The St. Lawrence Question A REPLY TO MR. DRURY: PART TWO

Says this writer: No need for a canal at all; we'd be better off to use the railways

J. LAMBERT PAYNE June 1 1929

The St. Lawrence Question A REPLY TO MR. DRURY: PART TWO

Says this writer: No need for a canal at all; we'd be better off to use the railways

J. LAMBERT PAYNE June 1 1929

The St. Lawrence Question A REPLY TO MR. DRURY: PART TWO

Says this writer: No need for a canal at all; we'd be better off to use the railways

J. LAMBERT PAYNE

IF MR. DRURY has tried in one thing to be more impressive than in another, it has been in his earnest effort to tell us that if Canada does not become a partner with the United States in carrying out the proposed St. Lawrence development, the United States will build a rival canal between Lake Ontario and New York harbor. Knowing him, I believe he is sincere.

This is, however, an appeal to fear—a threat. It is a weak argument. Canada cannot be scared in that way. To attempt to scare her is really poor tactics.

But the United States will never build a rival canal. In the first place, that country has very little traffic to offer, as I have shown in my first article. The eastbound business from the western states which is turned annually into the existing and adequate waterway would not be sufficient to keep the proposed canal open for a single month in the year. And it is a shrinking business. Moreover, New York State has now one of the most efficient canals in the world, and it is not handling more than one-fifth as much traffic as did the old and much smaller waterway which it displaced. In fact, Governor Smith, two years ago, seriously proposed to the Legislature either to close it or to sell it.

Something, I admit, might be said about Canada needing increased facilities twenty-five or fifty years hence; but the United States is utterly without a case based on genuine need, either now or for the future. Moreover, the proposed American canal would cost probably two billion dollars, and our neighbors are not in a position to throw away a huge sum like that for the mere sake of striking a blow at Canada. It would be a futile blow, anyway. How could such a canal, enormously more expensive to maintain, and against which Nature has interposed such serious obstacles, hurt Canada? Canada enjoys no advantages whatever from the American traffic passing through our canals. It simply means expense.

The United States, in a fit of pique, is not likely to spend a couple of billions in paralleling the present New York State Canal. To imagine for a moment that such a thing would be done is the precise equivalent of assuming that our shrewd and calculating neighbors, whose best customer we are, had gone insane.

No; Canada cannot be scared by a threat into doing anything she doesn’t want to do.

Before the St. Lawrence proposition got into politics this whole matter of a canal from Lake Ontario to the American seaboard was very carefully considered.

The army engineers unhesitatingly condemned it, and so did the Department of Commerce at Washington. A fact like this cannot be easily ignored.

Canada is carrying exceedingly heavy obligations. Taxation is high. Prudence is necessary. Large and unavoidable capital expenditures loom ahead. Development and expansion will bring increasing calls on the public treasury. We have blundered several times, at immense cost. We cannot afford to make any more mistakes. The Hudson Bay Railway will represent a capital outlay of at least $75,'000,000 before it is ready for efficient operation, and if it is successful, which I gravely doubt, it will have an important effect on the St. Lawrence outlet. I mention this merely as a complicating factor.

What will the proposed St. Lawrence development cost? Nobody knows. If the Canadian proposition were adopted, the engineers tell us it would mean an outlay of $600,000,000. But we have the best of reasons for distrusting estimates. The new Welland was to cost $55,000,000; it will actually cost $115,000,000. The Panama canal was estimated at exactly $100,000,000; the capital figures are now $425,000,000. The Chicago Drainage Canal was to be built for $16,000,000; the liability stands at $80,000,000. And so on the world over. Just as competent engineers as those who made the calculations respecting the St. Lawrence scheme have declared that it cannot be completed for less than twice $600,000,000.

A painful experience with estimates should make us cautious in respect of what any huge project will finally cost. The conclusion to which my studies of the matter have led me is that, as a r. of dollars and cents, it would pay the people of (_ TI 1 ' give a straight bonus

of six cents per bushel on a ' ; ' wheat rather than go into this costly enterprise. U cc-Jd be cheaper in the end, and we should know ^ . :rc the money went. If Mr. Drury were to take pencil L id paper for ten minutes he could readily convince himself that a capital liability of only $400,000,000, as Canada’s share, plus the cdèt of maintaining the proposed new canal system, would be the exact equivalent of a public contribution of seven cents per bushel on 300,000,000 bushels of export wheat per annum.

