,706,956 as repayments of $234,531 had been made by that date. Taking into account all sources of revenue, total expenditure by the Railway Administration on capital additions and improvements amounted between 1934 and 1945 to $8,574,486. From the table of operating expenses it will be seen that with the exception of the financial year 1936-37 the Railway incurred an annual loss averaging $107,000 between 1934 and 1940. Owing to the falling off of freight and passenger earnings following the end of the war a further loss of at least $500,000 is expected as the outcome of the financial year 1945-46. During the period of the war Railway operations showed a marked change which was directly attributable, as the following revenue figures show, to the increased passenger traffic and freight handled, and to the number of naval and merchant vessels requiring repairs at the St. John's dockyard. TABLE 11 Year

Freight

1938/39 1943/44 1944/45

1,172 2,706 2,992

Passengers

Steamer Service

(Figures in OOO's of dollars) 414 765 1,422 4,648 1,571 5,194

Dockyard

429 2,006 1,922

It cannot however be said that the net profit shown on the accounts between 1940 and 1944 is any true guide to the Railway's position, since in the absence of any approved method for the calculation of depreciation no real picture of the Railway's financial position can be obtained. Whether or not a Renewals Fund is ultimately created, the fact remains that large sums will be required annually for the replacement of wasting assets, and since the accounts for the financial year 1945-46 and the Estimate of expenditure for the present year show that the Railway is already unable to meet its operating costs, it is evident that the necessary contributions for renewals will have to be financed from the Exchequer. The estimated grant for renewals for 1946-47 amounts to $270,000, and this is in addition to a Treasury grant of $430,000 for capital improvements. There is no doubt therefore that if the Railway is to maintain an efficient service to the public, similar or larger Treasury grants will have to be provided by the Exchequer for some time to come. In addition, in order to replace three of the Railway operated Steamers, the Commission of Government recently approved plans for the construction of three further vessels in the United Kingdom at an estimated cost of $3 million. It may be stated here that the Railway Administration at present employs 3,070 permanent and 562 seasonal personnel. (v) Personnel and Salaries of the Government Service 26. The commitments referred to in the preceding paragraphs have led to the need for a larger administrative machine. The increase in personnel and the total of their emoluments are shown in the following table:

NATIONAL CONVENTION

30

table 12 government p Fiscal Year

Administrative

Clerical and Miscellaneous

Professional and Technical

Total

1934/35 1937/38 1941/42 1943/44 1944/45 1946/47**

96 107 98 102 122 131

850 1,610 1,722 1,850 2,000 2,230

550 1,173 1,184 1,386 1,491 1,765

1,496 2,900 3,006 3,338 3,613 4,126

Total Salaries $ m. 1.4 1.9 2.4 3.6 4.0 5.2

* Excluding teachers, railway and hotel employees. ** Estimated. Following the severe curtailment of staff and salaries which resulted from the years of depression immediately prior to the Commission's assumption of office, the Civil Service was reorganised, posts were graded and salaries and increments readjusted on a more equitable basis. The growth of staff reflects the increase in Government activities due to special wartime circumstances. There has also been some increase in rates of remuneration, including the payment of a cost of living bonus. 27. The table below shows the aggregate costs of administering and maintaining public and social services. TABLE 13 COSTS OF ADMINISTERING AND MAINTAINING THE PUBLIC AND SOCIAL SERVICES ($ millions) Year

Public Services

Social Services

Salaries and Civil and War Pensions

Total

Percentage of Total Expenditure**

1934/35 1937/38 1941/42 1943/44 1944/45 1946/47

1.6 2.3 2.8 4.5 5.1 5.4

2.6 3.3 3.1 4.2 5.2 6.7

2.1 2.7 3.0 4.4 4.7 6.1

6.3 8.3 8.9 13.1 15.0 18.2

73 82 75 70 67 53

* Estimated ** Excluding debt services, but including reconstruction expenditure. 28. The figures show that the war hardly affected the policy of expanding expenditure on public and social services as far as revenue would permit. This process of raising the standard of living of the country was however accomplished under conditions which were exceptional. In pre-war days expenditure on health and welfare, roads, school, etc., expanded only as a result of deficit financing or free grant financing; in wartime the further and more rapid expansion was made possible by extraordinary revenue arising from wartime conditions. Today such expenditure follows the

PAPERS AND REPORTS

31

prosperity of primary industries functioning in conditions of world scarcity. 29. Public and social expenditure has therefore been geared to a national income growing under abnormal financial and economic influences. With or without these influences the Newfoundland budget will have to continue on a scale much larger than in pre-war years if it is to allow for this large overhead expenditure, for such expenditure assumes a rigidity in time, which cannot be disturbed without detrimental effects on living standards. The scale of spending in the past has been helped by the increase in prices, but as far as can be judged recent growth has been faster than this increase. The needs for continued expenditure of this kind is however such that no diminution can be expected for some time. Furthermore, the reconstruction plans in operation and to be executed will add additional sums to the annual budget because part of the capital investment will lead to new public maintenance costs. 30. As long as the national income continues to grow, the central cost of improving living standards will be borne without difficulty, but, as has already been pointed out, the prosperity of Newfoundland in peacetime is almost entirely dependent on the returns from her exports. A sustained decline in exports would, as in the past, lead to a decline in central revenue, and expenditure assumed easily during the last five years would then become a problem. Under such conditions a fall in employment would mean further sums for unemployment relief, for which no extra-budgetary funds have been created. The old problem of meeting the interest on the national debt would also arise and once again Newfoundland would be faced with further budgetary difficulties. Section IV Employment and Trade. (i) Employment 31. Full returns from the 1945 Census are not yet available but the Census of 1935 showed that about two-thirds of the labour force in Newfoundland obtained its living from the four primary industries, fishing, logging, mining and agriculture - and that fishing accounted for three-quarters of this number. It is apparent therefore that a fall in the demand for fish has much greater repercussions on the country than a decline in the demand for other primary products. The fishing industry, and more especially the codfish industry, was in a chronic state of depression during the thirties. Before the outbreak of war, mining, paper making and Government construction work provided some demand for labour, but in view of the small proportion of the labour force thus employed these various activities could hardly affect conditions for the rest of the working population. Separate figures for able-bodied unemployment prior to 1940 are not available, but statistics of the numbers receiving Government assistance show that up to the outbreak of war an average of one sixth of the total population relied on relief in order to live. It is thus evident that a very high rate of unemployment persisted throughout the pre-war phase of Commission Government, mainly as a result of passivity in the fish markets. 32. The war brought about a swift transformation in the employment situation. In the first place a high proportion of Newfoundlanders of military age volunteered for various forms of war service overseas; secondly, large numbers of men and women found employment at the Canadian and United States defence bases. The labour employed was on the whole relatively unskilled and this, combined with the traditional mobility of fishermen and the relatively attractive remuneration, enabled a considerable labour force to be quickly assembled. Meanwhile, exports were severely limited by submarine warfare and people not employed on bases, generally fishermen living outside the Avalon Peninsula, were still carrying on under the difficulties of the 1930's. When construction of the various bases neared completion and labour had to be laid off, there was therefore some danger that large scale unemployment would reappear. Fortunately, however, the improvement in shipping conditions, which came about early in 1943, brought with it a renewed demand for Newfoundland's primary products, especially fish, and men found employment in their principal occupation without difficulty. The fact that these three influences followed each other meant that at no point between 1940 and 1945 did unemployment become a serious problem.

32

NATIONAL CONVENTION

(ii) Wages and Prices 33. Statistics of wages are very incomplete and it is difficult to determine whether they have kept pace with prices during the period under survey. Generally wages in all industries have increased in varying ratio. In Section V below it is shown that average wages and salaries in the pulp and paper and mining industries increased between 1939 and 1945 by some 60 per cent, and 50 per cent, respectively. The wage rates of miscellaneous technical labour and longshoremen in St. John's rose between 60 and 70 per cent, over the same period. Remuneration to fishermen also increased substantially. 34. The Newfoundland Cost of Living Index shows that, early in 1946, prices were 63 per cent, higher than in 1938. The Index, however, is not compiled on up to date family budgets, and certainly understates the true increase in prices. Furthermore, owing to the drastic reduction of supplies from the United Kingdom, wartime imports came almost entirely from the United States of America and Canada, and Newfoundland, being neither eligible for the domestic subsidies of these countries nor in a position to bargain from bulk purchasing, had perforce to accept uncontrolled export prices. The initial impetus to the rise in prices was therefore the F.O.B. price of imports, but before the product reached the Newfoundland consumer further on-costs, and in particular heavy freight and insurance costs had to be incurred. On top of inflated purchase prices and high on-costs, the widespread use of ad valorem duties caused further expansion in prices, and finally the profit margin of shop and storekeepers and middlemen was included in the retail price. There is no doubt that the pressure of demand arising from the invlux of purchasing power caused by employment on the Defence Bases also forced up prices to a higher level than would otherwise have been the case. The sharpest increase took place during the years 1941 and 1943. In 1944, the cost of living curve began to flatten out, and apart from seasonal variations there has been no marked upward change during the past year. A Defence (Price of Goods) Regulation was promulgated in 1941 and further price regulations dealing with certain foodstuffs were issued in the next two years. In 1944 a Price of Goods Order fixing profit margins was passed. These regulations seem, however, to have had little effect on the rise in prices. (iii) Trades Unionism 35. Between 1934 and 1944 membership of the various Trades Unions in Newfoundland grew from 20,000 to 42,000. To-day there are over 45 unions whose membership varies from ten to 15,000. A number of the unions suffer from the fact that a percentage of their members have not fully subscribed, with the result that figures of effective membership are often difficult to obtain. Trades Unionism in Newfoundland is a movement of recent growth and has been largely fostered by the organisation of craft unions amongst railway and pulp and paper workers, a number of whom came originally from Canada. It was not until 1937 that the Newfoundland Federation of Labour was formed with the object of assisting the organisation of unions along craft membership lines, and of encouraging the affiliation of local unions with their American counterparts. At the present time, a number of the more important associations, particularly those covering the paper mill and railway employees, are affiliated to international organisations, the number of workers in this category amounting to some 4,000 in all. The Newfoundland Federation of Labour has also been active in pressing for minimum wage rates for unskilled labour; the establishment of an eight hour day in the mining industry; the introduction of compulsory insurance schemes for companies, and the establishment of a Department of Labour. A Labour Relations Department was in fact formed in 1942, and this step, coupled with the passing in 1941 of Regulations providing for the setting of Trade Dispute Boards, marked a considerable advance in the organisation of Labour throughout the Island. The Labour Relations Department has been instrumental in assisting the settlement of thirty disputes, and has also prepared legislation dealing inter alia with labour conditions, with the payment of wages in cash, and with conciliation. More recently the Commission of Government opened two Labour Exchanges, the first in the history of Newfoundland, and these are now in operation under the direction of the Labour Relations Department. A further advance has been the introduction by the two Pulp and Paper Companies of contributory pension schemes for their employees. These are the first schemes of their kind outside the Government service and provide for retiring allowances for Company employees at the age of

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65, the employee making annual contributions from salary, and the Companies meeting such part of the cost of the schemes as is not met by the above contributions. (iv) Exports and Imports 36. The trend of individual exports is covered in the discussion on the development of Newfoundland's main industries in Section V below. Exports from Newfoundland consist almost entirely of fish and fish products, newsprint and minerals. In pre-war years, nearly one half the total value of exports was accounted for in the form of pulp and paper, the remaining half being divided almost equally between minerals, and fish and fish products. Obviously such proportions do not measure the significance of these exports to the economy, for although fish exports account only for a quarter of the total exports by value, it is apparent from the above account that they form by far the most important export. Furthermore, the value figures may not be a true measure of the earnings from exports; certain industries run by outside concerns bring into the country only sufficient money to run their operations, but the great bulk of earnings from the sale of fish is ploughed back into the economy. 37. Between the two wars Newfoundland relied almost entirely on Canada, the United States of America and the United Kingdom as sources of supply. Of the three countries Canada was the greatest supplier and provided 37 per cent, of total imports in 1938-39; the United States of America supplied 31 per cent, and the United Kingdom some 24 per cent. Thus over two-thirds of total imports came from North America, this being largely due to geographical proximity, to lower transportation costs, to the similarity of taste in certain consumer goods, and to the adoption of North American standards in semi-durable and capital goods. The war accentuated this reliance on North America. On the one hand imports from the United Kingdom were reduced to negligible proportions; on the other it was agreed that Canada and the United States of America should continue to supply Newfoundland with essential goods at a level fixed in relation to pre-war imports, with an additional allowance to cover the requirements of armed forces living out of barracks. As will be seen from the following table, Canada received practically all the increased share of exports to Newfoundland, and at the end of the war she supplied almost two thirds of Newfoundland's import requirements. TABLE 14 PERCENTAGE DISTRIBUTION OF NEWFOUNDLAND IMPORTS 1938/39 United Kingdom Canada United States Other British Sources Other Foreign Sources

1942/43

1944/45

24 37 32 2 5

4 57 36 1 2

4 61 33 1 1

100

100

100

38. During the war total imports for civilian consumption increased from a level of $28.4 million in 1940-41 to $57.0 million 1944-45. This doubling of imports was due mainly to the increase in prices and partly to an increase in the volume of imports. The most significant import was food, which rose from $10.9 million in 1940-41 to $25.4 million in 1944-45. Practically all other classes of imports also rose, but to a lesser degree. 39. Newfoundland's balance of payments position cannot be determined from the available statistical material. Net balance of trade was positive throughout the 'thirties but the gains from visible trade were more than offset by invisible imports. During the war the balance of trade became negative and the negative balance on invisibles increased because of higher shipping costs and of mounting net

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insurance remittances. Exchange losses are however borne by Canada since the Canadian dollar is legal tender in Newfoundland and all banking transactions are carried out by Canadian banks. Any losses on Newfoundland trading account were probably more than balanced by the earnings from the purchase of Canadian dollars by United States forces which, for the four years ending December, 1945, amounted to about $77 million U.S. dollars. Section V. Industries. (i) The Fisheries 40. Activities of the Government and of the Newfoundland Fisheries Board. During the early thirties the codfishery suffered a serious decline owing to the general depression in world markets. When the Commission took office in 1934 they found widespread unemployment in the fishing outports, coupled with a lack of organisation in production and marketing which made it difficult for those engaged in the industry to receive anything approaching adequate returns. As a first step a Fishery Investigation Commission was set up to study the industry in detail, and shortly afterwards a statutory Salt Codfish Board was appointed to control exports and generally to deal with the problems of marketing. In 1936 a further statutory body, the Newfoundland Fisheries Board, was created. This authority, whose members are appointed by the Government, is now concerned with problems relating to the production and marketing of fishery products, and its activities are financed jointly by the Central Government and by the Fish Trade. Since its creation, the Board has succeeded in bringing about a greater degree of cooperation between the fish exporters, and in improving the grading and standard of fish produced for export. A compulsory system of Government inspection on export has been built up; existing regulations governing fishing and conservation have been amended and new regulations introduced, and a system of compulsory licensing of exporters and their premises has been instrumental in increasing the standard of the fish produced. In addition, statistical services of various kinds relating to the fisheries have been set up. The Government on their side, in cooperation with the Board, have concentrated on improving the bait services. Seasonal lack of fresh bait supplies had in the past reacted seriously on the industry, and the construction by the Government of a series of bait depots, served by a refrigerated bait depot ship, has done much to ensure regular supplies to fishermen. The quantities of bait made available to fishermen in 1945 amounted to 6 million Ibs. as compared with 1.8 million Ibs. in 1939. The continuance of depressed conditions and the consequent dislocation of markets led the Commission to introduce legislation fixing a minimum price for fish exported each season, and at the same time to impose an Export tax of ten to twenty cents per quintal on all exports of salt codfish. The proceeds of this tax, plus a contribution by Government, were used to constitute a fund for the equalization of prices to fishermen. Exporters' losses were first paid from this fund, and the surplus, if any, was to be applied to the establishment and development of new markets. By legislation passed in 1941, the surplus of the fund of that year was divided in the proportion of 3/4 to the fishermen, and VA to the Salt Codfish Marketing Fund. In 1942 and subsequent years the proceeds of levies of varying amounts on the export of fishery products were utilised for the stabilisation of the price of salt imported for the use of fishermen. The war gave additional impetus to the policy of group marketing which had been pursued by the Fisheries Board since its creation. In 1936 the first group of exporters, the Portugal Exporters' Group, was formed, and by 1943 the policy of group marketing had been extended to cover the whole of Newfoundland's production of salted codfish. This development alone has done much to eliminate excessive local competition, and has enabled producer and merchant to co-operate more effectively in the processing and marketing of fish. 41. Trade Developments. Appendix C, Tables 13-15, give details of the value and in certain cases of the weight of all fish exported to the more important markets between the fiscal years 1934-35 and 1944-45. Table 13 shows that from 1934 until the outbreak of war, dried, salt bulk, pickled and soft cured codfish accounted in each year for some 2/3rds of the total value of the fishery. Exports of fresh

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codfish, frozen cod fillets and herring were small, the bulk of remaining exports being in the form of salmon, lobster, whale, products of the seal fishery and fish oils. At the time when the Commission assumed office Newfoundland's main markets were still located in the Iberian peninsula, in Mediterranean countries and in Brazil; Spain, Portugal, Italy, Greece and Brazil alone accounting for over 80 per cent, of the total export of dried cod. The world depression seriously affected Newfoundland's permanent markets, and this fact, coupled with the rise of Norway and Iceland as highly organised and in the case of the former subsidized - competitors, tended still further to depress the Newfoundland industry. Newfoundland dried cod fetched over $9.00 per quintal in the late twenties, but the average price between 1934 and 1938 had fallen to as little as $5.00 per quintal. Political events in Europe caused yet further setbacks to the industry. Sanctions against Italy and civil war in Spain threatened to eliminate two of the most important European markets, and the value of exports of dried cod to European countries fell from $3,400,000 in the financial year 1934-35 to under $1,520,000 in 1937-38. Owing to difficulties of exchange the Brazilian market suffered a similar setback. The general recession was in part counteracted by a steady expansion of trade with the British West Indies and French Caribbean possessions, and exports to these areas in 1939-40 represented over 40 per cent, of the total value of exports of dried cod as compared with 22 per cent, in 1934-35. Throughout the pre-war period and indeed up to the end of the financial year 1943-44, exports of dried, salt bulk, pickled and soft cured codfish continued to account for over 2/3rds of the value of all fish exported from Newfoundland; but the years from 1940 onwards brought about considerable changes, both in overseas markets and in the types of fish produced. The elimination of such competitors as Norway; greatly increased demands from Spain and Portugal which more than counteracted the closure of the Greek and Italian markets; and the system of purchasing introduced in 1943 by the Combined Food Board, led to a steady demand for Newfoundland dried cod at higher prices than those obtaining before the war. Whilst the weight of exported dried etc., cod actually fell from 1,065,000 quintals in 1939-40 to 849,000 quintals in 1943-44, the value rose over the same period from $5,063,000 to $12,216,000 or an increase per quintal of nearly $10, i.e., a price of $14V5 per quintal as compared with $5 in 1934. At the same time, with the world shortage of food, the policy of modernisation and concentration of the industry which had been encouraged by the Fisheries Board, began to bear fruit, and from 1940 onwards contracts received from the United Kingdom and demands from the Canadian and United States markets for supplies of fresh cod and frozen fillets opened up possibilities of a diversification of the fisheries such as the industry had not hitherto experienced. During the financial year 1941-42 over 10 million Ibs. of fresh and frozen cod were exported to a value of $816,000. In 1944-45 nearly 23 million Ibs. to a value of $3,855,000 or nearly 17 cents per Ib. were exported, over 50 per cent, going to the United Kingdom. Preliminary returns show that exports for the period 1945-46 are likely to reach the neighbourhood of 30,000,000 Ibs. The herring industry is another branch of the fishery which has benefited very considerably during the war. Between 1934 and 1940 exported herring of all varieties doubled in value, the average for these years being $248,000. During the financial year 1943-44 this figure had increased to over a million dollars, and in the course of the next twelve months over $2 million of herring was shipped abroad. In the calendar year 1946 the value of herring contracts for export will be over $5 million. This increase is due mainly to large contracts placed by the United States Government and by U.N.R.R. A. Improvements in methods of preparation and the erection of new plants have raised the standard of herring processed in Newfoundland and have enabled it to be offered on the world market with a sound reputation and at more competitive prices. Other branches of the industry, such as the salmon, lobster, halibut, seal and whale fisheries and the processing of fishmeal and oils have steadily improved in standard as a result of the grading and inspection methods introduced by the Fisheries Board, and whilst their total export value, expressed as a percentage of all exports from the fisheries, has decreased during the war, it is reasonable to assume in view of the developments which are at present taking place in canning, freezing and processing methods and of the increasing use new being made of fish oils and offal, that these

36

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subsidiary branches of the industry will secure a greater share of the total export trade. 42. Employment and Remuneration. No figures are available of fishermen employed annually in subsidiary branches of the industry or in processing and canning plants. The following table however gives details of the numbers employed in the codfishery, of the average yearly catch per man, and of the estimated value per quintal of salt fish to each man. TABLE 15 Year

1937 1939 1941 1943 1944

Men Employed

22,273 25,220 18,643 20,019 22,387

Average catch per man (Quintals)

43.5 41.5 44.5 47.0 42.0

Average Value to fishermen per quintal

$ 3.7 3.9 8.0 10.5 10.7

As has already been stated, conditions in the fishing industry prior to the war were generally depressed, and although exports of salt fish remained at a relatively high level, prices obtained on foreign markets were low, with the result that returns to fishermen were barely sufficient to cover the cost of equipment and supplies. The outbreak of war, the temporary elimination of some of Newfoundland's most powerful competitors, and the fixing, as the result of the allocation of fish exports by the combined Food Board, of a minimum price to fishermen for their catch, brought about considerable changes in the economic position of those employed in the fisheries, and the average annual income of a salt cod fisherman, apart from any other seasonal occupation in which he might engage during the winter months, advanced from about $ 160 to $460. At the end of 1944 the numbers employed in the cod fishery were some 2,000 less than in 1939, considerable reductions having occurred during the earlier stages of the war when many men normally engaged in fishing left for war service overseas or obtained work at the Canadian or U.S. bases. Since 1943, the drift back to the industry has been more pronounced, and it is probable that many of the men already demobilised will return to the fisheries for their livelihood. 43. Conclusions. The above brief account of developments in the fishery during the past twelve years shows how sensitive the industry continues to be to political and economic changes in its overseas markets. The five pre-war years were years of constant uncertainty with exporters striving to find new markets to replace those which has been eliminated or depressed owing to events beyond their control. The period of the war on the other hand brought with it a maximum demand for Newfoundland fish at guaranteed prices and solved, temporarily at least, the perennial problem of selling fish in competition with other countries in relatively poor and unstable markets. Even more important from a long term viewpoint was the stimulus which the war gave to the frozen fish and herring trade. These developments have assisted in giving a greater balance to the industry, which had hitherto relied over much on the marketing of a single low priced product - salt codfish. So long as the world shortage of foodstuffs continues, the Newfoundland fisheries should enjoy relatively prosperous conditions. This phase will however be of a temporary nature and the future prosperity of the industry will depend mainly on the retention of a proper balance between the various types of fish produced: on the maintenance of high marketing standards: the constant study of existing and potential markets and of world demand for fishery products; and on careful attention to production costs.

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(ii) The Mining Industries 44. General. Whilst traces of many minerals are known to exist in Newfoundland, their inaccessibility and in most cases the considerable capital expenditure required to exploit them have prevented the development of any large-scale operations except in the case of the iron-ore deposits on Bell Island, which are worked by the Dominion Steel and Coal Corporation of Sydney, Nova Scotia; and the composite lead-zinc-copper deposits at Buchans in the centre of the Island, which are exploited by the Buchans Mining Company, a subsidiary of the American Smelting and Refining Company and of the Anglo-Newfoundland Development Company. Large high-grade iron ore deposits exist in Labrador and intensive work is being carried out in the areas concerned by the Labrador Mining and Exploration Company. There are also a number of smaller operations concerned with the working of fluorspar, limestone, and pyrophyllite, whilst some prospecting and exploration are at present in progress in areas where deposits of gold and asbestos are known to exist. The presence of coal seams on the west coast, which it has not hitherto been thought economical to exploit, is also engaging the attention of a private company. It is not however possible at this stage to indicate what effect these developments may ultimately have on the economy of the Island. 45. The numbers of men employed in the mining industry as a whole between the years 1934 and 1945 are shown in the following table: TABLE 16 Year

Numbers employed

1934* 1935* 1936*

1,704 1,820 1,842

1937 1938 1939 1940 1941 1942 1943 1944 1945

2,772 2,906 2,888 2,827 2,906 3,040 2,762 2,341 2,571

* No record is available of employment in miscellaneous operations between the years 1934-1936. It will be seen that over the eleven-year period, employment has increased by 50 per cent., the peak year being 1942 when over 3,000 men were at work. This development was due mainly to higher employment in the fluorspar and limestone mines which were operating under war contracts. 46. The Bell Island Mines. The Bell Island ore taken by the Dominion Steel and Coal Corporation is smelted at the Company's main plant at Sydney, the Corporation taking from Newfoundland such quantities of the ore as it can absorb in Canada. Between 1934 and 1945 this has varied from one-third to two-thirds of total annual exports except in the years 1943 and 1944 when some seven-eighths of the total tonnage was absorbed by the Sydney plant. Between 1934 and 1939, the bulk of remaining exports were shipped to Germany, the United Kingdom and United States of America taking small quantities only. Despite the abrupt disappearance of the German market, exports were maintained at a high level for a further year by the acceptance by the United Kingdom of a shipment of over 700,000 tons, a quantity nearly three times greater than any export figure for the United Kingdom market since the company began operations. At the same time, with the expansion of the armaments programme in Canada, exports to that country increased in relation to total production. Shipping and other wartime

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difficulties, however, reduced the demands from the United Kingdom, and from 1941 onwards exports of iron-ore declined from nearly 1,200,000 tons to under 600,000 tons in 1944. A further contract from the United Kingdom in 1945 led again to an abrupt rise in production and the tonnage shipped amounted to nearly one million tons. Although the deposits at Bell Island are stated to be almost unlimited, the prosperity of the industry is entirely dependent on world markets, as no processing or smelting is carried out locally. In consequence Bell Island has always presented one of the most difficult labour problems in Newfoundland. The men are for the most part skilled miners, and as such are unfitted, or have little inclination, for seasonal occupation in the woods or at the fisheries. The temporary closure of a mine or the slackening off of production because of reduced demands from overseas leads therefore to immediate unemployment for which no solution can be found on Bell Island itself, whose activities depend entirely on the industry. How difficult this problem has been can be judged from the fact that in 1934 three of the four mines were idle; that in 1936 two mines were idle and the other two worked only for four days per week; that following a period of almost full production between 1937 and 1942 one mine fell idle in 1943 and the remaining mines worked only four days per week; and that in 1945 one mine remained closed throughout the year. This general instability explains the fluctuations in labour referred to in the table below, and it would seem, bearing in mind the increased mechanical efficiency which has occurred in the industry, that the mines could not at any time offer employment to more than some two thousand men, even in a peak year of production. TABLE 17 EMPLOYMENT AT BELL ISLAND MINES

1935 1938 1940 1942 1944 1945

1,295 1,781 1,889 1,894 1,377 1,427

Unless new markets can be found it is doubtful whether exports will again reach the level which obtained just prior to the war. The German market has disappeared; Canadian demands are likely to shrink following the end of hostilities, and despite the willingness of the United Kingdom Government to take further quantities of ore in the immediate future, long term prospects for the United Kingdom market remain uncertain. Despite the difficulties referred to above, Bell Island during the war has enjoyed greater prosperity than in previous years. In line with other industries the company has on several occasions during the last five years increased the wages of its employees, the annual average wage having risen from $490 per year in 1934 to $977 in 1941 and to $1,960 per year in 1945. Between 1934 and the latter date over $23 million have been paid out by the Company in the form of wages and salaries, but with the exception of monies required for capital additions and improvements and for local purchases, the profits on operations are remitted direct to the parent company in Canada. 47. The Buchans Mine. As in the case of Bell Island, the town of Buchans is entirely dependent on the mining industry. The mines contain an ore with a relatively high percentage of the sulphides of zinc, lead and copper, and were first opened in 1927 when the Buchans Mining Company was formed by agreement between the American Smelting and Refining Company and the Anglo-Newfoundland Development Company, the latter's interests being subsequently transferred to a new company, the Terra Nova Properties Ltd. The following figures show total exports by weight; the numbers employed in the industry, and the annual average wage of employees at selected points

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between the years 1934 and 1945: TABLE 18 Year

1934/35 1937/38 1939/40 1941/42 1943/44 1944/45

Tons Exported

(in 000' s) 185 202 157 186 176 131

Employees

Average Annual Wage

409 733 753 695 678 689

$ 1,400 1,420 1,424 1,540 2,023 2,140

Physical exports of concentrates never rose during the course of the war to the level reached during the year 1937-38, but the value of exports increased very considerably from 1942 onwards, the gross value per ton exported being roughly $31.00 for the fiscal year 1944-45 as compared with $ 14.00 for 1934-35. Between 1934 and 1940 the chief markets for the Buchans industry were situated in Belgium, France, the United Kingdom and the United States of America. In 1934-35 Belgium took some two-thirds of total exports, United States purchases being insignificant and the remainder being divided between the United Kingdom and French markets. The next few years saw a gradual increase in United States and United Kingdom purchases, Belgian and French demands declining to a comparable extent and ceasing completely in 1940. During the remaining war years exports of concentrates were shipped to the United Kingdom and United States of America, the latter being the chief buyer from 1941 onwards. In 1944 small consignments were made for the first time to the Canadian market. It is as yet too early to say whether the European market will revive or whether United Kingdom and United States demands will continue at their present level following the end of the war. At the present moment, however, the primary problem at Buchans is not so much one of dependence on world markets, as is the case at Bell Island, but rather of ensuring the continuous supply of ore from mines to mill. As long ago as 1933 it had been calculated that, on the basis of the pockets of ore then known to exist in the Company's concession area, the mines and mill could be kept in operation for a further fourteen years, i.e., until 1947. Since then further pockets of somewhat lower grade ore have been found, but the opinion held by experts is that unless yet further pockets are discovered, the mill may well have to cease operations in or after 1956. The future of a township of some 2,000 persons and the further employment of up to 800 men, all of whom are at present directly dependent on the industry, is therefore a problem which may at some stage have to be faced. There has, generally speaking, been little unemployment in the mines and mill, the industry having, if anything, suffered to a certain extent from seasonal movements of labour to the fishing industry. Labour has, moreover, benefitted from the increased prosperity of the industry which in turn was principally due to war time demands. The total payroll rose sharply from 1938 onwards in relations to the number of men employed and the average annual wage paid in 1945 was $2,140 compared with $1,424 in 1939, or an increase of 51 per cent. Between 1934 and 1945 the Company paid out in salaries and wages a total sum exceeding $ 12Vi million. Over the same period payments to the Newfoundland Government in respect of Customs duties, royalties and income tax totalled $3 4/5 million, whilst $1Vi million were spent on local purchases and services. 48. Other Mining Industries. The production of fluorspar and limestone is the most important of the smaller mining developments in Newfoundland. The first of the two fluorspar mines, owned by the St. Lawrence Corporation of Newfoundland Ltd., was opened in 1933 when about 2,000 tons were produced. The second company, Newfoundland Fluorspar Ltd., began operations in 1942. Until

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now the sole markets for this product have been found in Canada and the United States of America, and during the war years production increased very sharply in view of the importance of fluorspar to the aluminium and allied armaments industries. In 1943,94,000 tons were exported as compared with 14,000 tons in 1938 when only one company was operating. By 1944, however, exports had dropped to 46,000 tons, and it is understood that one of the mines may shortly cease operations altogether. The figures of employment in the Newfoundland Fluorspar Ltd. mine had, in fact, fallen from 339 in 1942 to 84 at the end of 1945. The limestone operations on the west coast of the Island are directly linked with the Dominion Steel and Coal Corporation, the limestone being used in the smelting of iron ore. Though on a small scale, the industry has expanded steadily during the past ten years, over 320,000 tons having been exported in 1944 as compared with 160,000 tons in 1936. Some 100 men are employed by the company. (iii) The Forest Industries 49. General. The area under timber in Newfoundland has been estimated at some 25,000 square miles. Of these about 4,000 square miles remain under the control of the Crown, mostly in the form of a strip around the coastline known as the "three mile limit", much of which has now been denuded by excessive cutting both for local and other needs. Of the balance, small timber companies control a little over 2,000 square miles, chiefly under long term leases, whilst the two major pulp and paper companies, the Anglo-Newfoundland Development Company Ltd. of Grand Falls, and Bowater's (Newfoundland) Pulp & Paper Mills Ltd., of Corner Brook, hold between them nearly 19,000 square miles or some four-fifths of the total forest area of Newfoundland. Some 15,000 square miles of these holdings are in the form of long term leases and about 3,500 are fee simple lots. Of the 25,000 square miles hitherto regarded as forest, only about 15,000 square miles are suitable for commercial exploitation; of these the two large companies hold between them some 11,000 square miles. It is believed that only a small part of the area held by other companies is fully timbered. The Anglo-Newfoundland Development Company Ltd. was formed in 1903 and has continued in operation since that date. The mill at Comer Brook was built between 1923 and 1925 by the Newfoundland Power & Paper Company, but owing to a succession of financial and other difficulties it passed first into the hands of the International Paper Company and, in 1937, into those of the Bowater Company under whose control it remains to-day. In terms of production and employment, the pulp and paper industry ranks immediately after the fisheries in importance. The Table below gives details of the output of newsprint, sulphite pulp and groundwood pulp; of the numbers employed by the two companies; the total payroll, and the average wage of all employees at selected dates from 1937 onwards when both the present Companies were operating. TABLE 19

Year

1937 1938 1944 1945

Output of Newsprint Sulphite and Groundwood Pulp Tons 000' s 356 276 353 385

Employees

Payroll

Average Annual Wage

7,499 6,853 8,363 9,097

$ OOO's 6,510 6,076 11,088 12,973

$ 870 890 1,320 1,420

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50. Exports. The normal market for the Anglo-Newfoundland Development Company is the United Kingdom, whilst the Bowater Company during its eight years of operation has sold its newsprint principally in the United States. The following Table shows the general market changes in exports of newsprint which have occurred from the fiscal year 1937-38 onwards: TABLE 20 EXPORTS OF NEWSPRINT BY PRINCIPAL MARKETS Total

Countries OOO'sof tons

Year

1937/38 1938/39 1939/40 1940/41 1941/42 1942/43* 1943/44 1944/45

000' s of Tons

OOO'sof $ Value

U.K.

U.S.

South America

Australia

324 288 346 352 307 184 251 253

13,874 12,664 15,303 14,120 12,634 7,250 11,050 12,643

215 202 150 91 46 15 102 101

108 79 136 197 206 139 110 98

— — 15 27 38 5 28 42

— — 21 8 5 — 4 7

* Nine months. The two Tables show that whilst total output is now higher than in 1938, the peak point of exports was reached in the years 1939-40 and 1940-41. From the latter year onwards exports fell off sharply, to some extent owing to the curtailment of imports of newsprint into the United Kingdom market, but principally because of shortage of labour in the woods and of high freight and delivery costs. The virtual closure of the United Kingdom market led to increased exports to the United States and, since the start of the war, to South American countries, in particular Mexico and Argentina. Whilst exports of newsprint have not yet reached their pre-war level, total output in the case of both Companies has increased during the past two years, an additional 30,000 tons having been manufactured in 1945 as compared with the output for the preceding year. Sulphite pulp, groundwood pulp, pulpwood and pitprops are also exported by the two companies from time to time. At present, purchases by the United States are roughly equivalent to those taken in the immediate pre-war years; exports to the United Kingdom, which between 1941 and 1943 had sunk to a very low level, were during the last fiscal year still equivalent only to 50 per cent, of exports by volume for 1938-39. It can be expected however that as soon as questions of exchange and of shipping permit of greater purchases abroad of newsprint by the United Kingdom, the percentage of exports from the Newfoundland mills to the United Kingdom will begin to increase. Sales to the South American markets, which prior to the war were insignificant, today amount to some 20 per cent, of total exports and during the last five years have been of considerable value to the industry in countering the adverse effect occasioned by the limitations in the United Kingdom market. Continuing exports to South America and exports to new markets will necessarily depend on the cost of producing newsprint in Newfoundland as compared with the costs of other North American mills and, to a certain degree, although this is not believed to be a major factor, on the extent to which United Kingdom requirements are to be met from Newfoundland and on the relation of United Kingdom needs to Newfoundland's total annual production capacity. In the first case the Newfoundland mills are situated on or close to tidewater; transportation costs within the Island are relatively low; and forest growth is considered sufficiently rapid to obviate the need for planned reafforestation. These factors should tend to allow the

42

NATIONAL CONVENTION

Newfoundland mills to compete on favourable terms with the North American pulp and paper industry, provided that freight rates continue to decline. So far as production capacity is concerned, on the assumption that United Kingdom imports of newsprint will, under normal circumstances, return roughly to their pre-war level, i.e., to some 200,000 tons per annum or 65 per cent, of total exports, the question becomes one of total capacity on the one hand and on the other of the resources of pulpwood on the Companies' timber limits. In this connection, the view of the companies is understood to be that natural regrowth is more than sufficient to meet their present needs. 51. Employment With the exception of the year 193 8 when markets generally were depressed, the numbers of men employed by the Companies on woods work and in the mills have shown a steady increase. The Company towns of Grand Falls and Corner Brook which, with their adjoining suburbs, have grown up around the mills and whose joint population today numbers 17,000 as compared with 14,000 in 1935, are however faced with the problem that the population is increasing too rapidly in relation to the maximum employment which can at present be offered by the industry. It would seem therefore that a position may shortly be reached where the two Companies, whilst able to offer steady employment to a fixed number of persons, will be able to absorb only a percentage of the younger generation which under normal circumstances would look to the industry for its livelihood. A further limiting factor on the employment capacity of the industry arises from the policy initiated in 1934 of cutting pulpwood in the summer months (thus avoiding the loss of stumpage occasioned by winter operations in snow conditions), and of hauling the wood in winter. This practice, whilst offering chances of full employment to men who are prepared to engage regularly in woods labour, nonetheless prevents the majority of fishermen, who had hitherto worked in the woods in considerable numbers during the winter months, from benefiting directly from the industry. This development, coupled with the fact that numbers of fishermen tended in the years of depression before the war to turn to woods work for employment, has gradually brought about a distinct division between fishermen and woodsmen and has also reduced the mobility of labour within the Island. Over a period of years the pulp and paper industry has in fact become, like the mining industry, a centre of regular and steady employment, the labour force in the mills being composed of skilled or semi-skilled men engaged on a more or less permanent basis, and the woodsmen tending more and more to rely on one form of employment. This had led to the establishment of a number of townships in the interior of the country where, generally speaking, the standard of living is considerably higher than in the fishing outports. 52. Apart from the timber operations of the two pulp and paper Companies, there exist in Newfoundland today some 900 saw mills, most of which operate as small family concerns catering for immediate local needs. In 1943 these mills cut 57,000,000 foot board measure of sawn lumber for local use as compared with 42,000,000 foot board measure in 1940. Numbers of contractors and of smaller private concerns are also engaged in cutting pulpwood on behalf of the Bowater and A.N.D. Companies, whilst the production of pitprops is also permitted under licence from the Government from time to time. The average value of pitprops exported per year between 1934 and 1944 amounted to some $400,000. In view however of the relatively small economic advantage of exporting unmanufactured wood, and of the limitations on the timber areas held by the Crown and by interests other than the pulp and paper companies, the Government have tended to encourage this branch of the industry only when it has been of direct assistance in relieving unemployment or when urgent demands for pitprops have been received from the United Kingdom Government. Appendix A Newfoundland's War Effort Newfoundland's principal contribution to the war effort of the United Nations took the form of manpower and of territory provided for the construction of defence bases. There was no conscription but volunteers for all branches of the U.K. and Canadian Armed Forces came forward as soon as war broke out. Some 7,000 men - a very high proportion of all those of military age - took part in the campaigns in Europe, and, with the Royal Navy, against Japan. Two Artillery Regiments and a night

PAPERS AND REPORTS

43

fighter squadron of the Royal Air Force were preserved as geographical entities, although forming part of the United Kingdom Armed Forces. In the Royal Navy and Mercantile Marine Newfoundlanders took part in many actions, and were much valued for their seamanship. A number of women joined the various Canadian services, and a local Regiment was raised for the defence of certain important military installations. No less significant was the work performed in the United Kingdom by an overseas Forestry Unit, with an original strength of some 3,600 men, which throughout the war maintained a high standard in the production of timber and pitprops. In all, the second world war cost Newfoundland some 600 casualties, whilst 63 per cent, of the tonnage registered in Newfoundland in 1939 was lost through enemy action. Newfoundland industry was never converted, even in part, to the production of armaments, and although fishermen and loggers made an indirect contribution to the maintenance of the supply line of the United Nations, the real importance of Newfoundland during the way lay in her strategic position. Following the fall of France, the battle of the Atlantic and the development of aerial warfare greatly increased the significance of the Island as an outpost to the North American Continent. Events led rapidly to the development of air and naval bases on her territory, and in 1941 the Canadian Government assumed temporary control of the Newfoundland airports at Gander and Botwood and began construction of an airport at Goose Bay in Labrador which was subsequently leased by the Newfoundland Government for a period of 99 years. In the same year, under a Protocol to the Anglo-American Bases Agreement (Command 6259), the United States Government obtained from the Newfoundland Government 99-year leases on three areas of land which were rapidly converted to military, naval and air bases. A further airport near the capital was also constructed by the Canadian Government, and title in fee simple to the lands in question is shortly to be vested in Canada. In addition to these major developments, the Naval Dockyard at St. John's was considerably extended: certain communications were improved and gun and radar sights and radio posts were installed at strategic points. It is impossible to assess with any accuracy the wealth accruing to Newfoundland as a result of these wartime developments. The effects on employment, already referred to, and the high rates of wages paid to Newfoundlanders working at the bases were however the most evident returns from these activities, and the reversion to the Newfoundland Government at very low cost of a number of hospitals and other buildings constructed by the Canadian Forces was another important factor. Perhaps the most significant single development has been the handing back to the Newfoundland Government of the airbase at Gander, which has now been designated by the Commission as the Island's international airport. As the result of an Agreement (Command 6823) recently signed between the United Kingdom, Canadian and Newfoundland Governments, the Canadian Government have agreed to hand over to the Commission for the sum of $ 1,000,000 all the buildings and equipment at Gander constructed or installed by Canada during the course of the war at an estimated cost of $25,000,000. The Newfoundland Government will thus be in a position to take over and to operate this major airbase with little additional capital expenditure. It is not however expected that — in the early stages at least — the airport will be a revenue earning item, and preliminary estimates indicate that a substantial loss will be incurred annually on operations. Methods of meeting this prospective deficit are at present engaging the attention of the United Kingdom and Newfoundland Governments. Appendix B Post-War Reconstruction Schemes The following is a list of the major schemes, together with their total cost, which have already been approved by the Commission of Government and by the Secretary of State for Dominion Affairs as part of the Government's post war rehabilitation programme:

44

NATIONAL CONVENTION

Scheme Total Estimated Cost Fisheries Rehabilitation $ 1,000,000 Civil Re-Establishment 6,852,000 St. John's Rehousing Scheme 865,000 Tuberculosis Sanatorium 2,200,000 Total $10,917,000 Certain of these schemes have already been put into operation, and taking into account estimated expenditure thereon during the course of the financial year 1946/47, over $3,800,000 will have been spent on these services by the 31st March, 1947, leaving expenditure amounting to approximately $7 million to be met in future years if the whole programme is to be completed. The objects of the various schemes are referred to in more detail below: (a) Fisheries Rehabilitation Scheme This scheme was started in 1943, and was at that time calculated to involve expenditure amounting in all to over $4,000,000. The principal aim of the Commission was to encourage private interests to develop the Newfoundland fisheries and in particular the fresh frozen fish trade, and allied activities, such as smoking, canning and the production of fishmeal; to arrive at a greater concentration of the industry by the construction of modern quick freezing and processing plants at selected sites around the coastline, and to introduce more modern methods of fishing. The Commission of Government were prepared to make loans to companies interested in the scheme, in return for which they would inter alia be entitled to appoint a Government director to the Board of each Company. Two loans, amounting to $250,000 in all, have so far been taken up, and a further loan of $100,000 is now under consideration. The development of the fresh frozen fish trade, and the increased prosperity of the industry generally have however for the most part encouraged companies interested in the erection of new plants to proceed independently of Government assistance. Today there are eighteen modern plants in operation as compared with five in 1939 and two in 1934. It has therefore proved possible, on an assessment of the present position, to reduce the overall cost of the scheme, which is due to be completed in 1948, from some $4 million to $1 million, leaving a sum of $750,000 still to be expended. (b) Civil Re-establishment Scheme Plans for the re-establishment of ex-servicemen cover assistance for further education; technical and apprenticeship training; training for the fisheries and the establishment of men in individual enterprises. A Vocational Training Centre has been established in St. John's, and maintenance grants are provided for unemployed ex-Servicemen for a period of up to one year from their date of discharge from the Armed Forces. A scheme for Land Settlement is also an important part of the Civil Re-establishment Programme. Under this scheme provision is made (a) for the establishment of 300 Ex-Servicemen and their families on farms in the Upper Humber Valley, a fertile area on the west coast of the Island of which a detailed soil survey had previously been made, and (b) for assistance to a similar body of men who wish to engage in farming in or near their home communities. Under plan (a) the Government are prepared to spend some $4,500 on establishing each settler on his holding: under plan (b) up to $2,500 per settler will be spent in the form of land clearing, and in the provision of livestock, farm implements, etc. Plan (a) requires that $500 shall be repaid in installments by individual farmers but no repayment is required under Plan (b). The Government Scheme also provides for the construction of a main highway through the Upper Humber farming area, and for secondary roads connecting farms with this highway. Certain work on land clearing and roadbuilding has already been undertaken. Another aspect of the Land Development Scheme is concerned with the clearing of land for existing and prospective farmers. Under this scheme nearly 900 acres have already been cleared, and subject to machinery becoming available it is intended that 500 acres shall be cleared annually over the next three years. Including estimated expenditure for the present financial year, total disbursements on these measures will by the end of March 1947 have amounted to $658,000 leaving liabilities of $3,892,000 to be met if the scheme is to be completed on its present ten year basis. Overall liabilities on the Civil Re-establishment programme amount at present to $5,967,000.

papersandreports

45

(c) Housing Scheme In 1942 a Commission of Enquiry was appointed to investigate housing conditions in St. John's. Following the receipt of its findings the Government introduced legislation providing for the setting up of a Housing Corporation, this body being provided with powers to expropriate land with a view to developing two new suburbs outside St. John's, and to undertake the necessary construction work. The Government agreed to meet part of the initial cost of the scheme, provided that the Municipal Council was also prepared to contribute. Building operations began in 1945 and the Government have to date made payments - some of which are ultimately recoverable of $1,180,000 to the Corporation. During the course of the financial year 1946/47 further advances amounting to $175,000 will be made. In addition the Government have advanced to the Corporation out of their surplus balances loans of $700,000 to finance the building of houses. These, and similar advances amounting to a further $2 million, which are being made available from the same source in the current year are secured by debentures bearing interest at 3Vl per cent, per annum. (d) Tuberculosis Sanatorium The known incidence of tuberculosis in Newfoundland is high, and despite the efforts which are being made on the preventive side to check the disease, the fact remains that existing hospital facilities are not sufficient to deal with all tuberculosis patients. The Government have therefore decided to construct a new sanatorium on the west coast of the Island, the total cost of the scheme being estimated at $2,200,000. No major expenditure has been incurred on this project to date, but sums amounting to $500,000 have been provided in the Estimates for 1946/47. Appendix C Statistics Table 1 Approximate National Debt and Liquid Assets, 31 March 1946. Sterling* £

Dollar

$

Total (dollars) $

Debts Sterling Dollar

19,072,546 5,004,100

89,876,930

Total Less Sinking Funds Sterling debt 1940 $ loan 1942 $ loan 1943 $ loan

7,293,500

1,639,000

222,000 92,069 81,291

82,188,070

Net Debt

*Sterling converted at £1 = $4.45

395,360 7,688,860

Total

Liquid Assets Exchequer Balances Recoverable Advances Interest Free Loans to United Kingdom

84,872,830 5,004,100

17,842,000 327,000 10,500,000 $28,669,000

TABLE THE COMPOSITION OF GOVERNMENT REVENUE

($ thousands) FISCAL YEARS ENDING :

1934

1936

1940

1938

1941

1942

11.354 916

16,803

Customs and Excise* ... Posts and Telegraphs ... Board of Liquor Control Income Tax and Excess Profits Tax. Death Duties Income from Natural Resources (i.e., Rents and Royalties). Other Sources ...

6,406 576 149 824

6,784 655 275 1,090

8,683 974 35O 1,188

8.785 814 432 1,566

129

43

112 109

136 246

92 224

181

87

779

805

695

658

Total Revenue ...

8,720

9.830

12,272

12,571

I943t

1944

1945

1946^

1,641 2,265 9,406

18,280 1.455 1.703 9.5i6

758

15,066 1,781 2,260

2,091

7.4io

128 185

273 188

356

162

218 34O

270 439

995

1,047

95°

1.195

1,286

1.765

16,196

23.3M

I9.54O

33.342

33.428

556

2,107

1,200 809 3.142

14,462 1,081

28,601

I7.97I

(*) Includes a number of small, miscellaneous items which it was not always possible to segregate ; excludes refunds, (f) Nine months, change of fiscal year. (J Estimated. (J) TABLE 3 tECONSTRUCTION EXPENDITURE RECONSTRUCTION EXPENDITURE

($ thousands)

Dept. of Finance ... Dept. of Posts and Telegraphs. Dept. of Home Affairs Dept. of Education Dept. of Natural Resources. Dept. of Public Works. Dept. of Public Health and Welfare. Total Expenditure per annum.

1937/38

1938/39

—

—

— —

—

17

I939/4O

1940/41

8

5

—

—

— 115

740

— 144 634

1943/44

1944/45

1945/46

— —

— —

— —

— —

157

— 307 232

— 45O

1.225

— 489 561

3.45O

322

— 346 288

1.485

6,222

716

1.773

3.274

4.5io

14.695

7

63

198

39O

1,216

1,262

3.5H

4.522

11,065

28,900

—

15

—

322

34 413

296

907

1.594

53i

53i

563

95

106

123

IOI

133-

1,466

2.563

1.437

1,126

—

618

Exp. 1946/47* Total by Depts.

1942/43

1941/42

* Estimated.

I.33O

43O 300 500

475 300

3.45O 2,542

TABLE 4 SUMMARY OF BANK RETURNS '935-45 ($ millions) Loans

Deposits

Onld ami VTV/1U. CLI1U,

Year

Savings Deposits

1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945

25-0 24-5 23-9 25-1 24-3 25-3 32-3 41-8 52-3 59-5 68-4

Demand Deposits 1-2

•°3 • 04 • 06 • 04 •05 • ii •19 •17 .48 •24

Total Deposits

Deposits by Deposits not Bearing N'land. Govt. Interest i-7 1-8 2- I

0-8 i-3 i-i 5'i 7-0 10-7 15-4 19-2

30-8 30-4 32-2 30-4 30-7 33-2 48-5 65-3 83-2 97-1 no-8

2-7 4-1 6-1 4.4 5'i 6-7 I2-O

16-2 20 -o 21-7 22-9

Loans to Public

Other Loans

Total Loans

5-3 3-6 5-6 5-5 7-8 4.1 6-3 8-4 3'9 4'9 4'7

2-0 2- I

7-3 5-7 7'5 7-6 9-8

1-9

2- I 2-O 2-1 2-O I-I 0-8

Subsidiary Coin held in Newfoundland •64 •64 •5-i •53 •49 •35 •28

6-2

8-3 9-5 4'7 6-5 5-8

i-7 i•i

• 12 •0 7 •06 •OS

TABLE 5

SUMMARY OF LIFE INSURANCE COMPANIES' RETURNS 1935-1944 Year

1935 1936 1937 1938 1939 1940 1941 1942 1943 1944

Amount of Number of Insurance Policies (at 3ist December) (at 3ist December) 24,980 24,808 25,426 26,275 26,667 27.657 29,056 31,821 36,071 40,190

52-4 52-9 55-i 57-4 58-7 59-8 63-9 68-7 76-6 85-4

Liabilities to Policyholders

9-2 IO-I

10-7 12-4 12-8

13-5 14.6 15-7 17-1 18-9

Securities Deposited ($ millions) 9-5 9-8 10-5 ii. 8 12-0 13.0 14-6 15-4 17-7 18-9

Policy payments, including Dividends

Premium Income

1-7 1-6 1-7 1-8 1-7 1-8 1-9 2-1

2-4

2-5

I -2

;

i-3 i-3 i-5 i-7 1-7 1-4 i-3 i-7 1-4

TABLE 6 INCIDENCE OF COMPOSITE INCOME TAX RATES ON INDIVIDUALS* 1929-1942

Incomes— $ Up to 6,000 next 2,000

1929

1930

I93I-I938

1939

1940-1941

1942!

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

Per cent.

5

3-75 7-5 9 10-5 13-5 17-25

6 14 16 18

7-2 16-8 19-2

lS-2 20-8

10 12

2,000

10,000 10,000 10,000 10,000 50,000 over 100,000

14

18 23 28 38 43

21 28-5 32-25

22 27 32 42

47

21-6

26-4 32-4 38-4 50-4 56-4

7-8

9

21

35-i

27 36 54 63

6l-i 67-6

78

26

41 -6 48-1

70-5

85-5

* Combined rates oi normal tax, supertax and surtax. Discount for prompt payment of 15 per cent, in 1929 and 1930 and 5 per cent, thereafter has not been taken into account in the above calculations. f No change made since 1942 TABLE 7 MAINTENANCE OF THE PUBLIC SERVICES (excluding salaries) (I thousands) Year

1934/35 1937/38 1941/42 1943/44 1944/45 I946/47J

Postal and Telegraphs

438 373 56i 584 616 612

Customs

85 52 47

00

73 "5

Justice

97 171 •^35 331 35 292

Natural Resources* 362 325 346 486 576 738

Public Worksf

357 1.055 1.549 2,242 2.657 2,792

(*) includes annual recurrent expenditure on the fishery, forest, game, ranger, and survey services, (t) includes the cost of maintaining and repairing public institutions, hospitals etc., and communications. (1) Estimated.

Finance Department issues to Railway 250 366 100

800 900 870

Total

L589 2.342 2,838 4.533 5.127 5.419

49

PAPERS AND REPORTS TABLE 8 NUMBER OF PERSONS AND EXPENDITURE ON RELIEF Fiscal Year 1933/34 1934/35 1935/36 1936/37 1937/38 1938/39 1939/4° 1940/41 1941/42 1942/43 1943/44 1944/45

December to May

June to November

78,400 65.512 70,769 75.096 56,335 75.M4 54.96i 36,650 8,025 6,907 7,260 8,892

Expenditure ($ thousands) .550 .450 .339 .647 ,266 .339 ,382 ,000 469 280 432 592

43.300 28,412 36,810 49,200 30,618 43.226 40,086 23,066 9,78i 6,483 7,457 7.729

TABLE 9 GAINFULLY OCCUPIED BY PRINCIPAL OCCUPATIONS (Census 1935 ; nearest 100)

PRIMARY INDUSTRIES— Fishing (catching, curing, handling) ... Logging Agriculture Mining Total Manufacturing (including paper-making) Service Industries and Trade (construction, transportation, wholesale and retail, etc.) Professional, Personal and Government services Unspecified Total

Males No.

Per cent, of Males

36,900

46-7

A

SOO

4 qOO

I 8OO

48 ooo 5,200 I2,7OO

5,200 6 700

77 71O //./ J"

Females

5 . 7/ 5. c

2 •3 f~)T • ~! Ul /

6-7

800

16-4 6-7 8-0

2,100

IOO

8,100

NATIONAL CONVENTION

50

TABLE 10 EXPORTS AND IMPORTS ($ millions) Total Exports (including re-exports)

Total Imports

Imports*

26-7 24-5 26-8 27-2 28-9 28-1 34-9 32-0 33-4 37-3 39-4 30-9 44.4 48-7

18-1 15-2 16-3 19-2 20-7 23-9 27-9 24'5 28-4 35'5 64-6 52-4 62-5 65-8

18-1 I5-I 16-0 19-0 20-3 23-7 27-9 24-5 27-8 3i-7 45-1 39-7 46-6 57-o

1931/32

1932/33 1933/34 !934/35 1935/36 1936/37 1937/38 1938/39 1939/4° 1940/41 1941/42 1942/43 1943/44 1944/45

Trade Balance — —

8-6 9-4 10-8

-

8-2

— — — + +

8-6 4.4 7-0 7*5 5-6 5-6 5-7 8-8

+

2-2

+

8.3

* Excluding Armed Forces imports. TABLE ii NEWFOUNDLAND IMPORTS (By COUNTRIES) ($ thousands)

United Kingdom Canada United States Other British sources Other Foreign sources

1938/39

1942/43

1944/45

5,878 9,196 7,678 393 i,3l6

1,580 22,925 14,395 486 280

2,090 34,954 18,661 679 659

24,461

39,666

57.°43

...

TABLE 12 NEWFOUNDLAND EXPORTS (BY COUNTRIES) ($ million) United Kingdom

1934/35 1935/36 1936/37 1937/38

1938/39 1939/4° 1940/41 1941/42

1942/43 1943/44 J

944/45

Canada

United States

i°-3

2-2

10-9 13-2

5'2 6-2

2-6

6-3

"•3 n-3 II-O II-2

7-1

3-9 "•5 12- I

2-9 3'i 2-5 3'° 3-9 5-5 5'° 8-5 7'4

8-2

7-3 9-8

13-5 15-9 I3-I 14-0 14-0

Other British Sources •9 •7 •9 •9 i-i 2-8

2-4 i-7 i-i 2-3 2-4

Other Foreign Sources 8-7 7-7 7-4 9.4 9.8 6-8 6-3 9-2 7.8 8-1 12-8

Total

27-3 28-8 28-1 34-8 32-0 33-4 37-3 39-4 3°'9 44.4 48'7

TABLE 13 EXPORTS OF FISH CODFISH

CODFISH

Dried : salt bulk and soft cured

Fresh and Frozen fillets

Year 1934/35 1935/36 1936/37 1937/38 1938/39 i939/4 1940/41 1941/42 1942/43* 1943/44 1944/45

'ooo's of $ 6.342 5.34 4.515 4.732 5.314 5.067 6,297 8.843 9,257 12,218 12,434

'ooo's of Quintals

'ooo's of $

.323 ,272 ,070 ,027 ,296 .067 .014 879 767 893 814

3 4 55 58 4 424 519 818 735 2.371 3,855

'ooo's of Ibs. 296 203 1,108 1,184 190 7,984 10,645 10,136 7,4io 15.300 22,722

* Nine months.

HERRING

'ooo's of $

236

OTHER FISH

'ooo's of |

1,706

290

2,010

197 250 325 472 571

2,466

190

545 1,282 2,071

2,130

1,871

2,283

2.447 2,423 1,520 2,615 3.509

TOTAL EXPORTS

'ooo's of $

8,287 7.338 6,890

7-453 7-439 8,099 9.735 12,655 12,057 18,486 21,869

TABLE 14 EXPORTS OF FRESH COD AND FROZEN FILLETS (Value in $ thousands) Year

United Kingdom

Canada

1934/35 1935/36 1936/37 1937/38 1938/39 1939/40 1940/41 1941/42 1942/43* 1943/44 1944/45

— — — — —348 366 529 464

4 6 7 4 71 140 192 MI

United States

Total

— —

3 4 55 58 4 424 519 818 735

3

49 5i 5 13 97 130 527 821

1050

794

2,070

964

2.371 3.855

* Nine months

TABLE 15 EXPORTS OF DRIED COD BY PRINCIPAL MARKETS [ $ thousands) Year 1934/35 1935/36 1936/37 1937/38 1938/39 1939/40 1940/41 1941/42 1942/43* 1943/44 1944/45

B.W.I.

F.W.I.

762 690 839 852 947 951 921 974 780 1,883 2,073

563 634 778 497 600 959 1.252 1,529 791 320 444

Italy

Spain

Portugal

Greece

Brazil

P. Rico

912 205 1 20 540 670 927 — — — — 658

1,374 1,041 154 29 1,083 9 738 1.395 L975 2,619 2,062

857 990 798 483 1,023 641 1,664 3.76o 3.355 2,164 3.286

249 293 67 128 9i 4

1,172 852 1,169 977 75i 860 955 234 U5 — 388

— — — — — — — — 897 1,168 1.233

* Nine months.

— — — 973

REPORTS BY COMMITTEES OF THE CONVENTION AND DELEGATIONS

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PAPERS AND REPORTS

53

Report of the Committee on Rules and Procedure I. Sitting and Adjournment of the Convention 1. Unless otherwise ordered, the Convention shall meet on Mondays, Tuesdays, Wednesdays, Thursdays and Fridays at 3 o'clock, and upon adjournment of Friday's session shall stand adjourned until the following Monday. 2. Subject to prior adjournment, if at the hour of 6 o'clock in the evening the daily business of the Convention or of the Committee of the Whole be not concluded, the Chairman shall leave the Chair until 8 o'clock. 3. Meetings shall be held in public unless the Convention otherwise orders. 4. The Chairman of the Convention shall preside at all sittings of the Convention save that in his absence the Chairman may appoint the Secretary or the Assistant Secretary, or, in their absence, some other person to act as deputy for the Chairman for the time being. 5. At the hour named for the meeting the Chairman shall take the Chair and if 15 members, including the Chairman, be present, the journal of the previous day's proceedings shall be read and any mistake corrected. 6. If 15 members of the Convention be not present by a quarter after the time named for meeting, the Chairman shall adjourn the Convention until the usual hour upon the next sitting day without question first put. 7. If it appear, on notice being taken at any time, that 15 members be not present, the Chairman shall order that members within the precincts of the Convention be summoned by the servants of the Convention to attend and if 15 members be not present within five minutes of such notice being taken the Convention shall be adjourned without question first put until the ordinary hour upon the next sitting day. 8. The Convention may adjourn from time to time as it thinks fit but no motion for adjournment of the Convention shall be made until all the questions on the Order Paper for the day shall be disposed of, except by leave of the Chairman and of the Convention. n. Order of Business for the Convention 9. The arrangement of the business of the Convention and of the Orders of the Day shall be undertaken by a Business or Steering Committee, which shall be a standing committee of the Convention, to consist of seven members in addition to the Chairman of the Convention, who shall be Chairman of the Committee ex officio. 10. The order of business proposed may be varied by the Convention as it thinks fit. in. Motions 11. Each member in giving notice of motion shall deliver it at the table in triplicate. 12. A member desiring to change the date for bringing on a motion may give notice of such motion for any day subsequent to that first named. 13. A motion may be made without previous notice by unanimous consent of the Convention. 14. -16. [Other provisions concerning motions.] IV. Amendments 17. - 21. [Provisions concerning amendments.] V. Rules of Debate 22. Every member desiring to speak shall rise in his place and address himself to the Chairman. 23. A member proposing a substantive motion or taking part in debate otherwise may speak for 60 minutes and not more save that an extension of time not exceeding 15 minutes may be granted to any member by consent of the Convention save that this rule shall not apply to proceedings of the Committee of the Whole or in any other committee of the Convention. 24. No member may speak to any question after it has been put by the Chairman and the voices have 1These rules, the report of the Committee as amended, were adopted by the Convention on 17 September, 1946.

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been given in the affirmative or negative thereon. 25. When two or more members rise to speak the Chairman shall call upon the member who first rose in his place. 26. On resuming an adjourned debate the member who moved its adjournment shall be allowed precedence, provided he rises in his place at the proper time. 27. A member may speak to any question before the Convention or upon a question or amendment to be proposed by himself or upon a question of order arising out of the debate, but not otherwise. 28. By the indulgence of the Convention a member may explain matters of a personal nature, although there be no question before the Convention, but such matters may not be debated. 29. No member may speak twice to a question except in explanation or reply or in Committee of the Whole Convention. A reply shall be allowed to a member who has made a substantive motion in the Convention or has moved an order of the day or an instruction to a committee. 30. Any member may rise to speak on a point of order. 31. No member may use offensive or unbecoming words in reference to any member of the Convention. No member shall speak disrespectfully of His Majesty nor of any member of the Royal Family, nor of the Governor or person administering the government, nor shall he speak beside the question in debate. 32. Any member having used objectionable words and not explaining or retracting the same or offering apologies for the use thereof to the satisfaction of the Convention, may be censured by a vote of the Convention. 33. No member of the Convention shall presume to make any noise or disturbance whilst any member is orderly debating or whilst any matter is being read or opened. 34. Order shall be maintained in the Convention by the Chairman. The Chairman shall decide questions of order subject to an appeal to the Convention without debate. 35. A member may, with the consent of the Chairman, move without comment the formal motion that the question be now put, or that the Convention do now proceed to the next business, or that the debate be now adjourned, on the seconding of which the Chairman shall forthwith put the formal motion to the vote. VI. Questions 36. Questions may be put through the Chairman of the Convention to any department of government, public body, or to any person on any matter connected with the business of the Convention. Save by permission of the Chairman, no questions may be asked without notice of at least one day. VII. Voting in Convention 37. - 38. [Rules concerning votes.] 39. In discharging its duty, to make recommendations to His Majesty's Government in the United Kingdom as to possible forms of future government to be put before the people at a National Referendum, the Convention shall include in its report to the Secretary of State for Dominion Affairs the opinion of each several member of the Convention as to the form or forms of government which in his opinion should be put before the people, together with any preference which he may choose to express as between one form of government and another. VIII. Committees of the Convention 40. The Convention may at any time for greater convenience and freedom of debate resolve to go into Committee of the Whole. In Committee of the Whole the Chairman of the Convention shall be Chairman of the Committee. 41. The Convention may set up such other committees as it thinks fit. A Committee may consider such matters only as have been referred to it by the Convention. 42. The Chairman of the Convention shall appoint all committees. 43. The Chairman of the Convention shall be ex officio a member of all committees. Save as provided otherwise in these rules, each committee shall elect its own Chairman. 44. A motion made in committee need not be seconded.

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45. In committee members may speak more than once to the same question. 46. Save as provided otherwise in these rules, the same order in debate is to be observed in committee as in the Convention itself so far as applicable. 47. When all the matters referred to a committee have been considered the Chairman shall report the same to the Convention. 48. A motion may be made during the proceedings of a committee that the Chairman do report to the Convention. 49. A majority of a committee shall be a quorum save in Committee of the Whole Convention, when 15 shall be a quorum. 50. A committee shall have power to invite persons to appear before it and to give evidence upon matters within the terms of reference of the committee. 51. Except by leave of the Convention no committee may sit while the Convention itself is in session. 52. By leave of the Convention a committee may report its opinion or observations from time to time. IX. Amendment of Standing Orders 53. The Convention may alter, amend and repeal these standing orders. X. General 54. Whenever any matter arises in the course of the proceedings of the Convention or of any committee of the Convention which in the opinion of the Chairman of the Convention is not covered by these standing orders, reference shall be made to the rules and orders of the House of Assembly of Newfoundland and the matter decided in accordance with those rules, save that where the said rules and orders are silent upon a matter, the question shall be decided in accordance with the rules of British Parliamentary practice.

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NATIONAL CONVENTION Report of the Forestry Committee

October 24, 1946. The Forestry Committee, having enquired thoroughly and in a general way into the various phases of our forest industries in Newfoundland and Labrador, make the following report both as to operation on the island of Newfoundland as well as Labrador. Newfoundland, Britain's oldest colony, with a population of something over 300,000 people, having a moderate climate, strategically situated in the Gulf of St. Lawrence, contains an area of approximately 42,000 square miles. Newfoundland, apart from its possession of Labrador, is a fairly well- wooded country, principally spruce, balsam, yellow and light birch. There are at present held under lease some 22,000 square miles of timberland, 20,000 being held by the two paper companies, and the balance of about 2,000 square miles is held by individuals, with the exception of about 400 square miles which is held by the Reid Newfoundland Company. From information available, it is estimated that these areas contain about 60 million cords of timber. The total annual rentals collected by the treasury on these properties amount to around $50,000. Practically one third of the island is comprised of rivers and lakes, most suitably situated for the driving of timber to the many fine harbours all over the country, around which our population is fairly well distributed. Several of the rivers are already harnessed, whilst many more are available for the production of cheap water-power, which could be used for manufacturing purposes. Timber areas are licensed generally for a period of 99 years at an annual rental of $2 per square mile. In the case of sawmills, an additional 50 cents per 1,000 feet b.m. for lumber sawn is charged. All wood used for the production of pulp and paper is free of royalty. There are two large pulp and paper mills in Newfoundland. One of these is located at Grand Falls in the Exploits Valley, and the other at Corner Brook in Bay of Islands. The production of the Grand Falls mill is at present around 500 tons daily, whilst the Corner Brook development is capable of producing 600 tons of newsprint and 100 tons of sulphite daily. Grand Falls Activity in the pulp and paper industry in Newfoundland began during the year 1905. During a session of parliament that year, the Bond government enacted legislation whereby certain concessions were granted to a company incorporated in Newfoundland under Newfoundland laws for the purpose of developing the timber areas in the Exploits Valley. This company was controlled by the Harmsworth interests of London, England, who in turn controlled many of great Britain's largest and most widely circulated newspapers. The idea of the incorporators of this company at the outset was to provide newsprint for their many publications in Great Britain. The name of the Company thus incorporated and promoted became the Anglo-Newfoundland Development Co. Ltd. Construction of the Grand Falls development began during the early part of 1906, and was completed and open for business during the early part of 1910. The original production of the mill was around 200 tons daily. In addition other pulp industries sprung up around Bishop's Falls, which were eventually acquired by the Grand Falls company, whilst the project gradually grew until today, we find the industry at Grand Falls producing somewhere in the vicinity of 500 tons of wood products daily. The establishment of this industry created much-needed labour for our people. A modern, well-organised and efficiently administered townsite was established. Homes for our people who worked in the mill were built, and today we are happy to say that we can look on the progress made in this part of the interior of our country as an accomplishment which is not only a great tribute to the pioneer spirit of the corporation, but also evidence of the capacity, integrity and progressiveness of our people generally. The outlook for the paper industry generally today is one of great encouragement. It is known that large contracts have been made by the paper companies for the sale of their productive capacity for a period often years to come. It is heartening to find that the same pioneer spirit which prompted the original development of Grand Falls over 40 years ago still prevails with the company today, for we

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are advised that the further extension of operations is under serious consideration at the moment, with the ultimate idea in view of a productive capacity of around 700 tons of wood products daily. With such expansion practically assured, it is safe to say that the earning power of our people will be increased proportionately, and this would mean an annual earning power to our people of not less than $8 million. From information received through the various government agencies, we find that in addition to the labour given our people, the Customs department at Grand Falls collected in revenue during the year 1945-46 the sum of $360,000. The company paid in rentals to the treasury some $15,000, whilst in addition to this, the company complies with all Newfoundland income tax regulations, and pays in proportion to its annual profits the same taxes as apply to other Newfoundland mercantile concerns. The company owns and controls about 7,000 square miles of timberland. Corner Brook This great industrial development had its origin during the year 1923. The greater portions of the timberlands included in the original plan were either owned outright by the Reid Newfoundland Company on a fee simple basis, or under 99-year lease. The Reid company had been devoting its efforts for several years to bring about the promotion and development of this particular project, but it was not until the early part of 1923 that they were successful in interesting the Armstrong, Whitworth Company of England in the financing and establishment of this industry. However, in order to make the project an assured success, a guarantee of £2 million was granted by the British government, for which they received a first mortgage, whilst in addition, another guarantee of an additional £2 million was granted by the Newfoundland government for which our country received a second mortgage. The legislation which made this development possible passed the Newfoundland House of Assembly unanimously during the session held in the spring of 1923, and under the government of which the late Sir Richard Squires was Prime Minister. At this particular period Newfoundland, in common with other countries, had begun to feel the disastrous effects of the post-war depression, and consequently the employment of many thousands of our people on construction and woods works played a most important part in maintaining our national life. The name of the original company was the Newfoundland Power and Paper Co. Ltd. The mill began operations during the summer of 1925 and had been planned to produce around 400 tons of newsprint daily. The original estimate for the construction of mill, development of water-power at Deer Lake, and the laying out of the townsite at Corner Brook was some $30 million. As this figure was considerably under actual expenditure, it was not long before the company found itself in financial difficulties owing to over-capitalisation, and was forced to obtain a further loan from the Bank of England for which the Bank was given a preference mortgage over both the British and Newfoundland governments. During the early part of 1927 the International Paper Company of New York acquired control of the company, and new legislation was enacted by the Monroe government, along similar lines to that passed by the Squires government in 1923. The International Company continued to operate the Corner Brook project until 1938, when the whole of the common stock of the company was purchased by the Bowater interests of London, England. The amount paid for this stock was in the neighbourhood of $5 million - the International Company having paid $2 million for the same stock during the year 1927. From the advent of the International Company until the present time, great progress had been made, and the mill which was originally built to produce but 400 tons of newsprint daily, is now turning out around 600 tons. When Bowaters acquired the Corner Brook industry in 1938, they also acquired the Reid interests in the Gander area, which they incorporated with the Corner Brook development - thus bringing the timberlands under their control at present up to some thirteen square miles. In consideration of their acquiring the Gander areas, the Bowater company undertook to construct a sulphite mill at Corner Brook to produce 100 tons of sulphite daily, but also acquired under the same agreement the right to export up to 130,000 cords of unmanufactured pulpwood annually at the

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insignificant royalty of 30 cents per cord. This Committee strongly condemns the action of the Commission government with respect to passing of what is generally known as the "Gander Deal." The Committee is of the opinion that the government should have insisted that the sulphite mill be built on the Gander, and that under no circumstances should permission to export unmanufactured wood be granted to this or any other company. By the incorporation of the Gander areas with Corner Brook, and the failure to insist that Bowaters incorporate a separate company for the operation of the sulphite mill, the Committee estimates that the revenues of Newfoundland have been deprived of not less than $750,000 annually. This is on account of the fact that under the original Corner Brook agreement the company is only liable for $150,000 annually in the way of profits taxes. From the latest annual report of the Bowater's Newfoundland Pulp and Paper Mills Limited, we note that the plans of the company for the next two or three years envisage the expenditure of $7 million for expansion purposes, with an ultimate production capacity of some 335,000 tons of pulp products annually. Such expansion at Corner Brook will result in additional employment for 1,000 men in the woods and mills, and it is anticipated that the new machines will be in operation during the year 1948. When this expansion work is completed we estimate that the total annual earnings of the people employed by the Bowater company will be in the neighbourhood of $11 million. During the year 1945-46 the company paid in rentals and royalties over $19,000 to the treasury, whilst in addition customs duties collected at Corner Brook amounted to $350,000. Also the sum of $150,000 was paid by the company in profits taxes. Export ofPulpwood Under an agreement made with the Commission government during the year 1938, the right to export up to 130,000 cords of raw pulpwood annually was granted to the Bowater company. During the war period no wood was exported under this permit. However, this company has again started to export wood and we find that during the present season it is planned to ship some 50,000 cords to the United Kingdom for use in their British plants. Under this agreement the treasury receives 30 cents per cord on all wood exported. It has come to our attention that the sulphite mill at Corner Brook has been shut down for some months, and that now the main plant will be forced to curtail operations owing to shortage of wood. It is claimed that this shortage is caused by what is called "dry season", and the difficulties encountered in the driving of timber, owing to shortage of water in the various rivers adjacent to the company's properties on the western end of the island. If we take into consideration that one ton of sulphite requires two cords of wood for its manufacture, we find that we have exported out of the country during the past year sufficient raw wood to keep that sulphite mill in operation for 250 days, with a resultant loss in labour to our people of around $100,000. Again we want to specially emphasise the importance of conserving our available supply of timber on the island. When we realise that once the expansion programmes at both Corner Brook and Grand Falls have been completed, and both mills running at full capacity, both developments will consume around one million cords of wood annually. From information ascertained by this Committee, the regrowth of timber suitable for manufacturing purposes cannot be counted upon under 50 years. Reafforestation Under the previous heading we have stressed the importance of the conservation of our forest resources. Those in authority have informed us that the companies have every confidence that the timber areas under their control contain a sufficient supply of timber to ensure operations in perpetuity. Despite this fact however, the Committee desires to place itself on record as being of the opinion that no chances should be taken - and furthermore, we feel that steps should be taken without any further delay by those who are responsible for the safeguarding of our national wealth, to have this whole matter investigated by competent and trustworthy forestry engineers, with a view to the outlining of

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plans and policies to be put in to immediate effect, in order to eliminate any possibility of future shortages. Forest Protection Newfoundland forests have suffered greatly, particularly in recent years, because of forest fires. During the past season millions of dollars have been destroyed and many families have been made homeless by the ravages of fire. Causes of this scourge are attributed to the railway, as well as to the carelessness of the public generally. The responsibility for fighting this threat to our national wealth rests primarily on the government, but the entire population cannot shirk its responsibility either. The government takes upon itself the responsibility for the protection of our forests from St. John's to Port Blandford; whilst the two pulp and paper companies are held responsible from Port Blandford to Port-aux-Basques. An association, known as the Newfoundland Forest Protection Association, has done good work, and is continuing to do good work in respect of the guarding of forests. During the present year this association expended approximately $55,000 in its fight against the ravages of fire. $14,000 of this was contributed by the government. In addition to this another $35,000 has been expended under government supervision - in all a total of $90,000 has been dispersed during the present season contending with this particular danger to which our forest resources are liable. The Committee is advised that the Newfoundland Railway is at present making plans for the conversion of all their coal fired locomotives to oil, at an expenditure of around $500,000. By such action the Railway will have eliminated a danger that might have existed in the past through carelessness or otherwise on the part of Railway employees in the operation of locomotive engines across the country. Summary of Pulp and Paper Industry In summing up the whole pulp and paper industry in Newfoundland, we are happy to be in the position to inform the Convention that the prospects for this great industry are most encouraging. Contracts for the whole saleable product have been made by Bowaters for ten years, and it is anticipated that a further rise in the price of such product will in the not too distant future be obtainable. It is even anticipated that such advance in price will bring the price of newsprint up to around $85 per ton. With such an advance, it is only natural to expect that those of our people now engaged in this industry, in all phases of its operations, will benefit proportionately. And this brings us to the labour situation, which at the moment confronts all those engaged in producing this most vital commodity derived from our natural resource. It is a well-known fact that during depression years, wages paid our woodsmen and other employees throughout this particular industry were little better than sufficient to keep body and soul together. However, in recent years, but particularly since the demand for this product has been increased, the men have come together in various unions organised all over the country, and today we find that through the co-operation, energy and determination on the part of those who have been delegated to represent the masses of workers engaged in the production of wood products, higher wages have been obtained as prices for the sale of the product increased. There is much yet to be done in this respect - not alone in respect to wages, but in living and working conditions generally, and there is no doubt in our minds now, that in view of the optimism prevailing throughout the pulp and paper industry generally, further concessions in favour of our working men will be received. Local Sawmills There are over 800 sawmills scattered all over the island of Newfoundland. During the year 1945, these mills cut and manufactured into various kinds of lumber, staves, boxwoods, etc. in excess of 50 million feet. Based on the present prices being paid for lumber of all kinds, it is estimated that the total earnings of our people employed in the production of this class of lumber is approximately $1.75 million yearly. The revenues collected by the Department of Natural Resources in the form of royalties during the fiscal year 1945-46 amounted to $14,415, whilst in addition the amount of $7,764 was collected

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for licenses from the operators. Of the 800 sawmills in operation, some 200 manufacture less than 10,000 feet of lumber annually, and are thus exempt from paying any royalty whatever. The Committee is of the opinion that royalties should be collected on all lumber sawn and marketed. It is quite obvious that the treasury is not receiving full and complete returns for the amounts of timber cut and manufactured, and this Committee is of the opinion that at least another 10 million feet of lumber are being sawn on which no returns whatever are being made. Furthermore, the Committee strongly recommends that a more strict and systematic system regarding the grading and inspection of all classes of lumber be inaugurated without delay. Export of Pit Props Prior to the outbreak of hostilities in Europe in September, 1939, considerable shipments of pitprops for use in British coal mines were made from the island of Newfoundland, apart from quantities exported from Labrador. However, shortly after war broke out such shipments were discontinued, and the British Timber Control Board confined their purchasing of this important commodity to the neighbouring Dominion of Canada. Negotiations were conducted for some time with regard to prices etc., but nothing whatever materialised. Considerable comment through the columns of the press strongly condemned the attitude of the Commission government for its failure to have some of this business secured for Newfoundland. During the year 1945-46 some 20,000 cords of pitprops, cut off private lands, were exported to the United Kingdom from various sections of the island. The total value of these shipments amounted to something over $400,000. From information available now, we estimate that around 15,000 cords will be exported the present season at an approximate value of $300,000. As in the case of the export of raw pulpwood, this Committee is of the definite opinion that no further permits should be granted for the export of pitprops from the island of Newfoundland, unless under circumstances whereby it would be necessary to find employment for those of our people who would be unable to earn a livelihood in some other sphere of activity. Birch Of the total amount of available timber on the island, it is estimated by those who should be competent to judge that many millions of cords of good birch are available for cutting, and that it is possible that this commodity could either be manufactured locally or exported to the European markets, particularly Great Britain, where it is known that large quantities of all kinds of timber are required at present, and will continue to be required for many years to come. On areas which are being cut over by the two pulp companies as well as by the local mills, it is known that substantial quantities of this particular brand of timber are present, which if not cut immediately will begin to deteriorate, and eventually become a total loss to the country as a whole and cease to be of any value to our people from an earning point of view. The Committee feels that special encouragement, and if needs be assistance be given our local mills, for the purpose of inducing them establish a business which could manufacture a goodly portion of our local birch, which could be used locally as well as exported to either North American countries or Great Britain. We understand that the pulp and paper companies are prepared to permit the cutting of birch from areas of theirs which have been cut over. It is felt that with some material assistance as well as encouragement, a profitable industry along the lines just mentioned could easily be established in the country, which would eventually bring an earning power to our people of at least another $500,000 yearly from forest operations. Labrador In February, 1927, by decision of the British Privy Council, 110,000 square miles of Labrador territory was ceded to Newfoundland. Prior to this decision the territory of Labrador, whilst always claimed to be Newfoundland territory, had been under dispute - a dispute created by the leasing to Alfred Dickie in the early part of the present century of some 300 square miles of timberland on the Hamilton River, which runs in to Hamilton Inlet. The rentals collected by the Newfoundland government were

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at a rate of $2 per square mile and the leases were for a period of 50 years. Dickie started the operation of a sawmill in this area, and actually exported some manufactured lumber from his acquired limits, but once the Quebec government made claim to the territory, operations naturally ceased and Dickie was forced into liquidation. In the meantime, several other speculators acquired leases of certain timber rights in the Labrador area for a period of 99 years, and at the present time we find that something over 10,000 square miles of the Labrador are under lease to various individuals or companies. There has been no reliable survey ever made of the quantities of timber available on Labrador, and opinions vary as to quantities existing. These estimates run from 50-100 million cords, which is principally spruce and fir, but it is generally known that at least 70% of this timber is spruce and the other 30% is mostly balsam. All this timber is most suitable for the manufacture of pulp and paper and for export to the United Kingdom as pit props. It is also known that the timber areas of Labrador are the last available virgin forests on the east coast of North America. It is therefore obvious that in view of the definite demand which exists at present for pulp and paper products, and which will continue to exist for at least another decade, this particular area should be conserved. Under no circumstances should further leases be granted unless the individuals or corporations seeking such concessions would undertake to develop such areas on sound commercial lines. At present there are two small operations being conducted in Labrador. One of these companies, known as the Labrador Development Company Ltd., which was incorporated in Newfoundland during the early part of 1934, is still working, but on a very small scale. The other company which began its activities this present season is located on Kaipokok Bay and is known as the Three Rivers Estates Ltd., but up to the present has not shipped any of its product. The Labrador Development Company began operations in the Port Hope Simpson area in 1934, having acquired through purchase of leases some 6,000 square miles, and up to the early part of 1940 shipped over 100,000 cords of pit props to Great Britain. This particular company after doing considerable exploratory and development work, received financial assistance from the government during 1935, in the form of a loan of some $200,000. The company ceased operations in 1940, having had some difficulty with the government over further advances which had been made. It seems to us that this was the great opportunity to have continued these operations and prove beyond doubt the value of our timber resources in Labrador. At this particular period large orders for pit-props were being placed by Great Britain in the neighbouring Dominion of Canada, whilst timber for construction of military bases, which could have been procured from Labrador, had to be imported from both the United States and Canada. The Labrador Development Company resumed operations again last autumn, and have shipped this season around 6-7,000 cords of pitprops at a value of nearly $150,000. However, the further development of this industry is being considerably retarded because of the lack of competent and determined labour organisation. The company is having untold difficulties with securing any permanent labour, and all during the present season men have been arriving at Port Hope Simpson on one boat and leaving again on the next. It seems to us, therefore, that in order to make progress with such development more capital must be found - to be used principally in the construction of homes for workmen's families, and the creation of a settlement with the necessary medical, school and entertainment facilities. We are given to understand by the managing director of this company that he is in negotiation with highly reputable financial people with a view to raising further capital to be used for the ultimate accomplishment of these plans. The average navigation season for Labrador is not more than six months each year on the southern portion, whilst in the northern end of the territory, which includes Hamilton Inlet, not more than five months navigation is available. It is thus seen that all shipment from Labrador must be made within a period from around the end of June until the end of October. This is the most serious handicap to any development which may be proposed or inaugurated in Labrador. We have stressed the great demand which is now general in both the American and European

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markets for pulp and paper products. Under such circumstances therefore, it is not unlikely that the establishment of a sulphite mill, possibly another paper mill may materialise in the near future. The construction of such a mill would be on the southwest or east coasts of Newfoundland, where the necessary power is available in quantities sufficient for the operation of a 400 ton mill. There should be no doubt at any rate for the establishment of a 150 ton sulphite mill. Such a mill would be fed with raw material from the forests of Labrador, and would create further employment for our people, who would earn annually $1.5 million. We understand that at the present time the government are in receipt of applications for leasehold rights on several thousand square miles of Labrador timber areas. The government has pointed out to us that at the present stage of negotiations they are unable to give us full particulars of any such applications. But we take this opportunity of expressing the view that under no circumstances should leases be granted to any individuals or corporations without making definite provision for the secured development of such areas within a specified period, so as to ensure the protection of the interests of the country generally. Summary In concluding this report, we give for the information of the Convention as well as the country as a whole, the following summary of our findings: (1) The pulp and paper industry in Newfoundland at the present time is in a most flourishing condition. (2) Plans by the two companies for the future envisage a total annual saleable production of approximately 550,000 tons of both newsprint and sulphite annually. (3) We estimate that at the moment the annual earnings of our people from the pulp and paper industry is around $15 million. (4) It is estimated that within a period of another two or three years, the pulp and paper industry will employ about 12,000 of our people, and that their annual earnings will be close to $20 million. (5) We strongly recommend some definite policy of reafforestation. This particularly in view of the fact that the further expansion of the industry will naturally result in the consumption of a greater amount of wood. (6) We have stressed at some length the importance of the conservation of our forests through reafforestation and, further, we now point out for the benefit of the Convention the importance of strict regulations with respect to the guarding of our forests from any future fire conflagration. (7) In view of the present demand for the products of our various sawmills, it is not unlikely that the earning power of the people, which is at present around $1.75 million yearly, will not only be maintained, but increased to $2 million yearly. (8) This Committee strongly condemns the action of government in leasing to corporations or individuals the rights to cut timber over the three mile limit, which was originally reserved for the exclusive right of our fishing population. From information ascertained, the Committee learns that the three mile limit has been practically denuded of its timber. This is very unfortunate indeed, and we suggest that immediate steps be taken by the government to enact legislation for the purpose of providing exclusive rights for our fishermen and small mill owners to operate on the three mile limit. This Committee strongly suggests that small mill owners should not be permitted to cut timber or lumber on the three mile limit for sale to industrial corporations. (9) Should further expansion and development of Labrador timber resources be achieved, it is most probable that not less than 500 additional men can be employed, and the additional earning power from that source would be increased by another $500,000. (10) From information given us we find that the total amount of wood available on Crown lands is roughly 5 million cords, excluding birch. The total amount on leased lands is approximately 60 million cords. (11) Recapitulating the entire forest operations of the country, both Newfoundland and Labrador, we find that at the present time some 14,000 of our people are engaged in this major industry; that the total earning power at present amounts to some $16 million yearly. On a most conservative basis

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we visualise that within a period of three years, at least 15,000 people will find employment in our various forestry operations, and that the total earning power accruing to them should be not less than $20 million yearly. Pierce Fudge, Convener. E.L. Roberts. K.M. Macdonald. Chas. L. Bailey. R.G. Starkes. A. Northcott. Peter Cashin. W. Dawe. S.F. Vincent, Secretary. Supplementary Report of the Forestry Committee of The National Convention, February 3,1947. During the debate on the Forestry Report introduced during the latter part of October, 1946, it was suggested that the Committee get some further information regarding the potential value of our timber resources on Labrador. The Committee made further enquiries regarding surveys that had been made by Messrs. Bowater's Newfoundland Pulp and Paper Mills Ltd. during the year 1938, and is now in a position to make the following report. Mr. H.M.S. Lewin, vice-president and general manager of the Bowater company, accepted an invitation by the Committee to attend a special meeting on January 27 last, and was most co-operative with regard to any information held by his company. The survey made by the Bowater company was a private one and had cost the company some $90,000. Mr. Lewin informed us that their survey was conducted by land and air and was confined to the area in the Hamilton Inlet. He informed us that this particular area, which covers some 6,000 square miles, carried between 20-25 million cords of merchantable timber, which he claimed was most suitable for the manufacture of pulp and paper. In this particular area it is known that some 350 square miles are held under lease by private companies, whilst the balance is held by the Crown. He further stated that the greater portion of this timber is black spruce and that, in his opinion, it should be conserved by the Newfoundland government for the purpose of future development. He was most emphatic in his views, and expressed the opinion that it was possible that a sulphite mill could be established on Labrador or, alternatively, either a sulphite or paper mill could be constructed in Bay d'Espoir and fed the raw timber from this particular area on Labrador. Mr. Lewin indicated to the Committee that it would take in the vicinity of $5 million capital expenditure to promote a woods operation for the purpose of producing around 100,000 or more cords of wood annually, and that in his opinion such a development would mean an annual earning power of around $1.5 million. He went further and stated that should a sulphite or paper mill be constructed, it would mean an additional annual earning power of around $5 million. In our original report presented to this Convention, we had given an estimate of earning power for the people of Newfoundland from the pulp and paper industry as in the vicinity of some $16 million yearly. Mr. Lewin not alone confirmed this estimate, but went further and stated that in his opinion within another couple years the total earning power accruing to the people of Newfoundland from the pulp and paper industry would be not less than $20 million. His estimate is based on present operational conditions. This means that our total prospective annual earnings from our forest industry would be approximately $25 million annually. We understand that recently 320 square miles of timber area have been granted to the Three Rapids Estate. This particular area is not included in the territory covered by the Bowater survey. We are given to understand by a director of this latter company that their total mileage carries in the vicinity of one million cords of timber products.

