by Greg Malone
This, as is no doubt fully realized by the Canadians, will be a long process, for Newfoundlanders at present are as suspicions of Canada as ever. Indeed the experiences of the war have served to accentuate rather than diminish the traditional jealousies and dislikes, largely because the attitude of the Canadian forces towards the people of the Island has compared unfavourably with that of the Americans, who have proved excellent “mixers” and have won golden opinions. In this atmosphere the Canadians dare not make Newfoundland an offer, for fear that it would be rejected, as indeed it certainly would be: and they have therefore confined themselves to friendly expressions of interest, and assurances that if Newfoundlanders themselves should wish to turn to Canada they would be given a warm and sympathetic welcome. These assurances have cut no ice in Newfoundland, where indeed they have been received with something approaching derision.
The Canadian Government, who now have their own High Commissioner in the Island, will fully realise in these circumstances that there can be no prospect of Newfoundlanders, when they come to choose their course for themselves after the war, opting for political union with Canada. What would be the next best thing from the Canadian point of view? What the Canadians want is time, time to win over Newfoundland opinion and to bring home the advantages of the union of the two countries: what would suit them therefore would be something which was calculated to ensure reasonable stability in the Island until there had been opportunity for a policy of breaking down the barriers to take effect. This is exactly what our proposals are calculated to provide.… Moreover, in so far as the reconstruction schemes proposed would be calculated to add to the country’s earning power, our proposals should be doubly welcome to the Canadians since the prospect would be that Canada, if and when she should take over Newfoundland in the future, would find herself relieved pro tanto of expenditure which she would then otherwise be forced to incur.
… We recommend that in approaching the Canadian Government we should lay all our cards on the table, explain the full scope of our proposals and the motives which have prompted them, and say we feel sure we can count on their sympathetic interest; the one difficulty we are up against is the exchange problem, and it is on this aspect particularly that we are most anxious for their advice. We could here say that the alternative to the finding of Canadian dollars for this purpose would be to give Newfoundland a new currency of its own.…
… Thus, both politically and financially, it would suit us best that we should finance the programme from our own dollars and our object, in discussing the position with the Canadians, should be to secure their acquiescence in this course.
It should be added that it would of course be necessary to keep any discussions with the Canadian on a most secret basis, since any suspicion in Newfoundland that we were in touch with the Canadians regarding our policy in the Island would have the most damaging results.33
Clutterbuck’s description of the Canadian attitude to Newfoundland brought this “Top Secret” comment from the British ambassador in Ottawa, Malcolm MacDonald: “I do not think that the early part of the note entitled ‘The Approach to Canada’ is entirely fair to the Canadian point of view. But this is not a matter of great importance and I only mention it because I do not wish silence to be taken as meaning that I agree with every phrase and emphasis in that note. In general the note is true enough.”34
The Dominions Office constitutional plans for Newfoundland were tied to a large reconstruction package, but the memorandum prepared by Turk and Tarr of the Foreign Exchange Control Board of Canada on the postwar plans of the UK exchange control foreshadowed the problems that the Dominions Office would have with that agency, and John Maynard Keynes in particular, about their ambitious schemes for Newfoundland:
Secret. Apparently the United Kingdom Parliament is in an extremely sentimental mood about Newfoundland at the present time and a great deal of pressure is being exerted on the Government to take steps to maintain the prosperity created by American military expenditures now that those expenditures are decreasing rapidly.… The Dominions Office is apparently receiving information which makes it feel that there is a real danger of Newfoundland electing to link up with the United States and feels that immediate steps must be taken to prevent any tendency in this direction. The proposal which is being pressed strongly is for the United Kingdom Government to borrow $100 million in Canada to be furnished to Newfoundland for road building and other development projects.
The Bank of England and the Treasury are strongly opposed to any such move because it would prejudice the post-war financial arrangements which the United Kingdom will wish to make with Canada but there is a good deal of fear that in its present mood Parliament may force the Government to take some steps of this kind.35
In spite of the gathering clouds at the Exchequer, Lord Cranborne remained committed to the Newfoundland strategy. On February 20, 1945, he sent a pleading letter to John Anderson, the chancellor of the exchequer:
My dear John,
… I am under increasing pressure both from Parliament and from Newfoundland itself to follow up on our main statement of policy—made, with the approval of the War Cabinet, as long ago as December, 1943—by announcing the Government’s detailed proposals [and pressure] is likely before long to reach formidable proportions … especially now that the new Colonial Development and Welfare Bill has been through the House of Commons.