The Water Power Bogey

THE United States needs water power. It is, in fact, the supreme need of that country at this stage of industrial development and industrial competition. On the other hand, if I have proved any one of my points in these articles, it is that our neighbors do not urgently need increased transportation facilities by way of the St. Lawrence inland waterway. Only a relatively unimportant and unimpressive usé is now made of the excellent and adequate facilities afforded by that route; and the figures in that regard are as likely to fall as to rise.

Hon. Mr. Drury speaks of “the insistent demand of the immense commerce and industry of the Great Lakes and the regions tributary to them for better connection with the seaborne commerce of the world;” but I cannot find anything in the official records to justify his concept of either the “immense” volume of American inland waterway business or the urgent demand, except politically, for increased facilities. By no straining of the plain facts can the present American traffic through the Soo gateway be reckoned beyond 4,000,000 tons as available for the St. Lawrence. Furthermore, Canada’s export business over that route has not yet reached 9,000,000 tons; so that the two combined, and I am well within the mark, would be less than 13,000,000. These are not big figures, and they represent some measure of duplication. When compared with railway traffic they are actually very small. The capacity of the existing system is certainly two or three times that volume, and could be raised to five times without the channel being deepened. In fact, as I shall show later, the solution of the entire transportation problem is already in sight without spending a dollar on the proposed St. Lawrence project.

The Value of Water Power

IN a broad way it might be said that the nation which has the greatest volume of water power will have a distinct, if not controlling, advantage in the rivalry for industrial supremacy which has been begun throughout the world. It is the cheapest known form of primary power, and power is basic in production. If I am not mistaken, Canada is in a distinctly favorable position in that regard, since she has larger resources in water power than any other country.

Assuming quite frankly, therefore, that water power is the impelling motive behind the proposed St. Lawrence development scheme, should Canada become a party to it? With her eyes wide open, should she go ahead with an exceedingly costly canal undertaking, which she does not need, in order that she should receive a certain proportion of the resultant water power? It is a fair question. Before solemnly registering our answer, let us look at the whole matter dispassionately and from the rational standpoint of self-interest.

Whatever the growth of national industrial interests may make necessary in the future, only a man who is unfamiliar with the facts would for a moment say that Canada is just now in need of additional water power. A little farther along I will give a few figures in ordet .to show how amazing has been the development of that type of powër~dürmg~tÊe

past two decades in particular. No one, of course, is able to say what will be our requirements as the years proceed; but I shall not be successfully contradicted if I repeat, as I do very positively, the assertion that we have enough and to spare at the present time. Therefore, my first point is that Canada could not justify the taking of any immediate part in this project on the ground of need, either now or in the near future.

My second point is that when Canada needs additional water power every consideration of prudence and sound policy should lead her to make the St. Lawrence the final resort. In the March issue of Nation’s Business Sir Henry Thornton has an article in which he says: “Every industrial centre in the Dominion is now served with hydro-electric energy and has within easy transmission distance ample reserves for the future.” That is true; and it is significant. These existing reserves are numerous and valuable. They could be developed at considerably less cost than the St. Lawrence. A nation cannot afford to be wasteful of money any more than an individual, and Canada has very strong reasons for being prudent.

Power and Population

rT'HERE can be no question about the -Ivalue of water power in this industrial age. But it is quite easy to exaggerate its bearing on population. I mention this because the alleged favorable effect on population has been accentuated, and with obvious effectiveness, in connection with this St. Lawrence proposition. Quite recently the advocates of the Beauharnois power enterprise put forth the statement that the development of 500,000 horsepower would mean an increase of 2,000,000 in the population of the Dominion. Even the bases of the calculation were given, and they were almost identical with those which have been used to bolster the St. Lawrence scheme. Again it is well to test theory by the cold gauge of experience.

Between 1891 and 1901 the population of Canada increased from 4,833,239 to 5,371,315, or by 11.1 per cent. No one would for a moment argue that water power development gave any appreciable stimulation to that upward movement. Between 1921 and 1928 the growth of water power proceeded on an unprecedented scale. It brought into use 2,047,765 horsepower over and above the volume available in 1920. The total was thereby raised to 4,556,219. If the contention of propagandists rests upon a sound foundation, this development of power should have added 8,000,000 to the population of the Dominion; yet the arresting truth remains that the actual increase, using only official figures, vas but 869,517. Adding the average for the eight years, so as to complete the decade for comparative purposes, the increment would be 11.8 per cent as contrasted with 11.1 per cent for the corresponding period between 1891 and 1901 when water power could not have been a factor.