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At the present time we are not in possession of the terms of agreement made between the Commission government and the Three Rapids Estate. This company has already spent in the vicinity of $50,000 for labour on their concessions since the commencement of operations in June last. We are also informed that the government is making plans for a complete survey of Labrador timber. Exports of Newsprint

Year

1909-10 1910-11 1911-12 1912-13 1913-14 1914-15 1915-16 1916-17 1917-18 1918-19 1919-20 1920-21 1921-22 1922-23 1923-24

United Kingdom Tons Value $ 6,966 21,064 26,821 44,424 40,077 40,556 62,285 33,281 6,544 7,691 69,022 61,449 34,512 56,386 60,537

1924-25 62,862

1925-26 61,885 1926-27 71,968 1927-28 84,452 1928-29 82,771 1929-30100,926 1930-31 120,962 1931-32113,100 1932-33 125,209 1933-34158,419 1934-35 177,957 1935-36206,129 1936-37 193,380 1937-38215,571 1938-39202,280 1939-40150,198

311,834 943,699 1,201,656 1,990,229 1,795,488 1,817,193 2,790,461 1,503,694 449,626 517,058 3,939,755 4,585,857 3,088,260 5,052,141 5,423,982 5,633,778 5,090,717 5,387,742 6,332,093 5,936,670 6,834,778 8,004,557 6,990,571 7,331,586 6,979,081 7,877,782 9,123,857 8,389,995 9,137,773 8,652,127 6,667,210

Tons

USA Value $

900

Other Countries Tons Value $

40,321

242 11,308 13 6,146 95 26,489 1,783,598 9,505 646,051 5,623 7,434 499,570 4,261 833 55,969 29

600

388,235 286,335 4,756

7,488 639,108 43,087 3,133,440 1,312 159,165 98,166 7,051,484 1,078 78,349 114,241 98,930 7,134,272 1,570 129,082 8,548,409 5,936 398,953 148,611 9,122,974 146,458 9,130,224 135,743 8,385,827 91,905 5,328,113 332,983 92,911 4,268,281 7,572 459,581 89,821 4,159,299 8,258 106,750 4,826,222 1,808 104,986 4,810,311 40 240 8 108,145 4,736,448 53,870 78,750 3,958,472 1,113 136,412 6,025,012 59,514 2,611,736 Total:

I Adapted from the table in the original report.]

Tons

Total Value $

7,866 21,064 26,821 44,424 40,077 40,556 62,527 33,389 34,060 22,819 80,717 62,311 34,512 56,386 60,537 70,350 106,284 171,212 184,952 217,789 249,537 267, 420 248,843 217,114 258,902 276,036 312,879 298,406 323,724 282,143 346,124

352,155 943,699 1,201,656 1,990,229 1,795,488 1,817,193 2,801,769 1,510,440 2,302,243 1,551,344 4,725,660 4,646,582 3,088,260 5,052,141 5,423,982 6,272,886

8,383,322 12,517,575 13,580,606 14,884,032 15,957,752 17,134,781 15,376,398 12,659,699 11,580,345 12,496,662 13,950,079 13,202,114 13,874,461 12,664,469 15,303,958

4,459,791 249,041,980

65

A Report of the Committee on Education

October 28,1946 1. Educational services, costing this year $3,538,500 inclusive of reconstruction expenditure, are the third largest single heading of service expenditure. It is almost entirely a spending department of government, for its income is trifling. 2. The Committee decided at the outset that its approach to the subject of education must be strictly limited in character. It felt its own inability to discuss education philosophically, or to approach it professionally. No member of the Committee felt competent to deal with education either as an art or as a profession. It was decided at the outset to restrict our approach to the economic side. What does education cost the treasury now, and what has it cost in the past? Is the country getting adequate results for the money spent? Could the same results have been got with less expenditure? Will the same level of expenditure have to be maintained in future, or will expenditure be higher or lower than now? One thing the Committee decided from the commencement of its approach was its inability to judge of the country's capacity either now or in the future to meet the costs of education: the members felt that while as members of the National Convention itself they would have ultimately to come to that judgment, as members of the Committee they had neither the general national data, nor even the mission, to consider the wider question of the country's ability to carry educational services. 3. It was decided that a better view of the whole education set-up could be got if the Committee took in a period of time that was sufficiently representative of the ups and downs in the country's economy. As the Department of Education itself was established around 1920, it was agreed to take the whole period from then. The period under review thus includes the beginning of the modern movement in Newfoundland education; the great set-back which education received with all other social services in the early 1930s; the early years of Commission government; the war years and the beginning of the post-war era. 4. The following table shows graphically the actual growth of expenditure on education out of public funds: Year

Total Education Grant

$

%

$

$

1921-22 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38

817,177 837,498 839,851 836,351 877,590 892,977 924,027 932,027 987,085 1,025,157 761,355 509,137 517,661 716,807 956,168 1,156,681 1,126,689

8.10 8.25 8.37 8.54 8.27 8.00 8.26 8.09 8.35 7.88 6.36 4.49 7.28 8.37 9.42 10.27 10.48

24.35 24.47 24.34 23.20 24.07 23.10 23.85 24.11 24.68 25.46 18.95 13.86 14.03 19.00 24.45 25.84 25.95

3.11 3.19 3.11 3.18 3.34 3.40 3.51 3.54 3.75 3.91 2.90 1.94 1.80 2.47 3.27 3.57 3.77

% of Education Grant to Gov't. Expenditure

Per Student cost of Education

Per Capita cost of Education

NATIONAL CONVENTION

66

1938-39 1939-40 1940-41 1941-42 1942-43 (9 mos.) 1943-44 1944-45 1945-46 1946-47(est.)

1,284,111 1,453,781 1,532,508 1,662,922

11.26 11.26 13.35 14.01

28.38 31.11 33.22 37.56

4.43 5.02 5.25 5.40

1,895,002 2,370,757 2,996,076 3,310,177 3,538,500

13.35 12.06 13.39 13.04 10.41

39.40 48.23 58.53

6.54 8.19 10.34 11.43 11.10

The following table shows the comparative figures for Newfoundland and Canadian provinces: Year

% Total Expenditure spent on Education

Per Capita Expenditure on Education

Expenditure per pupil in average daily attendance

Newfoundland Nova Scotia P. E. Island New Brunswick Quebec Ontario Manitoba Saskatchewan Alberta British Columbia

1944-45 1944-45 1942-43 1942-43 1941-42 1942-43 1942-43 1942-43 1943-44 1942-43

13.39 16.1 15.1 9.6 11.0 12.6 10.5 12.8 22.3 11.0

10.34 12.00 6.90 8.33 13.03 14.40 13.17 16.68 20.42 13.53

From 1921-22 the total expenditure on education rose steadily year by year until it reached a million dollars in 1930-31. The following year saw the onslaught of the world depression as it affected Newfoundland, and the grant was slashed by $250,000. Another $250,000 was sliced off in the following year, and in the third year the expenditure on education was still around the $500,000 mark, though it is to the credit of the government of the day that retrenchment was even more severe in other fields of expenditure, so that the costs of education still accounted for over 7.25% of the whole. The following year, 1934-35, saw the advent of Commission government and of grants-in-aid from the British Treasury; facts reflected in the increase of education expenditure, both absolutely and qualitatively, that same year. From then until the outbreak of the late war, with continued grants-inaid, the progressive upward trend of the 1920s was continued. The immense increase of public revenue flowing in from the wartime prosperity enabled this upward trend to be maintained and increased, until in the fiscal year recently ended education accounted for $3,310,177 (or 13.04%) of the total expenditure of the government. In 1941-42 education expenditure reached a total of 14.01% of government expenditure. 5. The following table showing increases in the number of schools, classrooms and teachers, illustrates the educational advancement made over the period. Where the table shows an increase of 58 schools, there is a corresponding increase of 564 classrooms and 657 teachers. In other words, the trend has been for a large number of the outport one-room schools to improve their status by becoming two or even three-room schools.

67

PAPERS AND REPORTS Year 1921-22 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43 1943-44 1944-45

No. of

No. of

No. of

No. of

Schools

Classrooms

Teachers

Students

1139 1121 1099 1130 1139 1161 1149 1156 1177 1214 1198 1133 1103 1132 1132 1156 1166 1175 1168 1182 1171 1151 1164 1197

1483 1469 1451 1471 1466 1512 1514 1528 1565 1609 1595 1523 1524 1558 1604 1653 1742 1776 1810 1832 1865 1880 1950

1570 1471 1498 1529 1571 1594 1625 1640 1689 1712 1680 1549 1602 1709 1726 1784 1804 1889 1938

55,152 56,378 58,093 59,393 59,088 60,288 60,691 60,580 60,759 60,592 59,201 55,267 55,054 57,409 59,310 62,497 64,272 65,893 66,508 67,184 66,161 66,439 67,641 69,737

2047

2000

2014 2083

2114 2227

% of daily attendance

60.91 60.86

59.41 60.67

61.69 64.10 63.83 63.82 65.82 66.45 67.84 66.45 67.00 65.57 65.92

65.41 67.50 68.70 70.20 68.60

66.91 72.40 72.66 73.40

Since 1921 the population of Newfoundland (with Labrador) has increased 21%. Bearing this figure in mind it is interesting to note these increases over the same period: In schools 5% In classrooms 38% In teachers 42% In students 26% The total expenditure on education falls under several headings, and the Committee was particularly careful to examine and compare these headings. It is not easy to make exact comparisons over the entire period since 1921-22, since the headings themselves have changed through additions to the functions of the Department of Education. It is, however, feasible to make the comparisons over the period commencing in 1930-31. These headings are, in the first place, as follows: administration, teachers' salaries, erection and improvement of schools, new services, maintenance and equipment of schools. Administration expenditures over this period have been as follows: Year

1930-31 1931-32

Total Educational Grant

Administration

$ 1,025,157 761,356

$ 39,795 34,570

% Total Expenditure

3.88 4.54

68

NATIONAL CONVENTION 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43

509,138 517,661 716,807 956,168 1,056,681 1,126,689 1,284,111 1,453,781 1,531,508 1,662,922

28,659 27,502 28,535 47,882 55,802 56,426 61,123 69,490 70,499 71,173

5.62 5.31 3.98 5.00 5.28 5.00 4.76 4.78 4.60 4.28

(9 mos.)

1,895,002 2,370,757 2,996,076 3,310,177 3,538,500

61,398 80,842 102,465 136,379 160,318

3.24 3.41 3.42 4.12 4.53

1943-44 1944-45 1945-46 1946-47(est.)

It will be noticed at once, that though the proportion of administration to the whole expenditure has remained low, the absolute amount spent on administration has risen rather sharply in the past few years. This is explained only to a very small extent either by increases of salary for those employed at administration, or by the employment of additional personnel. It is explained for the most part by the transfer to the department, in the administrative section, of services previously coming under other departments; and by the creation of entirely new services. Examples of these are the visual education and public libraries divisions. 6. Teachers' Salaries Year

1930-31 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43 (9 mos.) 1943-44 1944-45 1945-46 1946-47(est.)

Educational Grant

Teachers' Salaries

$ 1,025,157 761,356 509,138 517,661 715,807 956,168 1,056,681 1,126,689 1,284,111 1,453,781 1,531,508 1,662,922

$ 803,018 622,577 393,586 402,771 573,513 680,028 795,335 833,154 976,823 1,056,898 1,099,010 1,216,760

78.33 81.76 77.30 77.80 80.00 71.12 75.27 73.95 76.07 72.70 71.76 73.17

1,895,002 2,370,757 2,996,076 3,310,177 3,538,500

1,290,875 1,733,260 1,997,257 2,013,548 2,165,000

68.12 73.11 67.33 63.85 61.18

% Total Expenditure

PAPERS AND REPORTS

69

In the table above teachers' salaries include all income accruing to teachers - straight salaries, which have been increased, augmentation, and cost of living bonus. The present scale of straight salaries, less augmentation and cost of living bonus is as follows: No. of Rooms

Enrolment

1

10 or less 11- 20 21- 30 31- 40 41 and up 51- 90 51- 90 51- 90 91 - 130 131-170 171-210 211-250 451-490

2 (a)

(b) (c)

Prin.

V-Prin.

Asst.

Asst.

Asst.

Asst.

$

$

$

$

$

$

200 400 450 500 550 550 700 750 825 900 975 1050 1400

500 500 500 525 575 625 700 1100

3 500 4 500 525 5 525 500 525 6 525 525 525 525 12 675(4) 550(4) 525 875 Note: (a) A two-room school which does not qualify for a high school grant. (b) A two-room school which qualifies as a high school under the minimum requirements of the 1927 education act. (c) A two-room school with 11 or more pupils enrolled in grades XI and up. The following table shows the number of teachers receiving various rates of salary:

Under $ 300 $ 300 - 399 $ 400 - 499 $ 500 - 599 $ 600 - 699 $ 700 - 799 $ 800 - 899 $ 900 - 999 $1000 - 1999 $2000 - 2999 $3000 - up

1944

1943

1942

1941

1940

1939

2 31 240 196 285 232 215 157 446 20 5

12 141 182 209 433 232 166 124 290 10 5

51 131 375 454 230 134 96 74 185 14 3

56 380 492 268 148 121 84 50 125 9

116 360 438 242 156 104 76 54 117 10 4

145 377 392 220 135 117 62 57 115 7 4

4

The median salary (including augmentation and cost of living bonus) received by teachers is shown for the years named:

1941

1942

1943

1944

1945

$487

$569

$682

$768

$992

70

NATIONAL CONVENTION

Note. The median salary must not be confused with the average salary. For instance, the median salary in 1945 was $992, whereas the average salary was $1,009. The median salary is at a point on the salary scale at which half the teachers get less and half the teachers get more. The number of teachers receiving $1,000 or more a year is shown for the following years:

1939

1940

1941

1942

1943

1944

1945

126

131

138

202

305

371

783

7. Erection and Improvement of Schools Year 1930-31 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43 (9mos.) 1943-44 1944-45 1945-46 1946-47(est.) (est.)

v

New and Improved Schools $ 21,225 9,927 7,035 6,983 9,971 9,986 9,828 9,996 39,706 108,740 144,036 157,723

% Total Expenditure

202,922 316,854 460,224 498,859 510,000

10.71 13.37 15.36 15.07 14.41

2.07 1.30 1.38 1.34 1.39 1.04 .93 .88 3.09 7.48 9.40 9.48

Previous to 1938 there was a statutory grant of $10,000 per annum for the erection and equipment of school buildings. In the past nine years a very great expansion has been shown in the erection and extension of school buildings. This has been a program of building new schools where they were urgently needed; affecting major repairs to existing structures; and altering, renovating or extending other school buildings. At the same time much attention has been given to supplying schools with equipment such as desks, chairs, blackboards and maps. Up to March 31,1946, the expenditures under this heading have totalled $1,885,000, and another $500,000 is being spent in the present fiscal year. What has been done with this money is summarised in the latest Education Department report available which deals with the period ending March 31st, 1945: "The reconstruction grants have enabled the larger denominations to have 316 new building projects approved, representing 581 classrooms. Eighty-six other buildings have been either extended or renovated, representing 119 additional classrooms." During the current year, so the department estimates, another 100 classrooms will have been added, bringing the total since the start of the programme to 800 classrooms. The cost to the government of extensions or renovations has averaged $944 per classroom, and of new buildings $1,646 per classroom. The figure of $1,885,000 spent by the government on this programme represents only a portion of the total cost. In by far the larger

PAPERS AND REPORTS

71

number of projects, the local communities concerned spent as much as did the government. Government allocations to denominational reconstruction committees are made on a per capita basis, with the agreement that the money can only be spent on any project on a 50-50 basis, and in many cases the contribution of the local school board has been even greater than half the total cost of the building. 8. New Services Year

1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43 (9mos.) 1943-44 1944-45 1945-46 1946-47(est.)

New Services

% Total Expenditure

$ 32,600 77,020 99,375 105,952 106,628 107,020 104,533

3.41 7.28 8.82 8.17 7.33 6.98 6.28

105,251 125,286 132,428 193,500 206,683

5.55 5.28 4.42 5.85 5.84

New Services include the following, among others: (a) Annual grant to the summer school for training of teachers. These grants are shown over the 11-year period ending 1946-47 as follows: (Figures in thousands of dollars)

1936 5.0

1937 4.44

1938 6.66

1939 7.00

1Q4Q 7.50

1941 7.50

1942 7.50

1943 7.63

1944 9.41

1945 12.66

1946 16.00

1947 15.00

(b) The provision and distribution of school supplies was a new service undertaken by the government in 1936, although in the case of school texts, the policy at present is to supply at a nominal fee, the books then becoming the property of the pupil, rather than supply them free of cost on a loan basis as heretofore. The cost of this service is shown in the following table: (Figures in thousands of dollars.)

1936 9.94

1937 54.07

1Q3R 44.91

1939 44.45

1940 41.64

1941 41.47

1942 41.93

1943 40.71

1944 39.74

1945 52.44

1946 50.00

1947 75.00

(c) Adult education shows an increasing cost over the same period. This increase has been due in part to an increase of executives and field staff, and increased travelling expenses. Although the expenditure on visual education is shown separately, the two services have now been combined, and the aim is to operate them with a common staff. The present policy in adult education is to concentrate on the larger centres of population, where it is hoped to make the work self-supporting financially, and from these centres radiate to outlying settlements. The following table shows the annual expenditure on these services over the period under review:

72

NATIONAL CONVENTION (Figures in thousands of dollars)

1936 11.96

1937 11.99

1938 14.29

1939 15.00

1940 15.00

1941 15.00

1942 15.00

1943 14.94

1944 1945 20.70 21.63

1946 1947 50.00 46.48

New services not included above are: scholarships; grant to Memorial University College (last year $38,000); boat construction and repairs (last year $15,000); and small grants for the Moravian Mission and to Dalhousie University ($1,000 and $5,000 respectively last year). 9. Maintenance and Equipment of Schools Year

Maintenance

% Total Expenditure

$ 1930-31 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43

33,435 24,932 21,278 21,311 24,457 30,005 32,638 34,299 35,547 39,198 40,206 40,104

3.26 3.27 4.17 4.11 3.41 3.13 3.03 3.04 2.76 2.69 2.62 2.41

(9 mos.)

29,567 40,115 128,585 205,000 210,000

1.56 1.69 4.26 6.19 5.93

1943-44 1944-45 1945-46 1946-47(est.)

Previous to 1939 no separate grant was made for maintenance and equipment of schools, but boards could spend one-tenth of their full grant on this service. The figures given are therefore arrived at by calculation, and very nearly approximate the actual expenditure. The present rate of expenditure is set out in the following table: No. of Rooms 1 2 3 4 5 6 12

Maintenance $

50, 75,100 (depending on enrolment) 200,250 (depending on type of school) 350 450 550 650 1,600

PAPERS AND REPORTS

73

10. The Future The heads of the Department of Education have stated for the Committee an outline of their plans for the future. They propose to continue for many years, to all intents permanently, the program of assisting boards in building new, and improving existing schools, and improving their equipment. Half a million dollars a year is presently being spent under this heading, and on the assumption that the value of the dollar remained at the present level they would continue to spend at least half a million dollars a year. By 1951, so they estimate, they will have completed their present program; but that does not mean the end of building and re-building, for by then it would almost be necessary to start over again. Their ideal is to furnish all schools with modern equipment, including flush-toilet facilities and improved heating arrangements. Prominent in their plans is the building of a new wing on the Newfoundland Memorial University College at a cost of $600,000 to enable the college to accommodate the ever-increasing numbers of students clamouring for admission. The College is presently overcrowded to a point which impairs efficiency, and many students cannot presently obtain admission. Operation of this new wing would make it necessary to increase the government grant to the College from the present figure of $40,000 to an estimated $60,000 a year. If the tentative plan to transform the College into a degree-conferring university is realised the government grant to the College would have to rise from the $60,000 to approximately $100,000 a year. It is hoped eventually to build a number of regional high schools. The belief in the department is that in a very great number of cases teachers in the smaller schools - particularly in the outports have too many grades to teach. This, it is pointed out, is unfair to teacher and students. To remedy the situation and give pupils in remote areas a better chance, the regional high schools would be erected. In the smaller schools the higher grades would not be taught, the regional high schools concentrating on these higher grades, together with manual training, science, domestic science and other studies of a technical nature which the smaller schools are not equipped, and scarcely can be equipped to provide. There might be three or four of these regional schools situated at strategic points serving large areas, and to them would come the students from the smaller schools in that area. This involves the cost to the students, or their parents, of travel and of board and accommodation while attending the regional school, and the idea is that financial assistance would have to be given by the government to offset this cost. Particular attention and study are being given to this whole plan by the department at the present time. The department feels that such schools will do much to equalise educational opportunity for all children whether they live in the larger settlements or not. It must be emphasised that the whole plan is no more than an ideal at present. A great deal of study will be necessary to determine whether or not it can be done. 11. Conclusions Without prejudice to the conclusions which may be drawn by the Convention as a whole we conclude this report with our own observations: (a) We feel that the Department of Education has done and is doing a remarkably good job. We are deeply impressed by their sincerity and devotion to the cause of education in Newfoundland. (b) We are satisfied that the Department has made excellent use of the money and means at their disposal. (c) It is apparent that education has made and is making very real progress in Newfoundland. (d) We feel very strongly that none of the existing services should be abolished or reduced, but that on the contrary the trend towards extension and improvement should be continued. (e) Except insofar as the value of the dollar may increase, which would enable expenditure to be reduced, we are convinced that the present scale of expenditure must be maintained; which is only another way of saying that the present scale of educational services must be maintained, if not increased. Throughout our deliberations we have never lost sight of the changing concept of education which

74

NATIONAL CONVENTION

is becoming evident amongst our people. Education is no longer regarded as a luxury for those who can afford it, but a necessity for all, whether they can afford it or not. Signed: Malcolm Hollett (Chairman) M. F. Harrington Joseph Fowler J. T. Spencer Denis L. Ryan Frank D. Fogwill Leonard J. Miller Colin G. Jones J. R. Smallwood Isaac Newell (Secretary).

PAPERS AND REPORTS

75

Report of the Transportation and Communications Committee 1. Our enquiry extended to six activities of the government which we felt came under our scope. They are as follows: Gander Roads and bridges Posts and telegraphs The railway system Broadcasting Tourists We have accordingly divided our report into six sections. 2. We have to record that with one exception we have secured all the information we sought. The one exception is Gander, the details of whose income and expenditure have not yet reached us. 3. We wish to express the pleasure it has given us that our chairman, Mr. F. Gordon Bradley, K.C., has been honoured by being appointed Chairman of the National Convention. His chairmanship of our Committee was the source of much pleasure throughout our deliberations, and we acknowledge gratefully the benefit we received from his sound judgement. Respectfully submitted: J.R. Smallwood, Chairman Kenneth Macdonald John A. Hannon Dennis L. Ryan Arch. Northcott A.B. Butt Charles L. Bailey Percy Figary Alfred Walton, Secretary Gander Airport Gander Airport was constructed originally by the British Air Ministry. Construction was commenced in 1936. The Canadian government installed and operated the meteorological facilities at its own expense, and operates them today. The British government installed and maintained the radio facilities until the airport was taken over by the Newfoundland government on April 1,1946. It is believed that the British government's capital outlay on the radio facilities amounted to about half a million dollars. Apart from the meteorological and radio facilities, Gander airport (with Botwood) cost $4 million. The British government paid five-sixths (about $3,333,000) of this, and the Newfoundland government paid the remaining $666,000. Ownership of the airport was vested in Newfoundland from the beginning. At its completion in 1939 it was the largest airport in the world. It still has the largest paved runways in the world, and is still one of the world's large airports. Its operation before the outbreak of the war, down to April 17,1941, was around $200,000 a year. This was paid equally by the British and Newfoundland governments. On April 17,1941, the airport was leased free to the Government of Canada. During the war Canada spent about $25 million on the airport by way of capital expenditure. This was to enlarge the runways, erect many buildings (including hangars) and provide ample facilities for operation as a huge war-time airport. This amount includes the cost of the numerous buildings and hangars provided for the American forces at Gander. During the war the Royal Air Force spent about $3 million on hangars, buildings, etc. To the end of the war, therefore, the following amounts had been spent on capital account:

76

NATIONAL CONVENTION Newfoundland Britain Canada RAF

$

666,000 3,333,000 25,000,000 3,000,000 $31,999,000

This is exclusive of the huge amounts spent by the Forces on non-capital account. On April 1, 1946, the Government of Newfoundland took back the airport and began active operation of it. The government paid the Government of Canada $1 million for all the hangars and other erections they had put there, as well as whatever equipment the Canadians had left there. This consisted of a great number or quantity of trucks, cars, bulldozers, tractors, snow-blowers, etc., etc. It is estimated that if the Newfoundland government had had to buy all these buildings and equipment new it would mean an outlay of nothing less than $5 million and it would probably be very much more. The government also acquired, for nothing, the buildings and some non-military equipment left behind by the RAF. Active operation of Gander was actually conducted, and has since been conducted, by the Division of Civil Aviation of the Department of Public Utilities, since April 1, 1946. Great changes and conversions have had to be made by the Division of Civil Aviation in the general set-up of Gander. Many barracks buildings have had to be converted into apartment houses. One of the huge hangars has had to be converted into a modern lounge for airline passengers. The former RAF section of Gander has been converted into the airlines' terminal. The numbers of men employed at Gander today, and the numbers likely to be employed there in future, are as indicated in the subjoined table: Employer

Present no. of employees

Future no. of employees

Division Civil Aviation Airlines Meteorological Department Shell and Imperial oil companies Civil servants Miscellaneous

700 350 50 60 37 100 1,297

500 400 50 60 37 100 1,147

Of these, the overwhelming majority of the employees of the Division of Civil Aviation are Newfoundlanders. The big majority of the airlines' employees are Newfoundlanders. A majority of the Canadian Meteorological Department's employees are Newfoundlanders. Nearly all the remainder are Newfoundlanders. The Division of Civil Aviation is paying out roughly a million dollars a year in salaries and wages. It may be estimated that about another million dollars is paid out by other employers at Gander. The Director of Civil Aviation, Squadron Leader H. A.L. Pattison, informs us that it is necessary for the government, through his Division, to spend about $300,000 to convert the airport to civilian use. He estimates that another $300,000 may still have to be spent to acquire further equipment, etc. It seems, therefore, that by the time the airport is considered to be amply equipped and arranged for its present purposes, the Newfoundland government will have spent the following amounts on it: Their share of the cost of building it $ 666,000 Their share of operating it-to outbreak of war 300,000 Buying Canadian buildings, equipment, etc 1,000,000 Converting to civilian use since the war 300,000

PAPERS AND REPORTS Purchase of further equipment, etc

77 300.000 $2r566.QQQ

This is on capital account, and does not include the operating losses. Mr. Neill, the Commissioner for Public Utilities, informed the Public Finance Committee that his estimate of the probable operating loss was around half a million dollars a year. Squadron Leader Pattison, however, informed this Committee that he estimated the probable operating loss at around a million dollars a year. The decision of the government to take over the operation of Gander is to us incomprehensible. There was a period, in the winter of 1946, and earlier, when they had to make a deliberate decision: to operate Gander or not. They themselves had no need of this huge and expensive airport, for the only aircraft they owned was a tiny, single-engined, two-seater "Moth" which had been written off as useless. Nor could they have considered that the day might come within the foreseeable future when they would have aircraft of such numbers of size as to require the active operation of Gander. Private individuals or companies within Newfoundland might reasonably be expected, at some future date, to possess a few aircraft; but by no stretch of the imagination could the government's decision to operate this great airport be supposed to be determined by such a probability. It was, clearly, for no conceivable local or national use that they decided to take over operation of Gander. It could only be for the use of foreign aircraft that they came to their decision. That decision had further to be made in the light of three important considerations: 1. They would have to pay out a million dollars to the Government of Canada for the huge installations which Canada had put there, and the large amount of equipment that Canada had left behind. 2. They would, in addition, have to go to at least another half million dollars of expense to covert existing installations to civilian use and to acquire new capital equipment. 3. They would have to operate the airport at a loss of something between half a million and a million dollars a year, which money would have to come out of the pockets of the Newfoundland people. These were high prices to expect the Newfoundland people to pay for the privilege of operating a huge airport for the convenience of American, Canadian, British, Dutch, French, Swedish, Turkish, Belgian and other wealthy airline companies. That the Commission of Government decided to make the Newfoundland people pay such prices for such a doubtful privilege is to us almost beyond belief. Mr. Neill, the Commissioner for Public Utilities, was asked why the Commission of Government had made this decision. His reply was that it was because Newfoundland was a member of the Provisional International Civil Aviation Organisation (PICAO) which organisation decided that Gander should be kept open by Newfoundland. He was reminded that Newfoundland was not forced to be a member of PICAO, and that in any case Newfoundland could have left it rather than agree to saddling herself with such a hugh unnecessary expense. Mr. Neill made no comment on this point. He was asked if it were not true that the real reason why the Commission of Government made this extraordinary decision was that the British government wished it. His reply was that it was the first he had heard of it. It was suggested to him that the British government had in fact asked the Commission of Government to operate Gander, and had offered to pay the losses. Mr. Neill replied that it was the first he had heard of it. It was put to him then that it was a remarkable decision that the Commission of Government had made, namely, to decide to operate Gander for the benefit of wealthy foreign airlines at such an expense to the Newfoundland people. His only comment was the Newfoundland was a member of PICAO and the PICAO had decided that Gander should be operated by Newfoundland. It was again pointed out to him that Newfoundland was not forced to be a member of PICAO and that she could have resigned her membership in PICAO rather than agree to accept the financial burden of operating Gander for foreign airlines. Mr. Neill made no comment. It was then suggested to him that the Commission of Government should have announced simply that Newfoundland did not propose to operate Gander; that if the foreign airlines wanted to use it, Newfoundland would operate it at the airlines' expense according to standards laid down by Newfoundland, but that under no circumstances would Newfoundland put herself to any expense in the matter. To this Mr. Neill offered no comment.

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Mr. Neill volunteered the information that he had recently written a strong letter to the British government stating that in his view it was unthinkable that Newfoundland should be expected at her own expense to operate Gander. He had not received any reply to his letter, but hoped to have one at a reasonably early date. He again stated that there had been no offer by the British government, when the Commission of Government was making its decision, to pay the losses of Gander. On his admission it is clear that the Commission of Government decided deliberately to saddle the country with the heavy costs of operating the airport. Newfoundland Government Civil Aviation Division Gander, Newfoundland 18 November 1946. The Chairman, Transportation Committee, National Convention, St. John's, Newfoundland.

Sir, I have the honour to submit herewith the information which your Committee requested at the time I gave certain evidence before your Transportation Committee. (a) Aircraft passing through Gander during the War. We have not access to the complete records, but as far as British aircraft are concerned the number which passed through Gander en route to Europe was approximately 6,5000. Without consulting the US authorities we cannot give you more than an estimation. However, the number of US planes which passed through Gander under the organisation of the US Army was probably about 10,000. The majority of these planes were fully equipped with their operating crews ready to go into action as units. These figures of military planes using Gander during the war are entirely trans-Atlantic aircraft and do not include operational flights of aircraft which used Gander as a base. (b) Civil traffic using Gander since 1 April, 1946. The following is a record of landings April 362 May 486 June 541 July 571 August 572 September 630 October 616 These figures include TCA Newfoundland-Canada service which averages 130 planes per month, and US military aircraft which may be diverted to Gander and would average about 30 per month. Thus in seven months the traffic of Atlantic planes totals about 2,700, or an average of 390 planes per month. This latter figure might be interesting to compare with the war-time traffic on the Atlantic. It will be seen that the war-time traffic was approximately 16,500, which covers a period of41/2years and gives an average figure over that period of 300 per month. It is to be admitted that the traffic in 1941 and '42 was not as heavy as it became in 1944 and '45. However, it will be seen that the Atlantic traffic, even at this comparatively early stage, is comparable with war-time traffic. The number of passengers in transit during the period April to October was approximately 100,000.

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79

(c) Prospect of Future Traffic This is difficult to estimate but indications from all companies are that traffic will increase. For example, BOAC, TCA and the European companies have not the equipment to get into full operation. We have received information from the three US companies that they expect to increase operations considerably by mid-1947, and we have a figure of 42 planes per day, i.e., 21 in each direction for these three companies alone. This is being borne out to a certain extent by the arrangements being made by the oil companies for fuel supplies. One oil company has already undertaken considerable capital expenditure both at Gander and Lewisporte to be able to supply one and one-half million gallons of fuel per month. This quantity approximates to the total of 42 planes per day. Therefore with the European companies the daily traffic may be 60 aircraft per day, but in our opinion this development is optimistic and by mid-1947 we might expect a total of about 1,000 per month. (d) Landing Charges I attach scale of landing fees which are now being collected in respect of civil aircraft making use of Gander. The two types of planes in general use now are the C-54 in the 80,000# class, i.e., $80 landing fee, and the Constellation in the 90,000# class, i.e., $85 landing fee. The landing fee includes one landing and the subsequent take-off. In 1947 it is likely that the Boeing Stratoliner will be taken into use. The all-up weight is not yet known, but the scale of charges attached will be increased pro rata so that the Stratoliner is likely to pay a landing charge of $105. I have the honour to be, Sir, Your obedient Servant, (Sgd.) H.A.L. Pattison Director of Civil Aviation. Supplementary Report: Gander Interview of Members of the National Convention with Hon. J.S. Neill, January 22,1947 The following Members of the National Convention met in the office of Hon. J. S. Neill, Court House at 12 noon on Wednesday, January 22, 1947: Mr. Smallwood, Mr. Newell, Major Cashin, Mr. Crosbie, Hon. R. B. Job. Major Cashin We are here principally to try and get information regarding the operation of the Airport at Gander, particularly with respect to what it is costing the country at the present time. To begin with, we would like to know the revenues and expenditures since taking over — that is this year — April 1st to December 31st. Hon. Mr. Neill I can only give you to November 30th: Expenditure 'ordinary' — 1st April to November 30th $1,548,000.00 Revenues 1,164,000.00 The deficit is $48,000 a month. Major Cashin Any outstanding revenue, not collected at the present time? Hon. Mr. Neill I would say there was. I could not tell you how much. There would be outstanding revenue for landing fees, but I do not know the amount. Mr. Job No very serious amounts?

Hon. Mr. Neill I do not think so. We call upon them to pay monthly.

Major Cashin Is it one company which owes this or is it two Companies? Hon. Mr. Neill I could not really tell you. Major Cashin We understand the T.W.A. is in financial difficulties; and we understand they have

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been using Gander, and they possibly have an account? Hon. Mr. Neill T.W.A. are paid up to the end of June, I am certain. I have written to all the companies insisting on monthly payments. Mr. Crosbie Can you put aeroplanes on the same basis as steamers? They have to pay before anything is done. Hon. Mr. Neill For schedule airlines, the usual thing is monthly payments; for others coming in you usually pick up the money at the time. Major Cashin This deficit of roughly $400,000 has been paid, I take it, out of the vote in the estimates of $750,000? Hon. Mr. Neill Yes. Mr. Crosbie You mentioned 'ordinary' expenditure; was there any 'Extraordinary' expenditure? Hon. Mr. Neill Yes. $302,000 — capital expenditure. Major Cashin You cannot tell us the amount of revenue outstanding at present? Hon. Mr. Neill I could not tell you. These airlines pay differently — some have authority to use the money which they collect on fares; others pay through their head office. B.O.A.C. and T.C.A., they are Lancasterians and I do not know how they pay. Major Cashin When you met the Finance Committee you told us, you will recall, that you were communicating with Great Britain with regard to the future of the Gander Airport. Hon. Mr. Neill Yes, but I did not say I wrote a 'strong protest to the British government.' I do not write protests to the British government. Mr. Smallwood Did anyone say you did? Hon. Mr. Neill It was broadcast. Major Cashin Have you had any reply from them? Hon. Mr. Neill No. Major Cashin Is it going to continue to be a liability on Newfoundland? Hon. Mr. Neill I express the pious hope that it is not. I can go no further than that. We did expect, in October or November, the MCA party to come out here. Major Cashin That brings us back to the time it was taken over by the Newfoundland government in April (incidentally, the Newfoundland government spent $150,000 on it); but when it took over, the Newfoundland government agreed to take it over? Hon. Mr. Neill Yes. Major Cashin Knowing it was going to be a liability, would you not think there would be some strong objection to involving Newfoundland in something which was going to be a continuous liability on the exchequer? Hon. Mr. Neill I am a man of faith. Mr. Job You cannot live on faith. Major Cashin You cannot balance a budget on faith. Hon. Mr. Neill I hope we will come to a satisfactory conclusion. Major Cashin We, too, have faith in our country. These airlines are using our airport. It is true it was built by outside capital, but apart from that, they are using our property and it looms out that there is this specific deficit for several years to come. If you people have faith in it, why not rent it? Hon. Mr. Neill There was no talk of that. Major Cashin The government never put up a counter-proposition? Hon. Mr. Neill No. Major Cashin The government agreed to operate, knowing there was going to be a loss, primarily for the purpose of helping these air companies? Hon. Mr. Neill I go with you except to say we never contemplated there would be a loss on the Newfoundland exchequer. Major Cashin You must have some reason for that? Hon. Mr. Neill Yes. Ministry of Civil Aviation

PAPERS AND REPORTS

81

Major Cashin Great Britain half indicated they would pay the deficit? Hon. Mr. Neill I tell you in brief words, we have put up the case to them and they have not yet finalised it. Major Cashin But the thing has been going on for nine or ten months. The MCA were expected here in October or November. Mr. Smallwood Instead of merely answering questions, could you not tell us frankly what the position is. Hon. Mr. Neill I must object to your saying I am not speaking frankly. Mr. Smallwood You merely answer questions. We are entitled to know these things. If we know enough to be able to ask the right questions, then we will ask; but if we do not know the questions to ask, we get no answers at all. Mr. Job Do you think we would be justified in saying definitely that there would be no loss to Newfoundland on the Gander Airport? Hon. Mr. Neill What would be your authority? As I have told you, that until we get a definite statement from His Majesty's Government, I can tell you no more. Mr. Crosbie This PICAO — this body which controls rules and regulation — they deal only with air rights for air rights. Hon. Mr. Neill PICAO is largely technical, (produces booklet). Mr. Crosbie We are not a member of PICAO? Hon. Mr. Neill Yes. The United Kingdom is. They sign for us. Mr. Smallwood Newfoundland has no part, except as part of the United Kingdom. Mr. Crosbie Whatever the United Kingdom says, goes, as far as Newfoundland is concerned? Hon. Mr. Neill That is not correct. Major Cashin If we had been fortunate, or unfortunate enough to have our own government, they would never have agreed to that. Mr. Smallwood In what capacity, exactly, did the Newfoundland representatives attend any meetings of PICAO? Hon. Mr. Neill They attended as part of the British delegation. Mr. Smallwood As members of it, or merely as observers? Hon. Mr. Neill They were attached to the British delegation. They were members of the British delegation. Mr. Job They were in a minority. Mr. Walsh and Sir George London attended. Mr. Smallwood Could you give us all minutes, all printed documents and reports issued by PICAO? Could we have that? Hon. Mr. Neill Yes, but Newfoundland is not mentioned in it. Mr. Smallwood I understand there is something in it as to who is to pay the operating loss on Gander — but you have to look closely to find it. Hon. Mr. Neill I have not read through it. I am told by the people who were there that Newfoundland is not mentioned in it. Major Cashin (Quoting from booklet) "United Kingdom, not including Newfoundland" is in the signatures. Hon. Mr. Neill There were various conventions. Major Cashin Who decided the rates of landing fees? Hon. Mr. Neill We did — the Government of Newfoundland. Mr. Smallwood During your tenure? Hon. Mr. Neill I am not going to become personal. The Newfoundland government decided that. Mr. Smallwood When? Hon. Mr. Neill Since we took over the Airport — since April 1st. Major Cashin I think you will agree that the government would have technical advice on that? Hon. Mr. Neill I agree strongly. Major Cashin Surely the technical advisers did not say they should pay $80 or $85 or whether they

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should get more in order to balance the budget? Hon. Mr. Neill We got the best advice on it. We acted on the advice received. Major Cashin These technical individuals said $85 would square the accounts? Hon. Mr. Neill No. They advised that that was a landing fee. If you go too high for landing fees, nobody would ever land. Mr. Smallwood Would $86 be too high — or $96? Hon. Mr. Neill It was fixed on a well-known schedule. Mr. Smallwood Based on what? Whose schedule? Hon. Mr. Neill It is twice LaGuardia fee for planes landing, not engaged in scheduled operations. Mr. Job What has that got to do with the question of Gander? Hon. Mr. Neill These are pretty high prices. Mr. Smallwood Your advisers, you told us, were the Ministry of Civil Aviation — they advised this $85 fee — did they indicate the basis upon which they arrived at that figure — the rate basis of fees? Did they advise you on what principle they based that figure? Hon. Mr. Neill They took general schedule rates. I do not think you will find any higher fees. Mr. Smallwood You do not know if the fees at Gander are the highest or not? Hon. Mr. Neill They are higher than any landing fees that I know. I could give you the British rates. Mr. Job What is the fee in Ireland? (Question not answered). Hon. Mr. Neill The British rate is £5-12-6 for 30,000 Ibs. It goes up to 12-6 for each 5,000 Ibs. That is a modern rate. Major Cashin Most of the airports in the world are State subsidised? Hon. Mr. Neill No. They are not in America — I think they are municipal. Major Cashin Why should Newfoundland be burdened with this expenditure of 3/4 million dollars? Hon. Mr. Neill I am hoping we will rectify that. Mr. Smallwood When you did it, did you have any knowledge or belief that Newfoundland would not have to pay that operating deficit on Gander? Hon. Mr. Neill We always put up the position that we would require assistance for the operation of Gander. Mr. Smallwood To whom? Hon. Mr. Neill To the British government. Major Cashin They did not say 'yes' or 'no', they would pay this deficit? Hon. Mr. Neill Not yet. Mr. Smallwood Is this the position: you took over the operation of Gander, believing there would be a deficit in its operation, and hoping only that the British might assist Newfoundland in paying the deficit? Hon. Mr. Neill I would not go so far as to say that. We have placed the position before the British government, stating that we expect assistance in the operation of Gander. Mr. Smallwood When did you put that before them? Hon. Mr. Neill Several times. Mr. Smallwood When was the earliest time? Did you put it to them before you decided to take over the airport? Hon. Mr. Neill I think it was always known. Major Cashin When they knew that, do you not think our government in Newfoundland should have held off until they were assured that the deficit was going to be repaid? Hon. Mr. Neill No. Mr. Crosbie The general feeling of our people is that the United Kingdom did get concessions because of Gander. We got no benefit and the United Kingdom did get the benefit. Hon. Mr. Neill I do not understand that. Mr. Smallwood I can understand the government's wanting to operate Gander. I can understand their not wanting to close it down. You felt it was the natural thing to do. You operated and envisaged

PAPERS AND REPORTS

83

a deficit, but it was understood from the beginning—you hoped and expected the British government to pay the deficit. Is that the position? Hon. Mr. Neill I am going to say nothing more than I did. I cannot speak for Britain. We put the position to the British government. Mr. Smallwood After you decided to take it over? Hon. Mr. Neill I could not tell you that without going into the files and I haven't time to do that. Mr. Crosbie That loss of $686,000, would not some of that be returnable by way of rents? Hon. Mr. Neill That is purely an estimate. Mr. Crosbie I am talking about the amount spent to reconvert those buildings into apartment houses. Would not that be returnable in rents? Hon. Mr. Neill Yes. It will be more this year. That is capital expenditure. Mr. Smallwood That is apart from the $300,000? Hon. Mr. Neill The $300,000 — that was extraordinary expenditure. The other is money used for reconversion of apartments. We called it "current" expenditure — expenditure current every year. Mr. Smallwood You told us you had recently written a letter, you said you 'worded it as strongly as any of you gentlemen would word it', to the British government that Newfoundland ought not to be saddled with the operating deficit. You had not yet received a reply. You hoped to have one soon. Have you had one? Hon. Mr. Neill Not as yet. Major Cashin This $1 million paid Canada. The Minister of Finance told us that $1 million had not been paid - you are paying it in installments? Hon. Mr. Neill In three installments — three years. Mr. Smallwood Do you expect to pay any of that? Hon. Mr. Neill Definitely. I included it in my estimates for 1947-48 — $333,000 as first instalment of the Gander Airport. Mr. Smallwood At the present moment you do not know who is going to pay the operating deficit on Gander? Hon. Mr. Neill I do not know. Major Cashin At the present time, we are paying. Hon. Mr. Neill When we write we always say we expect assistance. Mr. Job If you were making an estimate on behalf of the Convention, would you say we would be justified in saying that Newfoundland would not have to pay the deficit? Hon. Mr. Neill If I were drafting a report, I would say, "At the present time we visualise a loss of $1 million, but the question of who will meet that loss is under consideration." Mr. Smallwood I have never believed Newfoundland is going to have to pay one dollar. He says he does not know who is going to pay. Hon. Mr. Neill I am not in a position to say. I have to be cautious. Major Cashin It is under your department; you, as head, should know whether or not your department is going to be liable in future or not? Hon. Mr. Neill I cannot agree that I should know. Mr. Smallwood There must be some reason for not knowing? Hon. Mr. Neill Simply because I do not know any more than I knew in September. Mr. Smallwood You would say there is a hope that Newfoundland will not have to pay it? Hon. Mr. Neill I cannot speak on behalf of anyone. Mr. Smallwood You yourself hope Newfoundland will not have to pay? Hon. Mr. Neill Definitely. Mr. Smallwood Have you a little bit more than a hope? Have you a half-belief? Hon. Mr. Neill There is no such thing as a half-belief. Major Cashin The position is this: when you took over, you did so knowing there was going to be a loss? Hon. Mr. Neill No.

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Major Cashin Events have proven you have. Hon. Mr. Neill Give us time. Major Cashin You know you were going to have a loss. The government without any influence from Dominions Office took over on its own? Hon. Mr. Neill You cannot quote me as saying that. Mr. Smallwood Could we get this PICAO straight? You told us when you were asking why Newfoundland had taken over Gander, that it was because of PICAO, because we were a member of PICAO. Hon. Mr. Neill I must disagree with that. Mr. Smallwood I am quite certain you said that. Hon. Mr. Neill I mentioned PICAO once, and that was in connection with air rights for air rights. There are hundreds of committees. I cannot remember them all. There is the air transport side, the operating side; it is divided into a series of committees. Mr. Job What I objected to war are rights for air rights and Newfoundland accepted it without representation. Hon. Mr. Neill That Chicago business — there were political issues — there has been agreement since, but where there was agreement it was on the technical side. Major Cashin Getting down to brass tacks, I cannot understand why the British government have not decided one way or another whether they are going to take over the deficit. Mr. Smallwood Did you receive from the Ministry of Civil Aviation only, advice as to what fees should be charged? Hon. Mr. Neill That is who we would consult, naturally. Mr. Smallwood Did you have advice from the Civil Aviation of Newfoundland? — from the Department of Civil Aviation? Hon. Mr. Neill Of course we had. Mr. Smallwood Did you have advice that $300 per landing should be charged? Hon. Mr. Neill I am not going to answer that question. It might interfere with Pattison. Mr. Smallwood Would you say what, in the opinion of the Director of Civil Aviation, the landing fees ought to be? Hon. Mr. Neill No, I would not. Mr. Smallwood Would you say whether or not that it is the opinion of the Director and other officials of the Department of Civil Aviation that it ought to be $300 per landing? Hon. Mr. Neill I certainly will not. Mr. Job Would you say they expressed that opinion? Hon. Mr. Neill Minutes between Gander and myself are privileged. Mr. Smallwood Would you say, in your opinion, what ought to be charged? Hon. Mr. Neill I am not going to place my opinion against Civil Aviation on a technical matter. I have told you all I know. Mr. Smallwood All you know, or all you are privileged to tell? Hon. Mr. Neill I am not going to be cross-examined on my statement. If I could tell you more, I would. Mr. Job You might, at any time, have word in reply to your letter? Hon. Mr. Neill Yes. Major Cashin You are going across to the other side shortly, I suppose you will discuss this with the British government? Hon. Mr. Neill It is not unlikely.

PAPERS AND REPORTS

85

Roads 1. Road Mileages It is estimated by the Department of Public Works that there are approximately 5,195.9 miles of road in Newfoundland. These roads are classified by the Department as follows: 1. Highroads: a. paved; b. gravel. 2. Secondary: a. motorable; b. non-motorable. 3. Local. Of local roads the Department estimates about 3,000 miles, but admits that this is little better than a guess. The Department's definition of roads is as follows: Highroads are those serving many settlements or communities; Secondary roads are those connecting one settlement with another; or connecting a settlement with a highroad, or with the railroad or with another secondary road; or sued extensively as well by other than purely local residents, or used mainly for transportation of fishery products or other natural resources; Local roads are those running only within, through or around settlements. The Department's statement of road mileages, other than of local roads, is as follows: Highroads Secondary Roads Paved Gravel Motorable Non-motorable 93.8 1,506.2 442.1 153^8 It may thus be seen that there are in Newfoundland 2,042.1 miles of motorable road, exclusive of the estimated 3,000 miles of local roads. It must not be supposed that these 2,042.1 miles of motorable road are connected, or that a motorist can drive that many miles without retracing his route. Of the estimated total of 5,195.9 miles existing in Newfoundland, 4,931.9 miles existed here before the Commission of Government came into being. Since they took over the country they have constructed 264 miles of new road, an average of 22 miles a year. The Department divides the island into four road districts. These are as follows: Location

Highroads Paved

Dist. No. 1 Avalon Peninsula, west to Chapel Arm Dist. No. 2 Isthmus of Avalon, Burin and Bonavista Peninsulas west to CapeFreels. Dist. No. 3 Gander, west to Hampden Dist. No. 4 West Coast, Hampden toPort-aux-Basques

81.2

Gravel

Secondary Roads Motorable Non-Motorable

636.2

335.9

17.0

480.5

53.8

41.0

2.5

161.7

18.4

25.8

10.1 93.8

227.8 1,506.2

34.0 442.1

70.0 153.8

It will thus be seen that there are 1,063.3 miles of motorable road on the Avalon Peninsula, and 978.8 miles in the remainder of the island.

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2. Recent Road Work In the 12 years 1935 to 1946 inclusive the Commission of Government have spent $2,532,723.64 on construction of new roads. By years this is accounted for as follows: Year 1946 1945 1944 1943 1942 1941 1940 1939 1938 1937-6-5

Mileage 34.4 13.5 33.2 19.0 1.5 10.9 19.5 79.5 2.6 49.9 264.0

Amount Spent $ 477,977.50 181,252.60 204,596.91 69,236.71 2,873.47 99,669.70 104,266.13 460,422.98 12,199.39 920,228.25 $2,532,723.64

The figure for 1946 is to the end of September. The figures for 1935-37 inclusive are lumped. The average amount spent per mile on new construction was $9,593. In the 11 years 1936 to 1946 inclusive the Commission of Government spent $1,571,055.16 on the reconditioning and reconstruction of roads as follows: Year 1946 1945 1944 1943 1942 1941

Mileage 7.0 20.4 17.7 11.7 18.2 15.0

Amount Spent $ 92,766.22 261,102.65 191,529.51 122,305.62 143,382.86 76,000.36

Year 1940 1939 1938 1937 1936

Mileage 4~xT 24.5 29.6 18.3 .5

Amount Spent 20,437.43 385,842.36 189,954.23 84,563.82 3,170.10

166.9

$1,571,055.16

,

This was an average of $9,401 per mile spent on reconditioning and reconstruction. In the 11 years 1936 to 1946 inclusive the government spent $1,355,967.63 on the paving of roads, as follows: Year 1946 1945 1944 1943 1942 1941

Mileage 17.4 11.4 5.6 9.0 8.0 3.1

Amount Spent $334,008.24 261,225.17 165,151.55 113,400.01 128,470.50 46,551.66

Year 1940 1939 1938 1937 1936

Mileage 2~!8~~ 9.2 7.8 14.0

Amount Spent $ 27,679.85 98,832.44 69,360.30 4,188.38 107,099.52

88.3

$1,355,967.63

This was an average of $15,431 per miles spent on paving roads. In the 11 years 1936 to 1946 inclusive the government spent $4,524,000 on the maintenance of roads as follows:

PAPERS AND REPORTS Year 1946 1945 1944 1943 1942 1941 1940 1939 1938 1937 1936

87 Amount Spent $ 800,000 697,000 634,000 536,000 425,000 416,000 365,000 267,000 155,000 128,000 101,000 $4,525,000

The Convention will not fail to note the extraordinary rate at which road maintenance costs have increased in the past 11 years — practically 800%. Further treatment of this heading is to be made lower in this report, and it must suffice at this point to observe that the Department estimates that some proportion between 70% and 80% of the annual road maintenance expenditure consists of wages paid to highroads employees. They say further that a recent (August, 1946) increase in wage rates payable to these employees involves an increase of about $200,000 a year under this heading. We give next a detailed account of one year's road maintenance expenditure. It is for the current year 1946-47, and totals a million dollars. This is $200,000 more than shown in the table immediately preceding, the difference being accounted for by the fact that the following table is the Department's own estimate for the fiscal year, and the further fact that it is for the period ending March 31,1947. It is given as a sample of a road maintenance year: 1946-47 Maintenance of highroads Maintenance of secondary roads Snow clearing Garage labour Garage parts Garage tools Garage light and power Garage acetylene and oxygen Garage gas and oils Camp and equipment Miscellaneous Manufacture of concrete pipe

$607,000 145,800 39,000 50,000 45,000 6,500 1,600 3.500 2,900 9,000 44,700 45,000

In the ten years 1936 to 1946 the government spent $132,262.33 on snow-plowing, as follows: Year 1946 1945 1944 1943 1942

Amount Spent $ 42,991.68 27,135.79 23,101.97 11,975.36 2,066.82

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1941 1940 1939 1938 1937

6,670.02 6,312.10 2,559.00 5,949.85 3,499.74 $132,262.33

The following table shows the actual expenditure for snow-plowing in the winter season 1945-46 by road districts: St. John's to Portugal Cove St. John's to Holyrood St. John's to Tor's Cove, etc. Mt. Pearl Road to Wireless Station Waterford Bridge Road and Cowan Avenue Craigmiller Avenue and Old Topsail Road Old Portugal Cove Road, King's Bridge Mount Pearl Park Road to Baird's Cottage Total 73.5 miles Total cost $27,934.69 Average cost per mile: $380 Bonavista to Port Union, including spur road to Elliston Total 15.7 miles Total cost $2,513.96 Average cost per mile: $160.15 Badger to Botwood, via Grand Falls Total 42 miles Total cost $4,597.27 Average cost per mile: $109.46 Corner Brook to junction of new road to Upper Humber area, including spur road to Midland. Total 36 miles Total cost $7,945.76 Average cost per mils: $222.72 Total cost for the year: $ 42,991.68 In the 12 years 1935 to 1946 inclusive the government built 271 concrete bridges at a cost of $1,075,327.07 as follows: Year 1946 1945 1944 1943 1942 1941 1940 1939 1938 1937-36-35

Bridges Built 19 25 19 24 29 36 21 31 20 _46 270

Amount Spent $106,588.34 116,235.27 118,038.90 104,457.32 81,146.12 84,708.39 54,484.84 80,372.10 49,875.62 166,742.32 $962,649.22

In addition to the above a large bridge was constructed over the Humber River in 1939-41 inclusive at a cost of $112,677.85. The total picture for the period is therefore: Bridges built: 271 Amount spent: $1,075,327.07 The total number of reinforced concrete bridges existing in Newfoundland today is 502, which means that 231 such bridges had been constructed before the Commission of Government took office in 1934.

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89

Recapitulation Recapitulating, we find that the government has spent $11,059.073.50 on road construction, reconstruction, paving, maintenance, and bridge building. The totals are as follows: New road construction, 1935-46 $ 2,532,723.64 Reconstruction and reconditioning, 1936-46 1,571,055.16 Paving, 1936-46 1,355,967.63 Maintenance, 1936-46 4,524,000.00 Bridge building, 1935-46 1,075,327.07 $11,059,073.50 It is of some interest to note that during the period under review, that is, since the Commission of Government came to Newfoundland, they have spent $ 1,401.073.42 on the Conception Bay highroad from St. John's around Conception Bay to Carbonear, a distance of approximately 76 miles. This amount has been spent on reconstructing, reconditioning and paving this road, and does not include the cost of bridge-building or of ordinary annual maintenance. Included in this amount is an amount of $529,464.61 spent in the past two years on the 9.2 miles between St. John's and Topsail to reconstruct, recondition and pave the Conception Bay highroad. It will be of some further interest to note that under the heading of new road construction, reconditioning and reconstruction, as well as of paving roads on the Avalon Peninsula during the same period an amount of $2,325,593.61 has been spent, as follows: New construction $ 108,419.71 Reconditioning and reconstruction 1,100,914.40 Paving 1,116,259.50 $2,325,593.61 Equipment Since 1933 the Highroads Department has purchased road equipment in the amount of $781,817.41. The table following shows the principal items of equipment now on hand, with some indication of their conditions ....1 The Department estimates that $500,000 must be spent to bring equipment up to minimum standard. The Future There remains only to touch upon future expenditures under the heading of roads. It is not easy to state categorically what future expenditures will have to be, for it is not easy to know what they will, or even what they must be. In case of dire need, expenditures for a while at least could be terminated altogether. If the worse came to the worst all expenditure on road building, reconditioning, paving or maintenance could be eliminated completely for a period, although it must be clear that if maintenance expenditures were eliminated for even a couple or three years it would only pile up the amount that would have to be spent under that heading eventually. We have at present 2,000 miles of motorable road, and unless we decide that we can and must do without these miles of road we shall have to spend money on their maintenance. Maintenance runs now to a million dollars a year. New miles of road would mean additional maintenance expenditure. Expenditure under all headings on roads is presently running around two and a half million dollars a year. In the current year, for example, the Department is spending: On maintenance $1,000,000 On reconstruction and reconditiong 675,000 On new construction 735,000 The Commissioner for Public Utilities, in reply to our question, gave it as his opinion that future road expenditures ought to be about the same in grant total as this year, though the grand total might List of equipment omitted.

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from year to year vary in classification. In one year new road construction might account for more or less of the total, and similarly with expenditure on the reconditioning or reconstructing of existing roads. And clearly any increase in the number of miles of new road would involve an increase of maintenance expenditures. The Department says that maintenance runs to an average of $300 on gravel roads, $400 on paved roads. It is the policy of the present government, so far as road building is concerned, to aim at completing the construction of a transinsular road. This does not involve the construction of new road all the way across, for there exist already certain stretches of road which would form part of that transinsular road. What is involved is the construction of stretches of road to link up existing stretches. The Department estimates that to build these new links would cost at least $6 million. This involves an 18 ft. gravel road, and does not include the cost of bridges. Some of the expenditures that would have to be made, so they estimate, to get the transinsular road, would be as follows: Bellevue to Clarenville Clarenville to Gander Gander to Lewisporte Norris Arm to Notre Dame Jet. Gander to Glenwood Norris Arm to Bishop's Falls Badger to Hall's Bay Springdale to Deer Lake Corner Brook to Stephenville Stephenville to St. George's St. George's to Robinson's St. Fintan's to Doyle's Codroy to Port-aux-Basques

$ 100,000 1,250,000 200,000 150,000 50,000 150,000 450,000 800,000 250,000 60,000 250,000 500,000 300,000

The Department's policy is to aim at making the expenditures necessary to complete this road, although contemporaneously they would be doing road work elsewhere as well. On the Burin Peninsula they have decided to spend $1,150,000 in the next couple of years. In Conception Bay, to re-pave a section of the highroad west of Topsail, they plan to spend $420,000. They plan also to rebuild the road from St. John's along the Southern Shore to Bay Bulls to make it an 18 ft. highway. On this they plan an expenditure of $540,000. All these items are projected expenditures by the present government; and although of course as a Committee we cannot be expected to anticipate the ability of a future government to make these or any expenditures on roads, we cannot disagree with their intentions. It is our firm conviction that, provided ways and means can be found, these and other expenditures should be made. Including an estimated 3,000 miles of purely local roads (that is, roads running within, through or around settlements) we have 5,195 miles of road in Newfoundland. How backward we are in this respect will be seen from the following table: Country Newfoundland Prince Edward Island New Brunswick Nova Scotia

Area 42,000 20,000 27,985 21,068

Population 312,000 95,000 457,000 577,000

Again, a comparison of the numbers of motor vehicles will be instructive:

Miles of Road 5J95 3,706 12,305 15,075

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91

Road Revenue Year Country No. of Motor Vehicles $ 634,069* Newfoundland 8,276 1946 Newfoundland 1945 6,895 1944 Newfoundland 6,751 664,492 Newfoundland 6,795 1943 480,752 Prince Edward Island 8,032 1943 3,523,288 New Brunswick 1943 40,205 4,564,677 Nova Scotia 59,194 1943 This total is got by adding vehicular licenses, drivers' licenses, and all customs duties collected on gasolene, including gasolene used by fishing boats, etc. This means that road revenue shown for Newfoundland is more than the amount actually received under this heading. It is to be noted that in the year shown, 1943, gasolene was stringently rationed in Prince Edward Island, New Brunswick and Nova Scotia; which means that road revenues for that year would be lower than in normal times. In conclusion, it seems quite clear to us that the country must look forward to making an annual expenditure of at least $1 million on roads. We regard this as the irreducible minimum of expense in future. It ought to be very much more, and for the next two or three years it is pretty certain to be very much more, for it seems a reasonable assumption that the road projects actually begun and definitely projected by the Department will in fact be completed. Our estimated expenditure has to do more with the period commencing two or three years hence; and when we estimate $1 million as the minimum annual expenditure we mean that practically that much will have to be spent on maintenance alone. It may be argued that present maintenance costs will fall as wages fall, but to that there appear to be two answers: one, that it must not too readily be assumed that wages of those engaged in road maintenance will fall; and, second, that if they did there will be additional mileages of road by then to make up the difference. But this $1 million is only the irreducible minimum of expenditure if we are to keep up the roads we now have and will have within the next two or three years. It takes no account of a continuous programme of new road construction, and in our view it is a confession of defeat to abandon the idea that such continuous new construction will be carried on. Appendix Local Roads Roads in Newfoundland are divided into three classifications: highroads, secondary roads, and local roads. A highroad is the main trunk road serving many settlements or communities. A secondary road is a road that (a) connects one settlement with another; (b) connects a settlement with a highroad, the railroad or another secondary road or (c) is used extensively by other than local residents or is used mainly for transportation of fishery products or other natural resources. A local road is a road running in, through or around a settlement. The maintenance of all highroads as well as most secondary roads is undertaken by the Department of Public Works, while the maintenance of certain secondary roads is supervised by magistrates on behalf of the Department. It is not possible for the Department to carry out work on local roads in the same manner as it does on highroads, nor may it expect magistrates to assume direct responsibility in such cases. Practical considerations based on the large number of settlements, their wide dispersal, the small number of government officials available and the cost and difficulties of transportation rule out these courses. For these reasons and on grounds of general policy it is necessary and desirable that the assistance of the residents themselves should be invoked so that a reasonably satisfactory system may be worked out for deciding what sum is to be spent out of general revenue on the local roads of a settlement, and for ensuring that the money is properly spent. In June 1943, the Commission of Government introduced a local roads committee scheme. This

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scheme is to set up local roads committees, each committee consisting of not less than three and not more than five members appointed by the Commissioner for Public Utilities. This scheme does not apply to settlements or groups of adjoining settlements where the population equals 2,000 persons, as it is reasonably considered that such places should have town councils. Committees are entitled to grants computed on the basis of $25 per mile of local road or $.25 per head of population, the committee being permitted to select whichever basis will be of greater advantage. It was realised that, generally speaking, such grants would not be sufficient for the maintenance of public works at a satisfactory standard and the scheme envisaged the acceptance by the people of the principle of self-help. Where residents of settlements are willing to act on such a principle the committee submits to the Department of Public Works, through the magistrate for the district, a scheme whereby the additional expenditure over the limit above-mentioned may be met on a 50-50 basis from funds supplied by the Department and funds or free labour contributions supplied by the residents themselves. Such schemes put forward by the local roads committees and showing evidence of a spirit of self-help are given special consideration. While a maximum overall grant of $ 1 per head of population applies as a general rule, this standard is not strictly adhered to as, in special circumstances, where the value of public works is disproportionate to the population or other conditions exist that make it impracticable for the people to contribute a full share, government on occasion agrees to provide funds on a higher scale. Upon appointment a committee conducts a survey of local roads conditions within the area and reports to the magistrate for the district. The report is prepared to reflect the following information: (1) names of settlements coming within the province of the local roads committee; (2) population of each settlement; (3) boundaries of the area; (4) approximate lengths of road in each settlement; (5) statement of the work that is required to be done; (6) estimate of the expenditure involved; and (7) a statement of the method by which the work may be carried out and supervised. In preparing this report the assistance may be sought where deemed necessary or desirable of the Ranger or other public official in the locality. The report so made will be forwarded by the magistrate to the Department of Public Works whose responsibility it is, under the instructions of the Commissioner for Public Utilities, to decide what action will be taken; It an allocation of money is made as a result of such a report by a local roads committee it is the duty of the chairman of the committee, in consultation with the other members, to make arrangements for the carrying out of the work. Upon completion of the job a proper return supported by a certificate of the work done, payrolls and vouchers, is forwarded to the magistrate for the district who transmits it to the Department of Public Works for payment. It is a condition of each allocation made by the Department that a copy of the return must be exhibited in some conspicuous place (e.g. at the local post office). Where committees have not been established the scheme provides, generally, that the assistance to be given shall be limited to the supplying of materials on condition that free labour is given by the residents in carrying out the work, but in special circumstances the government agrees also to meet part of the labour cost. At the close of the 1943-44 financial year, the year in which the scheme had been introduced, 109 local roads committees had been appointed. Of that number 30 had put forward schemes for the repair of local public works. The total expenditure in respect of these programmes was $15,785. Of this amount the Department bore $9,145 with the balance being arranged as cash donations or free labour contributions by the committees concerned. In addition to the work undertaken by the committees, repairs to the value of $19,000 were carried out through the supervision of magistrates, Rangers and police. In the second year of the operation of the scheme a very substantial increase in the number of committees appointed was recorded. At the end of December 1944, the number was 183 of which

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119 had put forward and obtained approval of proposals for the carrying out of programmes of repairs to local public works. The total expenditure recorded at the close of the year 1944-45 was $88,471. This figure is inclusive of the financial assistance which was authorised through magistrates, Rangers, etc. for the repair of local amenities at settlements having no local roads committee. The contributions arranged by the committees in relation to that expenditure was of the order of $35,000. The success which followed the scheme in the first 18 months of its operation was even more noticeable during the next financial year. In 1945-46 140 additional committees were appointed, bringing to 323 the total number as at the end of March, 1946. The total number of persons appointed to serve on these committees was 1,284. Committee members serve gratuitously. The total value of the repair programme authorised to be performed during 1945-46 was $179,760. Of this amount the Department of Public Works assumes liability for $109,573 the balance of $70,186 being contributed by the people either by means of cash donations or free labour. So far this year 50 new committees have been appointed, and indications are that by the close of the year the number of committees will have risen to a total of 400, involving an approximate number of 1,600 committee members. 275 committees will presented proposals for the carrying out of works of repair to local roads and bridges, which have been approved. It is anticipated that the value of these works together with the proposals yet to be received will be of the order of $200,000 of which government will bear approximately $125,000 with the balance being arranged as contributions by the people. REGISTRATION OF MOTOR VEHICLES3 Motor "D" Cycles Year Cars Plates Trucks Trailers No. No. No. No. No. 1937 151 998 3666 39 24 3966 1938 179 38 1082 171 44 28 4208 1939 1240 150 50 29 1306 4386 1940 147 47 1941 50 1638 5036 44 1694 5106 1942 135 28 124 20 43 1825 4846 1943 1944 27 31 4709 109 1933 110 40 2247 4530 1945 25 118 32 2917 5231 1946b 35 a Military vehicles not included. b !946 figures taken to 16 October, 1946.

Drivers' Licenses No. 6028 6567 6975 7251 9072 9775 9838 9548 10027 10975

Revenue $ 88,594 95,985 104,342 110,150 145,710 155,627 153,101 159,247 184,069 218,169

Posts and Telegraphs Having made for the seven years ending March 31,1945, an average annual surplus of $179,926, this department may fairly be described as self-supporting, with important qualifications which will be made later. The Committee has approached consideration of the department with these points in mind: 1. What has the department cost to operate, what is it costing? 2. What is likely to be the necessary expenditure in future? The department employs 880 full-time workers, including administrative and headquarters staff, but excluding part-time mail couriers and the like. Salaries paid to these full-time workers amounts currently to $766,000 a year, according to the estimates. There are in Newfoundland 517 post offices, of which 170 are also telegraph offices. In addition to these there are 13 temporary or seasonal offices established mainly in transient fishing settlements throughout the fishing season. Newfoundland and Labrador have 550 post offices of which 172 are also telegraph offices. In Newfoundland the Department operates also 79 telephone offices.

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During the summer months there are in Newfoundland 159 courier routes aggregating 167,000 miles; and in Labrador two courier routes aggregating 1,340 miles. During the winter months there are in Newfoundland 160 courier routes aggregating 116,000 miles; and in Labrador eight courier routes aggregating 7,300 miles. The following table gives some idea of the magnitude of the actual business transacted by the Department:

Letters and postcards Parcels Telegrams Newspapers, circulars and small packets Money orders issued (no.) Money orders issued (value) Money orders paid (no.) Money orders paid (value)

1938-39 9,436,990 427,559 516,716 5,725,400 248,000 $2,714,000 215,180 $2,509,613

1944-45 13,150,000 590,600 1,126,361 7,900,000 404,583 $7,046,477 330,458 $4,147,667

The Department states that the volume of business transacted during 1944-45 will be maintained and probably increased this year, and during the next two or three years, especially as the Department's facilities are extended and improved. The following table shows the Department's total costs (with total incomes contrasted) for the years indicated: Year 193T39 1939-40 1940-41 1941-42 1942-43 1943.44 1944-45

Income $ 764,913 813,721 916,103 1,199,920 1,081,012 1,780,665 1,642,317

Costs $ 784,510 770,030 792,128 992,576 1,021,047 1,246,460 1,332,439

Surplus or Deficit -$ 19,597 43,691 123,975 207,344 59,965 534,205 309,878

The net result of the seven years was an operating surplus of $1,259,481 or an average of $179,916 a year. Two observations have to be made on this figure: first, that the period in question includes the exceedingly prosperous war years; and second, that it takes no account of the physical condition of the Department's equipment, about which more will be said below. The Future The facts of the past are fairly obvious. The Department for quite a few years has more than broken even. The prosperity of the war years has been vividly reflected in the business of the Department, as the figures show. The question that has concerned the Committee most is that of the capital equipment of the Department particularly on the telegraph-wireless side. The Committee investigated this question and is driven reluctantly to the conclusion that what the country possesses today is what may fairly be described as a worn-out telegraph system. It is hopelessly outdated, inadequate, inefficient. The Department's heads are very insistent upon this point and have formulated plans for replacing the present worn-out telegraph-wireless system with a modern, efficient one that would give the public much better service at lower cost to the public exchequer. The question was put bluntly to them: "If the government told you that hard times are imminent, and relentless retrenchment must become the rule of conduct in all departments, what would your reactions be? What about your plans for a new and improved telegraph service then?" Their reply was that in that case they would inform

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national conent

a 69 22 11 14 8 30 6 14 4 18 18

Assorting Clerks Letter Carriers Counter Clerks Porters and caretakers Cleaners Telegraph Clerks (Male) Telegraph Clerks (Female) Patrol Men and Line Repairers Indoor Messengers Telegraph and Postal Clerks (Male) Telegraph and Postal Clerks (Female)

1050- 70-1400-70-1900 960- 60-1600 750- 50-1000-50-1300 1000-60-1600 480- 15- 550 1050- 70-1400-70-1900 950- 50-1100-50-1450 1300- 50-1500 610 950- 60-1400-60-1800 950- 60-1100-60-1450

Postmasters 38 Part-time seasonal postmasters (Labrador) 203 Postmasters 97 Postmasters 56 Postmasters 22 Postmasters 72 Postmasters 58 Postmasters 21 Postmasters 4 Postmasters 1 Postmaster

12 per season $ 78 to 120 year 126 to 240 year 246 to 480 year 500 to 660 year 696 to 900 year 930 to 1200 year 1209 to 1500 year 1560 to 1680 year 2000 Assistants

$ 13 Assistants 300 to 480 year 21 Assistants 500 to 660 year 15 Assistants 696 to 900 year 17 Assistants 930 to 1200 year 5 Assistants 1209 to 1302 year 1 Assistant 1350 to 1900 year 60 Messengers and Messenger Assistants 174 to 480 year It will be seen that of the 534 Postmasters, 356 are receiving salaries of under $500 a year, or under $9.61 a week. Three hundred of them or over half the total number, receive salaries of under $250 a year, or under $4.80 a week. A recent review of salaries of all outport postmasters was made and the government are considering certain proposals for increases as this is written. 2. We have no reason to doubt that in general the country has received reasonably good service for the money expended. 3. The telegraph and wireless equipment of the Department is almost hopelessly outdated, inadequate and inefficient, and must be replaced at considerable capital cost amounting to something between half a million and a million dollars. Department of Posts and Telegraphs Estimates Expenditure on Reconstruction Work Over The Next Ten Year Period First Year, 1946-47 1. Mail Services (a) To convey mails by all trains (b) Revision of circulation and courier routes

$ 5,000 5,000

PAPERS AND REPORTS (c) Air mail, probable revision of charges and new direct services (d) Opening new parcel handling depot at Corner Brook 2. Telegraph Service (a) Extension of copper wire circuits from Grand Falls to Corner Brook and St. George's and other smaller sections (b) Ship-to-shore radio and associated improvement in point to point communication on south coast (c) Special telegraph service at Gander airport (d) Telegraph carrier equipment 3. Telephone Service Local service at Gander and long distance service St. John'sGander-Botwood-Grand Falls

97 20,000 3,000

130,000 60,000 6,000 60,000 10,000 $299,000

Second Year, 1947-48 1. Mail Services. (a) Improvements in inland services (b) Expansion of airmail service (c) Parcel delivery and courier services (d) New sub-office to serve housing estate 2. Telegraph Service. (a) Completion of copper wire programme (b) Extension of ship-to-shore service to east and west coasts (c) Partial introduction of zone system to eliminate unnecessary repeating of telegrams 3. Telephone Services. Extension of local and long distance services $335,000 Third Year, 1948-49 1. Mail Services. (a) Introduction of carrier service at Corner Brook (b) Inland air mail service 2. Telegraph Services. (a) Modernisation of the smaller out-stations to conform to zone telegraph system 3. Telephone Service. Extension of long distance services $185,000 Fourth and Fifth Years, 1949-51 1. Mail Services. Expansion of service to meet probable developments following fruition of reconstruction programme of other departments 2. Telegraph Services. Completion and extension of programmes 3. Telephone Service. Extension and addition to local and long distance services .... $110,000

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Sixth to Tenth Years, 1951-56. 1. Mail Services. General improvements and additional services 2. Automisation of Gander internal telephone system $ 200,000 Expenditure during this period will depend on the developments of the island as regards mail services and the trend of events at Gander airport. Regarding the latter it may be that aircraft developments may render unnecessary the use of Gander as a point of call. Total expenditure for the ten year period $1,129,000 Department of Posts and Telegraphs Report by Secretary on Suggested Alterations and Improvement of Services Postal Services The first point to consider is the question of postage rates. It is, of course, desirable that there should be as low a rate as possible but there are many considerations which must be taken into account in deciding whether the present rates are capable of reduction. The general public make comparisons between the rates in this country and elsewhere and we can, perhaps, do the same. Broadly speaking our rates compare favourably with those of Canada, are a little higher than those in the USA and 25% lower than the rates obtaining in Great Britain. Conditions vary considerably. In all countries named except Newfoundland there are very large volumes of traffic passing between densely populated areas. In Newfoundland, on the other hand, correspondence for delivery, other than in the city for which latter there is a lower rate, has to be subdivided into some 400 divisions and some of these only attract a few letters per mail. The cost for onward conveyance from drop points on the railway is also considerably higher on the average than is the case in America or Canada. It could be claimed that there are areas in Canada and America comparable in remoteness with those in Newfoundland but the proportion of correspondence for those areas is much smaller than is the case in this country. Other factors to be taken into account are the general living costs. It is, I think, true to say that the businessmen of St. John's charge more than the same commodities sell for in Canada. In all the circumstances, therefore, I am unable to recommend any reduction of existing rates. Conveyance of Mails Newfoundland depends for the carriage of its mail on facilities supplied by third parties and the frequency of dispatch must, therefore, be governed largely by the availability of public service transport. Here again there is a great difference between this country and others. Where there are good highroads connecting centers of population, it is desirable, and often economical, for the Post Office to convey mails between points so connected by means of its own vehicles. In Newfoundland, however, there is not the scope for this type of mail service. This does not mean to say that there is no room for improvement in the present service and the Department is now engaged on looking closely into all the possibilities. A start has been made in the direction of improvements by having mails conveyed on the local expresses as well as by "foreign" trains and thanks are due to the railway company for its ready and whole-hearted co-operation in bringing this about. There is a decided advantage to the public at points so served because correspondence receives up to 36 hours acceleration in delivery. There is also a benefit to the Department in the arrangement because the traffic is smoothed out and undesirable peaks are largely eliminated. At present it does not seem possible to extend this augmented service beyond Millertown Junction during the winter months, but should it be decided to extend the public service further we shall, of course, include despatches to the additional places. So far as I have been able to gather there is scope for an improved layout of the areas served by courier and arrangements have been made for a complete survey of the territories served by couriers in the course of the coming year.

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99

Parcel Mails The arrangements under which parcels are hauled all the way from Port-aux-Basques to St. John's for Customs appraisement has long been a source of grievance to the public residing in the inland towns. Steps, however, are now being taken for the establishment of a Customs examination and parcel sorting depot at Corner Brook. In this connection it should be noted, in case there should be any misunderstanding, that the whole of the island's parcels, other than St. John's, will be examined and distributed from the new office at Corner Brook. Exceptionally, of course, parcels arriving by steamer at St. John's will be dealt with at St. John's, as at present, and will not be subject to the delay of sending them to Corner Brook. In other words, we shall have two examination depots in the island instead of one and each will have equal facilities for the disposal of traffic. Air Mails When the present air mail rates were fixed the charge of seven cents for conveyance to Canada and the United States was secured as a result of an agreement made by my predecessor with the Canadian government. It is perhaps undesirable that undue publicity should be given to the substantial financial saving to this country which resulted from this agreement, but it is quite certain that many thousands of dollars have been saved and this saving has been passed on to the general public in the form of the low rate mentioned. Unfortunately this agreement was a wartime one and we may expect that the Canadian government will ask for it to be reviewed at any time in the near future. It must not be overlooked that the granting of additional air freedoms to American and other countries are not outside the bounds of possibility and it will be the duty of this Department to see what advantages there could be in diverting mail from the Canadian carriers to those of other nationalities by which more expeditious conveyance and delivery might be secured. It is a matter, however, which will require careful consideration in order to ensure that slight, and uneven uncertain, advantages of acceleration are not secured at prohibitive cost. Ancillary Services In these days, with rapid means of transport and general improvement in communication, it is found that the travelling public expect similar postal service in every country. In this respect Newfoundland is not very much below the general world level. There is, however, one important exception and that is that postal orders, or as they are called on the American continent, postal notes, are not available for the transmission of small sums. In this country, where St. John's is practically the only shopping town, much recourse is had to mail order business and there is a very large volume of money transmitted by means of money orders. There is, I feel, scope for the introduction of postal notes, as I shall call them, in Newfoundland and it would be of considerable advantage if these could be made equally valid when transmitted to Canada. There should be no difficulty in obtaining the concurrence of the Canadian government to this proposal; we honour their postal notes in this country. It is found, on examination, that about 50% of the money orders issued are for sums of $5 or less, and this confirms that view that there is good scope for the introduction of postal notes. It is considered that the less complicated procedure of issue and payment would make them immediately attractive to the public. It would have the great advantage of simplifying the work and this point is of special importance in small towns and villages in the rural areas. This question is being pursued and will be submitted for the consideration of the Commission of Government as soon as possible. Postal Guide Both the Department and the general public are handicapped by the fact that there is no Newfoundland post office guide. Such a book would be a standard reference for the staff in the conduct of business with the public, and for the public would tend to educate them in the facilities available. It would also tend to reduce enquiry work very considerably. The question of providing such a guide was in hand when the war broke out but the pressure of wartime business caused consideration to be postponed. I consider the time is now ripe to go into the question again and suitable steps in the matter are being taken.