Whatever our short-term dollar position, Parliamentary and public opinion would, I am sure, never accept a situation under which Newfoundland, alone of the dependent Empire, was to be promised no assistance for reconstruction and development—and this in spite of the special obligations which we have assumed for her welfare.36
But Anderson’s reply was not encouraging. “I fear that when we come to talk about Newfoundland to Canada, we shall find that it will be a very difficult and delicate discussion.”37
4
PROBLEM CHILD:
THE 1945 DEAL
In May 1944 J. Scott Macdonald was named the new Canadian high commissioner in Newfoundland to replace Charles Burchell, who at last was able to return to sunny Canberra. Burchell had established a network of prominent Newfoundlanders who were sympathetic to Confederation, and he left on good terms with British governor Humphrey Walwyn. However, Burchell was not enthusiastic about the possibility of Newfoundland entering the Canadian Confederation, and his wait-and-see attitude was marked with caution.1
The appointment of Scott Macdonald signalled a more aggressive approach on the part of Prime Minister Mackenzie King and the Department of External Affairs. Certainly his initial reports to the department plot a much more vigorous Canadian role in Newfoundland’s affairs:
Secret. It is hardly likely that there would arise, spontaneously, a sufficient demand for federation with Canada to lead to the appointment by the proposed National Convention of a delegation to proceed to Ottawa to ascertain if the Canadian Government were willing to admit Newfoundland into Confederation, and, if so, on terms that would be acceptable. In these circumstances I have been wondering whether … it would be good policy to take an initiative in the matter.
The present would not … be a propitious moment to secure a majority for federation with Canada. We would, however, probably have to wait many years before a really propitious conjuncture of circumstances would arise, e.g.—a Government finding itself facing a depression and financially unable to carry on. Canada itself could hardly escape from the effects of any such depression and public opinion would then be adverse [sic] to accepting new commitments. Moreover, if Newfoundland is to enter Confederation there would be many advantages from our point of view in having the matter consummated during the next year or two rather than a decade hence …
… At any rate of one thing we could be reasonably sure. We would get a far more favourable and more valuable verdict through a plebiscite of the people than we would ever get through waiting for the return of Responsible Government and having the matter voted on by
the Assembly.…
… It would be desirable to take means to ensure that the United Kingdom does not, in a sentimental mood, dip down into its meagre resources and provide Newfoundland with a fund for development projects that would make it economically independent and uninterested in the advantages of federation. Such a move has been mooted and may be still under consideration.
… It would be important that the initiative be taken by Newfoundland so that there would be no shadow of support for the opponents who assert that the “big Canadian wolf” was at last preparing to gobble up little Newfoundland.… A careful campaign would have to be planned to ensure that the advantages of union were made clear to the people of Newfoundland.… Strong teams would have to be organized under the directions of a Central Committee to see that the whole Island was covered.…
… The United Kingdom does not seem to be in any hurry to change the present system and may even be contemplating maintaining its trusteeship until questions of post-war military and civil aviation rights and the composition of the post-war sterling bloc are settled.2
Macdonald was obviously familiar with Turk and Tarr’s memo and had accepted their argument that any thought of reconstruction in Newfoundland would be nothing but sheer sentimentality. His reference to Newfoundland’s “military and civil aviation rights” was exactly the advantage that Lord Beaverbrook and others at Whitehall wished to keep, and, despite avowals to the contrary, Macdonald had deep suspicions that the British secretly wished to hold on to Newfoundland indefinitely. In spite of these perceived obstacles and the many years of bad public relations between Canada and its sister dominion, Macdonald articulated a detailed campaign, complete with “strong local teams,” to bring Newfoundland into Confederation as soon as possible. As it happened, the chance that he and External Affairs were seeking to move this agenda forward came just three months later.
The Canadians and the British finally connected on Newfoundland in June 1945 at the San Francisco Conference, called to discuss the Allies’ postwar policies. This meeting gave Hume Wrong, from External Affairs, the opportunity to discuss the Newfoundland situation personally with Lord Cranborne. On June 6 Wrong reported to J.E. Read, the acting under-secretary of state for external affairs:
Dear Mr. Read,
When sitting next Lord Cranborne at dinner last night the conversation turned from the problems of Palestine to the problems of Newfoundland. He agreed with my remark that Newfoundland was the “problem child” of the Dominions Office and said that some new steps would have to be taken without much delay. He referred to the considerable interest in the House of Commons in the status of Newfoundland, adding that there was a strong feeling that the present system of commission government over a people of purely British stock was repugnant to a great many members.
… He was interested to hear that the antipathy of Newfoundland towards union with Canada seemed to be receding and I should judge that he personally feels that this would be the most satisfactory outcome from the point of view of the United Kingdom Government.