Thus theory falls before the impact of stern official facts. If water power did not have any discernible effect on population between 1921 and 1928, how can it be assumed that the result would be any different in the future? Yet I have no thought of lightly regarding the value of new and cheap power. It would be senseless to do that. My only point in that relation is made when I say there is no warrant for suspecting that many millions would be added to the population if the St. Lawrence development should take place. That the power developed would be a source of national strength I do not for a moment deny; but we must all frankly see that up to this moment new power has done no more than take care of the normal increase in population.

Millions of Horsepower

TT IS calculated that 4,500,000 horse-*■ power would be developed by the scheme under consideration, of which Canada’s share would presumably be half. Hon. Mr. Drury puts the total power at 5,000,000, and he places Canada’s share at 4,000,000. At all events, that is my understanding of what he has written. Thus far in the official discussion, however, only a fifty-fifty basis has been implied. The point is not important at the moment. What impresses me when I read such huge figures is, that few people apparently have any definite concept of what 4,000,000 horsepower really means, or even, 1,000,000. It would turn a tremendous number of wheels. Even 100 horsepower will operate a plant of considerable size. I shall not endeavor to excite imagination by inventing illustrations, but content myself by saying that the country would be utterly unable to absorb millions of horsepower if it were to become available at once or within the next decade. It could put only a fraction of it to useful purposes; for fresh development has always been ahead of demand. On the whole, we have a substantial surplus at the present time.

I confess to the wisdom of looking ahead; and ye¿ I yield to no one in my confidence and optimism regarding the industrial potentialities of the country. All said and done, there is such a thing as rational and calculated optimism, and there is also such a thing as rash and unwarranted optimism. Therefore we would do well to base our outlook on experience rather than on theory or mere hope.

Who Would Control?

TT WOULD scarcely be possible to

exaggerate another phase of this matter. The Supreme Court of Canada has not settled the question of jurisdiction as between the Dominion and the provinces; and it is quite clearly fundamental. Ontario and Quebec appear to be determined to contest the claims of the federal authorities to the utmost, and I cannot share Mr. Drury’s conviction that an easy, satisfactory and prompt settlement of the dispute will be had. In the meantime, it would be exceedingly rash to take a single step until that issue has been settled.

But I have more particularly in mind the question of ultimate control under international administration. Obviously, an undertaking of that nature would carry with it joint and co-equal authority in the disposal of power. If Canada could not absorb her share at once—and she certainly could not—would it be allowed to lie idle, or would it be sold temporarily to the United States? To suggest such a situation is sufficient. My point is that under joint control Canada would have to be constantly on the defensive. Power once rented might not be returned.

Even Mr. Drury abandons his high optimism at that point and admits the danger which might arise.

In fact, Canada could not possibly approach this matter in too cautious a mood. It is inconceivable that in such a situation any man, or group of men, could draw up a document which would serve as a basis of joint control, faultless in all its definitions and anticipating every possible contingency. How, for example, could provisions be made so perfect and comprehensive as to exclude the play of three forces which carry with them sinister suggestions? I mean industrial rivalry, greed, and politics.

And then comes in the vital matter of Canada’s permanent surrender of her sovereignty in the St. Lawrence. If that were no more than a sentimental consideration I should not even allude to it. It would be subordinate to the economic view. But it is very much more than a matter of mere sentiment. It has intensely practical implications, most of them so obvious as to make explanations unnecessary. My own judgment, whatever it may be worth, is this: We are getting along very nicely in all our relations with our neighbors across the boundary, and every consideration of national safety and peace suggests the expediency of avoiding any change which would introduce the slightest probability of misunderstanding and friction.

The United States is a nation of 120,000,000. Canada is a nation of less than 10,000,000. These two countries are industrial rivals. Notwithstanding the fact that we are small in numbers, we export on the per capita basis three times as much as do our neighbors. We have bright prospects. Left to ourselves, with vast resources, we shall continue to grow. Yet at every angle we shall be met in our upward march by fierce competition from the United States. Our resources in water power will obviously have much to do with our industrial expansion under such conditions. Is it necessary to amplify that thought? I think not. Let every man who reads this do his own thinking along that line.

Above all things, no one should allow himself to be misled by the bright pictures painted by professional propagandists in this matter. The people of Canada should soberly realize the nature and priceless value of their heritage, as well as the wisdom of working out their national destiny free from risky entanglements.

The Solution

T_TAPPILY, a satisfactory and logical Jsolution of the transportation aspect of this matter is in sight. I have tried to make it plain that practically all of the trouble on the St. Lawrence inland route arises in the 119-mile stretch between Prescott and Montreal. That cannot be too definitely understood. The negotiation of the long series of canals in that section of the river accounts for the slowness of the traffic movement; and that situation brings out in bold relief the fundamental truth that unless time could be saved the use of larger vessels would not have a favorable effect on rates. I say very positively, out of a long and absolutely independent study of this inland waterway problem, that time could not be saved in that way, since the larger the vessel the slower her passage through canalized waters

The only thing that could possibly help the St. Lawrence inland waterway would be a speeding-up of the transportation service. As I have just said, a deeper channel and the use of larger vessels could not shorten the voyage time between Fort William and Montreal, nor could such changes modify the adverse effect of a season only three and a half months in length, so far as profitable business is concerned, plus the unfavorable play of one-way traffic and tremendously increased overhead. How then could a speeding-up be brought about?

The answer is quite simple. When transfer facilities at Prescott, now under way, have been completed, let that point be the eastern end of the Great LakesSt. Lawrence waterway system. Nothing would be lost by doing that, and much would be gained. At Prescott the railways could pick up all cargoes and transport them to Montreal in five or six hours. It now takes a vessel from two to four days to do it, although one learns nothing of that rather important fact from the propagandists. Furthermore, inasmuch as it takes a vessel just as long to get back to Prescott, empty, it will be seen that from four to eight days could be saved in the round trip.

The railways could probably carry grain from Prescott to Montreal at the rate now allowed to the steamers on the basis of time. Since, however, the latter would be able to make a greater number of voyages each season, because of the elimination of the slow and costly run through the St. Lawrence canals both eastbound and westbound, their economic position would be improved. Under such conditions they could make the use of larger vessels pay, because for most of the time they would be in open water. In no other way would it be practicable. If steamers drawing twenty-five feet of water attempted to use the proposed locks between Prescott and Montreal the time limit of the round trip would certainly be lengthened; and once more let it be pounded home that time is the controlling factor in the fixing of rates by water.

A Bright Outlook

"L-TERE, then, is Canada’s logical course of action. It would save her from adding enormously to her already very heavy liabilities for something she does not really need. It v/ould open the way for the consideration of water power development on its strict economic merits and entirely apart from the perplexing transportation question. There is not a single obstacle in the way. It is precisely the solution which a group of business men, looking at the matter as a problem in dollars and cents, as well as a way to reach a certain definite end, would adopt. A nation cannot afford to be less businesslike.

In order to give it the emphasis of reiteration, I say again that here is the reasonable and practical way of speedingup the St. Lawrence inland waterway. It would inevitably reduce the present humiliating diversion to Buffalo-New York of more than half of all Canadian and American export wheat. Be that as it may, the only means by which full advantage could be taken of the new Welland canal would be to bring the larger vessels down to Prescott and have them transfer their cargoes at that point to the railways. To build a new canal system in the St. Lawrence would defeat, rather than help, the end at which the advocates of the proposed development are aiming, which is cheaper and more expeditious transportation facilities by water. Here, too, is an easy way of escape from the entire international project, leaving the Canadian people in full possession of their sovereignty in the St. Lawrence and free to work out their destiny along independent lines.

Finally, let us not forget that canals belong to a bygone period of transportation development. They are slow, costly to build and costly to maintain, and are available for no more than seven months each year. That is a terrible drawback. The money a new waterway system would cost would meet our railway needs for many years to come; and railways are in keeping with the spirit and purposes of the times. Canals are not. They cannot, in this northern latitude, render a service commensurate with their cost. Canada, therefore, would do well to think long and carefully before yielding to either fear or offers of favorable tariff consideration in this matter. To yield might lead to infinite and perpetual remorse.

Editor’s Note—This is the second and concluding article by Mr. Payne in reply to Mr. Drury. Mr. Drury will present his rebuttal to Mr. Payne’s arguments in an early issue of MacLean’s.