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Telegraphs It is without doubt in the telegraph section that much work of a reconstructive character is required. Up to the present main circuits have been constructed of galvanised iron wire and the well-known tendency of iron wire to lose its efficiency as a signal carrier during bad weather is particularly marked in a country like Newfoundland with such severe climatic conditions. The question of affording adequate communication facilities to the people of Newfoundland presents an interesting, if somewhat difficult problem to those concerned with its operation. We have very few places of any size outside the city of St. John's. The settlements are scattered over the island and the country between them is wild and desolate. In the winter the maintenance of such things as telegraph pole lines is a matter of considerable difficulty. It has not been possible during the war years to make necessary additions and improvements to the actual wire lines themselves and to the equipment at terminal points. In one way this has not been a bad thing because now that we have the matter in hand we shall be able to take advantage of the many improvements in the design and construction of telegraph and telephone apparatus which have been achieved as a result of special research made during wartime. It is appreciated that many pieces of apparatus, showing large advances on previous achievements, have been designed to meet special situations and conditions, but it is also true that many of these improvements have been, and will continue to be included in pieces of apparatus of standard type. Owing to the problem of maintenance and the smallness of the technical staff, it is essential that all apparatus acquired should be, as far as possible, of known performance and easy to maintain. In short we should aim at buying our apparatus off the shelf, so to speak, rather than to have it specially designed for our use. The broad principles of communication on the island are by wired circuits along the railway line to serve the centres of population situated theron, and by wireless from distributing points on that wired system to the more remote places. This system was introduced about 1934; it is as sound today as it was then and it is not proposed materially to depart from it. At the time when the system was introduced the wireless sets available were comparatively primitive and could work only across short spans. This meant that in order to reach the remote centres of population it was, and still is, necessary to relay telegrams from point to point, and it is the fact that in extreme cases a telegram is relayed by as many as ten operators. The wired circuits, comprising the backbone, so to speak, of the communication network, were constructed by means of iron wire and the telegraph circuits were carted at the telegraph stations and at the end of the line. On some of these lines as many as 16 telegraph stations are connected and it follows that the work must be handled on a time schedule, each station working into the circuit at a stated time. It will be seen, even by a layman, that such a system cannot be expeditious and cannot meet the demands of present day business in which speed, for the exchange of information, is a dominant factor. The Department's programme of modernising all telegraph communication facilities has as its object: The establishment of direct telegraph service between St. John' s and those offices where the traffic warrants a direct circuit, and the physical conditions make this economically possible. The benefit of this will be twofold. First, there would be considerable acceleration int he delivery of messages to the places concerned, and secondly, the undesirable repetition of messages at one or more intermediate points will be abolished, thus eliminating sources both of delay and error. The acquisition of the copper wires between St. John's, Gander and Grand Falls and associated terminal equipment gives us a very valuable start. On the main links of the wired system we shall have installations known as carriers which will enable many circuits to be provided on one pair of wires. This system is well-tried and proven and the equipment is standard. We have already acquired telegraph carriers and are using them on the copper wires between St. John's and Gander. I find it very heartening to see how the members of our very small engineering branch have mastered the intricacies of this equipment although they had no previous practical knowledge of it, and it is true to say that their service has proved as good as, if not better, than that given by the first operators of the system. For this reason I have no qualms about introducing other types of equipment, of

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well-proven design, to improve the communications of the island. In other words I think that we have a nucleus on our own staff who will be able to do all the work necessary. In addition to the main trunk telegraph circuits which follow the railway line, we shall install or improve wired circuits to other points. Beyond these points telegrams will be conveyed by wireless. The story of the old-fashioned equipment we now use for wireless transmission has been told so often that there is no need to say it all over again; sufficient to say that it must be replaced and that our plans provide for this. The location of fishing settlements around the coast is such that a combination of ship-to-shore and point-to-point radio-telephone service is not only a practical but a desirable arrangement. This question is reported on further in a later paragraph. There is at present a very serious shortage of staff trained in morse telegraphy and fewer candidates for training are coming forward. This shortage will, perhaps, be better appreciated when I say that a minimum period of 12 months is required to produce a fairly efficient telegraphist. It is to my mind a great waste to have to train people for so long a period in order that they may work in an isolated spot and handle two or three telegrams a day. Up to the present there has been no alternative to this arrangement because the equipment could only provide for a morse telegraph method of transmitting signals. Our programme provides for the smaller places, dealing with only a few telegrams a day, to be served by radio-telephone. The re-arrangements of the telegraph circuits will enable a systemised method of traffic circulation to be followed. The country will be divided into zones with one main distributing office for each zone. The zone centre will be connected to St. John's by teleprinter service and will transmit traffic for all telegraph offices in its zone. In some zones there will also have to be area centres to cover small places in areas remote from the zone centre. The area centre will retransmit telegrams for these small offices and eventually it is hoped that by the installation of suitable apparatus at the area centre that transmission may be made automatically without the intervention of a third operator. In the early stages, however, it may be necessary to install an operator at the area centre to handle the traffic manually. The proposals outlined above for the telegraph service are ambitious and wide in their scope. The effect will be practically to construct a new telegraph system in the island. On the other hand nothing is proposed that is not considered to be necessary, bearing in mind that in these days trade and business depend more and more on swift communication between the respective centres of interest. I am of the opinion that if the natural resources of the island are to be exploited to the best advantage then a reliable and fast system of communication must be there. I find considerable difficulty in estimating the cost of the programme. Although, as is stated, only equipment of proven performance will be purchased, it is the fact that so far firms manufacturing the apparatus have not yet reached a point in their conversion from war to peacetime production sufficiently far to enable them to quote prices or give firm dates of delivery. It is certain, however, that there is no shortage in the supply of copper wire and the substitution of our worn our and inefficient iron wire circuits by copper wire must be the first step. Ship-to-Shore Radio-Telephone Service The modernisation of the fishing industries of the country demands that there shall be a ship-toshore radio service. This applies most particularly to the fresh fish industry. My information is that fleets no longer cast their nets over the side and hope for the best but ply their craft in places where fish is most likely to be. These spots, of course, vary from time to time and even from day to day and if the boats are to work to the best advantage they must be apprised of the best place to fish. It is here that radio communication, with information or advice, is essential. This is, of course, realised by the merchants themselves, particularly those who have had boats working off the Canadian coast where ship-to-shore service is available. There are, in fact, at present on file in this office applications from seven firms asking for this facility. There are three ways in which the service can be provided, (1) to allow each merchant to set up his own installation at his fish plant, (2) to allow a private company to operate and (3) for the

102

NATIONAL CONVENTION

Department of Posts and Telegraphs to undertake the work. The first method is impracticable, if only because of the very tight control which is necessary over the use of frequencies allotted for point-to-point communication. Enquiry into the type of equipment most suitable for the ship-to-shore service has been made and it is found that suitable apparatus can be secured to provide not only the shop-to-shore service but a point-to-point radio-telephone service as well. This means that only a few shore stations need be provided and the desired connection extended from the station to the merchant's office. The same equipment will also provide point-to-point service for our domestic telegraph work, and it so happens that the location of the ship-to-shore stations and associated equipment is such as to service places where our service is most crude at the moment. It has to be replaced anyway, and a combination of ship-to-shore and point-to-point is the best way of doing it. In my opinion, therefore, the Department of Posts and Telegraphs should undertake the ship-to-shore radio. Our enquiries reveal that it is not out of the question to have one ship-to-shore station in a working position in the course of the coming fishing season. Telephones The Department has a few telephone subscribers in remote places, where these have been allowed connection to existing public networks, but the arrangement is not a good one and the improvement in the telegraph system will also provide for better service to telephone subscribers. Apart from these small telephone commitments the Department has very little experience of a telephone branch. The installation of copper circuits, which, as explained, will allow the provision of many circuits over one wire, also allows for telephone channels to be provided in this same equipment. As these carrier systems will serve fairly long distances it is, I think, obvious that use must be made of the telephone facilities, particularly as so few exist at present. In particular such long distance or trunk service will be available very shortly between St. John's and Gander and perhaps to other points in the near vicinity, eg, Botwood, Grand Falls. To make the service fully available to the public it will be necessary, of course, to work in collaboration with the Avalon Telephone Company. Satisfactory conversations aiming at an equitable arrangement have already taken place, and it is expected that an arrangement will be made acceptable to both parties. At Gander it will be necessary for the Department of Posts and Telegraphs to take over the existing internal telephone service. Employees of this Department have been maintaining this system since November last, and here again they have proved themselves to be more than equal to this work, new to them as it is. There are signs already that the services of the Department will be called upon to an increasing extent at Gander. The airline operating companies expect that many hundred of passengers per week will be halting for varying periods at Gander Airport, and that many of them will wish to send telegrams. With the few aircraft now calling there this view is fully borne out by the number of telegrams actually handed in. As the schedules of the aircraft provide usually for arrival at destination points in daylight it works out that most of them will be scheduled to make the stop at Gander during the night. It will, therefore, be necessary to maintain a service, not necessarily continuous, to cover the 24 hours, and the situation of the service hangars calls for the installation of a teleprinter in the hangar itself. Steps in this direction have already been made, and a through service from hanger no. 12 to the St. John's central telegraph office was instituted, and worked satisfactorily, on February 14. The experiment is being closely watched with a view to this service reaping the financial advantages resulting therefrom. It is estimated that the Department's share of the charges will cover the cost involved. This is a conservative statement, and I think we shall make a profit. Advantage will be taken of the situation to offer for sale sets of Newfoundland stamps, and experience shows that the sale of these sets will probably be quite substantial. Accommodation and Staff The congestion in the head post office building at St. John's will be relieved shortly by the occupation of the upper floor of no. 1 building, Admiralty Dockyard. Present proposals are to transfer the parcel work and the headquarters branch. It may also be necessary to locate there the stores, in whole or in part, and the engineering workshop. The space released will be used for the installation

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of the fittings necessary for the performance of the mail work. In addition it is hoped to suggest a more attractive layout of the public counter. Work is in progress on the relative plans. I have not visited the offices in the outports but my information is to the effect that many buildings there are in a bad, and some of them in a deplorable condition. The worst cases have been brought to the notice of the Department of Public Works and I have no doubt that remedial measures will be suggested by them in their own reconstruction proposals. The staff situation in most branches is still suffering from the necessary dilution of the war years. All our men are not yet back from the army; all those who have returned have been reinstated at a rank not less than that relinquished by them. I find that, generally speaking, staff revision and review is necessary in all branches. The work to be done on the communications side calls for immediate action. As regards the engineering section our proposals have already been submitted. On the postal side I find that the staff is not now properly allocated to the work. It must be borne in mind that the performance of their work is subject to considerable variation both as between the summer and winter seasonal changing of trains and from day to day arrival of expresses. With the despatch of mails by all available trains it has been possible to level some of the peaks but the position is far from satisfactory. Steps have been taken to place the staffing on as sound a basis as the circumstances will allow, but here again the proposals are not sufficiently advanced for details to be gone into in this report. The salaries at the outports are governed by the work performed. Each item of work is valuated in terms of units and the total units then form the basis of the salary. The present forms and method of taking the figures and recording them are capable of some improvement and steps have already been taken in this direction. Investigation reveals that credit is not being given for certain items of work, eg. radio licenses and savings bank work. It is hoped to review the work and salary at all offices commencing in April next. Statements are attached showing the programme covering the next ten years, with estimates of cost. It must be pointed out, however, that these estimates are based on incomplete knowledge. It is not possible at this time, for example, to quote on the apparatus and equipment required for the telegraphs and I do not know what I shall find when I come to examine my reviews of staff. During the past six years the accounts of this Department show that the aggregated surplus amount to $1,279,058. Up to the present no sums have been allocated for reconstruction work. The estimates provide for spending something under the surplus mentioned. The Railway The Committee has approached and considered the whole question of the Railway, with its ancillary coastal boat service, as that of a necessary public service. Though it is aware of a whole field of controversy, extending backwards for many years, about the desirability or otherwise of a railway system, it has resolutely ignored all such considerations, and confined itself to close consideration of the following factors. 1. What the system has cost to operate since it became a nationally-owned and nationally-operated public service. 2. What the situation is likely to be in future. It is comparatively easy to deal with the first of these two factors, but the second of them is of a somewhat difference class. On this point there is this to be said: that the Committee has made no attempt whatever to forecast the possible general economic future of the country. It has no knowledge of future trade or of the exact public need of the railway system or of the nature or extent of the traffic which that system may have to carry. These are matters which the Convention as a whole may perhaps have to forecast. Cost of Operation History: The railway system was taken over by the government in 1920. In one form or another it has been operated as a public utility ever since. The better, however, to enable the Convention to

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NATIONAL CONVENTION

understand costs it has seemed advisable to show these throughout the entire period commencing in 1904. Inclusive of the coastal boat system, the figures are as follows: REID NEWFOUNDLAND COMPANY, LTD. RAILWAY OPERATIONS Year

1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921

Earnings $ 430,964.00 414,476.25 444,773.76 448,147.24 458,180.25 530,665.96 589,682.91 614,272.68 622,076.11 725,519.59 766,581.71 677,965.90 810,670.65 1,091,887.39 1,238,229.23 1,465,176.23 1,432,783.10 1,545,290.44 $14,317,343.40

Expenses $ 522,600.19 523,961.56 556,590.75 602,681.29 620,302.93 601,314.01 608,845.32 648,102.89 755,513.55 861,620.09 972,772.95 878,628.02 977,785.55 1,232,976.58 1,584,669.10 2,153,539.86 2,767,890.65 3,226,551.67 $20,096,346.96

Loss

$ 91,636.19 109,485.31 111,816.99 154,534.05 152,122.68 70,648.05 19,162.41 33,830.21 133,437.44 136,100.50 206,191.24 200,662.12 167,114.90 141,089.19 346,439.87 688,363.63 1,335,107.55 1,681,261.23 $5,779,003.56

NEWFOUNDLAND RAILWAY GOVERNMENT OPERATIONS Year 1920-21 1921-22 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 1933-34 1934-35

Earnings $ 2,501,864.87 1,877,333.19 2,047,173.47 3,231,852.58 3,371,200.38 3,009,290.19 3,057,809.88 3,203,572.80 3,396,676.34 3,714,606.18 3,187,157.66 2,309,086.68 2,208,565.73 2,573,896.10 2,695,103.28

Expenses $ 4,259,890.84 2,830,700.81 2,640,453.19 3,238,371.92 3,729,710.22 3,753,087.57 3,675,485.44 3,647,732.53 3,784,293.50 4,095,100.15 3,896,765.70 2,648,119.24 2,422,897.73 2,711,514.83 2,724,033.27

Loss $ 1,758,025.97 953,367.62 593,279.72 6,519.34 358,509.84 753,797.38 617,675.56 444,159.73 387,617.16 380,493.97 709,608.04 339,032.56 214,332.00 137,618.73 28,929.99

Surplus

$

105

PAPERS AND REPORTS 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43 (9 mos.) 1943-44 1944-45 1945-46

2,847,863.37 3,024,247.87 3,503,560.93 3,110,577.05 3,512,185.89 5,015,117.18 8,167,263.64

2,890,234.37 2,991,414.15 3,577,130.65 3,413,172.59 3,595,140.14 4,516,487.61 6,716,130.70

42,371.00 32,833.72 73,569.72 302,595.54 82,954.25 498,629.67 1,451,142.94

226,666.34 7,713,141.04 7,486,474.70 113,754.68 11,729,538.97 11,615,784.29 12,668,129.94 525,716.46 13,193,846.40 11,140,417.02 12,171,823.24 1.031.406.221 2,323,017.25 9,731,580.80 114,817,232.23 122,225,795.78 Included in this figure is $333,000, amount charged Railway for interest payment on loans and repayment equipment charges to US Government. The loss would be $698,000 when compared with pre-war years. As will be seen, during the 18 years 1904-1921 inclusive, when the Railway was privately operated, the earnings were $14,317,343.40 and the expenses $20,096,346.96. The operating loss for that period was $5,779,003.56, over half of which was incurred in the final two years of private operation. In the 26 years during which the Railway has been operated either partially or wholly by the government the earnings were $114,817,232.23 and the expenses $122,225,795.78. The operating loss for the period was $7,408,563.55, an average of $284,944.75 per year. In the ten years ending March 31, 1946, the operating surplus was $2,323,017.25 and the loss $2,016,242.19, leaving a net operating surplus of $306,775.06 for the ten year period. This was an average operating surplus of a little over $30,000 a year, in a period which includes the richest years the country has ever seen. In the 44 years ending March 31,1946, the total operating loss of the Railway was $ 13,187,567.11. In that whole period there were only five years in each of which there was an operating surplus. Four of these were the recent war years. The fifth, 1936-37, saw an operating surplus of $32,833.72 over the $3 million expenditure for that year. It will be noted that the fourth of the wartime surplus years (1943-44) which saw a surplus of $113,754.68 was followed by a year (1944-45) which saw an operating loss of over half a million dollars. That year was followed by another, the one which ended March 31, 1946, with a loss of $1,031,406.22. To the amount which the Railway has cost the public exchequer under the heading of operating losses there has to be added a further amount of $ 10,851,906.31 handed to the Railway by the treasury for capital improvements and maintenance. These amounts were given as follows: From the commencement of government operations to June 30,1946:

1936 1937 1938 1939 1940 1941 1944 1945 1946

$ 6,863,058.28 189,637.50 617,521.61 219,469.45 934,964.18 202,255.29 400,000.00 710,000.00 715,000.00 $10,851,906.31

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NATIONAL CONVENTION

Taking the 26 years ending March 31, 1946, during which the Railway has operated as a public enterprise, we find that the treasury has contributed $7,408,563.55 on account of operating losses, and $10,851,906.31 on capital and maintenance account, a total for the period of $18,260,469.86. This is an average of $702,325 per year. From a public standpoint the situation is not quite as bad as it appears. These figures are gross, and against them must be placed several factors. Amongst these factors are the Customs duties paid to the treasury upon its importations of parts, materials and the like. For example, in the year ending March 31,1945, the Railway paid $213,915.45 into the treasury under this heading. In the year ending March 31,1946, they paid in $167,636.87. Again, there are the Railway's important local purchases of supplies. Not all of these locally purchased supplies had been imported into the country, or had paid Customs duties even when they were imported: but on much of them duty was paid by the original importers. In 1944-45 for instance the Railway's total expenses were $13,193,846.40. Of this these local purchases accounted for approximately $2,238,102. In 1945-46, when the Railway's total expenses were $12,171,795.24, local purchases amounted to approximately $1,860,814. Forming part of the overall picture of the Railway, and its relationship to the public exchequer, there is also the matter of the salaries and wages paid. To the 3,635 employees in 1944-45 these amounted to $4,502,829.17; and to the 3,751 employees in 1945-46, $5,628,724.42. Most if not all of this money was spent by the employees on consumption goods, and on most of these goods Customs duties had been paid into the treasury. We are not desirous of pushing this wages factor too far, lest it partake of the "living-by-taking-in-each-other's washing" angle. The facts may be interpreted in a variety of ways — we set down the facts. All the modifying factors having been taken into consideration, the fact remains that throughout the entire period of the Railway's operation by the government the direct cost to the public exchequer has run to an average of over $700,000 a year. The Future It is a well-known fact that World War I played havoc with the railway. Shortages of shipping resulted in an enormous increase of railway traffic, traffic that the railway was never designed to carry. Very little capital investment was made throughout those years, and as is well known, what we had at the conclusion of that war was a worn-out railway on which accidents were frequent. World War H thrust upon the railway an increase of traffic that was staggering. Vast military bases were constructed, and very large numbers of people travelled. Considerable capital expenditure was made during the late war, and the railway system cannot accurately be described as worn-out. It is in distinctly better condition than it was at the end of the earlier war. The General Manager states that the main line needs rerailing, that seven new locomotives, and some new rolling stock must soon be purchased. These expenditures which cannot, it seems, long be delayed, will run up into millions of dollars. Apart from capital expenditures, we are impressed by the probability that operating losses are likely to increase rather than decline. As started at the outset we have approached the whole problem from the viewpoint of a necessary public service. That the system has been of value indirectly by conveniencing and assisting main industries and developing natural resources which might otherwise have remained dormant, is indisputable, but it is obviously impossible to assess this return in terms of dollars and cents. We append to our report a series a statistics and memoranda furnished us by the management of the railway, and we have only to add that no obstacles whatever were placed in our way in the obtaining of information. Special Observations We invite the attention of the Convention to what we consider to be a matter of first-rate importance, namely, the large amounts of revenue which, it appears, the Railway is losing by giving certain large and reputedly wealthy corporations special rates for moving certain of their freight over

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the main line. We refer particularly to Anglo-Newfoundland Development Company Limited; Bowater's Newfoundland Pulp and Paper Mills Limited; Buchans Mining Company Limited; Imperial Oil (Newfoundland); and Shell Oil. We have appended lists showing in respect of each of these and other corporations the special freight rates they enjoy from the Railway on the haulage of pulpwood, newsprint paper, ore concentrates and gasolene and oil, together with the normal rates chargeable on the same goods in carload lots. We give here a table showing the actual tonnages of these goods hauled in 1945 for these corporations by the Railway:

Company Buchans Mining Ores AND Co. Ltd. Wood Paper Bowater's Wood Paper

Tons Hauled

If normal freight rate were charged

At the special rates

Amount of subsidy enjoyed

176,980

$ 707,957

$302,663

$405,294

66,339 40,160

106,950 329,315

72,567 132,580

34,383 196,735

132,624 23,404 439,507

212,199 130,453 $1,486,874

67,376 56,189 $631,375

144,823 74,264 $855,499

The Convention will wish to know how we have arrived at these figures. Reference to the lists appended will reveal that the rates, both normal and special, vary according to the distances. The figures we have received of tonnages hauled, however, are not broken down to show how many tons were hauled at each of the special rates. We have therefore averaged the special rates in each case — that is, in the case of all pulpwood hauled for AND Co. Ltd. for instance—and multiplied the tonnage hauled by the average special rate. It will thus be realised that the figures of freight actually paid, and freight that would have been paid at normal rates, are not to be taken literally. The actual amounts would be more or less than those shown in our table. We feel, however, that we are reasonably close to the actual amounts. It will not be denied that these corporations are fully entitled to receive special freight rates. They have a great deal of freight to be hauled, and we know that the Railway is anxious to have their business. The question, however, that we have asked ourselves is this: are these corporations entitled to receive such great reductions as they do? If our computations are close to the mark, it means that at normal carload freight rates the Railway would receive from the three corporations named $1,486,874 for hauling the 439,507 tons indicated. Instead, the Railway received $631,375. This is less than half the amount that would be received at normal rates, and the Railway lost in that one year the sum of $855,499. The corporations in question have, under their agreements with the Government of Newfoundland, been relieved of very considerable amounts of taxation to which other corporations are liable in this country. It seems to us incongruous that their existing and statutory exemption from normal taxation should be still further increased by this very great exemption from normal freight rates charged them by the nationally-owned and nationally-operated railway system. These corporations are paying substantial dividends to their owners, but the Railway is operating at a loss which the Newfoundland people must meet out of general taxation. We suggest that the Railway could justly and expediently reduce the amount of special freight rate concession presently granted to these and perhaps other corporations. We do not wish to exaggerate the proportion by which this special concession by the Railway might be reduced, but it does seem practicable to us that $2-300,000 a year could be added to the Railway's income in this respect.

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[Tables giving details of preferential freight rates omitted.] NEWFOUNDLAND RAILWAY GRANTS-IN-AID FROM FINANCE DEPARTMENT FOR TEN YEAR PERIOD 1936-37 TO 1945-46

Year 1936-37 1937-38 1938-39 1939-40 1940-41 1 041-42 1942-43 1943-44 1944-45 1945-46

For Operating Losses and Working Capital $ 42,738.00 84,517.76 145,521.60 254,467.78 83,481.88

For Capital Expenditure $ 189,637.50 617,521,61 219,469.45 934,964.18 202,255.29

Total $ 232,375.50 701,039.37 364,991.05 1,189,431.96 285,737.17

925,000.00 300,000.00 90,000.00 410,000.00 $2,335.727.02

400,000.00 710,000.00 715,000.00 $3,988,848.03

925,000.00 700,000.00 800,000.00 1,125,000.00 $6,324,575.05

Grants-In-Aid From Newfoundland Government to Newfoundland Railway for the Years 1923-24 to 1945-46 For operating losses and working capital $ 6,874,495.45 For capital additions and improvements 10,851,906.31 $17,726,401.76 Capital Expenditure for Additions and Improvement Provided By Loans From Defense Supplies Corporation of USA Repayment to be Made in Fifteen Years Rolling stock and other equipment $ 1,941,488.64 Note: Repayments to March 31, 1946 376,742.64 Balance owed (in American funds) $1,564,746.00 [Table giving details of equipment purchased with US loans omitted.] NEWFOUNDLAND RAILWAY STATEMENT SHOWING RAILWAY STEAMERS PASSENGER AND FREIGHT EARNINGS AND NUMBER OF PASSENGERS CARRIED EACH YEAR FROM 1936-37 TO 1945-46. 1939-40 1936-37 1937-38 1938-39 $ >j> $ $ $ Passengers 192,494.27 179,001.13 217,307.81 211,236.09 328,533.31 369,334.91 350,316.78 434,303.53 Freight 645,539.62 507,534.44 586,642.72 542,811.05

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PAPERS AND REPORTS

No. of passengers carried

Passengers Freight No. of passengers carried

Passengers Freight No. of passengers carried

1936-37 $ 36,913

1937-38 $ 45,182

1938-39 $ 38,400

1939-40 $ 42,732

1940-41 $ 291,334.34 532,408.12 823/742.46

1941-42 $ 477,297.08 720.560.78 Ir197r857.86

1942-43 3> 325,746.79 874r494.90 Ir300.241.69

1943-44 $ 392,575.72 2,006,653.52 2,339,229.25

52,140

82,916

1944.45 $ 439,914.28 1,932,592.15 2,372,506.43

53,157

56,209

1945-46 $ 476,234.18 1,432,92862 1 r909. 1 62.80

57,049

63,579

NEWFOUNDLAND RAILWAY 1946 Coastal Boats

Commercial earnings Subsidy Expenses Profit or Loss

Commercial earnings Subsidy Expenses Loss

Baccalieu $258,257.62 27/700.00 285,957.62 263,025.29

Burgeo $305,067.63 23.442.85 328,510.48 255,60629

$ 22, 1,223,848 1,448,370 1,260,511 1,292,537 1,105,205 1,236,446 1,455,682 1,464,452 1,637,288 1,961,136 2,524,443

367

NATIONAL CONVENTION 1938 1939 1940 1941 1942 1943 1944 1945 1946f

322,196 426,903 325,939 265,109 268,163 342,598 338,874 382,704

419,587 338,186 438,384 423,744 302,597 415,299 408,882 410,959 292,313

1,070,504 1,071,424 1,069,363 1,068,390 1,226,920 1,378,158 1,472,775 1,535,607 1,204,842

179,612 173,165 177,315 230,238 281,947 358,046 441,255 493,655 370,241

251,445 241,381 290,297 290,554 290,143 374,302 327,515 229,404

88,194 97,420 104,103 91,730 82,644 85,828 83,871 72,442 61,331

18,681 10,240 30,977 12,228 1,742

2,350,218 2,358,719 2,436,378 2,381,991 2,454,156 2,954,231 3,073,173 3,124,771

2,677,318 172,053 576,539 a Customs duties, royalty and income tax. Royalty was not charged in 1927-28 and 1930-32; and income tax was not charged in 1927-28 and 1930-31. nPaid to Newfoundland Railway. G Lumber, mine timber and other supplies Handling costs, supplies and services C 8 months 9 months. This royalty and income tax figures are estimated.

[Omitted: 1. Graph showing peak employment, wages and salaries Bell Island, Buchans, and St. Lawrence. 2. Map of Newfoundland showing the active mines and quarries of Newfoundland. 3. Water powers — leases. 4. Graph showing value of annual mineral production from 1934-1945. 5. Map of Newfoundland and Labrador showing location of concession areas of Labrador Mining and Exploration Co. Ltd. 6. Map of central and southwest Newfoundland showing areas covered by aerial photographs furnished by Buchans Mining Company Ltd, Newfoundland.] Summary The foregoing comprises the general picture of the mineral resources of Newfoundland. We are of the opinion that, while the Geological Survey has done excellent work, work has been retarded through lack of funds, as we are satisfied the country has a great future in mining. The life of Buchans may be limited, but considerable money is being spent in prospecting, and the Management are hopeful new ore will be found. Bell Island has practically unlimited resources. The prospects for St. lawrence appear excellent. Aguathuna will likely maintain its present standard. The small industires are expected to maintain their present production, and the prospect of having the slate quarries re-opened is most promising. The iron ore deposits of Labrador, we believe, will be a great factor in the future economy of the country. The asbestos development has good promise of success. The cement proposition at Port-au-Port and Random Island, and the Pilley's Island pyrites mine, are developments that might well be considered by the Newfoundland Development Board. Respectfully submitted, Reuben T. Vardy, Chairman, Charles M. Bailey, John McCormack, Secretary.

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NATIONAL CONVENTION

A. Production of Newfoundland minerals with their total value: 1934-1945

Production 18,394,001 tons

Value $8,923,232.63

B. Total payments by the Buchans Mining Company Ltd. under all headings in Newfoundland: 1927-1946

$40,420,872.76

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Report of the Committee on the Financial and Economic Position of Newfoundland April 15,1947. Part One — Financial In the compilation of this report the Committee ever has kept in mind the terms of reference governing the activities of the National Convention which under section 3 of the Convention Act read as follows: It shall be the duty and function of the Convention to consider and discuss among themselves as elected representatives of the people of Newfoundland the changes that have taken place in the financial and economic situation of the Island since 1934, and, bearing in mind the extent to which the high revenues of recent years have been due to wartime conditions, to examine the position of the country and to make recommendations to His Majesty's Government in the United Kingdom as to possible forms of future government to be put before the people at a national referendum. The Committee feels, however, that in order to accurately estimate the changes which have taken place since 1934, it is necessary for us to extend the scope of our survey and investigations beyond that period. Because it is obvious that if we are properly to estimate the changes which have occurred in our financial and economic set-up, it is highly important that we have some knowledge of the conditions which existed prior to these changes — and to the events and happenings which brought them about. We have given some thought as to how far back we should go for the commencement of our survey, and have decided for reasons which we will give later on that the fiscal year 1909-10 should be our starting point. 1. The following is a statement of the revenues and expenditures of the country from the years 1909-10 to 1919-20, both inclusive: Year Revenue Expenditure 190SMO $3,447,988 $3,137,774 1910-11 3,527,126 3,354,746 1911-12 3,736,455 3,524,652 1012-13 3,919,040 3,803,561 1913-14 3,618,329 3,920,178 1914-15 3,950,790 4,008,622 1915-16 4,600,271 4,110,885 1916-17 5,206,647 4,554,890 1917-18 6,540,082 5,369,454 1918-19 9,535,725 6,766,430 1919-20 10,597,561 9,247,006 Total $58,680,014 $51,798,198 An examination of these figures shows that for the five years preceding the outbreak of World War I, the budget was balanced and for that particular period the country's finances showed a surplus of approximately $500,000, whilst the total surplus for the full 11 fiscal years, 1909-1920, amounted to nearly $7 million. The total public debt of the colony in 1909 was approximately $27 million, and at the end of the fiscal year 1919-20 the debt amounted to approximately $43.5 million. Of the total borrowings over the period referred to, $4 million was used for the construction of branch railways, whilst the other $12 million was used primarily for the maintenance of the Royal Newfoundland Regiment during the period of World War I, and for the re-establishment of many of our returned sailors and soldiers upon demobilisation.

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NATIONAL CONVENTION

The following are the trade returns for the period under review: Year Imports Exports 1909-10 $12,799,696 $11,824,997 1910-11 13,383,910 11,975,747 1911-12 14,733,499 13,874,809 1912-13 16,012,365 14,672,889 1913-14 15,193,726 15,134,543 1914-15 12,350,786 13,136,880 1915-16 16,427,336 18,869,493 1916-17 21,318,310 22,381,762 1917-18 26,892,946 30,153,517 1918-19 33,297,184 36,784,616 1919-20 40,533,388 34,865,438

Total $24,624,693 25,359,657 28,608,308 30,685,254 30,328,269 25,487,666 35,296,829 43,700,072 57,046,463 70,081,800 75,398,826

Analysing these figures, particularly for the five-year period prior to the outbreak of World War 1, we notice that each year shows a substantial increase in our import and export business. We notice that the general trade of the country increased by over 25% between the years 1909-10 and 1913-14. This particular period may be counted as one of general stability. Our fisheries were in good shape, branch railways had been helpful to a considerable degree in the stimulation of business, and the Grand Falls development, begun in 1906, had come into production in 1910 and was a great source of earning power to the people of the country generally. The iron mines at Bell Island exported during the same period around 9.5 million tons of ore at an approximate value of some $20 million. With the exception of the year 1914-15, which covers the outbreak of hostilities in Europe, the other six years consistently show an increase in the general trade of the country. During this particular period (1914-15) world conditions were paralysed and trade in almost all countries of the world became temporarily chaotic. However, the following years show a marked improvement in our general trading, but particularly noticeable were the sharp advances in the prices obtained for our fishery products. All through the period of World War I there existed a continuous demand for the products of our mines, forests and fisheries, and it will be noticed that the total trade values increased enormously — from some $25 million in 1914-15 to over $75 million in 1919-20. This enormous advance in our total trade was caused by the unprecedented prices obtained for all our products of the sea, and whilst the prices obtained for all food products were unusually high, the records show that our fishery products increased in greater ratio than any other world food product. During these years our people were able to reap the harvest of the sea and ice-floe almost undisturbed by war conditions. It is also interesting to know that during the period under review the savings of our people both in the government Savings Bank and the Canadian chartered banks rose from $8.5 million in 1909 to over $20 million in 1920. Concluding our review for the period from 1909-10 to 1919-20, we find a surplus on ordinary account of revenue over expenditure of around $7 million. Our national debt increased over the same period by $16 million and the cost of World War I became a capital charge on the country, it having cost Newfoundland over $13 million, leaving us an annual obligation for pensions to our returned servicemen of over $600,000. 2. Let us now review the period from 1920-21 to 1932-33, both inclusive. The following is a statement of the revenues and expenditures of the country from the years 1920-21 to 1932-33, both inclusive: Year Revenue Expenditure 1920-21 $ 8,438,039 $ 10,951,488 1921-22 8,269,680 9,127,542 1922-23 8,876,772 9,552,301

REPORTS AND PAPERS 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 Total

8,401,669 9,783,188 9,752,551 8,932,435 9,466,005 10,025,649 11,579,214 9,655,640 7,931,047 8,085,666 $119,197,555

371 10,022,137 9,436,185 9,865,167 10,533,400 10,740,925 11,132,822 11,434,312 12,898,933 11,960,386 11,339,442 $138,995,040

It will be seen from this statement of revenues and expenditures on ordinary account that the deficits accruing each year amounted to a total of $ 19.75 million, or an average annual deficit of over $1.5 million. During the same period the government raised loans on the credit of the country of $54 million, less approximately $11 million, which was used for the refunding of loans maturing; thus leaving a net amount of loans actually raised of approximately $43 million. It will be remembered that during 1931, when bids were invited for a proposed loan of $8 million, that no tenders were received and consequently it became necessary during the next two years to secure temporary loans from the banks, and the British and Canadian governments, which amounted to roundly $8.5 million. Therefore the total loans raised from 1920-21 to 1932-33 amounted in all to some $52 million which, when added to our public debt of some $44 million at the end of the fiscal year 1919-20, made our total national debt on June 30,1933, roundly $98.5 million. The deficits incurred between the fiscal years 1920-21 and 1932-33, amounting to $19.75 million, were paid from the proceeds of the loans raised between these dates; and consequently left a balance of roundly $32 million to the credit of these loans. This brings us to the consideration of the operations of the Railway and its subsidiaries. After the cessation of hostilities in 1919-20, the Railway, which for over a quarter of a century had been operated by the Reid Newfoundland Company, found itself in financial difficulties which necessitated government action. This resulted in the appointment of a government commission to supervise and finance its maintenance and operation. The entire railway system, together with steamers and dry dock, were finally acquired by the government in 1923 for the sum of $2 million. The railway at that time was in a practically hopeless condition. It had been in operation for over a quarter of a century and the whole system was badly run down. Originally built with only 50 pound steel, its rolling stock practically worn out because of unusual traffic during the war period of 1914-18, one might say that the whole system called for renewal. This involved a capital expenditure of many millions of dollars, which were spent on the rerailing of the entire cross-country road-bed with 70 pound steel, the purchase of new rolling stock and the acquisition of the steamer Caribou for use on the Gulf service. During the summer of 1924 the wooden dry dock was found to be in a very dilapidated condition and the possibility of its total collapse by no means was exaggerated. This situation was met by the construction of a new concrete dock and freight shed at a cost of over $2 million. We give herewith a statement which shows the total cost of the railway, steamships and dry dock from the year 1920-21 to the end of the fiscal year 1932-33. These expenditures cover both deficits and capital expenditure for the period under review: To December 31,1921, under a govt. commission $ 3,250,496.72 1922 ditto 930,349.72 1923 Purchased by government 2,000,000.00 1924 Deficit 6,519.44 1925 ditto 358,509.84

372

NATIONAL CONVENTION 1925 Capital expenditure 1926 Deficit 1926 Capital expenditure 1927 Deficit 1927 Capital expenditure 1927 Dock construction 1928 Deficit 1928 Capital expenditure 1929 Deficit 1929 Capital expenditure 1930 Deficit 1930 Capital expenditure 1931 Deficit 1931 Capital expenditure 1932 Deficit 1932 Capital expenditure 1932-33 Deficit Total Less surplus, 1923 Total deficits and capital expenditure, 1920-21 to 1932-33

1,843,523.41 743,797.28 1,403,555.04 617,675.56 959,616.59 2,051,148.86 446,544.43 396,161.08 387,617.16 1,427,866.70 380,493.97 1,064,721.68 709,608.04 444,005.06 339,032.56 71,401.53 214,332.00 $20,046,976.67 163,175.99 $19,883,800.68

We already have pointed out that the deficits of the colony, exclusive of the Railway, for the period from 1920-21 to 1932-33, which amounted to a total of $19.75 million, were paid from the proceeds of total loans raised during the same period, which loans amounted to $52 million. This, therefore, left approximately $32 million to the credit of these loans and from that amount was paid the deficits and capital expenditure of the railway, steamships and dock—the latter deficits amounting to roundly $20 million — thus leaving an amount to the credit of these loans of roundly $12 million. This latter amount was expended on highroads, roads and bridges; the taking over of the Newfoundland Hotel, which had been guaranteed by the government for the amount of $450,000 as to principal and interest; and some $3 million all told had been used for the purpose of providing able-bodied relief to our people, which amount was provided out of these loans. The Committee wishes to point out that of the total national debt of the country as at June 30,1933, the greater portion of such debt carried interest charges of more than 4% per annum. For the information therefore of the Convention, as well as the country, we give the following detailed information regarding these outstanding loans: Position of outstanding loans as at June 30, 1933: $ 1,581,666.66 18,905,060.00 6,041,352.29 49,941,693.30 15,800,000.00 6,000,000.00 Total $98,269,772.25

@3% @3*/2% @4% @5% @5l/2% @6l/2%

We also give herewith the annual interest charges on our public debt for each year from 1920-21 to 1932-33, both inclusive: 1920-21 $ 2,012,791.99 1921-22 2,492,207.72

REPORTS AND PAPERS 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33

373 2,748,892.85 3,061,257.23 3,128,224.96 3,381,706.09 3,538,785.22 3,841,922.65 3,894,939.58 4,159,800.49 4,328,128.66 4,731,571.79 5,113,145.28 $46,433,374.51

It will be seen therefore that of a total expenditure on ordinary account of roundly $139 million for the period under review, over $46 million was paid in interest charges — an average annual charge of over $3.5 million. Further, it will be seen that the total interest charges paid over a period of 13 years amounted to almost 50% of our total outstanding indebtedness as at June 30,1933. With further reference to interest charges, it should be realised that during the early twenties high interest rates were being paid for money, and at no time was any loan raised during the period under review at a rate less than 5%. It also must be borne in mind that whilst Canada and Great Britain introduced legislation for the purpose of reducing their national interest charges, no determined effort was made by any of our governments to do so. When such legislation was enacted in 1933-34 it resulted in reducing these interest charges by the sum of around $2 million annually. We previously have stated in this report that the cost of World War I from the period 1914 to 1919 amounted to some $13 million. This information has already been outlined in the section of our report referring to government operations from 1909 to 1920. In addition to this capital expenditure we must not overlook the fact that World War I had been a continuous source of expense, and for the purpose of giving the Convention as much information as possible, we herewith give a statement showing the annual pensions paid our returned servicemen from 1919-20 to 1932-33, both years inclusive: 1919-20 1929-21 1921-22 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33 Total — 14 years

$ 555,065.60 875,885.64 547,129.52 558,228.75 573,221.61 594,499.27 626,559.64 618,835.08 620,747.74 642,891.44 633,832.98 644,841.66 650,746.61 570,139.94 $8,712,625.48

The following is a statement of imports and exports for each year from 1920-21 to 1932-33, both years inclusive:

374

NATIONAL CONVENTION Year 1920-21 1921-22 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33

Imports $28,909,727 18,209,853 19,321,824 27,677,182 36,404,674 27,552,305 25,813,871 27,637,193 29,237,381 31,871,151 25,261,701 18,135,631 15,166,868

Exports $22,441,267 19,478,417 20,956,863 21,071,571 23,590,186 27,563,213 30,839,859 33,644,619 36,797,703 40,051,959 33,537,569 26,689,476 24,475,032

Total Trade $51,350,994 37,688,270 40,278,687 48,748,753 59,994,860 55,115,518 56,653,730 61,281,812 66,035,084 71,923,110 58,799,270 44,825,107 39,641,900

For the same period our exports of salt codfish were as follows: Year 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31 1931-32 1932-33

Quantity 1,506,265 (quintals) 1,301,832 1,181,605 1,397,513 1,600,930 1,609,243 1,364,253 1,327,957 1,167,698 1,113,606 1,208,144

Value $10,209,821 8,595,299 10,520,712 12,180,569 12,093,064 11,665,753 11,849,879 11,889,580 7,790,193 5,036,715 5,124,493

From 1924 to 1931, both years inclusive, the mines at Bell Island exported 9.25 million tons of iron ore valued at $19.5 million. Of this amount around two-thirds were shipped to Germany, around 100,000 tons to Great Britain, and the balance to Canada. The Buchans Mining Company, which began development of its properties during the summer of 1927, came into production a year later and from 1929 to 1931 exported 258,965 tons of ore concentrates at a gross value of $6,170,209. With the exception of some 14,000 tons, all this product was shipped to the European markets. The following is a statement of paper products exported from Grand Falls from 1923 to 1931, both years inclusive: Year 1923 1924 1925 1926 1927

Tons

Value

Year

Tons

Value

58,888 59,440 67,264 80,145 81,225

$ 5,075,755 5,225,170 5,748,071 5,768,319 5,951,411

1928 1929 1930 1931 Total

87,045 90,859 106,577 110,535 741,978

$ 6,387,916 6,123,676 7,139,292 6,864,697 $54,284,307

The Corner Brook mill, the construction of which began in 1923, came into production during the

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summer of 1925, and the following is a statement showing the amount of paper products shipped, as well as the values, from 1925 to 1931, both inclusive: Year 1925 1926 1927 1928 1929 1930 1931 Total

Tons 17\842 101,218 106,835 133,925 156,342 163,463 177,030 856,655

Value $ 1,159,729 6,579,156 6,945,421 6,319,412 8,598,786 8,990,444 9,833,188 $48,426,136

The above statistics show that from 1923 until 1931, approximately 1,600,000 tons of paper products were manufactured, which had a gross value of slightly over $100 million. We are conservative in estimating that the total earnings accruing to the people of Newfoundland from this important industry during the period referred to amounted to over $30 million. These figures are based on the wages paid during that time. General Review, 1920-21 to 1932-33. It was in the early part of this period that Newfoundland began to feel the first tremors of the upheaval that was beginning to shake the financial structure of the bigger countries of the world. This post-war depression was something from which neither our smallness nor our isolation could protect us. It was a threat which even the very best government or the best brains could not combat. During the year 1919-20 the total trade of the country had amounted to over $75 million. By 1922-23 this had declined to just over $40 million, or a decrease of $35 million. During the period of World War I, the prices paid for our fishery products were the highest in history. These prices suddenly slumped during the year 1920, and for a period the main industry of the country was threatened with total collapse. Prices paid for our general imports had been unusually high, as practically no price control had been in effect during the period of hostilities. Merchants found themselves carrying stocks of all kinds at costs which were no longer realisable, and which a declining earning power no longer could afford to purchase. The prices procurable for our fishery products were reduced further owing to the decline in the pound sterling which had been the main medium of exchange for the sale of our fishery products in the principal markets of Europe. At one time the pound sterling had dropped from a par of $4.86 to the pound to around $3.30, a reduction of over 30%. This state of affairs continued for two or three years, resulting in widespread hardship in many sections of the island. Owing to lack of purchasing power, revenues dropped sharply and additional expenditures became necessary; necessitating the raising of loans for the purpose of creating work in order to relieve this serious condition. In 1923, the critical situation in which the whole world had been floundering since the end of World War I began to readjust itself, and Newfoundland was most fortunate at this particular time in securing the development of the Corner Brook industry, which was instrumental in giving much needed employment to many thousands of our people. We find that the trade statistics began to rise again in 1923-24 and gradually increased yearly until in 1929-30 the total trade of the country reached a figure of over $70 million. This gradual increase in business was brought about by the increase in export of our paper products, the fisheries became more stabilised, and prices obtained for this product increased considerably. During the year 1927 by decision of the British Privy Council, Newfoundland was awarded 110,000 square miles of Labrador territory. Our ownership of this great national asset had been under dispute with the federal government of Canada as well as the provincial government of Quebec for many years. By this decision Newfoundland acquired probably her greatest potential asset, and the

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NATIONAL CONVENTION

full value of its mines, forests and water power are now being recognised by investors from Canada, Great Britain and the United States. During this particular period a policy of highroads was inaugurated also, which called for the expenditure of many millions of dollars, whilst the rerailing of the railroad and the construction of the dry dock created further employment, with a resultant rise in annual revenues. We find that in 1929-30 the budget balanced for the first time in nearly ten years, and the revenue reached a record of around $11.5 million. This, of course, did not include the operations of the railway, dock and steamships, and we herewith give the revenues and expenditures of this branch of the public utilities of the country for the period 1923 to the end of December, 1933: Year 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933

Revenue $ 1,780,011.13 3,231,852,58 3,371,200.38 3,009,290.19 3,057,809.88 3,200,908.50 3,396,676.35 3,714,606.18 3,187,157,66 2,309,086.68 2,208,565.73 $32,467,165.26

Expenditure $ 1,616,835.14 3,238,371.92 3,729,710.22 3,753,087.57 3,675,485.44 3,647,452.93 3,784,293.50 4,095,100.15 3,896,765.70 2,648,119.24 2,422,897.73 $36,508,119.54

The figures just given for the operations of the railway, steamers and dry dock for a period of 11 years show a total deficit for its operation of approximately $4 million, or an average annual deficit of roundly $400,000. This particular branch of government employed during this period around 1,800-2,000 people, with an average annual wage of approximately $1.5 million. These deficits do not include capital expenditure or cost of purchase, or approximately $4 million spent on the system during the period of administration by government commission from 1920-23. Whilst the cost of this public utility may seem to many as entirely too high, it must be borne in mind that the railway had been instrumental in opening up the country, and it is questionable whether or not the two great pulp and paper industries at Grand Falls and Comer Brook could have been possible if no railway existed. As previously stated, the year 1929-30 saw the budget balanced on ordinary account for the first time in a decade — the railway, dock and steamships were in fairly good operating condition, and it might be said that the outlook for continued stability in the country was in sight; but out of a clear sky another financial crash enveloped the world. This demoralisation of world conditions began in the United States in the autumn of 1929, quickly spread to Canada and the effect of this financial disaster crept into the Newfoundland picture in 1931. During 1930 it is interesting to note that the loan of $5 million which was raised had been the most successful, as to returns, of any loan raised in the history of Newfoundland. However, in 1931, when the government of the island called for tenders on a proposed loan of some $8 million, no bids were forthcoming; and as the financial outlook for 1931-32 indicated a substantial deficit on ordinary account, the situation became acute. The Bank of Montreal always had acted as the country's fiscal agents in the raising of loans, and some of those who participated in underwriting the loan of 1930 now found themselves in difficult financial circumstances. By now the financial collapse originating in the United States in 1929 had spread to Canada and Great Britain. The pulp and paper business which had been overexpanded in Canada was in a state of practical bankruptcy, and many of the large companies were forced to curtail operations and, in some instances, forced into liquidation. Prices on

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wood products also slumped, and this seriously affected the two industries in Newfoundland at Grand Falls and Corner Brook. The United States being a creditor nation, the Canadian dollar was at a discount of 20%; whilst the pound sterling, again as in 1920-21, depreciated around 25%. Our fish markets, both in South America and Europe, similarly were affected; with the result that prices obtained for our fishery products declined around 40%. On June 30, 1931, a syndicate of Canadian banks doing business in the country advanced a temporary loan of some $2 million for the purpose of meeting our semi-annual interest charges, and again on December 31, 1931, another amount of $2 million was advanced by these banks — which loan was guaranteed by the British and Canadian governments. This loan was also for the purpose of paying the semi-annual interest due on our national debt. Again, on the same dates in 1932 and 1933, the necessary amounts were advanced by the Canadian banks, and the British and Canadian governments, for the purpose of paying the interest charges on our national debt. No attempt whatever was made to refund our debt at a lower rate of interest. During the autumn of 1931 the Newfoundland government was approached by the Canadian banks doing business in the country, requesting legislation to make Canadian currency legal tender in Newfoundland, and have us abandon the gold standard. Up to this time the Canadian banks were compelled to pay Newfoundland depositors in gold on demand. Great Britain and Canada both had abandoned the gold standard, and the United States being the creditor nation, gold flowed into that country and was depleting both the Canadian and British reserves. Newfoundland abandoned the gold standard on December 31,1931. All these things, beyond the control of any Newfoundland government, created widespread unrest and unemployment all over the country. The demand for the products of our paper mills declined rapidly, and hundreds of our people were thrown out of work. The mines at Bell Island also were affected seriously because of the lack of demand for steel. Our fisheries were probably the most seriously affected of all, and prices dropped to the lowest point for nearly a quarter of a century. During the summer of 1932, the Prime Minister and Minister of Justice attended the Ottawa Conference, and were given an assurance by the British Prime Minister and the Secretary of State for Dominion Affairs that on their return to England, they would use their efforts to ensure to Newfoundland a substantial order for Bell Island ore. In turn, Newfoundland agreed to grant certain tariff preferences on British goods. Nothing materialised and very little, if any, of our iron ore ever found its way to Britain until within the past two or three years. In the meantime the government of the day requested the British government to appoint a royal commission to make an investigation into the financial and economic condition of Newfoundland. The commission was headed by Lord Amulree and its other two members were Sir William Stavert, a former Assistant General Manager of the Bank of Montreal, and Mr. C.A. McGrath, a Canadian industrialist. The commission began its work during the spring of 1933 and its report was made public in November, 1933. This commission recommended the present form of Commission of Government. The House of Assembly met on November 27, 1933, and an address was introduced making representation to the British government to appoint a commission of six, with the Governor as Chairman, to administer the affairs of Newfoundland. Three of the commissioners were to be Newfoundlanders, the other three were to be British. After five days of session the resolutions were passed by the House of Assembly and sent to the British government. Under an act passed by the British government during December, 1933, these resolutions were adopted, and the Commission of Government took over the administration of our affairs in February, 1934. The British government assumed responsibility for our finances until such time as the island became self-supporting. In concluding our findings for the period of government from 1920-21 to 1932-33, we find the following results: that despite all the tribulations and set-backs, our country stood up under the stress reasonably well. We find that for the period mentioned the savings of our people in the government and Canadian banks increased from $20 million to $25 million. We find that but for our obligation

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NATIONAL CONVENTION

incurred through our participation in World War I, there practically would be no deficit on ordinary account. The reason for this was that interest charges on our borrowing of $13 million at 5.5% per cent per annum, amounting to over $700,000 yearly, would have been eliminated; whilst in addition, the producing of annual pensions for our ex-servicemen of over $600,000 would not be necessary. We find that if steps had been taken to reduce our interest charges, sufficient saving could have been affected to pay the deficits for which we obligated ourselves by the acquisition of the railway during 1923. This deficit, as our statistics show, then would have averaged less than $500,000 annually, which would have meant a reduction in interest from an average of 5% to an average of not more than 4%. To summarise the period under review, we feel that future historians in viewing this era in our political lives will, if they are impartial, concede that no finger of criticism can be pointed at Newfoundland for her conduct in the face of the situation which then existed. With the same courage and fortitude with which our forefathers had faced their other historic disasters, the people of this time tightened their belts and carried on. And it ever must be borne in mind that in addition to the normal handicaps of dwindling revenues, we had to carry also the additional load of the extra obligations incidental to our participation in the war of 1914-18. Looking back now, one wonders why some effort was not made at that time to obtain a reduction in our interest rates, or an adjustment of our national debt. But apparently anything in the nature of default or compromise was not considered, and so, for a period of 13 years we see in the revenues and expenditures a tragic reflection of the struggle of our country to battle her way out of her financial difficulties. 3. Review of Period Covering the Years 1933-34 to 1939-40. For the first seven months of the fiscal year 1933-34 the affairs of the country were administered by the Alderdice government and, in order that the Convention and the country generally may understand clearly the terms and conditions under which Commission of Government was instituted, we give herewith an exact copy of the resolutions and the annex to the resolutions which passed the House of Assembly and the Legislative Council on November 29,1933: Be it resolved that a humble Address be presented to His Majesty the King in the following words: To the King's Most Excellent Majesty: Most Gracious Sovereign: We, Your Majesty's most dutiful and loyal subjects, the Legislative Council and Assembly of Newfoundland, humbly approach Your Majesty praying that — Whereas in the present emergency Your Majesty's Island of Newfoundland is unable from its own resources to defray the interest charges on the public debt; And Whereas the Royal Commission appointed by Your Majesty's Warrant bearing date the seventeenth day of February, 1933, to examine into the future of Newfoundland, has recommended that for the time being, until such time as the Island may become self-supporting again, the administration of the Island shall be vested in His Excellency the Governor acting on the advice of a specially created Commission of Government and that during such period Your Majesty's Government in the United Kingdom should assume general responsibility for the finances of Newfoundland and should, in particular, make such arrangements as may be deemed just and practicable with a view to securing to Newfoundland a reduction in the present burden of the public debt; And Whereas Your Majesty's Government in the United Kingdom have signified their readiness, subject to the approval of Parliament, to accept the recommendations of the Royal Commission, and have made detailed proposals for carrying those recommendations into effect; Now, Therefore, Your Majesty may be graciously pleased to suspend the Letters Patent under the Great Seal bearing date at Westminster the Twenty-eighth day of March, 1876, and the Letters Patent under the Great Seal bearing date at Westminster the Seventeenth day of July, 1905, and to issue new Letters Patent which would provide for the administration of the Island, until such

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time as it may become self-supporting again on the basis of the recommendations which are contained in the Report of the Royal Commission, and of which a summary is set out in the Annex hereto. And Further that Your Majesty may be graciously pleased to cause to be laid before the Parliament of the United Kingdom at its present session such a measure as may enable them to be given immediate effect. Annex Extract from the report of the Royal Commission appointed by His Majesty's Warrant bearing the date 17 of February, 1933. 634. (4) We therefore recommend that the Newfoundland Government, recognising that it is impossible for the Island to surmount unaided the unprecedented difficulties that now confront it, should make an immediate appeal for the sympathetic co-operation of Your Majesty's Government in the United Kingdom in the adoption and execution of a joint plan of reconstruction, of which the following would be the main features: (a) The existing form of government would be suspended until such time as the Island may become self-supporting again. (b) A Special Commission of Government would be created which would be presided over by His Excellency the Governor, would be vested with full legislative and executive authority, and would take the place of the existing Legislature and Executive Council. (c) The Commission of Government would be composed of six members, exclusive of the Governor, three of whom would be drawn from Newfoundland and three from the United Kingdom. (d) The Government Departments in the Island would be divided into six groups. Each group would be placed in the charge of a Member of the Commission of Government who would be responsible for the efficient working of the Departments in the group, and the Commission would be collectively responsible for the several Departments. (e) The proceedings of the Commission of Government would be subject to supervisory control by Your Majesty's Government in the United Kingdom and the Governor-in-Commission would be responsible to the Secretary of State for Dominion Affairs in the United Kingdom for the good government of the Island. (f) Your Majesty's Government in the United Kingdom would, for their part, assume general responsibility for the finances of the Island until such time as it may become self-supporting again, and would, in particular, make such arrangements as may be deemed just and practicable with a view to securing to Newfoundland a reduction in the present burden of the public debt. (g) It would be understood that, as soon as the Island's difficulties are overcome and the country is again self-supporting, responsible government, on request from the people of Newfoundland, would be restored. This legislation, after being adopted by the House of Assembly and the Legislative Council, was forwarded to the British government, and during December, 1933, the Parliament of the United Kingdom passed the necessary legislation to cover the Newfoundland resolutions. No amendment whatever was made to these resolutions. When Prime Minister Alderdice delivered his budget speech on June 29, 1933, he made the following forecast as to revenues and expenditures for the year 1933-34: Revenue Expenditure

$ 8,819,338 10,964,605

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NATIONAL CONVENTION

This would mean an estimated deficit of $ 2,145,267. He included on the expenditure side of his accounts an amount of $5,200,000 for interest on the public debt, based on the rates of interest at that time prevailing. However, it is noted that when the legislation of November and December 1933 came into effect, the annual interest on the public debt was reduced by an amount of approximately $2 million. Legislation covering this reduction had been passed in November, 1933. When the commission form of government took over our affairs in February 1934, they carried on for the balance of the fiscal year, which ended on June 30,1934, with the estimates of expenditure on which their predecessors had been working. We find at the close of that fiscal year the following results as to revenue and expenditure: Revenue Expenditure Deficit

$ 8,745,195 10,273,730 $ 1,528,535

The above deficit was paid by a grant-in-aid totalling $2,930,974 advanced by the British government during the months of January, March and June, 1934. The total interest charges for this year amounted to $3,108,220 as against the budget estimate of $5,200,000. The Commissioner for Finance in presenting his estimates of revenue and expenditure for the fiscal year 1934-35 made the following forecast: Revenue Expenditure Deficit

$ 8,102,104 10,294,604 $ 2,192,500

We find that the actual revenue amounted to $9,511,134 and expenditure, $11,634,872, which left a deficit of $2,123,738. This deficit was met by a grant-in-aid from the Government of the United Kingdom of £353,716-13-6, or approximately $1.75 million. In addition, the Colonial Development Fund advanced $1,081,845.64. With reference to the Colonial Development Fund, during the year 1934-35 it is shown that a sum of £404,500 was set aside for Newfoundland and was allocated as follows: (1) For roads (loan £100,000) (2) Fishery development (loan £100,000) (3) Land settlement (loan £100,000) (4) Beaver farm and game reserve (loan £ 4,500) (5) Port-aux-Basques paper terminal (loan£ 60,000) (6) Labrador development (loan£ 40,000) These loans were free of interest for the first three years and an interest charge of 3.5% per annum thereafter. During the year 1934-35, as already outlined, the sum of £237,600 was expended, equivalent to $1,081,845.64. The following are the details of this expenditure: Fisheries: Roads:

Labrador schooners, western boats and small boats Retreading of main roads, concrete bridges, additional plant, reconditioning of roads Railway: Wharf at Port-aux-Basques Land settlement: Geodetic survey: Labrador development (loan): Total expenditure from Colonial Development Fund:

$ 342,597.62 253,775.70 290,269.75 100.00 1,102.57 194,000.00 $1,081,845.64

This particular year (1934-35) also saw the beginning of a land settlement plan, and some $190,000 was spent out of the vote for Natural Resources for the establishment of Markland. Interest charges

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on the national debt for this year amounted to $3,032,728. 1935-36: The total revenue and expenditure for this year is as follows: Revenue $ 9,744,016 Expenditure 13,008,206 Deficit $ 3,264,190 Of the total expenditure of over $13 million, $1,009,813 was supplied by the Colonial Development Fund and was expended on the following projects: Labrador schooners, western boats and small boats Land settlement Beaver farm and game reserve Geodetic survey Co-operative expert Roads retread Port-aux-Basques wharf Railway Road construction outside Avalon Peninsula Total

$ 136,873.80 235,000.00 5,392.40 10,790.00 4,463.65 217,686.68 46,073.75 168,637.00 273,395.56 $1,098,312.84

This year (1935-36) another £205,000 was set aside from the Colonial Development Fund for the construction of roads outside the Avalon Peninsula, and over $270,000 of the amount was spent. Over $200,000 was expended on the retreading of roads, and out of the total of over $490,000 spent on roads, approximately $185,000 was used for the purchase of plant and machinery. In addition to the amount of $190,000 set aside during 1934-35 for the Markland scheme, another $100,000 was spent during this year (1935-36); making the total amount expended on this venture up to June 30, 1936, $297,302. During this year (1935-36) another land settlement scheme was inaugurated at Haricot and approximately $30,000 was disbursed in the construction of houses, barns, etc., as well as the purchase of machinery and clearing of land. Another $47,000 was spent in the development of a national park on the Salmonier Line. The total interest charges paid on our national debt for this particular year (1935-36) amounted to $2,992,403. Another grant-in-aid from Britain amounting to $1,469,928 was used for the purpose of paying the deficits on ordinary account. 1936-37: The revenues and expenditures for this year are as follows: Revenue $10,734,773 Expenditure 13,039,130 Deficit $ 2,304,357 These overexpenditures were met by a grant-in-aid from the British government of $1,547,169, and another advance of $832,356 from the Colonial Development Fund. Expenditure continued on the Markland venture and the total amount spent on this project up to June 30,1937, amounted to approximately $420,000. In addition the Haricot project was continued, and up to June 30, 1937, over $60,000 was expended. Other projects of a similar character were inaugurated at Lourdes, where $39,000 was spent; Brown's Arm, $53,000; Midland, $49,000; and a sum of around $18,000 was spent at Harbour Grace and Colinet. In all, up to June 30, 1937, some $700,000 had been spent in rural reconstruction. During this year road construction continued outside the Avalon Peninsula—between Grand Falls and Badger, and Deer Lake and Corner Brook — and the sum of $575,437 was spent on the roads

382

NATIONAL CONVENTION

and bridges. The total amount expended on this scheme for two years amounted to $848,811 as at June 30,1937. It was during this year (1936-37) that the construction of the huge airport at Gander began. Under an agreement between the British and Newfoundland governments, five-sixths of the cost of the airport were to be for the account of Great Britain, and one-sixth for the account of Newfoundland. Out of a total expenditure of $ 1,100,000 during the year under review, $ 150,000 was provided by the Newfoundland government. This year (1936-37) interest charges on the public debt amounted to $3,068,329. 1937-38: This year showed the revenues and expenditures of the country as follows: Revenue $12,272,211 Expenditure 14,150,535 Deficit $ 1,878,324 This deficit was paid through a grant-in-aid of $189,477.50, and from balances standing to the credit of the treasury from previous advances and loans. A free grant of £4,400 ($21,950.50) was made by the Colonial Development Fund for a geodetic survey and the salary of a co-operative expert. This year the sum of $533,660 was spent on the Grand Falls to Badger road and the Corner Brook to Deer Lake road, making a total expenditure on these roads during the past two years of $1,382,050.15. The total number of miles of road built under this scheme was 53, and 18 concrete bridges were also constructed. This made an average of about $26,000 per mile. Out of this amount of grant, nearly $500,000 was spent for the purchase of plant and machinery — or at the rate of $10,000 per mile for every mile built. Over $40,000 was expended for gasoline and oil, and travelling expenses for the year 1937-38 came to approximately $26,000. Expenditure under the heading of Department of Rural Reconstruction eased somewhat this particular year to a figure of roundly $152,000, making the total expenditure on this scheme from its inception to June 30,1938, $838,587.03. During the year 1937-38 work on the Gander airport continued, and another quarter of a million dollars was spent by the Newfoundland government on this project; making our total expenditure up to June 30, 1938, approximately $400,000. Under the Loan Act of 1933, which was passed during the last session of our House of Assembly in November-December, 1933, for the purpose of reconverting our national loans, provision was made for a sinking fund of 1 % to become effective not later than July 1,1938. Sub-section 3 of section 3 of this particular act reads as follows: A Sinking Fund, equivalent to one per cent per annum of the total nominal amount of Stock, shall be established under the control of Trustees to be appointed by, or with the approval of, the Treasury. The first payment to the Fund shall be made at a date to be approved by the Treasury, not being later than the first day of July 1938, and the Sinking Fund moneys and the income arising therefrom shall, subject to payment thereout of the expenses of management of the Fund, be applied in purchase of Stock, or be invested in such other Securities as may, from time to time, be approved by the Treasury. The total nominal amount of the stock to which this sinking fund is applicable is £17,790,000. The amount of the annual sinking fund is £177,950. The Bank of England was appointed trustees of this fund and during the year 1937-38 the first payment was made which amounted in dollar exchange to $892,690. In addition to the above sinking fund, the annual interest on our public debt amounted during 1937-38 to $2,988,108. We also wish to draw the attention of the Convention to an act passed by the Commission of Government on May 10,1937. This act was termed "An Act to amend the Newfoundland Savings Bank Act, 1934." Sub-sections 1 and 2 of this act read as follows:

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1. The profits of the Bank now existing, and such as shall arise from time to time, shall be paid into a general reserve fund. 2. The said general reserve fund shall be paid over to and invested by and managed on behalf of the Bank, by the Crown Agents for the Colonies, subject to the general directions of the Governor of Newfoundland in Commission. The terms of this act never were carried out and no general reserve fund was properly set up. The Commission of Government in reply to a question which sought the object of the legislation, made no reply; but it is clearly evident that sub-section 2 was intended for the specific purpose of transferring the reserve fund of the Bank into the hands of the Crown Agents in London for management and investment. This act, although in effect until December, 1939, was for some inexplicable reason wholly ignored until its repeal in December, 1939. 1938-39: The revenues and expenditures for this year are as follows: Revenue $11,220,473 Expenditure 15,289,793 Deficit $ 4,069,320 Over $1.25 million was spent during this year on roads and bridges. The Department of Natural Resources increased its expenditure by over $350,000 and the Department of Public Health and Welfare registered another increase of over $250,000. Grants-in-aid from the United Kingdom amounted to $4,337,475, and a further advance of $107,112 was received from the Colonial Development Fund, which was spent principally on rural reconstruction schemes, which amounted to approximately $1 million from their inception up to June 30,1939. During this fiscal year (1938-39) two most important pieces of legislation affecting the future of the country were adopted by the Commission of Government. These were: (1) the agreement between the government and the Bowater's Newfoundland Pulp and Paper Mills Limited; (2) an agreement between the Newfoundland government and the Labrador Mining and Exploration Company Limited. The agreement between the Bowater company and the Government of Newfoundland gave the company most generous concessions, particularly with regard to the export of raw wood. This matter has been dealt with extensively in the Report of the Forestry Committee. Further comment on this enactment will be found later on in this report. During this year (1938-39) an agreement was entered into between the Newfoundland government and the Labrador Mining and Exploration Company Limited, whereby the government gave certain concessions to this company for the purpose of exploring certain areas in Labrador for mineral products. The company was to expend a minimum of $50,000 annually, and after this exploratory work had been concluded, the company had the right to apply for mining licenses over an area not exceeding 1,000 square miles; and, provided the company had performed its part of the agreement, the government would be compelled to grant these licenses. Further, in this act, a clause was inserted which, in substance, also gave the Labrador company an option on the Grand Falls water-power for the purpose of developing this power in order to carry on its operations. This was during 1938. At that time there was no indication that this prospective mine adjoined a similar extension of mineral areas in the Province of Quebec. During the last couple of years this particular mining company has acquired mining claims in the Quebec portion of Labrador adjoining their properties in the Newfoundland-Labrador, and there is a possibility that the Labrador Mining Company may decide to develop the Quebec portion of their property only, leaving the Newfoundland portion idle; but, at the same time, using the Grand Falls water-power, located in Newfoundland territory, for the purpose of developing and operating the Quebec portion. This is a most serious situation and one which calls, we believe, for immediate attention and action on the part of the Commission of Government. The Commissioner for Natural Resources, when questioned by this Committee, practically admitted that our rights to this water-power had been given to the Labrador Mining Company through the legislation of 1938. The Grand Falls water-power on

384

NATIONAL CONVENTION

Newfoundland-Labrador is reputed to be one of the largest of its kind on the North American continent, and a survey made of its potentialities by the Aluminum Company of Canada in 1942, which survey has been perused by the Committee, indicates that the cost of its profitable development would be on a low scale. In the enactment of this legislation the interest of Newfoundland was not adequately protected, in that there has been no provision made in such legislation regarding the export of power, nor is there any provision whatever compelling the Labrador Mining Company to develop the Newfoundland mining claims in Labrador; and unfortunately the possibility exists that this company will use the potential assets of Newfoundland to develop the assets of Quebec, and tie up their mining claims in Newfoundland-Labrador for an indefinite period. Further, even if such water-power is developed by this company, the royalty they are liable to pay is practically negligible — a mere 15 cents per horsepower. Under such circumstances, the Finance Committee thinks there was a definite error of judgement in the actions of the Commission of Government in this respect; and in the interests of the country as a whole, this Committee urges that immediate action be taken by the government to introduce legislation prohibiting the export of power from Newfoundland-Labrador except under conditions advantageous to Newfoundland. During the year 1938-39 the Newfoundland government expended another $200,000 on the Gander airport. The total interest and sinking fund on the public debt amounted to $3,748,500 for the year 1938-39. 1939-40: The early part of this fiscal year witnessed the outbreak of World War II, and again, for the second time in a quarter of a century, Newfoundland was to play an important part in another world conflict. The revenues and expenditures for this particular fiscal year were as follows: Revenue $12,571,015 Expenditure 17,466,914 Deficit $ 4,895,899 The value of the pound sterling again dropped to $4.45. This year (1939-40) grants-in-aid amounting to $1,970,662 were received from the British government. A loan of $1.5 million was raised locally at 3.75% and a further loan of $874,925 was advanced by the Dominions Office. Advisors visited the country from Great Britain, which cost the country over $7,000. A further $200,000 was expended on rural development, which brought the total amount expended on this scheme up to $1,178,156. The Gander airport, which had been under construction for two or three years, was now practically finished; and up to this time had cost Newfoundland $672,000, as a further amount of $71,694 had been expended during the year 1939-40. The grand total cost of the airport up to the end of June, 1940, amounted to approximately $4 million. The total amount of interest paid on our national debt for this year (1939-40) amounted to $2,667,492, whilst the amount paid in sinking fund amounted to $795,660. The reduction in amount of interest and sinking fund paid during this year, as against the previous year, was brought about by a reduction in the value of the pound sterling of approximately 10%. During the year under review the construction of a new wing to the St. John's General Hospital began, and an amount of $47,000 was spent. In addition, another $110,000 was spent on the nurses' home, boiler house and architect's fees, etc. Considerable work was performed on roads and bridges. In this respect $281,000 was expended on improvement and reconstruction of roads and bridges, $675,000 on main road construction, and some $147,000 was spent on agricultural roads. In all, a total amount of over $1,130,000 was spent on these projects. During the year 1939-40 nearly $1 million was expended under the heading of the Fisheries Division. The largest single amount expended was $628,911 for assistance to the fishing industry,

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and a sum of around $147,000 was disbursed in connection with the Labrador herring meal and oil industry. Newfoundland Railway We have covered the years between 1933-34 and 1939-40 on the administration of government affairs, which do not include the railway, steamers or dock. Under separate headings we now give the earnings of the railway, steamers and dock, as well as the expenditures on each branch for each year now under review, 1933-34 to 1939-40, both inclusive: 1933-34:

Railway:

Revenue $1,466,933 Expenditure 1,627,444 Deficit $ 160,511 Steamers: Revenue $ 717,450 Expenditure 715,906 Profit $ 1,544 Dock: Revenue $ 389,516 Expenditure 368,164 Profit $ 21,352 Net loss on railway, steamers and dock operations amounted to $137,600. There was no capital expenditure on the railway, steamers or dock during this year. 1934-35:

Railway:

1935-36:

Railway:

Revenue $1,496,203 Expenditure 1,713,465 Deficit $ 217,262 Steamers: Revenue $ 804,603 Expenditure 658,368 Profit $ 146,235 Dock: Revenue $ 394,155 Expenditure 352,617 Profit $ 4T538 Net loss on operation of steamers, railway and dock amounted to $42,764, after making provision for bad debts and other incidental expenses. During the year 1934-35 an amount of $345,244 was expended on capital account. This amount was used mainly for the construction of dock facilities at Port-aux-Basques and the purchase of 25 new freight cars. Revenue $1,725,524 Expenditure 1,730,958 Deficit $ 5,434 Steamers: Revenue $ 700,616 Expenditure 679,881 Profit $ 20,735 Dock: Revenue $ 421,724 Expenditure 393,285 Profit $ 28,439 After making provision for interest on amount borrowed from the Colonial Development Fund as well as for pensions, etc., the railway, steamers and dock showed a net loss on operations for the year 1935-36 of $44,500. During this year (1935-36) $688,619 was expended on capital account. This money was used for the purchase of new rolling stock; the acquiring of the Northern Ranger for $317,500; 25 new freight cars for $54,000; and dock facilities at St. John's and Port-aux-Basques, $160,000.

386

NATIONAL CONVENTION

1936-37:

Railway:

Revenue $1,909,432 Expenditure 1,832,825 Profit $ 76,607 Steamers: Revenue $ 738,360 Expenditure 716,492 Profit $ 21,868 Dock: Revenue $ 376,457 Expenditure 355,457 Profit $ 21,000 After making provision for pensions, interest, etc., a profit was shown of $32,834. During this year (1936-37) a sum of $105,083 was expended on capital account, principally on rolling stock. 1937-38:

Railway:

1938-39:

Railway:

1939-40:

Railway:

Revenue $2,183,601 Expenditure 2,173,534 Profit $ 10,067 Steamers: Revenue $ 831,673 Expenditure 784,363 Profit $ 47,310 Dock: Revenue $ 488,287 Expenditure 459,378 Profit $ 28,909 After provision for pensions, interest and repayment of loans, the railway, steamers and dock operations showed a net loss of $73,824. During the year 1937-38 there was spent on capital account, $172,462, principally on rolling stock, buildings and the wharf at Port-aux-Basques. Revenue $1,915,297 Expenditure 2,133,208 Loss $ 217,911 Steamers: Revenue $ 765,862 Expenditure 712,492 Profit $ 53,370 Dock: Revenue $ 429,418 Expenditure 439,182 Loss $ 9,764 After making provision for interest, repayment of loans of $130,000, a net loss of $304,468 was shown. An amount of $266,918 was spent on capital account, principally for rolling stock. Revenue $2,121,854 Expenditure 2,213,700 Loss $ 91,846 Steamers: Revenue $ 925,104 Expenditure 799,551 Profit $ 125,553 Dock: Revenue $ 465,228 Expenditure 439,143 Profit $ 26,085 After provision was made for pensions, interest, etc., amounting to $142,000, a net loss for the year was shown, amounting to $89,982. During this year (1939-40) two new steamers were added to the fleet, which cost approximately $948,541. These boats were named the Burgeo and Baccalieu.

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Recapitulating the earnings and expenditures for the period from 1933-34 to 1939-40, we get the following: Railway: Total revenue $12,818,844 Total expenditure 13.425,134 Total Loss $ 606,290 Steamers: Total revenue $ 5,483,668 Total expenditure 5,067,053 Total Profit $ 416,615 Dock: Total revenue $ 2,499,557 Total expenditure 2,368,083 Total Profit $ 131,474 The recapitulation given shows that for the period 1933-34 to 1939-40, the railway, steamers and dock had a gross loss of $58,201. However, after we take into consideration interest on loans from Dominions Office, the Colonial Development Fund, repayments on these loans, as well as bad debts and contributions to pension fund, we find that the total net loss for this period amounts to $660,214. This is an annual average loss of around $95,000. It must be pointed out that prior to Commission of Government the annual subsidies paid the railway and steamers amounted to roundly half a million dollars. During the period under review the subsidy paid the Railway from the Department of Finance and the Post Office amounted to $250,000 per year. In other words, if the Railway Department had been receiving the same subsidy as it received, say, in 1931-32, it would have altered this financial picture from a loss of $660,000 to a profit of approximately $1 million. The statements given under this period do not include annual amounts spent on capital account and advanced from the treasury on account of the Colonial Development Fund and Dominions Office loan. For further information we give the following statement showing the amount spent by the Railway each year on capital account: 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

$ 345,244 688,619 105,083 172,462 266,918 948,541 $2,526,867

This concludes our review for the operations of the railway, steamers and dock from the year 1933-34 to 1939-40, both inclusive. The deficits were met by the Newfoundland treasury and, as outlined already, these amounted to $660,000. Newfoundland Hotel We will now give a statement of the operations of the Newfoundland Hotel from 1933-34 to 1939-40, both years inclusive. 1933-34: No account as to revenue and expenditure is shown in the Auditor General's Report for this particular year, but there is a vote under the heading "General Contingencies", amounting to $16,000 which was given the hotel as a grant-in-aid, and we are to assume therefore that this money was used to pay off the loss on operations for that year. For the following years the accounts are given as follows:

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NATIONAL CONVENTION Revenue

Expenditure

Bad Debts, etc.

Total Loss

$

$

$

$

1934-35 65,180.54 50,015.81 3,112.51 18,277.24 1935-36 109,107.53 119,002.94 11,238.14 1,282.73 1936-37 110,496.84 115,514.72 5,017.88 1937-38 128,440.19 130,598.80 238.20 2,396.81 1938-39 146,110.47 154,108.04 75.08 8,072.65 1939-40 141,013.17 150,508.76 283.48 9,779.07 The total of these deficits, which also includes the sum of $16,000 advanced as a grant-in-aid in 1933-34, amounts in all to $70,781.79. This is an average annual deficit of just a little over $10,000. Newfoundland Savings Bank We find that on June 20,1935 there was to the credit of depositors in the bank $2,090,510.17. The following are the details of deposits and profits for each succeeding year to 1939-40: 1935-36 1936-37 1937-38 1938-39 1939-40

Deposits held Profit for year Deposits held Profit for year Deposits held Profit for year Deposits held Profit for year Deposits held Profit for year

$2,310,473 33,078 2,931,530 32,803 3,538,610 36,118 4,396,066 45,728 4,548,954 54,557

Under this act of 1937 already referred to, a general reserve was to be established and the profits of the bank were to be paid to this general reserve. The Auditor General's Report of 1939-40 states that $252,453 was in this general reserve at the end of that fiscal year, but no special deposit account was created nor any securities purchased on behalf of this general reserve fund. The total assets of the bank include the reserve. Legislation was enacted in December, 1939, repealing the Bank Act of 1937, with regard to the transfer of the reserve fund to the Crown Agents in London for management. No monies ever were paid over to the Crown Agents from this reserve fund. Here is a statement of the assets of the bank as at June 30, 1940: Newfoundland government 3% stock Newfoundland government 3 3/4% war loan Dominion of Canada bonds Canadian National Railway bonds Commonwealth of Australia bonds Commonwealth of Australia stocks Government of New Zealand stocks St. John's Municipal Council bonds Public utilities companies — First mortgage bonds, Newfoundland First mortgage bonds, Canada Industrial companies, Newfoundland — First mortgage

$

171,333.34 43,376.35 1,302,243.98 68,075.00 1,027,025.00 379,404.53 418,532.84 24,062.50 203,186.25 97,050.00 733,607.50

389

REPORTS AND PAPERS Water company shares (interest guaranteed by Newfoundland government) Loans: St. John's Municipal Council Railway Employees' Welfare Assocn. Total Assets

47,960.00 1,600.00 38,000.00 $4,555,457.29

We will now give for general information a comparative statement of revenues and expenditures for the years 1933-34 and 1939-40. This statement will be under the various departmental headings and will not include in the expenditures a statement of interest charges: Revenue 1933-34 1939-40

$

$

Expenditure 1939-40 1933-~34

$

152,721 Finance 606,431 385,351 470,112 8,785,027 Customs 6,632,536 736,330 813,721 Posts and Telegraphs 576,135 10,034 867,942 1,672,461 Assessor of Taxes 1,557 ~ 22 House Affairs ~ 517,661 22,509 Education 482,788 Justice 17,232 12,079 197,554 -184,032 Natural Resources 143,647 -15,292 Agriculture and Reconstruction 589,633 11,632 274,785 Public Works 2,223,162 101,084 Public Health and Welfare 38,328 ~ ~ Board of Liquor Control 432,121 War Pensions 32,115 562,405 Colonial Development Fund Services 90,103 Secretary of State 56,408 704,537 Marine and Fisheries Labour 1,962 Less 40 2,349 Total 8,745,195 12,571,015 7,102,761 [Adapted from the original tables. Figures rounded to nearest dollar.]

$ 747,657 255,751 770,031 21,966 43,286 1,453,781 752,169 1,481,942 688,888 3,050,883 3,598,324 50,968

12,915,646

From these comparative statements it will be noticed that revenues increased by $3.8 million. This was caused by the increase in production on Bell Island, with a consequent increase in earning power. In addition, the Commission of Government through grants-in-aid and loans from the Colonial Development Fund spent around $15 million locally on roads, fishery development and schemes of rural reconstruction. On the other hand, whilst revenues increased by 3.8 million dollars, expenditures increased by a much greater amount — an amount of $5.8 million. Education increased by approximately $1 million; Public Health and Welfare services were expanded and, including war pensions, an increase is shown of around $750,000; whilst on public works, such as roads, etc., nearly $2.5 million additional expenditure is shown. The following is a statement of revenues and expenditures for each year from 1933-34 to 1939-40:

390

NATIONAL CONVENTION Year 1933^34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

Revenue $ 8,745,195 9,511,134 9,744,016 10,734,773 12,272,211 11,220,473 12,571,015 $74,798,817

Expenditure $10,273,730 11,634,872 13,008,206 13,039,130 14,150,535 15,289,793 17,466,914 $94,863,180

From the above statement it will be seen that for a period of seven years the Commission of Government spent over $20 million more than was received through revenues. This meant an average annual deficit of $2.8 million. It must be borne in mind that whilst the predecessors of the Commission of Government had larger deficits, the Commission had the advantage of having but $3 million annual interest charges, against the $5 million of their predecessors. In other words, if the Commission of Government had been burdened with a $5 million a year interest liability, their deficit would have been $5 million, as during 1939-40 ordinary revenues were practically the same as ordinary expenditures. These additional expenditures which were made in the departments of Natural Resources, Public Health and Welfare and Public Works, were used for the purpose of (1) efforts further to develop the fisheries by the guaranteeing of supplies; the building of boats and schooners and bait depots, as well as the inauguration of land development schemes at Markland and other localities; (2) increased hospital accommodation and the distribution of able-bodied relief to thousands of our people during the depression years; (3) the construction of roads and highways as well as the improvement of existing roads; whilst, in addition, over $600,000 was expended on the Gander airport. In addition to the aforementioned expenditures, there was the financing of the Railway Department's deficits which amounted to over $600,000, the capital expenditure on the railway for rolling stock, etc., as well as the acquiring of three new coastal boats, the latter costing around $1.25 million. No effort seems to have been made to establish a maximum point of expenditure beyond which it would not be considered sound economics to overexpend. It will be noticed that the total expenditure for 1933-34 was $10.25 million, whilst the expenditure for 1939-40, which included interest charges, amounted to $17.5 million. This shows an average annual increase of expenditure of $1 million. One of the results of this overexpending, some of which was necessary, was to create increased fictitious revenues. The revenues increased from $8.75 million in 1933-34 to $12.5 million in 1939-40, which was an average annual increase of not more than $750,000. Therefore, whilst our revenues were increased by $750,000, our expenditures were increased by $1 million, or 25% more than the corresponding increase. In order to pay these overexpenditures or deficits during the years under review, approximately $17.5 million was received in the form of grants-in-aid from the United Kingdom government. In addition, loans from the Colonial Development Fund amounted to £706,772 plus a free grant from that Fund of £19,200. These two amounts converted into dollars amounted to approximately $3.5 million. From this latter amount must be deducted £143,000 which was repaid on account of the loan, thus leaving a balance due the Colonial Development Fund of £563,772. This amount was converted into a free gift from the United Kingdom government on the 31 March, 1940. There was also a further loan from the Dominions Office during 1939-40 amounting to $874,925, which was advanced for the purpose of building two steamers for the Railway, the Baccalieu and the Burgeo. The following are the annual interest charges paid on our national debt from 1933-34 to 1939-40:

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$ 3,108,220 3,032,728 2,992,403 3,068,329 2,988,108 2,806,279 2,667,492 $20,663,559

1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

This therefore shows an average annual interest charge for this particular period of $2.9 million. The sinking fund established during 1937-38 is not included here. For the period under review pensions paid to servicemen as a result of World War I amounted to $4,106,004, or roughly $600,000 per year. The annual exports of iron ore from Bell Island for these seven years are as follows: Year 193T34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

L. tons 352,251 629,179 830,045 968,567 1,759,893 1,756,860 1,116,009 7,412,804

Value 972,234 1,735,539 2,250,761 2,470,295 4,476,623 4,481,989 2,858,219 $19,245,660

$

It will be noticed that 1937-38 and 1938-39 were probably record years and, over the whole period, the average annual production and shipments amounted to over one million tons at an annual average value of $2.75 million. It is safe to say that our miners and workmen on Bell Island received for their labour around $15 million, or over $2 million each year. The following are the details of ore exported from Buchans during the period from 1933-34 to 1939-40: Year 1913^34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

L. tons 192,785 185,167 197,224 144,631 202,777 181,767 154,346 1,258,697

Value $ 3,597,811 2,663,012 3,848,350 3,623,234 6,143,044 4,561,616 4,000,665 $28,437,732

These details of shipments for seven years show an average annual production and shipment of approximately 180,000 tons of ore concentrates at an average annual value of $4 million. It is safe to say that those of our people employed in this industry, and connected with its operations and shipment, received an annual wage of around $1.5 million.

392

NATIONAL CONVENTION

The following are the exports of pulp and paper, together with their values, from 1933-34 to 1939-40: Year 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

L. tons 258,902 276,036 312,919 298,406 328,094 282,172 358,227 2,114,756

Value $11,580,345 12,496,662 13,952,707 13,202,114 14,057,439 12,664,469 15,723,948 $93,677,684

These figures show that over two million tons of pulp and paper products were exported from both Grand Falls and Corner Brook for the seven years under review at a value of over $93.5 million. At the price of newsprint prevailing over this period, we estimate that our people received in the way of wages and other labour around $40 million, apart from the revenues accruing to the treasury in the form of Customs duties and other taxes. The following is a statement of salt codfish shipped and the total value of all fishery products for the seven years under review: Year 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 Total

Qts. Salt Codfish 1,192,161 1,322,765 1,271,662 1,069,637 1,027,038 1,296,343 1,066,857 8,246,463

Value Fishery Products $ 7,663,650 8,287,546 7,338,271 6,890,278 7,453,221 7,439,026 8,099,581 $53,171,573

The figures showing the total value of imports and exports of the country for the years 1933-34 to 1939-40 are given herewith: Year 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40

Imports $16,305,562 19,240,425 20,691,094 23,924,886 27,912,351 24,460,618 28,421,897

Exports $26,791,503 27,229,125 28,862,037 28,058,073 34,943,240 31,987,344 33,393,845

Total Trade $43,097,065 46,469,550 49,553,131 51,982,959 62,855,591 56,447,962 61,815,742

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General Review, 1933-34 to 1939-40 As already stated, for seven months of 1933-34 the Alderdice government administered the affairs of the country and during the month of February 1934, the Commission of Government was installed in office. When the Commission of Government assumed control of our affairs and the British government became responsible for our finances, the first reaction was one of complete confidence in the ability of this type of government, which was free from any interference, to restore the country to a sound financial and economic position. This confidence had been created in the minds of most of our people through statements by our own government before it abandoned office, as well as statements by the Secretary of State for Dominions Affairs in the British House of Commons, during the debate on the Newfoundland bill in December, 1933. These statements were, in effect, that the calibre of English Commissioners who would be sent to Newfoundland undoubtedly would be that of trained men in the field of finance and industrial development. The Dominions Secretary stated that these gentlemen would, in the course of their many duties, mingle amongst our people; speak to them through the medium of public meetings, and use their efforts to educate the people of Newfoundland in the administration of government, and generally to prepare us to carry out properly our own political future. We find that for five months of the year 1934, up to June 30, 1934, very little, if anything, was performed out of the ordinary. However, the beginning of the year 1934-35 shows that over $1 million was voted for roads, fisheries, land settlement, the Port-aux-Basques dock terminals and an advance to the Labrador Development Company of some $200,000. In order to try to encourage and build up our fisheries, advances for supplies were granted to fishermen; a programme for the building of schooners and small boats was instituted, which cost that year around $300,000; another $250,000 was spent in repairing and retreading existing highroads; nearly $300,000 was spent on the erection of new dock facilities at Port-aux-Basques; the Markland scheme absorbed nearly $200,000, whilst $200,000 was loaned the Labrador Development Company to encourage and help finance woods operations on the southern portion of Labrador. These schemes were continued for the following couple of years. Considerable additional highroads were built at substantial cost, for the purpose of giving employment, whilst for periods in each year around 70,000 of our people were forced to seek government relief. Over $3.5 million was expended on these schemes, but the law of supply and demand continued to prevail and this "pump-priming" (to use the late President Roosevelt's expression) was unable to relieve the situation and, even as a relief measure, no tangible results were obtained from these enormous expenditures. Our revenues increased, caused by the expenditure of public monies loaned to us by Great Britain from the Colonial Development Fund and by grants-in-aid from the United Kingdom Government. At the same time our expenditures rose consistently each year. When we look at our trade returns we find that the prices obtained for our fishery products were probably the lowest for many years, whilst additional hardship was incurred by the imposition of sanctions against the export of fish to the Italian market during the Ethiopian conflict. During 1933-34 the mines at Bell Island produced less than 500,000 tons of ore. The expectations resulting from the Ottawa Conference regarding the shipment of our ore to Britain never materialised. However, we find that gradually during the next few years large shipments of ore were made to Germany and Canada. The years 1937-38 saw these tonnages grow to record figures, as Germany was taking nearly 70% of our iron production, and shipments to this country continued right up to a month prior to the outbreak of war in September, 1939. The other 30% went to Canada. The newsprint market which, in the early thirties, was in a serious financial predicament, continued in this state for several years; but in 1937 and 1938 it picked up substantially and again declined. Prices obtainable for our forestry products had dropped to a very low figure, but in this respect some stability was restored to the industry at the outbreak of war. The export of ore concentrates from the Buchans mine was fairly steady, although prices were low at the commencement of the period under review. The operations of our railway, steamers and dock had struck the lowest point in revenues for years.

394

NATIONAL CONVENTION

The average annual deficit for seven years was less than $100,000. Three new steamers were added to the fleet of ships, whilst an additional $1 million was spent on railway rolling stock and general repairs. In all, $2.5 million was spent on capital account. The railway payroll was reduced considerably owing to necessary lay-off of employees, but the general condition of the whole system was considered good, which justified the expenditures of some years previously; as when war broke out, the system was capable of handling the unusually large traffic which it was compelled to handle under most difficult conditions. As previously stated, the agreement with the Bowater company for the operation of the Gander areas for the purpose of exporting wood to Britain gave some immediate relief through the additional employment created, whilst the export of over 100,000 cords of pit-props from Labrador was instrumental in distributing another million dollars in earning power to the people. During the period referred to here, the value of the export of our forestry products exceeded that of our fisheries by $40 million. This in spite of the fact that the prices obtained for our forestry products were the lowest for years. The value of our mineral products was over $47 million, whilst that of our fisheries amounted to $53 million. This decline in value of our fishery products reflects itself in the values of our imports and exports, where imports are at an unusually low level as compared with exports. This was caused by the low earning power of our people engaged in the fisheries in comparison with the higher earning power of a much smaller number engaged in the forestry and mining industries. From 1933-34 to 1939-40, which might be considered one of the most distressing periods in our history, our people suffered untold hardship and privation. This can be borne out by the fact that each year monies paid out for relief purposes, particularly during the winter seasons, were abnormally high; and at times the recipients of government relief comprised nearly 25% of our total population. In addition, the general health of our people began to deteriorate and the ravages of tuberculosis and other illnesses became evident in all sections of the island. This necessitated additional expenditures for hospital accommodation and medical treatment. It is expected that the ill-effects of such continued privation and hardship will continue to place a compulsory expense on the treasury of the country for many years to come. 4. 1940-41 to 1946-47. The year 1940-41 was one of momentous happenings. During the spring of 1940 the German army had invaded all of France and the Low Countries, and Italy had entered the war against the Allies. After the invasion of the Channel ports, Britain herself was in imminent danger of invasion — the supplies necessary for the maintenance of the people of Britain, as well as arms and munitions, being purchased from Canada and the United States were becoming more difficult to deliver on account of the adoption by the Germans of ruthless submarine warfare. In short, the general situation was most serious. Britain up to this time had been purchasing all her necessary supplies from the United States on a "cash and carry" basis, and her reserves of available American dollars were becoming depleted. The sympathy of the American people was on the side of Great Britain and her allies. It was in the autumn of 1940 that the late President Roosevelt conceived the idea of lend-lease to Britain. That is, in return for supplies of guns, ships and planes, that Great Britain would arrange to give America long-term leases of certain military bases in the North and South Atlantic. Newfoundland was one of the first bases selected by the Americans, and the records prove that as soon as the agreements in respect of these were signed by the representatives of the United States and British governments, that supplies in the form of ships, destroyers, etc., were at once released to Britain. In the early winter of 1941 two of the Newfoundland Commissioners went to England and on behalf of the Newfoundland government agreed with the terms and conditions of arrangements that had been entered into between the British and American governments in September 1940 with regard to the 99-year lease of bases in Newfoundland. This agreement, known as the "base deal", was enacted into legislation by the Commission of Government on June 11,1941, and surrendered the sovereignty of these bases to the American government for a period of 99 years; and today Newfoundland has no legal jurisdiction over any territory leased to that government.

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Whilst this Committee is of the opinion that Newfoundland and her people were prepared to make any sacrifice necessary to the winning of the war, at the same time they are of the considered opinion that the Commission of Government and the Dominions Office had no right whatever to alienate Newfoundland territory to any foreign power without a reasonable quid pro quo. If such alienation were necessary to the winning of the war, the transfer of these territories should have been only for the duration of the war. Furthermore, the Committee feels that in view of the legislation of 1933-34, whereby Newfoundland merely suspended her constitution, the Commission of Government and the Dominions Office were acting merely as trustees of the assets of Newfoundland, and that any transfer of such assets certainly called for recompense. The Committee feels that this recompense should have taken the form of the cancellation of the whole or a considerable portion of the national debt of our country on the part of Great Britain, and that the United States of America, in consideration of the acquiring of these bases, should have granted a preferential tariff to the fishery products of Newfoundland. The Finance Committee also deplores the action of the Commission of Government with respect to restriction by the Commission of the rates of pay to be given our Newfoundland workmen in return for their services in the construction of the American bases — inasmuch as it is asserted that the Commission of Government gave direct or indirect instructions to the American and Canadian contractors not to pay Newfoundlanders the same rates of pay as American workmen for performing similar work, on the grounds that it would upset the general economy of the country. The first contingent of American military forces arrived in St. John's on January 29, 1941, and commenced construction of the military base at Fort Pepperrell. The work at Argentia on a military and naval base began in the early part of 1941, whilst the construction of an air base at Harmon Field on the west coast of the island began later that same year. In the meantime, Canadian military authorities had taken over the defence of Newfoundland and also began the work, in conjunction with the American authorities, of converting Newfoundland into a gigantic defence fortress. The important strategic position of our country, which 75 years previous had been pointed out to the British government, had at last been recognised by both the British and American authorities; and the facilities of our fine harbours and great airports played a most important part in the winning of the Battle of the Atlantic, and the ultimate victory in May, 1945. The work created by the construction of these military and naval bases in various sections of the country gave employment to many thousands of our people from all parts of the island, resulting in the budget being balanced for the first time in over a decade. The results for the fiscal year 1940-41 as to revenues and expenditures are as follows: Revenue Expenditure Surplus

$16,196,432 15,830,699 $ 365,733

It will be noticed that the revenues increased by over $3.5 million over 1939-40, whilst the expenditures decreased from $17.5 million to a little under $16 million. This increase in revenue was brought about by greater purchasing power on the part of our people for the purchase of consumer goods, whilst the decline in expenditure was caused principally because of a decrease in capital outlay, and a decline in the necessity of supplying funds for the creation of non-productive work and the distribution of government relief. During this particular year the Commission of Government inaugurated a policy for the investment of our people in the purchase of war savings certificates, giving returns an annual rate of around 3%. As a result, our people invested $534,473 in the purchase of such securities. The following year (1941-42) the returns as to revenues and expenditures are as follows:

396

NATIONAL CONVENTION Revenue Expenditure Surplus

$23,313,741 16,095,197 $ 7,218,544

The revenues increased by around $7 million over the previous year, whilst the expenditures remained practically the same. It would seem that the Commission of Government had realised that this figure would have been a maximum of expenditure and that, in future, providing that revenues remained at this same level, the country generally would accumulate considerable surpluses. However, from the surplus of some $7 million, we find that a free gift of $500,000 was made to Britain for the purpose of establishing a Newfoundland air squadron; another $3.8 million was given as a free of interest loan to the United Kingdom, whilst $1,945,000 was disbursed on account of bills owed in Newfoundland by Great Britain in settlement of claims for properties appropriated from individuals for the construction of war bases, etc. Whilst the Committee agrees in principle with the financial help given the mother country, it cannot reconcile the action of the borrowing of $2.1 million in US funds from the Defense Supplies Corporation by the Newfoundland Railway at an interest rate of 2.5% per annum, for the purpose of purchasing railroad equipment. It was a case of giving away money free of interest charges, and then borrowing money from the United States and paying interest on it. The records show that during this year, the Newfoundland treasury had financed Great Britain to the extent of $5,745,000 out of our surplus of $7 million. During this same year our people invested $809,950 in war savings certificates. It was during the summer of 1941 that Prime Minister Churchill met with the late President Roosevelt in Placentia Bay, where the Atlantic Charter was signed. However, it was not until December 7,1941, when the Japanese navy and air force made a savage and treacherous attack upon the American naval base at Pearl Harbour in the Pacific that America declared war upon both Germany and Japan. Coming to the year 1942-43 for a period of nine months, as the fiscal year was changed from June 30 to March 31, we find that for this period, from July 1,1942, to March 31,1943, the revenues and expenditures are shown as follows: Revenue Expenditure Surplus

$19,539,949 15,850,149 $ 3,689,800

It will be observed that for a period of nine months in comparison with the year 1941 -42 the revenue again increased, whilst the expenditure for the same period increased at a rate of another $3 million annually. Again we see the story of the previous year repeated, for we find that another loan, free of interest, was given Great Britain which amounted to $4 million, or nearly $400,000 more than our surplus. During this year a loan was raised locally on the credit of the country for an amount of $1.5 million at 3.25% and, in addition, our people invested $470,000 in war savings certificates. In addition to the interest-free loan of $4 million, the government paid bills owed by Great Britain in Newfoundland which amounted to $462,745, and Great Britain repaid some $77,873 on account of previous bills paid on her account by the Newfoundland treasury. The main items of overexpenditure occurred in the departments of Natural Resources, Finance and Defence. There was an increase in the Finance Department of nearly $800,000, due mainly to a grant of $925,000 for additional working capital for the railway. In the Department of Defence there was an increase of nearly $1 million, due mainly to the first provision for deferred pay of Newfoundland servicemen, amounting to $655,000. There was an increase in the expenditure of the Department of Public Works amounting to nearly $350,000 caused by the supplying of certain mooring facilities in the harbour of Bay Bulls. We note that it was during this year (1942-43) that the government launched its shipbuilding programme at Clarenville. The estimate of $900,000 for the completed scheme included the construe-

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tion of ten motor vessels of not less than 300 tons each, a shipyard at Clarenville with the necessary plant and equipment, and all incidental expenses. According to information supplied by the Department of Natural Resources, the capital cost of the Clarenville shipyard was $122,240. This plant recently was sold to local interests for the sum of $23,400. The actual cost of the Clarenville shipyard operations, which included the building often motor vessels, together with two other ships, amounted to $2,670,400. Of this amount $272,400 was expended on the building of the Investigator and the Eastern Explorer, and some other minor work. Thus it is seen that the ten vessels originally planned to cost $900,000 actually cost the country around $2,400,000, or at the rate of $240,000 for each ship. The Finance Committee feels that whilst the vessels are now engaged in the general trade of the country, and thus employ around 100 of our seamen regularly, that the administration of the Clarenville shipyard was, to say the least of it, faulty in that the original budgeted estimates must have been very badly calculated. It was in February, 1943, that the Commissioner for Finance announced the imposition of a retroactive taxation affecting income and profits taxes. No explanation was ever given to the country, and no replies to questions seeking the reason for this irregular legislation have been given to this Convention, but it is generally felt that the idea of its imposition was to curb inflation in some small way. From April 1, 1943 to March 31, 1944 the revenues and expenditures are recorded as follows: Revenue Expenditure Surplus

$28,600,947 25,238,794 $ 3,362,153

During this year (1943-44) prosperity continued, thousands of our people were still working on military, naval and air bases, and the fisheries were giving substantial returns to our fishermen. The Newfoundland treasury advanced the government of the United Kingdom another $2.5 million, free of interest, whilst our people invested $730,000 in war savings certificates. Our second Victory Loan of $2 million was raised locally at a discount of 1%. This loan bore interest at the rate of 3%. It is interesting to note that at the end of this fiscal year over $3.25 million was on deposit to our credit at the Crown Agents in London; the greater portion of this amount was the proceeds of this second Victory Loan, raised for the purpose of redeeming an outstanding loan of £266,464 or around $1,200,000 coming due June 15,1945. As the maturing date for the outstanding loan in question was not until June, 1945, we find that the treasury of the country was taxed unnecessarily for a period of one year, and the Finance Committee must consequently disapprove of this method of financing by the Commission of Government. Furthermore, we again draw the attention of the Convention to the fact that the raising of this particular loan was not essential, as we were loaning money to Great Britain, free of interest, and borrowing money from our own people for the purpose of paying our own obligations. It will be noticed that the revenue of over $28.5 million was a record one. This substantial increase of $9 million over the year 1942-43 was derived principally from income and profits taxes, these having risen by over $5 million in comparison with the previous year, and the Board of Liquor Control increased its profits from $750,000 in 1942-43 to $2,260,000 in 1943-44. On the other hand our expenditures increased by over $9 million as compared with 1941-42, reaching the enormous figure of $25.25 million. This increased expenditure was caused by the repayment of a 5% sterling loan amounting to £377,890, and the balances of the Colonial Development Fund and Dominions Office loans of £212,911. Converted to dollars these amounted to $2,640,884. Because of change of fiscal year in 1942-43, the sinking fund payment which was $100,000 in that year, amounted to $966,910 in 1943-44; and interest charges, which amounted to $1,416,453 in the nine month period of 1942-43, amounted to $2,775,169 in 1943-44. The shipbuilding programme at Clarenville, to which we already have referred, and for which an amount of $400,000 was budgeted in 1942-43, was overexpended by nearly $600,000. The total expenditure under the heading of Defence had now risen to $1.75 million per annum, and the

398

NATIONAL CONVENTION

expenditure for education, as well as the building and equipment of new schools in certain sections of the country, had now risen to nearly $2.5 million in comparison to $1.5 million in 1940-41. During this particular year also (1943-44) the Newfoundland treasury paid bills for the British government amounting to $171,658, whilst the United Kingdom government repaid Newfoundland $1,821,470 for outstanding obligations. We now come to the year 1944-45, the last fiscal year for which the Report of the Auditor General is available. It shows the following results as to revenues and expenditures: Revenue Expenditure Surplus

$33,342,191 26,309,168 $ 7,033,023

It will be observed that this revenue of over $33 million exceeded the total revenue of the previous year by approximately $5 million. Customs revenue accounted for nearly $3 million of this increase, and the Department of the Assessor increased its receipts by over $2 million. The Customs collected the record amount of almost $18 million, and the income and profits taxes collected amounted to $9,825,383. Expenditures continued to increase, and another $1 million is shown in excess of the year 1943-44. These are accounted for by an additional grant of over $600,000 under the heading of Education, which was used to implement teachers' salaries, as well as for the erection and equipment of new schools. Also another $800,000 was advanced the Railway for capital expenditure and for the purpose of meeting an anticipated deficit on the Railway for 1944-45 of $90,000. It will be noted that the Railway had no deficit during this particular year, as its accounts show a surplus of over $500,000. Again, another $2 million was advanced to the Government of the United Kingdom, free of interest, whilst our people invested a further $495,000 in war savings certificates. At the same time the Government of Great Britain repaid $167,178 to the Newfoundland treasury on account of disbursements made on its behalf by the Newfoundland government in Newfoundland. There was also transferred to war savings certificates redemption account $741,699. The fiscal year 1945-46, which ended on March 31,1946, was probably the most outstanding year in our whole history. The first week in May, 1945, the German forces surrendered unconditionally to the Allies and less than three months afterwards the Japanese forces surrendered unconditionally to the allied forces in the Far East. Thus ended the greatest military conflict in the history of the world. Thousands of American and Canadian soldiers, sailors and airmen, who had been stationed in Newfoundland, began to withdraw from our shores and by the end of 1945-46, only skeleton crews remained on our island to occupy the bases granted to the United States under the base agreement of 1940-41. Also our own men in all branches of the services began to return to their homes, and by the end of the year 1946 we can say practically all our servicemen were demobilised — hundreds of them resumed their peacetime occupations, whilst hundreds are being trained through the re-establishment programme to take up occupations in various avocations in the general life of our country. As the Auditor General's Report covering the administration of government for the fiscal year 1945-46 is not yet available, it will be somewhat difficult to give full information as to the various activities of government for this particular period. However, our investigations show that the revenues and expenditures for this particular year are as follows: Revenue Expenditure Surplus

$33,426,986 30,288,476 $ 3,138,510

When Commissioner for Finance Wild introduced his budget speech on April 27,1945, he forecast a revenue for the fiscal year 1945-46 of approximately $29 million, and he estimated the expenditure for this particular year as approximately $28.5 million; thus leaving an estimated surplus of around

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$500,000. The actual expenditure, as will be seen, was approximately $30.25 million, or $1.75 million more than forecast. This overexpenditure was caused principally because the estimate for the Railway deficit was placed at $700,000, whilst the actual deficit amounted to roundly $1.25 million. In addition, the vote for Public Health and Welfare was underestimated by another $500,000, whilst extra expenditure in the departments of Public Works and Education accounted for almost $750,000. The actual revenue of $33.5 million exceeded the estimate by over $4.5 million. This underestimate of revenue was confined principally to the departments of Customs and the Assessor of Taxes, whilst the Board of Liquor Control contributed over $100,000 more than forecast. It will be observed that the record amounts of $18.25 million in revenue were derived through the Department of Customs, whilst the Department of the Assessor collected almost $10.25 million. During this particular year (1945-46) the Department of Finance advanced the Railway $ 1,125,000 apportioned as follows: Capital Deficit Total

$ 715,000 410,000 $1,125,000

It does not seem that the government policy was to curtail expenditure during this period, even after the cessation of hostilities in May, 1945, when it was obvious that many war-time expenditures were no longer necessary. During this year the sum of $ 150,000 was disbursed by the Department of Public Works in relation to the operations of the Gander airport. The Finance Committee has decided to submit this report based upon the available information as to revenues and expenditures up to December 31, 1946. For the information of the Convention therefore, we give the following statement of revenues and expenditures as covering the period from April 1, 1946 to December 31,1946: Revenue Expenditure Surplus for nine months

$28,983,960 26,975,289 $ 2,008,671

According to the budget address given by Mr. Wild, the Commissioner for Finance, on April 18, 1946, the total estimated revenue for the fiscal year ending March 31, 1947, was $30,757,200, and the total expenditure — which included reconstruction and special expenditure - was forecast at $34,400,700. This forecast would mean a deficit for the present fiscal year (1946-47) of approximately $3.25 million. It will be noted that we have an actual surplus for the nine month period of the fiscal year 1946-47 of roundly $2 million and, following ordinary conditions, it would be expected that at the end of March, 1947, there should be a surplus of not less than $4 million. However, in reply to a question directed by this Committee to the Commissioner for Finance, Hon. Mr. James, asking what he estimated the expenditures and revenues would be for the next three months, we were astonished to receive the following reply: "At this time the required information is of a confidential character and it is regretted may not be divulged". Such a reply in the opinion of this Committee is most unsatisfactory, and is a definite indication that the Commission of Government is by no means co-operative in giving information which is, after all, important information; and there is no apparent reason why such information should be withheld, which would greatly assist us in giving an actual picture of the financial standing of Newfoundland. It was on April 1, 1946, that the Commission of Government concluded negotiations with the Canadian government to take over the Gander airport for a price of $ 1 million and became responsible for its maintenance and operation. This great airport has become the key air base for all air communications between the continents of Europe and America. We find that under the terms and

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conditions of its present management by the Commission of Government, that the treasury of Newfoundland perhaps may be called upon to find as much as $1 million annually to pay the deficits incurred in its operation. The Commissioner for Public Utilities, Hon. Mr. Neill, informed a committee of the Convention that the Commission of Government undertook this venture with the hope that ultimately it would become a paying proposition. The Committee feels that the Commission of Government did not assume this responsibility without the approval of the British government, and are of the considered opinion that again, the outstanding strategic position of our country is being used for the sole purpose of giving concessions to outsiders at the expense of the people of Newfoundland. Up to November 30,1946, the operating deficit of the Gander airport amounted to nearly $400,000, which amount was paid by the Department of Public Utilities. In addition, another $300,000 was expended on certain capital expenditure in connection with the renovating of buildings and other improvements, whilst we understand that one of the large airways companies, now in financial difficulties, owes the airport in the vicinity of several thousands of dollars. Also, it again must be pointed out that before the airport was taken over in April, 1946, another $150,000 had been expended by the Commission of Government in paying certain operational charges of the airport. Again, the Finance Committee must register its strong protest because of the lack of definite information concerning the whole Gander airport transaction. We find that the Commissioner for Public Utilities was quite indefinite on all matters pertaining to the future of this project. The Finance Committee feels that with proper administration, this great airport can be a definite asset to our country and, if proper steps had been taken, the revenues of our country would have been substantially swollen — either in the form of greater landing fees for aircraft, or in the form of an annual rental. Unfortunately, as the situation stands at the moment, Newfoundland stands to lose through the operation of Gander an amount in the vicinity of $ 1 million annually, whilst foreign airway companies and outside nations are merely using our strategic position for their own advantage and at the expense of the taxpayers of Newfoundland. For this particular nine month period it will be noticed that the expenditure under the heading of Home Affairs is unusually high. This is accounted for by the fact that under this particular department comes a vote for civil re-establishment and vocational training for our returned servicemen, amounting to nearly $1.25 million. This expenditure comes under the heading of reconstruction expenditure. In addition, two other amounts advanced as loans to the housing associations and the St. John's Housing Corporation amounting to $2,050,000 comes under the heading of special expenditure, and a considerable amount of these votes have been spent as at December 31, 1946. The Finance Committee would draw the attention of the Convention, the country and the government to the fact that the amounts advanced housing associations and the St. John's Housing Corporation are loans, and consequently should, in our opinion, not be charged up as expenditure, as they are repayable. The Committee also would point out to the Convention and the country that the manner in which the accounts are presented to the country are more or less misleading, inasmuch as millions of dollars have been spent during the past six years under the headings of reconstruction and special expenditure, which are not ordinary expenditure, but are really capital expenditure and, as such, should be shown separate and apart from the ordinary operational expenditures for government administration. Newfoundland Railway We now have concluded our review of the operations of government for the years 1940-41 to December 31, 1946, which do not cover the operations of the railway, dock, steamers, hotel or Newfoundland government Savings Bank. The following are the particulars which cover the administration of the railway, steamers and dry dock for the period under review: 1940-41 Railway: Revenue $2,911,640 Expenditure 2,548,811 Profit $ 362,829

REPORTS AND PAPERS Steamers: Dry Dock:

Revenue Expenditure Profit Revenue Expenditure Profit

401 $1,081,752 949,316 $ 132,436 $1,021,725 810,393 $ 211,332

After making provision for pensions, $84,626; repayment to Colonial Development Fund, $53,093; and also repayment on account of loan from Dominions Office of $70,249, there was a net profit on all operations of $498,630. It will be seen that the revenues of the whole system rose from $3 million in 1939 to over $5 million in 1940-41. For the year 1941-42 the revenues and expenditures are given as follows: Railway: Steamers: Dry Dock:

Revenue Expenditure Profit Revenue Expenditure Profit Revenue Expenditure Profit

$5,028,425 3,818,885 $1,209,540 $1,681,298 1,528,401 $ 152,897 $1,457,541 1,149,722 $ 307,819

After making provision for pensions, repayment of loans and interest, as well as depreciation, a profit of $1,447,430 is shown. During this year the construction of the great American base at Argentia got well under way, and the resources of the railway system became heavily taxed. Railway equipment commenced to be run down, which made it necessary to purchase further rolling stock. This necessitated large capital expenditures, and a loan of $2,100,000 was negotiated with the Defense Supplies Corporation of the United States for 15 years at 2.5% annual interest. Up to June 30,1942, the amount spent out of this loan for equipment was $419,882. In addition to this capital expenditure from the American loan, the sum of $842,784 was spent from the surplus on operating account, for the purpose of acquiring locomotives, box cars, flat cars, as well as a steamer called the Moyra, which cost $278,114. During this year (1941-42) the Newfoundland Transportation Control Board was formed, and the General Manager of the railway was appointed chairman. Owing to difficulties encountered by business generally all over the country in acquiring ships to carry supplies to Newfoundland, the entire transportation business of the island was placed under the control of this Board which was financed from Railway funds. The amount of hire for such ships for this year came to $168,090. It is difficult to understand how the transactions in relation to these chartered ships resulted in a loss for this year of over $50,000. For the nine month period, June 30,1942 to March 31,1943, the results are as follows: Railway: Steamers:

Revenue Expenditure Profit Revenue Expenditure Loss

$4,021,874 3,724,106 $ 297,768 $2,345,180 2,514,093 $ 168,913

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NATIONAL CONVENTION Dry Dock:

Revenue Expenditure Profit

$1,346,760 1,098,245 $ 248,515

After providing for pensions, interest and repayment of loans amounting to $ 150,704, there was a net profit on all operations of $226,666. Again we observe that the sum of $461,913 was disbursed for the hire of chartered ships, and that the railway through its operation of this public service incurred a loss of $21,042. During October 1942 the S.S. Caribou was sunk by an enemy submarine on a voyage from North Sydney to Port-aux-Basques, and many lives were lost. No war risk insurance was carried on this vessel as it was cancelled in June, 1942, on all ships operated by the Railway. This resulted in considerable inconvenience, and the Gulf service was temporarily held up. The Caribou had been making the Gulf crossing during night time, but shortly after this tragic accident, the crossings were made during daylight and under the protection of convoy. This ship, which had originally cost over $500,000, had been specially built for the service in 1925 and today, in order to replace her, it is necessary to expend considerably in excess of $1 million. War risk insurance was replaced on the Baccalieu and Burgeo after the loss of the Caribou. During this year (1942-43) a total of $1,335,445 was expended on capital account. $925,000 of this amount was advanced from the Newfoundland treasury, whilst around $250,000 was supplied out of the American loan. Considerable rolling stock and other equipment was acquired, whilst two freight steamers were purchased, which cost approximately $715,000. These two ships were used in the freighting service, carrying coal and other goods from Canada and the United States. During the fiscal year 1943-44 the revenues and expenditures of the Railway Department are shown as follows: Railway: Steamers: Dry Dock:

Revenue Expenditure Loss Revenue Expenditure Profit Revenue Expenditure Profit

$5,079,053 5,631,341 $ 552,288 $4,648,310 3,971,062 677,248 $2,006,902 1,695,335 $ 311,567

After providing $319,866 for pensions, payments of interest, etc., on British and American loans, there was a net overall profit on operations of $116,660. This year $856,000 was spent on capital account. Of this amount $156,000 was taken from the American loan and the Newfoundland treasury advanced $700,000. These monies covered the purchase of additional rolling stock, paid for the repairs of several bridges, and also the purchase of the motor ship Henry Stone, which vessel cost $85,000. There was paid for the hiring of ships through the Transportation Control Board $1,034,421, and this service shows a profit for the year of $288,870. The fiscal year 1944-45 shows the following result: Railway:

Revenue Expenditure Loss

$5,547,702 6,042,661 $ 494,959

REPORTS AND PAPERS Steamers: Dry Dock:

403 $5,193,881 4,998,143 $ 195,738 $1,922,373 1,655,884 $ 266,489

Revenue Expenditure Profit Revenue Expenditure Profit

After making provision for interest, pensions, depreciation and repayments of loans amounting to $497,157, there was a loss of $529,889. During this year (1944-45) there was expended on capital account a total of $1,942,245. Of this amount $1,116,894 was spent from the American loan for sleeping cars, dining cars, 50 box cars, 50 flat cars, 25 ballast cars, ten baggage, mail and express cars and eight coaches. $800,000 was advanced from the Newfoundland treasury, and was expended in the purchase of locomotives, box cars, dump cars, snow plows and the general repair of several buildings all along the railway line. During this year (1944-45) the hire paid for chartered ships amounted to $1,417,466 and a profit of $373,614 is shown in this respect. The earnings of the railway, steamers and dock totalled the record amount of over $12.5 million. Wages paid employees amounted to over $5 million for something less than 4,000 employees, as against $2,600 employees for the year 1939-40, who received around $2.25 million. As the report of the Auditor General covering the operations of the Railway for the fiscal year 1945-46 is not yet available, we are unable to present a complete statement of the accounts. However, we have obtained the following information from the Railway, which generally speaking, will give an approximate idea of the operations of this government public utility for this particular year. Railway: Steamers: Dry Dock:

Revenue Expenditure Loss Revenue Expenditure Profit Revenue Expenditure Profit

$5,038,209 6,399,704 $1,361,495 $4,024,846 3,937,231 $ 87,615 $1,720,358 1,495,502 $ 224,856

The result of the operations of the Railway therefore shows a loss of $1,049,024 for the fiscal year 1945-46. These figures do not take into account the payment of pensions, interest on loans, depreciation, etc. We therefore must assume that when these amounts would be added, the total deficit for the railway would not be less than $1,500,000 for the year under review. During this year (1945-46) the treasury made payments to the Railway on account of capital and deficit accounts as follows: Capital Deficit Total

$ 715,000 410,000 $1,125,000

The amount advanced on account of deficit was for the purpose of enabling the Railway Department to balance its account for the previous year 1944-45, when a deficit of over $500,000 was incurred. During the year, the sum of $573,881 was expended on capital account; the details of these expenditures are not available at present, but will be incorporated in the Auditor General's Report when it is published shortly.

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We have been able to secure figures covering the period from April 1, 1946, as follows: The total revenues for railway, steamers and dry dock from April 1, 1946, to August 31, 1946, a period of five months, show as $4,119,416, whilst the total expenditures for the same period amount to $4,812,773; thus leaving a deficit on account of operations in the sum of $693,357. For the same period during 1945-46 the loss is $271,830. It is therefore seen that the losses have increased for this particular five months by over $420,000. It was during this year (1945-46) the S.S. Moyra was stranded below the city of Quebec on the St. Lawrence River, and was abandoned by the officials of the Railway, and then sold as she lay stranded for the sum of $7,500. This ship was purchased by the Railway during the year 1941-42 for the sum of $278,000, was a good carrier, with low fuel consumption — although somewhat slow. As per the Railway plan, there was no marine insurance carried on the ship. From the time she was acquired by the Railway up to the date she was lost, the vessel had made a profit on her operations of $465,000. After being purchased by the Shaw Steamship Company Limited at the price stated, the vessel was refloated, towed to Montreal, and repaired on a Montreal dry dock at a cost of somewhere in the vicinity of $200,000. She was then sold to foreign interests, according to newspaper reports, for the sum of somewhere in the vicinity of $400,000, thus realising a profit on the transaction to her purchasers of somewhere in the vicinity of $200,000. Up to December 31,1946, the Department of Finance made the following advances to the Railway: Capital Account Deficit Account Total

$ 400,000 1,230,000 $1,630,000

During this nine month period of operations of the railway, steamers and dry dock, the amount spent on capital account is shown by statements furnished us by the Railway Department as around $600,000 net. We find that the steamerNorthton, purchased in 1942, was sold for $195,000, and that another steamer called the Rockcliffe Park was purchased to take her place at a figure of roundly $425,000. The Canadian army building in the Waterford Valley, near St. John's, was acquired at a price of $46,500 to be used as a car shop, whilst an outward freight shed in St. John's was erected at a cost of $110,000. The balance was spent on the purchase of 1,000 tons of 70 Ib. rail. As the receipts from the sale of the Northton were used in part payment for the Rockcliffe Park, the gross amount spent on capital account came to nearly $800,000. This concludes a full review of the administration of the railway, steamers and dry dock for the period 1940-41 to August 31, 1946. However, we find that the ten vessels constructed under the supervision of the Department of Natural Resources were handed over to the Railway for management during the fiscal year 1945-46. As already pointed out in this report, these ships had cost the treasury of Newfoundland $2,400,00, or approximately $240,000 for each ship. We now find that when these ships were handed over to the Railway, another $168,000 was expended on nine of them. Thus it will be seen that the total cost of the Clarenville shipyard venture to the treasury of the country now stands at well over $2.5 million. For the year 1945-46 the vessels show a net loss on operations of roundly $37,000. The arrangement for management fees between the Department of Natural Resources and the Railway is somewhat unusual. The Railway manages the ships on a basis of 5% of the gross freight receipts, plus a further $3,000 per year for each vessel, and for the year referred to, we find that the Railway profited to the extent of $45,000 in this respect, whilst the treasury had to find $75,635 to reimburse the Railway for repairs and other expenses. The management fee of 5% plus $3,000 for each ship annually is unusual, as in ordinary business such management fee amounts to no more than 5% on all freights collected. One of the vessels has recently been lost on a return voyage to Newfoundland, and under the government plan, no insurance is carried. This leaves nine ships of the original ten. The vessels are employed in the foreign and local trade, and are a source of continuous employment to some 100 of

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405

our seamen. They receive the regular rates of freight paid to outside shipping for the transportation of our products, both as to imports and exports, and whilst we realise that the capital cost is abnormally high, nevertheless the operation of these ships will be instrumental in giving employment to our seamen whilst, in addition, the monies received for freights will be retained in our own country. Before concluding this report as to Railway operations generally, we feel it is most important that we give a brief explanation as to the shipping operations of the transportation branch of this public utility, which should be of great value to both the Convention and the country as a whole. From statements furnished us by the management of the Railway, we find that for a period of seven years (1939-40 to 1945-46), the entire operations of the shipping branch of the Railway show a net profit on operations of $ 1,202,574. This profit includes both the coastal boats and freighters, as well as some 86 time-chartered ships which were operated through the Transportation Control Board during the period of war. We find that a profit of $803,541 was made through the time-chartering of some 86 ships, or an average profit of just less than $10,000 per vessel. The freight steamers owned and operated by the Railway show a profit of roundly $1.25 million, whilst the coastal boats which serve the various sections of the island show a loss of nearly $1.25 million. With reference to the loss on operation of these various coastal boats, several factors enter into the situation. Firstly, we again mention the fact that prior to the inauguration of Commission of Government, the subsidy granted the Railway from the treasury amounted to $500,000 annually, whereas since that time the annual subsidy for the whole system amounts to just $250,000. Of this amount $200,000 annually is credited to the various coastal boats on a basis planned by the Railway management. Secondly, since the year 1939-40, the cost of coal has advanced nearly 100%, whilst the cost of other supplies such as wages, materials and cost of repairs has increased proportionately. It would seem therefore that if the treasury had continued to pay the same annual subsidies as in the days prior to Commission of Government, instead of a loss of $1.25 million for the period just outlined, there would have been no loss whatever; as the railway branch of the service never received anything in excess of $48,000 annual subsidy for mails, and the balance of the annual subsidy has always been credited to the coastal boats. However, this is merely a matter of bookkeeping, but we feel that injustice to the Railway the matter should be fully brought to the attention of the Convention and the country. We would like to draw the attention of the Convention, the government and the country generally to the fact that no subsidy has been paid by the Canadian government for the Gulf service since the Railway and its subsidiaries were taken over by the government in 1923. During 1930 negotiations were entered into with the then Government of Canada, and tentative arrangements were made for a subsidy of some substantial character; but this never came to any conclusion, as a new government was installed in office in Ottawa in the early part of 1931, and the matter seems to have ended there. In view of our large purchases from the Dominion of Canada, it is not unreasonable to expect that a substantial subsidy for mails and other services should be paid by the Canadian government — particularly in view of the fact that we understand that a private steamship company, operating from Canada and with its terminal at Corner Brook, has been largely subsidised by the federal government and is in competition with both our Railway and Gulf services. Summarising the entire operations of the railway, steamers and dry dock for the period 1940-41 to 1945-46, and to the end of August, 1946, we find that the total earnings of all branches amount to $60,201,418. This covers a period of six years and two months, as it was not until 1942-43 that the fiscal year was changed from ending on June 30 to March 31. The following are the yearly revenues and expenditures. Year 1940-41 1941-42 1942-43 (9 mos.) 1943-44

Revenue $ 5,015,117 8,167,263 7,713,814 11,734,265

Expenditure $ 4,516,487 6,719,833 7,487,147 11,617,605

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NATIONAL CONVENTION

1944-45 1945-46 April 1 to August 31,1946 Total

12,668,130 10,783,413 4,119,416 $60,201,418

13,193,846 11,832,437 4,812,773 $60,180,128

It will be observed from the above figures that for the period under review the Railway and its subsidiaries balanced their accounts, as there is about $20,000 of a surplus shown. These figures, however, are for ordinary operating expenses; but in addition to these expenditures on ordinary operating account, substantial amounts were advanced from the treasury as well as a 15 year loan from the Defense Supplies Corporation of the United States for the purpose of acquiring new equipment, rolling stock, steamers, etc. The following is a statement of amounts spent each year on capital account from 1940-41 to December 31,1946: Year 1940~^4T 1941-42 1942-43 (9 mos.) 1943-44 1944-45 1945-46 To Dec. 31,1946 Total

Amount $ 170,000 1,262,666 1,335,445 856,000 1,942,245 573,881 600,000 $6,740,237

Of this amount the Newfoundland treasury advanced approximately $4,700,000, whilst the other $2 million is from the 15 year loan from the United States authorities. These monies, as already outlined, were needed for the purchase of considerable new equipment in the way of rolling stock, etc., to cope with the huge traffic caused by movement of large quantities of military equipment and supplies to the various American and Canadian bases located in several sections of the country. Approximately $1,250,000 of the amount was expended in the acquiring of three freighting steamers which made sufficient profit on operations to pay for themselves, and are now an asset to the organisation. It will be observed from the annual statements of revenues and expenditures on the whole railway, steamship and dry dock operations that the expenditures have been increasing rapidly, whilst the revenues do not seem to keep in line with such expenditures. It will be noticed that in a comparative way the revenues during the year 1945-46 decreased nearly $2 million as against the earnings of 1944-45, whilst the expenditures only declined about $1.3 million. It must be borne in mind that the cost of coal for the whole system has increased out of all proportion and we are informed by the General Manager of the Railway that the cost for this commodity alone has increased expenditures on operations by around $800,000 annually. This being a fixed expenditure, at present prices cannot be reduced. Comparing the payroll of today with that of the fiscal year 1939-40, we find that today the Railway and all its subsidiaries employ over 4,300 people who receive something over $6 million yearly, whilst in 1939-40 the payroll amounted to $2,239,000 for a little over 2,600 employees. We find that the Railway management under the supervision of the Commissioner for Public Utilities are taking steps to have all their locomotive engines converted from coal to oil fuel, and it is estimated that by this capital outlay of roundly $ 1 million that somewhere around $500,000 annually will be saved. In addition, the fire hazard will be greatly decreased, as particularly during the year 1946 numerous forest fires occurred in various sections of the country which were attributed to defective locomotives. It is also planned to acquire another seven locomotives and switch engines, which will be oil engines and these, together with other engines required, are estimated to cost in the vicinity of $850,000. Another 50 freight cars are to be acquired, costing around $250,000.

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It is also generally known that three new steamers are now under construction in the United Kingdom, which will cost approximately $2.5 million, whilst the gradual rerailing of the roadbed with 70 Ib. steel will require another $250,000 each year. The outlook therefore for capital expenditure in connection with the whole railroad organisation is briefly as follows: Three steamers Locomotives Cars Rerailing Convert to oil Total

$2,500,000 830,000 250,000 250,000 1,000,000 $4,830,000

In addition to these capital expenditures which are foreshadowed for the fiscal year 1947-48, we must expect to have to find somewhere in the vicinity of $1.5 million to pay the deficit on operating account for the present fiscal year 1946-47. This means, therefore, that the total amount of money which will have to be provided for Railway requirements during 1947-48 will be in the neighbourhood of $6.5 million. We are informed by the Railway management that by the conversion of the system from coal to oil fuel a saving of around $500,000 annually can be made. This therefore is, in our opinion, a capital expenditure which is worth-while. It is also anticipated that further reductions in expenditures in operating costs can be effected, and as it will be unnecessary to make any further capital expenditure for some years to come — with the exception of the annual rerailing cost of $250,000 — the General Manager had indicated to us that, in his opinion, once these capital expenditures have been made, the annual deficit — including the cost of rerailing — should not be in excess of $750,000. This amount therefore may be used as a basis for making an estimate for the compiling of estimated expenditures of the entire operating expenses of the country. The Finance Committee cannot close these comments on the affairs of the railway, steamers and dry dock without drawing the attention of the Convention and the country generally to the annual references made by the Auditor General regarding the careless manner in which the accounts of the Railway are kept. We quote from the report for the fiscal year 1944-45 as follows: The position with respect to Railway inventories is similar to that described in my Reports of previous years. Stock differences totalling $89,706 being the net amount by which stocks on hand were in excess of the value shown in the control value account, were adjusted to operating account. This state of affairs is one which certainly should be remedied, and even though the Auditor General has been repeatedly drawing the attention of the government to the matter, and even though the amounts of money involved have been substantial, no effort whatever seems to have been made by either the Commission of Government or the railway management to either explain the discrepancies, or to take steps to institute any enquiry with the object of eliminating the possibility of future repetition. Newfoundland Hotel In our previous review of the operations of the Newfoundland Hotel, we omitted to point out that when this public utility was first constructed in 1925, the company formed to operate and construct the hotel had been given a government guarantee of some $450,000 for which the Newfoundland government received a first mortgage on the entire assets of the company. The company which promoted and built the Newfoundland Hotel, which cost a total of well over $1 million, continued to operate the business for three or four years after it opened. However, during 1929-30 this company was forced into liquidation, having defaulted on its interest payments on the first mortgage bonds guaranteed by the Newfoundland government. The government was compelled to redeem the bonds and take possession of the hotel, and it has been operated ever since as a government utility. We have

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shown in the previous sub-section of this report details as to its operations up to June 30, 1940, and now give a statement of its annual earnings and operating expenses from the fiscal year 1940-41 to December 31,1946: Revenue Expenditure Profit/Loss

-4> 1940-41 177,571.35 160,461.86 17,109.49 1941-42 260,829.37 253,060.32 7,769.05 1942-43 (9 mos.) 217,115.52 227,251.62 -10,136.10 1943-44 289,353.56 328,288.68 -38,935.12 1944-45 300,172.67 330,692.57 -30,519.90 1945-46 295,915.80 343,194.29 -47,278.49 The result of these operations from July 1, 1940 to March 31, 1946 shows a net loss on hotel operations of approximately $102,000. Included in this loss is considerable replacement expenditure, and for the fiscal year 1945-46 an amount of $42,000 is shown. For the period April 1, 1946 to December 31,1946 a profit of $7,800 is shown, after making provision for $4,625 capital expenditure for new boilers. Also, the operating account of the hotel is obligated to the payment of a pension to the former manager in the vicinity of $1,200 annually. It is difficult to understand how the hotel has been showing a loss on operations from the year 1942-43. The hotel was continuously filled to capacity, but the system of rates seems somewhat unusual. We find that travellers from outside the country who come to Newfoundland on either business or pleasure, are charged a higher rate than those living in the country. Further, we find that special concessions have been given to those officials from the United Kingdom who have been seconded for duty with the Newfoundland government, and further, that the management of the hotel is subject to control at the present time by the Department of Public Utilities, whose officials have no knowledge whatever of the hotel business. The Finance Committee is of the opinion that no discrimination as to rates should be shown, and that all transients, whether Newfoundlanders or those from outside the country, should be charged the same. The same should apply to permanent guests. There are some 165 persons on the payroll, which amounts to around $150,000 annually. It is only natural to anticipate further capital expenditure on the hotel as it is now over 20 years old, and during the period of war suffered from lack of many essentials. The new manager has informed us that he estimates a capital expenditure of around $80,000. This money would be spent in the various departments for the purpose of modernising equipment, renewing furniture, etc. As it will be seen that during the past nine months a profit of almost $8,000 is shown, it is hopeful that after this amount of capital expenditure is incurred, the hotel should be operated at a profit; but it is evident under present operating conditions that its accounts can be balanced. NEWFOUNDLAND SAVINGS BANK Deposits as at June 30, 1941 Profit for year 1940-41 Deposits as at June 30,1942 Profit for year 1941-42 Deposits as at March 31, 1943 Profit March 31,1943 Deposits March 31, 1944 Profit for year 1943-44 Deposits March 31,1945 Profit for year 1944-45

$ 5,108,475 $ 58,676 $ 6,669,291 $ 64,792 $ 8,165,270 $ 53,656 $11,525,536 $ 80,122 $14,559,611 $ 110,545

409

REPORTS AND PAPERS

At the end of the fiscal year 1945-46 the profits on business for that year showed as $99,395.54. At the end of the fiscal year 1944-45 the accumulated profits which have been held by the bank since 1937-38 amounted to $620,246.99. Therefore the total accumulated profits as at the end of March, 1946, stood at roundly $720,000. As the Auditor General's report covering operations for the fiscal year 1945-46 is not yet available, a definite statement of the bank's affairs is not possible at this time. However, the above information was supplied us by the Department of Finance, and we can say that the total deposits in the Newfoundland Savings Bank as at December 31,1946, were close to $20 million. The following is a statement of cash and securities held by the bank as at March 31,1946: Cash on hand On deposit, Bank of Montreal On deposit, Eastern Trust Company Investments (at cost) Newfoundland government 3% stock Bonds Savings certificates Canadian Dominion of Canada bonds Canadian National Railway bonds Australian Government bonds Government stocks New Zealand government stocks City of St. John's, Newfoundland Bonds Public utility coys., first mortgage Newfoundland $166,879 Canadian 37,750 Industrial first mortgage bonds, Nfld. Water companies (Newfoundland) Loan to REWA Accrued interest Furniture Total

$

;

102,104 188,351 250,000

$

540,455

202,282 553,861 1,000 14,779,456 68,075 935,003 379,404 418,532 150,962 204,629 743,069 20,560

$18,436,833 24,888 197,628 1,000 $19,200,804

Of the $18.5 million in securities held by the bank, less than $2 million are Newfoundland securities. The Finance Committee feels that a greater amount of this money should be invested in Newfoundland securities. We express the opinion that no country can prosper unless it shows faith in its own future. In 1939 legislation was enacted whereby the bank was not permitted to invest any more than 20% of its deposits in Newfoundland securities unless these securities were guaranteed by the British government. During the period of war some $5 million in bond issues was raised on the credit of Newfoundland. It is sad to note that just around $500,000 worth of these bonds were purchased by the bank, whilst many millions have been used for the purchase of Canadian bonds. For the purpose of showing how revenues and expenditures advanced from the fiscal year 1940-41 to December 31,1946, we herewith give a statement of the annual revenues and expenditures under the various headings covering this period:

410

NATIONAL CONVENTION REVENUES 1940-41

1941-42

1942-43a

1943-44

1944-45

1945-46

1946b

$

$ $ $ $ $ 325,294 256,287 205,589 388,937 440,582 Finance 14,462,555 15,066,439 17,971,093 18,280,314 15,991,742 Customs Posts & Tele1,081,012 1,780,665 926,104 1,199,921 1,641,317 1,454,028 1,169,578 graphs 2,209,489 3,306,724 2,522,076 7,782,511 9,825,384 10,225,094 9,200,721 Assessor 5,004 2,059 3,672 3,438 17,585 2,479 9,959 House Affairs 27,517 23,851 30,841 30,956 23,080 42,139 39,912 Education 63,744 25,843 27,347 39,848 40,192 41,542 14,166 Justice 3,608 32,526 39,110 43,694 9,753 18,921 35,863 Defence Natural 188,367 479,348 427,230 439,074 340,028 215,278 214,118 Resources Agriculture & 33,625 ~ ~ ~ Reconstruction 72,601 395,238 484,332 429,898 105,423 437,156 294,857 373,213 Public Works Public Health 230,517 130,954 96,989 243,154 225,752 96,225 215,108 & Welfare Board Liquor 809,208 556,475 758,021 2,260,000 2,265,000 1,702,925 1,125,000 Control Col. Dev. Fund & D.O. Loan 2,736 182,181 156,178 134,562 134,292 134,292 — Service 1,774 ~ ~ 3,225 138 Supply 23,313,741 19,539,949 28,600,947 28,983,960 16,196,433 33,342,191 33,426,989 Total $

148,082 271,899 11,353,949 16,803,082

EXPENDITURES0 1940-41

1942-433

1943-44

1944-45

1945-46

1946b

$

$

$

$

$

685,996 250,434

544,471 292,942

1,334,428 273,475

1,329,762 423,307

1,415,141 428,416

1,726,440 471,393

2,119,323 417,837

792,129 23,065

992,577 25,602

1,021,048 25,638

1,246,460 33,029

1,332,440 54,995

1,380,400 61,127

1,181,432 42,615

61,253 1,531,508 639,803 492,794

48,372 1,662,922 681,974 666,411

39,428 1,895,002 639,566 1,646,843

64,107 2,370,757 982,116 1,785,623

108,382 2,996,076 1,139,150 1,514,643

360,830 3,310,177 1,185,679 1,149,446

3,211,958 2,381,806 888,567 134,122

1,106,409

1,047,983

1,894,521

2,480,926

2,936,294

3,479,962

2,293,712

641,405 1,996,326 3,220,955

363,336 2,634,608 2,831,641

-

$

Finance Customs Posts & Telegraphs Assessor House Affairs Education Justice Defence Natural Resources Agriculture & Recons.

1941-42

$

2,982,369 Public Works 2,368,372 Public Health & Welfare Board Liquor 51,573 77,763 69,488 Control -Supply Total 1 1 ,473,65 1 1 1 ,870,601 14,190,178

-

--

~

~

4,354,236 3,633,095

5,947,002 4,304,549

6,937,719 5,020,833

6,382,464 4,165,906

109,511

~ 18,812,930

121,534 94,122 117,199 182,884 169,178 80,838 22,477,172 25,374,718 23,394,702

REPORTS AND PAPERS

411

a

9 months April 1 - December 31,1946 °Not including interest charges. [Adapted from the table in the original report. Figures rounded to the nearest dollar.]

b

The following is a statement of interest and sinking fund paid annually on our national debt for the years 1940-41 to December 31,1946. It also includes the repayment of some loans which came due for redemption during this particular period: 1940-41 1941-42 1942-43 (9 mos.) 1943-44 1944-45 1945-46 To December 31,1946 Total

3,910,205 4,179,596 1,626,221 6,382,964 3,786,996 4,913,758 3,580,587 $28,380,327

Of the above amount, $4,342,398 was the redemption of loans as follows. Syndicate of banks, $625,000 advanced in 1932 for the purpose of helping to pay interest charges. During 1943-44 two sterling loans, £377,890-10 at 5%. Bonds amounting in dollars to $1,689,170; and £212,911-7-9 of a Colonial Development Fund and Dominions Office loan equivalent in dollars to $951,714. In addition another loan which came due in the United Kingdom during the year 1945-46 amounting to £266,464-1-0, equivalent in dollar currency to $1,076,514 was redeemed. Therefore the interest and sinking fund paid during the period from July 1, 1940 to December 31, 1946 amounted to roundly $24 million. The annual exports of iron ore from Bell island for the years 1940-41 to 1945-46, together with their values, are shown as follows: Year 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 1946-47 approx.

L. Tons 1,395,680 1,137,962 697,418 791,688 578,263 999,868 1,000,000 6,600,879

Value in Dollars $ 3,558,998 2,918,128 1,777,965 2,019,695 1,474,346 3,051,630 3,100,000 $17,900,762

It will be noticed that from 1942-43 to 1944-45 the exports of iron ore were on a low scale. This was caused because of the lack of shipping facilities, and the fact that very little of this product was being shipped to Britain but was confined principally to the company's steel mills in Nova Scotia. However, after the cessation of hostilities in May, 1945, shipments again began to rise, and for the past couple of years exports to Britain have increased, and the steel mills in Nova Scotia have taken a goodly quantity. We understand that again contracts have been made with Great Britain for the handling of substantial quantities of this product during the next couple of years, and indications are that the mines on Bell Island will be operating to capacity for the next few years. During the slack period referred to, many of those laid off from the mines were engaged in woods operations, as well as on construction of military bases.

412

NATIONAL CONVENTION

The following is a summary of ore concentrates exported from Buchans for the period July 1,1940 to April 1,1946: Year 19~4O41 1941-42 1942-43 1943-44 1944-45 1945-46 Total

L. Tons 195,442 185,994 126,421 176,709 131,948 160,095 976,609

Value in Dollars $ 4,009,638 3,720,006 3,224,608 4,189,186 4,091,898 5,375,903 $24,611,239

During this war period, shortage of shipping facilities considerably hampered the operations of this mine, with the result that exports slackened off somewhat. However, we understand that the mine is now operating to capacity and the company which controls this development are now making further explorations, not alone in this territory, but in other sections of the country; and we look forward with hope and confidence to the future for the continuation of operations in this industry. The following is a statement showing the annual exports of newsprint from Newfoundland for the period July 1, 1940 to April 1, 1946: Year 1940^41 1941-42 1942-43 1943-44 1944-45 1945-46

L. Tons 399,382 395,568 248,085 291,798 332,209 372,528 2,039,570

Value in Dollars $16,314,379 16,970,702 10,335,141 12,737,862 16,584,578 20,653,403 $93,596,065

The shortage of shipping, as well as the rationing of newsprint during the war period, curtailed operations in our two paper mills considerably. The prices obtained for this commodity were low in comparison with prices today; whilst great difficulty was encountered in the obtaining of the necessary labour for woods operations. We now give a statement showing the number of quintals of salt codfish exported from Newfoundland during the period July 1,1940 to March 31, 1946. The dollar values include all the fresh and frozen fish exported, as well as all other fishery products: Year 1940-41 1941-42 1942-43 1943-44 1944-45 1945-46 Total

Qtls. of Salt Codfish 1,013,169 879,303 766,911 892,666 815,726 1,024,211 5,391,986

Value Fishery Products $ 9,735,175 12,655,834 12,057,117 18,486,226 21,869,343 29,697,069 $104,500,764

413

REPORTS AND PAPERS

During the period of war the prices obtained for our fishery products advanced to a point which gave handsome remuneration to both producers and dealers. It will be observed that for a period of six years the total value of our sea products came to over $100 million, whilst for the previous seven years the total value of our fishery exports amounted to but $53 million. Such sharp advance in this commodity of food is in line with a similar advance which took place in the period of World War I, and this was considerably helped by the establishment of many cold-storage plants located around the island, as well as increased demand for our herring fish. The demand was further enhanced because of short supply owing to thousands of our fishermen being engaged in base construction, thus leaving a lesser number of our people engaged in the fishing industry. The figures shown above do not show the number of millions of pounds of fresh and frozen fish exported. Neither does it show the number of barrels of herring or other fishery products produced. These various statistics will be obtained with greater accuracy as to quantities in the report of the Fisheries Committee. The figures showing the total imports and exports of the country for the years 1940-41 to 1945-46 are as follows: Year 1940-41 1941-42 1942-43 (9 mos.) 1943-44 1944-45 1945-46

Imports 35,484,343 64,584,894 52,376,886 62,488,649 65,824,066 65,898,707

Exports 37,329,815 39,399,640 30,928,201 44,444,620 48,711,980 62,558,498

Total Trade $ 72,814,158 103,984,534 83,305,087 106,933,269 114,536,046 128,457,205

During this period the total trade of the country reached record heights. It will be observed that each year sees a gradual increase. It will also be observed that during the period 1941-42 to 1944-45 our imports greatly exceeded our exports. This is accounted for by the fact that great sums of actual money came into the island and was earned by our people in the construction of military bases - the handling of great amounts of shipping, the repairs to scores of ships disabled by enemy action. In addition to our total exports of roundly $250 million of products for this period, which represents the earning power of our people from our three major industries for six years, it is estimated that at least another $150 million found its way into the country and was expended by the American and Canadian governments in the construction of military bases. Prices received for our fresh and frozen fish reached a new high record, but the paper industry, in addition to suffering from lack of shipping, as well as rationing, also was pegged at a price that did not reach above $50 per ton. Taking everything into consideration, namely, employment on bases, expenditures by the armed forces, as well as merchant marine, it is admitted that the period covered by these trade statistics has been the most prosperous ever witnessed by our people. It might be termed artificial prosperity, but nevertheless we feel that the contacts made with the outside world, as well as definite recognition of Newfoundland's strategic position, will contribute in no small measure in helping the country make further progress in the world when conditions once again become normal. We herewith give a statement showing the annual revenues and expenditures from the period July 1,1940 to December 31,1946: Year 1940-41 1941-42 1942-43 (9 mos.) 1943-44

Revenue 16,196,432 23,313,741 19,539,949 28,600,947

Expenditure $ 15,830,699 16,095,197 15,850,149 25,238,794

414

NATIONAL CONVENTION 1944-45 1945-46 To December 31,1946

33,342,191 33,426,986 28,983,960 $183,404,206

26,309,168 30,288,476 26,975,289 $156,587,772

It will be observed that the total revenue for six and one-half years amounted to over $108 million, or an average annual revenue of $28 million; whilst the total expenditure for the same period amounted to $156.5 million, or an average annual expenditure of $24 million. From the revenue side of the picture it will be seen that the Customs returns rose sharply each year from $11.3 million in 1940-41 to $18.3 million in 1945-46, and indications are that for the year ending March 31, 1947 this latter amount of revenue will be exceeded. The Department of the Assessor shows an even more marked advance in collections, from $2.2 million in 1940-41 to over $10 million in 1945-46, or over 400%. The Board of Liquor Control had similar sharp advances from $556,000 in 1940-41 to $2,265,000 in 1944-45. For the full period under review the Board of Liquor Control shows a net profit on its operations of over $9 million. This does not include the Customs revenue derived from the importations, or excise duty on local beers manufactured and sold through the Board, which we estimate should have brought in another $5-6 million. On the expenditure side of our accounts we find the following. Out of a total expenditure of $156 million, $4.7 million was advanced the Railway for expenditure on capital account; another $4.3 million was used for the repayment of loans coming due in the United Kingdom and the Canadian banks; $19.5 million was spent under the heading of Reconstruction from the year 1940-41 to December 31,1946, whilst over $3 million was spent under the heading of Special Expenditure. These amounts aggregate some $27 million, or an additional annual expenditure of over $4 million, apart from ordinary expenditure. Under the heading of "Reconstruction Expenditure" we find that for the period of July 1,1941, to December 31, 1946, $19.5 million was expended. Of this amount over $9 million was expended between the years 1940-41 and 1944-45. This period was one in which we believe such large capital expenditures were unnecessary. There arose no necessity for the expending of money for the purpose of finding employment or relief, and there is no doubt that the country did not receive real value for the amount of money disbursed. We believe it was a period when our ordinary expenditure should have been quite sufficient to carry on the administration of the affairs of the country. There was an abundance of employment in the country and it would appear there was no necessity for such heavy expenditure of public funds. It is unnecessary to relate in detail these various over-expenditures, but as an example, we again must refer to the Clarenville shipbuilding scheme, when the government had estimated an expenditure of less than $1 million for the construction of ten vessels, and the ultimate cost to the treasury as already has been outlined, amounted to $2.7 million. Reviewing the expenditure side of the administrative affairs of the Commission of Government, we only really can justify two increases in expenditure. These are the increase in the educational vote from $1.5 million in 1940-41 to $3.3 million in 1945-46, as well as the cost of living bonus given the civil servants, which amounts to an additional increase of nearly $1.25 million annually. The increase in the Department of Public Works from roughly $2 million annually in 1940-41 to nearly $7 million in the year 1945-46 cannot be justified, and if we are to judge from the comments of the Auditor General's Report every year for the period under review, the increase in the Department of Public Health and Welfare from $3.2 million during the year 1940-41 to over $5 million for the fiscal year 1945-46, a goodly amount of this additional expenditure is questionable. It is the considered opinion of the Finance Committee of this National Convention that at no time during the period from 1940-41 to 1945-46 should the total expenditures of the country have exceeded the sum of $21 million annually. This would have meant an additional $20 million in surplus account today. We are also of the opinion that if the Commission of Government had not restricted the rates of wages to be paid our people engaged in the construction of military, naval and air bases, that the

REPORTS AND PAPERS

415

earnings of those people would have been supplemented by an additional $15-20 million. We find that no effort was made to establish a surplus trust account, which should be kept as a separate account by the government in the Bank of Montreal. This causes untold confusion, and tends in no small degree to mislead the people as to the actual cost of administering the affairs of the country. We contend that a special account should have been opened in the bank for this purpose, and that each year, when surpluses were shown, that such surplus should have been transferred to this surplus trust account, and that any amounts spent on capital expenditure account should have been taken from that account. This would keep the ordinary operating account of the country separate, and would show the actual cost of ordinary government upkeep. Let us give an example. In the ordinary expenditures, as the accounts are kept, we find that loans have been made to the Housing Corporation aggregating some $3.5 million. This amount of money is a loan to the Housing Corporation at 3.5% per annum, and is repayable over a period of years. This amount therefore is recoverable and should not be shown in the actual expenditures of the administration of government. Against this money is the security of about 250 houses and ten apartment blocks. We understand that further expenditures in respect of this project have been confined more or less to the completion of the buildings now actually under construction. It will be observed that the total revenues and expenditures under the various headings for the period from April 1,1946 to December 31,1946 show a surplus of roundly $2 million. We have been unable to get the expenditures and revenues under the various headings for the balance of the fiscal year; but it will have been noted that figures published in the local press around the first week of February still show that we had a surplus of $2 million at that period. On further enquiry from the Commissioner for Finance we were successful in ascertaining that the revised estimates of the Commission of Government for the balance of the fiscal year 1946-47 might show a deficit in the whole year's administration of over $3 million. It was indicated also to us that the estimated revenue for this year will be around $36 million, and that the total expenditures will aggregate over $39 million. In the estimates for expenditure presented by the former Commissioner for Finance, the Honourable Mr. Wild, in April, 1946, made the following forecast: revenue $30,757,200, which figures forecast a deficit for the present fiscal year of $3.25 million. It would be expected therefore than when the revenues exceeded the estimated amount, that the expenditures would be kept at the level forecast nearly one year ago. But again, as in nearly every year since 1940-41, it would appear that when the Commission of Government realised they were getting more revenues than expected, no effort was made to keep within the original estimates of expenditure. The additional expenditure which has not been included in the government's estimates for 1946-47 covers a prospective deficit on the Railway this year of around $1.5 million. It includes $2.5 million for the three new steamers now being constructed in the United Kingdom for the account of the Newfoundland Railway. We have not been able to obtain the details of the other overexpenditures, but we understand that various departments of government have overspent their budget. The Finance Committee again must condemn strongly the present policy of the Commission of Government with regard to the expenditure of public monies. The Committee feels that if this state of affairs is permitted to continue, our total accumulated surplus now held on deposit in the Bank of Montreal in St. John's, Newfoundland, will disappear within two years. This is tragic, and we regret to say that no steps whatever have been taken by the government to curtail or control expenditures. The present fiscal year (1946-47) is witnessing the spending of a record amount of money in all Newfoundland history. It is not unlikely that the total disbursements will reach the colossal amount of upwards of $40 million. At the moment it is difficult to say the exact amount which is being spent on capital account, but it is evident that such expenditures will be in the vicinity of $16 million. $2.5 million of this amount is being spent for the purpose of paying for three ships under construction in the United Kingdom. These monies are being taken from our cash balances in Newfoundland, and it is our view that such money should be found from the outstanding interest-free loans due us by the United Kingdom government. Furthermore, the ships in question are not being delivered before the year 1947-48, and consequently the payment for their construction is a proper charge upon that year's

416

NATIONAL CONVENTION

accounts and not on the present year. In addition, it is evident that many of the votes in the 1946-47 estimates are being overspent, but the details of such overexpenditures are not available at the present time. Again we point out that in the budget speech delivered by former Commissioner for Finance Wild last April, he estimated our revenues at around $30 million and the expenditure at approximately $34 million or a deficit of $4 million. The actual revenues under the revised estimates will be around $36 million whilst the expenditures will be around $40 million. In other words, the deficit will be as forecast, that is $4 million, despite the fact that revenues exceeded the estimate by approximately $6 million. During this period of unprecedented prosperity the savings of our people rose sharply. We find that up to the end of December, 1946, the total amount of money on deposit in both the Canadian chartered banks and the Newfoundland Savings Bank amounted to roundly $115 million. Of this amount, $22.5 million was to the credit of government accounts, whilst the balance of $92.5 million stood to the credit of the people of the country. In addition, the investment of our people in life insurance rose sharply from around $55 million in 1939 to upwards of $90 million at the present time. This amount of protection should represent at least another $25 million in cash. These amounts of money do not include some $12.25 million on loan to Great Britain, free of interest, and at the credit of the government account with the Crown Agents for the Colonies in London. Neither does it include the investment by our people of some $5 million in government locally raised loans, or by the investment of around $2.5 million in war savings certificates. It is impossible to ascertain what amount of securities and other investments are held by our people, but which are not recorded or registered. A rough estimate would be at least another $25 million. The Finance Committee would like to draw the attention of the Convention to the fact that particularly during the period of war, when the Canadian dollar was at a discount of 10% in the United States, and Great Britain was short of dollar currency, Newfoundland contributed considerable of these much-needed United States funds both to Canada and Great Britain. We estimate that around $300 million in American currency was cleared through our local Canadian banks, and the Bank of Canada made profits on such transactions, while the treasury derived no benefit whatever from these transactions and apparently no effort was made by the Commission of Government to secure a part of the profit on such transactions. In addition, the Commission of Government, without being requested, made interest-free loans to Britain as follows: Year 1941-42 1942-43 1943-44 1944-45 Total

Amount $ 3,800,000 4,000,000 2,500,000 2,000,000 $12,300,000

In addition to these loans we also contributed $500,000 as a free gift for the purchase of planes and the establishment of a Newfoundland squadron of the Royal Air Force. In addition to these loans and the free gift, the Newfoundland treasury also paid all the claims settled by a specially created arbitration board for the purpose of valuating properties appropriated by the American and Canadian governments for defence purposes. The amounts in question totalled roundly $2 million and were repaid the Newfoundland treasury by Great Britain. In this respect we would like to draw the attention of the Convention and the country to the fact that under the terms of the base agreement originally made between the American and British governments during September 1940, it is distinctly stated that the American government would pay all compensation to owners of private property for loss by expropriation or damage arising out of the establishment of the bases and facilities in question. We, the Finance Committee, are unable to determine whether or not the American government repaid Great Britain any amount on account of Newfoundland claims settled by the arbitration board set up for the purpose of settling such claims.

REPORTS AND PAPERS

417

The following is a statement of the public debt of the country supplied us by the Department of Finance: Trustee securities, £872,528, equiv. dollars Temporary loan from UK £400,000 3% guaranteed stock, £17,793,405 Deferred securities, £ 6,460, do 3% War Loan (Newfoundland) 3 1/4% First Victory Loan (Newfoundland) 3% Second Victory Loan (Newfoundland) Savings certificates Sundry, £250 Total

$ 3,525,013 1,616,000 71,885,356 26,098 1,500,000 1,500,000 2,000,000 1,935,470 1,010 4,100 $83,993,047

This is the gross national debt of the country as at December 31, 1946, computing the sterling debt at $4.04 to the pound. The total of sterling or external debt amounts to $77,052,467, whilst the balance of $6,940,580 is held in Newfoundland. As against this gross debt we have a sterling sinking fund, established during the fiscal year 1937-38, and this fund amounted to £1,868,000 or in dollar currency, $ 7,546,720 as at December 31, 1946. If we deduct this amount from the gross sterling debt, we get our net sterling debt of $69,505,747. The sinking fund established for the redemption of our local debt amounted to $768,118 on December 31,1946, and deducting this amount from our gross dollar debt, we get a net dollar debt of $6,172,462. Consequently our total net debt as at December 31,1946 amounted in dollar currency to $75,678,209. Referring to this public debt, we would like to draw the attention of the Convention, the Commission of Government and the Dominions Office to the fact that it would seem that the loan referred to above as a temporary loan of £400,000, and on which no interest ever has been paid is not, and should not, form a part of our national debt. This loan was raised during the year 1917-18, and the understanding at that time seems to have been that it would not bear any interest, and eventually would be cancelled. It has been carried in our accounts and shown as a part of our debt ever since; whereas according to unwritten agreement, it would appear that it should have been cancelled years ago. The money was used at that time to keep the Newfoundland Regiment in action at a time when the regiment had been suffering severe casualties, and had been withdrawn from front-line action for a period, in order to bring it back to full strength for the purpose of devoting its fighting qualities to contribute in bringing about ultimate victory in the autumn of 1918. With reference to the sterling sinking fund which was begun during the fiscal year 1937-38 under an act passed by our last legislature in November, 1933.... On perusal of the Auditor General' s Report, we find that for each year since the fund was established, the principal of the annual sinking fund (£177,950) was used for the purpose of purchasing the 3% stock referred to in the statement of our national debt. That meant — if it meant anything — that this portion of our debt redeemed by the annual sinking fund should have been cancelled. However, this was not done, and we find that the sinking fund established in the Bank of England now amounts to £1,868,000, and we further would point out that if this sinking fund, paid over to the bank annually, and which amounts each year to £177,950, were compounded at an annual rate of interest of 3%, the fund now should show not less than £2 million to its credit. We consider that each year when this sinking fund amount (£177,950) is used for the purchase of the principal of our 3% stock, that our estimates of expenditure should show a reduction in principal and interest accordingly. However, we find that we now are paying over to Great Britain interest on debts which really have been liquidated, and the treasury of Newfoundland has lost thereby approximately $250,000. Our statement of revenues and expenditures for the years 1940-41 to December 31, 1946, show

418

NATIONAL CONVENTION

an excess of revenue over expenditure of $26.8 million. During this period loans were raised on the credit of the country in the form of bonds and war savings certificates in an amount of approximately $6.5 million. Adding these two amounts together, we now should have on hand in Great Britain and in Newfoundland approximately $33.5 million. From information received from the Department of Finance, we find that as at December 31, 1946, the actual cash to the credit of Newfoundland was distributed as follows: On deposit Bank of Montreal, St. John's With Crown Agents in London, £804,000 Interest-free loans to Britain Total

$22,031,500 3,232,080 9,310,000 $34,573,580

We were informed by the former Commissioner for Finance, the Honourable Mr. Wild, when he appeared before the Convention, that the sum of £800,000 had been transferred from the interest-free loans to Britain during this year to the credit of our account with the Crown Agents in London, and invested at 2% interest for the purpose of redeeming two loans maturing in 1950 and 1952. These two loans amount to £872,528, or $3,525,013. This is unusual procedure when we come to consider that the maturing dates of the loans in question are three and five years distant. Such action certainly has some significance, but no definite explanation has been given. Under such circumstances, therefore, we must reduce our available cash balances down to $31 million with a consequent reduction in our sterling debt of that amount; thus establishing that debt at roundly $73.5 million gross, or after deducting the sterling sinking fund of $7.5 million, our debt to Great Britain at present stands at $66 million. The Finance Committee are of the opinion that the treasury of Newfoundland now should be receiving some interest payment on the interest-free loans made to Britain during the period of war, and that such interest should be not less than 2.5%. On the loans granted Britain by both Canada and the United States, interest is being charged, and there seems to us no reason why Newfoundland should not be entitled to interest at the same rate as is being paid to these countries. We find that the Newfoundland government has created a separate bank account for the purpose of paying allotments, pensions, etc., on behalf of the United Kingdom. This is being done through the Department of Public Health and Welfare. As at December 31, 1946 this particular account was overdrawn to the extent of $1,701,800. The Auditor General in reporting on this matter points out that the delay in submitting accounts to the United Kingdom by the Public Health department results in a consequent loss of interest to our exchequer account. General Financial Review We have dealt as closely as possible with the entire administration of the country from the period 1909-10 to December 31,1946, a period of 37V5 years. We commenced our investigations from the year 1909 because of the fact that the Amulree Report stated, on page 37, paragraph 105, that from evidence given before the Royal Commission, there was almost unanimous agreement among witnesses that our financial misfortunes began in that year. (1) We have produced evidence that for a period of 11 years, that is from 1909-10 to 1919-20, the finances of Newfoundland were never in better condition. For that period it is proven beyond any doubt that continued surpluses on government account are shown, in all about $7 million, on an annual average revenue of $5.5 million. In addition, the country obligated itself to finance its own participation in World War I. This seems to indicate that the Amulree Report took for granted statements that are open to question, and did not investigate the true facts. (2) After a close review of the administration of our affairs from 1920-21 to 1933, we find that but for the ravages of a post-war depression during the early twenties, and the financial collapse of the world generally in 1929, all of which was beyond the power or control of any Newfoundland government, ordinarily our affairs were progressing favourably. We have proven that were it not for

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our involving ourselves in World War I, and thereby accepting an annual liability on account of that war, for interest and pensions which amount to approximately $1.5 million yearly — that if our governments of those times had enacted legislation reducing our interest charges to 3% as Great Britain and Canada did, we would have weathered the financial storm without any difficulty. (3) We find that for the period 1933-34 to 1940-41 the country experienced more severe hardship and suffering than any time in its history. Our people, nearly one-third of them, were forced to exist on six cents per day; and whilst it would appear that these monies were found by the government of the United Kingdom, the fact of the matter is that the grants-in-aid as well as the allocations from the Colonial Development Fund, amounting in all to something over $20 million, were just sufficient to pay the interest on our debt to the bondholders. This would indicate, therefore, that all the relief given and the relief work performed, was provided from funds derived from our own ordinary revenues. (4) Coming to the year 1940-41, we find our budget balanced for the first time in 11 years, and a small surplus was shown. We find, as already stated, that the Government of the United Kingdom, whom we maintain merely were acting as trustees of the affairs of the people of Newfoundland, gave a 99-year lease of our strategic bases to the United States of America. We find that Newfoundland received no recompense whatever for these bases, and our workmen were discriminated against as to pay and remuneration for work performed in the construction of these particular bases. We find that no effort whatever was made by either the Commission of Government or the Dominions Office to obtain any favourable tariff concessions on our fishery products from the United States government in return for the lease of these important military bases, or any provision made for post-war renegotiations. (5) The year 1941-42 shows a substantial surplus on account of revenues and expenditures amounting to over $7 million. We find the government advancing, without request, the sum of nearly $4 million, free of interest, to Great Britain; whilst at the same time the government-owned railway had to borrow some $2 million from the Defense Supplies Corporation of the United States at an annual interest charge of 2.5% for the purpose of purchasing additional rolling stock and other equipment. This year might be regarded as the beginning of the Commission of Government's abnormal expenditures, because it was during this year that the Clarenville shipbuilding scheme was started, which resulted in the spending of over $2.5 million for the construction of ten vessels, which were estimated to cost less than $1 million. (6) The year 1942-43 gives the result of the spending policy of the Commission of Government, when we find that for a period of nine months nearly $16 million was expended. Again, we find that another loan, free of interest, was given to the United Kingdom amounting to $4 million, whilst the government raised a Victory Loan on the credit of the country amounting to $1.5 million. (7) The year 1943-44 again shows the expenditure mounting - this time by $9 million over the year 1941-42, and again we find another free of interest loan given to Great Britain, amounting to $2.5 million. (8) The year 1944-45 witnesses the revenue of the country amounting to $33.4 million, a record in our history; but again the expenditure rises another million dollars to $26 million and we show a surplus of around $7 million. Another $2 million was advanced to Great Britain, free of interest. (9) The year 1945-46 sees practically the same revenue collected as the previous year, but expenditure advances by $4 million over the previous year. We find the government budget forecasting a deficit for the first time in six years. We find that during this year orders were placed in the United Kingdom for the construction of three ships, the total cost of which will be not less than $2.5 million. With regard to the payment for these ships, we were informed by the Commissioner for Finance, the Honourable Mr. James, that it is the intention of the Commission of Government, no doubt on the authority of the Dominions Office, to pay for these ships from monies now to the credit of the Newfoundland treasury in Newfoundland. In view of the fact that we have considerable funds in England, something over $9 million owed us by the United Kingdom government, it would seem preferable from a Newfoundland viewpoint to utilise these funds. As a matter of fact, we feel that our semi-annual interest charges, due in Britain every six months, should be paid from the monies owed

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us by the United Kingdom government, and that no further transfer of funds outside the country should be made, at unnecessary expense, until such time as our sterling credits have been used up. (10) Recapitulating our whole financial situation, we are happy to be able to report that Newfoundland is at present in an excellent financial position. We find that if we were to use the available cash at our disposal, as well as the sinking funds for the reduction of our national debt, that such debt would be very little in excess of $40 million. (11) We feel that if more serious consideration had been given to the conservation of our expenditures between the years 1940-41 and 1945-46, as well as the present fiscal year, that the country would have been in an even better financial position than it is today. However, in spite of unusually heavy expenditures, particularly on capital account, we find the country is in a sound financial position. Nevertheless, we take this opportunity of warning the Convention, the Commission of Government and the people of the country generally, that such abnormal expenditures cannot possibly continue, and that it is essential that the present government or any future government take the necessary steps to initiate and carry out a steady, progressive policy for the development of our natural resources. (12) We find that the total cost of the Railway and its subsidiaries, which includes the purchase price of $2 million, from 1920 to December 31,1946, amounts to $29,810,881. Approximately 50% of this amount is capital expenditure, whilst the other 50% represents deficits incurred in the operation of the entire system. (13) We find that the total interest and sinking fund paid on our national debt from 1920 to December 31,1946 amounts to the huge sum of $95,477,260, or over $20 million more than our total net debt at the present time. (14) We find that our per capita debt at the present time is $237, that the per capita debt of Canada is $1,387; that of Great Britain is approximately $1,900, and that of the United States of America is $1,853. Further, our per capita tax is $110, whilst the per capita tax of the Dominion of Canada is over $230. These figures prove beyond the shadow of a doubt that the financial position of Newfoundland today is most encouraging. It is interesting to note that for the period between 1933-34 and 1939-40, the total amounts of grants-in-aid, plus loans from the Colonial Development Fund, amounted to just slightly over $20 million. For the same period our total interest charges amounted to $20.6 million. This shows that in actuality the only monies received from Great Britain during the depression period prior to the outbreak of World War II were just sufficient to pay our interest charges to our bondholders, and that consequently Newfoundland paid all its own operating expenses for that period with the exception of debt interest; this includes the maintenance of government and expenditures on relief. The amount of outstanding stock for which the Government of Newfoundland is liable in case of default for Bo water's Newfoundland Pulp and Paper Mills Limited stood at £1,694,600 as at March 31,1945. In dollar currency this amounts to less than $7 million. In addition to our public debt, already referred to, the treasury of the country is liable to the United States Defense Corporation for the balance of a loan made by that body to the Newfoundland Railway. This amounts at present to approximately $1.5 million. Also over $3 million is due the treasury as loans granted to the St. John's Housing Corporation which will be ultimately liquidated. We find that during 1939-40 the civil service employed 2,877 people who received salaries totalling $2,165,230. Today the same civil service consists of 4,023 who receive $4,834,128 annually. In addition, some 2,000 teachers are occupied all over the island and receive in the vicinity of $2 million annually. If we take into consideration the Railway employees, who number well over 4,000, and who receive over $6 million annually, we find that the government employs today well over 10,000 people who receive in pay and emoluments approximately $13 million annually. Concluding our findings with respect to this section of our Report, we are glad to be able to state that despite consistent abnormal expenditure during the past five years, Newfoundland stands in the strongest financial position in her history; that after making provision for the surprising deficit indicated for the fiscal year which ends on March 31,1947, there should be available in cash balances

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over $30 million. $19 million of this amount should stand to the credit of the exchequer account in the Bank of Montreal in St. John's, and the balance would consist of interest-free loans due us by the government of the United Kingdom, as well as deposits to our credit with the Crown Agents in London. Attached to this report will be found two statements, No. 1 showing the annual expenditures and revenues of the country for a period of nearly 50 years, from 1897 to December 31,1946. If we take into consideration the fact that during the past five years over $20 million have been expended on capital and loan account, which ordinarily should be deducted from the total expenditure, the final result for a period of nearly half a century should show approximately $15 million of a surplus. No. 2 gives the Customs revenue of the country. We give herewith the annual revenues and expenditures of the country from the fiscal year 1897-98 to 1945-46, both years inclusive: Year 1897-98 1898-99 1899-1900 1900-01 1901-02 1902-03 1903-04 1904-05 1905-06 1906-07 1907-08 1908-09 1909-10 1910-11 1911-12 1912-13 1913-14 1914-15 1915-16 1916-17 1917-18 1918-19 1919-20 1920-21 1921-22 1922-23 1923-24 1924-25 1925-26 1926-27 1927-28 1928-29 1929-30 1930-31

Revenue 1,789,874 1,753,736 2,110,234 1,991,154 2,193,526 2,328,044 2,513,633 2,574,069 2,660,805 2,759,690 2,829,078 2,947,868 3,447,088 3,527,126 3,736,455 3,919,040 3,618,329 3,950,790 4,600,271 5,206,647 6,540,082 9,535,725 10,597,561 8,438,039 8,269,680 8,876,772 8,401,669 9,783,188 9,752,551 8,932,435 9,466,005 10,025,649 11,579,214 9,655,640

Expenditure $ 1,784,826 1,719,834 1,850,630 1,955,525 2,129,466 2,270,028 2,393,286 2,443,814 2,519,235 2,625,336 2,785,835 2,947,868 3,137,774 3,354,746 3,524,652 3,803,561 3,929,178 4,008,622 4,110,885 4,554,890 5,369,454 6,766,430 9,247,006 10,951,488 9,127,542 9,552,301 10,022,137 9,436,185 9,865,167 10,533,400 10,740,925 11,132,822 11,434,312 12,898,933

422

NATIONAL CONVENTION 1931-32 1932-33 1933-34 1934-35 1935-36 1936-37 1937-38 1938-39 1939-40 1940-41 1941-42 1942-43 (9mos.) 1943-44 1944.45 1945-46 (budget) December 31, 1946 Total

7,931,047 8,085,666 8,745,195 9,511,134 9,744,016 10,734,773 12,272,211 11,220,473 12,571,015 16,196,432 23,313,741 19,539,949 28,600,947 33,342,191 33,426,986 28,983,960 $464,531,403

11,960,386 11,339,442 10,273,730 11,634,872 13,008,206 13,039,130 14,150,535 15,289,793 17,466,914 15,830,699 16,095,197 15,850,149 25,238,794 26,309,168 30,288,476 26,975,289 $469,678,873

CUSTOMS REVENUE Year 1855 1865 1875 1885 1895 1905 1915 1925 1935 1945

$

approx.

Amount 368,573 379,266 744,029 840,936 1,383,810 2,295,960 3,000,000 7,996,972 7,043,504 17,971,693

Reviewing all the statistics, it will be found that if we had devoted our total cash surplus to the reduction of our national debt, it would have left a net debt not exceeding $40 million. This net debt represents our expenditures in loans as well as in current account of $55 million which our participation in two world wars has cost the exchequer of the country. It is therefore seen that all our public works such as highroads, public buildings, lighthouses, public wharves, hospitals, railway, steamers and dry dock are actually surplus assets which have been fully paid for, and these represent, in our opinion, well over $50 million. This concludes the Report of the Finance Committee of this National Convention. We feel assured that the delegates and the country generally will fully understand that the economic side of our report cannot possibly be presented until such time as certain outstanding facts relating to our national debt, strategic bases, as well as airports, are available. Respectfully submitted, P.J. Cashin (Chairman) W.J. Keough R.B. Job A.E. Penney C.A. Crosbie A.J. Goodridge E.L. Hickman C.H. Ballam P.W. Crummey E.G. Cranford

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Supplementary Financial Report Since completing the general financial report of the affairs of Newfoundland, which showed our position as at December 31, 1946, we have received a statement of the revenues and expenditures under the various headings for the full fiscal year 1946-47 which we give herewith: 1946-47 Total Revenue (as below) $37,247,132 Total Expenditure (as below) 37,141,138 Surplus (subject to audit and amendment following receipt of Crown Agents' March statements) $ 105,994 Revenue Head Finance Customs Posts & Telegraphs Assessor of Taxes Home Affairs Education Justice Defence Natural Resources Public Works Public Health & Welfare Board of Liquor Control C.D.F. Recoveries Supply TOTAL

Actual Revenue $ 443,391 20,255,973 1,594,820 10,972,916 47,864 73,145 56,186 4,386 1,058,412 513,042 304,623 2,000,000 102,093 281 $37,247,132

Expenditure Actual Expenditure Head $ 3,593,087 Consolidated Fund Services Finance 4,499,082 557,502 Customs Posts & Telegraphs 1,758,100 Assessor of Taxes 67,036 Home Affairs 4,216,642 Education 3,382,462 Justice 1,188,341 Defence 394,403 3,080,934 Natural Resources Public Works 8,251,052 Public Health & Welfare 5,923,352 Board of Liquor Control 125,488 Supply 103,657 Total $37,141,138 N.B. An amount of $1,551,864 being the aggregate of actual Crown Agents' payments in February on our account, and an estimate of like payments in March, is included in the total of $37,141,138.

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NATIONAL CONVENTION

The Convention will have noticed that we gave the information under various headings for the nine month period of the fiscal year 1946-47, which closed on December 31 last, from which information, given us by the Commissioner for Finance, it was seen that revenues for this particular nine months amounted to nearly $29 million, whilst the expenditures for the same period totalled approximately $27 million. It will be observed from the statement of revenues and expenditures for the full fiscal year 1946-47, which ended on March 31 last, that the total revenues of the country amounted to the record sum of $37.25 million and the expenditures under all headings aggregated $37,141,000. This therefore shows the general accounts of the country practically balanced, as there would be a surplus of almost $106,000. It will have been noticed in our main report that some three months ago we had been informed by the Commissioner for Finance, the Honourable Mr. James, that the revised estimates forecast a revenue of $36 million and an expenditure of $39 million. It now will be seen that the revenues exceeded expectations, and that expenditures were less than anticipated. Nevertheless, both revenues and expenditures are records in the history of the country. If we take the budget speech of former Commissioner Wild delivered nearly one year ago, we find that he forecast a revenue for the fiscal year just ended of approximately $30 million and that he forecast an expenditure both ordinary, special and reconstruction of approximately $34 million. The additional expenditure incurred over and above the estimates, which amounts to $3 million, is accounted for principally by the payment for the three ships now under construction in the United Kingdom, which are costing roughly $2.5 million and on which $1.5 million has been paid on account. In addition the deficit on railway operations for 1946-47 amounting to approximately $1.5 million also is provided for. These two amounts total $3 million. The actual revenues received exceed the estimate made by the Commissioner for Finance in his budget speech of one year ago by some $6.5 million. The Department of Customs were instrumental in collecting $20.25 million, or roughly $2 million in excess of that collected for the previous fiscal year. There was an increase in the collections of the Office of the Assessor of Taxes of around $500,000. The Department of Natural Resources shows an increase of around $600,000, being accounted for in part by repayment of loans advanced under special account for the purchase of salt during war years. The Department of Public Works shows an increase of $150,000. The Department of Public Health and Welfare increased its collections by $60,000 and the Board of Liquor Control contributed an additional $300,000 in profit, having made a profit of $2 million for 1946-47 as against $1,700,000 the previous year. Reviewing the expenditure side of our accounts we find that the Department of Public Health and Welfare incurred an expenditure of almost $6 million as against some $5 million for 1945-46, or an increase of $1 million. The Department of Public Works expended $8.25 million during 1946-47 as against $7 million for the previous year. The greater portion of this increase is accounted for through payment of deficits incurred in the operation of the Gander airport. There was a reduction in expenditure of over $700,000 in the Department of Defence due to reduction in military activities. There was an increase in the Department of Home Affairs of almost $4 million, which is represented by advances to the St. John's Housing Corporation, as well as substantial amounts devoted to the rehabilitation of our returned servicemen in the form of vocational training, etc. In addition we must take into consideration the expenditure incurred in connection with the holding of the election for this National Convention, which we estimate has cost the country to date in the vicinity of $250,000. Our Committee has been greatly handicapped in making its investigations as thoroughly as it would wish, because of the fact that the Report of the Comptroller and Auditor General for the fiscal year 1945-46 is not yet published. However, despite such obstacles we are confident that we have given the Convention and the country a complete picture of the financial standing of our affairs at the present time. We now find that after making provision for the payment of the Railway deficit of $1.5 million, as well as $1.5 million to be paid on account of the steamers being built in Great Britain, there remains to the credit of the treasury in the Bank of Montreal approximately $21 million, which therefore makes an available cash surplus, including free of interest loans to the United Kingdom, of roundly $32 million.

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Report of the Committee on the Financial and Economic Position of Newfoundland October 16,1947 Part Two - Economic In presenting this Economic Report of Newfoundland for the information of the Convention, as well as the country generally, it might be well at the beginning to define the actual meaning of the word "economic". The dictionaries give it as being "the management of the affairs of government or community with reference to its source of income, its expenditures and the development of its natural resources". For the purposes of clarity, we propose to divide this report into three sections. The first will contain an estimate of expenditures which in our view, and under present conditions, are necessary to pay the ordinary expenditures of the administration of the Government of Newfoundland. The second section will be a conservative estimate of revenue for the foreseeable future, and such estimates will be based as nearly as possible on normal conditions and earning powers created by and arising from our main export industries, together with earnings accruing to our people from local industries. The third section will be a general summarisation of the entire economic situation as arrived at through the aforesaid estimates of revenues and expenditures. To begin with, therefore, it might be well to first consider the present liquid assets of Newfoundland. In the Financial Report recently discussed in this Convention, we find that the total revenues of the country from the year 1897 to September 30, 1947, amounted to, in round figures, $496 million, whilst the expenditures for the same fiscal years come to approximately $500 million. These expenditures up to the year 1934-35 did not include any capital expenditure, but from that period until September, 1947, from what we can gather from the various pieces of information supplied by the Commission of Government, we ascertain that there has been somewhere in the vicinity of $20 million expended on capital account. Consequently, if we deduct these capital expenditures from the total of $500 million we find ordinary expenditures for the period mentioned amounted to approximately $480 million. It is seen, therefore, that for a period of half a century revenues exceeded ordinary expenditures by an amount of roundly $15 million. In other words, in the ordinary administration of the affairs of Newfoundland for this period, there is a surplus shown of $15 million or an average annual surplus of $300,000. However, in order to properly estimate our liquid assets, it will be necessary to take into consideration our present national debt, which has been shown to amount to some $70 million. Now, if we devoted the $35 million cash surpluses which lie to our credit in the banks in Newfoundland, as well as with the Crown Agents in London, together with our interest-free loans to Great Britain, to the reduction of this debt, it will be seen that our net indebtedness at the present moment is approximately $35 million. Again we must make a survey of the assets we have which would be represented by this $35 million of actual indebtedness, and, in addition, valuate these assets, and what do we find? We find that at the present time our railway, steamer, dry dock and all branches of that transportation system have been valuated, according to the estimates prepared by the Ottawa delegation, at $72 million; add to this value of our highroads of at least $20 million; public wharves and breakwaters, and our telegraph system, another $ 10 million—and we find a total of approximately $ 110 million which is represented by this $35 million. Consequently over a period of 50 years we have accumulated a surplus of stock, so to speak, of $75 million or an average annual surplus of $1.5 million. This estimate does not take into consideration the fact that the total cost to the treasury of Newfoundland on account of its participation in World Wars I and II, amounts to not less than $55 million. In other words, the administration of the affairs of Newfoundland over a period of 50 years shows that if we take everything into consideration, with the exception of our war costs, we have had an average annual surplus on operating account of $1.5 million.

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Today therefore, we can definitely state that Newfoundland's capital account shows a surplus in cash of $35 million; and in addition the people of the country have on deposit in the various savings banks not less than $80 million; also our people carry life insurance with a protective value of some $100 million with a cash value of at least $30 million. Therefore on these figures we can evaluate a capital account for the treasury of Newfoundland and our people of not less than $150 million. In addition we are aware that approximately $25 million of the treasury's surplus is on deposit in Newfoundland, whilst the balance is to the credit of the country in England in the form of interest-free loans and deposits with the Crown Agents in London. That, then, is the general outline of our economic picture today. Now let us particularise, first taking the item of: Expenditures We refer now to expenditures under what we term normal conditions, which might be reasonably expected in the ordinary administration of our affairs for the next three years. For this purpose therefore, let us take our estimates of ordinary expenditures which, in our view, would be necessary to cover the ordinary administration of government — that is, interest on our national debt, civil service, upkeep of our roads and bridges, public wharves, hospitals, public buildings, lighthouses, and the estimated foreseeable deficit on the operation of our railway and general transportation system. Prior to the outbreak of World War II, the total expenditures for the administration of government in Newfoundland, including the deficit on the railway system, amounted to roundly $16.25 million. However, it is proper that we take into account, in making our estimates for the foreseeable future, the following factors: 1. Increase in educational grants; 2. Increase in cost of operating the railway; 3. Increase in civil service; 4. Increase in the maintenance of all public buildings, roads and bridges, lighthouses and other governmental institutions. These increases, according to estimates for the present fiscal year 1947-48, come to approximately $11 million. However, when the former Commissioner for Finance, Mr. Wild, appeared before this Convention sometime during the month of October, 1946, he definitely stated that in his opinion the cost of ordinary administration of governmental affairs, which included interest on public debt, would be covered by an amount of roundly $23 million. But the present Commission of Government has increased these estimated expenditures by an additional $4.25 million. Of these additional expenditures, an amount of some $2 million is voted as a deficit which the operation of our transportation system will incur for the fiscal year 1947-48. In our view, and particularly in view of the Railway Manager's statement when he appeared before the Finance Committee early this year, we are convinced that once the necessary capital expenditures of the Railway have been completed, and when the system has been converted from coal fuel to oil fuel, that the net deficit on the Railway and its various subsidiaries will not exceed the sum of $750,000. Consequently it will be seen that a reduction in expenditure in this respect, after the present year, can be made amounting to approximately $1.25 million. Railway. With respect to the Railway we are of the opinion that considerable reorganization of our entire transportation system is necessary. In our view, it would be of considerable economic value to segregate what we would term the mercantile marine branch of the system from the Railway Department entirely. Let us stress the point that this would be apart from the coastal boats, which must remain attached to the Railway system because they are connecting links with the railway for the handling and distribution of freight, as well as the passenger service, all over the system. These particular ships receive subsidies paid the Railway through the treasury which considerably helps the earning power of these ships. However, let us again point out that such subsidies are substantially lower than those paid the Railway system prior to the advent of Commission government. Let us at this time emphasise a point made in our Financial Report, to the effect that the connecting

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link between Port-aux-Basques and North Sydney, a ship recently acquired by the Railway at a capital cost of over $1 million, is operated without any subsidy whatever from the Canadian government. Again we point out that prior to the acquisition by the Newfoundland government of the entire Railway system in 1923, the boats owned by a private corporation and operating on the Cabot Strait received substantial subsidies from the Canadian government. But since that period, the Canadians have not paid us a dollar for the facilities given them to facilitate their trade or carry their mail. And speaking of trade, it is interesting to note that the latest statistics show that Newfoundland purchases over $40 million worth of goods annually from Canada, whilst Canada buys less than $10 million worth annually from Newfoundland. In 1930 an approach was made to the Canadian government with respect to the payment of a subsidy in connection with the operation of our ship on the Gulf service. At that time the Canadian authorities promised us that some subsidy would be considered. Nevertheless, the matter was deferred, and whilst we understand some efforts have since been made to negotiate an annual subsidy, nothing of a material nature has resulted. We feel, therefore, that once a proper constitutional government is established in the country, immediate steps should be taken with the federal government at Ottawa with a view to having this state of affairs properly adjusted. Mercantile Marine. With regard to the freighters operated by the Railway, which do not come under subsidisation, and which include the nine or ten vessels built at Clarenville, we feel that it would be most advantageous from an economic and business standpoint to have these ships segregated from the Railway and put under separate management and operated as a separate unit. This should result in more efficient administration, particularly in view of the fact that considerable waterfront property has been acquired by the government in the city of St. John's from whence these vessels could be operated, and which would be used as headquarters for the administration of the large freighting business which would undoubtedly accrue. In other words, it is proposed to set up something in the nature of a Crown company under direct supervision of an efficient manager and staff, to manage ships, charter them on a competitive basis, collect freights, pay operating expenses and upkeep, and at the end of each year transfer or pay over the profits which would certainly accrue to the treasury of the country. Whilst on this point, we would like to stress the economic value to the country generally of the establishment of a Newfoundland mercantile marine. Today, operated under the Railway management, are two steam freighters as well as the nine or ten Clarenville vessels. We are aware that millions of dollars have been sent out of the country every year which might properly have been retained in Newfoundland, provided we had established a proper mercantile marine of our own. In making this suggestion, which will require considerable financial backing, we are of the view that local capital should be encouraged to invest in the acquisition of three or four ships of suitable specifications for Newfoundland's trade. If, however, private capital was not interested in promoting such an industry, we are of the opinion that the Crown company referred to, and the establishment of which we recommend, should acquire as opportunity arises ships of suitable specifications for the general freighting business of the country. Not alone would the establishment of such a mercantile marine be of a profitable nature, but there also should be taken into consideration many millions of dollars which would be retained in our country, and the large measure of employment that would be afforded our seamen in manning these ships. This is a suggestion we put forward in the hope it may be considered seriously, and appropriate steps be taken to make the proposition a reality. Dry Dock. Today the dry dock at St. John's is more or less dependent for its existence on the employment given by the Railway and the ships operated by our transportation system. In World War II, our dry dock contributed immensely to the winning of the Battle of the Atlantic, in that many disabled ships were repaired and made available for further service. This branch of public utilities, in our view, should be further organised for the purpose of inducing foreign ships to avail of its facilities. The dry dock has consistently shown profits on account of its operation, but we take this opportunity of pointing out that these profits were principally made because of work performed on behalf of the Railway and the various steamers and other vessels operated through the railway system. Though perhaps from an accounting standpoint desirable, it would be very difficult today, under

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existing circumstances, to segregate the dry dock from the Railway, because of the fact that our locomotives as well as the coastal boats are serviced through its shops; also all the rolling stock of the Railway is repaired there. Summarising our entire transportation system, and bearing in mind the results of the investigation recently made by an expert in that line sent to Newfoundland by the Dominions Office, we are of the considered opinion that our entire transportation system, which includes the dry dock, could, with efficient and economic management, be administered at a figure much below the $750,000 debit furnished by the General Manager of the system several months ago. But for the purposes of calculation, we estimate the total annual deficit on the railway, steamships and dock at $750,000 annually, which must be found from the general revenues of the country. This is therefore a reduction in overall expenditures by the treasury of $1.25 million annually. National Debt. With respect to our national debt, at the present time the total interest and sinking fund provided in our estimates of expenditure for the year 1947-48 amounts to $3,375,000. When a delegation from this Convention met representatives of the British government in London several months ago, we were advised by the Dominions Office that, beginning January 1,1948, the conversion of our 3% guaranteed stock, which amounts to £17,790,000 or in dollar currency approximately $72 million, which is at present bearing interest at 3%, would be made, and that new stock would be issued bearing interest at 2 Vi%. In addition also we were definitely promised, as can be seen from the report of the London delegation, that our sinking fund which has accumulated in London against this sterling indebtedness would be devoted to the reduction of the principal of that debt. At that time also it will be remembered that efforts were made by the majority of the London delegation to try and induce the Dominions Office and/or the British government to devote the interest-free loans to our credit in England, which amounted to approximately $9.25 million, to the reduction of this sterling debt. In this connection we were advised by Lord Addison and his colleagues that on the recommendation of the Commission of Government (who, by the way, were represented at that gathering by the Chairman of the Commission and the Commissioner for Justice), that this step would not be taken, but that the money would remain to the credit of Newfoundland and would be at the disposition of whatever form of future government was adopted when the referendum took place. The failure of the British government, as well as the Commission government, to co-operate with us on these matters is to be regretted, for we feel that by the application of these interest-free loans to the reduction of our national debt, and by using the sinking fund now amounting to around $8.25 million to further reduce that debt, which would bring our sterling indebtedness in dollar currency down to approximately $54 million, that an amount of around $1 million annually could be saved in interest and sinking fund. We are of the definite opinion that this $1 million saving can be effected by the carrying out of the promised conversion and by using the interest-free loans and sinking fund as already described, thus making a total savings of $2.25 million already referred to as savings on Railway deficits. In connection with our whole national debt, we have not taken into consideration the possibilities or justification of readjustment of our entire sterling debt, which is now, less sinking fund, roughly $64 million. We realise that in times such as these the British government is going through a strenuous period, and we have every sympathy with their present difficult position, but nevertheless some adjustment of our debt should and must be made in the future. However, we do not propose at the moment and for the purposes of this report, to take into consideration any savings of either interest or sinking fund which might accrue through an ultimate adjustment of our sterling debt by some future Newfoundland government. It will also be noted that in outlining our proposed $2.25 million savings no reduction of the present set-up of the civil service has been included, nor is it the intention under this programme to consider any such steps. Gander Airport. Further dealing with the lessening of our national expenditures, we feel it our duty to point out that the operation of the Gander airport is a considerable drain on the treasury of Newfoundland. This matter was also taken up with the Dominions Office by the British delegation

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on its recent visit to London. The result, whilst in our opinion not satisfactory, effected as you are aware some savings to the treasury of the country, in all approximately $500,000. There is no doubt whatever in our minds that the future operation of this valuable strategic airport should not, and must not, cost the treasury of Newfoundland any more money. When it is remembered that the airport is used principally by foreign airlines which are operating on a strict commercial basis, we can concede no argument which can be put forward to justify the Newfoundland treasury's having to bear any portion whatever of deficits incurred in such an operation. It is the foreign airlines that profit through the operation of the Gander airport, and it is these same airlines which should be made responsible for any deficits that may accrue in operation. Up to the present time - and dating from the very beginning of the construction of this airport - its maintenance and operation has cost the treasury of Newfoundland upwards of $7 million. That takes into account the cost of its original construction, various expenditures since that period, our payment to the Canadian government as an outright purchase price, further capital expenditures necessary to bring the airport up to date and, in addition, deficits of roundly $1 million up to March 31, 1948. It would appear that this airport has been used by the British government as a bargaining point and that as usual, Newfoundland is made to pay the bills; for it is well known that our country has received no remuneration whatever for this valuable strategic airbase, and it will be the duty of a future Newfoundland government to take immediate steps to rectify this injustice. For if we were rid of this airport liability it would effect a further saving of not less than $750,000 in our annual expenditure. We have therefore shown savings which we believe can be effected in government spending amounting to in all approximately $3 million; namely: Railway and general transportation Servicing public debt Gander airport

$ 1,250,000 1,000,000 750,000 $3,000,000

For purposes of explanation we give herewith proposed expenditures under the various departmental headings: Consolidated Fund Service Finance Posts and Telegraphs Customs Assessor Home Affairs Education Public Health and Welfare Public Works Justice Board of Liquor Control Supply Division Natural Resources Total

$ 2,500,000 1,360,000 2,000,000 580,000 80,000 500,000 3,750,000 6,250,000 4,000,000 1,180,000 135,000 110,000 2,500,000 $24,945,000

It will be seen under these various headings that our total annual expenditures for the ordinary administration of the affairs of Newfoundland will be approximately $25 million. These estimated figures have been arrived at after a close perusal of the present estimates of public expenditure published by the Commission government covering the year 1947-48. These estimates of expenditure show the total ordinary expenditure to be incurred for the present fiscal year amounts to $27,298,000. We have already given the proposed reductions which can be made effective, which will not in any

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way effect the present governmental setup. Revenues The total revenue for the country from all sources in the year 1940-41 amounted to approximately $16.25 million. This might be termed our first war revenue. Since that time both revenues and expenditures have mounted annually, and we find that the year which closed on March 31,1947, gave us a total revenue of approximately $37.25 million, which is $21 million more than collected in 1940-41. It seems obvious that we cannot expect these revenues to continue indefinitely, despite the fact that for the present fiscal year available figures indicate that the total revenues will approach the amount of nearly $40 million. In trying to arrive at the amount of the annual revenues we could reasonably expect in the future, your Committee gave due regard to the fact already mentioned, and our conclusions therefore are that making allowances for all known factors, we believe that Newfoundland can look to its future normal revenues as being in the vicinity of $30 million. We now propose to set forth the basis for these revenues thus forecast. Let us first of all set forth our sources of earnings through which revenues must be earned. They are as follows: 1. Forests 2. Mines 3. Agriculture 4. Fisheries Forests. Let us begin with our forests as a source of revenue. The Report of the Forestry Committee submitted to the National Convention showed that our earning power from this particular industry would be in the vicinity of $25 million annually. Let us therefore see what the total value of our forest industries will likely be in the future. At present, the two paper mills operating at Grand Falls and Corner Brook produce in the vicinity of 400,000 tons of newsprint and pulp annually. The total exportable value of these products under present conditions and prices can be safely placed at almost $40 million annually. At the present time a large programme of expansion involving the expenditure of $10 million or more is being pushed forward at Corner Brook. This expansion will being this great industrial centre up to the point where some 355,000 tons of wood products will be manufactured annually. It means that the pulp and paper industry at Corner Brook will be one of the largest producers of such products in the entire world. In addition to this, the company at Grand Falls has under serious consideration the further expansion of their industry in the Exploits River valley. However, this expansion has been postponed temporarily. The world market for newsprint as well as pulp, particularly in the United States and South America, and also other countries in the Pacific such as Australia and India, is such that the possibility of a further rise in newsprint prices from $90 per ton to probably $ 100 per ton next year is not improbable. The products of both our mills have been disposed of for the next ten years. With the coming into production of the expansion we mentioned at Corner Brook, our total production from the forest industries will, by the end of 1948 or the beginning of 1949, be well over 550,000 tons annually, which would have an export value of from $45-50 million. It has been estimated that the total earning power of our people from this particular industry will not be less than $30 million per year. Today our two paper mills employ between 12-15,000 Newfoundlanders and pay to them in wages roundly $25 million annually. In addition, considerable quantities of raw pulpwood are being exported from the country. This latter policy is one which we feel should not be continued. It simply means that Newfoundland is finding the raw product to export in order to keep competitive outside mills in production. We have even had instances during the past 12 months where the sulphite mill at Corner Brook lay idle because of shortage of wood, whilst at the same time the raw product was being exported to be used in outside mills to manufacture pulp and paper to compete with our Newfoundland products. We feel that immediate steps should be taken to put an end to such uneconomic practices. During the period the Forestry Committee was investigating this industry, it was discovered that large quantities of high class pulpwood were available, particularly in the northern section of our

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Labrador possessions. And here we must draw to the attention of the Convention and the people of Newfoundland generally, that the timber areas of Labrador are the last available virgin forests on the northeast coast of North America. It is estimated that these forests have in the vicinity of 50 million cords of high class commercial timber suitable for the manufacture of pulp and paper, 70% of which is spruce and 30% fir. This wood is invaluable at the present time for the simple reason that many of the large pulp and paper industries located in Canada, and particularly in the Province of Quebec, are short of the necessary timber to supply their own mills. In addition, many small sulphite mills and paper mills located in the State of New York as well as in the State of Maine, are extremely handicapped for want of this raw product. Do we want any further evidence to show us that our forests on Labrador are of great potential value, and that these forests should be used by us for the purpose of creating industry in our own country? We have already pointed out that the further expansion of the pulp and paper industry in Newfoundland would bring about a resultant and proportionate increase in the earning power of our people who will be engaged in the operation of this additional industry. We feel that as soon as our political future is definitely decided upon, that whatever form of government takes over the administration of the affairs of this country, steps should be taken immediately to further investigate the possibilities for the promotion of another pulp and paper industry on the south coast of the island, which additional development would be fed with raw wood from the forests of Labrador. It is a well-known fact that the waterpower in Bay D'Espoir can be developed at a reasonable cost to produce in the vicinity of 150,000 horsepower, which is practically equivalent to the hydraulic development in our Humber area. In order to foster and encourage a further development of the pulp and paper mill, we believe that any form of future government we may adopt would be justified in guaranteeing a bond issue of up to $20 million in order to encourage the establishment of an additional pulp and paper industry in Newfoundland. And in this connection, we desire to place ourselves on record as being wholly opposed to any further concessions being granted for timber areas or waterpowers on Labrador or the island of Newfoundland to private individuals or corporations without a definite guarantee that an industry would be forthcoming and a development ensue. With regard to our suggestion of the guaranteeing of a bond issue for the further development of a pulp and paper industry on the southwest coast of Newfoundland, we should like to point out to the Convention and to the country, that it was only through the means of a government guarantee that the great industrial centre at Corner Brook was made possible in 1923. At that time, a guarantee of $20 million was given the promoting company, with the British government taking a first mortgage and Newfoundland accepting the second mortgage on the entire assets and properties of the corporation. This corporation is now known as Bowater's, and if we take into consideration that over a period of 22 years, this development has produced not less than 3,300,000 tons of forest products with an export value of approximately $165 million, out of which Newfoundlanders have earned in the vicinity of $80 million, apart from the labour given in its construction; and then if we review the balance sheet of Bowater's at the present time, we ascertain that not alone has the Newfoundland government not been called upon to pay any interest on account of the company's defaulting in any way, but that our original guarantee of $10 million in 1923 has been now reduced to $7 million. Therefore it will be seen that this precedent indicates it is a wise measure that government encouragement, and financial backing if necessary, should be forthcoming for the development of such potential wealth as our forests of Labrador and our waterpower on the southwest coast of the island. We realise that the cost of materials necessary for the construction of a pulp and paper mill with a capacity of 500 tons daily production, would probably involve a total expenditure of over $50 million to establish such an industry. Nevertheless it will be seen how important it is that necessary steps be taken by our future form of permanent government to explore the possibility, as well as the economic prospects attached to the establishment of such an industry, which would undoubtedly be of untold value to the people of the country as a whole. It is our view that by the establishment of industry such as mining and pulp and paper manufacturing, our fisheries can be made more profitable to those who desire to continue to prosecute them, for the simple reason that many of those now employed in the fisheries

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would be absorbed in either the mining industry or in the manufacture of pulp and paper. This would prevent overcrowding and harmful competition in our main industry. Diversification of labour is one of the best means of dealing with any future employment problems. We have given a fairly accurate survey of our present and possible future pulp and paper industry. In addition to these two main forest industries, we find the local consumption of our woods production by small mills amounts to anywhere between 50-60 million board measure feet annually, and that the annual value of this particular class of forest products is in the vicinity of $3 million. In addition, we are of the opinion that the possibility for the establishment of a couple of small industries for the purpose of manufacturing Newfoundland birch for export as well as local consumption is not improbable. This therefore brings our total earning power from our forest industries to not less than $30 million, with the possibility of an additional $10 million annually being added through the development of another paper mill on the southwest coast. In concluding our remarks with respect to our forest industries, we deem it essential that we draw to the attention of everyone concerned the importance of the preservation of our forests from the ravages of fire. In recent years in many sections of the island, forest fires have caused untold damage and destroyed millions of dollars worth of potential wealth. Today on the island of Newfoundland there are some 20 million cords of commercial timber suitable for the manufacture of pulp and paper. We have been advised by officials of both the manufacturing companies operating at Corner Brook and Grand Falls that for many years to come, sufficient timber is available to keep these mills in full production. However, it is most essential that these forests be given the protection necessary to their preservation. We feel that by conversion of our railway locomotives from coal fuel to oil fuel, the hazards of forest fires will be considerably reduced. At the same time, we would urge a campaign of co-operation between the operating companies and the government with a view to taking every precaution necessary for the protection of our forest areas. In addition, it is most important that our people themselves should look upon our forests as a source of great wealth and security, and should take the necessary interest in their preservation for the purpose of eliminating as much as possible any future destruction of our timber resources. Mining. Today in Newfoundland we have two active mining operations. At Wabana is located one of the largest deposits of iron ore in the North American continent, employing around 2,000 Newfoundlanders. At the present time the company operating these mines owns vast steel mills in Sydney, Nova Scotia, and consumes around 750,000 tons of ore annually in the manufacture of their varied products. Before the outbreak of World War II, around a million tons of this ore was exported to Germany each year, but since that time most of the products have been shipped to Canada, whilst during the past two or three years around 750,000 tons have been exported to Great Britain annually. The present payroll is approximately $4 million each year, and indications are that the next two or three years at any rate the total production of around 1.5 million tons yearly will be purchased by Canadian interests and the steel interests in the United Kingdom. Thus we feel that, under reasonably conditions, a continuation of this industry can be reasonably assured. The Buchans Mining Company located at Buchans employs around 1,000 Newfoundlanders, with a total payroll exceeding $1 million annually. This mine, now in operation for 20 years, produces considerable quantities of lead and zinc which are in great demand in both the United States and the markets of Europe. It is anticipated that sufficient ore is in sight to continue this particular operating profitably for the next ten years. In addition, the Buchans Mining Company, which is controlled by the American Smelters Corporation, are making a survey of the LaManche property and expending considerable monies in this exploration. These properties are known to contain considerable quantities of lead and other minerals; and as the demand for lead in the various markets of the world at the present time is great, it is to be hoped that before very long this exploration will bring into production another industry similar to that of the Buchans Mining Company at Buchans. The fluorspar operation in St. Lawrence on the southwest coast of the island, during the period of World War II, gave promise of great possibilities; but during the past two years operations have been curtailed because of the shortage of power which is necessary to the efficient and economic operation

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of the properties. The outlook, however, for this industry seems to us at the present time to be fairly optimistic, and we trust that within the period of the next two or three years operations will be resumed and the properties operated at full capacity. We will now give a short review of the possibilities which exist for the development of mining operations in Newfoundland-Labrador. At the present time the Labrador Mining and Exploration Co. Ltd., which have acquired considerable concessions in Newfoundland territory close to the border line of the Province of Quebec, are spending substantial amounts of money, with the object of bringing about the ultimate development of a great iron ore deposit. From information published in Canadian mining papers during the past six months, it has been observed that these iron ore deposits are of untold value. Further, it has been predicted that within a period of five years, or not more than ten years, the development of the iron ore deposits in both Newfoundland- Labrador and Quebec-Labrador will be an accomplished fact. We are advised that at least 60% of these deposits exist in the Newfoundland-Labrador territory. It is a well-known fact that the iron ore reserves on the North American continent are rapidly becoming depleted. In the Lake Superior area, in the State of Minnesota, known as the Mesabi Range, the mines operated by the various steel industries, which produce over 100 million tons of iron ore annually will be exhausted, so it is forecast, within the next ten years. This means that the huge steel interests of both Canada and the United States, of Ohio and Pennsylvania, will have to look elsewhere for their supplies of ore in the very near future. True it is that in recent years in the Province of Ontario an iron ore development has taken place at Steep Rock Lake, close to the head of Lake Superior. This particular operation was made possible by financial assistance from both the United States and Canadian governments; but its total production will not exceed more than three million tons annually. At the present time it is generally conceded that the greater portion of the iron ore necessary for the continued operations of the steel mills in the United States as well as Canada must ultimately come from Newfoundland-Labrador and Quebec-Labrador. Steel is really a necessity of life, practically as valuable to the human existence as food itself. Without steel no industry can prosper. It can be safely said that no industry can function without steel. Consequently it is obvious that the possibilities for the future development of this frozen waste land of Labrador, as it has been termed, is in actual fact becoming a reality. Those closely identified with the development of these valuable properties have predicted that within a period of not more than ten years, possibly five years, the Labrador Mining Company will be producing in the vicinity of ten million tons of iron ore annually. This ore is of the highest grade - somewhere in the vicinity of between 62% and 67% actual iron. The ore is on a par with the Swedish ore and is suitable for the manufacture of high grade steel. Up to the present time, the Hollinger Company of Canada, together with the Hanna interests of Cleveland in the United States, have expended over $2 million in exploring and drilling these various deposits to be found in Newfoundland-Labrador and Quebec-Labrador. As a matter of fact, this year alone, $1 million is being expended by these financial interests in drilling and further exploration, and by the end of 1947 a total of $3 million will have been expended in prospecting the field. The Northern Miner of September 4, 1947, quotes the following: So far, the discoveries total 50 ore bodies for an aggregate length of 10 miles of ore. Several have been found this year. The finding takes work. The overburden runs six inches to six feet generally, and much deeper in the swamps and low places. There are occasional outcrops of ore — not many. Ore is usually found by digging pits in likely places, or where the overburden is deep, by penetrating down to rock with a churn drill. The diamond drill follows up and 45 holes have been drilled this year. Another quotation from the same paper reads as follows: From the air the whole countryside is stained brown. The iron formation stretches for at least one hundred miles and in this formation and alongside it are found the concentrations of high grade ore. Another quotation taken from The Chicago Daily News of recent date, reads as follows:

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It would be silly to deny that the annexation of Newfoundland, if no one objected, would be advantageous to us. If we build the St. Lawrence Seaway, the great resources of iron ore in the island might turn out to be the salvation of our Great Lakes steel industry after Minnesota's high grade ores are exhausted...Newfoundland owns Labrador. The great hydro-electric power resources of Labrador are destined to become an important unit of the eventual interconnected power system of North America....All of these desirable objectives can be effected, however, by agreements either with an independent Newfoundland, or with Canada. It seems to us that there is no question whatever but that the future development of the iron ore industry in Labrador is one which will undoubtedly be of great value to the wealth of Newfoundland in the very near future. Before this prospective mine is brought into production, a railway of over 350 miles must be built which will run through parts of Newfoundland-Labrador as well as Quebec-Labrador. This railway will cost upwards of between $50-60 million and will include the construction of loading docks on the north shore of the St. Lawrence River. The whole development when ultimately completed is estimated to involve an expenditure of upwards of $150 million — truly a huge amount of money; but nevertheless in view of the fact that the great steel industries of North America will be dependent to a great extent for their future supplies of iron ore on the production in Wabana as well as Labrador, the expenditure involved might be termed infinitesimal. The steel industries of the USA consume approximately 100 million tons of iron ore annually. On President Truman's recent visit to Canada he definitely indicated that the deepening of the St. Lawrence waterways would be pushed forward with all possible speed. Under present conditions the various canals leading from the Atlantic ocean to the head of Lake Superior can only handle cargoes of around 2,500 tons, which are handled in ships with a draft of not over 14 feet. When the St. Lawrence waterways project is completed, ships carrying 10,000 ton cargoes with a draft of up to 30 feet will be able to be safely navigated to the head of the Lake. It would be folly on our part just at the present time to attempt to forecast the ultimate results of these great potential developments. However, we feel that we are safe in saying that the industrialisation of Newfoundland- Labrador, particularly in connection with the production of high grade iron ore, is practically assured within a period of the next five years. This means that when the preliminary construction work is completed, townsites will crop up in this frozen waste land and upwards of 10,000 Newfoundlanders and Labradorians will be able to find employment in the production of iron ore. It further means that the great Grand Falls waterpower will finally be developed and from statistics shown by a survey conducted a few years ago by the Aluminum Company of Canada, it is estimated that this waterpower when developed will produce somewhere in the vicinity of 1.5 million horsepower. The development of this water-power will be used for the purposes of operating the mines as well as the operation of the railway, and there will be surplus power available for transmission into the Province of Quebec as well as for the purpose of servicing other possible developments in this vast Newfoundland possession. And whilst commenting on this water-power, we wish to stress the point that in our opinion at any rate, the benefits accruing to Newfoundland under the agreement made with the Labrador Mining and Exploration Company are practically of a negligible character. It has been shown to the Convention that just 15 cents per horsepower is to be paid as a royalty to the treasury of our country, whilst in our opinion nothing less than $ 1 a horsepower should be received. Also, in the original agreement made with the Labrador Mining Company, it is distinctly stipulated that a royalty of 10 cents per ton on all iron ore produced would be paid by the company into the Newfoundland treasury, and that a further royalty of around 3% on the gross value of all other minerals would be paid to the Newfoundland treasury. Under an amendment to this act passed by the Commission of Government in 1944, we were astonished to find that no specific royalties are now to be collected, but that an overall tax of 5% on the net operating profits of the company will accrue to the Newfoundland treasury. At this juncture let us point out for the information of the Convention as well as the country as a whole, that for a much smaller concession adjoining this concession in the Province of Quebec, the provincial government of Quebec is collecting an annual rental of $100,000, whilst in addition they collect lVl% on the net operating profit. In our

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view therefore, we feel and strongly recommend that, when a permanent constitutional form of government takes over the administration of Newfoundland affairs sometime in the very near future, immediate steps should be taken to (1) re-negotiate the rentals clause covering the development of waterpower on Labrador; and (2) re-negotiate the taxes to be paid either specifically or on a profit-sharing basis. In this review of our mining operations which cover Bell Island, Buchans, St. Lawrence, the possibilities of LaManche and finally the development of Newfoundland-Labrador, we have given a very accurate outline covering the mining possibilities of the country for the next four years and possibly ten years. We are of the opinion that in addition to the $5-6 million of earnings accruing to Newfoundland workmen through the operation of Wabana and Buchans, and the possibility of an early development of LaManche, together with our most optimistic views in connection with the prospects for a huge development and industrialisation of Labrador, that, within a period of not more than ten years, the mining industry of Newfoundland should mean in earning power to our people not less than $20 million annually. Agriculture. With regard to the agricultural industry and its further development in Newfoundland, it is difficult to estimate with any degree of accuracy the value of the various local agricultural products. From the report submitted to this Convention by the Agricultural Committee many months ago, it will be observed that our total agricultural production is valued at some $12.5 million. We must now take into consideration further agricultural development which is being promoted, sponsored and financed by the government and which, within the period of the next two years, will bring about additional production as well as earning power. This programme was properly sponsored in order to rehabilitate, as far as possible, many families or dependents of servicemen who had contributed their portion in the winning of World War II. We are of the view that within another year at least 100 families will be settled in the upper Humber area and will be earning a decent living through their efforts in the production of agricultural products. It is safe to say, therefore, that in view of the present high prices obtainable for all farm products, the actual value of the production of the land today is closer to $15 million than to $12.5 million; and in this respect we quote a statement given recently to the Chairman of the Agricultural Committee by the Director of Agriculture, that "It would be fair to assume that at today's prices, and with the increased production, the value of agricultural products should be placed at not less than $15 million." Now, when we take into consideration the fact that these additional developments will be in operation within the period of the next 18 months, we can consequently assume and base our figures of earning power on a continued basis of $15 million annually, possibly more. Agriculture in Newfoundland is an industry more difficult to valuate because in our many outport settlements our fishermen produce vegetables and other farm commodities which it would be impossible to estimate the value of in any agricultural report that might be submitted to this Convention. In a general way however, farming in Newfoundland is confined principally to sections of the west coast of the island and the Avalon Peninsula. There are also some similar industries located in the middle of the country. These industries supply all their products to the industrial settlements of Corner Brook and Grand Falls, and considerable trade and employment if given due to this local production. Those interested in farm life on the Avalon Peninsula find a ready market in the vicinity of the capital, St. John's, and other sections of Conception Bay and Trinity Bay; whilst in many parts of the country the land is most difficult - we might say practically impossible - to farm on an economic basis. In concluding our references therefore to our agricultural possibilities, we feel that, in view of all the circumstances mentioned, within a period of the next three or four years and with prices obtaining at the present time continuing, the products of our soil should approach an estimated value of close to $20 million. Fisheries. Ever since the discovery of our country by Cabot in 1497, the name Newfoundland has been synonymous with fish. All down through our history, and centuries before the pulp and paper industries or the mining industry were ever dreamed of, the fisheries of Newfoundland stood out

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preeminently in practically every corner of the globe. Up to the beginning of the present century, the fisheries in their undeveloped character were the main industry of the country, and our people worked and lived through their efforts in recovering from the ocean their annual harvest. In those days it was principally the catching, curing and exporting of salt codfish which created the major earnings on which our people subsisted. On the great Grand Banks of Newfoundland, on the rugged coasts of Labrador and from the offshore fishing operations conducted close to the hundreds of settlements which dot our island, each season our hardy and industrious forefathers went forth to reap the harvest of the sea. Like every other great national industry, the fisheries of Newfoundland have always proven to be more or less a speculation both on the part of the merchant-supplier as well as the fishermen themselves. At certain seasons of the year the herring fish are abundant in certain sections of the island, whilst in other seasons lobster and salmon are found either in abundance or in scarcity. Our salt codfish was principally exported to European and South American countries and has formed the principal commodity of food for millions of the Latin people. The prices which they could afford to pay for this Newfoundland product varied from decade to decade and from year to year, with the consequent result, as already stated, that our fisheries as a whole have generally been looked upon as a highly speculative enterprise. This however is also true of principal national industries in nearly every country of the world. For instance, in the neighbouring Dominion of Canada, the great wheat fields of the West which produce the grain have always been of a speculative character. In the southern cotton fields of the United States as well as in its western farm lands and ranches the same principle has always applied. And so it will be as time goes on, that principal national industries of nearly all civilised countries will be prosecuted and operated on a more or less speculative basis. Records have proven that in ordinary normal times prices for our products of the sea have been based on the unwritten law of supply and demand. And so it was that in the year 1915 when the first World War was raging, when the German submarines were making efforts to starve the European countries, that the prices of our salt codfish soared to unprecedented figures. Never in our history have prices for our principal product been so high. And then once hostilities ceased and the world generally started its journey on the road back to normal, prices obtained for our primary products began to drop sharply, resulting in many cases in the bringing about of financial disaster to our fishing industry. And so we find it once again when normal conditions had been restored to the world generally in 1923 that the prices for our salt codfish product became more stabilised. Then again during the year 1930-31 when a financial crisis engulfed the world suddenly, prices for our saltfish product during the early thirties and practically up to the beginning of World War II, had reached the lowest figure in history. It was during this latter period that modern methods of handling, curing and marketing of both fresh, frozen and salt codfish were begun by the establishment in various sections of the country of bait depots and cold storage plants financed in some cases by our own government. Thus as a result our people became more confident of their capabilities to secure paying voyages whether in a fresh, frozen or salted state. And now we come to the outbreak of World War II, and again we witness as in 1916 a great demand for this food product from the countries of Europe and South America. Particularly so did this demand refer to our fresh and frozen codfish, and in later years for our herring fish, which through the Combined Food Board at Washington, and through the finances provided by the Government of the United States of America, is distributed throughout a starving Europe. In the meantime, local capital became interested in the establishment of modern fish plants, together with modern methods of catching, freezing, storing and shipping the fish product to both the USA and Great Britain. And now we arrive at the stage where these same local investors have an amount of approximately $6 million invested in these modern methods of handling and securing from the fishermen the product of their toil. The establishment of these modern facilities undoubtedly relieved the situation where once our marketable export product was only the salt cured product. It is clear that the establishment of these fresh fish plants will lessen the production of the salt product, which is generally sold to countries which cannot afford to purchase the most expensive product. And now we arrive at the position where we must look forward to the future of our codfish industry from a more modern viewpoint. We must,

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for instance, use every effort at our disposal to secure markets for our fresh and frozen fish products and thereby lessen the production of our salt product which, in turn, will create a much better price for the salt commodity because of the fact that less of this latter product would be produced. Time and time again during the sessions of this Convention the matter of the sale and marketing of our fresh and frozen fish products in the USA has been a subject which has provoked interesting and valuable discussion. For ourselves, we of this Committee feel that once we are in a position to market our fresh and frozen fishery products in the USA, our fishery problems will be finally solved; and most of us are of the opinion that until such time as this matter has been finally and successfully negotiated, our main fishery problem will remain unsolved. Consequently, we strongly stress the importance of steps being taken as soon as possible to negotiate with the authorities of the USA, with a view to bringing about a trade agreement which would solve for all time our whole fishery situation. In Newfoundland today the USA holds important strategic military, naval and air bases granted to them in September, 1940, through the Commission of Government and with the approval of the British government, for which Newfoundland and its people have received no remuneration whatever. We are of the definite view that if proper representations were now made by a properly constituted government of Newfoundland, that the American government as well as the American people, whom we consider fair and just, would certainly seriously consider giving Newfoundland some favourable tariff concessions for our fishery products. True it is that the USA, particularly the east coast in the State of Massachusetts and the State of New York, conducts fishery operations of its own. But, on the other hand, the market for fishery products in the United States is so tremendous that there are many parts of the mid-western states as well as the southern states, which are not in a position to secure any fish foods to any great extent. This is because the supply created by the fishing industries in the eastern states is not sufficient to cover the demand for the entire republic. And so it is that we again reiterate and strongly recommend that once a permanent form of government is established in Newfoundland, one of its first duties should be to enter into negotiations with the United States government having as its object the negotiating and bringing about of a favourable trade agreement particularly for our fishery products. We feel certain that if aggressive steps are taken, results of a favourable character will eventuate. During the year 1946 the total value of our fishery products amounted to roundly, $34.5 million. Those closely identified with our fishing industry give as their view the opinion that there is no reason for assuming that the present year should give us lower returns than 1946. With the revival of the seal fishery and the whaling industry, which in recent years declined considerably, but which industries are again recuperating and are capable of still further development, together with an increase in the quantity of salt codfish produced this year as well as small shipments of fresh and frozen fish to the USA and elsewhere, we feel that the results of the 1947 harvest of the sea will be on a par with, or possibly greater than the results of the year 1946. One of the principal handicaps to the handling and exporting of our salt codfish production during the present year has been caused by the shortage of dollars in the United Kingdom. It has been pointed out to this Convention on many occasions that an amount of around 500,000 quintals of our salt codfish finds its way into the consuming markets of Portugal, Spain, Italy and Greece. The custom in the past has been that these various countries have established sterling credits in London for the purpose of buying our fishery products. In turn, the British government or the banks were always in a position to convert these sterling funds into dollar exchange. But this year unfortunately, Great Britain found itself in a position where she was unable to convert these sterling funds into our dollar currency. To solve the problem the Newfoundland Commission of Government, as we know, took steps (after three weeks' deliberations) to provide the necessary dollar currency to convert this sterling, until such time as Great Britain was in a position to repay the advance. And this action of the Commission Government compels us to speculate as to the future possibilities of the conversion of sterling funds to dollar currency. Unfortunately, Continental Europe is in extreme financial difficulties. The ravages of war have crippled practically all its industries, and unless financial help is forthcoming quickly, and drastic steps taken to curb the present Communistic trend, civilisation

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itself may be in jeopardy. The only country in the world today that can relieve this dangerous situation is the United States of America, and recent news from Washington indicates that measures are about to be taken to re-establish the war-torn and starving countries of Europe. It seems probable to us that the plan advanced by Secretary of State Marshall of the United States will be adopted in part at any rate, and if so this will reflect itself in Newfoundland, and consequently will relieve the present pessimistic feeling of those interested in the marketing of our salt codfish product in continental Europe. With respect to new developments in our various fishing industries, we believe it will be of great interest if we include herewith a statement showing the value of the exportable Icelandic fishery products for the year 1946: Salt codfish Frozen Frozen Fish conserves Fish meal

fish fillets

11,500 tons 73,000 " 24,000 " 500 " 6,200 "

Brought Forward Salt roes Medicinal oil Herring oil Salt herring in barrels

1,500 " 7,745 " 17,600 " 160,000 brls.

$ 2,945,000 9,610,000 9,455,000 465,000 620,000 $23,095,000 1,348,500 4,417,500 3,100,000 4,340,000 $37,541,000

It will be noted that the total value of the fisheries of Iceland, with a population of some 100,000 people, exceeds the value of the entire fishing industry of Newfoundland. This would seem to be a clear indication of the possibilities of expansion by the use of modern industrial methods in our Newfoundland fishery. At the present time considerable exploration and development of future possibilities for our various fishing industries are in progress, such as the manufacture of fish meal from offal, the production of herring oils and herring meal, the canning of herring and other fish secured on the west coast of the island. These industries are more or less in their infancy at the present time. Considerable capital has been invested and is continuing to be invested for the promotion of these industries, and the promoters are confident of their future success. The demand today for live lobsters (which in previous years were canned at considerable cost and are now exported in a live state) is great. The same applies to our fresh salmon industry. Some of our co-operative societies established in various sections of the country during recent years have done, and are continuing to do fine work in the promoting and establishment of these fishing industries such as lobster and salmon. These bodies of Newfoundlanders have come together in a co-operative way and established themselves in various communities, and through their efforts have made marked progress. The results of these efforts have been most satisfactory. Summarising what we have said with regard to our fishing industry, it would seem that the outlook for the Newfoundland fisheries is anything but discouraging. Indeed, judging from the evidence available and the opinion of those qualified to speak, it would seem that we have entered upon a new era -the era of modernised methods, faster production and more profitable markets. And it is not unreasonable to say that the adoption of methods which have brought prosperity to such a country as Iceland, cannot fail but bring similar results to the 30,000 of our people engaged in the fishing industry of Newfoundland. This concludes our review of our four main industries. It is undoubtedly understood that the three exportable industries, namely forestry, mining and our fisheries, are the ones which concern us most

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with respect to the direct earning power of the people; inasmuch as the various products of these three industries are responsible for the visible earning power of our people. Our agricultural industry might be termed an internal industry as the products of our soil are consumed directly in the country. Nevertheless, the production of some $15 million worth of agricultural products eliminates the necessity for the importation of these important food necessities, and consequently the monies so earned remain in our own country. In addition to these four main industries, we also have many local industries such as the manufacturing of tobacco, margarine, boots and shoes, lines and twines, and several other important and valuable industries which compose the economy of the country. These local industries employ approximately 2,500 of our people, whose internal earnings must of necessity contribute to our revenue, such earnings we estimate to be in the vicinity of $3 million annually. In addition to all these national industries of our own, it will be understood that the establishment by the United States of America of important military, naval and air bases in Newfoundland creates employment for some 3,000 of our people. These earnings must amount to some $3-4 million annually. Then again, we understand that the United States government has made extensive plans for the expansion of Harmon Field airport, and have a programme outlined for construction during the next two or three years. We have been informed that these plans call for an expenditure of $ 15 million and that the actual construction work will be performed by our Newfoundland people. Through this avenue therefore, further earning power will be created which should amount to anywhere between $2-3 million each year for the next two or three years. No doubt when this construction work is completed many more of our people will be employed through the operation of this strategic airport. At the present time we figure that not less than 25,000 of our people are employed in the fishing industry; 15,000 in the pulp and paper industry; and 3,500 in the mining industry. Through the export therefore of our three main products, as well as the earning power created by our local and internal industries, we estimate an amount of $90 million annually will be collected as follows: 1. Pulp and paper 2. Fisheries 3. Mining Total

$50,000,000 annually 30,000,000 10,000,000 $90,000,000

It will be noted that we estimate the total of our export for the next year and for two additional years at an amount of $90 million. When we take into consideration the fact that for the year 1946-47 the total value of our exportable products amounted to $72.5 million, and during that period revenue amounting to over $37 million was collected, it is not unreasonable to expect that with our exportable products rising to a value of $90 million, we should reasonably anticipate an annual revenue for the next three years of not less than $30 million annually. As a matter of fact, these revenues might be substantially increased. In this case we feel that a revision of our whole taxation system should take place. In order that this revision of our entire taxation system should be done properly and without any partisanship whatever, we feel that it would be desirable for our future government to engage the services for a period of one year of an outstanding firm of industrial economists. Their duties would be to survey our entire taxation system, review our whole economic position and in the light of their findings make recommendations to the Government of Newfoundland. These industrial economists would certainly have to be given every facility by both the government and our local business community in order that their task may be successfully accomplished. The annual revenues of $30 million, which we have estimated can be collected under reasonable circumstances over the next three years, would be received under the following departmental heads:

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$

320,000 17,000,000 1,500,000 9,000,000 25,000 50,000 40,000 450,000 350,000 250,000 1,000,000 $29,985,000

General Review We have covered the estimates of expenditure in every detail under which we feel that the ordinary administration of the affairs of Newfoundland can be economically administered. These expenditures which are shown under the various departmental headings amount to roughly $25 million annually. If we survey the figures in these estimates it will be noted that in no case has the present set-up of our governmental organisation been disturbed. The main items of reduction in expenditures are based on conclusions drawn from the reports of the several committees which investigated our affairs during the past 12 months. These reductions are confined to two departments of government, namely, the Department of Finance and the Department of Public Works. In the Department of Finance we show a proposed reduction in the deficits which should accrue to the Railway, which reduction is based on the authority of the General Manager's statement made before the Finance Committee many months ago, and which in this instance amounts to $ 1.25 million. Another proposed reduction in public expenditure in the Finance Department is one which relates to conversion of our sterling debt which amounts at the present time to almost $72 million at the present rate of sterling exchange. This proposed reduction in expenditure would be made possible by the carrying out of the proposal outlined to the Convention delegation by Lord Addison when that delegation discussed Newfoundland's affairs in London six months ago. The outline of this proposal is roughly as follows: the using of the sinking fund, which incidentally amounts at the present time to $8.25 million, which sinking fund is comprised of the actual securities of this particular sterling debt. In addition the reduction takes into consideration the conversion of the entire amount of sterling debt from an annual interest of 3% to 2Vl%, which would thus reduce expenditures by an amount of approximately $500,000. In addition to this reduction, we have recommended that the balance of our interest-free loans to the United Kingdom government, which now amount to $9.25 million, should also be used for the further reduction of the principal of our sterling debt, thus saving an additional $500,000 in interest and sinking fund annually, and reducing our sterling indebtedness to approximately $54 million. In all therefore, the proposed reductions of expenditure in the Finance Department would amount to $2.25 million annually, and we feel reasonably sure that such a programme of re-financing can be successfully carried out. Taking the Department of Public Works, we have taken into consideration the fact that the Gander airport is at present costing the treasury of Newfoundland not less than $750,000 annually. Consequently we feel that we are fully justified in assuming that this annual disbursement by our treasury, which is made for the benefit of foreign airlines, should not continue to be a liability to the taxpayers of Newfoundland. We honestly feel that those corporations or governments which are profiting through the operation of this airport, will see the justification of our attitude in the matter, and would be willing to assume the obligation, which would be based on the condition that the continuation of the operation of Gander airport must give preference to the employment of Newfoundland citizens.

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It is now seen that the programme of expenditures outlined in this report would amount to approximately $25 million annually which is $2.5 million less than forecast by the government for the present fiscal year, and $1.5 million more than former Commissioner for Finance Wild's estimate of one year ago. It must be distinctly understood however, that these expenditures do not include any capital expenditures whatsoever. With regard to our forecast of revenues which we feel confident can be collected annually for the next three years, we have estimated an annual revenue of not more than $30 million, or $10 million less than it is expected will be collected for the present fiscal year. In making this estimate of revenue, we have taken into account the probability in a decline in prices of those commodities on which customs duties are collected on an ad valorem basis. We have taken into account the possibilities in the decline in prices which might be obtained for our fishery products, which would thus reduce earnings and purchasing power proportionately. At the same time we are also taking into account the assurance of increased values in the marketing of our forest products. Under such circumstances therefore, we feel reasonably assured, particularly under present business conditions and in view of a possibility of any world recession, that for the next three years at least the revenue of Newfoundland will not fall below $30 million annually. Rather do we think that the average annual revenues for this stated period will be substantially higher. In any case, we feel confident that under reasonable conditions, our expectations will be realised. Under the programme which we have forecast it will be observed that we have concluded by estimating a surplus of revenue over ordinary expenditures of not less than $5 million annually for the period of at least the next three years. In the beginning of this report we told you that at the present time there lies to the credit of the treasury in the banks of Newfoundland, an amount of approximately $25 million. We recommend that this amount of surplus be transferred to the credit of a surplus trust account, which should earn interest at the rate of 1 Vl% annually, or possibly 2%. This annual interest, we would suggest, should be devoted to the purposes of any additional social services which the country may require in addition to those already outlined in our forecast of ordinary expenditure. The surplus of $5 million annually which would be shown on ordinary administration of government affairs we suggest should be expended as follows: Additional old age pensions Fishermen's and mariners' insurance and other social services Encouragement of tourist traffic by building roads from Port-aux-Basques to Comer Brook; linking up Grand Falls and Gander, also Lewisporte with Gander Further encouragement and development of fisheries particularly fresh fish Local public works Mercantile marine Railway capital expenditure, including re-railing of entire system Total

$ 600,000 400,000

1,000,000 1,000,000 500,000 500,000 1,000,000 $5,000,000

We desire to make it plain that this amount of capital expenditure above outlined in our opinion should not be exceeded, and that under no circumstances whatever, unless in case of extraordinary times of stress, should the $25 million surplus trust account be disturbed. It should remain as a fund only to be used in cases of great national emergency. With reference to the proposed $5 million capital expenditure annually to be made from our estimated annual surpluses, we consider $5 million is quite sufficient. We feel that large expenditures on capital account, such as are being made at the present time, do not result in giving proper value

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for the various works performed. The amount of $600,000 annually being set aside for the purpose of increasing old age pensions would be added to the amount of $260,000 now voted in the ordinary estimates of expenditure, which would thus increase the payments made to those receiving the old age pension and would bring their monthly stipend up to not less than $25. Another $400,000 added to social services would include provision for a plan to be worked out for the establishment of a fishermen's and mariners' insurance fund. We have set aside an annual expenditure of $1 million from this estimated surplus for the purpose of encouraging and developing the tourist traffic in Newfoundland. There is no doubt in our minds but that the tourist traffic, properly organised and developed, would mean considerable additional revenue. When it is considered that the neighbouring Dominion of Canada receives $200-$300 million annually through tourist traffic, we do not think it unreasonable that the tourist traffic in Newfoundland could be developed to a point where our annual revenue would be increased by another $5 million. During the period between 1940 to the end of 1945, thousands of Americans were stationed in the country in the various armed forces. Hundreds of others came here on other business. This, in our view, has given Newfoundland considerable advertising, particularly in sections of the United States where formerly our country was practically unknown. It is therefore felt by us that many of these people would like to return to Newfoundland for holidays, and avail of the natural facilities afforded by our country in sporting life. To promote tourist traffic it is necessary that roads be available for the convenience of these tourists. It is therefore proposed under our plan to spend an amount of $1 million annually for the purpose of linking up roads in certain sections of the island. One of these roads would lead from Port-aux-Basques to Corner Brook, linking up the roads now under construction, and such highways would lead through parts of the country where salmon fishing facilities are known to exist. Another road would be built connecting Grand Falls with Gander airport, as well as between Lewisporte and Gander airport. The road now under construction on the Burin Peninsula would be completed. It will be noted that we have set aside from this estimated surplus an amount of $1 million to be used for the purpose of the further encouragement and development of our fishing industry, with particular reference to the marketing of our fresh and frozen fishery products. The manner in which this amount of money would be spent each year would be outlined by a small committee consisting of representatives of the government, the fishing interests and the fishermen themselves. It is a well-known fact that many of our public roads, breakwaters, and public wharves have deteriorated during the past ten years. In view of this, then, it is felt that an amount of at least $500,000 annually should be devoted for the purpose of rebuilding and putting into good condition these various important public utilities. We have set aside an amount of $500,000 each year out of this estimated surplus for the purpose of establishing an efficient mercantile marine. We have pointed out already in the early part of this report the importance of the establishment of such a service, and we are of the opinion that such a policy would be of great material advantage to the country as a whole, as it would place us in a position where we would be able to supply the necessary transportation facilities for the marketing of our own products and for the purposes of carrying our own importations. Through such a policy, many millions of dollars would be retained in the country whilst in addition, employment would be assured to many of our fine seamen. When the General Manager of the Railway was interviewed by the Finance Committee some months ago, he pointed out to us the necessity of the gradual re-railing of the entire railway system. It is acknowledged that during the period of war the services of the railway system were severely taxed and unusually heavy traffic undoubtedly created a position where the steel became heavily worn. In view of this therefore, and in view of the fact that it will be necessary to secure further rolling stock in the way of refrigerator cars for the purposes of carrying perishable goods, additional steel box cars for freight purposes to replace those now practically worn out, as well as other necessary equipment, an amount of $1 million annually should be devoted to these various purposes in

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connection with our railway system. This disposes of our $5 million estimated surplus, and we are of the view that these expenditures are sufficient to take care of the general capital expenditure. With further reference to the proposed establishment of a surplus trust fund to be created by our present $25 million treasury balances in Newfoundland, we want to point out that the St. John's Housing Corporation, up to the present time, has received advances from our treasury in the vicinity of $4 million, possibly more. When the Commissioner for Finance, James, was interviewed by the Finance Committee some nine months ago, he distinctly informed us that this particular reconstruction programme was to be considerably curtailed. We were surprised therefore to ascertain later through the estimates of public expenditures for the year 1947-48 that an additional $1.25 million has been advanced to the St. John's Housing Corporation this year. We are of the view that this particular plan should be curtailed until such time as the present construction work is completed, in order that we may be able to more accurately estimate the final results of the proposition. The repayments from the St. John's Housing Corporation particularly in our opinion should not form part of the actual revenues of the country, but such payments should be deposited directly to the $25 million trust fund already referred to. In presenting this report on the economic position of Newfoundland, we are aware that in all respects we cannot, as in the case of the Financial Report, deal with fixed values. There are instances wherein we are unavoidably compelled to deal in the realm of surmise and even conjecture. To some, this may give the impression that we may be colouring the picture to suit our particular ideas or political inclinations. Such however is not the case. For throughout, our object has been to try and given as accurate a picture as we possibly can of the state of our country. Any figures used by us have, in most cases, been already submitted to this Convention in the various committee reports and have received the approval of the delegates. And in cases where we do express opinions, we have taken care to have their correctness endorsed by those competent to do so. Our task in the preparation of this report was in fact, somewhat similar to that of persons appointed to examine a business concern. We had to find out if the business was solvent. We had to examine the assets and liabilities. We had to see how much it costs to run the business, and we finally had to satisfy ourselves that the business would continue to be a paying proposition in the foreseeable future. Now in conclusion, with our use of the phrase "foreseeable future", we think we should explain what we mean. We are conscious of the fact that there may be delegates who will be satisfied with nothing less than an absolute gilt-edged guarantee of our solvency for the next 20 years before they will accept the fact that Newfoundland is self-supporting. "Things are all right now," they may say, "but what of the future?" To such we reply that we do not know about our future. We do not know what the future of Newfoundland will be five years from now, any more than the governments of Canada, the United States or Great Britain know how things will be with them five years from now. All we can do is to follow the example of these various governments and plan for the future in the light of such facts and information as are presently available. We do what the ordinary businessman does, who satisfies himself that he is financially sound and then takes his chance on the future. Businessmen in this country have been doing just this sort of thing for over 100 years and they are still going strong. In our case, however, we have exceeded the ordinary government budgetary period of one year and made our estimate on a basis of things as we believe they will be for the next three years. And in view of the information available to us, including such features as the ten year contracts of our newsprint industries have for their product, we feel that we are being sufficiently conservative. Now the first matter which engaged our attention was the question of whether Newfoundland was self-supporting. The Report of the Finance Committee of this Convention indicates that we are. In 1945 the Secretary of State for Dominion Affairs, according to the British Hansard, stated in the British House of Commons that Newfoundland was self-supporting. And Commissioner for Finance Wild, when he appeared before this Convention one year ago, distinctly stated that Newfoundland was self-supporting. During the discussions of the delegation from this National Convention to London with Lord Addison, he told us the same thing. We think therefore that we can, without further discussion, accept the fact that Newfoundland is now a self-supporting country.

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But the terms of reference of this Convention contain the following qualification: "to consider our present financial position bearing in mind the extent to which the high revenues of recent years have been due to war time conditions." In this connection we have the following observations to make. In the first place the war has now been over for over for two years and we find our revenues even greater than our highest war time revenues. Now, making every allowance for the momentum of war expenditures carrying on after the close of hostilities, and allowing for the gradual recession of this boom period, it is yet an obvious fact that our present revenues cannot be something dependent on war boom. There must be some other cause, and on examining the matter further we found that a great portion of our present revenue is coming to us because of the growth of our main industries. Now, these industries are wholly peace industries and are not dependent for their prosperity on war conditions. It is clear therefore that we can properly regard our present revenues as being anything but a result of war boom. Our present revenues therefore are substantially solid in their structure, and seem capable of carrying on without any serious decline. However, in estimating our future revenue we prefer to err on the conservative side, and we have therefore, as this report shows, allowed for a drop of from $40 million to $30 million annually for the next three years. On the expenditure side we have actually estimated on a similar conservative basis and have allowed an annual expenditure of $25 million on ordinary administration of the country, which we consider quite sufficient, and which might be considerably reduced if necessity arose. This leaves an annual surplus of $5 million. And in our report we have suggested how this surplus should be expended. Now, to those who can only envisage government operations in Newfoundland on a deficit basis, the idea of our having forecast a surplus of $5 million may seem somewhat strange. But it must be borne in mind that our country is not the same today as it was before the war. To a certain extent our economy has undergone something akin to a revolution in our geographical importance. Our increased wealth, our relations with the United States of America, have all contributed to this change. In view of these factors, a change from a deficit to a credit is not to be regarded as anything abnormal. Reviewing therefore the results of our investigation, we arrive at the following conclusions: (1) That Newfoundland is at present a self-supporting country based on sound economic factors; (2) That all the evidence available to us indicates that this position of self-support will continue in the foreseeable future. In view of the above, we feel that it is not beyond the province of our report to conclude with the observation that it would seem to your Committee, in reviewing their investigations, that it is to be regretted that the list of our assets does not contain in greater quantity, one which we cannot place in the columns of our Economic Report; we mean faith in ourselves, the faith and confidence which every man owes to himself and his country. This lack of faith, of course, is not so with all of us. Our farmers cannot understand the mystery of growth, yet by faith they cast their seed into the earth and God gives a bountiful harvest. Our fisherman knows not the fortunes which await him on the bosom of our waters, but each year finds him ready to venture with faith and confidence upon his quest, and it is proper that this should be so. For faith and trust are in the inescapable laws of both individuals and nations. To use the words of the late President Roosevelt, "We have nothing to fear but fear itself." Respectfully submitted, C.A. Crosbie E.L. Hickman P.W. Crummey A.E. Penny A.J. Goodridge C.H. Ballam E.G. Cranford P.J. Cashin (Chairman)

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Report of the Steering Committee September 20, 1946 1. The Steering Committee at its meeting at 11 am this day gave further consideration to the organisation of the work of the Convention and has agreed upon a final report. 2. The Committee recommends that the Convention set up committees to deal with each of the following subjects: (a) Fisheries (b) Finance (Public) (c) Forestry (d) Mining (e) Agriculture (f) Local Industries (g) Education (h) Public Health & Welfare (i) Transportation It is proposed that members shall be appointed to the committees by the Chairman of the Convention in accordance with the attached schedule. Each member of the Convention is allotted to two committees. 3. In view of the fact that each member of the Convention is to sit on two committees, it has been necessary for the Steering Committee to suggest some schedule of meetings in order that there should be no clash between the Committees. A plan of meetings is given on an attached sheet. 4. In order that there may be complete liaison between the Steering Committee and the nine committees of the Convention, it is suggested that it might be well if the chairmen of the committees were the members of the Steering Committee. In any case where the chairman of a committee is not a member of the Steering Committee, the Steering Committee asks leave of the Convention to add to its numbers accordingly. 5. While these committees are at work — and it is proposed that they should begin work at once — it is intended that the Convention should adjourn until called together by the Chairman, at the instance of the Steering Committee, subject to the decision already taken that the Convention should meet the Commissioner for Finance on Tuesday next at 4 pm in private session of the committee of the whole. 6. It is proposed that each committee shall have the assistance of an official of the appropriate government department to assist it in its task of obtaining the necessary information from that department. The Commission of Government have assured the Chairman of their fullest co-operation in this respect. 7. The Steering Committee has given consideration to the problem of how best to acquire information which members of the Convention desire from government departments. It has decided to establish a Sub-Committee on Information, consisting of the Chairman, Mr. Bradley, K.C., and Mr. Higgins, K.C., and it recommends that all questions and other requests for information in future, together with those already put forward, be referred to the Sub-Committee on Information, which will forward them to the appropriate quarter. The Sub-Committee on Information will act as a clearing house for information and will see that all requests are dealt with in such a way that the information can be speedily obtained. Cyril J. Fox Chairman.

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(1) Fisheries Brown (Convenor) Job Goodridge Crosbie Bradley Ashbourne Hillier Reddy Fudge Figary

(2) Finance Cashin (Convenor) Job Crosbie Hickman Crummey Keough Penny Goodridge Bellam Cranford

(3) Forestry Fudge (Convenor) Cashin Dawe MacDonald Roberts Vardy Brown Vincent Northcott Bailey

(4) Mining Higgins (Convenor) Hollett Banfield Miller Jackman Vardy Fowler McCarthy Walton Burry

(5) Agriculture Butt (Convenor) McCormack Fogwill Keough Hannon Bellam Spencer McCarthy Jones Kennedy

(6) Local Industries Hickman (Convenor) Reddy Dawe Hillier Penny Vincent McCormack Starkes Cranford Jackman

(7) Education Hollett (Convenor) Fowler Jones Fogwill Spencer Miller Harrington Smallwood Ryan Newell

Public Health (8) and Welfare Ashbourne (Convenor) Newell Roberts Higgins Harrington Kennedy Banfield Burry Crummey Starkes

(9) Transportation Bradley (Convenor) Smallwood Hannon Figary Northcott Ryan Bailey Walton Bull MacDonald

[The suggested committee meeting schedule is omitted.]

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Report of Conference of a Committee of the National Convention with His Excellency the Governor in Commission, held at Government House, February 8,1947. February 12,1947. His Excellency the Governor presided. The following Commissioners were present: Hon. Sir John C. Puddester, Kt., Hon A.J. Walsh, Hon. W.H. Flinn, Hon. R.L.M. James and Hon. H.W. Quinton. The Committee of the National Convention consisted of: Mr. F.G. Bradley, K.C., Hon. R.B. Job, Mr. C.A. Crosbie, Mr. T.G.W. Ashbourne, Mr. G.F. Higgins, K.C., Mr. J.R. Smallwood, Mr. I. Newell and Mr. F.D. Fogwill. The purpose of the conference was to discuss the resolution passed by the National Convention at the session of February 4, and forwarded to the Secretary to the Commission of Government by the Secretary of the National Convention on February 5. Upon the question raised in clause I of the resolution respecting steps for establishing an economic or fiscal relationship between the United States and Newfoundland, your committee was informed that this question was one for negotiation between governments through the regular diplomatic channels and that it was doubtful whether the subject matter of the clause came within the terms of reference of the National Convention. In April of this year representatives of the majority of the states forming the United Nations, including the United Kingdom and the United States, will meet in conference at Geneva to discuss the formation of an International Trade Organization with a view to an international agreement on tariff and trade questions. Newfoundland representatives will be present at this conference. With international discussions of these important questions scheduled to take place within the next few months, it is not considered likely that a participating state would entertain proposals for separate tariff arrangements. Your committee was advised that for these reasons it would not be practicable to take any steps contemplated by this clause. Respecting the financial and fiscal relationship to be expected between the Government of the United Kingdom and Newfoundland under each of the forms of government mentioned in clause 2 of the resolution, your committee was informed that upon request from the National Convention His Excellency would forward to the Government of the United Kingdom any enquiries from the Convention respecting this relationship. If the Convention requests discussion of the question with the Government of the United Kingdom by a delegation of Convention members, His Excellency will enquire and inform the Convention whether a delegation will be received. Mr. Job enquired if, in the event of a delegation being sent, they could discuss in London the point raised in clause 1 of the resolution. The Commission pointed out that this would be a matter to be decided by the Government of the United Kingdom, if the question should be raised during the discussions between the delegation and that government. Respecting clause 3 of the resolution, relating to a basis for federal union of the Dominion of Canada and Newfoundland, your committee was informed that upon request from the Convention His Excellency would follow the same procedure as outlined in the next preceding paragraph to obtain from the Government of the Dominion of Canada the information requested by the Convention or to ascertain whether a delegation of Convention members would be received. Your committee was advised that the words "or what other fiscal, political or economic arrangements may be possible" appearing in clause 3 of the resolution, should not be included in any enquiry or in the terms of reference of any delegation to the Dominion of Canada as these are matters entirely for discussion between governments. In relation to the questions raised in clause 2 of the resolution, your committee was advised that any request for information or for reception of a delegation, should be accompanied by a detailed memorandum setting forth precisely the questions on which information is sought, or the matters which it is proposed that the delegation will discuss with the Government of the United Kingdom. This memorandum will be forwarded with the request received from the National Convention. If either or both governments should intimate willingness to receive a delegation, the Commission of Government will give all possible assistance in making transport and other arrangements for the delegates. Your committee recommends to the National Convention that upon any action taken by the Convention on the different clauses of the resolution, the advice received at the conference be accepted.

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The London Delegation, 1947 A. Matters to be Discussed with the United Kingdom Government (n.d.) B. Statement of Matters to be Discussed with the United Kingdom Government (n.d.) C. First Meeting with Delegation from Newfoundland National Convention, 29 April, 1947. D. Memorandum in Reply to Questions submitted by the Delegation (1 May, 1947). E. Second Meeting with the Delegation, 1 May, 1947. F. Reply to the Memorandum submitted to the Newfoundland Delegation on May 1, 1947 (6 May, 1947). G. Memorandum with Reference to Section 3 of the Convention Act, 1946 (6 May, 1947). H. Third Meeting with the Delegation, 7 May, 1947. Sources: Items A, D, F and G are from PANL, GN 10/B, Box 2. The other items are from the papers of the late A.B. Butt. See Volume I: 337, 365. A.

Matters to be Discussed with United Kingdom Government The subjects set out in the resolution on which the delegation from the National Convention wish to seek information from the Right Honourable the Secretary of State for Dominion Affairs, are as follows: 1. The public debt. 2. The interest-free loans. 3. Development loans. 4. The position arising out of the various base deals. 5. The financing and control of Newfoundland airports. 6. Trade and tariffs. 7. Any other matters relative to Newfoundland affairs which the delegation may raise and His Majesty's Government in the United Kingdom be willing to discuss. It is understood from the communication received from His Excellency the Governor in Commission that the Right Honourable the Secretary of State would be glad if the precise questions, which the delegation propose to ask, under the above-mentioned headings, can be formulated and forwarded, at the earliest possible date. It is further understood that the questions to be asked should be supported by explanatory memoranda. It is obvious that it would be difficult to set out precisely all the questions to be enquired into by the delegation. It is hoped that the following will contain the necessary information required by the Right Honourable the Secretary of State for Dominion Affairs. 1. The Public Debt What is the possibility for the cancellation either in whole or in part of the sterling debt owed by Newfoundland, and which debt as to principal and interest has been guaranteed by Great Britain; or the possibility of the further refunding of said debt? Explanatory Memorandum It is considered that it would be most difficult for any future government to achieve the modernisation and expansion of our chief industry, the fisheries, and to maintain our now greatly expanded public and social services if considerable monies must be found annually to meet interest payments on the public debt. 2. The Interest-free Loans (a) What is the possibility of Great Britain's now paying interest on said loans?

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(b) In the event of some consideration being given to the question under heading no. 1, to what extent could said interest-free loans be used as an offset against the cancellation or refunding of said public debt? Explanatory Memorandum Now that the emergency that occasioned the making of interest-fee loans to Great Britain no longer exists it is felt that the time has come when, in the interests of the people of Newfoundland, some such action as envisioned below should be taken with regard to non-interest bearing loans that Newfoundland made to Great Britain: 1. The loans should come to bear interest forthwith, or 2. The loans be applied to the offsetting of a portion of the public debt. 3. Development Loans What are the possibilities of obtaining loans in England in the future for development purposes in Newfoundland — it being understood that any such loans be spent in England for goods and services? Explanatory Memorandum Whilst it is felt that loans from Great Britain that would involve the transfer of dollars are out of the question at the moment it is nevertheless felt that the matter of development loans should be discussed in view of the fact that it is desirable, if possible, for Newfoundland to make considerable expenditure to re-organise her fisheries and proceed with other development activities, and in that it is thought there may be some possibility of Great Britain's being able to make loans to Newfoundland for such purposes which could be spent in Great Britain to acquire goods and services necessary to such a programme. 4. The Position Arising Out of the Various Base Deals (a) What possibility exists of securing modification fo the Leased Bases Agreement of 1941 whereby the sovereignty of Newfoundland has been impaired and may be further impaired? (b) What possibility exists of securing some quid pro quo for Newfoundland for the territories alienated under the base agreements? Explanatory Memorandum Since the sovereignty of Newfoundland was impaired by the Leased Bases Agreement of 1941 and since that agreement leaves the way open for further impairment of such sovereignty, we believe it of paramount importance in the interest of the people of Newfoundland that the whole matter should be thoroughly discussed with a view to arriving at some desirable modification of the agreement and the obtaining for Newfoundland of suitable quid pro quo for the alienation of portions of our territory for 99 years. 5. The Financing and Control of Newfoundland Airports What proportion, if any, of the cost of operating Gander airport will Newfoundland be called upon to pay, and what is the basis for allocating any proportion to the Newfoundland government? Explanatory Memorandum Before the National Convention can complete the work that it has in hand, it is necessary for it to have full information with regard to Gander airport — particularly so since it would appear that its operation may well cost the treasury of Newfoundland in the vicinity of $1 million annually and it is not apparent that the Newfoundland government will derive any benefit from such expenditure. 6. Trade and Tariffs (a) In the case of return to responsible government, would Newfoundland be included in favourable trade and tariff agreements made by Great Britain with countries which are presently, or may be potential customers for our produce, or would we have to adopt the Statue of Westminster and make our own agreements? (b) What is the position with regard to imperial preference having in mind the reciprocity offered at the Ottawa Conference which was not carried out (sale of Bell Island ore). (c) What assistance, if any, could be expected from the United Kingdom in effecting sales of our

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goods in the sterling areas? In case dollars were not procurable for all the sterling received would the United Kingdom alternatively be prepared to offer payment for the balance in the form of goods or services from the United Kingdom or her colonial empire? Explanatory Memorandum It is thought to be highly desirable that we have a clear understanding of the extent to which Great Britain may be prepared to assist us in the making of favourable trade and tariff arrangements in the future. 7. Any other matters relative to Newfoundland affairs which the delegation may raise and His Majesty's Government in the United Kingdom be willing to discuss. B. Statement of Matters to be Discussed With the United Kingdom Government A. The members of the National Convention representing the people of Newfoundland feel that, taking the whole history of Newfoundland into account, there are good grounds for a discussion with the United Kingdom government on the question of our national debt, with a view to discovering what arrangements may be made, necessary to lighten the burden which Newfoundland may have to carry in the period of rehabilitation which she is facing. It is a well-known fact that the finding of funds to finance the interest on our debt was, and is, of fundamental importance in any decision as to the degree of self-government which Newfoundland can enjoy. The National Convention, therefore, must deal with this matter before it can consider a form of government for Newfoundland. Without attempting to intrude too much of our national aspirations towards an economic standard higher than we have as yet known, and without approaching the problem of our national debt as one wherein this country depends upon the generosity of another, it is hoped that some arrangement may be arrived at which would allow Newfoundland's national economic aspirations a chance to materialise. B. The principle of extra-territorial rights which was, we feel, negatived by the good sense of the more progressive nations of the world during the early part of the present century, has been invoked by powerful nations during recent years at the expense of Newfoundland. Recognising to the full the emergency which justified the revival of this principle by those nations, we nevertheless feel that those nations would not willingly use a small country such as Newfoundland without assuring to Newfoundland compensatory benefits of a very real nature. It is, therefore, felt that there ought to be a serious discussion as to the omission of a reservation clause, in the appropriate agreement, calling for a re-consideration of the agreement after the war, with a view to allowing the nations concerned to accord to Newfoundland the treatment which we feel they must be anxious to extend. C. The United Kingdom government has announced that it is sending a delegation to Newfoundland to consider the question of the share which Newfoundland should be called upon to pay on the financing of Gander airport. The United Kingdom government thereby acknowledges, in principle, that Newfoundland should not be called upon to pay more than its just proportion of the cost of maintaining and operating the airport. However, no indication has been given of the basis of approach to the problem in a detailed way, and it is necessary that the Convention have more specific knowledge of the problem, as this country is one which cannot afford to have any number of institutions operating on a deficit basis — however small the deficit may be decided upon. It will be realised that the air world should not expect a country which does not participate in the benefits accruing from the operations of its own commercial lines to pay any part of the costs of operating these lines. D. The people of this Island, which enjoys the distinction of being Britain's oldest colony, cannot but be pained at the tremendous cost which the mother country presently is being called upon to pay for her altruism in a world of war-like nations. They feel, however, that recovery will not be too long delayed. In the meantime, in view of her four centuries of struggle, it is inconceivable that Newfoundland should not make the most of her present position, and it is therefore of no little importance that the position as between Newfoundland's willingness to assist the mother country in the matter of interest-free loans, and her own future welfare, should be clarified for the Newfoundland

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people. How the interest-free loans in Great Britain should be taken into account should, it is felt, be the subject of careful consideration. E. In the questions dealt with above the references are specific. There are, however, other matters arising out of and related to them which are also of importance to the activities of the National Convention, in that they will play an important part in assisting the members of the Convention to make up their minds as to the form or forms of government which will be recommended to the United Kingdom government for inclusion in the national referendum. For example, the Convention would wish to explore the possibilities of ways and means whereby trade between the United Kingdom and Newfoundland may be increased. C. First Meeting with Delegation from Newfoundland National Convention House of Lords, Tuesday, 29 April 1947

Present: The Right Honourable Viscount Addison, K.G., Secretary of State for Dominion Affairs Mr. W. Glenvil Hall, M.P. Financial Secretary to the Treasury Mr. A. G. Bottomley, M.P. Parliamentary Under Secretary of State, Dominions Office Sir Gordon Macdonald, K.C.M.G. H.E. the Governor of Newfoundland The Hon. A. J. Walsh, K.C. Newfoundland Commissioner for Home Affairs and Education Dominions Office Sir Eric Machtig, K.B.E., K.C.M.G., O.B.E. Mr. C. G. L. Syers, C.M.G., C.V.O. Mr. H. N. Tail, C.M.G. Mr. J. Chadwick Lt. Col. W. Russell-Edmunds, T.D., Treasury Newfoundland Delegates: Mr. Gordon Bradley, K.C. Mr. C. A. Crosbie Mr. B. Butt Mr. P. Cashin Mr. M. Hollett Mr. P. Keough Mr. P. Fudge Lord Addison: I should like to say once more on behalf of H.M. Government that we are glad to see you in the old country, and we will do our best to deal frankly with the matters that are before us. We asked you if you would inform us beforehand of the chief matters that you wished to raise, and you have very kindly done so. I have before me the questions which you asked us to consider. We have given them some thought, and I shall be very glad to consider them with you. The first question in your questionnaire relates to the public debt, and I think we had better deal with the questionnaire straight away. Mr. Bradley: I think so, my lord. Lord Addison: What is the possibility for the cancellation either in whole or in part of the sterling debt owed by Newfoundland and which debt as to principal and interest has been guaranteed by Great Britain, or the possibility of further refunding of the said debt?". That is the first question, and perhaps you, Mr. Bradley, would like to say something about it.

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Mr. Bradley: I have very little to say in that connection, the question being really self-explanatory. You are aware, of course, of the purposes of the National Convention. Firstly, we have to explore the financial position of the country and our economic prospects for the future in the light of existing circumstances and the possibilities for the future. The country at present is not only solvent, but, I think it is fair to say, fairly prosperous. We have, however, no guarantee of any lengthy continuance of that favourable situation; on the contrary, we fear that we have to visualise the probability of a recession in the prices that we shall receive in foreign markets for our chief production, namely fish. So far as the fresh processed fish is concerned, that recession has begun. It is anticipated by many of those more familiar with the trade than I am that there is a likelihood of a recession in the prices that we shall receive for our salted fish products within the next 12 months at any rate. That of course is bound to affect our revenue. We have this situation also to face. Unfortunately — and perhaps we will have to lay some of the blame for this at your door — we are a very conservative people and we dislike change. As a result, I fear that our methods of production are not as modern as they might be. We have reached a point now where some of us at any rate realise that these methods have got to be changed, and that is bound to mean something in the nature of an industrial revolution in Newfoundland, and a very substantial expenditure of capital running into many millions of dollars. In view of these circumstances, the Convention did feel that perhaps the British government might be approached with a view to ascertaining what, if anything, could be done to relieve the country of some of this annual burden caused by our national debt which, of course, was the basic cause of our downfall in 1933. We do not know whether anything can be done in that connection. I think that is about all that I can tell your lordship in a few words. If you would require any figures on the matter, possibly my colleague Mr. Cashin might be able to supply them as he is more familiar with the figures than I am; and from the industrial aspect I think Mr. Crosbie would be the man to give you the information. Lord Addison: I suppose that, from the point of view of figures, your reference to your colleagues relates to what you think will be your ability to meet the costs of the development to which you have referred? Mr. Bradley: Yes, my lord. Lord Addison: And the maintenance of your services? Mr. Bradley: Yes. Lord Addison: Have you anything to say on those points, Mr. Cashin? Mr. Cashin: In connection with our public debt — that is the sterling debt, but I quote it in dollars — at the present time you have set aside $3,200,000 to meet two loans that are due in 1950 and 1952. Consequently, that is taken care of. There is a temporary loan of £400,000, the amount of which in dollars at the present rate of exchange is $1,600,000.1 would like to point out that that loan was made in 1917; it was a temporary loan; at that time the Newfoundland Regiment was in action in France and had been considerably cut up, and the government, whose revenues in those days were around $7 million, could not see its way clear to continue, and the result was the United Kingdom government gave us that £400,000 to carry on. The understanding verbally at that time — I do not think there was anything official — was that the loan was not to bear interest. We have never paid interest on it, it has just been lying on our books, and I personally consider under the circumstances that loan was for the purpose of keeping our regiment afloat. That loan is down in our accounts, we are not paying any interest or sinking fund on it, and naturally we look to have it wiped out to-day. The next amount is a 3% guaranteed stock. As of 31 December that amounted to approximately £17.75 million, or over $71 million. Lord Addison: That is the main debt? Mr. Cashin: Yes, that is the main debt. Against that there is a sinking fund held over here of about $7.5 - 8 million. That would reduce it to say $64 million in our money. Mr. Glenvil Hall: I gather there was a set-off to that loan of about $6 - $7 million. Mr. Cashin: Yes, a sinking fund.

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Mr. Glenvil Hall: That is the sinking fund? Mr. Cashin: Yes. It is in Great Britain, with the Bank of England—about $7.5-8 million altogether. Mr. Glenvil Hall: It is not an interest-free loan? Mr. Cashin: This is entirely different. That would bring it down to $64 million. Our other loans are practically all local loans — that is Newfoundland loans. There are $5 million of war savings certificates which have been taken care of by a sinking fund in Newfoundland, but the principal amount of our outstanding debt is this $64 million. That is the one which I think would form the main subject of our discussion. Lord Addison: Mr. Crosbie, have you anything to add? Mr. Crosbie: The only thing I have to add is that we have the feeling at home that the interest we are now paying could be used for further development, principally in the fisheries, because we are very much behind and we cannot get the fishing on to a sound basis while we are in financial difficulty to a certain extent, and there is tremendous room for improvement in the fisheries. If we could be relieved of that debt interest we could use the money for further development. Mr. Cashin: Our interest and sinking fund to-day amount to roughly $3.25 - 3.5 million annually. Lord Addison: As regards the two smaller amounts that you referred to, the money is already provided.... Mr. Cashin: Yes. Lord Addison: ...except the £400,000? Mr. Cashin: That is a separate thing. I am speaking of the two maturing in 1950 and 1952. Lord Addison: That is being taken care of? Mr. Cashin: The money is already provided, so we can leave them out. Lord Addison: With regard to the 1917 amount of £400,000, you never paid any interest on that? Mr. Cashin: No. Lord Addison: I do not expect the Treasury expect to get any. Perhaps you can make a statement on that, Mr. Hall? Mr. Glenvil Hall: We are always willing to receive interest. Mr. Cashin: I quite appreciate that. Mr. Glenvil Hall: I take it the real discussion here will centre around the £18 million, nearly, of 3% stock. Mr. Cashin: Yes. Mr. Glenvil Hall: That falls to be paid off in 1943-1963. Do I understand the suggestion is that this country should take over that debt, or what is the proposition which Mr. Cashin and your delegation would like to make? Mr. Cashin: We are suggesting that by wiping off that debt it would save us, as Mr. Crosbie pointed out, over $3 million a year, which we feel should be devoted to building up our fisheries. With that $3-3.5 million a year Newfoundland could, we feel, build up her fisheries, which I think Mr. Crosbie would agree are our main industry; they could be built up, in other words subsidised, and the saving of that interest could be devoted to that purpose and to development. Lord Addison: Let us get the small things out of the way first. We have dispensed with the 1950 1952 item. As to the £400,000 loan of 1917,1 will consult the Treasury about that and we will make a statement to you later on. The fact is that you have not paid any interest on it, and we have not asked for any interest. That is how the matter stands at the moment, and as to the future I will consult with Mr. Hall. As to the other, the Treasury can tell you better than I can, but you are well aware that this country has a few debts these days. Mr. Cashin: Yes. Lord Addison: Newfoundland is not in a peculiar position in that respect. This country is burdened with terrific debts and we have had, as you know, to sacrifice all or the greater part of our overseas assets. We have 40% of our shipping at the bottom of the sea, and therefore with the best of goodwill in the world we are not in a position, however kindly may be our disposition, to be generous in these matters. There is one consideration which occurs to me about this which I am rather surprised you

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did not refer to. At present it is a 3% loan. Mr. Cashin: Yes. Lord Addison: The policy of the Treasury here is to keep money cheap, and there is a possibility, which might be considered, and no doubt the Treasury as far as they are responsible would certainly consider it, of converting it to 2.5%, which would save a substantial amount in the annual service to the loan. Mr. Cashin: On the other hand, Newfoundland has also given temporary loans to Britain. Lord Addison: That is right. I am coming to that later on. That is the next item. Mr. Cashin: The two kind of mix up. Lord Addison: Yes, but still you have to discuss things separately. Mr. Glenvil Hall: That is why I asked you whether the suggestion was — we will all be frank with each other.... Mr. Cashin: It is the best way. Mr. Glenvil Hall: We are all in the same family. I gather the suggestion was that the United Kingdom should now see its way if possible to take over this debt of, in round figures, £18 million. It is £17,790. Mr. Cashin: Yes. Mr. Glenvil Hall: Call it £18 million. Our trouble is, as Lord Addison said, that you have come to us at a particularly awkward time, when we ourselves are burdened with debt. Our national debt is now £24,000 million, which is terrific, and we are not out of the wood yet. Our annual budget runs into something over £3,000 million, apart from borrowings — that we are raising in revenue — and income tax is still 9 shillings in the pound, while as regards persons with incomes able to bear it it goes up to 19s 6d. in the pound, so that the cow has been milked pretty thoroughly and the whole desire, and we all share it, is for a remission of the taxation burden and of the debt that does hang like a millstone around our necks. You may say that £18 million makes little or no difference in face of such huge figures, but nevertheless you have come to us at an awkward time and we do feel — and we have thought about this — that there seems to be no good reason at this juncture why it should be taken over by us. If I may remind you, we have guaranteed this and underwritten it both as to principal and interest, and that has made some difference — I put it no higher than that — some difference to the interest and service of the loan. That being so, the Treasury does feel that a good case has not been made out so far for taking this over. Mr. Cashin: With reference to that, as I said a moment ago I think you and I can talk of these interest-free loans we have given to you, plus the sinking fund. Mr. Glenvil Hall: I agree. Mr. Cashin: You understand what I am trying to get at, but if we could make a deal on that... Mr. Glenvil Hall: That is what I thought. I thought that was in your mind, but I wanted first of all to clear out of the way the other matter, and carry you with me if I could. At the moment, with every desire to help Newfoundland in her troubles, we unfortunately have our troubles too, and £18 million to us at this juncture is £18 million. You say there is $3 million interest on it, and we realise that, but I would like to follow up what Lord Addison said, and to add this now, if I may, that whilst we should find it very difficult to substantiate to our electors and to the House a complete taking over of this debt, there is no reason why a further reduction of interest should not take place; and so we would be very willing to help you carry that through. Here, as Lord Addison said, we have now got rates down to 2.5%, and it is the considered and definite and continuing policy of this government to keep money rates cheap and there is no reason why Newfoundland should not share in that cheap money policy if it is so minded. The only difficulty that arises is that you have to give notice when you make these conversions and of another issue at a lower rate, and I doubt if it could be done before January, 1948. That is not a long time ahead, but it is some months ahead. If you cared to discuss a proposition on that basis we would be more than willing to meet you halfway, but on this question of our taking over the debt, at the moment we think we should have the very greatest difficulty with our own people if we tried to put it over on them.

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Lord Addison: The reduction in the interest would save you one-sixth of your existing charge straight away — half a million dollars. Mr. Glenvil Hall: Again I am being quite frank with you. You are not doing too badly now. During the war you were, fortunately for you — it was not your fault — a little out of the path of the storm, and you have been getting surpluses lately, and, as you know, from your surpluses you have been able to set aside sums to wipe off the 1950 and 1952 loans. That would undoubtedly be raised in the House. They would say, "Why on earth are you doing this when our need is so great? Newfoundland does not seem to be in need of having this wiped off, and I will ask you, if you will, to bear that in mind. Lord Addison: Now we pass to the next one. You notice our suggestion there, Mr. Bradley and Mr. Cashin, that we will participate as soon as may be, but owing to the requisite notice and the rest of it I gather it will not be until next January. The suggestion is to reduce the rate of interest from 3% to 2.5%, which would give Newfoundland an advantage of half a million dollars in round figures, which is a substantial contribution. With regard to these interest-free loans, it is the habit of this country to honour its obligations, and we do not propose to depart from that principle with regard to these loans. Mr. Cashin: That is what I was coming to. If we could devote — say it is a little over $9 million.... Lord Addison: What you do with it is Newfoundland's affair; it is not for us to say. Mr. Cashin: If we devoted that to reducing our debt, that would bring it down to round about $55 million with the sinking fund. Mr. Glenvil Hall: Yes; the loan. Mr. Cashin: Yes, it would bring our debt down to $55 million, and then at 2.5% interest that would be fairly good. I mean our national debt to-day is in sterling $71 million and we have a sinking fund against that of $7.5 million. Now we have another $9.25 million which you people owe us. That is $16.75 million. That $16.75 taken off the $72 would bring it down to $56 million dollars — our debt. If our debt is down to $55 - 56 million at 2.5% it would be a saving equal to pretty well $1 million to us. Lord Addison: You would naturally not expect us to be anxious to find the money before we are required to do so. At the same time, these are interest-free loans, and you are not proposing that the principle should be departed from. Nevertheless, they were accepted by us on the understanding that we should repay them. Mr. Cashin: Yes. Lord Addison: And we do not propose to depart from our obligations. I understand that a certain sum of money has already been set aside towards that purpose. Is that right? Mr. Cashin: The total interest-free loan is $12 million, and $2,300,000 was set aside to meet the other loan becoming due. That leaves $9.25 million. Mr. Glenvil Hall: Those are dollars? Mr. Cashin: Yes; but you do not have to find them in dollars. Lord Addison: That is the next point to consider. What about the question of repayment by expenditure on things here that you require? Mr. Cashin: Goods that we would have to purchase? Lord Addison: Yes. You have certain sterling requirements in this country. Mr. Cashin: Yes. Lord Addison: Whatever may be the form of government ultimately decided upon — that is not for us to decide, that is for Newfoundland — it would be a practical suggestion that some of this money should be devoted to meeting your sterling requirements in the United Kingdom, which would avoid the dollar trouble and at the same time finance some of your necessities so far as they are required to be met in this country. Mr. Cashin: I am still of the view that we should try and buy in our 3% stock with that $9 million and reduce our debt as much as possible and avoid paying interest. Lord Addison: You mean set this against?

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Mr. Cashin: Yes. Mr. Glenvil Hall: I am not sure that we can come to a final decision on this this afternoon. Mr. Cashin: No. Mr. Glenvil Hall: We are all exchanging views, and might like to consider it and think about it. There are other people who come into this besides us, and it would perhaps be as well if we have a completely free and frank interchange of views now, speaking our minds quite openly, almost brutally, and leaving things perhaps to fructify in our minds, and come back to it tomorrow or whenever the occasion may offer. We are, as Lord Addison said, in a jam, otherwise we would meet Newfoundland with open arms. We were delighted and very grateful for the interest-free loans which you made to us in our hour of need, and we honour our bond, but at the same time it is very difficult for us to find dollars, very difficult indeed. This money has been useful, and undoubtedly you may want to buy things here, and if so it will be very useful there ... and probably if others desire to join in the discussion we could have a frank interchange of views and ... then look at it again tomorrow. Mr. Cashin: That will be quite all right. Mr. Bradley: I think that will be the wiser course. Mr. Hollett: I was wondering if the bases would interlock. Lord Addison: It may do. We will take things in order. One thing may affect or help another. Again you will understand that it is not my business to forecast what the Government of Newfoundland does with its money; it is for them to say. We shall honour our obligations, but at the same time we do not want to have to find a lot of dollars. That is quite sensible and you quite understand that, I am sure. Mr. Cashin: I think we might defer that matter until the next meeting and then have another chat about it. Mr. Glenvil Hall: If the Chairman agrees, and the delegation agree, I think perhaps it would be well to do that. This is a sort of preliminary skirmish. We mutually disclose what is in our minds and then perhaps we can balance what we want against what you are in need of. Mr. Cashin: Yes. Lord Addison: There are three points: there is the possible conversion of the 3% to 2.5%; there is what is to be done about that £400,000; and then there is what is to be done about these interest-free loans. Those three matters have emerged up to the moment. Mr. Crosbie: We think the Government of Newfoundland might want to make some suggestions about the $9.5 million. Lord Addison: Yes. I myself am an outside party in this matter and, therefore, whatever the Newfoundland government has to say it says it amongst yourselves. I think I must leave you to conduct your own business in your own way. Mr. Crosbie: The point is that we cannot get close enough to our government to do that. Lord Addison: It seems to me you have got on remarkably well. I only wish this poor old country had got on as well during the war years as you appear to have got on. Mr. Crosbie: We cannot complain about what happened during the war years. Lord Addison: No, I do not think you can really. Mr. Crosbie: No, sir, we cannot. Mr. Hollett: At the same time, our people have seen more of this austerity business than ever the English people have yet; I mean in the past, before the war and right up to 1939. Lord Addison: You had a lot of poverty amongst your fishermen, I know you had. It was only the question of hard cash I was talking about at that particular moment. Mr. Crosbie: Cold dollars and cents? Lord Addison: Yes, national debts. It is a fact that our debt is now of an astronomical order — I think that is a fair statement — whereas you, fortunately, during the war years, happen to have accumulated a bit of a surplus, not a big one as compared with this prodigious debt of ours, but still it is a surplus, and I am sure, as fair-minded men, you are quite willing to recognise that fact. Sir Gordon Macdonald: I take it Mr. Hall's suggestion means that not only will you consider the matters that have been mentioned, but also that the delegation, as a delegation, should consider them?

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Lord Addison: Yes. You are at liberty, and we shall give you every facility for meeting and discussing whatever you want to discuss. Mr. Glenvil Hall: And, as was said, the Government of Newfoundland comes into it. That was what I meant by saying that other bodies perhaps would have a view. Sir Gordon Macdonald: Yes, except that at this moment part of the government is in Newfoundland and Mr. Walsh and I happen to be here. Lord Addison: So far as I am concerned, I would rather confine the matter to discussing what the United Kingdom government feels able to do. You are putting your requests before us and we are giving them, as you see, the fairest consideration. I think that is as far as I can go — to say what I would recommend His Majesty's Government here to do. Mr. Hollett: The real government would be here in the Dominions Office, I should say. Lord Addison: I represent His Majesty's Government, and I accept the responsibility for it, of course. So far as these particular financial transactions are concerned, I will tell you what the United Kingdom is prepared to do. Who we do it for, or whoever it may be, is not the point, so far as I am concerned. I am telling you what we can do, with the best goodwill in the world. Therefore, I should hope that you would regard these other issues as, shall we say, aside from the main point. New development loans is the next item on your paper. As you said, Mr. Bradley, they really overlap. Your question is — what are the possibilities of obtaining loans in England for future development purposes, it being understood that such loans would be spent in England for goods and services? Mr. Hollett: I think that was meant to be more in the future than at present. Mr. Bradley: In the event of their being required. Lord Addison: Yes. Do you wish to discuss that? Mr. Cashin: I think we could pass over that particular item at the present time. Mr. Glenvil Hall: I think perhaps it might be fit and proper, considering that up to now we have rather stonewalled the delegation, to say this. So long as it did not involve dollar expenditure and so long as it did not, at any rate for some time ahead, involve the floating of considerable loans, we are more than willing to help Newfoundland insofar as we can in her desire to buy goods and services in this country, and to ease the mechanism of your finding the money to spend here and our providing the goods. One of the difficulties is, of course, that at the moment we are very short of goods ourselves. We are striving hard to build it up, particularly the export trade. If that is borne in mind, I can assure you that the will to help you is there. On the surface it would appear to be somewhat absurd to be discussing possible loans to Newfoundland when up to now the suggestion from Newfoundland has been that we should partially wipe out, and, secondly, take over all the indebtedness they now have to this country. Mr. Cashin: It is not suggested that Newfoundland is looking for any loans at the present time. Any goods we can buy here now our people are able to find the money to pay for. Mr. Glenvil Hall: Any assistance in the direction of giving credit on favourable terms and so on, we are more than willing to discuss and to go to the utmost limit to help Newfoundland within the four corners of what is possible. Lord Addison: In terms of goods, you will remember that at the present time we are suffering from a shortage of goods. The demand is so prodigious. Mr. Glenvil Hall: What goods do you want particularly? Mr. Bradley: So far as I can gather, the position there is that we do not anticipate any immediate help in that direction. The idea is rather to get your general attitude in the matter. For instance, within the next few years we may require substantial numbers of marine engines and other small ship fittings. Mr. Glenvil Hall: You have come to the right country for them; we make the best in the world. Therefore, as and when we are only too willing to go right forward to meet you. Mr. Bradley: Of course, we realise the position at the present time. Not only have you a shortage of goods in your country, but you need to export all you can in order to get dollars. We realise that fact too.

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Lord Addison: Shall we go on now to your next question which deals with bases. There are two matters, if I remember rightly, relating to airports. The first question deals with the position arising out of the various base deals: What possibility exists of securing modification of the Leased Bases Agreement of 1941 whereby the sovereignty of Newfoundland has been impaired and may be further impaired? What possibility exists of securing some quid pro quo for Newfoundland for the territories alienated under the bases agreements? That is your question. Have you anything to say about that? Mr. Bradley: Under these base deals we have lost the sovereignty of portions of our country, and under those deals also there is a possibility of our losing the sovereignty of further portions of the land. The suggestion is, I think, that the British government might possibly be in a position to gain concessions for us, trading concessions, with the United States, which is a market in which under favourable conditions we could sell considerable quantities of our own products. Whether that is possible at the present moment, in view of the fact that these I.T.O. conferences are about to commence, I do not know. Mr. Glenvil Hall: You mean the ones at Geneva? Mr. Bradley: Yes. Mr. Glenvil Hall: You have a representative in Geneva, I think? Mr. Bradley: Yes. Mr. Glenvil Hall: Have you had any reports from him? Mr. Cashin: No. Mr. Glenvil Hall: Of course, the conference is not under way yet. Lord Addison: On that let us be realists. We leased some bases to the United States in some of our territories. We got some destroyers for them when we wanted them desperately badly and, of course, that was part of our plan of defence in the war, to which Newfoundland made her contribution by the leasing of these area. There was an area near St. John's where garrison quarters were established, a large naval base at Argentia in the west of the Avalon Peninsula, and a site at Stephenville on the west coast. Mr. Bradley: That is right, and one or two smaller places, one at Cape Bonavista, for instance, where they had one of those Lorenz stations. Then they had another base at Elliston, about five or six miles away, but that has been evacuated and I do not know whether they still hold the territory or not. Lord Addison: I understand those were the three that were leased. Were there any others? Mr. Walsh: It is not a leased base at Bonavista, but I think they came in temporarily to establish that service during the war. Mr. Bradley: I have no idea, but they are still there. Mr. Walsh: They may be still there, but it is not permanently leased to them. Mr. Bradley: I do not know under what terms they came in. Mr. Crosbie: Then there was Goose Bay which was leased to Canada. Lord Addison: That is another matter. You have raised a question about Canada; that is a separate question. I was on these bases leased to the United States. May I ask you a question? Newfoundland has derived some advantages from these services at these bases? They have employed Newfoundlanders, have they not? Mr. Cashin: I know we derive benefit in that respect, but on the other hand, a foreign outfit has come in and taken over that part of our country. They had to employ someone to build the bases; our people happened to be there and they benefited by it and it was an act of Providence in that respect, but the point is that that part of the country belonged to Newfoundland and was under Newfoundland sovereignty, and I am certain I am expressing the view of everyone in Newfoundland when I say that we have no objection to giving these bases for defence purposes for the duration of the war, and we would do anything to win the war, but what a lot of people in Newfoundland object to is the fact that the Americans have control of these bases, and have taken the sovereignty away from Newfoundland International Trade Organization.

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for 99 years. Lord Addison: May I ask you a question on that? I know what happened in this country and I am going to ask you what you think would have happened in your country. If this question had been put to the Newfoundland people to vote on, would they or would they not have been agreeable at that desperate time to leasing these little bits of ground for that purpose? Mr. Cashin: I believe they would have voted to release them for the duration of the war. Lord Addison: Do you think they would have limited it in that way? Mr. Hollett: I think they would have put in some sort of saving clause. Lord Addison: I do not know about that, but, you know, when you are confronted with the perils we were confronted with, and that you were confronted with.... Mr. Cashin: And the United States was confronted with. Lord Addison: Yes. We were all in it. They all helped to save us by these arrangements. It is true that one little base is not much, but it was part of a comprehensive deal and I should be sorry to want to go back on that now. What do you think your people would have done at that time? Would they have been unwilling to have made this sacrifice in the common interests? Mr. Bradley: In the emergency I think they would have done it, but I think what a good many people look at today is the fact that while Canada gave the United States concessions in their territory during the war, it was definitely stipulated that they were to get out within a given period after the war ended. I suppose, economically, it does not make very much difference to us, but it is a fact I think that the King's writ does not run in Argentia. Mr. Walsh: The writ is there, but it cannot be served. It can be turned over to the local officer who will serve it. Mr. Bradley: That grates on me, being a lawyer. Lord Addison: We are in the same position in the West Indies. There are some places in the Pacific where exactly the same position arises. That is one of the things we endure; it is one of the prices we paid for winning the war. You would not think we had won it, to judge by the state of affairs at present, but still we did win the war, incredible as it may appear, and that is one of the prices we are paying. This is, if I may say so, a small contribution Newfoundland has made. It is a small one, really. Do not let us exaggerate it. After all, Newfoundland does get some benefit out of it of a continuing kind. I take it there are several Newfoundlanders now employed there. They spend money in your place and, insofar as it goes, economically you get more advantage out of their being there than you would get if there was nothing there. That must be true. Mr. Hollett: That was an agreement made by the British government. Lord Addison: Yes. We are responsible and we accept all the kicks. Mr. Hollett: Did you forget the Labouchere agreement with our Governor Darling in 1857? Lord Addison: That is a long time since. Mr. Hollett: I know, but it was a guarantee. Mr. Glenvil Hall: A representative of your government was in on these negotiations, on the bases agreement. What I would like to ask, if I may, is whether the delegation has any suggestion to put forward? Mr. Crosbie: With regard to American policy, I do not think you will get them out because they have spent $40 million on these bases and I do not think we want to spend $40 million to get them out of the country, but the thing that is troubling a lot of Newfoundlanders is this. Let us assume — it may be far-fetched and it may not be — that the United States is at war, and this country is not and Newfoundland is not. What is Newfoundland's position to be then? What position should we be in? The United States would have a perfect right to come into Newfoundland and take control of everything and declare a state of emergency. Lord Addison: Only in these areas? Mr. Crosbie: Our people do not object to the United States having this concession provided they !

The famous Labouchere despatch (26 March 1857) stated that "the consent of the community of Newfoundland" was an "essential preliminary to any modification of... territorial or maritime rights."

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will agree to give Newfoundland something in exchange for it, and I think the idea at home is to have some special tariff agreement as regards Newfoundland products going into the United States. Mr. Glenvil Hall: I wondered whether that was it. If so, let us have it out and look at it. Mr. Crosbie: That is what is in our mind at the moment. Mr. Glenvil Hall: That is in your mind, that you should have that as a quid pro quol Mr. Crosbie: Yes. Mr. Bottomley: In that agreement there is a clause that provides for some modification of the agreement after the end of the war. Lord Addison: At our next meeting we will have a copy of the agreement before us. Mr. Bottomley: Are we not rather losing sight of the experience of the last war? Do you think it possible for America to be at war and Newfoundland out of it? Mr. Crosbie: This country was at war for two years before America came in. Mr. Bottomley: Do you think, as a result of the experience of the last war, that is possible? Many small countries in Europe thought they could keep outside but they were forced in. I am putting it to you that it may be in your interest to have these defence arrangements. Sir Gordon Macdonald: What the delegation and those in the country have in mind is this. Here are these bases. The arrangement was made at a time when nobody wanted to argue; the position was too serious; but is it not now possible to use this as a means of getting some favourable trade agreement with the United States? I know that is the feeling in the country. Mr. Glenvil Hall: It will be complicated because, as you know, when you start to deal with variations of trade agreements, you are up against a very complicated world system, but that is no reason why we should not look at it and if there is some advantage to Newfoundland in any sort of agreement of that kind, let us see what we can do to help. Sir Gordon Macdonald: That was the only reason we put it there, so that if we could do anything about it we might try. Lord Addison: I think it would be valuable if we had the precise agreement before us, because that particular implication of it was not known to me. Sir Gordon Macdonald: "In the light of experience" were the words used. Lord Addison: If such a calamity did recur, which pray God it won't, we should none of us split hairs over these things. We are all in it together and you would be in it too; you could not keep out. Mr. Crosbie: We never have kept out and I do not say we want to. Lord Addison: I am sure you do not. I am only thinking of the physical possibilities. Mr. Hollett: We did not keep out in 1914. Lord Addison: Newfoundland never has kept out; Newfoundland has been with us all through our troubles; you have helped us as much as ever you can, and I am sure you would again. We will approach the matter with goodwill. At the same time, I was bound to put it to you; as practical people you know very well that, whilst you have these things at the back of your minds, it must bring considerable economic advantage to some of your people. Mr. Cashin: We have 2-3,000 people employed at the present time at these bases and they get fair wages; they do not get extraordinary wages any more. Lord Addison: No; but still.... Mr. Fudge: I might add that as far as wages are concerned the rates of pay were ridiculously low. Lord Addison: Are they? Mr. Fudge: Terrible. If I remember correctly, the first offer was 35 cents per hour for labour. Eventually we got it up to 40, and it still remains at 40 in spite of the cost of living. I think at that time the American wages were 76 cents per hour, and the Canadian were about the same, but the point we did not like about it was that the Canadians and Americans came in and they simply paid this low rate, they did not pay the Canadian or American rate. Lord Addison: Are they still paying low rates? Mr. Fudge: Yes. Lord Addison: To the 2,000 people you referred to?

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Mr. Cashin: Yes. Mr. Fudge: I think the Canadians and Americans are quite willing to pay the rate, but are in some way prevented. As a labour representative I say that. Lord Addison: I understand your statement, Mr. Fudge, is that at the moment the rates of pay paid by the Americans on these bases is lower than the rate of pay they pay to their own people. Mr. Fudge: That is correct. Mr. Glenvil Hall: They do conform, do they, to what you consider to be a local trade union rate, or do they not? Mr. Fudge: No. Mr. Bradley: They have not been. Mr. Glenvil Hall: Have you a rate for your union? Mr. Fudge: Yes. Lord Addison: And they do not pay that? Mr. Fudge: Today our rate in the district, the paper industry, is 73 cents per hour. Lord Addison: For the same kind of work? Mr. Fudge: For the same kind of work, yes. Mr. Hollett: I do not know that this is a thing we can be at all active about. Mr. Fudge: No, I do not think so. I do not think there is much Newfoundland labour in it. We realise it is our own territory, but we are not permitted in there; it is theirs, they have got it and we cannot go in and negotiate wage rates there. Lord Addison: Do all the Newfoundlanders employed there live inside? Mr. Fudge: No. Lord Addison: They come from the neighbouring districts? Mr. Fudge: Yes. They are built round the base. Mr. Glenvil Hall: You as a trade union organiser are not allowed on to what now is notionally American soil? Mr. Fudge: We are not permitted to organise labour in the territory. Mr. Walsh: Were the Newfoundland Federation of Labour represented? Mr. Fudge: I referred to the war. Lord Addison: I am not talking of the war, but now. Mr. Walsh: I understand that organisations have been set up of workmen employed on the base. Mr. Fudge: Not on the base. Mr. Crosbie: They have had trouble. Lord Addison: Where is that? Mr. Crosbie: In Argentia. Sir Gordon Macdonald: Mr. Small brought a deputation to me personally of a trade union, and I intervened officially with the American authorities. I think they are recognised now at Argentia, but I quite agree there was a time when they were not. Lord Addison: I have not got anything about Goose Bay. That is in Labrador? Mr. Fudge: That is Canada. Lord Addison: You are more happy here? Mr. Crosbie: We are not growling too much about it. Lord Addison: That is in Newfoundland territory? Mr. Crosbie: Goose Bay, yes. Lord Addison: As Labrador is Newfoundland territory? Mr. Crosbie: Yes. There has been no impairment of sovereignty in Labrador. Mr. Addison: If you raise no question about Goose Bay, I will not. Now we come to Gander. You have raised a point. This is really Gander airport, is it not? Mr. Cashin: Yes. Lord Addison: What is the basic arrangement for Gander? Mr. Cashin: We have taken it over officially as from 1 April. Newfoundland paid $1 million for it,

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or is in the course of paying it, and arranged to operate it and pay any deficit, which is going to be in the vicinity of $500,000 to $1 million a year. We understand they have had some additional capital expenditure in connection with it, and we feel that Newfoundland should not be asked to pay any part of the deficit on Gander. We are not in the air business. It is Newfoundland property and we feel at least we should get some revenue out of it if it is our property, and now we are paying a deficit for the benefit of someone else. Lord Addison: We are discussing this at the moment with the Ministry of Civil Aviation, is not that right? Mr. Glenvil Hall: When is the report coming? Mr. Cashin: I have not heard. Mr. Crosbie: They have been back home for some time, I think. Mr. Glenvil Hall: You have no idea what line the report will take? Mr. Cashin: No, I have not. Sir Gordon Macdonald: Perhaps Mr. Walsh might make a brief statement. Mr. Walsh: It is under discussion now, but we are nearing the end of it. Our two colleagues who came from the Department of Civil Aviation recommended that the United Kingdom bear two-thirds of the operating deficit of Gander. That would be a temporary measure while the present constitutional status of the country remains. A public statement was issued by the government to that effect on this arrangement. Sir Gordon Macdonald: It has been circulated. Mr. Walsh: In January, I think. Mr. Cashin: It was vague; it was not definite. Mr. Walsh: Not exact proportions, but an arrangement was to be sought which would continue while the status remained unchanged. The recommendation of this committee is that the United Kingdom Treasury bear two-thirds of the operating deficit, and the Newfoundland government the remaining one-third subject to a minimum of $250,000 dollars. Mr. Cashin: In other words, we would have to find $250,000 if there is a deficit. If the deficit is $500,000, do we find $250,000? Mr. Walsh: Yes. Mr. Glenvil Hall: No, if the deficit is $500,000 Newfoundland only finds one-third. Mr. Walsh: $250,000 is the minimum recommended. Mr. Bradley: In other words, we have to provide a deficit up to $250,000 at least. Mr. Walsh: Yes, and one-third of the balance over that. If the deficit is $1,200,000 we provide $400,000 and the United Kingdom government $800,000. Mr. Bradley: If the deficit is $300,000 we provide $250,000 and the United Kingdom government $50,000. Mr. Walsh: Yes. It is estimated that the direct returns to the government on customs duty on the goods brought in for use at Gander, and some other direct returns, amount to $250,000. Mr. Butt: What are the committee's grounds for making this recommendation? Lord Addison: They would appear in their report, I take it. Mr. Walsh: In their report they made this recommendation; they felt the Newfoundland government itself was receiving certain direct benefits from the operation of Gander, and that in these circumstances they should not ask the United Kingdom government to bear the whole of the deficit, and they tried to make an estimate of these direct returns, and in asking the Newfoundland government to bear one-third of the cost they set the minimum at $250,000, which is the minimum return they figure the Newfoundland revenue would receive from the operation. Mr. Bradley: Is that customs revenue? Mr. Walsh: Customs revenue mainly; and income tax. Mr. Keough: I presume that the level of income from those returns can be maintained. Lord Addison: I have not seen the report. Mr. Keough: I suppose there was good reason for supposing that the level of income from returns

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at Gander can be maintained? Mr. Walsh: Yes. It is hoped that the revenue can be increased with the further set-up of the Gander operation. It was examined by the Department of Customs, who considered this was a fair estimate of the returns from that operation. Mr. Fudge: It does not look very fair to Newfoundland to have to pay one-third of the cost, with one plane and one wing. Lord Addison: I do not gather the technicalities of that. What do you mean by that, Mr. Fudge? Mr. Fudge: We have to find $250,000 because we have one plane, and she has only one wing. Mr. Butt: If Newfoundland pays any deficit at all she is subsidising a foreign concern. Lord Addison: You are getting revenue estimated at $250,000. Mr. Butt: We get that anyway. Lord Addison: You would not get it if there was not an airport at Gander. Mr. Butt: No, but the ordinary business of this airport is for a foreign concern. If some foreign company came from the United States to start work, you would not expect the government to subsidise it although it collected customs duties and income tax. Do you follow my point? Lord Addison: Yes. I have not seen this report. We will consider it. As far as I gather from the conversation, the report estimates that your customs revenue etc., etc., derivable from this base is $250,000, and that in respect of that they want to set off that amount as against a deficit. If it is no more than that you are neither gainers nor losers as far as that is concerned. If it loses more, your point is that you will then be at a net loss, which is true. Mr. Cashin: There would be no sound reason for our losing money on it. Lord Addison: How many Newfoundlanders are employed there? Mr. Cashin: I think 600 or 700 at the present time. Mr. Walsh: 1,200 by the Civil Aviation Division and 600 by the airline companies, and of those 1,500 to 1,600 are estimated to be Newfoundlanders. Lord Addison: It provides good employment for 1,500 people. Mr. Crosbie: That is first-rate, but what is going to happen if we get a change of government in Newfoundland? These arrangements were made under the present form of government, and the British government has no commitments after that. Lord Addison: If the British government gives an undertaking it will keep it. Whatever may be the form of government in Newfoundland it will not alter our undertaking. Mr. Crosbie: That is the understanding. Lord Addison: You can take it from me that if we enter into this undertaking it is an undertaking in respect of this affair and we shall keep it, whatever may be the form of government in Newfoundland. Sir Gordon Macdonald: I think Mr. Crosbie's point is that it is rather specified that this undertaking is limited to the period while the Commission of Government operates. Mr. Crosbie: Yes. Sir Gordon Macdonald: He is asking what happens if and when the Commission of Government ends. Mr. Crosbie: Yes. Mr. Bradley: That is a matter for the government. Lord Addison: That would be for the Newfoundland government to take up, but I am perfectly certain — and I am sure the Treasury will support me — that if we have entered into an agreement to meet a certain item we shall carry it out. Mr. Crosbie: My point is we have to decide as far as we can with regard to the future. From what we have been told in Newfoundland, the arrangement is for the life of the Commission of Government, which be a year or 100 years. We have to assume for our purposes that the Commission of Government is no longer in Newfoundland and the British government guarantee of that deficit is washed out. That is what I want to know. Mr. Walsh: So that there may be no misunderstanding, the economic value to Newfoundland placed upon the labour employed is $50,000 dollars. It is a token figure because it is impossible to estimate

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the value. If the men are not working there, many would be working in some other employment. Mr. Bradley: It is not a very solid argument, because after all the value of the men's labour might be the same if they were working elsewhere. Sir Gordon Macdonald: Mr. Walsh said that. Lord Addison: If there were a change in the form of government, there is an organisation which has to do with the maintenance of these international aspects — P.I.C. A.O. I think it is called — and they would have the responsibility of negotiating with whatever was the government there; but I am quite sure of this, that whatever was the undertaking in connection with this matter entered into by HM Government, we should keep it. Mr. Bradley: We have no doubt about that. Lord Addison: You need have no doubt about that. If I were a Newfoundlander, I do not care what the form of government is, I should put my back into developing the services of this airport, and the more aeroplanes there were coming in and going out the better I should be pleased. That is how I should look at it. Mr. Butt: Would you charge them quite a high fee to make up? Lord Addison: As in all other business transactions you have to balance one thing against another. You must not charge fees so high that it keeps them away, otherwise you kill the goose that lays the golden eggs. How far away is LaGuardia? Mr. Butt: 1,000 miles. Lord Addison: Would your fees have to run parallel with New York fees? Mr. Crosbie: I do not think so, because it is an entirely different situation in Gander. It has to develop its own power plant, and purchase coal to get the power. At LaGuardia it is provided by the city. Gander fees would naturally be higher than at LaGuardia. Mr. Glenvil Hall: You have not to watch and compete against their dues and fees? Mr. Crosbie: It will be some time before they can. The only danger to Gander is that it might be by-passed. Lord Addison: They might go on to Montreal direct? The danger to Gander, I should have thought, was twofold; first a plane with a longer range which would consequently not require to use Gander, and the services not made sufficiently attractive. It is to our interest as to everyone's to make the services attractive. Mr. Cashin: I do not think we have to worry about planes with longer range. They have to carry a payload, and would naturally have to stop at Gander to take on more fuel, because they want more load, more passengers and freight. I do not think we have to worry about their by-passing Gander. That is my view, but I may be wrong. Lord Addison: That makes it all the better. Mr. Walsh: This report was certainly only a few days ago. It has not been finally accepted. It came out on Thursday or Friday of last week. Lord Addison: By the way, I think I ought to mention one thing. In the earlier stages of our talk we were quite frank amongst ourselves and we must be very careful that that is all private amongst ourselves. I think we must arrange that when we have had these preliminary talks we will next week prepare an agreed statement on all these matters. I think that is the best way of approaching that. Mr. Bradley: I think so. Lord Addison: Otherwise we cannot speak with the same freedom. There is another point you have mentioned, that is trade and tariffs. There are three conjectural questions there. In the case of a return to responsible government would Newfoundland be included in favour of a trade and tariff agreement made by Great Britain with countries which are presently or potentially customers, or should we have to adopt the Statute of Westminister and make our own agreement? It would not be essential for you, clearly, to adopt the Statute of Westminster, and therefore you would be included — you could be — if you wished in any favourable negotiations which we could undertake. That is the answer to that question. Provisional International Civil Aviation Authority.

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Mr. Cashin: We would be included? Lord Addison: You would be included — or could be. It would be for Newfoundland to say if she wanted to. She could be. We should place our services at your disposal with great pleasure. Mr. Bradley: That seems to clear that up. Mr. Glenvil Hall: You are quite free to make agreements outside or inside with us. Mr. Hollett: It would be wise to do it through the British government. Lord Addison: We have much more bargaining power. Mr. Hollett: Yes. Mr. Glenvil Hall: You might find that circumstances altered the case occasionally, but in the majority of cases it would be better to come in with us and we would assist you. At other times you might want to go off on your own on a particular issue. Mr. Hollett: In that case we should have to adopt the Statute of Westminster. Mr. Glenvil Hall: To keep us informed, and possibly come to us for advice, but if you wanted to come to a conclusion on your own there is nothing to prevent you doing that. Lord Addison: You would have to adopt the Statute then. Mr. Glenvil Hall: No. I may have been badly advised here, but I do not think I was. I understand you are quite free, Statute or no Statute. Is not that so? Mr. Hollett: We were blocked once under the Bond-Blaine treaty. Mr. Butt: It is up to them, I think. Mr. Walsh: Is there not a question of representation abroad? If you want to negotiate with a state, you have to do so through the Foreign Office? Mr. Glenvil Hall: If Newfoundland took over the responsibilities of government again, and she did not adopt the Statute of Westminister, the position would be the 1933 position. Can any of you remember what your situation was in this direction in 1933? Obviously that it what it would be again. Mr. Bradley: We had to operate through the British ambassador. Mr. Glenvil Hall: Always? Mr. Bradley: Yes. Mr. Glenvil Hall: Although you may have done — here I am saying what is perhaps not strictly correct but I am informed, for what it is worth, that although you did that, and normally it is to your advantage to do it, constitutionally and in certain directions if you wanted to make a trade agreement, there is no reason why you should not; but I am speaking under correction. We might turn this point up. Mr. Cashin: Yes. Mr. Glenvil Hall: It is a question of procedure. You would proceed through the ambassador. Mr. Bradley: If you look at the record of the Bond-Blaine treaty you will find more than that. Mr. Glenvil Hall: Then I am afraid I am wrong. Mr. Bradley: I am afraid you are. Mr. Glenvil Hall: I accept that. Mr. Cashin: I think it was changed in 1905. Sir Eric Machtig: It is quite simple. Let us assume that Newfoundland becomes self-governing again and wants to negotiate a treaty. She can do so direct — say with America, which is a simple case — and in that case you would have to make use of the ambassador at Washington only because he would be the point of contact with the United States. That is the simple case of a trade agreement between Newfoundland and the United States, but it would be for you to say what the ambassador should say, what you wanted him to do and give away and all the rest of it. It would be Newfoundland speaking. On the other hand, there might be a treaty between ourselves and the United States to which you might wish to adhere. There are two types of case, one is going direct and making use of the ambassador, and the other is coming under our umbrella. Mr. Glenvil Hall: I was correct. A draft reciprocity treaty negotiated by Robert Bond of Newfoundland and James Elaine of the United States in 1890. The British government refused to approve the treaty.

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Sir Eric Machtig: I think so. The Statute of Westminster has nothing to do with it from beginning to end. Mr. Cashin: Under the 1905 amendment to the constitution I think there was something in that. Mr. Bradley: Would that be the Letters Patent? Mr. Cashin: Yes. Mr. Bradley: That might be. There were two sets of Letters Patent. One was 1905. Mr. Butt: I do not think that the 1905 change had any reference to a matter like that. Mr. Bradley: If we wanted to do anything in the United States we contacted the ambassador in Washington and did our own deal. Mr. Butt: It can easily be settled. Lord Addison: It is a hypothetical question. You are asking whether as far as we are concerned you would be able to get any help or advantage in a complicated or tariff agreement, and our answer is "Yes". If you wish to take advantage of any agreement we enter into we shall be only too willing for you to do so. Mr. Bradley: That is the point we want to reach. We want to know the position so that we can report not to the government, but to the Convention, who report in turn to the Newfoundland people. Lord Addison: That is right. What is the next point? What is the position with regard to imperial preference, having regard to the reciprocity offered at the Ottawa Conference which was not carried out? That was never given effect to, was it? Mr. Cashin: That was in 1932. What happened, as I remember it, was this. It was in the days of responsible government. Two of our government went to the Ottawa Conference and made some tariff arrangements with the representatives of the United Kingdom government and, if I remember correctly, the understanding was that they were to take some of our iron ore from Bell Island. We, I think, carried out our end of the plan, i.e. we gave them certain preferential tariff arrangements, but we never got any orders for iron ore. Lord Addison: But we are already importing some. Mr. Cashin: Yes, now, but this was in 1932 and 1933. We want to know now the position in connection with future deliveries of iron ore which have an important effect on the earning power of the country. This year I understand you are taking 350 million tons. Mr. Glenvil Hall: We are discussing the issue now. Lord Addison: I can tell you that we have done our best in this Office with the people who matter here in regard to the allocation for Bell Island ore and at the present time, as you are well aware, we are taking considerable quantities. Mr. Cashin: I quite agree, but we can get a long term arrangement? Mr. Glenvil Hall: That is a matter for discussion. Lord Addison: That is a matter for discussion. All I can tell you is that Newfoundland has already had our active assistance in getting as much iron ore imports to us as possible and as you know, today it is a very substantial amount; it is considerably more than it was. Mr. Cashin: Much more. Lord Addison: So far so good. As far as the future is concerned, we should have to look into that and see what could be done. Anyhow, we have given a very practical expression of our goodwill, because we have done our best to see that Newfoundland ore is imported. Newfoundland ore costs dollars, does it not? Mr. Crosbie: You might close the door tomorrow, and we would like to have something in writing. Lord Addison: This means negotiation with the iron and steel people and so forth. We will enquire into the matter and see what we can do. I cannot guarantee the long distance future and it is no good saying I can. Mr. Glenvil Hall: What Mr. Crosbie wants, as a really sound businessman, is a contract over a period. Mr. Crosbie: Certainly, a contract over a period of time; that is what we would like to see. Mr. Cashin: Five or ten years.

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Mr. Glenvil Hall: As the Secretary of State has said, that is a matter for discussion with the Board of Trade. There is no reason why, while you are over here, that meeting should not take place. I am sure they would be delighted to meet you. The Secretary tells me it is being dealt with through the Ministry of Supply as regards iron ore. Lord Addison: I will confer with the Board of Trade on this and, if need be, we will get one of their representatives at a future meeting. I cannot do anything further than that at present. All I can tell you is that we have given a very practical expression of our goodwill and we have every desire to maintain that, but what is going to happen in future.... Mr. Cashin: After fishing, it is one of the most important things for us. Lord Addison: I quite agree. We will see how forthcoming they will be. However, we are bringing quite a lot now, but it costs dollars, does it not? Mr. Bradley: How much is Britain importing now? Lord Addison: 700,000 tons this year. In the old days we used to reckon about 300,000 to 400,000 tons of Bell Island ore. Mr. Bottomley: In the old days 1 million tons a year went to Germany, 500,000 - 700,000 tons to Canada and a very small amount to Great Britain, never more than 20,000 tons, or it might have been 50,000. Lord Addison: Newfoundland seems to be doing pretty well at present so far as we are concerned, and you are asking for more. Mr. Cashin: Do not forget that you have asked us to forecast the future and that is part of it. Lord Addison: You are looking to the future and I do not blame you for that at all; that is what you are here for. Mr. Bottomley: Do you mean to forecast the future kind of government? Mr. Cashin: No, the economic position. Lord Addison: The point is whether we shall continue to import iron ore from Bell Island and, if so, to what extent? We will discuss the matter with the Board of Trade. Mr. Glenvil Hall: This involves dollars. As the Secretary of State says, we can come back to this and undoubtedly it would be well, if we did have someone from the Board of Trade here. Eventually it will come to the Treasury, if it has not already reached that stage, and our difficulty is the continuing one of dollars. That might be raised with you and I mention it so that you will not be taken by surprise. If you have amongst yourselves any policy or suggestions to make on it, you might perhaps be thinking of them. Mr. Cashin: Undoubtedly the Canadian government would be in on this too, because the people who own Bell Island are a Canadian outfit and they would undoubtedly bring pressure on the Canadian government to keep the place going. You will have their help as well with regard to dollars. Mr. Glenvil Hall: It might mean a three-cornered arrangement, by which the Canadian government would be willing to come to an arrangement with us to meet the cost, so that you got the benefit although for the moment we are not willing to spend the dollars, but all that is a matter for discussion. Lord Addison: What you are asking is what arrangements can we make of any more definite kind with regard to the future? Mr. Cashin: That is right. Lord Addison: Your next question is: What assistance, if any, can be expected from the United Kingdom in promoting sales of our goods in the sterling area? In case dollars are not procurable for sterling reasons, would the United Kingdom alternatively be prepared to offer for the payment of the balance in the form of goods and services from the United Kingdom? Mr. Glenvil Hall: The first point is — what goods would you have to offer? We have mentioned iron ore. What else? Mr. Bradley Fish, of course. Mr. Glenvil Hall Fish, of course, and certainly paper and iron ore. Mr. Cashin: I think most of our paper goes to the United States.

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Lord Addison: Does Bowater's go to the United States? Mr. Cashin: Quite a lot of it, and AND. Mr. Glenvil Hall: But you would have a surplus to send here. Mr. Cashin: We have not any surplus paper. Mr. Glenvil Hall: Apart from the iron ore for which you have now lost the German market, there is nothing for which at the moment you are looking for a market? Is that the correct position? Mr. Hollett: Except fresh fish. Mr. Bradley: We are looking for a market for fresh fish. Mr. Crosbie: A short while ago the Ministry of Food were offered 20 million pounds of fillets and the price was, I think, 15 cents a pound. The answer the trade got was that Great Britain could not provide the dollars for this fish. It was roughly $3 million. Since then I understand that fish has been bought from Iceland and from Norway. It has been bought from Iceland at a higher rate than 15 cents a pound. The position is that a great many of our people are dependent on fishing and that is going to make a great deal of difference to their earning power this year. The British Ministry of Food require the fish or they would not have bought it from Iceland and Norway, but they were blocked from getting it from us because of the dollar situation. We reckon to have, say, six ships being built over here and two or three ships for the Newfoundland government and dollars were transferred to pay for those ships. Our argument was — why should we not have transferred fish to pay for them and let our own government pay our own people out there in dollars. We come back again to the dollar question and I am just wondering whether it would not be feasible to come to some agreement under which England would agree to take so much of our fish for a period of eight or ten years, and in the first few years perhaps our own government could advance to them a $4 million loan to pay for that fish and after a period of, say, three or five years, you people might be in a position to take care of those dollars which you cannot do today. Definitely, fish is a big item. Lord Addison: I have already taken up this point with the Chancellor of the Exchequer. The other point you have mentioned about Ministry of Food purchases is being considered at the present time. Your suggestion there is whether for a time we could agree to purchase fish up to a certain amount; that the dollars would be made available over there and would be redeemed later on; that is what it boils down to? Mr. Crosbie: Yes. In other words, the Newfoundland government would advance you a loan for the whole of this fish and after a period of time you might be in a position to redeem those dollars. I think if the fresh fish trade got an opportunity in the next two or three years they might develop other markets, particularly in South America, but the situation today is that some of the cold stores built during the war years are closed down and out of action because the American market is more or less closed to them. Lord Addison: Is it? Mr. Crosbie: More or less. In the last four or five years England has been taking 20-30 million Ibs. of fillets and that is a great help. Lord Addison: What kind of quantity have you in mind? Mr. Crosbie: Up to 15,000 tons. Lord Addison: Your unit is tons of fillets, is it? Mr. Crosbie: Tons of fillets. I should say 15,000 tons, which would be roughly about 35 million a year. Mr. Glenvil Hall: 35 million sterling? Mr. Crosbie: No, pounds of fish. Mr. Glenvil Hall: I was going to say you must be getting very rich. Lord Addison: I can quite understand your making that suggestion; it sounds a very advantageous suggestion from your point of view. Mr. Crosbie: One horse, one rabbit. Lord Addison: We have taken it up with the Ministry of Food, as a matter of fact, some time ago. Mr. Crosbie: Could we not use our interest for that purpose?

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Mr. Glenvil Hall: It is very kind of you to suggest that the money should be frozen for a time and that you should live on your loan, but I doubt whether it would be worth it in the long run. We would like to think about it, but I do not think it would be worth it. It would be hanging over us. If any deal can be done, we are again anxious to help you, subject of course to the overriding consideration of dollars. What we should not like to see, if we could avoid it, would be you spending the money you get for the fish in, say, America or somewhere else. It would be better if you spent it here, provided we had got the goods to supply you. That would be much better than letting the thing pile up and building up another loan that we owe you. We want, if we can, to pipe down on that sort of thing. Mr. Cashin: I think our tariff at the present time gives your goods a preference running into 10% anyhow. Mr. Glenvil Hall: Perhaps we can think about that. Lord Addison: It all fits in together. We do not want to pile up a lot more debts; that is not our policy. If the money can be spent here in goods you require, all right. Mr. Crosbie: The point I am making is this. We have already had three ships going out from here to Newfoundland, but instead of being allowed to provide fish against those ships, we had to produce dollars to pay for them. I do not see why they should not have been paid for in trade between the two countries. Mr. Glenvil Hall: I have taken the point. Mr. Crosbie: I should think during the next four or five years there might be quite a few ships required. Is there any reason why they should not be bartered for fish, provided you could turn them out, but you have trouble about getting the raw materials for these things. Mr. Hollett: Last year we imported $49 million worth from Canada; there is no reason why some of that should not come from England. Mr. Glenvil Hall: This afternoon we are turning the ground over. We shall have to go further into this. Lord Addison: What do you buy in this country? Mr. Cashin: We have bought a lot of textiles. Lord Addison: I am trying to visualise, supposing this money had to be spent in purchases in the United Kingdom, what could you purchase. The first thing you mention is textiles. The position of our textiles industry is that it is working and producing about 50% of its capacity and not more, for two reasons. Firstly, it has not got the labour it requires, it is very short of labour, and, secondly, it has not got enough coal to work at full power. If you were to ask any housewife in London what she had to say about the drapers' shops, you would find that her language, whilst not being unprintable, would be vigorous. Our people are shouting out because they cannot buy textiles here. They cannot. We have had to cut down our export of textiles, I am sorry to say, I am ashamed to say, because we just had not got the textiles to meet the demand. They are not being produced at present. They will be produced in the course of two or three years and we shall get round it, of course. The reason they are not being produced now is that the textiles industry is rationed for coal and cannot work at full power and, secondly, it is short of labour. Until those two shortages are made good, we cannot get the textiles industry working to full capacity. Mr. Crosbie You clearly are building quite a few ships. Lord Addison: We are doing better in ship production. We may be able to do some business there, but I am afraid textiles are short. Mr. Cashin: Coal is out of the question too at present. Mr. Glenvil Hall: With regard to clothing, we get 30 coupons for about six or seven months; if you want to buy a suit it costs 26 coupons, which leaves you only four or five for collars, vests, underclothing and everything. That gives you the position in a nutshell with regard to textiles here. It is strictly rationed for all of us. We cannot buy anything except on coupon. Mr. Crosbie We appreciate the difficulties you are up against; there is no doubt about that. Mr. Glenvil Hall Things should get better in a year or two's time. We are here perhaps talking more about a long term policy than about the next six months or a year. I think it is not waste of time that

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we should realise that you would like to buy textiles, because presently the textiles will be there. As the Secretary of State has said, at the moment it is one of the things in very short supply. Mr. Crosbie: As a matter of fact, the circulars we got suggested bringing our own towels, so I should imagine things over here must be pretty bad. Lord Addison: Do not take too much notice of these Jeremiahs. We shall get round all right. We are not doing too badly. Why is it that all these industries are short of coal and solid fuel? It is because they are using more coal than they have ever done. They are as busy as can be. They are all working at full capacity as fast as they can get the stuff to work with. Mr. Crosbie: The raw materials. Lord Addison: The raw materials. Our people are busy enough so far as that goes, but they have not got the stuff to work with, not yet. We shall get it. Mr. Glenvil Hall: We turned over completely to the war effort. Not even Germany went into it as we did. In the early days when we and the other parts of the Commonwealth stood alone, America, of course, went on with her ordinary peace-time industry to a certain extent side by side with her war industry, but we did not; we went clean over; and it is a big job to reverse the engine. Factories were even gutted of their old machinery in order to put in machinery for making the weapons of war, and all that has had to be put back. Where machinery was working it was working right round the clock and it is worn out and needs replacing. Of course, in the case of the textile factories they were turning out khaki by the hundred miles, not only for us but for all sorts of other people, and those machines have worked themselves out. We will pull round, don't you worry; we are not dead yet by a long way, but it is the effort, you see, and if you folks will only realise and be a little patient, you can rely upon this solid fact; we are going to pull through all right, don't you worry about that, but it will take time. We are in this mess because we did what we did and we are proud of the fact that we did it, and we are not ashamed that we are in the mess because we know why we are in the mess. Mr. Crosbie: We have to think about our own people too. You people are having a hard time, but our people have had a hard time in the past. They have done fairly well in the last six or seven years, but we have to think of the future. Lord Addison: I quite agree. Mr. Crosbie: That is our job. People may say, change Commission government — but we have to do what we can. Mr. Glenvil Hall: We realise that. Lord Addison: We have gone through all these things. Quite a number of them are reserved. We shall have to get the Board of Trade on iron ore and on these other points; we shall have to get the Ministry of Food on the fish point; and we have some questions to go into with the Treasury on the earlier points. I am wondering whether it would not be desirable to adjourn now until Thursday, which would give us a bit of time to get things ship-shape. I am at your service. If you want to meet tomorrow, that is all right, but we have these inter-departmental things to do and I should have thought it better to adjourn until Thursday in order to give time for that. Mr. Cashin: I think that is quite all right. Mr. Bradley: It will give us time to discuss what we have discussed here this afternoon between ourselves. Mr. Glenvil Hall: I think that is a good idea because it will give us time to get out a document giving a sort of resume of the points that have come out of our discussion, which can then be circulated and we shall have it in front of us next time. I think the discussion we have had this afternoon has been very valuable. [The meeting adjourned.]

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D. Memorandum in Response to Questions Raised by the Newfoundland Delegation I . Public Debt

Question. What is the possibility for the cancellation either in whole or in part of the sterling debt owed by Newfoundland and which debt as to principal and interest has been guaranteed by Great Britain; or the possibility of the further refunding of said debt? Answer. The position as to the Newfoundland public debt has been under constant review during recent years in discussion with the Newfoundland government. Briefly, the debt falls under three main heads: (1) The two 3.5% sterling loans amounting together to about £870,000 which mature in 1950 and 1952. (2) The £400,000 temporary loan which was made available to Newfoundland by the United Kingdom government in 1917 for war purposes. (3) The 3% sterling debt of £17,790,000 guaranteed by the United Kingdom government. The Newfoundland government have already provided from the Newfoundland surplus balances for the repayment of the two 3.5% loans, and money has been set aside at interest with the Crown Agents for the Colonies for this purpose. As regards the £400,000 loan, no interest has been paid since 1931 and it may be assumed that repayment of this debt will not now be sought. As regards the 3% sterling debt, it will be recalled that this was guaranteed as to principal and interest by the United Kingdom government in connection with the establishment of the Commission of Government in 1934. The conversion operation which was made possible by this guarantee resulted in a considerable saving in the debt service. The debt is a Newfoundland obligation incurred by previous Newfoundland governments and His Majesty's Government would naturally expect the Newfoundland government to honour it. In any case the present drain on the United Kingdom government's financial resources and the grave shortage of dollars at this time make it impossible for the United Kingdom government to consider taking over the sterling debt. The question of converting the debt to a lower rate of interest had been raised by the Commission of Government with the United Kingdom government. Such a step is in line with the United Kingdom cheap money policy and the Newfoundland government understand that a conversion operation can be carried put, subject to three months' notice being given, after the necessary legislation has been passed in Newfoundland. The next opportunity for conversion will occur in January, 1948. Upon conversion the sinking fund already established for redemption would be used to provide for a reduction in the new issue. 2. Interest-Free Loans Question. (a) What is the possibility of Great Britain's now paying interest on the said loans? (b) In the event of some consideration being given to the question under heading 1, to what extent could said interest-free loans be used as an offset against the cancellation or refunding of said public debt? Answer. In making available to the United Kingdom government interest-free loans amounting to $12,300,000 the Commission of Government took into account the fact that the United Kingdom was already assisting to a considerable extent in the financing of the Newfoundland war effort, by maintaining the two Newfoundland artillery regiments in the field and by meeting expenses involved in raising volunteers for service with the Royal Navy and RAF. It has always been accepted that these loans are repayable on demand from the Newfoundland government and the sum of $3,232,000 was last year withdrawn by that government for investment in order to pay off two sterling loans maturing in 1950 and 1952.

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It is, of course, open to the Newfoundland government, if they so desire, to withdraw the balance of the loans and to decide to what purpose they should be put. It is, however, understood that it is the view of the Commission of Government that it would not be prudent, having regard to the development requirements of the country, to use the balance of the loans for further debt reduction at the present time. The United Kingdom government cannot themselves undertake to pay interest on the loans made interest free and it is naturally assumed that the Government and people of Newfoundland, recognising our grave dollar shortage, will be prepared to leave the outstanding sums here for the time being. 3. Development Loans Question. What are the possibilities of obtaining loans in England in the future for development purposes in Newfoundland — it being understood that any such loans be spent in England for goods and services? Answer. Apart altogether from the financial difficulties of the United Kingdom to which reference has already been made, it would be unusual for the United Kingdom government to undertake to make development loans to a country having responsible government. At present the question of such assistance would not seem to arise in view of the ample funds available to the Newfoundland government, but if at some future date sterling credits should be required for the purchase of goods in the United Kingdom the United Kingdom government would not wish to rule out the possibility of assistance along these lines. In any case it will be appreciated that the present supply position in this country makes it very doubtful whether it would be possible to supply goods on a scale sufficient to justify such an arrangement. 4. The Position Arising out of the Various Base Deals Question. (a) What possibility exists of securing modification of the Leased Bases Agreement of 1941 whereby the sovereignty of Newfoundland has been impaired and may be further impaired? (b) What possibility exists of securing some quid pro quo, for Newfoundland for the territories alienated under the base agreements? Answer. The grant of bases to the United States in Newfoundland was part of the arrangement under which in exchange for 50 destroyers the United States received 99 year leases to bases in the West Indies for the general purpose of strengthening the ability of the United States to cooperate effectively in the defence of the western hemisphere. The exact rights granted to the United States in these bases are defined in a formal agreement made with the United States in 1941. Members of the Commission of Government in Newfoundland were associated with the negotiation of this agreement. The granting of the bases in Newfoundland was part of a comprehensive plan for the defence of the western hemisphere towards which the Newfoundland government were not themselves in the position to make any other effective form of contribution. It will be recognised that Newfoundland owed her wartime immunity and prosperity in no small measure to the presence of United States forces in the island. Article 28 of the Agreement provides "that the Government of the United States and the Government of the United Kingdom agree to give sympathetic consideration to any representations which either may make after this Agreement has been in force a reasonable time, proposing a review of any of the provisions of this Agreement to determine whether modifications in the light of experience are necessary or desirable. Any such modifications shall be by mutual consent." In a note sent to the United States ambassador on the occasion of the signing of the agreement it was stated that it is the intention of the United Kingdom government that upon the assumption by Newfoundland of the constitutional status held by it prior to February 1934, the words "the Government of the United Kingdom" wherever they occur in relation to a provision applicable to Newfoundland in the

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agreement shall be taken to mean, so far as Newfoundland is concerned, the Government of Newfoundland. There is no reason to think that the United States government would be prepared to agree to any substantial variation of the basis on which the agreement was entered into or to give any quid pro quo for rights which were given to them "freely and without consideration." So far as trade or tariff concessions are concerned these are at present the subject of negotiations at which Newfoundland is represented. If, however, Newfoundland should return to responsible government it would be open to her to raise the question of some modification of the Agreement and in that event negotiations would no doubt be carried out with the assistance of the United Kingdom government. 5. The Financing and Control of Newfoundland Airports Question. What proportion, if any, of the cost of operating Gander airport will Newfoundland be called upon to pay, and what is the basis for allocating any proportion to the Newfoundland government? Answer. When the wartime control of Gander airport by Canada had ended on 31 March 1946, the Commission of Government raised with the United Kingdom government the question of the liability for deficits on the operating cost of the airport. It was represented that it was beyond Newfoundland's capacity to meet the expenditure involved in maintaining so large an air base. This question has been under consideration by the United Kingdom government, and the Governor of Newfoundland was recently authorised to make a public statement explaining that it had been agreed in principle that from the time of the transfer of the control of Gander to the Newfoundland civil authority and for so long as the present constitution of the island continues, the United Kingdom government would be prepared to meet such portion of the deficit on the running cost of the airport as could not be attributed to the Newfoundland government on account of the benefits accruing to Newfoundland from its operation. Following this announcement experts from the Ministry of Civil Aviation proceeded to Newfoundland to examine in detail the cost of operating the airport and to make recommendations as to the percentage of running costs to be met from the United Kingdom and Newfoundland exchequers respectively. In brief, the recommendation of the mission, on the basis of the 1946/47 estimated net operating deficit ($750,000), is that the United Kingdom government should bear two-thirds of the deficit ($500,000) and the Newfoundland government one-third ($250,000), the portion to be borne by Newfoundland being at least equal to the estimated benefit ($250,000) accruing directly to the Newfoundland treasury from the airport. It should be borne in mind that the airport provides employment for over 1,500 Newfoundland people. In the event of a return to responsible government, the Newfoundland authorities will decide their policy with respect to the operation of the airport and they might if deemed desirable submit a request to the International Organisation for financial assistance. 6. Trade and Tariffs Question. (a) In the case of return to responsible government, would Newfoundland be included in favourable trade and tariff agreements made by Great Britain with countries which are presently or may be potential customers for our produce or would we have to adopt the Statute of Westminster and make out own agreements? (b) What is the position with regard to imperial preference having in mind the reciprocity offered at Ottawa Conference which was not carried out (sale of Bell Island ore)? (c) What assistance, if any, could be expected from the UK in effecting sales of our goods in the sterling area? In case dollars were not procurable for all the sterling received, would the UK alternatively be prepared to offer payment for the balance in the form of goods or services from the UK or her colonial empire?

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Answer. (a) Should Newfoundland return to responsible government it would not be essential for her to adopt the Statute of Westminster and as was the position before 1934 she could leave the conduct of her external affairs to the United Kingdom. It would, however, always be open to her to enter on her own account into negotiations with a foreign government with the assistance of the United Kingdom representatives for the conclusion of a commercial agreement, the approach being made through the United Kingdom diplomatic representative. There would further be no constitutional difficulty in the inclusion of Newfoundland in the scope of agreements concluded by the United Kingdom if Newfoundland so desired. How far this would be practicable would have to be considered in each individual case as it arose. (b) The Commission of Government since its establishment in 1934 have constantly been pressing for the purchase by the United Kingdom of Newfoundland iron ore. The question was therefore taken up with the iron and steel interests in this country but there were practical difficulties in the way of any considerable importation of Newfoundland iron ore into this country and prior to the war most of the Wabana ore went to Canada and Germany. Following the outbreak of war some substantial shipments of iron ore were made to this country but subsequently shipping difficulties limited such importation at this period. During the last two or three years there have been more substantial importations of the iron ore into this country and a contract for 750,000 tons for 1947 is under consideration. In view of the dollar shortage it is difficult at this stage however to consider the making of any long term contract. On the general question of imperial preference, the delegation will be aware that international trade and tariff discussions at which Newfoundland advisers are assisting are now in progress in Geneva looking towards a general reduction in tariffs and preferences. (c) The immediate over-riding situation is the existing financial position of the United Kingdom which inevitably limits purchases of dollar supplies for the time being. As regards fish, in which Newfoundland is particularly interested, the Commission of Government have been in constant touch with the United Kingdom government as to the arrangements for the sale of both salt and fresh fish, and in particular consideration is being given by the United Kingdom government to proposals by the Commission of Government for the marketing of frozen fish in the United Kingdom. As regards salt fish, satisfactory arrangements have been made for the present for sales to Newfoundland's usual continental markets in the sterling area. As regards frozen fish, however, the dollar position makes it difficult to hold out hopes that Newfoundland is likely to find a long term market in the United Kingdom for frozen fish. At the same time it is the desire of the United Kingdom that maximum supplies of goods within the limits of existing resources should be made available from the sterling area to Newfoundland and other parts of the dollar area. It will be the object of the United Kingdom government, as soon as the present financial problems have been overcome, to assist in the encouragement of trade between Newfoundland and the sterling area. E. Second Meeting with Delegation from Newfoundland National Convention Thursday, 1 May 1947, at the Dominions Office

[The same persons attended as at the first meeting with the exception of Mr. Glenvil Hall] Lord Addison: Gentlemen, we have given consideration to our talk last time, and, as I promised, I have tried to put into a fairly definite form what has emerged in our minds concerning it, and I suggest that we might have a little time on the document, copies of which have been provided, and then you will perhaps wish to consider it amongst yourselves and then we could have a meeting sometime next week, when it may be possible to put it into a final shape. We will discuss the questions one by one, and one or two additional points which have emerged, and I think the best thing to do would be to go

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through this paper, which I have put into the form of a draft. It states the history of the cases, some of which were not very clear last time — they were not clear to me anyhow — and I have set out these things as clearly as I can. Have you all had a look at this document? Mr. Bradley: Yes, my lord. Lord Addison: Then we will take these points one by one, and you can make your comments as we go along. Some of the matters are a bit longer than others, but we have tried to make them as compact as possible. The piece about "Trade and Tariffs" is rather long, but it is not as long as the negotiations will take in Geneva, nor the mass of papers with which we have already been confronted. Shall we look at the first one? We repeat the question, with which we are all familiar. Then we say what emerged at our conversation last time: that the debt falls under three heads: the two 3.5% sterling loans, amounting to £870,000, which mature in 1950 and 1952; the £400,000 temporary loan which was made available in 1917, and the 3% sterling debt of £17,790,000. With regard to the first, the Newfoundland government has already provided from the surplus balances for the repayment of the two 3.5% loans, and money has been set aside at interest with the Crown Agents for the Colonies for this purpose. That we all know. Mr. Cashin: I understood, my lord, that that money was bearing interest at 2%. Lord Addison: We will ask the Treasury. What interest are you getting for it, Mr. Russell-Edmunds? Mr. Russell-Edmunds: I am not certain, my lord, what interest they bear. Mr. Addison: Will you find out for us? Mr. Russell-Edmunds: Yes, I will certainly do so. Mr. Cashin: We were informed in Newfoundland that it was 2% by Mr. Wild before we left. Lord Addison: We will ascertain that. As regards the £400,000 loan, it was suggested that no interest has been paid since 1931, and in answer to the question which was put to me last time I here say that it may be assumed that repayment of this debt will not now be sought. Mr. Hollett Before going on, could I refer to the previous point, on the two 3.5% loans. May I ask, is it not a bit unusual to do that, to have set aside money to pay for interest on these loans which will not mature until 1950 and 1952? Lord Addison: I think it is a wise thing to set aside money when you have got it to set aside. Mr. Hollett: Admittedly it may be wise, but may it not be unusual? Lord Addison: I should not say so. I should have thought most business firms when they have a bit surplus would set it aside for future requirements. You happened to have a surplus so you set it aside to pay for something later on, which seems to me to be rather a sensible thing to do, when you have got it. Mr. Cashin: I think, my lord, we ought to be getting interest on it anyhow; at least 2%. Lord Addison: We will find out and give you a precise answer as to that. It has been set aside at interest with the Crown Agents for the Colonies. What they are getting for it I do not know, but we will enquire into the question and you shall have an answer. Mr. Hollett: Is not that taken from the interest-free loans? Mr. Cashin: Yes, it was transferred from the interest-free loans to the credit of the Crown Agents for the Colonies. Lord Addison: I suppose that was so, yes. Mr. Cashin: For the purpose of meeting these obligations when they became due in 1950 and 1952. Lord Addison: Yes, it was set aside with the Crown Agents for that purpose; that would be so. As regards the 3% sterling debt, you will recall that this was guaranteed as to principal and interest by the United Kingdom government in connection with the establishment of the Commission of Government in 1934. The conversion operation which was made possible — it was at 3.5% was it not by this guarantee — resulted in a considerable saving in the debt service, which paid a higher interest before that date. Is not that so? Mr. Russell-Edmunds: Yes. Lord Addison: Then I go on: "The debt is a Newfoundland obligation incurred by previous Newfoundland governments and

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His Majesty's Government would naturally expect the Newfoundland government to honour it. In any case the present drain on the United Kingdom government's financial resources and the grave shortage of dollars at this time makes it impossible for the United Kingdom government to consider taking over the sterling debt." It is not a very favourable answer, but I am afraid we have got to take it. Mr. Cashin: When we were discussing the matter the other day, my lord, I gathered from Mr. Glenvil Hall.... Lord Addison: He is unfortunately absent today; he has got to be on the bench this afternoon. Mr. Cashin: I understood at that time they would give consideration to this matter in connection with the reduction of this particular amount by devoting the sinking fund towards it, and also in connection with the possible use of these interest-free loans to reduce it. As a matter of fact, all this big business is interlocking. Lord Addison: Of course it is, and that comes in later. Mr. Cashin: As you can appreciate, the interest-free loans, the debt, and the base deals are all interwoven; we cannot consider one without bringing in the other. Lord Addison: That comes in next, Mr. Cashin. We have got to deal with one thing at a time, although, as you say quite fairly, one thing bears upon another. Mr. Cashin: Yes. Lord Addison: Certainly it does, but I hope you will notice the careful wording of this document. "The grave shortage of dollars at this time makes it impossible for the United Kingdom government to consider taking over the sterling debt". It may be that happier times will dawn for all of us at some time in the future. Mr. Cashin: Well, the United Kingdom government would not have to find any dollars to handle that debt, if we could make a deal on it in some way. The debt is held in Great Britain, I take it. The Treasury should know where it is held, whether it is held by the British government or by outside individuals, but I am pretty certain that most of it is held in Great Britain. There is a little amount of $200,000,1 think, which is held by the Savings Bank in Newfoundland. Lord Addison: Most of it is held here. Mr. Cashin: My point is as regards finding dollars to handle, you would not have to find them. Lord Addison: That depends upon what the actual conditions are. Then on the question of converting it, as I intimated last time, to a lower rate, you will notice that we wish to be helpful forthwith, as soon as may be, and help you, we say: "The question of converting the debt to a lower rate of interest has been raised by the Commission of Government with the United Kingdom government. Such a step is in line with the United Kingdom cheap money policy and the Newfoundland government understand that a conversion operation can be carried out,- subject to three months' notice being given, after the necessary legislation has been passed in Newfoundland." That would be, of course, for the Newfoundland authorities to deal with. "The next opportunity for conversion will occur in January, 1948". As far as we are concerned, we are willing to be helpful, and that means a saving of $500,000 a year, does it not? Mr. Cashin: Yes, that is not a considerable amount. Lord Addison: It may be used to provide for reduction if you wish it. Mr. Hollett: You referred earlier to the Commission of Government, I take it? Lord Addison: It would be the Commission of Government or any commission that was set up in Newfoundland. Mr. Hollett: The Commission of Government and the Dominions Office are synonymous, are they not? Lord Addison: No, they are not. Mr. Hollett: The point I wanted to raise was, you yourself, the Dominions Office, would have to be consulted by the Commission of Government for a direct answer to that? Lord Addison: Yes, I am certain that is the policy, that we have to be consulted, but, as you know,

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it is not for the Dominions Office, to interfere with details of government. We are certainly consulted on major matters of policy. Mr. Hollett: This appears to me, my lord, as a major matter in the interests of the country. Lord Addison: Certainly it does, so that if you want the conversion, whether it is our Commission of Government or whoever it is, all I can tell you is that we are willing to convert the loan, and the operation would save Newfoundland half a million dollars a year. Mr. Cashin: As regards the interest-free loan, that is coming on later, is it? Lord Addison: Yes, I put them in exactly the same order as they were before. Mr. Hollett: May I ask if half of one per cent is the ultimate? Lord Addison: Yes, it is at present. We are issuing it here at 2.5%. It takes a good bit of holding down to 2.5%. No doubt the Chancellor of the Exchequer would be very happy if he could get money for less, but I do not see it happening. I think you can take it that 2.5% is as far as we can get, and it is remarkably cheap, too, as compared with.... Mr. Hollett: As compared with the 5% and 6% which we are paying. Lord Addison: Yes, it makes a lot of difference; it would to us, too. Now we come to the interest-free loans. This is better than we said, Mr. Cashin. The money is invested in 2.5% national war bonds, and the effective rate of interest is therefore a little under 2.5%. Mr. Cashin: We are getting 2.5% now. Lord Addison: Nearly 2.5%, so that has been well looked after. Mr. Cashin: That is good. Lord Addison: Of course, that money is all available to help. Then we come to "Interest Free Loans", and we say: "In making available to the United Kingdom government interest free loans amounting to $12,300,000, the Commission of Government took into account the fact that the United Kingdom was already assisting to a considerable extent in the financing of the Newfoundland war effort, by maintaining the two Newfoundland artillery regiments in the field and by meeting expenses involved in raising volunteers for service with the Royal Navy and RAF. It has always been accepted that these loans are repayable on demand from the Newfoundland government and the sum of $3,232,000 was last year set aside and withdrawn by that government for investment in order to pay off two sterling loans maturing in 1950 and 1952. It is, of course, open to the Newfoundland government, if they so desire, to withdraw the balance of the loans and to decide to what purpose they should be put. It is, however, understood that it is the view of the Commission of Government that it would not be prudent, having regard to the development requirements of the country, to use the balance of the loans for further debt reduction at the present time." That seems to me to be sound sense. Then I go on: "The United Kingdom government cannot themselves undertake to pay interest on the loans made interest free, and it is naturally assumed that the government and people of Newfoundland, recognising our grave dollar shortage, will be prepared to leave the outstanding sums here for the time being." Are there any comments on that? Mr. Cashin: Yes, my lord, I have two or three comments I would like to make on it. To begin with, if the money remains over here I am quite happy to see it remain here and be devoted to a reduction of our debt. On the other hand, it is stated here "that it is the view of the Commission of Government that it would not be prudent, having regard to the development requirements of the country, to use the balance of the loans for further debt reduction at the present time". During the past few years Newfoundland has had considerable surpluses; we have approximately $20 million in cash at the present time. Lord Addison: That is during the war years? Mr. Cashin: And now, also, my lord. The expenditure has been jumping. It has gone from $16 million in 1940/41 to somewhere in the vicinity of $37-38 million this year. At least $10 million or

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$12 million is on capital account, and I hold that the next two or three years we are going to have some surpluses in Newfoundland, and I hold that we should not over-expend these surpluses, because one of these days, if we continue to do that, we are going to wake up one morning and find nothing left in the Treasury. Consequently expenditure in that respect should be reduced, and this money which we have now should be devoted, if possible, to the reduction of our debt, if we can make a deal in some respect on that debt. As I said a moment ago, we are expending entirely too much money at the present time in Newfoundland. Lord Addison: That is, of course, a very legitimate case to put, and it is primarily, of course, for the people in Newfoundland to decide what they will do with their own money. At the same time, as you have quite properly said, our views matter; they are naturally taken into account, which is quite right. Of course, I do not propose to argue the merits of that because it is not for me to argue it, but I should have thought it would have been really useful and wise to have had a bit of a nest-egg in hand. Mr. Cashin: We are diving into that nest-egg now. This year we have spent about $14 million over and above our ordinary expenditure. Lord Addison: What are you spending it on? Mr. Cashin: The estimates show that; it has been spent on all kinds of projects. Lord Addison: But you want the country developed, do you not? Mr. Cashin: We are creating overheads, my lord, that we may not be able to carry on when the time comes to get down to brass tacks. Expenditure is increasing instead of decreasing, and the time will come when we shall not have it to expend. That is what is happening to Newfoundland, as has happened to many other countries, they are over-expending, as I think you will appreciate. Lord Addison: We will take note of what you say, but it is, of course, a responsibility not of this Office, but of the Newfoundland government. Mr. Cashin: Well, as you say yourself, my lord, this Office.... Lord Addison: No, I am not going to accept the identity of this Office. Mr. Crosbie: We were told by one of the Commissioners that the Government of Newfoundland were naturally agents for the Dominions Office. Lord Addison: I cannot accept responsibility for what he said. Mr. Crosbie: You are responsible for the government. Lord Addison: No, the government is responsible to me. Mr. Crosbie: Well, the people of Newfoundland are not responsible to the government. Mr. Keough: Your position, my lord, is that these loans should remain here interest-free, at the discretion of the Newfoundland government? Lord Addison: Yes, that is what it boils down to. Mr. Keough: Until such time as they move? Lord Addison: Until such time as they decide they wish to have them. Of course, if they call them in we have got to meet them. That is my view. Mr. HoIIett: May I ask what is the interpretation of development requirements in the eyes of the Commission of Government? Lord Addison: You cannot expect me to answer questions as to your internal requirements, but I gather that in the matter of roads and many other things there is very considerable need for development expenditure in Newfoundland. Mr. Hollett: Some of us feel, my lord, that the development of the fisheries is more important than expensive roads. Lord Addison: Very likely, I would not controvert that at all. That is very probably correct, and I am glad to say there is already a large sum of money for helping fishery development which has not been called on. Mr. Crosbie: You people are having a hard time to find it. We have got over here roughly $9 million in round figures, and I do not see how that can be used for roads, because it is just as hard for you to find the machinery to send to us as it is for you to find the dollars to send to us. You people have nothing in the way of machinery to send to us.

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Lord Addison: We have, if you will tell us what you want we will see what we can do to meet your requirements. You spoke of machinery connected with fishing enterprise. Mr. Crosbie: No only in connection with fishing, but we can use steamers. Lord Addison: We are the best shipbuilders in the world. If we have a request put to us we will give it the most friendly consideration. Mr. Crosbie: I am speaking now from the point of view of one of the public of Newfoundland. We have no ships at all. At the present time none of this money is being used over here for transport requirements or to pay for ships. It does not look as though any of this $9 million over here is going to be used for the purchase of things in the United Kingdom. Lord Addison: All I can say is that if a proposal is put up to us for using it for purchases in the United Kingdom we will give it the most friendly consideration. Mr. Bottomley: That is for the Commission of Government to decide. We cannot give you the supplies you want immediately, but you want the things, we have the best, you have told us that, and therefore the present position is that the Commission of Government have decided to leave the money here for the time being as against the purchase of the goods you require. Mr. Crosbie: I would like you to remember this, that the public of Newfoundland are not advised or informed of what the Commission of Government is going to do. That is why we are over here, because we cannot get the information in Newfoundland. Mr. Bottomley: I do not know about that; I have read some of the Newfoundland papers, which have given the information I have just mentioned. Mr. Crosbie: We do not get the information. How can the people get it? Mr. Bottomley: If they read their papers. Mr. Crosbie: They do read their papers. Mr. Bottomley: That is where I get my information, from the Newfoundland newspapers. Lord Addison: Mr. Crosbie, you are a businessman, are you not, and you cannot expect me to answer a question in the abstract. The policy at present being pursued seems to me a very sensible policy, that is to hold the money over here to buy the things when you can get them, and so far as I am concerned, all I can tell you is that when I am informed in a practical way as to what it is that is wanted we shall be as helpful as ever we can. Mr. Cashin: I quite appreciate your answer, my lord, but in connection with this particular point in regard to buying things, when we bought two or three steamers over here the other day they cost $2.5 million. They did not then use this money, but they took other monies from Newfoundland. That is what you are trying to say, is it not? Mr. Crosbie: Yes. Mr. Cashin: Why take this money from Newfoundland when you have really got the money over here to pay for it? That is what Mr. Crosbie was putting to you. Lord Addison: Was that Mr. Crosbie's question? Mr. Crosbie: Yes. We are coming on in this memorandum to the question of trade and tariffs. What I am trying to get at is this: we are naturally anxious to sell England fish. If the steamers cost $2.5 million, we could probably use the home fish sales to pay for them. However, that question comes up a bit later, so we can discuss it then. Mr. Hollett: At the same time, on that page, it is a very important decision which the Commission of Government have come to, as to whether or not it would be wiser to keep the money here so that they can use it for development purposes, or whether it can be applied for the reduction of our sterling debt. Lord Addison: That is right. Mr. Hollett: Personally I am of the opinion that it might be much better to apply it to the reduction of our debt. We should be saving a certain amount annually in interest. As has already been pointed out by Mr. Cashin, it appears that if we want goods over here we have to use some of our surplus in Newfoundland. Lord Addison: If you have got the money to pay for goods it is as a rule wise to use that money to

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pay for them rather than to use some accumulated funds which you are holding in hand for future remittances, is it not? Mr. HoIIett: But why keep this here, paying no interest, if we can apply it to the reduction of interest and save it for our country? Mr. Bottomley: I am surprised to hear you say that. Mr. Hollett: We have 312,000 people over there getting a pretty raw deal from this country for a good many years, and our job is to look after the interests of our people, as yours is to look after the interests of your people. As I say, we appreciate your point, but I should think you would also appreciate ours. Lord Addison: We are trying to appreciate yours. We have now 45 million people on very strict rations in this country. Mr. HoIIett: On very strict rations! Mr. Cashin: No one has more sympathy for the British people than we have, but we must remember that the last war, 1914-18, got us into this difficulty, and at the present time it has cost us over $40 million and this war has cost us $10 million, and we do not like to be told that we are not doing anything to help out the home situation. Lord Addison: The point you have put is one which I will certainly consider. Mr. Cashin: This is a business proposition as far as I am concerned, my lord. Lord Addison: Yes. At the same time we all mix our business with a little sentiment at times, do we not? Mr. Cashin: Yes, but sometimes we have to forget sentiment and get down to brass tacks, and when it comes to the point and we are prepared to do it, we do not like to be told straight out that we have to do it. Sir Gordon Macdonald: This question is arguable, there are two sides to it, and for the time being the Commission will not have taken a decision. It may be, it is possible, that everyone in the Commission did not see eye to eye with the decision, and it is quite likely that many outside did not see eye to eye with the decision, but they took the decision, and all that is recorded is the fact that we took a decision on this very issue. Now I am not at all surprised to find that Mr. Cashin and Mr. Hollett are not in agreement with this decision, but there is the decision, and this decision is a fact which is stated in this paragraph. Mr. Cashin: The position is that we are prepared to help and we are doing it, but why not tell us we are doing it? Sir Gordon Macdonald: I should like to say there is no country more anxious to help Great Britain, either in peace or in war. I was here for 12 months, and I know that. Mr. Cashin: If you had come along and said, "Look here, Newfoundland delegation, we are in a tight spot, we would like you to help us out", we would. Lord Addison: We do say that. Mr. Hollett: We should like to be told that. At the same time we must not forget our people are in a tight spot if they cannot sell their fish and their ore, much tighter than in 1933. We are 99% English, Scottish and Irish over there — we have one Welshman — we must consider their situation as well. Lord Addison: I am not complaining in the least. This is a matter we will consider further. I see your point. This is how the matter stands at the moment. I am quite sure you do not wish to press us unduly at the present time. Mr. Hollett: Definitely not, other things being equal. Lord Addison: At the same time you have to look after your own interests as well. Now, "Development Loans". Of course, the rule we adopt in the whole Commonwealth is that self-governing territories finance their own requirements. At present, as we saw in the last discussion, neither of these loans seem to arise in view of the funds you already have at your disposal, but if at some future date sterling credits should be required, the United Kingdom government does not rule out the possibility of assistance. Mr. Cashin: I do not think we should expect any development loans at the present time, I am certain

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we could not, so I think we can pass over that matter. Lord Addison: Thank you. Mr. Cashin: I think the others of the delegation will agree with me. Mr. Hollett: Except I would point out we are not a self-governing dominion or colony or anything else at the moment. Lord Addison: Still, we have to look to the future. Now the position about the base deals. My colleagues have spent considerable time over this. There were some points that emerged at our discussion which were relatively new. I would like you quietly to read this page and the next. May I think aloud for a minute. You say quite honestly, and I appreciate it, you do not press any question in regard to development loans, but you are pressing for the consideration of using the loan here for the purpose of financing certain requirements. That is what it boils down to. Mr. Cashin: You mean for the purpose of goods in England or the reduction of our debt. Unfortunately at the present time I do not think you are able to supply us with many goods. Lord Addison: We soon shall be. I do not know. It depends what the goods are. Mr. Cashin: We cannot buy coal. Lord Addison: You cannot buy coal, I accept that straightaway. You cannot buy any coal. We have not enough for ourselves. We cannot send you any coal, but there are some things we could send you in the near future. However, I was only recapitulating what we have got. I would like to have a statement of your requirements in terms of goods and have a look at it. Do you object to that being supplied? Mr. Bradley: I think that could only be supplied by a government having a clearly defined policy before it. Lord Addison: We will ask the Commission of Government to consider that matter. On the question of these bases I thought it was desirable to have looked up the form of the agreement that was entered into with the United States and in the paragraph at the bottom of the page which is before you, you will see recorded a very important article, 28, of the agreement. The part in front is just an historical statement of fact. "The grant of bases to the United States in Newfoundland was part of the arrangement under which in exchange for 50 destroyers the United States received 99 year leases to bases in the West Indies for the general purpose of strengthening the ability of the United States to co-operate effectively in the defence of the western hemisphere. The exact rights granted to the United States in these bases are defined in a formal agreement made with the United States in 1941. Members of the Commission of Government in Newfoundland were associated with the negotiation of this agreement. The granting of the bases in Newfoundland was part of a comprehensive plan for the defence of the western hemisphere towards which the Newfoundland government were not themselves in a position to make any other effective form of contribution. It will be recognised that Newfoundland owes her wartime immunity and prosperity in no small measure to the presence of United States forces in the island." I now draw your attention to an important article in the Agreement which provides: "That the Government of the United States and the Government of the United Kingdom agree to give sympathetic consideration to any representations which either may make after this agreement has been in force a reasonable time, proposing a review of any of the provisions of this agreement to determine whether modifications in the light of experience are necessary or desirable. Any such modifications shall be by mutual consent." You will see therefore that the Agreement contains a clause which does leave open at some future time some possible revision of the form of the Agreement. Then we sent a note to the United States ambassador on the occasion of the signing of the agreement in which it was stated: "That it is the intention of the United Kingdom government that upon the assumption by Newfoundland of the constitutional status held by it prior to February 1934, the words 'the Government of the United Kingdom' wherever they occur in relation to a provision applicable

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to Newfoundland in the agreement shall be taken to mean, so far as Newfoundland is concerned, the Government of Newfoundland." This is to say, if at a future time Newfoundland had a government of her own on the lines indicated prior to February 1934, it will be open to that government to take advantage if they so wish of the provisions of article 28, that is, the words "United Kingdom" in that article will then mean the Government of Newfoundland so far as any bases in Newfoundland are concerned, so it is open in future in that event. Mr. Hollett: My lord, I take it, it is open now at the present time to the British government under section 28. Lord Addison: Practically, no. We should not think of re-opening this question at present. We have too many other things on our plate. There is no ground at present for re-opening it. Mr. Hollett: In other words, if there is any benefit to be derived by the people of Newfoundland, no benefit can accrue to them until they resume their former status. Is that the position you take? Lord Addison: Not necessarily, but I am bound to tell you as a practical man of affairs that I think it is extremely unlikely the United Kingdom government would re-open this particular issue at the present time. We have many other vast and complicated issues with which we are dealing with the United States, and quite honestly it is not in the least likely we shall raise this and I will not mislead you by saying we shall. Mr. Cashin: I can understand that, but this is a matter upon which I think I voice the opinion of every man, woman and child of Newfoundland. When these bases were granted in 1940 and 1941, and particularly for the long period they were granted, 99 years, the people of Newfoundland as a whole felt they should have had some form of quid pro quo for these bases. The sovereign rights were given away. Today Newfoundland is in the position that this territory is no longer part of Newfoundland, it is part of the United States. Lord Addison: A very small part. Mr. Cashin: Under the agreement they can move into other places if necessary, therefore in a sense it is under the control of the American government today, but leaving that aside, the people had no objection to giving these bases to the United States for the duration of the war, but we did not think the war was going to last for 99 years, and they feel when we gave them for 99 years, we were entitled to some consideration. We got none. I think the general feeling in the country was we should have had some tariff consideration, particularly for our fishery products, from the United States and we think the government that had charge of the affairs of the country at that time certainly fell down on their job as far as Newfoundland is concerned. I realise, I was here at that time, that things were very hot and in the rush to try and win the war everything was forgotten. Lord Addison: We were glad to save ourselves in 1941. Mr. Cashin: The United States must not forget, whilst they helped us from the financial standpoint, they also through Newfoundland helped to save themselves. Therefore we feel we are entitled to some consideration for these bases. We cannot go to the United States today and look for it, and there is only one place we can come and look, and that is to you. Mr. Bottomley: The only point is what would you have done, what could you have done, when the agreements were reached, when the Americans said the bases were wanted for 99 years. I do not think anybody in Newfoundland could have stopped it. The people did agree to it. Mr. Cashin: They had nothing whatever to say about it. They have had nothing to say about things for 14 years. Lord Addison: If we can find any ways and means of getting you anything for the bases, we shall be happy to help, but at the same time let us be frank with one another. The British government concluded the agreement for these bases in the West Indies and they are there. I never heard any citizen grouse about it, as it were. They felt we are in a hole and these bases will be useful for air bases, as they were, invaluable, and it is worth it, and it was. For all that, I take note of what you say. Mr. Fudge: As far as the war is concerned I am prepared to state again, we have nothing to hang down our heads for in both wars.

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Lord Addison: Of course, you have not. Mr. Fudge: But when it comes to 99 years it is a mighty long time, and then in view of the fact — and I want you to bear with me when I express myself in this way — that it was the trustees of the country who gave the rights away for 99 years, it does not seem to be logical. I do not think a trustee of any estate would be permitted to do that. They are simply trustees of the country. Mr. Hollett: Following up Mr. Fudge's statement, may I ask if there were any bases granted to the United States in this country during the war, and if so, may I ask for how many years they had them? Lord Addison: In Great Britain? Mr. Hollett: In the United Kingdom. Lord Addison: No. Mr. Hollett: They were here in their millions. Lord Addison: They were indeed, but there were no bases; they were not required. It was purely a strategic operation; the disposition of the bases was a strategic matter. This country was a base. We were all one huge aerodrome. There was no necessity for any bases here, but they had them in the West Indies. Mr. Cashin: In Canada, when they took the Alaska highway and built it right through from the United States, after the war they moved out, but here in our country they came in and they have control. Mr. Walsh: Did not Canada pay compensation? Mr. Cashin: For some of it. We paid compensation to Canada for an airport which will cost us several hundred dollars a year and gave them another one for nothing. Lord Addison: I see your point and I will see it is not lost sight of at all. Putting aside the very natural and very proper patriotic considerations which we all have regard to — I should feel the same as you — it is a fact, I take it, the country does derive considerable economic benefit from the presence of these bases. Mr. Hollett: Not at the present time. Mr. Butt: A certain amount on labour. Mr. Hollett: These men would probably work in the country anyhow and probably earn more wages than on these bases. Lord Addison: Do you think so, Mr. Fudge? Mr. Fudge: Yes, my lord, I do. Lord Addison: But still, I take it, you are like us, you are glad of any useful avenue of decent employment. Any addition to the opportunities for employment is an addition to the potential wealth of the place, whether a lumber camp or an aerodrome. The point here is, it is not your land; that is the point. Mr. Cashin: That is the point. We want to control it. If the Americans had put it to Great Britain, "We want bases in Northern Ireland for 99 years in consideration for these destroyers", I do not know what would have happened. Mr. Bottomley: If you look at it in this way. The strategy of these parts demands bases there, not only for America, but for Canada and for yourselves. We hope there will be no more clashes, but it is in the common interest to have that part of the world very well defended. We cannot help; you cannot do it. The scheme has been established. Lord Addison: If we cannot invent a quid pro quo we are anxious to help, but it is no use me deceiving either you or myself, I do not think at the present time it is a practical question to take up, the abrogation of the agreement. Mr. Hollett: We do not anticipate that. Lord Addison: What you would like is either by way of tariff concessions or in some other way to get something in return? Mr. Cashin: That is it. That is why we think we are justified in asking for it. Mr. Fudge: There is another position, my lord, I would like reviewed. It is said that the United States came in and gave us a lot of employment. On the other hand, the United States was mighty lucky that

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we had the labour in Newfoundland to do it. They did not have it. They would not have been able to get the bases there so quickly but for our people. Lord Addison: That is true. Mr. Fudge: If they have done us a turn, we have done them a turn too. Lord Addison: Of course, you have. You have to maintain it too. Mr. Fudge: I do not see any use arguing about the United States. I believe in going to the boss when I want to do business, and in this case you are the people who are the bosses. You are the people to do the job, not the United States. You are the boss. Lord Addison: I am fully seized of your point and at the present moment all I can say is I am glad you have emphasised it. We shall be glad in the event of any negotiations being possible to give any help we can. At the same time I gather, as was said earlier, if you can get some tariff or other kind of concessions that you think would be useful, it would be some sort of consolation. Mr. Cashin: If we could get some fishery concessions out of it. Mr. Fudge: On the other hand, how far will these people go? I may want to set up a little shop next week; if they have any idea that someone will cause trouble they may take it from me and move me into the forest. Under the lease they can move as fast as they like and where they like. They can take more territory if they need it — in the case of emergency, it may not be war together. Mr. Walsh: They may use the territory outside their bases. At White Hills I do not think it is for base purposes exactly. They arranged to take some small territories for target practice, but the right you are referring to is the right to go into more territory for emergency purposes. Mr. Hollett: Might I read section 27,1 have it here: "The United States may by common agreement acquire on supplementary lease for the unexpired period of the lease agreement in a territory such additional areas, sites and locations as may be found necessary for the use and protection of the base on such terms as may be agreed." Lord Addison: The governing words there are "by common agreement". That is the first thing. Mr. Walsh: And "for use and protection of the base". They are subsidiary areas. The dock in St. John's is for the use of the St. John's base and certain waters in the approach to the Argentia base. There was the extension of the Harmon Field base a few years ago, and a subsidiary lease in White Hills. I do not think it gives a right to select additional bases. Mr. Hollett: You have to read that with article 2: "When the United States is engaged in war or at a time of other emergency the Government of the United Kingdom agree that the United States may exercise in the territories or surrounding waters or air space all such rights, powers and authority as may be necessary for conducting any military operations deemed desirable by the United States, but these rights will be exercised with all possible regard to the spirit of the Preamble." Mr. Walsh: That is the right to go into the territory, but not a right to acquire a 99 year lease. Lord Addison: I do not think we need spend much time on this. In the first place it says 'The United States may by common agreement". In other words, they cannot do anything except with agreement and then it is limited to acquiring sites for the use and protection of the base. It is limited to that purpose, and even then, it is on such terms and conditions as may be agreed. In other words, you have it in you hands. If you say you do not agree, nothing can happen. They cannot turn you out of your hypothetical shop. Mr. Fudge: It may be for 499 years instead of 99. Lord Addison: Not unless you agree to it. I do not think there is very much in that. Mr. Cashin: I think the whole thing is the bases have gone, and we have nothing for them and we want something. Mr. Hollett: In connection with that point, is it a new policy of the British government to forfeit British Commonwealth territory for such things as 50 destroyers, and to allow the use of it for 99 years? Lord Addison: We did, in fact, in our emergency in 1941 lease these and other bases for 99 years in return for the destroyers to save our lives. We did, and that was our agreement. We have to honour

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it. That is all. We should not have done it, you may be sure, if we had not been in that plight. We had nothing with which to protect our convoys across the Atlantic and we got the destroyers for that purpose. If we had not had them, the ships would have been torpedoed and we should have been starved out. That is why we agreed to it and it was a very good reason. If you had had the responsibility for the government of this country at that time and had had that offer, you would have agreed to it. Mr. Hollett: I would have insisted on a financial clause. Lord Addison: Anyhow, we agreed to it and that is our agreement. So far as the bases are concerned I have your point. Mr. Fudge: Supposing I put it to you this way. In view of the fact that you did agree to it and by way of concession, why not cancel our national debt for them? Lord Addison: You are a good bargainer. I will say that for you. Mr. Bottomley: I think you are bold fellows to say you could have done better than Mr. Churchill. Mr. Fudge: It sounds reasonable to us. Lord Addison: I do not think we will tie up the bases with that. Mr. Fudge: It is worth it. Lord Addison: It is the United States who happens to be a party to the agreement. You do not owe the money to her; it is to us. I am afraid that is not a good bargaining weapon. Now, "The Financing and Control of the Newfoundland Airport"; what proportion, if any, is Newfoundland called upon to pay? I have now much more information on this, and about this recent arrangement, or proposed arrangement, I should say: "The Commission of Government raised with the United Kingdom government the question of the liability for deficits on the operating cost of the airport. It was represented that it was beyond Newfoundland's capacity to meet the expenditure involved in maintaining so large an air base. This question has been under consideration by the United Kingdom government, and the Governor of Newfoundland was recently authorised to make a public statement explaining that it had been agreed in principle that from the time of the transfer of the control of Gander to the Newfoundland Civil Authority, and for so long as the present constitution of the island continues, the United Kingdom government would be prepared to meet such portion of the deficit on the running cost of the airport as could not be attributed to the Newfoundland government on account of the benefits accruing to Newfoundland from its operation." So we make ourselves responsible. "Following this announcement experts from the Ministry of Civil Aviation proceeded to Newfoundland to examine in detail the cost of operating the airport and to make recommendations as to the percentage of running costs to be met from the United Kingdom and Newfoundland exchequers respectively. In brief, the recommendation of the mission, on the basis of the 1946/47 estimated net operating deficit $750,000, is that the United Kingdom government should bear two-thirds of the deficit ($500,000) and the Newfoundland government one-third ($250,000), the portion to be borne by Newfoundland being at least equal to the estimated benefit ($250,000) accruing directly to the Newfoundland treasury from the airport." So you do not lose anything. Mr. Cashin: That sounds funny to me. We take in $250,000 and then we throw it back again to an airport for the benefit of half a dozen air lines belonging to other countries. What benefit is it to those 1,500 people that we get $250,000? Lord Addison: It is duties — I do not know on what. Mr. Walsh: Coal used in the operation of the airport and duties on petrol used by the air companies and transportation. Mr. Cashin: If any industry in Newfoundland was operated in that way, we should be in bankruptcy again. Lord Addison: Is that so? Mr. Cashin: I cannot see through that. We pay $250,000 to get $250,000.

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Lord Addison: I think you have driven a very good bargain with the United Kingdom. Mr. Cashin: We have not driven anything yet. Lord Addison: These gentlemen have, your representatives. I think you have driven a hard bargain with us. Let us look at it. The deficit is estimated at $750,000 and we become automatically responsible for $500,000. That comes out of the pockets of the British taxpayer. That is where it comes from. What comes out of the pockets of the Newfoundland taxpayer? That is the next question. Nothing. He gets $250,000 from one side and he spends $250,000 on the other. In other words, he has not to put his hand in his pocket at all. Mr. Cashin: In other words, he is no better off than if he had not got the airport. Lord Addison: Let us be fair. The British taxpayer is a much oppressed fellow. We have forked out half a million dollars. You in fact have forked out nothing. You get some money in one hand and pay it out with the other, but it does not come out of your pocket at all. In addition to that, you have a running concern financed largely by the British taxpayer which gives useful, decent employment to 1,500 of your citizens who will spend their wages in your shops and buy Mr. Crosbie's fish. Mr. Crosbie: They won't buy mine. Mine is for export. Lord Addison: I hope yours is good enough for them to buy. Quite honestly, as man to man, do not you think you have done a good deal? Mr. Cashin: We have paid a million dollars for it. Mr. Hollett: I think Mr. Walsh said at our last meeting the benefits accruing to our treasury would be $50,000 and we were liable to pay out $250,000. That is not correct? Lord Addison: No. This is the true statement. Mr. Walsh: What I said was the value put upon the returns to the treasury from the employment of these 1,500 people was that amount. Mr. Hollett: Customs duties from their earnings? Mr. Walsh: The value put on the returns to the treasury from their employment was the nominal figure of $50,000. The $200,000 arose from customs duties on coal, petrol and on goods consumed in the course of the operation of the airport, together with profits tax on an oil company doing business there. I pointed out it was difficult to assess the return to the treasury from the employment of these people. They would be at home or employed elsewhere; they would be consuming goods subject to duty, and there would be a return to the revenue. I do not think any of us can say the only return to the revenue from the employment of the 1,500 people would be $50,000. I think our revenue is a great deal higher than that, but a merely nominal value of $50,000 was put on that aspect of it. Mr. Cashin: In the meantime we have to find the necessary capital to enlarge the airport and bring it up to modern style. Lord Addison: Do you find the capital? Mr. Cashin: We are doing it now. We spent considerable money on it last year. Mr. Walsh: Yes, in certain capital outlay, on machinery and converting a building into flats. That will be depreciated, in the case of machinery according to the life of the machine, and in the case of the expenditure on conversion over a period often years, with the result that it comes from the general account and is met as to two-thirds by the United Kingdom, one-third by ourselves, and the arrangement is that there is to be a repayment to the Newfoundland treasury over a period often years for the advances made for conversion of flats. Last year we expended $300,000. That is to be repaid at the rate of $30,000 a year over ten years and is to come out of Gander accounts. Mr. Cashin: In other words, the British government will pay two-thirds of the cost ultimately of the capital expenditure. Mr. Walsh: Let us make it clear. The million dollars paid to Gander will not be drawn into that, because we secured a large amount of goods. It included the road and hangars and some more permanent buildings; but our expenditure from the treasury on conversion and other capital expenditure will be depreciated and written off over the life of the building, estimated at ten years in the case of the flats, in the case of the machinery a life of five years. The net result is we pay one-third which does not include the million dollars.

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Mr. Cashin: In other words, the Newfoundland government spent a million dollars of public money in order to obtain a liability of a quarter million dollars a year. Mr. Walsh: I think to say that would be overlooking altogether the property for which the million dollars was paid. Mr. Cashin: The property was Newfoundland property, anyhow. Mr. Walsh: I do not think you can say that in the case of supplies brought in by Canada. In the case of the medical supplies, they are useful in the hospital there. We took over everything at Gander. The value is estimated at $25 million. Mr. Bottomley: Is Mr. Cashin's point that you do not want Gander? Mr. Cashin: It is up to the public. We do not operate aeroplanes. If outside people want to use it and operate it, they should pay for it. Mr. Bottomley: Do you want Gander as an aerodrome? Mr. Cashin: We should like an aerodrome there, yes, but we do not want to pay for it. Mr. Bottomley: When you open a business you do not expect to make a profit at once. You encourage customers to come there. Is not that your policy? Mr. Cashin: I do not believe in any policy that is going to cost us money. Lord Addison: No less than $25 million was spent on this place by Canada, your property. Mr. Cashin: It was a good deal for Canada. If they had their $25 million still in it and were operating it, they would be losing this money and not us. They sold out the liability to Newfoundland for a million dollars. Lord Addison: Who is paying for something he cannot see is, it seems to me, the British taxpayer. Mr. Cashin: I imagine the British taxpayer is not so badly off in this deal either. Mr. Walsh: I understand that there were stores there worth a decent million dollars. We took the whole thing, buildings and stores, for a million dollars. Mr. Hollett: Why pay a million dollars for something which is not going to be an asset to our people? Lord Addison: It is an immense asset. Mr. Walsh: It raises the whole question of the length of these bases. Mr. Cashin mentioned taking over the Alaska road. Canada paid compensation. Somebody suggested that all this should be turned over to us for nothing. Supposing the United States withdrew tomorrow from Newfoundland, we would not be in a position to pay compensation to those people. Mr. Cashin: No, I agree. Mr. Walsh: I realise the Newfoundland people do not expect to be called upon to make any outlay, but in this arrangement the United Kingdom government is coming in to finance it, and the question is, it seems to me, can we ask the United Kingdom to bear that portion of the deficit that is going directly to the Newfoundland treasury? That is the difficult question from my point of view. Mr. Hollett: There are only 300,000 people, and naturally resources are not so great for carrying the burden as those of the United Kingdom, the United States of America and Canada. Mr. Bottomley: Are you suggesting a Canadian base now? Mr. Hollett: No. Decidedly not. Lord Addison: It is not a burden, it is a very valuable asset. Mr. Hollett: It would be all right if we could pay for it. Ten years. Mr. Fudge: If on the other hand we could have rented Gander airport, we might have had half a million dollars a year. Seeing you had the 99 years fever, we would have applied 99 years to the lease. Lord Addison: You would not have spent $25 million in equipping an airport. You must pass that over to the marines. After this interesting and amicable discussion you leave me convinced that you have done rather well out of it. Mr. Cashin: We have not got anything yet. Lord Addison: Let us now take the three questions. I need not read them out. It would not be essential for you to adopt the Statute of Westminster; it would be open to you to enter into negotiations, if you liked, with a foreign government with our assistance, or you could do it on your own. You have someone at Geneva. As far as I am concerned, we are doing everything we can to be helpful both to

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you and to us. Mr. Fudge: How can it be said that we have a representative of Newfoundland there? Lord Addison: Your government has sent someone. Mr. Fudge: We have no government in Newfoundland. Lord Addison: Yes, you have — and a very competent government too. Mr. Fudge: We were told we have not. Our government is here. That is why we came over. Lord Addison: You are misrepresenting our authority. Mr. Fudge: This is our government here. Lord Addison: It is a government in Newfoundland. It is true that we have certain responsibilities because we are footing the bill. It is your government. It is no good going back to that. Neither do I want to re-open the circumstances in which it was created, but there it is, and you have a Convention which will freely decide in whatever way is decided — a referendum, I understand — what future form of government the colony wants. That is one of the reasons why you are here. On tariffs, we will do anything we can to help you, and you can do it with our assistance or on your own, as you wish. I am answering (a). Now (b), the question of Bell Island ore. Sometime at the outbreak of the war the thing was in suspense, but during the last two or three years we have had substantial importations, and at the present time a contract for 750,000 tons of ore is under consideration. Mr. Cashin: For which year is that? Lord Addison: 1947. Mr. Cashin: That contract is already made, I understand. I talked to the General Manager of the Bell Island company before I came over, and they had a contract for three quarters of a million tons then. Lord Addison: All these things are subject to the Treasury being able to say that they are willing to find the dollars. I am not throwing any doubt on the question, I am only trying to state it accurately. It has not yet had the final blessing of the Treasury. It is a very large importation. Mr. Cashin: Three quarters of a million. Lord Addison: Yes, and it is much bigger than it used to be. Mr. Cashin: It was practically negligible before 1939. Lord Addison: Yes. Mr. Cashin: Their excuse here in the days of responsible government—I think Mr. Walsh will bear me out — was that your furnaces were not suited to this ore, and the ships were carrying cargoes too large to discharge at the docks, but now it transpires that they are all wrong because big ships are carrying it here and the ore is working out all right. I feel that in making a request for something substantial, that is an annual rate of three quarters of a million tons for four or five years, Newfoundland is not asking too much; and with regard to dollars we will have to find some way of financing you. Lord Addison: Mr. Fudge has frequently been telling me that your nominal government is this government. I do not agree with that, but I would like to say that on this your Commission of Government has taken the initiative, and has pressed us very hard for a considerable time past, to do whatever we could with our Ministry of Supply people and all the rest to encourage the utilisation of Bell Island ore. I think you ought to throw them a bouquet for their efforts. Mr. Cashin: We want to push them along a little more. Lord Addison: I know; but it is a correct statement that I am making. We have been as helpful as we can do, and it looks to me as if the importation of your ore at present anyhow has shown a very gratifying increase. Mr. Cashin: It has. Lord Addison: It is vastly more than it was in the old days. Mr. Cashin: We do not want to be faced with the same situation as 15 years ago, that when they get straightened out they will hike off to Sweden and Spain and forget Newfoundland. That is what they did after the Ottawa Conference in 1932, when representatives of the British government were in Ottawa and the Prime Minister and Minister of Justice met them; they gave a definite understanding

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— not an agreement but a moral understanding — that they were going to give us half a million tons a year; they went back and we have never heard of it since until recently. Lord Addison: You must give us a little credit for that. Mr. Cashin: I am prepared to give you that credit, but at the present time we do not know what you are going to give us next year. Lord Addison: To be quite frank, we are going to do our best to keep up this importation of your ore. We shall do everything we can to maintain it, but in view of all our other requirements and necessities I cannot give you at this moment any guarantee as to amounts. The limiting factor in steel production in this country is the supply of coal. Mr. Cashin: You have lots of that here. Lord Addison: It is under the ground, unfortunately. Mr. Cashin: Yes, but our ore is also under the water, and our people have to pull it out and it is for your crowd to pull it out here. Lord Addison: Quite frankly, it is no good saying that. We intend to develop our steel industry to the utmost extent possible, and the development of the steel industry depends in the main on the supply of coal. That is what it depends on. At the present time we are not getting from our coal mines as much coal as we want. That is why we have had to be under these wretched conditions of cold during the last few weeks. We are not getting as much coal as our industrial plants require. We hope we shall; we are doing our utmost to increase the output of coal, and last week, I am glad to tell you, it was a very good output, and it is going up. Mr. Bottomley: Perhaps I ought to say at this stage that one thing limiting the amount of iron ore coming to this country was freight rates. As the result of pressure by the government there we have got the freightage rates substantially reduced. I have seen the iron ore representatives in this country, and they have expressed appreciation of what you were able to do for them. Lord Addison: Mr. Bottomley was dealing with that, and he deserves the credit. There you are. I can assure you that we done everything we can. Mr. Cashin: In outlining the future economic position of fishing, we have to have some idea of what prospects are in sight in the future in making up a budget. Lord Addison: However much you press, I cannot give a guarantee. Mr. Cashin: I realise that. Lord Addison: We have done what we have been doing with the best of goodwill, and we are now, I believe, taking more than we have ever taken. Mr. Cashin: Yes. Lord Addison: What better evidence could you have of our goodwill than that? But I cannot give a guarantee for the future. I do not know how much coal we are going to produce. Pray God it will be more than we have already. If it is, we shall use more iron. Mr. Cashin: That will be Newfoundland iron? Lord Addison: I shall hope and expect we should use more Newfoundland iron, but I had better repeat that I cannot give a guarantee. I have to be in the House of Lords in 20 minutes. Mr. Crosbie: With regard to trade and tariffs, I am not satisfied. We have been very friendly, and there has been a certain amount of sentiment, and we appreciate what has been done. On the other hand, you people are buying fish from Iceland; you bought about 12,000 tons of fresh fish from Iceland which you are paying for by barter or in Danish kroner; you are also buying fish from Norway, and yet we cannot get any fish from Newfoundland into this country. Why? There is some reason for it. It might be a question of financing England with certain loans to bring this fish over here; otherwise you might pay for it by way of goods over a period of years. I am definitely not content over the trade situation, and I do not think it is fair to Newfoundland. Mr. Hollett: The fish situation is the most important of the whole lot. Lord Addison: Is that frozen fish? Mr. Cashin: Yes, frozen fish.

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Mr. Crosbie: Neither can we put any saltfish into England. Mr. Bottomley: There is not a market for saltfish. Mr. Crosbie: There is a market for a certain amount. Mr. Bottomley: Is there? Mr. Crosbie: Yes. Lord Addison: "Arrangements have been made for the present for sales to Newfoundland's usual continental markets in the sterling area". Where are they? Mr. Cashin: Spain, Portugal, and Italy. Greece is out. Lord Addison: I will try and get a little further light on that next week, but evidently the question is one of dollars. At the same time, we are evidently facilitating your sales in the usual continental markets. Mr. Crosbie: You must remember that some 13 or so years ago your government accepted the responsibility of looking after Newfoundland, and it is part of your responsibility to see that people are employed. Lord Addison: I have personally written to the Chancellor of the Exchequer on this very point, but I do not know at the moment what the position is. Mr. Cashin: I think Mr. Crosbie will agree that this is a very important matter, because these frozen fish plants in Newfoundland are being shut down. They cannot sell any fish to the United States because there is a high tariff against it. We are looking to try and sell some here, and if we have an order for 30 million pounds of frozen fish this year it will be of great help to the country. It is roughly $5 million worth of fish. Otherwise, the plants, in which $5-6 million of private capital have been invested, will be closed down. It is very poor encouragement for other developments in the fisheries. Lord Addison: Did we buy this fish before the war? Mr. Crosbie: Frozen fish? Lord Addison: Yes. Mr. Crosbie: Very little. During the war years you did, and, to be perfectly fair to Newfoundland, we sold fish to you at that time at lower prices than you could buy it elsewhere; but since the war you have been buying it from Iceland and Norway, and I do not think that is British fair play. Lord Addison: I will make further enquiries into this, and we will discuss it again next week. That is really the only outstanding matter, and I must make further enquiries. I think on the whole it is fairly definite. Perhaps you would like to take the paper away and consider it. Mr. Cashin: I think it would be well if we made our own proposition based on this. Lord Addison: As far as I am concerned, this represents my matured consideration of the thing, taking it altogether; but it is at your disposal, and it will be for you to make your own suggestion. But I do not think you will find me in the mood to go very far. Mr. Cashin: I hope you are in better humour on Tuesday afternoon. Lord Addison: I think I am in an extraordinarily good humour, but you are very hard bargainers, you know. [The meeting adjourned.] F. Reply to the Memorandum Submitted to the Newfoundland Delegation on May 1,1947

(6 May, 1947) The preparation of this memorandum has been occasioned by the desire on the part of the delegation from the Newfoundland National Convention, formally to place upon the record the case advanced in respect of the various matters discussed with the representatives of the United Kingdom government. This memorandum is also in part a comment upon the memorandum handed to the delegation at the meeting with the representatives of the United Kingdom government held on May 1,1947.

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It is desired to note in preface, that in considering the various matters under discussion, rigid dissociation of one topic from another is not possible if the economic and financial picture of Newfoundland to which they relate is to be seen in true perspective. In consequence, some overlapping will be noted in the text of this memorandum. It is our opinion that any fair and adequate reply to the questions submitted to the British government under heading No. 1, that is to say, the public debt, can be made only in conjunction with questions (2) and (4) — that is the interest-free loans and the position arising out of the various base deals. The motion embodying all these points received the unanimous approval of the National Convention elected by the people of Newfoundland, and we feel it would be their wish, as it is ours, that anything that can reasonably be done to reduce our sterling indebtedness should be attempted. For one of the important means of successful administration in Newfoundland, as indeed in other countries, is the keeping of overhead to a minimum, compatible with efficiency. One step in this direction is, in so far as possible to reduce our annual interest charges on public debt. The case for seeking the cancellation in whole or in part of the sterling debt may be stated in these words: (a) The "historic deficit" (if that be a permissible phrase) of Newfoundland public finance has been in the amount of the interest payable upon public debt. In the past, whenever Newfoundland has failed to balance its budget, the excess of expenditure over revenue has generally speaking, been of such dimensions as the amount required to service the public debt. (b) Our war-time prosperity was based upon earnings from base construction and upon the somewhat inflated values of fish exports. It should not be taken for granted that because there is a national surplus that every individual has laid aside an individual surplus. There are many who still live merely from hand to mouth, and if it is wondered why, from their earnings of recent years, they have not made some provision for the future, the reason is that it has taken all of their surplus war earnings to replace and repair their properties and equipment that deteriorated in the depression years. Further, it is a well-known fact that no efficient method of price control was inaugurated during the war years and hence the cost of living soared. (c) It is difficult to see where any major basic change has been made in the economy of Newfoundland. It is true that in consequence of market conditions resulting from the war, some stability of the pulp and paper industry may be anticipated for the next decade. It is also true that due to enterprise of some few private individuals, a greater diversification of the fishing industry has been achieved. But any increased measure of stability of the Island's economy accruing from such diversification is dependent upon modernisation and the development of further markets for those products. (d) The endeavours of Commission of Government have latterly resulted in the extension of existing public and social services and the provision of new services involving maintenance costs of considerable dimensions. Granted that such services are highly desirable, it is however doubtful if they can be maintained from the revenues of the normal times of the future if several millions of dollars must also be found to service the public debt. (e) In the future as in the past the majority of the people of Newfoundland will have to depend for their living upon, for the most part, what they can get from the exportation of fish. To obtain anything like an adequate return in the future it would appear that Newfoundland will have to produce much more fish at less cost. It will in consequence be necessary to undertake a thorough modernisation of the fishery. Government assistance on a large scale will in all probability be necessary, and this could be the more easily accomplished if the monies that must be applied yearly to the service of the debt were available for such modernisation. As you state in your memorandum, our debt falls under three main headings: 1. The two 3.5% sterling loans amounting together to about £870,000 which mature in 1950 and 1952. 2. The £400,000 temporary loan which was made available to Newfoundland by the United Kingdom government in 1917 for war purposes.

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3. The 3% sterling debt of £17,790,000 guaranteed by the United Kingdom government. With regard to No. 1 you advise that £800,000 has been deposited with Crown Agents for the Colonies in London at 2.5 interest annually and this amount is to be devoted for the redemption of these loans. With regard to No. 2 you have advised us that we may assume that the repayment of this will not be sought. Coming now to No. 3 — that is the 3% sterling debt of £17,790,000, or approximately $71.75 million, we find our present annual interest charge at 3% is $2,156,000. To this we have to add the sinking fund of 1 % or $718,000, making in all a yearly expenditure by the Newfoundland government on account of interest charges and sinking fund of $2,874,000. We suggest that this annual expenditure can readily be reduced so as to save approximately $1 million for amount of debt services in the manner below indicated. (1) Sinking Fund. This sinking fund which was created during the fiscal year 1937-38, shows a credit on this account held in the Bank of England at December 31, 1946, amounting to £1,868,000 or in dollar currency, $7.5 million. In addition to this amount, there will be a further payment to this fund on July 1 next of another £177,950 or in dollar currency $718,918. This will bring the total amount of the sterling 3% sinking fund up to around $8.25 million. We gather from your memorandum that you are now prepared to reduce the sterling debt by the total of this established sinking fund, or by approximately $8.25 million, thus reducing the debt to $63.5 million. (2) Conversion. We gather further that you would be prepared as from January 1,1948, to reduce the interest rate on the debt from 3% to 2.5%, in line with the United Kingdom cheap money policy. This would of course result in a saving to the Newfoundland people of approximately $500,000 annually from said date. (3) Interest-free Loans. In addition to the above the Newfoundland delegation are of the opinion that the balance standing to the credit of Newfoundland in the way of interest-free loans to Great Britain and which is now lying idle, should be devoted to the further reduction of the Newfoundland sterling debt. This action will further reduce our sterling debt to approximately $54 million and consequently our annual interest charges together with the sinking fund, would be proportionately reduced, which would in all amount to a further saving of some $400,000 — or a total saving of approximately $1 million. We cannot understand the attitude of the Commission of Government when they advise you that, in their opinion, it would not be prudent to adopt this last-named procedure in reference to interest-free loans, which procedure as we have just pointed out will mean a saving to the Newfoundland treasury of some $400,000 annually. With regard to the statement of the Commission of Government that these interest-free loans may be required for development purposes, we wish to point out that these monies are now in sterling currency and in order to be of any benefit to Newfoundland would have to be converted to dollar currency. You have indicated to us that one of your main difficulties is the finding of dollars for the purchase of raw material and other commodities in both the United States and Canada and consequently we are at a loss to understand why the Commission of Government has in mind the conversion of these monies to dollars, particularly in view of the fact that at the present time there lies to the credit of the Newfoundland treasury in the Bank of Montreal in Newfoundland, well over $20 million, which in our opinion is ample for any immediate or foreseeable construction or development programme. If the above policies in relationship to interest-free loans, conversion and sinking fund were carried out, the public debt would be reduced from $17.25 million to approximately $54 million, and the annual debt service charges as from January 1,1948 would be reduced from $2,874,000 to $ 1,890,000. Both of these amounts include allowance for the sinking fund. Hence the debt would have been reduced to $54 million and the annual debt service would be less by $1 million. We strongly urge such a policy and we seek some assurance from the United Kingdom government before our departure to report back to the National Convention and through it to the people of Newfoundland. Under your memoranda headed interest-fee loans we quote the last paragraph thereof: "The United

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Kingdom government cannot themselves undertake to pay interest on loans made interest free and it is naturally assumed that the Government and the people of Newfoundland, recognising our grave dollar shortage will be prepared to leave the outstanding sums here for the time being." We, the Newfoundland delegation, are deeply conscious of this condition of affairs existing in the mother country at the present time, but we are also full of awareness of what the saving to our people in Newfoundland by the use of these interest-fee loans in a further reduction of our debt may mean to the general economy of our country, and in particular to the well-being of our people, who after all have suffered more than their share of hardship and privation in the past. Furthermore we consider this proposal a sound business proposition and one which in no way effects the dollar situation of Great Britain. The Position Arising out of the Various Base Deals It is, of course, recognised that the granting of bases in Newfoundland was essential to the defence of the western hemisphere and undoubtedly Newfoundland owed her wartime immunity in no small measure to the presence of United States forces in the island. But it is also true that the United States owed its wartime immunity in some measure to the presence of its forces in the island. It is our opinion that the Newfoundland people as a whole were prepared to make, and did definitely make, every sacrifice within their power towards the winning of World War II. Without doubt, the people of Newfoundland are convinced that it was utterly essential to the winning of the war that bases should be provided in Newfoundland for the defence of the western hemisphere. However, the people of Newfoundland have not yet had put to them such evidence as would convince them that the way could not have been left open for reciprocal negotiations after the war if the United States did still desire to retain bases in the island. In that there has been impairment of sovereignty beyond their power to repair for 99 years, the Newfoundland people do believe that some quid pro quo in respect of territories alienated should be forthcoming. They shall certainly go on believing the same irrespective of whether the Governments of the United States and the United Kingdom may be prepared to move in the matter or not. And it would appear that there is widespread opinion in Newfoundland that such quid pro quo should take the form of preferential entry into the United States markets for our fishery products as well as the cancellation of our public debt by Great Britain. The Financing and Control of Newfoundland Airports It is the opinion of the delegation that the arrangements for the financing of Gander airport are likely to be regarded by the Newfoundland people as highly unsatisfactory, even though it may be but provisional and although there is no certainty of even that. In the case of an operating deficit at Gander, it is agreed in principle between the United Kingdom and the Newfoundland government that Newfoundland shall be liable, in the first instance, to the full extent of the estimated benefit accruing directly to the Newfoundland treasury. In other words, Newfoundland is expected to maintain an airport for the service of foreign airlines from the maintenance of which it is unlikely that she shall derive any final benefit to her treasury and in the course of the maintenance of which it is not unlikely that she may have to expend more than does accrue directly to her treasury from the airport. If at any time there should occur a net operating deficit of much greater dimensions than $750,000, Newfoundland's position would be far from happy. It is noted that there are employed at the airport over 1,500 Newfoundland people performing services for foreign airlines in respect of which sufficient revenue will be forthcoming from abroad for 1946-47 at any rate, except an estimated $250,000. If the economy of Newfoundland is sound, it should be possible to absorb those 1,500 Newfoundlanders into industry where they would engage in the production of new wealth without benefit of subsidy. Trade We cannot accept your argument regarding our trade particularly with reference to the sale of fresh and frozen fish. It is absolutely essential that Newfoundland should export a minimum of 25,000,000 pounds of fillets to this particular market each year. And many of our people cannot understand why large purchases of this particular commodity are made from Iceland whilst none of the Newfoundland

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product is being acquired. We are of the opinion that the necessary dollar exchange can be arranged along the lines similar to Canadian transactions, or by the purchase for Newfoundland account of a corresponding quantity of British goods. We are also of the opinion that if for the next three years the United Kingdom purchased the quantity of fishery products mentioned, it would give the Newfoundland operators and producers an opportunity to consolidate their position in this market and to further explore and develop other potential markets. We are also of the opinion that by the co-operation of His Majesty's Government in the United Kingdom, the Newfoundland government and the Newfoundland trade that this particular position can be strengthened considerably to the benefit of our people and the future prosperity of the country generally. We cannot impress upon His Majesty's Government too strongly how vital it is that all our fisheries be fully developed. Iron Ore Our iron mines on Bell Island have been producing iron ore for over half a century. Up to the end of August 1939, our principal markets were Germany and Canada. At the Ottawa Conference in 1932 the then British Prime Minister and the Secretary of State for Dominion Affairs intimated to the Newfoundland Prime Minister and the Minister of Justice that immediately on their return to England they would take up the matter of the sale of our iron ore to the steel industry of Great Britain. In return for which Newfoundland was to grant certain tariff concessions to Great Britain. Although Newfoundland carried out her end of the bargain very little ore found its way to the United Kingdom until the past two or three years. We had been advised on more than one occasion that one of the difficulties in using our ore in Britain arose from the fact that it was low grade and did not suit the British furnaces, and further that the British docks were unable to handle ships carrying large cargoes. We are glad that in recent years these difficulties have evidently been overcome and we now feel that Newfoundland might be given substantial orders for this necessary product and that such orders should be made on a long-term basis providing dollar currency can be made available for its purchase. Such an arrangement would assure continuous employment to some 2,000 people and a decent standard of living for around 10,000 Newfoundlanders. We should also point out that the impending nationalisation of the British iron and steel industry will afford a favourable opportunity for the British government to make arrangements for the purchase of substantial quantities of Newfoundland iron ore, and we urge most strongly that His Majesty's Government should give early consideration to this question. We, the undersigned, regret exceedingly that there are a few matters contained in this memorandum in which neither Mr. Bradley nor Mr. Keough concur. M. Hollett P.J. Cashin A.B. Butt P. Fudge C.A. Crosbie G. Memorandum with Reference to Section 3 of the Convention Act, 1946

(6 May, 1947) Section 3 of the Convention Act, 1946, reads as follows: "It shall be the duty and function of the Convention to consider and discuss amongst themselves as elected representatives of the people of Newfoundland the changes that have taken place in the financial and economic situation of the Island since 1935, and, bearing in mind the extent to which the high revenues of recent years have been due to wartime conditions, to examine the position of the country and to make recommendations to His Majesty's Government in the United Kingdom as to possible forms of future government to be put before the people at a national referendum." In the resolutions passed in the Newfoundland House of Assembly in November 1933, sub-section

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(g) of the annex to these resolutions reads as follows: "It would be understood that, as soon as the Island's difficulties are overcome and the country is again self-supporting, Responsible Government, on request from the people of Newfoundland, would be restored." The Newfoundland Act, 1933, distinctly states that responsible government on request of the people of Newfoundland would be restored to the island when it became self-supporting. Are we to assume that section 3 of the National Convention Act, 1946, above quoted, is to be interpreted to mean that through the medium of the National Convention the forms of government to be recommended to the people of Newfoundland would be: 1. Retention of Commission government or 2. Restoration of responsible government? H. Third Meeting with Delegation from Newfoundland National Convention [The same persons were present as at the previous meeting.] May 7, 1947. Lord Addison: I received your memorandum and I have given it careful consideration. To be quite frank, I think most of it deals with matters which are outside the terms of reference of your delegation and of my business with you, and more concerns your own affairs. Therefore, in order to make it quite clear what my views of it are, I put it down on paper and I will circulate a copy to you. Then I also took account of your second memorandum. There is a definite question to which I shall reply, and in that connection we asked for the proceedings of your Convention when you were appointed, which I have in front of me. The proceedings were received on 2 March 1947.1 think it better if I read our statement which is quite deliberate. "I have studied your memorandum. In my view it goes beyond the terms of reference of your delegation and indeed of the National Convention itself. Most of the items to which you refer have already been raised with the United Kingdom government by the Newfoundland Commission of Government and careful consideration has been given to them here. In the written replies I have handed to you to the six questions you have asked, I have throughout been as helpful as I can be. I do not however regard it as the function of this delegation to debate with me questions of the policy of the Newfoundland government in current administrative and other issues, or to seek to negotiate trade arrangements between the United Kingdom government and the Government of Newfoundland. In effect, the observations in your memorandum are criticisms of the conduct of the Commission of Government and the United Kingdom government, and appear to me to be outside the proper purpose of this delegation, nor are they likely to assist the National Convention in arriving at conclusions for their recommendations as to suitable forms of future government in Newfoundland. I therefore regret to say that I have nothing to add to the answers I have already made to your questions. So far as your second memorandum is concerned, it is for the Convention to make to me such recommendations as they may desire. The wording of the Newfoundland National Convention Act of 1946 in my view clearly authorises the Convention to make recommendations as to possible future forms of government in addition to those mentioned in your memorandum. In this connection, I refer to the terms of the resolution of the National Convention which proposed this delegation. This resolution enquired as to the fiscal and financial relations with the United Kingdom government to be expected in the event of the people of Newfoundland deciding upon any of the following forms of government: (1) Commission of Government in its present form. (2) A revised form of Commission of Government. (3) Responsible government. (4) Any other suitable form of government.

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My reply to no. 1 is that the fiscal and financial relations between the United Kingdom government and Newfoundland would continue in that case as close as at present, and that the United Kingdom government would, as hitherto, regard itself as responsible for Newfoundland's financial stability. As regards no. 2, the answer would depend upon the precise form of revision suggested. As regards no. 3, responsible government means that full responsibility for Newfoundland's finances would rest with the Newfoundland government, and the United Kingdom government would no longer assume the responsibilities undertaken by her on the establishment of Commission of Government. As regards No. 4 the answer must depend on the form of government which is recommended." Those are quite definite replies to your four questions. I thought it much better I should put this down for your information. Mr. Hollett: In the second memorandum we merely ask for interpretation of the Convention Act. Lord Addison: I gave you the answer to that. It is for the Convention to make such recommendations as they may desire. The wording of the National Convention Act, in my view, clearly authorises the Convention to make recommendations as to the possible form of government in addition to those mentioned in your memorandum. Mr. Hollett: Do you completely ignore the question we asked? Lord Addison: I do not ignore anything. I am trying to give a correct interpretation of the law. Mr. Hollett: I do not want to see our people confused. It is immaterial to me what form of government we have as long as it is a decent form of government, but I do not want to see a bunch of forms going before our people and confusing the issue. Lord Addison: I cannot make an interpretation of the law other than what it is. I am advised that that is the right interpretation. It is for your Convention to say how you would like to make your recommendations. Mr. Hollett: In what manner? By a majority vote? Lord Addison: You will decide your own business, and the Lord bless you. I will give all the help I can. I would not presume to dictate the proceedings of your Convention; that is for the Convention to decide — it is an independent body. Mr. Cashin: Supposing there are two or three forms recommended, do you decide whether they go on or not? Lord Addison: That is quite so. Mr. Cashin: Assuming three forms of government go on the ballot paper and there is a vote of the people and the three are equal, what happens then? Lord Addison: I should hope you could make some recommendation to me. This is not a rule, understand; I have no authority whatever to dictate to your Convention; but if I were in your Convention as an ordinary experienced man, I should try and put my questions in such a form that there would be no confusion. Mr. Cashin: Supposing there were three forms, if there was no absolute majority of any one form, would the majority of the Convention be taken? Lord Addison: No. It is for the Convention to recommend; if they voted on three forms and none has an absolute majority, I would strike out the third and put the other two in another referendum. Mr. Hollett: If you look back at the 1933 Amulree Report, does that sound reasonable? Lord Addison: I shall give all the help I can to ascertain the wishes of the people. Mr. Hollett: What is the attitude if we have to have a multitude of referendums? Lord Addison: You will take care not to recommend a multitude of things. Mr. Fudge: Is it not correct on two occasions—one known as the "Goodwill Mission", and I believe the Prime Minister, Mr. Attlee with two others came over to Newfoundland and I believe they were trying to gather from the people their views on government. I understand the reply was that the people did not know what they wanted. Lord Addison: I have no information on that.

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Mr. Fudge: Now you have a set-up wherein the people of the country can be more confused. Lord Addison: That is the responsibility of the Convention. How could you ascertain the wishes of the people any other way? We were asked to set up some machinery which would ascertain the wishes of the people. I do not see any other way. Mr. Cashin: In 1933 when the Newfoundland Act was passed it distinctly stated that once Newfoundland became self-supporting and upon request of the people, responsible government would be restored. I take it before you could put any form, outside Commission or responsible government before the people, you would have to have responsible government restored. For instance, assuming this confederation business with Canada is considered; supposing tomorrow we had three things on the ballot paper, would it be constitutional to put the country into confederation without returning to responsible government? Lord Addison: Responsible government takes many forms. If it was suggested it be on the same lines as Canada — provincial institutions — that is a form of self-government. You say yourself "other forms of self-government." Mr. Cashin: If we were in confederation with Canada we should have a provincial government, but the country's laws would be really made at Ottawa. Lord Addison: Some of them. It depends on the constitution of Canada. Mr. Cashin: A lot of them would. Lord Addison: The provinces, of course, have a large measure of self-government. Mr. Cashin: They have a large measure of self-government, but they are subsidised by the federal government and for the general laws of the country they go to the federal government. Mr. Bottomley: How would you get responsible government without the will of the people being expressed? Mr. Cashin: Quite. Here is what I would do if I had the doing of it. You have first to find out whether the people want to retain Commission of Government or have responsible government, and I would have a plebiscite on that. If the people wanted responsible government they would vote for it; if they did not, they would retain Commission government and then the Commission of Government would be the democratic form of government, and they would have power to have any other form of government they wanted. Mr. Bottomley: There are several forms of government. There is going to be a plebiscite upon it and if, as a result of the choice available there was an equal division, that would not be good government and you would have to have a second plebiscite, surely that follows? Mr. Hollett: It seems to me it is a matter of opinion according to the particular form of government which happens to be in power in the United Kingdom at any particular time. Lord Addison: No sir, I beg your pardon; I cannot agree with that. It would be for the people of Newfoundland to decide. Mr. Hollett: Will you allow me to refer to a letter written by Mr. Churchill to Mr. Cordell Hull in November, 1941, which was written in connection with the lease agreements, wherein he said that when Newfoundland returned to the status which she had prior to 1934 the word "Newfoundland" would be substituted where is now "United Kingdom". Lord Addison: Yes, that is right. Mr. Hollett: That was apparently the opinion of the then government, that Newfoundland would return to her former status. Mr. Bradley: I do not see that at all. Mr. Hollett: I do, but that is immaterial. Lord Addison: It does not follow at all. With the greatest possible respect, we are not tied; your Convention is not tied by any terms of that letter. You are asked freely to express your own opinions and I hope you will do so and I shall do my level best, so far as is humanly possible, to try and give effect to your wishes. I assure you that we have no preconceived ideas. We want the people of Newfoundland to decide. Mr. Hollett: Yes, but you are throwing overboard altogether the Amulree recommendations and the

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legislation passed by the then British government and the Newfoundland government; you are throwing that overboard altogether. Lord Addison: I am not throwing overboard anything. I am trying to interpret the Newfoundland Convention Act. I do not throw anything overboard. I wish you, bonafide, in accordance with the provisions of that act, to say what you want. Mr. Hollett: We have no objection to confederation, or a good many people in Newfoundland have no objection to going in with the United States of America. The point is this. We figure that the proper way to do it is this. As Mr. Cashin has just pointed out, we must decide right now as to whether we are self-supporting and as to whether or not we wish to retain the Commission of Government or whether we wish to go back to our former status and, if we go back to our former status, then the thing for the people of this country to do would be to decide whether they wanted union with Canada or somebody else. Mr. Bradley: That is a position which I cannot accept. Mr. Hollett: I am sure you cannot, but you are only one.... Lord Addison: I am sure you cannot accept it; it is quite improper. I am sure your Chairman is right as an interpretation of the law. Mr. Hollett: You are sure he is right, of course. Lord Addison: I assure you I am only concerned to give an interpretation of this act and I am sure the Chairman is right, and that it is not limited in that way. If it had been intended to be so limited it would have been stated in the act. Mr. Hollett: I should like to point out that some people held different opinions some months ago on the matter than what they hold now. Lord Addison: We all, I hope, change our ideas as we go along; we learn things. I am sure the Chairman is right. The act does not limit you in that way. Mr. Butt: And the British government would not block in any way the wishes of the Newfoundland people? Lord Addison: I hope not. It would be my earnest desire to give effect to the wishes of the Newfoundland people. That is what we are here for and that is why we passed the act. Mr. Butt: You have no imperial policy, for instance.... Lord Addison: No sir; I assure you we are not playing any tricks. This act was passed in order to give the people of Newfoundland a bonafide opportunity of saying what they wanted, and it is my business to try to give effect to their wishes. I can assure you there is nothing behind it at all. Mr. Fudge: I wonder if the National Convention Act was passed under the present government, or under what was known as the Churchill government? Mr. Bottomley: The act as at present is the thing that entitles you to come here and make representations. If you do away with that act, then you people are not responsible persons to come here and make representations on behalf of Newfoundland. Surely that is the position? Therefore, if we are to get the wishes of the people of Newfoundland, it means that those people have got to have an opportunity of expressing by vote their wishes in this matter. Mr. Cashin: Yes, I quite agree with that, but many people agree with Mr. Hollett when he says there are only two forms of government on which they should express their opinion; that is, unless you are prepared to throw overboard the 1933 act, which is evidently what you are doing. Mr. Bottomley: Oh no. The Convention means that you put the point to the people. Mr. Cashin: Yes, but there was a law passed in 1933. An agreement was made between the two governments, and when we go in for this National Convention Act we forget the 1933 agreement; it is scrapped. Mr. Bradley: No. There is no such agreement. Mr. Cashin: There was a resolution passed in the House of Assembly and another one confirming it in the British Parliament. Mr. Bradley: You are referring to the recommendations in the Amulree Report? Mr. Cashin: Yes.

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Mr. Bradley: That is only confined to recommendation and is, as I interpret it, a matter of policy. Lord Addison: That is right. Mr. Bradley: The words "imperial government" are used in a generic and not a specific sense. Mr. Cashin: There were people in Newfoundland who so understood it. Lord Addison: If the people of Newfoundland want that, they will vote for it. Mr. Cashin: I quite agree, but when you put two or three matters on the ballot paper you confuse the people. You do it in England in the same way. Mr. Bradley: I do not agree with that at all. Mr. Keough: The people of Newfoundland should be perfectly capable of making up their own minds. Lord Addison: It depends how you put the questions to them. I think they would be put in a straightforward and understandable way, and I am quite sure your people would be quite capable of understanding them. Mr. Hollett: We are in no doubt about the plebiscite, but I fail to see the wisdom of several referendums. I mentioned $1 million just now. You will know, of course, that this Convention has already cost our taxpayers over $200,000 and we are nowhere with it yet. Lord Addison: That is your affair. Mr. Hollett: Of course, you say it is our affair, but I am doubtful whether it is really our affair. Lord Addison: The Convention is a device which our previous government started, and it was finally passed at the request of the present government to enable the people of Newfoundland to say what they want. That is what it is, completely, frankly and honestly, and it is my earnest desire to give effect to what they do want if they will express their wishes. Mr. Hollett: I put it to you that the people of any country want a multitude of things. Unless we lay down certain stipulations, where are we going to arrive in the end? To take this country itself, you have people here who want communism; you have other people who want the Labour party; others who want the Liberal party; others who want an Independent government and others who want the Conservative party and what not. There must be certain stipulations, surely? Lord Addison: How we do it is to have a general election. Mr. Hollett: Yes, but we are not blessed with that. Lord Addison: The people elect members of Parliament and those members go into the Lobby and they count the heads, and that is how we run the show; that is how our responsible government is conducted. We have all kinds of opinions here, and that is how we run our system of government. Mr. Fudge: Personally speaking, I am not very much concerned about the form of government, but I am concerned about the forbidden paths, if I may so term them, the forbidden roads that we should probably wander in. What I mean by that is this. On different forms of government, we have been told by very able solicitors in Newfoundland, and, mind you, I am prepared to say that they are at least as smart there as they are anywhere else.... Lord Addison: Of course. Mr. Fudge: We have been told that confederation is not a form of government, but rather one government affiliating with another. Now then, I, for one, would like to know just where I am going because I do not want to take any people into any place where I ought not to take them. Lord Addison: Certainly not. Mr. Fudge: And that is why I am rather cautious. Lord Addison: I entirely applaud your caution. Mr. Fudge: So far as the people of Newfoundland are concerned, what Mr. Keough has said is quite true, and I think I know something about the people of Newfoundland too; they are prepared to make the right decision at the right time, but it is not fair that they should be left to wander about, confused. Lord Addison: I assure you I do not want, and you really would think it an act of presumption on my part, to dictate to your Convention how they should do their business. It is for your Convention to decide these things. You will argue it out with your colleagues in the Convention. I hope your Convention will put the questions in a form that the people will readily understand, but that is for

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your Convention to consider and not for me to interpret; it is not my duty to advise your Convention; it is for the Convention to decide. Mr. Hollett: I maintain that the Convention Act is a dictation by your government. Lord Addison: It is an act and in that sense it is, but nobody has yet suggested a better machinery for ascertaining the wishes of the people of Newfoundland. Mr. Hollett: I, sir, submit that it is confusing dictation. Lord Addison: We may have our own views on that, but there it is; we are trying to carry out an act in all good faith. Mr. Hollett: Good faith, sir? Lord Addison: I assure you I shall act with complete good faith. I hope you will put your recommendations in such a form that the people will clearly understand them, but that is your responsibility. Mr. Hollett: I understand you have a say as to what should go on the ballot paper? Lord Addison: Yes. Mr. Hollett: I say that we have to decide. Lord Addison: It would be for the people to decide the answers. Mr. Hollett: I see. You gauge by the vote in Convention as to what form it should take; is that correct? Lord Addison: No, we should gauge by the vote of the people.... Mr. Hollett: No, as to what shall go on the ballot paper. Lord Addison: Oh yes, they will make recommendations. Section 3 of the act reads: "It should be the duty of the Convention, to consider and discuss...and to make recommendations to His Majesty's Government in the United Kingdom as to the possible forms of future government to be put before the people by a national referendum." That is the business of the Convention and all I have to tell you, as a responsible man, is that I shall do my very best to give effect to your wishes. Mr. Cashin: Would it be along these lines, that assuming we had three or four forms of government, you would use your own discretion as to which you thought were the best forms to put on that ballot paper? Lord Addison: I should hesitate to answer that. I probably should ask the Convention for advice. I should very likely refer to you for advice, but I hope you would not send it in such a confused way.... Mr. Cashin: There are 45 people in this Convention; assuming, for the sake of argument, that 30 members of the Convention want responsible government, ten want confederation with Canada and five the retention of Commission government; would all three go on the ballot paper then? Lord Addison: If you recommended it, I should think so, but I should be bound to be advised by the Convention, and if I was in any doubt.... Mr. Cashin: But five will advise you one way, ten will advise you another way and 30 yet another; how are you going to make up your mind? Lord Addison: I should do my best to get it interpreted fairly and decently, but, as they say in the House of Commons, I cannot reply to hypothetical questions until they are before me. Mr. Keough: And those five may represent a very considerable number of the people of Newfoundland. Mr. Cashin: I quite agree. I know that. Lord Addison: I think what we have to do is to give the people a bonafide honest straight opportunity of saying what they want and that would be my desire. Mr. Fudge: Regardless of the cost? Lord Addison: I do not think the cost would be very great. Mr. Fudge: The United States, and I am sorry to have to bring in their name here, the United States was not able to afford it. We have to determine whether or not we want a democracy. Lord Addison: There is an act; our business is to administer it. I do not think it would be very expensive. What will a referendum cost?

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Mr. Cashin: In my opinion, my lord, this Convention and the referendum and if there is a second referendum will cost between three-quarters and one million dollars, and I speak with some authority. Mr. Bradley: I do not think it will cost anything like that figure. Mr. Cashin: It is pretty nearly $400,000 now. Figure it out. Lord Addison: That is all very well, but there is the act and we have to administer it. Mr. Cashin: It is costing $1,000 a day; that is what it is costing. Lord Addison: It will be for the people to decide and I think it is worth a bit of trouble to find out what form of government the people want. I think it is worth a lot of trouble. Mr. Bottomley: We have had centuries of struggle in this country to find that out. Mr. Cashin: We have had a century or two also, my lord. Mr. Hollett: We have some people who want North of Ireland status, for instance; we have people who want a communist regime; we have people who want Commission government; we have also people who want revised Commission of Government, whatever that means; we have people who want representative government and also those who want responsible government. Lord Addison: And the people who go for America. Mr. Hollett: And the people who want to go into America. I submit that the proper interpretation of the act is that we must first decide whether we want to retain Commission government or return to our former status; if we return to our former status, then he who wants to lead a party to do something else should do so, and go to the people and let the people decide in that way. Lord Addison: It will be for you to convince your fellow members of the Convention, if that is what you wish to do and, if you do, so far as I am concerned, I am quite content. It will be for you to convince your fellow members of the Convention, not me. Mr. Cashin: Then, my lord, on that point, if the majority of the Convention, representing the majority of the people in Newfoundland, decide that way.... Lord Addison: Which way? Mr. Cashin: These two questions. Lord Addison: Very well; then they would be put on the ballot paper, I have no doubt. Mr. Cashin: Let me get that right; if the majority of the Convention representing the majority of the people in Newfoundland.... Lord Addison: Who they represent is not the point. If a substantial majority of the Convention said, "We would like these questions put to the people", I feel pretty sure I should be most anxious to give effect to their wishes. Mr. Hollett: That is a sufficient reply for me, my lord. Mr. Cashin: And the same here. Mr. Keough: And that would not involve cutting out a small group representing a substantial majority in the country. Mr. Bradley: Let us get this quite straight. Lord Addison: I cannot commit myself in advance to something I have not seen; I want to see the recommendations. Mr. Bradley: What you say, Lord Addison, is this; that if the majority of the National Convention request that certain forms of government be put on the ballot paper, you will do your best to see that their wish is carried out in that respect? Lord Addison: Certainly I shall. Mr. Bradley: But that does not commit you in any sense at all as regards your attitude upon the recommendations of a substantial minority? Lord Addison: No, certainly not; we want to let the people have a choice. Mr. Hollett: What is considered a substantial minority, may I ask? Mr. Bradley: That will be for Lord Addison himself to decide. Mr. Hollett: I am prepared to leave the matter in Lord Addison's hands, with the expression of opinion he has just given, which I think our people will quite appreciate. Lord Addison: I want to act quite fairly and straightly, but you will understand that I cannot be

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committed in advance to something I have not seen. Mr. Bradley: Certainly not. Mr. Hollett: Quite. Lord Addison: That must be quite definitely understood. Sir Gordon Macdonald: I think Mr. Keough's point, that a small minority in the Convention may possibly represent a majority in the country, should not be overlooked. Mr. Cashin: That was my point. I said they had to represent a majority of the people of the country. Lord Addison: If an influential minority said, "We would like this question put as well", it would be my duty to have regard to that wish and then if it was ruled out, all right; that is for the people to decide. Mr. Cashin: There is one more point, my lord; you have the final say in this ballot affair? Lord Addison: Yes, I suppose I have. Mr. Cashin: If the National Convention decided on these two forms of government, let us assume responsible government and confederation with Canada, would Commission of Government then be put on the ballot paper? Lord Addison: I should have to look at that if there was anybody who wanted it on the ballot paper. I am not committing myself about that. I suppose it would be very unlikely that it would be left off if anybody wanted it put on. That is not very likely to arise, is it? Mr. Bradley: There is a substantial number of people in Newfoundland today who are in favour of the retention of Commission government; I can assure you of that because I know it personally. Mr. Keough: I endorse that view. Mr. Hollett: I agree with that. Lord Addison: All right. It would be my business to see that that section of the population had an opportunity of expressing its wish; that is what I am for. Mr. Hollett: I agree with that entirely; I was about to say that you really must put Commission of Government on the ballot paper. Lord Addison: I should have thought it would have been on in any case, that you could not do anything else. I cannot imagine your doing anything else. You say — do you want to go on as you are or do you want something different? Mr. Hollett: That is carrying out the act. Lord Addison: I assure you I shall act in complete good faith and do my level best to make this act work and to ascertain the views of the people. Mr. Fudge: I forget the date, but a question was asked by one delegate of the Chairman at that time, the late Justice Fox — if union with the United States was considered as a form of government, could it be recommended on the ballot paper? And he left us, or me at least, with the understanding that it could be, and Professor Wheare concurred. Lord Addison: I do not rule out anything. Mr. Fudge: We are talking about the supporters of Commission government, and so forth. I can assure you there are more people in Newfoundland today who are interested in union with the United States than they are in confederation with Canada. I make that statement right here. Lord Addison: Very well, if they are so minded.... Mr. Bradley: I would like to vary that opinion a little bit. There are a great many people in Newfoundland today who are interested in securing a free market for Newfoundland fish in the United States of America, but when it came to a question of deciding by ballot to become part of the United States, I think it would be an entirely different matter. Mr. Fudge: I am not judging by the ballot; I am judging by the opinion there is. Mr. Walsh: Anyhow, you could not put that on the ballot paper without first ascertaining from the United States whether such a union would be agreeable to them. Mr. Cashin: We understand that. Mr. Hollett: I am quite sure that you, my lord, in your responsible position, even if it were recommended by the Convention, would not put that matter on a ballot paper. If you did, I would not

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call you an Englishman or a Britisher. Lord Addison: I thank you for your tribute. As Mr. Hollett says, we do not want a ballot paper that is going to contain unreasonable recommendations; we want to have something that is reasonably responsible. Mr. Fudge: Rule it out. Lord Addison: I should have thought myself that what the Chairman and Mr. Hollett say was right. Mr. Hollett: With regard to the statement in your memorandum where you say "In my view it goes beyond the terms of reference of your delegation", in our terms of reference we have clause 7 which reads, "Any other matters relative to Newfoundland affairs which the delegation may raise and which His Majesty's Government in the United Kingdom would be willing to discuss." Lord Addison: I have discussed those at great length. Mr. Bradley: Within the terms of reference. Lord Addison: Do not misunderstand. The details of business transactions are not the business of government. Your government would regard it as a great act of impertinence if I were to assume the function of your government. Mr. Crosbie: You say in this statement: "I do not however regard it as the function of this delegation to debate with me questions of the policy of the Newfoundland Government in current administrative and other issues, or to seek to negotiate trade arrangements between the United Kingdom government and the Government of Newfoundland." I think it is definitely our job, as members of the Convention, to try to ascertain from the British government or the Commission of Government what are the prospects of marketing our fish and other products. Lord Addison: I have given you as good an answer to that as I can. I can assure you that, as far as that particular item is concerned, it was raised by the Commission of Government as long ago as February, but that is a detailed matter relating to the business of government; it is not a matter that is before us today. You are representing your Convention. Mr. Crosbie: You ask us, as a Convention, to try and ascertain the future of Newfoundland; how can we decide that or make any decision about it if we do not know what the prospects are? Lord Addison: I have given you an answer. Mr. Crosbie: It is not an answer at all; it is just an evasion. Lord Addison: It is not, sir, excuse me, and we have proved that by our actions. Mr. Crosbie: I am not content about that point. It may be I am wrong. Lord Addison: I hope you will do your best, as we are doing our best, to give effect to the wishes of the Newfoundland people, and in response to the questions of your Convention I am telling you that it is not the particular business of this delegation. Mr. Bradley: I do not think it comes within our province. Lord Addison: No. Mr. Hollett: We are not trying to do that. Mr. Bradley: But it might possibly be within the purview of our terms of reference to ascertain the United Kingdom government's attitude towards trade relations, in order to enable us to form some view as to our future prospects but not beyond that. Lord Addison: Certainly. That is all. You have stated it very clearly. Mr. Cashin: In ascertaining the economic position of Newfoundland under this Convention Act in future, one has to have some idea of the trade we are going to have, in order to make out a proper budget — I think you will appreciate that? Lord Addison: I have given you very good replies to these questions and we spent a long time elaborating my answers. So far as trade is concerned, we will be as helpful as ever we can. Mr. Butt: Whatever the form of government? Lord Addison: Certainly, but that is quite a different thing from details of trade agreements. I tell you, as a member of the British government, that insofar as this government is concerned we shall be as helpful as ever we can in any matter to Newfoundland, whatever your form of government. I

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cannot do more than that. Mr. Crosbie: You accepted responsibility for the government of Newfoundland back in 1934 and I think you will agree that, as a member of the British Commonwealth of Nations, it is pretty tough to find the mother country buying fish from outside countries and not buying any from our own dominions. I do not consider that answer satisfactory. Lord Addison: I want to do everything I can to help your trade and I am doing it, but what I am saying now is that it is not my business to discuss the details of trading arrangements with this delegation. All I am saying, with the greatest possible respect to you, is that that is not our particular business. I am as anxious to help as you are to be helped, I can assure you, and I am sparing no effort to be helpful. Mr. Crosbie: That is what I call cold comfort for people who have to live on fish. Lord Addison: I am sorry, but so far as this business is concerned, that is the best I can say; it is true. Mr. Hollett: In connection with the remark you have just made, that the British government will endeavour to be as helpful as they can in all matters relevant to Newfoundland — I think that is more or less the gist of what you said? Lord Addison: That is right. Mr. Hollett: I hate to raise this point, but my memory carries me back to the period 1933, 1934, 1935 and so on. At that time, I was magistrate and district attorney in the District of Burin on the south coast of Newfoundland which before that time was a prosperous fishing district of about 12,000 souls. The British government, as you know, took away our form of government and did, I suppose, promise the same as you have just promised, to be so helpful as they could. I submit that from 1933 to 1939 about a quarter of a million of our people were living on six cents a day at the beneficent hand of Great Britain — six cents a day which is less than three pence a day — and I saw them go from a stout and sturdy race of fishermen down to practically a starving beri-beri population. I hate to raise this point. I know everybody was in difficulties in those days, but I do feel that your government of that day could have done better than that, and if we are to expect no better from this helpful attitude which you state now than we got in the period 1933-1940, then, sir, I hesitate to.... Lord Addison: I am not responsible for what happened years ago. Mr. Hollett: I quite agree, sir. Lord Addison: We have given you very substantial help on the financial side. We have told you what we are doing with iron ore. We have told you what we are trying to do with regard to fish and other matters. In other words, we are being as helpful as we can as a government and we shall continue to be so. I am sorry to hear of that appalling state of affairs; of course I knew about it many years ago, and I hope we shall now get better things. Things are better and I hope they will continue to improve. It is the business of your Convention to say what kind of government you want best to help the people of Newfoundland. That is what I want you to do. Mr. Hollett: Governments won't help the people if we cannot get something on the point Mr. Crosbie has raised — with regard to the marketing of our raw materials and so on. Mr. Bottomley: We are really anxious to help. Lord Addison: You won't believe me; that is all. Mr. Hollett: I know you are anxious to help us, and you throw out this minimum which we submit.... Lord Addison: I am not going to discuss the details of trading agreements. That is not our business and you won't persuade me to do it, whatever arguments you may put forward. Mr. Hollett: We do not expect you definitely to say what you can do. We are only throwing out an expression of opinion. Lord Addison: You have already done it at great length. I am going to live up to what I have said. Mr. Cashin: Might I bring up this debt question again? You are devoting the sinking fund to the reduction of the present 3% sterling stock; when will that come into effect? Lord Addison: I am afraid I did not quite catch what you said? Mr. Cashin: The sinking fund established in 1937-38, the 1%, against the 3% sterling stock; you

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have intimated to us that you are going to use that to reduce the principal of that sterling debt. Lord Addison: The conversion. I believe it will be after January, 1948. Mr. Cashin: That is the point I want to raise. Lord Addison: There has to be time to give the requisite notices and all the rest of it. Mr. Cashin: The point I make is this. At the present time that sinking fund is composed of 3% stock and consequently I suggest to you that that should be taken off right away, on June 30, and therefore we would not have to pay interest on that amount. Lord Addison: That is a suggestion and, as I say, all these matters will certainly have to be taken into consideration and most decidedly they ought to be taken into consideration, but I cannot say any more now. I am not here to deal with the details of government arrangements. That is not our particular job today. If it were, I should be happy to do it, but it is not. May I remind you of another point? I have asked my people to tell me what the United Kingdom has done to help and I find that since 1934 the United Kingdom government has helped Newfoundland, without any charge, to the extent of $16 million. Mr. Cashin: As a matter of fact, it is a little more. Since 1933 it is just over $20 million, which was just sufficient to pay the interest on our sterling debt. Lord Addison: Do you not think that was substantial assistance, anyhow? Mr. Hollett: There is one other point I want to raise. You said in your previous memorandum that you would naturally expect the Newfoundland government to honour its debt, i.e. the public debt? Lord Addison: Certainly. Mr. Hollett: May I point out that a very large part of that public debt was incurred during the war of 1914-1918; we have been paying interest on that debt and you expect us naturally, you say, to honour it. I submit that there is no other country in the world except the United States, who, after all, was a credit or nation, which did honour any of these debts of the last war. Why should you naturally expect us to honour that debt to the detriment of the well-being of our people? Lord Addison: That debt was in 1934, was it not? The war had been ended since 1918. Mr. Cashin: Yes, and that had cost us up to that time, 1919, somewhere around $16 million and since that period the interest on that money, plus the pensions we had to pay to our returning servicemen, has cost us over $45 million up to the present time. Lord Addison: I really cannot go back to what happened in 1934. That is not my job either. There was this debt and you were given that assistance of $16 million without any charge. We have in the past, and we are doing what we can to help in this matter. We in this country at the present moment are paying 9 shillings in the pound income tax. Mr. Hollett: I should like to point out in connection with this war that, since the war ended, I have seen a statement made in the House of Commons that you had handed out 750 million to Turkey and Greece and Burma. Lord Addison: What has that got to do with this question? Mr. Hollett: What has it got to do with a little country of 318,000 Britishers? Lord Addison: Really, Mr. Hollett, the policy of the British government with regards to Greece is not a question that is before us. Mr. Hollett: Oh no, I agree to that. Mr. Crosbie: We did not come over here to criticise the British government or the Commission of Government.... Lord Addison: It is comforting to hear that; I thought that was what you had been doing. Mr. Crosbie: If we want to do that, we can do it at home, but, after all, you bring them up — and if you bring up some of these contentious questions, we do not bring them up, you bring them up — and if you bring them up you have to expect answers to them. Lord Addison: I beg your pardon, with the greatest possible respect, you gave me six questions and it all arose out of those questions, and I have done my best to answer them. Mr. Crosbie: There is one thing more I would like to know. You state here: "the fiscal and financial relations between the United Kingdom government and Newfoundland would continue in that case

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as close as at present, and that the United Kingdom government would, as hitherto, regard itself as responsible for Newfoundland's financial stability." How close is that? You are not giving us any assistance at the present time? Lord Addison: We are guaranteeing your debt and I should have thought that was not a bad contribution as a start. Mr. Crosbie: But you do not have to find any deficit at the present time? Lord Addison: No, and that is a very good thing. Mr. Crosbie: That is fine, sir, but what I want to know.... Lord Addison: It is something to have a guarantor like us, you know. It is worth a bit of credit in the world. Mr. Crosbie: I fully appreciate that, sir. Lord Addison: Very well then, why do you discard it? Mr. Crosbie: I am not discarding it, as far as that is concerned, but what I want to know is this. In case Newfoundland should get back to the position where you had to finance a deficit, are you people going to be in a position to do it? Lord Addison: We are not broke by any means, and as far as that is concerned we shall live up to that undertaking. We always have done and we shall continue to do so. Mr. Crosbie: You have to find the dollars. How can you find them to meet a deficit? Lord Addison: We have not let you down yet. Mr. Hollett: What about being let down in 1933, or in 1939-40? Lord Addison: I am not responsible. Mr. Bottomley: I should like it to go on record that the Newfoundland people through their parliament elected to come into this form of government. It had nothing to do with this government, and you are giving the impression that you had to go to this kind of government. Mr. Cashin: If you want an answer to that you can get it pretty quickly. Lord Addison: It is not the business of this deputation to discuss the unhappy events of 1934. You have come to me with certain questions with regard to the business of the Convention, and it is my business to keep us to our business. Mr. Cashin: I cannot be responsible for things that happened in 1933. Mr. Keough: With your permission, might I again refer to this $9 million interest-free loan over here? Lord Addison: Yes, we shall take careful account of all you say. Mr. Keough: I suggest that it should be reduced from our present national sterling debt. Lord Addison: Yes, you have made that suggestion. Mr. Keough: And you will take it into consideration? Lord Addison: Certainly we shall. All the matters you have raised we shall take into most careful consideration. They are very important, I can assure you of that, but all I say is that it is not our particular business to discuss the details. Mr. Bradley: I would like to say, for my own part, while I see the advantage of the application of these interest-free loans to the reduction of the debt, in view of the circumstances and possible change in the form of government that may come into effect within the next few months, personally I am not prepared to make any recommendation which would bind any future government. Mr. Cashin: I take that same attitude. Lord Addison: I am very glad to hear that. You will notice that while I have given no undertaking, I think that a very proper statement. It is the government's business. Mr. Hollett: It is not suggested, my lord, that we did not know that. Lord Addison: I am not suggesting anything of the kind. All I can say is you have asked me to give certain undertakings which are the business of government and not of this meeting, that is all. Mr. Cashin: You see, my lord, our duty in the end is to make up the economic position of Newfoundland, and we have got to know where we actually stand. Are we to make up the economic position of Newfoundland knowing we are not going to get an order for iron ore next year from Great

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Britain, knowing we are going to have no reduction of our national debt? Lord Addison: You have no right whatever to make any statement of that kind. Mr. Cashin: Failing that knowledge we are not certain. Lord Addison: You have no right even to suggest it. Mr. Cashin: I happen to be chairman of the Finance Committee, and there will be ten of us on that committee who have to bring in that report, and when it eventually comes in people will say, "What grounds have you for saying the mines are going to produce 1.5 million tons of ore when you are not certain whether Great Britain is going to buy it?". Lord Addison: In course of time these things are considered in the ordinary way by the Supply Minister and others who buy the ore, it will be their duty to conduct their business as sensible businessmen; it is not our business here in this room to deal with iron ore. I think the fact that we are buying this large amount of iron ore and are using it is a very good indication of the kind of thing we want to do, but it is not our business to make terms as to the future importations of iron ore. That is my point. That is the business of the government, and I have said so. Mr. Bottomley: I think, my lord, I ought to say we cannot do better. I have fought very hard and we have got a lot of concessions, and we shall continue fighting as we have been doing, but really you have benefited considerably by the action of His Majesty's Government, as a result of your pressure, of course. Lord Addison: I can tell you that your Commission of Government has pressed this in season and out of season, to get our people to take as much iron ore as we can, and so far we have done it and we propose to do our level best. We cannot give undertakings; it is not our business. You really must excuse me for being quite emphatic on that; I am not going to be drawn on it. It is not our business at this meeting to conduct trade agreements. Mr. Hollett: I am sorry, my lord, I did not catch that last remark. Lord Addison: I say it is not our business; we are not authorised to conduct trade agreements. Mr. Cashin: We are not trying to make trade agreements. Lord Addison: As I stated, Mr. Cashin, with the best will in the world we have done our best in this Office, prompted by your Commission of Government, to secure that as large purchases of your iron ore are made as possible, and the proof of this activity is the present year's purchases. This is our disposition, that is our action, and that is what we propose to try to do in the future, but I cannot enter into trade agreements at this meeting, and I am not going to be bullied into doing it. Mr. Hollett: We quite understand that, my lord. Lord Addison: You really must have a little confidence in our good faith. Mr. Crosbie: Then we can expect for Newfoundland as much help from the British government as we have had in the past? Lord Addison: If it is in our power to give it, certainly. We must be conditioned by our ability and we shall certainly do our best. There is one point. We have had very frank talks amongst ourselves, you know, but of course these are confidential talks and we do not want all our detailed interjections to and from to be made public. You will make a report, no doubt, to your Convention. Mr. Cashin: We shall. Lord Addison: But the detailed conversations I hope will be treated as confidential, as between ourselves, otherwise we cannot conduct business. Mr. Hollett: I do not think we have conducted very much business, my lord. We have had two sessions — the first was a preliminary one. Lord Addison: I am not going to be pressed, Mr. Hollett, into going outside what I said, and I am sure I am right. Mr. Hollett: I am quite sure you are right, my lord. Lord Addison: We shall do our level best to help, to act in good faith as we have done in the past, and God bless you. Mr. Crosbie: I say God help us. Lord Addison: God also helps those who help themselves.

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Mr. Crosbie: That is a true word, we have got to help ourselves. Mr. Butt: Could I refer for one minute, my lord, to the statement you gave us last time? Lord Addison: Yes. Mr. Butt: It is on the first page on the public debt. "It may be assumed that repayment of this debt will not now be sought". Does that mean now or at any time? Lord Addison: I think you can take it to mean it will not be sought at any time. Mr. Butt: Supposing in the future Newfoundland wanted to bring home part of her own sterling debt, there would be no objection to that? Lord Addison: I think it is for your government to say what it wants to do, but that should be at any time. What you want to do would be for you, the Newfoundland government, to say. Mr. Hollett: On the last page of that memorandum, my lord, you said: "As regards frozen fish, however, the dollar position makes it difficult to hold out hopes that Newfoundland is likely to find a long-term market in the United Kingdom for frozen fish". Do I take that to mean that if the dollar position was favourable there would be, in your opinion — I do not want you to commit yourself— any likelihood of Great Britain obtaining a long-term supply? Lord Addison: Yes, I think so. The Ministry of Food likes this fish and wants to buy it. It is purely a question of finance. We should like to buy some if we can. Mr. Cashin: I think our fish is much better than we have had over here, judging from what I have eaten. Lord Addison: I think so. It is very good and we like it. The Ministry of Food likes it. Mr. Hollett: Supposing our government had some dollars, as I think our government at the present time have, and our people had either to sell fresh fish to Britain or starve, would it be possible, do you think, for us with our dollars to be able to advance to Great Britain a loan with which to buy it? Lord Addison: All those matters are conjectural. All I have got to say is that for my part I like your fish and I hope we shall be able to buy some, but I cannot say what any future government is going to do, really, Mr. Hollett. Mr. Hollett: No, I quite understand. It is merely supposition, my lord. Lord Addison: It is one of these suppositions which I will ask you to entertain, but to which I cannot give a definite reply. I cannot say what any future government is going to do. All I want to say is that we should like to buy as much as we can, but we are limited by what we have got to spend. Mr. Hollett: We heard on the last occasion that some millions of fish were bought last year from Iceland without dollars. Perhaps they have credits here, I do not know. Lord Addison: I do not know the details. Sir Eric Machtig: The dollar difficulty does not arise. It is soft currency and not dollar currency. Mr. Crosbie: What do you mean by "soft currency"? Lord Addison: We mean it is not dollars. We call it hard and soft. These are only names; it is dollar and sterling. Mr. Crosbie: Is it not true that Iceland is taking goods from England as part payment for that fish? Lord Addison: That may be so, I do not know without enquiring. In any case it has nothing to do with us. I do not know the answer to that question, Mr. Crosbie, without enquiring. Well, I am sure you will be able to make recommendations to your Convention, and I hope you will be kind enough to supply me with a copy of your report when you have drawn it up. Mr. Hollett: I expect His Excellency would see to that. Lord Addison: I think it would be a nice thing to do. Mr. Fudge: We shall not have anything to hide. Anything I saw you will be welcome to. Lord Addison: I have been as frank as I could be. Mr. Fudge: And I shall have to express my opinion as to what I think of this conference, and the position we were placed in personally as delegates. Lord Addison: I have been accustomed to frank criticism all my life and it will be nothing fresh. Mr. Fudge: So have I, my lord. Lord Addison: That is one of the prerogatives of the democratic system, but I assure you that....

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Mr. Fudge: Had I known I had no right to speak up for my country or my district I should not have come over. Lord Addison: We are glad to see you here, and I like to hear people say what they think. Mr. Hollett: There was one statement you made, my lord, when we first came into the room, and that was you were more concerned with your own affairs. I wonder what you meant by that? Probably I may have put a wrong interpretation on it. Lord Addison: I expect you have. Mr. Hollett: Those were the exact words. Lord Addison: I have no recollection of anything of that sort. We are concerned and naturally concerned with our own affairs, which is our business as a government; it is our job, but I do not know to what you are referring, Mr. Hollett. This was the deliberate statement, of which you were supplied with a copy. Mr. Hollett: We can have the exact words looked up. (Shorthand notes referred to: "My business with you concerns more your own affairs".) Mr. Hollett: "Your own affairs", I see, I did not want to get it wrong. I am quite satisfied. Lord Addison: Of course, Mr. Hollett, we are treating these notes of our conversations as absolutely confidential. The statement of which you have a copy is my deliberate statement. Mr. Hollett: Yes, that is your reply. Lord Addison: Thank you very much, gentlemen, and I hope you will think of us as kindly as you can when you get back. [The proceedings terminated]

510

NATIONAL CONVENTION

Report of the Ottawa Delegation Note: The so-called "Black Books", containing detailed information on Canada, and documentation relating to the Ottawa delegation, are not reproduced here. Some of their contents can be found in P.A. Bridle (ed.), Documents and Relations Between Canada and Newfoundland, Volume 2, Part I. The following document, known as the "Grey Book" arrived on November 6, 1947. Proposed Arrangements for the Entry of Newfoundland into Confederation. October 30,1947. Ottawa, October 29, 1947. His Excellency Sir Gordon Macdonald, K.C.M.G., Governor of Newfoundland, St. John's, Newfoundland. My dear Governor: On March 20, 1947, at the request of the National Convention of Newfoundland, you enquired whether the Government would receive a delegation which had been appointed by the Convention to come to Ottawa to ascertain what fair and equitable basis for union with Canada might exist. The Government of Canada replied that it would be happy to receive this delegation, and that it was "of the opinion that the questions to be discussed with the delegation are of such complexity and of such significance for both countries that it is essential to have a complete and comprehensive exchange of information and a full and careful exploration by both parties of all the issues involved so that an accurate appreciation of the position may be gained on each side." As you know, a delegation from the National Convention came to Ottawa late in June returning to Newfoundland early in October. During their visit to Ottawa they met from time to time with a committee of the Canadian Cabinet to exchange information and explore the many questions that would be involved in union. On their return to Newfoundland, the delegation of the Convention took with them a report of these discussions which it is hoped will be of use to the National Convention. Following the discussions the committee of the Cabinet which met with the delegation advised their colleagues that in their opinion a basis for union exists that would be fair and equitable to both countries. The Government having considered and approved the recommendations of the committee of the Cabinet, I am now in a position to advise you regarding the arrangements which the Government would be prepared to recommend to Parliament as a basis for union. These proposed arrangements are set forth in the document annexed to this letter. I feel I must emphasize that as far as the financial aspects of the proposed arrangements for union are concerned, the Government of Canada believes that the arrangements go as far as the Government can go under the circumstances. The Government could not readily contemplate any change in these arrangements which would impose larger financial burdens on Canada. On the other hand, with respect to those matters which are primarily of provincial concern, such as education, the Government of Canada would not wish to set down any rigid conditions, and it would be prepared to give reasonable consideration to suggestions for modification or addition. It is our understanding that the National Convention is entrusted with the responsibility of making recommendations to the United Kingdom Government regarding future forms of government to be submitted to the people of Newfoundland in a national referendum. The Government of Canada would not wish in any way to influence the National Convention nor the decision of the people, should they be requested to decide the issue of confederation. Should the people of Newfoundland indicate clearly and beyond all possibility of misunderstanding their will that Newfoundland should become a province of Canada on the basis of the proposed arrangements, the Canadian Government, subject to

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the approval of Parliament, would for its part be prepared to take the necessary constitutional steps to make the union effective at the earliest practicable date. I should be grateful if you would bring this letter, together with its enclosure, to the attention of the National Convention. Yours sincerely, W.L. Mackenzie King Proposed Arrangements for the Entry of Newfoundland into Confederation 1. Newfoundland will have, as from the date of union, the status of a province of Canada with all the rights, powers, privileges and responsibilities of a province. 2. The Province of Newfoundland will include the territory of Labrador defined by the award of the Judicial Committee of the Privy Council in 1927 as Newfoundland territory. Public Services Provided by Canada 3. The public services provided from time to time by Canada for the people of Canada generally will be extended to the people of Newfoundland. 4. Welfare services presently provided by Canada, and therefore applicable to Newfoundland after union pursuant to clause 3, include the following: (1) Family allowances, as provided by the Family Allowances Act, 1944 and amendments; (2) Old age pensions and pensions for the blind, as provided by the Old Age Pension Act, 1927 and amendments, subject to agreement with the Government of the Province; (3) Unemployment insurance, as provided by the Unemployment Insurance Act, 1940 and amendments; (4) Sick mariners' benefits for merchant seamen and fishermen, as provided under the Canada Shipping Act, 1934 and amendments; (5) Assistance for housing, as provided under the National Housing Act, 1944 and amendments. 5. At the union, or as soon as practicable thereafter, the following services will be taken over by Canada and become subject to the jurisdiction of Parliament, Newfoundland to be relieved of the public costs incurred in respect of each service after it is taken over: (1) The Newfoundland Railway, including steamship and other marine services; (2) The Newfoundland Hotel, if requested by the Government of the Province of Newfoundland; (3) Postal and publicly-owned telegraphic services; (4) Civil aviation, including Gander Airport; (5) Customs and Excise; (6) Defence; (7) Pensions and rehabilitation of war veterans and merchant seamen on the basis set forth in Annex I hereto; (8) Protection and encouragement of fisheries; (9) Geological, topographical, geodetic and hydrographic surveys; (10) Lighthouses, fog alarms, buoys, beacons and other public works and services in aid of navigation and shipping; (11) Marine hospitals, quarantine and the care of shipwrecked crews; (12) The public radio broadcasting system; and (13) Other public services similar in kind to those provided at the union for the people of Canada generally. 6. Canada will pay the salary of the Lieutenant-Governor and the salaries, allowances and pensions of superior court judges and of judges of district and county courts, if and when established.

512

NATIONAL CONVENTION Financial Arrangements

7. Debt Canada will assume and provide for the servicing and retirement of the 3 percent Stock Issue maturing 1943-63 guaranteed by the United Kingdom. (This, in the opinion of the Canadian government, represents a fair estimate of the amount of debt incurred for purposes which would presumably have been the responsibility of the Government of Canada had Newfoundland been a province of Canada when the debt was incurred.) All sinking funds against this portion of the debt will be taken over by Canada. The Province of Newfoundland will continue to be liable for the remaining portion of the Newfoundland debt and retain all sinking funds against that portion. The apportionment of the debt and sinking funds is set forth in Annex II hereto. 8. Public Works The following Newfoundland public works and property will become the property of Canada when the service concerned is taken over (as provided for in clause 5 above), without prejudice to the rights of third parties in respect of any leasehold or other property interest therein: (1) The Newfoundland Railway, including rights of way, wharves, drydocks and other real property, rolling stock, equipment, ships and other personal property, Canada to assume the cost of the two steamships contracted for on behalf of the Railway and presently under construction in the United Kingdom; (2) The Newfoundland Airport at Gander, including buildings and equipment together with any other property used for the operation of the Airport, Canada to reimburse Newfoundland for payments made, and to forgo payments to be made, under article 2 of the agreement effective March 31st, 1946, between the United Kingdom, Canadian and Newfoundland Governments, providing for the purchase by Newfoundland of buildings and Royal Canadian Air Force equipment at Gander; (3) The Newfoundland Hotel and equipment, if taken over by Canada (see clause 5, (2) above); (4) Public harbours, wharves, break-waters and aids to navigation; (5) Military and naval property, stores and equipment; (6) Public dredges and vessels except those used for services which remain the responsibility of Newfoundland; (7) The public telegraph system, including rights of way, land lines, cables and other real and personal property; (8) Real and personal property of the Broadcasting Corporation of Newfoundland; (9) Customs houses and post offices; and (10) Generally all public works and property, real and personal, used primarily for services taken over by Canada. Newfoundland public works and property not hereby transferred to Canada will remain the property of the province of Newfoundland. 9. Accumulated Financial Surplus Newfoundland will retain its financial surplus accumulated to the time of union, subject to the following conditions: (1) One-third of the surplus at the time of union shall be set aside during the first eight years of union.either in trust or on deposit with the Government of Canada at Newfoundland's option, withdrawable by the Newfoundland Government as required only for expenditures on current account in order to facilitate the maintenance and improvement of Newfoundland public services, any unspent portion thereof at the end of the eight-year period to become available for the unrestricted use of Newfoundland; (2) The remainder of the surplus shall be available to the Newfoundland Government for developmental purposes within Newfoundland; (3) No part of the surplus shall be used to subsidise production or sale of Newfoundland products in unfair competition with similar products of other provinces, it being understood that this

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proviso does not preclude assistance to industry by such means as developmental loans on reasonable conditions or by ordinary provincial administrative services. Newfoundland will have the right within one year of union to deposit with the Government of Canada all or any part of the surplus held in dollars and to receive with respect thereto interest at the rate of two and five-eighths percent annually during a maximum period of ten years after union on the minimum balance outstanding at any time in the year preceding payment of interest. 10. Contract Rights Arising from Advances of Public Funds Newfoundland will retain its interest in, and any securities arising from or attaching to, any loans or advances of public funds made by the Government of Newfoundland before the union to municipalities, corporations or individuals. 11. Subsidies to Provincial Government Canada will pay to the Province of Newfoundland the following statutory subsidies: (1) $ 180,000 and 80 cents per head of the population annually, subject to be increased to conform to the scale of grants authorised by the British North America Act, 1907, for the local purposes of the Province and the support of its government and legislature, provided that in no year shall the sums payable under this provision be less that those payable in the year of union; (2) $1,100,000 annually, in lieu of the various fixed annual awards, allowances and subsidies provided by stature from time to time for the Maritime Provinces or any of them, and in recognition of the special problems created for the island province of Newfoundland by geography and a sparse and scattered population. 12. Tax Agreement Newfoundland will be entitled to enter a tax agreement for rental to Canada of the income tax, corporation tax and succession duty (inheritance tax) fields on either of the following bases, the option to be exercised within six months after union: (1) On the same basis as the existing agreements with other provinces which apply to fiscal years up to and including 1952; or, if Newfoundland prefers stability of revenue for a longer period. (2) An agreement providing for the same annual basis of payment by Canada as in existing agreements with other provinces (i.e. existing at the date of the exercise of the option), applying to fiscal years up to and including 1957, regardless of the terms which may be negotiated (after the date of the exercise of the option by Newfoundland) by other provinces in any renewals of the existing agreements. If Newfoundland enters into a tax agreement, the subsidies under clause 11 above ($180,000 and 80 cents per head of population and the fixed annual subsidy of $1,100,000) will, as in the case of similar subsidies to other provinces, be included in the computation of tax agreement payments. (The methods of computing the payments to Newfoundland under such tax agreement are set forth in Annex III). 13. Transitional Grants In order to facilitate the adjustment of Newfoundland to the status of a province and the development by Newfoundland of revenue-producing services, Canada will pay to Newfoundland each year during the first twelve years of union a diminishing Transitional Grant payable as follows: The sum of $3,500,000 annually during each of the first three years after union; In the fourth year $3,150,000; In the fifth year 2,800,000; In the sixth year 2,450,000; In the seventh year 2,100,000; In the eighth year 1,750,000; In the ninth year 1,400,000; In the tenth year 1,050,000; In the eleventh year 700,000; In the twelfth year 350,000;

514

NATIONAL CONVENTION

14. Reassessment of Newfoundland's Financial Position In view of the difficulty of predicting with sufficient accuracy the financial consequences to Newfoundland of adjustment to provincial status the Government of Canada will appoint a royal commission within eight years of union to review the financial position of Newfoundland and to recommend the form and scale of additional financial assistance, if any, which may be required by the Government of Newfoundland to enable it to continue public services at then prevailing levels without resorting to taxation more burdensome, having regard to capacity to pay, than that of the Maritime Provinces. Representation 15. Representation of the Province of Newfoundland in the Senate and House of Commons of Canada will be in accordance with the British North America Acts, 1867 to 1946, as amended from time to time. Under the existing provisions, while the number of senators to which each province is entitled is fixed, the number of members of the House of Commons is determined from time to time on the basis of population, but in any case is not to be less than the number of senators to which the province is entitled. Under these provisions, the Province of Newfoundland will be represented by six members in the Senate and, on the basis of its present population, by seven members in the House of Commons. Miscellaneous Provisions 16. Transportation (1) Canada will maintain in accordance with the traffic offering a steamship service between North Sydney and Port-aux-Basques, which, on completion of a motor highway between Corner Brook and Port-aux- Basques, will include provision for the carriage of motor vehicles. (2) Railway services and railway rates over the Newfoundland Railway will be subject to regulation by the Board of Transport Commissioners of Canada as are railway services and rates elsewhere in Canada. (3) For the purpose of rate regulation: (a) Through traffic moving between North Sydney and Port-aux- Basques will be treated as all-rail traffic, (b) The Island of Newfoundland will be deemed to be within the Maritime region of Canada and any legislation of the Parliament of Canada (such as the Maritime Freight Rates Act, 1927, and amendments) providing for special rates on freight traffic moving within, into or out of, the Maritime region will, so far as appropriate, be made applicable to Newfoundland. 17. Government Employees (1) Employees of the Government of Newfoundland in services taken over by Canada as provided for in clause 5 above will be offered employment in the corresponding Canadian service under the terms and conditions governing employment in that service, but without reduction in salary or loss of pension (superannuation) rights acquired under Newfoundland law. (2) Canada will make all necessary payments in respect of such pension rights and may deduct from any subsidies payable to the Province of Newfoundland any payments made in respect of pensionable service of such employees with the Government of Newfoundland. (3) Pensions of employees of the Government of Newfoundland superannuated or retired on pension before the service concerned is taken over by Canada will remain the responsibility of the Province of Newfoundland. 18. Unemployment Benefits Since, under the Unemployment Insurance Act, 1940 and amendments, unemployment benefits are ordinarily available only to workers who have built up reserves by a period of continuous employment in insurable employment, Canada will provide for transitional unemployment benefits as follows: Residents of Newfoundland in insurable employment who lose their employment within six months prior to the date of union and are still unemployed at that date, or who lose their

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employment within a six months' period after that date, will be entitled for a period of six months from the date of union or six months from date of unemployment, whichever is the later, to assistance on the same scale and under the same conditions as unemployment insurance benefits. The rates of payment will be based on the individual's wage record for the three months preceding his loss of employment. The cost of this assistance will be borne directly out of moneys appropriated by Parliament for the purpose and not out of the Unemployment Insurance Fund. 19.* Education The Legislature of the Province of Newfoundland will have exclusive authority to make laws in relation to education within the Province, provided that: The Legislature will not have authority to make laws prejudicially affecting any right or privilege with respect to denominational or separate schools which any class of persons has by law in Newfoundland at the date of union, but the legislature may authorise any two or more such classes of persons to amalgamate or unite their schools and to receive, notwithstanding such amalgamation or union, their proportionate share of the public funds of Newfoundland devoted to education. *Note, see reference to education in the fourth paragraph of the covering letter from the Prime Minister of Canada. 20. Defence Establishments Canada will provide for the maintenance in Newfoundland of appropriate reserve units of the Canadian defence forces which will include the Newfoundland Regiment. 21. Oleomargarine Notwithstanding anything contained in the Dairy Industry Act or any other Act of the Parliament of Canada, oleomargarine and other substitutes for butter may continue to be manufactured and sold in Newfoundland after union unless prohibited or restricted by the Parliament of Canada at the request of the Legislature of Newfoundland, provided that notwithstanding anything contained in Section 121 of the British North America Act, 1867, no such oleomargarine or other substitute for butter may be exported from the Province of Newfoundland to any other part of Canada except by authority of the Parliament of Canada. 22. Economic Survey Should the Government of the Province institute an economic survey of Newfoundland with a view to determining what resources may profitably be developed and what new industries may be established or existing industries expanded, the Government of Canada will make available the services of technical personnel and agencies to assist in the work. As soon as may be practicable after union the Government of Canada will make a special effort to collect and make available statistical and scientific data about the natural resources and economy of Newfoundland, in order to bring such information up to the standard attained for existing provinces. 23. General Suitable provision will be made in the formal instrument of union or in other appropriate legislation for the following: (1) The extension of Canadian citizenship to the people of Newfoundland; (2) The continuation of Newfoundland laws, courts, commissions, authorities, etc., until altered by the appropriate authority; (3) The first constitution of the Province of Newfoundland, in accordance with the wishes of the appropriate Newfoundland authorities and subject to the provisions of the British North America Acts, 1867 to 1946 which are applicable to provincial constitutions generally; (4) The retention by Newfoundland of its natural resources on the same basis as other provinces; (5) The application to the Province of Newfoundland of the British North America Acts, 1867 to 1946 (except as otherwise provided in the terms of union), and of the federal laws of Canada.

516

NATIONAL CONVENTION ANNEX I War Service Benefits

A. War Veterans Canada will extend to Newfoundland veterans who served with any of His Majesty's forces the following benefits on the same basis as if these Newfoundland veterans had served in His Majesty's Canadian forces. 1. Newfoundland veterans who served in World War I and/or World War II will be eligible for: (a) Disability and Dependents' Pensions as follows: Canada will assume the Newfoundland pension liability arising from World War I, and for World War II will assume the cost of supplementing disability and dependents' pensions paid by the United Kingdom or Allied Governments to Newfoundland veterans up to the level of the Canadian rates of pensions, and, in addition, will pay pensions arising from disabilities which are pensionable under Canadian law, but which are not pensionable under United Kingdom law. Free legal assistance is provided in the preparation and presentation of pensions claims; (b) War Veterans' Allowance; (c) Free Hospitalization and Treatment. 2. Newfoundland veterans who served in World War II will be eligible for: (a) Benefits under Veterans' Land Act; (b) Contributions to National Unemployment Insurance Fund; (c) Veterans' Business and Professional Loans; (d) Veterans' Insurance; (e) Vocational and Educational Training as follows: Canada will assume, from the date of union, the cost of vocational and educational training of Newfoundland veterans on the same basis as if these Newfoundland veterans had served in His Majesty's Canadian forces. Note: In addition, under Canadian law, Newfoundland veterans who served with His Majesty's Canadian forces in World War II will (by reason of their new status as Canadian residents) be eligible for use of re-establishment credits on the same basis as other Canadian veterans. B. Merchant Seamen 1. War Benefits (a) Canada will extend to Newfoundland merchant seamen who served during World War II on Canadian or British ships or on ships of Allied Nations employed in service essential to the prosecution of the war the following benefits on the same basis as if these Newfoundland merchant seamen had served on Canadian ships: (i) Disability and dependents' pensions, if disability occurred as a result of enemy action or counteraction, including extraordinary marine hazards occasioned by the war. A Newfoundland merchant seaman in receipt of a pension from the United Kingdom or an Allied Nation will be entitled during residence in Canada to have his pension raised to the Canadian scale; (ii) Disability pensioners will be entitled to free hospitalization and treatment, vocational training and the benefits of the Veterans' Land Act and the Veterans' Insurance Act. (b) Canada will extend to Newfoundland seamen who served during World War n on Canadian ships and were eligible for the Special or War Service Bonus under the Merchant Seamen's Bonus Order, the following benefits on the same basis as they are made available to Canadian merchant seamen: (i) Contributions to National Unemployment Insurance Fund; (ii) Vocational Training; (iii) Veterans's Insurance; 2. General Benefits Newfoundland merchant seamen, like other Canadian merchant seamen, will be eligible for Unemployment Insurance, and Merchant Seamen's Compensation.

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ANNEX II Apportionment of the Direct Public Debt of Newfoundland and Statement on Surplus (As at December 31,1947) Public Debt Public Debt Outstanding Sinking Funds (Conversion rate £1 = $4.04) £ $ $ 9,221,748 82,377,047

Total Direct Public Debt To Be Assumed by Canada: 1. Public Debt Conversion under 23 & 24 Geo. V Cap. 1 2nd Session (a) 3% Guaranteed Stock Conversion Issue, maturing 1943-63: Amount issued to 8,342,380 31 December 1946 17,793,405 71,885,356 (b) Deferred Securities not yet nil converted to Stock: 6,460 26,098 71,911,454 8,342,380 Total to be Assumed by Canada To be retained by the Province of Newfoundland 2. Trustee Securities 3 /2% Loan, 1910-50 (10 Edw. VII Cap. 39) & 3*/2% Loan, 1912-52 nil* 872,528 3,525,013 (2 Geo. V Cap. 18) 3 3. Newfoundland 3 /4% War Loan 316,350 1,500,000 1940-65 (Act No. 9 of 1940) *An amount of $3,232,000 to meet this loan at maturity has provisionally been set aside at 2Vi% interest in the Bank of England. To be retained by the Province of Newfoundland (cont'd) 4. Newfoundland 3 /4% First Victory Loan, 1942-57 (Act No. 40 of 1942) 1,500,000 153,013 5. Newfoundland 3% Second Victory Loan, 1943-58 (Act No. 42 of 1943) 2,000,000 162,605 6. Savings Certificates (Act No. 14 of 1940, as amended) 1,935,470 247,400 7. Outstanding Balance of Loans past maturity: nil 4% Inscribed Stock, 1895-1935 (58 Vic. Cap. 250 1,010 13) 2,500 nil nil 4% Bond, 1905-30 (5 Edw. VII Cap. 1) 1,600 6*/2% Bonds, 1918-28 (8 & 9 Geo. V Cap. 35) Total to be retained by Newfoundland $10,465,593 $879,368* *In assessing the net position, the $3,232,000 set aside to meet payment at maturity of the Trustee Securities should be kept in mind.

518

NATIONAL CONVENTION

Surplus The accumulated surplus of the Newfoundland Government as at March 31, 1947 was estimated by the Newfoundland Commissioner of Finance to be $28,789,000 not including the $3,232,000 set aside for payment of the Trustee Securities. ANNEX III A Tax Agreement Applied to Newfoundland Newfoundland would agree: 1. To rent following fields of taxation: (a) Personal income taxes until end of calendar year 1951; (b) Corporation taxes (including corporation income taxes, but not royalties, rentals, etc., on natural resources) until end of calendar year 1951; (c) Succession duties on deaths occurring before March 31, 1952. (This is optional, but if Newfoundland remained in the field, federal payments would be reduced by federal losses in revenue.) 2. To impose a 5% tax on corporation income within Newfoundland to be collected by the federal government and turned over to Newfoundland with corresponding reduction in the federal payment. Failure to do so would result in equivalent reduction in federal payments in any event. Federal Government would agree: 1. To make certain payments on basis set out below in respect of fiscal years up to and including 1952; 2. To pay Newfoundland (whether or not there is an agreement) half the tax collected by the federal government on income of certain public gas, electric or steam utilities. Basis of Federal Payments to Newfoundland Let us begin with the minimum irreducible payment on which all subsequent calculations are based. Three options would be available to Newfoundland: (a) $12.75 per capita (1942 population) plus 50% of the amount agreed upon as equivalent to the total revenue received by the Province and its municipalities in respect of income taxes, corporation income taxes and corporation taxes during the fiscal year of the Province ending nearest to December 31, 1940, plus statutory subsidies payable by Canada during the calendar year 1947; (b) $15 per capita (1942 population) plus statutory subsidies payable by Canada during the calendar year 1947; (c) $2,100,000. The first option assumes the existence of a province in 1940. Newfoundland in that year was a unitary state and therefore raised revenues for what in Canada would be regarded as both federal and provincial purposes. It would be impossible to say how much Newfoundland as a province would have raised in 1940 by way of personal income and corporation taxes and succession duties. Hence this option does not appear to be applicable. In any event even were half the Newfoundland revenues from these sources in 1940 attributed to Newfoundland as a province (which greatly exceeds the share of the total of these taxes raised by other provinces in that year) this option would not give results as favourable to Newfoundland as the second option. The third option clearly would not be chosen by Newfoundland. On the grounds of both applicability and revenue the second option would therefore be selected. Assume that Newfoundland's population rose uniformly between 1935 and 1945 and that it continued to increase at the same rate after 1945. On these assumptions the relevant figures are: 1942 1944 1945

311,301 317,672 321,101

REPORTS AND PAPERS 1946 1947

519

324,434 327,802

Calculation of the minimum The irreducible minimum payment would be the sum of $15 per capita on the population for 1942 (311,301) plus statutory subsidies as for 1947 as provided in paragraph 11 of "The Proposed Arrangements". $15 per capita payment $4,699,515.00 Statutory subsidies 1,542,241.60 "Irreducible minimum payment.... $6,211,756.60 Calculation of payment for 1947 In order to arrive at the payment for any year, adjustments are first made for population changes in the province and changes in the gross national product of Canada as a whole since 1942. For example, if provincial population rises by 2 per cent a 2 per cent change is made in the figure for that year. Similarly if Canadian GNP rises by 5 per cent a 5 per cent upward adjustment is made. For purposes of easy calculation the two rates are combined into one. Thus a 2 per cent upward change in population and a 5 per cent upward change in GNP is the same as 7.1 per cent change overall (i.e. 102 per cent multiplied by 190 per cent equals 107.1 per cent). Total statutory subsidies for 1947 and minimum tax agreement payments to existing provinces are estimated (in round numbers) as follows: Minimum Tax Agreement Payments Statutory Subsidies (Most Favourable Option) Prince Edward Island $ 657,000 $ 2,100,0001 Nova Scotia 2,005,000 10,870,000 New Brunswick 1,632,000 8,773,000 Quebec 2,867,000 56,382,0002 Ontario 3,115,000 67,158,0002 Manitoba 1,716,000 13,540,000 Saskatchewan 2,042,000 15,291,000 Alberta 2,018,000 14,228,000 British Columbia 1,003,000 18,120,000 The signing of the agreement with Nova Scotia has been completed. (Oct. 29, 1947). Ontario and Quebec have not entered into tax agreements with the dominion government. Finally as a means of reducing the annual fluctuation, the payment in any one year (e.g. 1947) is the average of the adjusted figures for the three preceding years (e.g. 1944, 1945 and 1946). Regardless of downward adjustment in either provincial population or Canadian GNP or both, the payment to any province cannot fall below the minimum figure as calculated in the preceding section during the term of the agreement. On this basis let us calculate what the Newfoundland payment might be for 1947: First Step — Calculate population change in Newfoundland Population % Change from 1942 1942 311,301 -

1944 1945 1946

317,672 321,101 324,434

+2.04657 +3.14808 +4.21875

Ratio 100.00000

102.04657 103.14808 104.21875

520

NATIONAL CONVENTION

Second Step — Calculate gross national product per capita change in Canada GNP per capita (estimated) % Change from 1942 Ratio 1942 $883.47349 -100.00000

1944 1945

969.07907 940.87585

+9.68966 +6.49735

109.68966 106.49735

1946 910.78749 +3.09166 103.09166 (Note: These are the figures for Canada without Newfoundland. It is assumed that the inclusion of Newfoundland would not affect these ratios.) Third Step — Combine first and second steps by multiplication of ratios in order to arrive at composite effect of population and GNP changes. % Change from 1942 Ratio 1942 -100.00000 1944 +11.93454 111.93454 1945 + 9.84997 109.84997 1946 + 7.44084 107.44084 Fourth Step — Multiply minimum payment by above ratios for each of years 1944,1945 and 1946 and average

1944 - 6,2100,756.60 x 111.93454 = 6,953,101.18 1945 " x 109.84997 = 6,823,612.76 1946 " x 107.55084 = 6,673,963.47 Average $6,816,892.47

The forgoing average figure would be the amount payable to Newfoundland in 1947 (including statutory subsidies). If preferred, the $15 per capita figure might be adjusted to account for population changes and then for GNP changes and the statutory subsidies subjected to the same adjustment but such calculations are long and involved and the results exactly the same as those shown above. In addition Newfoundland would receive half the federal corporation taxes on public utilities as described above. ANNEX IV Probable Federal Revenues and Expenditures With Respect to Newfoundland From information supplied by the Newfoundland delegation and otherwise available estimates have been made of the additional federal revenues and the additional federal expenditures that would probably arise as a result of the inclusion of Newfoundland as a province. These estimates are necessarily tentative and subject to adjustment not only because of lack of adequate information but also because both revenues and expenditures will depend upon future developments. Revenue calculations for example, are based on a continuation of present levels of economic activity in Newfoundland and of present rates of federal taxation. Neither assumption is realistic yet there is no way of allowing for or measuring future changes. On the side of expenditures, the qualifications are at least equally important though of a different character. In particular, these estimates are not to be interpreted as an indication of the expenditures that the federal government is prepared to make or is committed to make with respect to Newfoundland other than those embodied in legislation. They are no better than an informed guess of the cost of extending to Newfoundland the departmental services now being rendered throughout the nine existing provinces. It is highly probably that these estimates overstate probably federal revenues and understate probably federal expenditures in a typical year in the future.

REPORTS AND PAPERS

521

Probable Revenues The following estimates represent the additional federal revenues that would probably arise as a result of the inclusion of Newfoundland within Canada in a full year at the rates of tax enacted in the 1947 federal budget on the assumption of a continuation of present levels of economic activity in Newfoundland. Federal Revenue Personal income tax Corporate income tax (including withholding tax) Succession duties Customs duties & import taxes Liquor taxes Tobacco taxes General sales tax Miscellaneous excise taxes & sources of revenue PostOffice Bullion and coinage and other such revenue Total

$ 3,200,000 7,500,000 320,000 2,000,000 400,000 500,000 4,000,000 1,500,000 750,000 15,000 $20,185,000

Probable Expenditures Estimates have been obtained from federal departments of the cost of extending existing services to Newfoundland in a typical year. The totals of the estimates so obtained are set out below, separate figures being given where fairly firm estimates based on legislative commitments, e.g., family allowances, can be made. Attention is drawn to the items not included, listed below: Tax agreement payment (1947 estimate) $ 6,820,0001 Old age pensions 2,000,000 to 2,600,0002 Family allowances 8,350,000 Other departmental expenditures 9,400,000 $26,570,000 to $27,150,000 Note (1) $15 per capita, plus population grant, the grant for government and legislation as contained in the BNA Act, and the special subsidy of $1,100,000 adjusted for population and GNP changes. Note (2) The estimate of old age pension payments by the federal government assumes a $30 per month basic pension of which the federal share is 75 per cent. A range is indicated because of lack of information as to the income status of those in the over-70 age category. The forgoing total does not include: (1) Payment under the transitional grant to the provincial government of Newfoundland of $3,500,000 annually for the first 3 years of union, reducing gradually thereafter according to the terms of the Grant; (2) Costs of servicing that part of the Newfoundland debt assumed by Canada; (3) Any costs in respect of the Newfoundland Railway or its auxiliary steamship services, taken over by Canada; (4) Any capital expenditures. It should be made clear that the expenditures estimate relates to the additional expenditures arising from inclusion of Newfoundland and therefore does not include any of the costs of servicing the present Canadian debt or any other costs now being borne by Canadians.

522

NATIONAL CONVENTION

Draft Provincial Budget Prepared by J.R. Smallwood, December 1947 Note: The original, detailed document could not be found. The following reconstruction is taken from a report in the Evening Telegram, December 9,1947 and from the debates on the draft budget in the Convention. There are some minor discrepancies between these two sources. See also P.A. Bridle (ed.) Documents on Relations between Canada and Newfoundland, Volume 2, Part I, p.752.

Expenditure Debt Service Dept. Finance Dept. Home Affairs Dept. Education Dept. Justice Dept. Natural Resources Dept. Public Works Dept. Public Health & Welfare Board of Liquor Control Provincial Legislature Increased expenditure and new services

Total Capital taken from Surplus Total

Expenditure Basic expenditure New and increased services

Total Capital taken from Surplus Total a

First Four Years After Confederation (Yearly Averages) $ Revenue 376,250a Dept. Finance 287,698 Dept. Posts and Telegraphs5 299,700 Assessor of Taxes0 3,107,700 Dept. Home Affairsd 1,053,409 Dept. Education 1,279,500 Dept. Justice 2,475,550 Dept. Natural Resources Dept. Public Works 5,214,868 Dept. Public Health & Welfare 134,100 Board of Liquor Control 200,000 Gasoline tax Surplus interest6 750,000 Refundsf Tax Rental Agreement Rebate on corporation taxg Transition grant New provincial taxation 15,138,775 Total 3,000,000 18,138,775 Second Four Years of Confederation (Yearly Averages) $ Revenue Epartmental (as above) plus 15,138,775 new taxation 500,000 Additional tax yieldh Surplus interest Refundsf Tax Rental Agreement Transition Grant 15,638,775 Total 3,000,000 18,638,775

$ 71,600 7,000 20,000 125,900 66,800 30,000 180,500 439,800 312,500 1,000,000 1,000,000 600,000 254,950 6,820,000 50,000 2,843,750 1,236,875 15,059,675

$ 4,570,075 850,000 299,375 254,950 6,820,000 2,843,750 15,638,150

ln debate on December 10, 1947, Mr. Smallwood agreed that this figure should be increased by $83,172 for each of the first four years of union, n'ax on cables, etc. Insurance licences.

REPORTS AND PAPERS

523

Includes repayments of principal and interest on loans to housing associations. Calculated on the assumption that Newfoundland would deposit the $28 million surplus with Canada at 2 5/8 per cent interest, allowing for withdrawals of $3 million each year. Monies returned to Newfoundland for cash already paid out for new coastal steamers and for Gander airport, which would become federal government property. g Rebate on taxes paid by gas and electricity companies in Newfoundland. Additional income expected from existing taxes on liquor, gasoline and foresty, and from motor licences.

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BIOGRAPHICAL APPENDICES

524

NATIONAL CONVENTION

APPENDIX A Members and Officers of the National Convention ASHBOURNE, THOMAS G.W. Twillingate. Politician, businessman. United Church. Born Twillingate, 4 December 1894. Educated Methodist College, St. John's, and the University of Toronto. Died 8 March 1984. When in 1917 Ashbourne was rejected by the Canadian Army as medically unsuitable for military service, he joined the British Army and served in Flanders with the Royal Garrison Artillery with the rank of lieutenant. After the war he went into the family business, Ashbourne's Limited, at Twillingate and was president of the company for 40 years. Ashbourne entered politics in 1924 as MHA for Twillingate. He quit politics after the resurgence of the Squires Liberals in 1928. In 1946 he was elected to the National Convention and supported confederation. In 1949 he was elected Liberal MP for Grand Falls White Bay - Labrador, and was re-elected in 1953 and 1957. Ashbourne was a classmate of Lester Pearson at Victoria College, Toronto, and declared that the latter had convinced him of the need for Newfoundland to become part of Canada. BAILEY, CHARLES LOUIS. Trinity South. Mariner. United Church. Born New Chelsea, Trinity Bay, 11 March 1890. Educated locally, and two years night school in New York. Died at New Chelsea, 11 March 1962. Bailey spent most of his life at sea, as a fisherman, a skipper and owner of small schooners, and as a foreign-going sailor. In the latter capacity, he worked on several of the last windjammers including the Finnish barque Procyon. In addition, he served in the merchant marine in both world wars. Bailey was a strong supporter of a return to responsible government and closer relations with the USA. He dropped out of active politics after the 1948 referenda until 1956, when he was defeated as a provincial PC candidate in Trinity South.

BALLAM, CHARLES H. Humber. Electrician, union leader, and politician. Anglican. Born Curling, Bay of Islands, 10 May 1901. Educated locally. Died 12 December 1981. Ballam worked for a time as an electrician with the A.N.D. Company at Grand Falls, returning to Corner Brook to work in the new paper mill there. He was active in the labour movement and eventually became one of the first presidents of the Newfoundland Federation of Labour. In 1940 he became the west coast representative of the Sun Life Company of Canada. Ballam was a strong supporter of confederation, and was a member of the Ottawa delegation. In the 1949 provincial election, Ballam was the successful Liberal candidate in Humber. He was appointed Minister of Labour and held that portfolio until August 1966, when he was dropped from the cabinet and resigned his seat in the legislature.

NATIONAL CONVENTION

525

BANFIELD, WILLIAM JOHN. Fortune Bay. Policeman, businessman, and civil servant. Anglican. Born Bay 1'Argent, Fortune Bay, 21 September 1911. Educated locally, and College of Our Lady of Mercy, St. John's; International Correspondence Schools. Banfield took a commercial course at the College of Our Lady of Mercy which included typing and shorthand. In addition, he completed correspondence courses in history and English. After working in his brother's firm for a few years, Banfield moved to St. John's in the 1930s and joined the Newfoundland Constabulary. Nine years later he returned to Bay 1'Argent and rejoined his brother's business. From the outset of the Convention, Banfield was a confirmed confederate. In 1950, Premier Smallwood appointed Banfield a member of the Newfoundland Liquor Commission and in 1967 he became its chairman.

BRADLEY, FREDERICK GORDON. Bonavista East. Lawyer, politician. United Church. Born St. John's, 21 March 1888. Educated Methodist College, St. John's, and Dalhousie University. Died 30 March 1966. Bradley began the practice of law in St. John's in 1914. He was elected to the Assembly in 1924, and following the 1928 election joined R. A. Squires' Liberal government as Solicitor General. Bradley was one of only two Liberals who survived Squires' defeat in 1932, and as leader of the opposition he opposed the surrender of responsible government. Appointed to the magistracy by the Commission of Government, Bradley served at Bonavista and Grand Falls before resigning in 1939 to devote his time to a supply business he had started in Bonavista. On the death of Judge Cyril Fox in November 1946, Bradley was appointed Chairman of the Convention. In this capacity he chaired the delegations sent to London and Ottawa. He resigned as Chairman in October 1947. A confederate since his college days, Bradley played an active role in the referenda campaigns and in 1949 became Newfoundland's first representative in the federal cabinet and MP for Bonavista-Twillingate. He resigned his seat in 1953 and was appointed to the Senate. BROWN, KENNETH MACKENZIE. Bonavista South. Seaman, paper mill worker, union organiser and politician. Anglican. Born King's Cove, Bonavista Bay, 3 April 1887. Educated locally. Died 28 August, 1955. As a young man Brown worked as mate, master and pilot on steamboats on the British Columbia coast. He returned to Newfoundland to work in the paper mill at Grand Falls, became involved in the labour movement and led a major strike against the AND Company in 1921. In 1923 he was elected Liberal MHA for Twillingate, reelected in 1924 and 1928. In 1932 he was elected for the United Newfoundland party, and entered the Alderdice cabinet as Minister of Labour. After the suspension of responsible government in 1934, Brown became President of the Fishermen's Protective Union. In the Convention he was a strong supporter of responsible government and was making a vehement anti-confederate speech when he collapsed, suffering a severe stroke, from which he never recovered, in November 1946.

526

NATIONAL CONVENTION

BURRY, LESTER LEELAND. Labrador. Clergyman. United Church. Born Safe Harbour, Bonavista Bay, 12 July 1898. Educated locally and Mount Allison University; ordained, 1924. Died 31 August 1977. After ordination Burry served at St. Anthony, Curling, Bay of Islands and Little Bay Islands before moving to Labrador to devote 26 years to the Labrador mission, based at North West River. In 1946, he was elected to the National Convention to represent Labrador over four opponents and made electoral history as the first Labrador representative in Newfoundland political history. He was an avowed confederate. On leaving Labrador he served at Clarke's Beach, Conception Bay for two years and subsequently was the United Church chaplain to hospitals and other institutions in St. John's. From 1958 to 1959 he was chairman of the St. John's Presbytery of the United Church, and from 1959 to 1960 served as president of the Newfoundland Conference. BUTT, ALBERT BOYLE. St. John's West Extern. Teacher, civil servant, manager. United Church. Born Carbonear, 7 April 1904. Educated locally, Methodist College, St. John's, and Normal School, St. John's. Died 10 March 1989. During the late 1920s and early 1930s, Butt taught school at Glovertown, Bonavista Bay, and Clarke's Beach, Conception Bay. Afterwards he was appointed to the Department of Education, and in 1933 became secretary to the Commissioner of Education. Butt later became personal assistant to Thomas Lodge, Commissioner of Public Utilities and then assistant secretary to the Commissioner of Public Works, Sir Wilfrid Woods. He resigned from the civil service to become a life insurance underwriter. Elected to the Convention, Butt supported responsible government and was a member of the London delegation. After confederation, he was appointed the founder-organiser of the Progressive Conservative Party of Newfoundland. He joined the St. John's Daily News as advertising manager, but eventually went back to insurance underwriting, and by the late 1950s was manager of the Maritime Life Assurance Company. Although an unsuccessful federal PC candidate in 1962 and 1963 for Trinity-Conception, he continued to be an active party supporter. Butt was prominent in the Methodist College Literary Institute, Gower Street United Churchmen's Service Club and the Avalon Raceway. He was also involved with TV programmes and frequently served as host and moderator.

NATIONAL CONVENTION

527

CASHIN, PETER JOHN. St. John's West. Businessman and politician. Roman Catholic. Born Cape Broyle, 8 March 1890. Educated locally and St. Bonaventure's College. Died 21 May 1977. With the outbreak of World War I, Cashin joined the Royal Newfoundland Regiment and subsequently the British Machine Gun Corps with a commission as second lieutenant, attaining the rank of major in 1918. On returning home he began a business career, but in 1923 decided to follow in the footsteps of his father, Sir Michael Cashin, and enter politics. He was elected Liberal MHA for Ferryland in 1923, and from 1928 to 1932 served as Minister of Finance. With the advent of Commission of Government, he left Newfoundland for Montreal to pursue business opportunities. In 1942 Cashin returned to Newfoundland in order to campaign for the restoration of responsible government. One of the most prominent anticonfederates, Cashin gained notoriety by charging that Commission of Government had been brought about by "bribery and corruption". Sued for libel, the case was dismissed by the Supreme Court in April 1947. He was a member of the London delegation. Following confederation Cashin ran successfully as an Independent for the provincial district of Ferryland. In 1951, he was successful in St. John's West as a Progressive Conservative. In 1953, he ran as an Independent in St. John's East in the federal election, thus splitting the vote and bringing about the defeat of Gordon F. Higgins. Cashin then retired from politics and was appointed Director of Civil Defence by Premier Smallwood, a position he held until 1965. CRANFORD, EDMUND CHARLES. Trinity Centre. Fisherman and merchant. Anglican. Born New Harbour, Trinity Bay, 1886. Educated locally. Died 5 March 1973. Cranford began his career as a fisherman, then commenced mercantile activities as a buyer and exporter of raw furs in association with C.M. Sampson of England. After confederation, Cranford ran provincially as a PC candidate in Trinity South in 1953, but was unsuccessful.

CROSBIE, CHESLEY ARTHUR. St. John's West. Businessman. United Church. Born St. John's, 4 November 1905. Educated Bishop Feild College, St. John's; St. Andrew's College, Toronto. Died 26 December 1962. After graduation from school Crosbie travelled in Europe for a year before entering his father's business. He subsequently became involved in numerous entrepreneurial activities including the fishing business, Eastern Provincial Airways, Chimo Shipping Company, and Newfoundland Engineering and Construction. During the National Convention, Crosbie was opposed to confederation and favoured economic union with the USA. He was a member of the London delegation. During the referenda compaigns he led the Economic Union party. In 1948 Crosbie was a member of the delegation which travelled to Ottawa to finalize the terms of union. He refused to sign stating they would mean financial suicide for Newfoundland.

528

NATIONAL CONVENTION

CRUMMEY, PLEMAN WELLINGTON. Bay de Verde. Teacher and general merchant. United Church. Born Western Bay, Bay de Verde, 8 April 1891. Educated Methodist College, St. John's; State Normal School, Oswego, New York. Died 1 February 1960. After graduating from school, Crummey entered the teaching profession. Subsequently he went into business as a general merchant and was later appointed a Justice of the Peace. Crummey was a member of the Loyal Orange Lodge and served as Grand Master. During the National Convention he was unequivocally opposed to confederation. He was a member of the Ottawa delegation. In the 1951 and 1956 provincial elections Crummey ran unsuccessfully as a Progressive Conservative in Carbonear-Bay de Verde.

DA WE, WILFRED G. Bay Roberts. Businessman. Anglican. Born Bay Roberts (Conception Bay), 1892. Educated locally. Died 31 August 1963. Dawe joined his father's business after leaving school, and in time became a prominent business figure in Conception Bay and on the northeast coast, specializing in the lumber trade. He was a Newfoundland representative at the Imperial Economic Conference, 1932. He supported a return to responsible government.

FIGARY, PERCIVAL WALTER. Burgeo. Unionist and railway worker. United Church. Born Channel-Port-aux-Basques, 21 April 1901. Educated locally. Died 12 November 1971. Figary worked with the Newfoundland Railway at Port-auxBasques. He became active in labour politics organising the Brotherhood of Railway Clerks in 1936. From 1941 to 1943, he was the Southern Vice-President of the Newfoundland Federation of Labour. Although belonging to the United Church he organised a local band of the Salvation Army and was an active member of the Independent Order of Oddfellows. He was elected to the Convention, defeating a merchant and a teacher, and from the outset was a supporter of confederation. After 1949 he took no part in provincial politics, but remained active in labour activities.

NATIONAL CONVENTION

529

FOGWILL, FRANK DESBARRES. St. John's East Extern. Electrician, union leader and organiser. Roman Catholic. Born St. John's, 21 November 1902. Educated Centenary Hall, St. John's. Died 25 February 1974. Fogwill was employed by Reid Newfoundland Railway as an electrician after an apprenticeship with Bowring Brothers, St. John's. He became involved in labour politics and in 1934, was founder and first president of a St. John's local of the Brotherhood of Railway Carmen. As a delegate to the founding convention of the Newfoundland Trades and Labour Council that subsequently became the Newfoundland Federation of Labour, he was one of the St. John's executive known as "seven men with seven dollars" who set out to organise the workers of St. John's in 1937. By the end of the year they had registered 5,000 workers in Newfoundland chartered unions. During the National Convention debates Fogwill supported responsible government. In the 1949 election, Fogwill was elected a PC member in the two-member constituency of St. John's East. Re-elected in 1951, he retired from provincial politics in 1956. In 1957 he ran unsuccessfully as a candidate in St. John's municipal election. In 1959, when the provincial PC party split over the Term 29 issue, Fogwill was defeated by A.M. Duffy of the United Newfoundland party. FOWLER, JOSEPH. Port de Grave. Teacher, civil servant. Roman Catholic. Born Cupids, Conception Bay, 20 May 1913. Educated Memorial University College and Mount Allison University. Fowler began his career as a school teacher. He strongly supported the restoration of responsible government during the Convention debates and the subsequent referenda campaigns. After confederation he entered the federal civil service.

FOX, CYRIL JAMES. Chairman. Lawyer. Roman Catholic. Born St. John's, 24 May 1889. Educated St. Bonaventure's College. Died 16 November, 1946 Fox was an active politician from 1919 to 1928, and served as Speaker 1924 to 1928. He became a Supreme Court judge in 1944, and was the Convention's first Chairman.

530

NATIONAL CONVENTION

FUDGE, PIERCE. Humber. Union organiser and general merchant. United Church. Born Triton, Notre Dame Bay, 1899. Died 14 May 1967. Fudge began seafaring at an early age, and saw active service with the Royal Navy from 1914 to 1918, while still in his teens. After the war he took up residence in Corner Brook and became proprietor of a general store. Fudge became very active in the labour movement and was chairman of the local council of the Newfoundland Lumbermen's Association from 1936 to 1938. He then separated from the NLA and founded the Newfoundland Labourers' Union. He advocated the restoration of self-government before confederation could be considered. He was a member of the London delegation. In 1949 he contested Humber as a PC in the first provincial election, but was defeated.

GOODRIDGE, ALFRED JAMES. Ferryland. Businessman. Anglican. Born Renews, 29 September 1878. Educated Church of England Academy, St. John's. Died 18 January 1963. Goodridge was employed in the family business in various communities including St. John's, Fermeuse and Renews. For many years he was the consular representative of the Portuguese government in St. John's. He gained his seat in the Convention by acclamation. Goodridge supported responsible government.

HANNON, JOHN P. Harbour Main. Telegrapher. Roman Catholic. Born 13 June 1886 at Harbour Main, Conception Bay. Died at Holyrood, Conception Bay 9 Mav 1955. Educated at the local school at Harbour Main, Hannon briefly taught school in the area, and then became a telegrapher, first at Holyrood and then at Gander. During the war he was an employment agent for a construction firm on the air base.

NATIONAL CONVENTION

531

HARRINGTON, MICHAEL FRANCIS. St. John's (City) West. Writer and broadcaster. Roman Catholic. Born St. John's, 13 December, 1916. Educated at St. Bonaventure's College, Memorial University College and Memorial University. Harrington began his career as a civil servant, and in 1943 succeeded J.R. Smallwood as "The Barrelman", a daily radio programme featuring Newfoundland history and stories. The programme was sponsored by P.M. O'Leary Ltd., for whom Harrington also edited a house magazine. A supporter of a return to responsible government, Harrington played an active part in the Convention and the referenda. He ran as a PC in St. John's West in the 1949 provincial election, but was narrowly defeated. While acting as Secretary to the St. John's Board of Trade, for whom he edited the Journal of Commerce, Harrington also wrote and published poetry, plays and commentaries. He continued to broadcast. He taught English at Memorial University between 1955 and 1959, when he became editor of the St. John's Evening Telegram. He retired in 1982, and joined the Memorial University History Department as a visiting fellow. HICKMAN, EDGAR LAURIE. St. John's (City) East. Businessman. United Church. Born St. John's, 23 October 1907. Educated Methodist College, St. John's; Lakefield Preparatory School, Ontario; Tonbridge School, England; Ontario Business College, Belleville, Ontario. Hickman was president of A.E. Hickman Co., Ltd. and involved in numerous other local and national companies. He opposed confederation and supported the Responsible Government League after the National Convention concluded.

HIGGINS, GORDON FRANCIS. St. John's (City) East. Lawyer, politician. Roman Catholic. Born St. John's, 8 October 1905. Educated St. Bonaventure's College. Died 13 October 1957. Higgins read law with his father's firm of Higgins, Hunt and Emerson and was called to the Bar in 1931. Higgins became involved with a variety of community organisations including the Benevolent Irish Society, the St. John's Regatta Committee and the Newfoundland Tuberculosis Association. As a member of the St. John's Housing Corporation he initiated a program to improve housing standards. In June 1946 he contested St. John's East for the National Convention, and headed the poll. Though ostensibly a supporter of responsible government, he appeared to some to have been ambivalent, in that he seconded J.R. Smallwood's motion to send a delegation to Ottawa, and became a member of that delegation. However, he was an active member of the Responsible Government League during the referenda campaigns. In 1949, he successfully contested the federal riding of St. John's East for the PC party. He was defeated in the 1953 election.

532

NATIONAL CONVENTION

HILLIER, DANIEL. Burin West. Teacher and civil servant. Anglican. Born Lamaline, 22 February 1881. Educated Bishop Feild, St. John's. Died 28 February, 1950. Taught in several communities including Blaketown, Burin, Garnish, Great Harbour and Lamaline, until 1925 when he was appointed customs officer in Lamaline. Due to fiscal restraint he was pensioned in 1933. Hillier was a staunch supporter of confederation. He served for a number of years as Master of the Darrell Lodge No. 27 of the Society of United Fishermen.

HOLLETT, MALCOLM MERCER. Grand Falls. Magistrate and politician. United Church. Born Great Burin Island, 9 December 1891. Educated Methodist College, St. John's; Mount Allison University; Oxford University. Died 23 September 1985. In 1915 Hollett was named Rhodes Scholar but postponed studies to enlist in the Royal Newfoundland Regiment. He went to Oxford in 1918, returning in 1921. He served as magistrate at Burin, Bell Island and Grand Falls. Elected to the National Convention he became a strong supporter of the restoration of responsible government. On March 10,1947, he moved the motion to send a delegation to London, and was elected to be one of the delegation. Following confederation he did not become active in politics until 1952, when he won a provincial by-election in St. John's West for the Conservatives. In 1953 he became leader of the opposition. He was defeated in the August 1959 election by J.R. Smallwood. In 1961 Hollett was appointed to the Senate. He retired in 1971. JACKMAN, DAVID IGNATIUS. Bell Island. Miner and union leader. Roman Catholic. Born Bell Island, 19 May 1902. Educated St. Bonaventure's College, Henry George School of Social Science, USA. Died 23 March 1967. After spending 10 years in the USA, Jackman returned to Bell Island to work in the mines. He has been credited with building one of the strongest unions in Newfoundland in the 1930s and 1940s. The Bell Island union, Local 4120 Steel Workers of Wabana, was affiliated with the United Steelworkers of America, AFL-CIO. He opposed the Commission of Government and favoured economic union with the United States under responsible government. In the 1949 provincial election, Jackman won the Harbour Main-Bell Island seat for the PC party. He was re-elected in 1951, but was defeated in 1956.

NATIONAL CONVENTION

533

JOB, ROBERT BROWN. St. John's City East. Merchant. Anglican. Born Liverpool, England, 12 February 1874. Educated Merchant Taylors' School. Died St. John's, 6 September 1961. Job was a member of a long-established merchant family. Educated in England, he came to Newfoundland in 1897 and later rose to become President of Job Brothers. He was also President of the Colonial Cordage Co., a director of the Royal Stores Ltd., and active with the Newfoundland Board of Trade. He was a member of the Legislative Council when the Newfoundland legislature went out of existence in 1934. Job strongly advocated close trade relations between Newfoundland and the USA. Elected to the 1947 Ottawa delegation, he withdrew because of a brother's death in England.

JONES, COLIN GILBERT. Harbour Grace. Teacher. Anglican. Born Trinity, Trinity Bay, 17 August 1882. Educated Bishop Feild College and Memorial University College. Died Harbour Grace, 9 September 1963. Jones was a teacher throughout his career, and also served as a Justice of the Peace and a lay reader. He was a supporter of a return to responsible government.

KENNEDY, THOMAS H. Harbour Main. Businessman. Roman Catholic. Born Harbour Main, 25 September 1914. Educated St. Bonaventure's College, and St. Francis Xavier University. Died 22 August 1970. After a distinguished service as a wireless operator in World War II with three complete tours of operations, Kennedy refused a commission and returned to Harbour Main to go into business with his father, P.J. Kennedy. An affirmed nationalist Kennedy supported a return to responsible government and campaigned for it in the referenda. After confederation he went back to the family business but subsequently joined the radio division of the federal Department of Transport.

534

NATIONAL CONVENTION

KEOUGH, WILLIAM JOSEPH. St. George's. Writer, co-operative worker, and politician. Roman Catholic. Bora St. John's, 13 October 1913. Educated St. Patrick's Hall School, St. John's, and St. Bonaventure's College. Died 3 March 1971. Keough began his career as editor of the Labour Herald, published in St. John's during the 1930s and 1940s. Subsequently he worked as organiser, auditor and counsellor for the West Coast Co-operative Association. He early showed his preference for confederation and became a strong Smallwood ally. He was one of the delegation elected to go to London in the spring of 1947. After confederation he was elected Liberal member for St. George's, and held various portfolios including Natural Resources; Fisheries and Co-operatives; Mines, Agriculture and Resources; and Labour.

MACDONALD, KENNETH MALCOLM. Grand Falls. Marine engineer. United Church. Born Greenspond, 8 May 1880. Educated Methodist College, St. John's. Died 27 January 1962. MacDonald worked as a marine engineer with the Reid Newfoundland Co. before becoming shipping superintendent for the Botwood Railway (AND Co. Ltd.). He supported confederation in the final Convention vote.

MCCARTHY, MICHAEL J. Port-au-Port. Teacher, co-operative manager. Roman Catholic. Born 25 November 1912, St. Jacques, Fortune Bay. Educated St. Jacques School, and Memorial University College. Died 20 November 1977. After spending a year at Memorial University College, McCarthy moved to Port-au-Port where he taught at a school in Mainland which he built himself. At the time of the National Convention he was manager of the co-operative store at Lourdes, one of the resettlement areas in the Commission of Government program. He supported confederation.

NATIONAL CONVENTION

535

McCORMACK, JOHN J. St. Mary's. Businessman, telegraph and wireless operator. Roman Catholic. Born St. Joseph's, St. Mary's Bay, 12 February 1905. Educated St. Bonaventure's College. McCormack had no previous political or governmental experience prior to running for the National Convention. He supported responsible government. Following the referenda he took over the operation of the postal telegraph station at St. Joseph's,leaving in 1950 to work as bookkeeper with the US officers' mess at Argentia. From 1950 to 1972 he worked as office manager with various companies including Fishery Products Ltd. at Trepassey.

McEVOY, JOHN BERNARD. Third chairman. Lawyer. Roman Catholic. Born St. John's, 2 August 1902. Educated St. Bonaventure's College and Dalhousie University. Died 13 October 1972. After graduating from law school, McEvoy worked as a legislative librarian in Nova Scotia before returning to join the firm of Squires, Curtis, McEvoy and Saunders. He dissolved the partnership in September 1936, and established his own office. Upon F. Gordon Bradley's resignation as Chairman of the Convention in October 1947, the Commission of Government appointed McEvoy to succeed him as the third Chairman. He supported confederation.

MILLER, LEONARD JOSEPH. Placentia East. Businessman. Roman Catholic. Born Placentia, 24 February 1907. Educated at St. Bonaventure's College. Died 21 September 1992. Miller was a founder of the Placentia Trading Co., and active in local government. He supported a return to responsible government, but thought that confederation should be on the referendum ballot. He was elected to the House of Assembly as a PC in 1949, but resigned in 1951 to join the Liberals. He was defeated in St. John's West in the 1958 federal election. He later served as mayor of Placentia.

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NEWELL, ISAAC. White Bay. Teacher, co-operative organiser, university professor. Anglican. Born, Cupids, Conception Bay, 1 January 1917. Educated locally; Memorial University College; Queen's University; Duke University; and Oxford University. Died 26 May 1977. After College, Newell taught school in Corner Brook (1939 -1940), and then spent 5 years with the International Grenfell Association organising co-operative groups among the fishermen between Flower's Cove, and Englee. In 1946 he was drafted at a public meeting in St. Anthony to represent White Bay in the National Convention. After the Convention he resumed his studies, winning several scholarships. He eventually returned to Queen's University where he taught English.

NORTHCOTT, ARCHELAUS. Lewisporte. Businessman. United Church. Born Lewisporte, 19 December 1894. Educated at Lewisporte, and studied architecture in Halifax. Died 10 August 1974. Northcott operated his own business in Lewisporte as general merchant and fish exporter. He was a member of the United Board of Lewisporte Societies. He was a strong supporter of responsible government.

PENNEY, ALBERT EDWARD. Carbonear. Businessman. United Church. Born Carbonear, January 1876. Educated at Carbonear. Died 1962. Penney worked with family firm of E. Penney and Sons which conducted a large fishing business in Labrador and the Strait of Belle Isle. Later he became director of various companies including the lumber firm of Saunders & Howell Co., Ltd; the Public Service Electric Co., Ltd.; and the Carbonear Water Company. He also served as Justice of the Peace. Penney took a strong anticonfederate stance from the outset. After confederation he went to live in British Columbia.

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REDDY, EDMUND PATRICK. Burin East. Businessman and politician. Roman Catholic. Born Marystown, 24 August 1904. Educated St. Bonaventure's College, St. John's. Died 13 October 1980. Reddy worked with the family general merchandising firm of Reddy Brothers at Marystown. He supported the return of responsible government. In 1951 he ran unsuccessfully as a PC candidate in Placentia West. He then turned to municipal politics, serving as deputy mayor of Marystown 1951-1957, and then as mayor on three occasions. He helped establish the Burin Peninsula Chamber of Commerce, of which he was the first president.

ROBERTS, EDGAR LESLIE. St. Barbe. Businessman and Justice of the Peace. Anglican. Born Woody Point, Bonne Bay, 11 May 1901. Educated at Woody Point. Died 5 March 1971. Roberts had a varied and successful business career becoming involved in general merchandise, tourism, and farming. He also served as a Justice of the Peace. He supported confederation. After the Convention, he became the first mayor of Woody Point.

RYAN, DENIS L. Placentia West. Businessman. Roman Catholic. Born Little Paradise, Placentia Bay, 2 August 1920. Educated at St. Bonaventure's College. On finishing school, Ryan worked in his father's general merchandising business in Little Paradise (Monkstown). With the outbreak of World War II he enlisted in the Royal Artillery and spent three years with the 59th Heavy Regiment in England. He subsequently transferred to the 166th Field Regiment and did nine months duty in North Africa. Ryan also saw active service in the Italian Peninsula Campaign in October 1943. He was demobilised in 1945. Though Ryan was undecided at the outset of the National Convention he eventually supported responsible government. He later moved to the USA.

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RYAN, FRANCIS J. Assistant Secretary. Lawyer. Roman Catholic. Born St. John's, 28 March 1926. Educated at St. Bonaventure's College. Ryan was still a law student when appointed the Convention's Assistant Secretary. He chaired that body once only, and for a brief period. He later became a prominent St. John's lawyer and businessman.

SMALL WOOD, JOSEPH R. Bonavista Centre. Journalist and broadcaster. United Church. Born Gambo (Bonavista Bay), 1900. Educated Bishop Feild College, St. John's. Died 1991. Small wood had a varied career until the late 1940s, working as a journalist, broadcaster, union organiser and farmer. He was associated with the Liberal party in the 1920s and early 1930s. From 1946 he was the principal spokesman for confederation, and a tireless organizer. He served on the Ottawa delegation, and piloted the draft terms of union through the Convention. In 1948 he led the confederates to victory in two referenda campaigns, and in 1949 became Newfoundland's first provincial premier (a position he held until 1970), and leader of the provincial Liberal party.

SPENCER, JOHN THOMAS. Hermitage. Civil servant and teacher. Anglican. Born 31 July 1909, Pass Island, Hermitage Bay. Educated locally. Died 10 December 1984. In 1925 Spencer began a teaching career, but by 1946 he was associated with the Milltown Lumber Company, Bay d' Espoir. He was elected to the Convention by acclamation and supported confederation. After the first provincial election Spencer joined the staff of the Department of Welfare. In June 1965 he was transferred to the City Welfare Office, St. John's, and appointed a member of the Old Age Assistance Board and the Social Assistance Board. He became administrator of the School for the Deaf on April 1, 1968 and held that position until his retirement in 1975.

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STARKES, ROLAND G. Green Bay. Businessman. United Church. Bom Nipper's Harbour (Green Bay), 4 June 1890. Educated locally. Died 19 November 1950. Starkes began his business career with the Union Trading Co. in Nipper's Harbour, and started his own business in 1924. He was elected to the Assembly in 1928 and again in 1932 — one of two Liberals to survive the election, the other being F.G. Bradley. He supported confederation.

VARDY, REUBEN THISTLE. Trinity North. Businessman. United Church. Born Hickman's Harbour, Trinity Bay, 7 November 1897. Educated locally. Died 25 December 1980. Vardy engaged first in fishing and lumbering, and then a small general business, until he joined the Newfoundland Regiment in 1917. He served overseas until 1919, and was demobilized as Sergeant. He resumed his business career, holding the position of president of R. & W. Vardy Ltd., Sydney (Nova Scotia), from 1926 to 1928. He also represented a number of agencies as a labour agent for the AND Co., Grand Falls. He was a member of various fraternal and other societies including the Great War Veterans' Association. In 1932, he ran as an Independent-Labour candidate and lost. Vardy favoured a return to responsible government.

VINCENT, SAMUEL FLETCHER. Bonavista North. Teacher and businessman. United Church. Born Cape Island, Bonavista Bay, 1 June 1907. Educated locally and at Memorial University College. Died 1981. After graduation from high school Vincent spent ten years as a travelling teacher on the coast of Labrador. He subsequently gave up teaching and opened a general business in Pound Cove, Bonavista North, becoming associated with the Labrador fishery. Later Vincent took time off to attend Memorial University College. In 1946 he was elected unopposed to the Convention. He supported confederation and campaigned in 1948 between Gambo and St. Anthony. In 1950 Vincent was appointed a member of the Board of Liquor Control, and in 1967 became the deputy commissioner. He retired in 1972. Vincent was active in community work and fraternal organizations.

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WARREN, W.GORDON. Secretary, Lawyer. Anglican. Born St. John's, 23 March 1910. Educated Bishop Field College and in England. Died 1991. Warren served during the Second World War with the Royal Artillery and the 166th (Newfoundland) Field Regiment. He was discharged with the rank of Captain. He ran unsuccessfully in St. John's City East for the Convention. Warren acted as Secretary throughout the Convention's life, and then returned to the practice of law. He became High Sheriff in 1956.

WATTON, ALFRED. Fogo. Businessman, teacher, and civil servant. Anglican. Born Change Islands, 11 March 1918. Educated locally and at Memorial University College. Walton taught for a brief period before joining the armed forces and going overseas with the Newfoundland Forestry Unit during World War I. He transferred to the Royal Navy and was honourably discharged at the end of the war with the rank of Chief Petty Officer. Watton then became connected with the general trade in the Fogo area, dealing primarily in fish products. He attended Normal School in St. John's, gaining a teacher's certificate in 1938. He was a strong supporter of responsible government. After confederation he entered the federal Department of Fisheries.

WHEARE, KENNETH C. Scholar, constitutional advisor to the Convention. Born Warragul, Victoria (Australia), 1907; educated at Melbourne and Oxford universities; died 1979. In 1946 Wheare was a fellow of All Souls and Nuffield colleges, Oxford, and Gladstone Professor of Government and Public Administration. He was the author of books on the Statute a/Westminster, 1931 (1933) and Federal Government (1946). He remained in Newfoundland only for the initial phase of the Convention. He later became Rector of Exeter College, Oxford (1956), and Vice-Chancellor of the university (1964-66).

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APPENDIX B Persons Mentioned in the Debates and Reports ABBOTT, Louise. Head stenographer. ABBOTT, Douglas Charles. Canadian Minister of Finance, 1946-1954. Judge of the Supreme Court of Canada, 1954-1973. ADDISON, Lord. Secretary of State for Commonwealth Relations, 1945-1947. ALDERDICE, Frederick C. (1872-1936) Prime Minister of Newfoundland in 1928 and 19321934. Commissioner for Home Affairs and Education in the Commission of Government, 1934-1936. ALLEN, George. Appointed Assessor of Taxes in 1941, Director of Taxes, 1949. ALLAN, J.W. Member of Newfoundland Tourist Board, 1946. Executive with Furness, Withy and Company. AMMON, Charles. British Labour MP and a member of the "Goodwill Mission". Author of Newfoundland: The Forgotten Island (1944). AMULREE, Lord. (1860-1941) Chairman of the Newfoundland Royal Commission, 1933 which recommended the suspension of responsible government and the establishment of a government by commission. ANSON, C.M. General Manager of the Dominion Steel and Coal Corporation, Bell Island. ATTLEE, Clement. Prime Minister of Great Britain 1945-1950. Secretary of State for Dominion Affairs, 1942-1943. ARCHIBALD, C.B. Manager, Dominion Steel and Coal Corporation Limited, Bell Island. BALDWIN, Stanley. Prime Minister of Great Britain, 1923, 1924-1929, 1935-1937. BARNES, Dr. Arthur. (1866-1956) Minister of Education, 1923-1924. Colonial Secretary and Railway Commissioner, 1928-1932. BENNETT, Dr. Raymond. Medical superintendent of the St. John's Sanatorium, 1934-1961. BENNETT, Sir John R. (1866-1949) Colonial Secretary in the Morris administration, 1913-1917, and the Monroe administration, 1924-1928. BEVIN, Aneurin. British Labour MP, 1929-1960. Minister of Health, 1945-1951. BLACKALL, Dr. William W. (1864-1943) Superintendent of Education for the Church of England, 1908-1933. BOND, Sir Robert. (1857-1927) Liberal Premier of Newfoundland, 1900-1909. BOTTOMLEY, A.G. Parliamentary Under Secretary of State for the Dominions, 1946-1947. BOWRING, Sir Edgar. (1858-1943) Prominent businessman. Newfoundland High Commissioner in London, 1918-1922,1933-1934. BRACKEN, John. Conservative Premier of Manitoba, 1922-1943. Opposition Leader in the House of Commons, 1942-1948. BRITTON, J.C. Canadian Trade Commissioner in St. John's, 1945-1948. BROMLEY, Rear-Admiral Sir Arthur. Ceremonial and Reception Secretary, Dominions and Colonial Office, 1931-1951. BROOKES, Herbert R. Chartered accountant. Director of Job Brothers and Company Limited, 1915-1932. BROWNE, William J. (1897-1989) Member of the House of Assembly, 1924-1928, 1932-1934. Judge of the Central District Court, 1935-1949. Conservative MHA, 1954-1957; MP, 1917-1962; MHA 1962-1965. BROWNRIGG, Henry J. (1874-1945) Liberal member of the House of Assembly, 1919-1923. Commissioner of Public Charities, 1925-1931. BURCHELL, Charles J. Canadian High Commissioner to Newfoundland, 1941-1944, and 19481949. BURKE, Dr. Vincent P. (1878-1950) Superintendent of Education for Roman Catholic Schools, 1899. Deputy Minister of Education, 1920-1927. Chairman of the first Board of Trustees of Memorial University College. Appointed to the Senate, 1950.

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BUTLER, Joseph. General manager of radio station VOCM. CANNON, A.E.L. Secretary, Canadian High Commissioner's office in St. John's. CAREW, William J. Secretary to eight Newfoundland prime ministers, 1909-1934. Appointed Secretary to the Commission of Government, 1934. In 1949appointed Clerk of the Executive Council. CARSON, Dr. William. (1770-1843) Medical doctor and prominent political reformer. Member of the House of Assembly, 1837-1843. CARTER, Sir Frederic B.T. (1819-1900) Premier of Newfoundland, 1865-69 and 1874-78. Chief Justice, 1880-1898. CASHIN, Sir Michael. (1864-1926) Businessman. MHA, 1893-1923. Prime Minister, 1919. CAVE, William H. (1872-1941) Educator and politician. Liberal MHA for Bay de Verde, 19191924. CHADWICK, G.W. St.J. Dominions Office official and Secretary to the "Goodwill Mission". With Edgar Jones of the Treasury, sent to St. John's in 1943 to survey Newfoundland's financial and economic situation. CHEVRIER, Lionel. Liberal member of the House of Commons, 1935-1954. Minister of Transport, 1945-1954. CLAXTON, Brooke. Liberal MP for St. Lawrence-St. George, 1940-1953. Minister of Health and Welfare, 1944-1946. Minister of National Defense, 1946-1954. CLUTTERBUCK, Sir Peter A. Secretary to the Newfoundland Royal Commission, 1933. British Assistant Undersecretary of State for Dominions Affairs, 1942-1946. High Commissioner to Canada, 1946-1952. COADY, Rev. Dr. Moses. Founder of the Co-operative Movement at St. Francis Xavier University. COADY, Fr. Parish priest, Tors Cove. CO AKER, Sir William F. (1871-1938) Founder and President of the Fishermen's Protective Union. Member of the House of Assembly from 1913-1932, in Cabinet on various occasions. COCHRANE, Sir Thomas. (1789-1872) Governor of Newfoundland, 1825-1834. COLDWELL, James. Leader of the CCF, 1942-1960. MP, 1935-1958. COOK, James. 18th century cartographer and explorer. From 1763-1767 Cook surveyed the coasts of Newfoundland and Labrador. COOK, Eric. Lawyer. Deputy Mayor of St. John's, 1941-1945. Appointed to the Senate, 1964. COYNE, James. Securities advisor, Bank of Canada, 1944-1949; Deputy Governor, 1950-1954. CRANBOURNE, Lord. Succeeded Attlee as Secretary of State for Dominions Affairs in September 1943. CROWE, Harry J. Pioneer in the sawmill and forest industries of Newfoundland. CURTIS, Rev. Dr. Levi. (1858-1942) Newfoundland Methodist minister and Superintendent of Education, 1899-1935. DALTON, H. British MP. Chancellor of the Exchequer, 1945-1947. DAVIS, Walter. School teacher, 1939-1945. Executive Secretary and Administrator of the Newfoundland Tuberculosis Association, 1946-1963. DA WE, Claude. Manager of the Royal Bank of Canada, Heart's Content, 1936-1944; General Insurance, 1945-1957. DOUGLAS, T.C. CCF Premier of Saskatchewan, 1944-1961. CCF, 1935-1944. Leader of the New Democratic Party, 1961. DOYLE, Gerald S. (1892-1956) Businessman. In 1932 he inaugurated the daily Doyle News Bulletin which broadcast local news, weather reports and personal messages. He was a member of the royal commission to prepare the Newfoundland case for the revision of the terms of union in 1953. DREW, George. Premier of Ontario, 1943-1948. Leader of the Progressive Conservative party, 1948-1956. DULEY, Cyril. (1890-1952) President, T.C. Duley and Company. Founding member of the Tourist and Publicity Association. DUNCAN, Sir Andrew. Chairman of the Royal Commission on Maritime Claims, 1926.

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DUNFIELD, Sir Brian. (1888-1968) Deputy Minister of Justice, 1932-1939. Judge of the Supreme Court of Newfoundland, 1939. Chairman of the St. John's Housing Corporation, 1944-1949. DUNN, P.D.H. Chairman of the Board of Customs in the Commission of Government, 1935-1941. Commissioner for Natural Resources, 1941 -1945. DUNNING, Charles. Liberal Premier of Saskatchewan, 1922-1926. Liberal MP, 1926-1930, and 1935-1939. DUPLESSIS, Maurice. Premier of Quebec, 1936-1939, and 1944-1959. EGGLESTON, Wilfrid. Canadian journalist. Author of "The Road to Nationhood" (1946). EMERSON, Sir Lewis E. (1890-1949) Commissioner for Justice, 1937-1940. Commissioner for Defense, 1940-1944. Chief Justice, 1944-1949. EMRYS-EVANS, P.V. British Parliamentary Undersecretary of State for Dominion Affairs, 19421945. EWBANK, Sir Robert B. Commissioner of Natural Resources, 1936-1939. FITZGERALD, Conrad. (1847-1939) Physician with Newman, Hunt and Company in Harbour Breton. FLINN, Major William. Commissioner of Natural Resources, 1945-1949. FORSEY, Philip. (1912-1965) Defeated in his bid to become a member of the National Convention for St. John's West in 1946, he campaigned for the Newfoundland Confederate Association on the Burin Peninsula. In 1949 he was elected to the House of Assembly as Liberal member for Burin. FRASER, Allan M. (1903-1969) Professor of history at Memorial University College. Author of a series of articles on Newfoundland's external affairs. FRECKER, George A. (1905-1979) Deputy Minister of Education, 1944-1949. Minister of Education, 1959-1964. Appointed Chancellor of Memorial University of Newfoundland, 1972. GALGAY, William F. (1906-1966) A pioneer in the development of broadcasting in Newfoundland. In 1932, Galgay and Joseph Butler established the Dominion Broadcasting Corporation. First director of Newfoundland service for the CBC. GAMMON, R.M. Author of "Report on Purse Seining Operations in labrador and Bay of Islands Areas," written for C.A. Crosbie and submitted to Fisheries Committee in March, 1947. GARSON, Stuart. Liberal-Progressive Premier of Manitoba, 1943-1948. Liberal MP, 1948-1957. Garson was instrumental in securing the appointment of the Royal Commission on Dominion-Provincial Relations. GODBOUT,Joseph-Adelard. Liberal Premier of Quebec, 1936 and 1939-1944. GORVIN, J.H. Commissioner for Natural Resources, 1934-1941. Author of "Report on Land Settlements in Newfoundland", (1938) and "Papers Relating to a Long Range Reconstruction Policy in Newfoundland", (1938). GRENFELL, Sir Wilfred. (1865-1940) Medical missionary, founder of International Grenfell Association. GRIEVE, Walter B. (1850-1921) Manager of Baine, Johnston and Company. Member of the House of Assembly. GRIMES, George. (1877-1929) Manager of Fishermen's Protective Union Trading Company; one of the founders of the Newfoundland Socialist Party in 1906. MHA, 1913-1929. GUSHUE, Raymond. (1900-1980) Lawyer. Appointed first chairman of the Newfoundland Fisheries Board in 1936. In 1943 appointed chairman of the fisheries branch of the International Combined Food Board. President of Memorial University, 1952-1966. HALFYARD, W.W. (1869-1944) Vice-President of the Fishermen's Protective Union Trading Company; MHA, 1913-1932. HALLEY, Gordon F. Chartered accountant. Business manager of Broadcasting Corporation of Newfoundland. HANLEY, Philip J. (1908-1972) Assistant Secretary of Education, 1936-1943. In 1943, appointed head of teacher training. HART, John. Liberal premier of British Columbia, 1941-1947.

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HEPBURN, Mitchell. Liberal Premier of Ontario, 1934-1942. HERBERT, Alan P. British Independent Member of Parliament 1935-1950; member of the "Goodwill Mission". HIGGINS, William. (1880-1943) Justice of the Supreme Court of Newfoundland, 1928-1943. Conservative MHA, 1913-1928. HOPE-SIMPSON, Sir John. Commissioner of Natural Resources, 1934-1936. HOUSE, A.M. (Bert). Chief operator with the Broadcasting Corporation of Newfoundland. HOWE, C.D. Liberal MP, 1935-1957. He held several Cabinet portfolios including Transport; Reconstruction and Supply; Trade and Commerce. HOWELL, Gordon. Chairman of the Board of Customs under Commission of Government. HOWLEY, Michael F. (1843-1914) Roman Catholic Bishop (St. John's), later Archbishop, 18941914. HOWLEY, William R. Commissioner for Justice, 1934-1937. HOWSE, Claude K. Newfoundland Government geologist, 1936-1955. Deputy Minister of Mines, 1955-1959. HOYLES, Sir Hugh. (1814-1888) Conservative Premier of Newfoundland, 1861-1865. Chief Justice of the Newfoundland Supreme Court, 1865-1880. HUGESSEN, Adrian K. Senator, 1937-1967. ILSLEY, James. Canadian Finance Minister, 1940-1946. INNIS, Harold. Historian. Author of The Cod Fisheries: The History of an International Economy, (1940). JAMES, Richard. Commissioner for Finance, 1946-1949. JAMIESON, Donald C. (1921-1986) In 1946, Jamieson began broadcasting nightly commentaries on the work of the National Convention. In 1948 he became the first Newfoundlander to be attached to Parliamentary Press Gallery in Ottawa, where he covered negotiations between Newfoundland and Canada. Liberal MP for Burin-Burgeo, 1966-1979; cabinet minister. High Commissioner in London, 1982-1984. JEFFREY, Charles E.A. Editor of the Evening Telegram, 1923-1959. Member of Newfoundland Tourist Board. JONES, Edgar. British civil servant, Treasury, co-authored the Chadwick-Jones Report. JONES, John Walter. Liberal Premier of Prince Edward Island, 1943-1953. Appointed to the Senate in 1953. KARPELES, Maud. Folklorist. Collected and published Newfoundland folk songs. KENT, John. (1805-1872) Liberal Premier of Newfoundland, 1858-1861. KING, William Lyon Mackenzie. Liberal Prime Minister of Canada, 1921-1926; 1926-1930; and 1935-1948. LAURIER, Wilfred. Liberal Prime Minister of Canada, 1896-1911. LEMESSURIER, H.W. Newfoundland poet and antiquarian. Assistant Collector of Customs. MHA, 1885-1890. LEWIN, H.M. Spencer. General Manager, Bowaters Pulp and Paper company at Corner Brook. LITTLE, Philip F. (1824-1897) The first premier of Newfoundland, 1855-1858. LODGE, Thomas. Commissioner of Public Utilities, 1934-1937. LONDON, Sir George. Commissioner of Public Utilities, 1944-1945. LUNDRIGAN, William J. Chairman of Lundrigan's Limited, Corner Brook, a major construction firm. MACDONALD, Sir Gordon. Labour MP, 1929-1942. Governor, 1946-1949. MACKAY, R.A. Political executive. Special assistant to the Undersecretary of State for External Affairs; editor of Newfoundland: Economic, Diplomatic and Strategic Studies, (Toronto, 1946). MACKAY, A.M. (1834-1905) Manager of the Anglo-American Telegraph Company and politican. MCLEAN, Allan. President, Director and Treasurer, Connors Bros. Ltd., 1923. MACHTIG, Sir Eric. Permanent Under-Secretary of State for Commonwealth Relations, 1940-

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1949. MANNING, Ernest Charles. Social Credit Premier of Alberta, 1943-1968. MANSUR, David. President of Canadian Central Mortgage and Housing Corporation, 1946-1954. MARSHALL, Walter W. Civil servant in Finance Department, Commission of Government. MAXTON, James. British Labour MP. MCCANN, Dr. J.J. Progressive Conservative MP, 1935-1957. Minister of National Revenue, 1945-1957. MCGRATH, Dr. James. Assistant Deputy Minister of Health, 1943-1956. MHA St. Marys 19561971. Minister of Health 1956-1967. MCNAIR, John B. Liberal Premier of New Brunswick, 1940-1952. In 1957 McNair chaired the royal commission examining the fiscal status of Newfoundland. MEEHAN, John F. Manager of J.F. Meehan, commission and brokerage business. President of Newfoundland Board of Trade, 1927. MONROE, Walter. (1871-1952) Prime Minister of Newfoundland, 1924-1928. MONROE, Arthur. Merchant in the export trade in frozen fish to the United States. Son of Walter Monroe. MORRIS, Sir Edward P. (1859-1935) Formed the People's Party in 1908. Prime Minister, 1909-1917. MORRIS, Patrick. (1789-1849) Advocate of the establishment of representative government in Newfoundland. Colonial Secretary, 1840. MORRIS, Miss. Legislative librarian prior to 1934. MULCAHY, Michael. Reporter for the Gerald S. Doyle News Bulletin. NEILL, J.S. Commissioner for Public Utilities, 1945-1949. OAKES, Sir Harry. (1874-1943) President, Lake Shore Mines, Ontario. OLDS, Dr. John. Surgeon at Notre Dame Bay Memorial Hospital, Twillingate. OLIVER, Douglas R. Author of "A Report on Newfoundland's Tourist Trade Position", Toronto 1946. OUTERBRIDGE, Sir Leonard. Businessman. Private secretary to the Governor, 1930-1944. Lieutenant Governor, 1949-1957. PADDON, Dr. Harry. Physician with the Grenfell Association at Northwest River, Labrador. PATTISON, Squadron Leader Harold. Director of Civil Aviation, Gander. PATON, John L. (1863-1946) First President of Memorial University College. PENSON, J.H. British civil servant, appointed financial advisor to Sir Richard Squires in 1931. Commissioner of Finance, 1937-1941. PERLIN, Albert B. Editor of the Daily News, member of the Responsible Government League. PLANTA, Clive. Secretary, Fisheries Council of Canada. PLUMPTRE, A.F.W. Economist. Author of "Newfoundland, Economic and Political Report (1933): A Review," in the Canadian Journal of Economic and Political Science, Vol. Ill, No. 1 (1937). POTTLE, Dr. Herbert W. Commissioner for Home Affairs and Education, 1947-1949. PRATT, Calvert C. Businessman, President of the Newfoundland Industrial Development Board. PUDDESTER, Sir John. Commissioner for Public Health and Welfare, 1934-1947. QUINTON, H.W. MHA for Bonavista South in 1928. Commissioner for Public Health and Welfare, 1947-1949. REID, W. Angus. Managing Director Reid Newfoundland Co. Ltd. RETTY, Dr. J.A. Geologist with Labrador Mining Co., who did initial explorations in Labrador, 1935. RUSSELL, HJ. General Manager of the Newfoundland Railway, 1923-1949. RUSSELL, Hazen. General Manager Fishermen's Union Trading Co. Ltd., 1922-1927; President and general manager, Job Brothers & Co. Ltd., Blue Peter Steamships Ltd., Northlantic Fisheries, 1940-1953. President Bonavista Cold Storage Co. Ltd., 1939-1974.

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NATIONAL CONVENTION

RYAN, Francis J. Assistant Secretary to the National Convention. SHARP, Mitchell. Liberal MP for Eglinton, 1963-1974. SHEA, Ambrose. (1815-1905) Prominent Liberal politician, 1848-1886. SKELTON, D.A. Economist. Chief of research department, Bank of Canada, 1935-1944. Secretary, Dominion-Provincial Conference, 1941-1945. SNELGROVE, Dr. A.K. Geologist. Author of "Mines and Mineral Resources of Newfoundland," 1938. Instrumental in inaugurating Geodetic Survey of Newfoundland. SQUIRES, Sir Richard. (1880-1940) Liberal Prime Minister of Newfoundland, 1919-1923, and 1928-1932. STAVERT, Sir William E. Banker. Established branch of the Bank of Nova Scotia, St. John's, 1895-1898; financial advisor to Government of Newfoundland, 1931. Member of the Amulree Royal Commission. ST. LAURENT, Louis. Liberal Prime Minister of Canada, 1948-1957. Deputy Prime Minister and Secretary of State for External Affairs, 1947. SQUIRES, Lady Helena. Wife of Sir Richard Squires. First woman MH A elected in Newfoundland. TANNER, Charles E. Lawyer, senator. Conservative member of Nova Scotia legislature. TASCHEREAU, Louis A. (1867-1952) Liberal premier of Quebec, 1920-1936. TEMPLEMAN, Dr. Wilfred. Fisheries scientist. Professor of Biology, Memorial University College, 1936-1944; Director of Newfoundland Government Laboratory, 1944-1949. THOMPSON, J.J. President of the Newfoundland Lumbermen's Association. THOMPSON, Sir Percy. British civil servant, financial advisor to Sir Richard Squires in 1931. THORBURN, Sir Robert. (1836-1906) Premier of Newfoundland, 1885-1889. TIMMINS, Jules. President, Labrador Mining and Exploration Company Ltd., Hollinger North Shore Exploration C. Ltd., Quebec North Shore and Labrador Railway Co.; Director, Iron Ore Company of Canada, Ltd. WALSH, Sir Albert J. Lawyer. District Magistrate at Grand Falls, 1935 and Corner Brook, 1936; Commissioner for Home Affairs and Education, 1944-1947; Commissioner for Justice, 1947-1949. Chairman of Newfoundland delegation to Ottawa, 1948; Lieutenant-Governor, April to September, 1949. WEEKS, Dr. E.P. Economist. Head of Area Studies Division, Economic Research Branch, Department of Reconstruction and Supply, Ottawa, 1946-1948. Executive Assistant, Department of Trade and Commerce, 1948-1950. WHITEWAY, Sir William V. (1828-1908) Liberal Premier of Newfoundland, 1878-1897. WILD, Hon. Ira. Commissioner for Finance, 1941-1946. WILLIAMS, J.O. Director, Labrador Development Company. WINSOR, Capt. Billy. (1876-1964) Sealing captain and politician. WINTER, H.A. (Harry) Commissioner for Home Affairs and Education, 1941 -1944; Commissioner for Justice and Defence, 1944-1946. WOODS, Sir Wilfred. Replaced Thomas Lodge as Commission of Public Utilities, 1937.

Index agriculture: acreage and farmers 176; expenditures l l l ~3> :77! feed P°°l 179-80; imports 178; livestock and poultry 176; reconstruction expenditure 173-5; revenue, encouragement of 176; value 168-70, 435 American Smelting and Refining Company 319 Anglo-Newfoundland Development Company Ltd 40, 56, 319 Bay of Islands 245-6 Bell Island 37-8, 326-34 Bowater's Newfoundland Pulp and Paper Mills Ltd 57-8, 63-4, 431 Bradley, Frederick Gordon 451-2, 458, 459 Broadcasting Corporation of Newfoundland 119-23 Buchans Mine 38-9, 318-26, 366-7, 412, 432. See also mining Buchans Mining Company Ltd 319, 432 Clarenville shipyards 113-14, building scheme 396-7 Cape Copper Company 339 Caribou, S.S. 402 Cashin, Peter John 452, 453, 455, 458, 461; on bases deal 482; on fisheries 490; on iron ore 466 Colonial Broadcasting Company 121 Colonial Development Fund 23, 380, 381 Commission of Government: and civil reestablishment scheme 307-12; Clarenville shipbuilding 396-7; institution of 378-9; and Labrador Mining and Exploration 383-4; and local roads committee scheme 91-3; over-expenditure 390, 414-15 Connors Brothers Ltd 242-3 cost of living index 32, 285-6 Crosbie, Chesley Arthur 453, 459, 468, 489 debt 21-2, 45, 428, 440; London discussions 448, 451-5, 471, 475-7, 491-3; terms 512, 517. See also expenditures; Finance; revenue defence 515 draft budget 522-3 Economic Report - expenditures: dry dock 427-8; Gander airport 428-9; mercantile marine 427; national debt 428; railway 426-7, 442-3; St. John's Housing Corporation 443; tourism 442

- Newfoundland as self-supporting 443 - revenues: agriculture 435; expansion of military bases 439; fisheries 435-8; forestry 430-2; Gander airport 440; mining 432-5; sterling debt 440; surplus 441 economic survey 515 education: classrooms and teachers, numbers of schools 66-7; future plans 73; maintenance and equipment 72; Memorial University College 73; terms 515; and veterans 281, 308-9 - expenditure 25-6, 65-6; administration 67-8; salaries 68-70; schools, erection and improvement 70-1 - new services: adult education 71; supplies 71; teachers, summer school 71. See also Reports, Committee on Education election June 1946: districts 4-11; results 12-15 employment 31; prices 32; wages 32 expenditures 18-19; agriculture 27-8; annual expenditures (1940-46) 410, 413-14, (1897-1946) 421-2; Clarenville shipbuilding 396-7; Commission Government and 390, 414-15; comparative statement 389-90; draft provincial budget 522; education 25-6, 65-71; finance report on 371-2, 376, 385-7, 400-7; fisheries 27, 199, 249-50; Gander Airport 399-400, 428-9; government personnel 30; local government service 26; national debt 390-1, 428; Newfoundland Hotel 387-8, 407-8; Newfoundland Railway 28-9, iu-12, 117-18, 426-7, 442-3; posts and telegraphs 96-8; probable federal 520-1; public health 24, 266-72; public and social services 30; public utilities 27; roads 89-91, 382; shipbuilding 28; welfare 24-5, 284-5, 373- See also agriculture; Economic report Finance - annual revenues and expenditures: (1940-46) 410, 413-14;(1897-1946) 421-2 - imports and exports 373-4, 413; and drop of pound sterling 375; iron ore 391,393,411-12; paper products 374-5, 392, 412; salt codfish 374, 392, 412; - revenues and expenditures: bases 394-5, 416; Clarenville shipbuilding 396-7; Colonial Development Fund 380, 381; comparative statement 389-90; custom revenue 422; interest charges

548

INDEX

390-1; financial assistance to Britain 396, 416; financial situation 418-23; fiscal year (1946) 415-16; fiscal year (1946-47) 423-4; Gander airport 399-400; natural resources legislation 383-4; Newfoundland Hotel 387-8, 407-8; Newfoundland Savings Bank 383, 388, 408-9; overexpenditures 390, 414-15; public debt 372-3, 411, 417-18; railway 371-2, 376, 385-7, 400-7; roads 382; savings 416; sinking fund 382, 417; victory loan 397; war and pensions 373 - statistics: approximate national debt and liquid assets (1946) 45 fisheries: Bay of Islands 245-6; employment 36; expenditure, natural resources 249-50; and government 34; Louisburg fish facilities 214-15; mercantile marine 243-4; purse seining, Labrador 245; reconstruction 44; revenue 209-10; trade 34-6, 437; value 196-7, 392, 435-8; war effects 413, 436 - by-products: cod liver 236-7; export value 194-5; fish meal 237-8; future 195; herring meal and oil 194, 238; meals and oils 239; other items 239; whale meal 238-9 - canning: export value 195-6; future 196; regulations 195; sub-committee on: codfish 241, future 242-3, herring 241, lobster 239-40, other 242, salmon 240, sealmeat 242 - cold storage: economic impact of fresh frozen 185-6; exports 185-6; forecast 186-7; future 212-13; special consideration for trade 213-14; special considerations 184-5; United States market 183-4 - Fisheries Post-War Planning Committee: Government of Newfoundland 220; Newfoundland exporters 220-1; Newfoundland Fisheries Board 220; recommendations 246-9; United Kingdom Government 220; - herring: Bay of Islands 226; economic impact 189; exports 223-4; relief 189-90; revival and expansion 189 - other pertinent factors: capital development 201-2; communications 202; Cooperative Movement 202-6; decked boats 201; depletion 202; employment 207-8; government assistance, development 199-200; government expenditure, research 199; Labrador 201; modernization and mechanization 197-9; Newfoundland Fisheries Board 202; repairing bounty 206; social security and fishermen 200; trap industry 200-1 - salt codfish: statistics 187; catch 217, 222; centralization of curing 218; cod traps 217; economic impact 187; employment 218; exports 215-16, 374, 392, 412, 437; future 187-9

- sealing: aerial survey 230-1; competition 228-9; dangers 229; decline 190-1; economic impact 191; encouragement of 191; future 229-30; government interest, lack of 228; history 226-7; marketing 228; steamers 230; value 227 - subsidiary: export value 193; future 193; lobster exports 235; other 235-6; salmon exports 235 - whaling: by-products 233; catch 233; catching 232; economic impact, export values 192; future 192; history 191, 231-2; processing 232; products 232-3; species 232; wages 234 See also Reports, Committee on Fisheries forestry: birch 60; Corner Brook 57-8; economic value 430-2; employment 42; exports 41-2, 58, 374~5> 392; Grand Falls pulp and paper industry 56-7; Labrador 60-2; local sawmills 59-60; newsprint exports 64, 412; pit props 60; production, employees, and wages 40, 59; protection 59; reafforestation 58-9. See also Reports, Committee on Forestry Gander Airport 43; capital account 75-6; civil traffic 78; conversion to civil use 76-7; deficit 400, 440; economic value 428-9; employment 76; future traffic, estimates 79; Government of Newfoundland control 76, 77-8, 399-400; interview with Hon. J.S. Neill 79-84; landing charges 79; telegrams 102 Geological Survey of Newfoundland 315-18 government employees 30, 514 Halifax Chronicle 214 Hall, Glenvil 454-5, 456, 457, 467, 468-9; Britain and war effort 470 Hamilton Inlet 63 Hollett, Malcolm Mercer 504 Huntoon, Louis D. 315 imports 33 King, W.L. Mackenzie. See Ottawa Delegation labour relations: employment situation 293-4, 295-6; exchange service 293, 296-7; fluorspar 290-1; function 289; history 288-9; Longshore work 289-90; national registration 292-3, recruitment outside Newfoundland 292, statistics 292; shop and Office employees 290; trade unionism 294, 296 - Bell Island 291, Carpenters' dispute 291, legislation 292, printers dispute 291 Labrador: and fisheries 201, 245; and forestry 60-4; and mining 254-60, 433-5 Labrador Development Company 61

549

INDEX Labrador Mining and Exploration Company 354, 361, 433; and Commission Government 383-4 LaManche mines 326 Lewin, H.M.S. 63 Loan Act (1933) 382 local industries: and Newfoundland Industrial Development Board 160, 161-5; payroll and employment 158,159; questionnaire results 155-6; statistics, previous attempts 156-7; tariffs and customs duties 160; value 157, 159; London delegation: aid to Britain 504; base deals 449-50, 457-6i, 472-3, 481-5, 493; development loans 449, 457, 472, 480-1; first meeting 451-70; forms of government 496-503; interestfree loans 448-9, 455-7, 471-2, 477-80; iron ore 494, 506-7; Newfoundland airports 449-50, 461-4, 473, 485-7, 493; public debt 448, 451-5, 471, 475-7, 491-3; second meeting 474-90; terms of reference 495; trade 503-4, fish 508; trade and tariffs 449-50, 464-70, 473-4, 487-90, 493-4, 503-4. See also Reports, London delegation Lord Addison 451-70 passim, 474-90 passim, 495-509 passim McGrath, Dr. James 263, 264 Machtig, Sir Eric 465 Mathes, J.M.: accommodation 144; attractions 140-2; entertainment 145-7; government and private enterprise 147; recommendations 148-52; tourism 140-53; transportation 143-4 Memorial University College 73 mercantile marine 243-4, 247-8, 427 military bases 43, 394-5, 416, 439; and special considerations for trade 184-5, 437- See also London delegation mining: claims 364-6; employment 37, 39; geological survey 315-18; Government of Newfoundland and Labrador Mining and Exploration Company Ltd 361, 383-4; history 314-5; LaManche Mines 326; Newfoundland-Labrador 354-60; royalties on output 362; St. George's coalfields 338; waterpower 354, 383-4 - Bell Island Mines: contribution to Newfoundland revenue 334; Dominion Steel and Coal Corporation employees 329; employment 38; exports 37-8, 391, 411; export tax 330; history 326-7; iron ore and United Kingdom 332-3; leases 331; local expenditures 333; markets 38; production and exports 327-8; production costs 328-9; revenue 331-2; wages 330 - Buchans Mine: agreement with Commission Government 319-20; contribution to Newfoundland revenue 324; employees 321; expenditure, freight

rates 322; expenditure, wages 322-3; exports 391, 412; exports, employees and wages 38-9; future 324-5; history 318-19; lead 432; markets 39; payments in Newfoundland 366-7; and zinc 325-6 - copper: Betts Cove 341; copper reserves 346; Crescent Lake Mine 341-2; exports 363; Gull Pond 342; Little Bay Mine 342; miscellaneous deposits 343-4; Pilleys Island 344-5; Terra Nova Mine 343; Tilt Cove 338-41; Victoria Mine 343; York Harbour Mine 343 - fluorspar 39-40; contribution to Newfoundland economy 337; exports 334, 363; hydro-electric power 336; mining 335-6; production 336; tons shipped 335 - gold: Mings Bight 347; Rambler 346-7 - iron ore 347-8, 433-4; and Britain 494; exports 362, 391, 393, 411-12; - lead: Silver Cliff 347; exports 363 - other 348-4; exports 363 See also Reports, Committee on Mining Moyra, S.S. 404 National Convention Act (1946) 1-4 Neill, J.S. 77-8, 79-84 Newfoundland Board of Trade 159 Newfoundland Fisheries Board 34, 202, 218, 220 Newfoundland Fluorspar Co. Ltd 337 Newfoundland Hotel 131, 387-8, 407-8 Newfoundland Industrial Development Board 160, 161-5; birch 162; cardboard cartons 164; fish offal 163; glass 164; gypsum 163; limestone 162-3; paper mills 163-4; Portland cement 164; seaweed 163; slate 163; wallboard 164 Newfoundland Railway: Clarenville Shipyards 113-14; coastal steamers 116-17; expansion of traffic 114; express train service 115; freight traffic 115; future operations 116; passengers carried 112; steamers in; tonnage of freight 112; vessels 29, 402, 404-5, 426-7; and war efforts 106 - operating expenses and earnings: 28-9, 115-16, 385-7, 400-7; capital additions and improvements 111-12; capital expenditure 117-18; costs 103-5; dock shops 113; equipment renewals 114-5; grants-in-aid 108; improvements 114, 115; increase in number of employees and payroll 114; losses 105-7; operating revenue and expenses (1944-45) iio-u; passenger and freight earnings/ number of passengers 108-9; repairs 118, 442-3; wages and employees 109-10 Newfoundland Savings Bank 388, 408-9 Newfoundland Savings Bank Act (1934) 382-3 North American Regional Broadcasting Agreement I2I-2

550

INDEX

Oke, C.C. 283-4 oleomargarine 515 Ottawa Delegation - apportionment of public debt and statement of surplus 517 - correspondence from W.L.M. King 510-11 - probable federal revenues and expenditures 520-1 - proposed arrangements:financialarrangements 512-14; miscellaneous provisions 514-16; public services 511; representation 514; veterans 516 - tax agreement 518-20 Pattison, H.A.L. 76-7; correspondence to Transportation Committee 78-9 posts and telegraphs: accommodation and staff 102-3; air mails 99; ancillary services 99; conveyance of mails 98; costs 94; improvements, postal service 98; parcel mails 99; postal guide 99; reconstruction expenditure, estimates 96-8; salaries 103; shipto-shore radio-telephone service 101-2; telegraphs 100-1; telegraph system replacement 94-5; telephones 102; wages 95-6 post-war reconstruction: civil re-establishment scheme 44; fisheries rehabilitation scheme 44; housing scheme 45; tuberculosis sanatorium 45 proposed arrangements. See terms of union Provisional International Civil Aviation Organization (PICAO) 77, 81, 84 public and social services: administrative and maintenance costs 30-1 public health - expenditures: capital 268; employees 270; expenditures (1934-35 to 1945-46) 272; hospitals 266-8, 269; medical personnel 268; other services 268; projected 268-9; sanatoria 268; total expenditure 269-70 - hospitals, nursing stations, clinics: governmental 252-5; non-governmental 255-6; work done 256 - impact on disease: birth 257; communicable diseases 259-60; death rate 261-2; infant mortality rate 257-8; maternity death rate 160-1; tuberculosis 258-9 - tuberculosis 263-6; sanatoria 265-6 public works 512 pulp and paper 431-2 reassessment of Newfoundland's financial position 514 reconstruction. See post-war reconstruction Reid Newfoundland Company, Ltd 104 Reports - Committee on Agriculture 167-80 - Committee on Education 65-74

- Committee on the Financial and Economic Position of Newfoundland 369-509; economic 425-44; financial 369-423, supplementary 423-4 - Committee on Mining 313-68; asbestos 348; barite strontium 350-1; Bell Island 326-34; brick 353-4; Buchans 318-26; cement 351; chrome 348; coal 337-8; copper 338-46; export on minerals 362-3; extract from memorandum submitted by the Mining Law Technical Committee of the Imperial Institute on the matter of royalty on output (fixed per ton) versus royalty on profit 362; gold 346-7; Government of Newfoundland and Labrador Mining and Exploration Company Ltd 361; gypsum 352; history and activities of the geological survey of Newfoundland 315-18; iron ore 347-8; labradorite 352-3; LaManche 326; lead 347; limestone 349-50; molybdenum 352; Newfoundland-Labrador 354-60; petroleum 349; pyrophyllite 349; St. Lawrence fluorspar 334-7; salt 348-9; slate 351-2; water-power 354 - Committee on Public Health and Welfare 251-312; Division of Child Welfare report 297-307; Labour Relations Office report (1945) 288-94; Labour Relations Office report (1946) 294-7; Newfoundland Tuberculosis Association report 286-8; public health 251 -72; welfare 273-86 - Committee on Rules and Procedure: amendment of standing orders 55; amendments 53; committees of the Convention 54-5; general 55; motions 53; order of business for the Convention 53; questions 54; rules of debates 53-4; sitting and adjournment of Convention 53; voting in Convention 54 - Conference of a Committee of the National Convention with His Excellency the Governor in Commission held at Government House 447-8 - Financial and Economic Position of Newfoundland: approximate national debt and liquid assets 45; employment and trade 31-4; fisheries 34-6; forestry 40-2; mining 37-40; Newfoundland's war effort 42-3; post-war reconstruction schemes 43-5; public and social services 22-31; public revenue and expenditure 18-22 - Fisheries Committee 181-250; extracts from report of Fisheries Post-war Planning Committee 246-9; interim report cold storage industry 211-15; mercantile marine 243-4; R.M. Gammon report on purse seining 244-6; sub-committee on by-products 236-9; sub-committee on canning 239-43; sub-committee on subsidiary fisheries 234-6; sub-committee on whaling 231-4; subcommittee report on herring 223-6, supplemen-

INDEX

551

tary report 226; sub-committee report on salt codfish St. Lawrence Corporation of Newfoundland Ltd 335 sinking fund 382, 417 215-23; sub-committee report on sealing 226-31 - Forestry Committee: birch 60; Comer Brook social services 23 subsidies 513 57-8; export of pit props 60; export of pulpwood 58; forest protection 59; Grand Falls 56-7; Labrador 60-2; local sawmills 59-60; reafforesta- tax agreement 513; Federal government responsibility tion 58-9; summary 62-3; summary of pulp and 518; irreducible minimum 519; Newfoundland paper industry 59; supplementary report 63-4 responsibility 518; payment calculation of 519-20 - Local Industries Committee 154-66 taxation: bank deposits and insurance transactions 22; - London delegation: agenda 448-50; first meeting customs duties 20; direct 19-20; distribution 21; 451-70; memorandum in response to questions income tax 20-1; liquor 21; national debt and liquid raised 471-4; memorandum with reference to assets 21-2 section 3 of the Convention Act (1946) 494-5; reply temporary loan 417 to memorandum 490-4; second meeting 474-90; terms of union: accumulated surplus 512-13; debt 512, statement of agenda 450-1; third meeting 495-509 517; defence 515; economic survey 515; educa- Meeting with Governor in Commission: ecotion 515; Gander 512; government employees 514; nomic relationship with United States 447; federal oleomargarine 515; railway 512; reassessment of union with Canada 447; fiscal relationship with Newfoundland's financial position 514; representaUnited Kingdom 447 tion 514; subsidies 513; tax agreement 513; tran- Newfoundland's Tourist-Trade Position by sitional grants 513; transportation 514; Douglas R. Oliver: accommodation 129-31; public unemployment 514-15; veterans 516 Terra Nova Company 319 tourist consciousness 132-3; recommendations Tilt Cove mine 315 !33~9; transportation 131-2 - Ottawa Delegation: proposed arrangements tourism 123-4; Mathes report 140-53; Oliver report 510-22 128-40; possibilities 124-5. See also Tourist - Steering Committee 445-6; committees 446 Board Tourist Board: correspondence 126, expenditure 126, - Transportation and Communications Committee: 1946 season 127-8; radio 127, sportsmen's broadcasting 119-23; department estimates expendshows 126-7, visitors 125-6, war years 125 iture on reconstruction work 96-8; department suggested alterations and improvement of services trade: exports and imports 33-4 trade unionism 32-3, 294, 296 98-103; Gander 75-9, supplementary report 79-84; local roads 91-3; posts and telegraphs 93-6; transitional grants 513 transportation 514. See also Reports, Transportation railway 103-14; roads 85-1; statement of railand Communication Committee way management Newfoundland railway progress Tuberculosis Association report 286-8 114-18; tourism 123-53 representation 514 unemployment 514-15 revenue 18-19, 22 > 79~8o; agriculture 176, 435; Colonial Development fund 380, 381; comparative statement 389-90; draft provincial budget 522; veterans: agricultural courses 309; allowances 310; assistance for individual small enterprises 310; asfisheries 209-10, 435-8; forestry 430-2; Gander sistance to fishermen 309-10; basic gratuity 282; airport 440; military bases 439; mining 324, 331-2, benefits 308-9; benefits, terms 516; education 334, 432-5, 366-7; Newfoundland Hotel 387-8, 281; employment 311; fishing outfits or small in407-8; probable federal 520-1; railway 110-11, dustries 281; maintenance allowance 311; med385-7, 400-7; sterling debt 440; surplus 441 ical treatment 311; unemployment 281-2, 310-11; roads: annual expenditure 91; bridges 88; districts 85; Vocational Institute 312; vocational training 281, equipment 89; future expenditures 89-91; gen309. See also welfare, veterans' affairs eral 89; local roads 90,91-3; local roads committees 91-3; maintenance 87; mileages 85; motor vehicles, numbers 91, registration 93; paving 86; re- Wabana mine 326-34; 432. See also Bell Island Walsh, A.J. 486 cent road work, construction of new 86; reconditioning and reconstruction 86; snow plowing welfare: board and lodging 278; boarding houses and foster homes 278; casual sick, aged, and infirm 87-8; and tourism 442; transinsular road 90 277; labour affairs 285-6; labour relations 288-94, Royal Commission (1933) 379

552

INDEX

number of people on 273; Labrador 277; number 294-7; old age pensions 278-9; widows and orof persons on 274; scale, per person monthly 274; phans 277-8 sick persons 275; total families, persons and cost child welfare division: boarding homes 304; 276 Boys' Home and Training School 302; Chadwick- veterans' affairs: civil re-establishment 281-2, Jones report 301; delinquent girls 301-2; devel307-12; cost 284-5; expenditure 284, expenditure opment 279; expansion 298; family cases 306; foster on behalf of Imperial government recoverable homes 299; juvenile court 301, 305-6; Kinsmen 284, war pensions 282-4 Club 299; organization 279; quarters 298-9; Rotary See also Reports, Committee on Public Health and Club 302-3; Salvation Army Anchorage 300; Welfare school attendance 303, 305; social service exchange World War II 42-3; and fisheries 413; and 306-7; unmarried mothers 300-1; Waterford Newfoundland railway 106 Hall 300; Welfare of Children Act (1944) 280-1 relief: amounts spent 273-4; average month