I then touched on the question of financial assistance and mentioned our unavoidable involvement in any measure of financial assistance which the United Kingdom might extend to Newfoundland in view of the existing dollar-sterling position. He said that they had had this matter under consideration in London but that it had always been their intention to discuss with us in advance any plans for new loans or subsidies between the United Kingdom and Newfoundland. I remarked that I thought it important that discussion should take place at an early stage before they had determined on a settled policy and particularly before any publicity had been given to their intentions in Newfoundland itself. He appeared to be fully in accord with this view.…
It would be unwise to ascribe great significance to a casual dinner table conversation. I think, however, that it would be useful for you to pass on copies of this letter to the High Commissioners in London and Newfoundland as well as to the Prime Minister.3
Despite Wrong’s disclaimer at the end of his remarks, they had an immediate and profound effect in Whitehall, where Canadian concerns began to weigh heavily on Dominions Office plans for “little Newfoundland.” Wrong had specifically linked Britain’s war debt to Canada with Newfoundland’s constitutional status as the subject of secret discussions to be held without the knowledge of Newfoundland. His patronizing characterization of Newfoundland as the “problem child” of the empire suggested that grown-up Canada just might have the answer the United Kingdom was looking for—and it was entirely consistent with the Amulree tradition of demeaning and discrediting Newfoundland as a prelude to violating its rights. What Amulree began, Canada would finish. Lord Cranborne and those at the Dominions Office who still hoped that political and moral considerations would outweigh financial ones would henceforth have to deal first with the Canadian “dollar difficulty”—the nature of which Clutterbuck struggled with in his lengthy memo of August 1945, prepared for the Dominions Office and titled simply “Newfoundland”:
[Our] proposals involve the establishment by legislation here of a Newfoundland Development Fund from which grants could be made for reconstruction and development in Newfoundland up to 100 million dollars over a period of 10 years.
… The currency of Newfoundland, however, is Canadian dollars, of which we shall, of course, be very short for many years to come, and the Treasury have felt that in these circumstances the financial objections to our proposals are overriding. The main points are:
(i) During the war … the Canadians have made available to us at their own expense the goods which we were unable to pay for. This state of affairs will, of course, come to an end immediately the Japanese war ends, but our essential requirements from Canada will nonetheless continue after the war at a level far in excess of our possible earnings of Canadian dollars.… We shall have to borrow large sums from the Canadian Government and it will be essential if we are to get through our difficulties that these borrowings should be kept to an absolute minimum.
(ii) In this general situation our Newfoundland proposals in practice could only be financed by increasing our borrowings from Canada. This would merely aggravate our balance of payments difficulty and would impose an unfair burden on the British Exchequer.
Nonetheless, we have continued to press our proposals on the Treasury, pointing out that His Majesty’s Government have assumed a special responsibility for the welfare of Newfoundland and that difficult as the position may be, the one thing that is clear is that we cannot run away from this responsibility; nor indeed will Parliament and public opinion here allow us to do so.…
Mr. Hume Wrong at San Francisco made an informal approach to Lord Cranborne in somewhat guarded terms which indicated that the Canadians themselves had views … and would welcome discussion before decisions were taken here. He implied also that the Canadian Government might take it amiss if we were, as it were, to overdo our assistance to Newfoundland and put them in so stable a financial position as to preclude any possibility of Newfoundland opinion turning in favour of confederation with Canada.… The interest now evidently being taken in Canadian Government circles of the Newfoundland problem is significant, and it is clear that both from the financial and also from the political point of view, early discussions with the Canadians are called for.4
In July 1945 Clement Attlee’s Labour Party was elected to power, and Lord Addison was named secretary of state for dominions affairs. With the new government came a new resolve to settle the constitutional dilemma in Newfoundland. Clutterbuck’s analysis in hand, Lord Addison wrote to Attlee on September 5, 1945:
It would, I think, be premature to give up hope of our being able to do something for Newfoundland … for much must depend on the outcome of the forthcoming discussions with Canada and the United States on Stage III finance. However this may be, I think it urgent to proceed with informal talks with the Canadians on the whole Newfoundland problem as soon as possible; and, the Chancellor having agreed to this, I prop
ose to send out Mr. Clutterbuck to Ottawa as soon as this can be arranged. I hope it may be possible for the visit to take place in the course of this month which would enable me to consult you further as to the position before Parliament reassembles.5
The Stage III talks mentioned here refer to the high-level and comprehensive talks among Great Britain, the United States, and Canada on postwar finance and reconstruction. In his reply to Lord Addison, Attlee agreed to the meetings with the Canadians, but he still seemed to hold out hope for the doomed reconstruction scheme in Newfoundland:
