Backstage at Ottawa


March 1 1941

Backstage at Ottawa


March 1 1941

Backstage at Ottawa



MOST significant thing in Ottawa these days is a revival of talk about National Government. It is not talk from St. James Street or Bay Street, or from businessmen, or from Conservatives. It is talk from the shrewdest of Ottawa’s observers; talk shared freely by the Government’s own camp followers.

It is not talk of National Government on a party-union basis. What is being discussed is a ministry of Canada’s ablest leaders, regardless of politics. Mr. King, it is agreed, would be at its head.

The setup, it is suggested, would be this:

Mr. King as Prime Minister.

A War Cabinet of four or five of the ablest men available, with these relieved of ordinary departmental duties.

A ministry that would contain not more than eight of the fifteen members of the present Cabinet.

An Overseas Minister (a member of the Cabinet) who would be constantly and continuously in touch with the British War Cabinet and with the British war strategy and measures.

The case for this? Briefly, it is that the present Government—a straight party ministry—will not survive the test of what may come with Hitler’s “all-out” attack on Britain. That only a National, non-party Government can exact real sacrifices from the nation. That only a National Government can impose successfully the limit of war taxation. That, finally, only a National Government can heal existing scars on Confederation, restore and compel national unity.

This movement has not yet taken coherence; definite form. Ottawa believes it will take definite form. That it will be merely a matter of months before it emerges into shape and development. Ottawra is frankly afraid of some present manifestations.

Post-Sirois Harmony?

AFTERMATH of the Sirois Conference collapse is threatened national harmony. And understandably. The three provincial premiers—Hepburn, Aberhart and Pattullo—who torpedoed the report, thought that things would revert to the status quo. They were wrong. Failure of the conference didn’t leave the provinces as they were before; it left them worse off than before. It left them

without Dominion assistance in unemployment relief. Left them without possibility of Dominion loans. This, for some of them, may be disastrous.

Manitoba will have desperate difficulty in making ends meet; Saskatchewan even more difficulty. What if they fail? What if they find themselves unable to take care of relief? To pay for their social services? To send their children to school? Will—or can— they be left that way?

Hence Mr. Bracken. Mr. Bracken’s speech, a despairing cry that his province may have to boycott Ontario, Alberta and British Columbia, frightens Ottawa. Ottawa struggles desperately to maintain national unity; to gain co-operation. Endangering its hopes, threatening to crash everything, comes Mr. Bracken’s talk of boycott. Mr. King sees the spectre of an imperilled war effort through a Balkanized Canada, with Manitoba—likely to be joined by Saskatchewan — warring against Ontario, Alberta and British Columbia, and with Ontario-through Mr. Hepburn— warring against Ottawa. Mr. King’s fears are natural. Threats of trade and financial boycotts among provincial principalities

are not calculated to bring strong war effort; to help a $100,000,000 war savings campaign; to help war loans that may top $1,000,000,000.

There is Mr. Hepburn. The ruins of the Sirois Report about him, Mr. Hepburn offered Ottawa war co-operation. He has given it thus far by: (1) offering farmers—without consulting Ottawa—a two-cents-a-pound increase in the price of cheddar cheese, provided Ottawa unpegged the price of butter; (2) by withdrawing promised financial participation in a Canadian radio program for United States tourists (this to help war exchange); and (3) by coming out for “more currency.”

Mr. King and Mr. Hepburn

^ATTAWA, frankly, is puzzled by Mr. Hepburn’s currency talk; isn’t sure what he means; professes to believe he doesn’t know what he means. Finance Minister Ilsley—backed by the Bank of Canada—says there’s no currency shortage; that it is adequate to present needs. Mr. Ilsley adds that if future business demands more currency, the matter will be attended to, as in the past. He points to the Bank of Canada records to show that monetary media in circulation have been steadily increased.

But Mr. Hepburn, apparently, meant more than that. His plan, as he explains it, is that the Bank of Canada should print an additional $480,000,000 in notes, give it to the Government to meet current needs. In other words, the Government would have an extra deposit of $480,000,000 with the banks; could write cheques against it to pay for war contracts or munitions, or for anything else it was compelled to pay for or buy.

There would be that much more money in the hands of the people.

This, says Mr. Ilsley—and the Bank of Canada and the newspapers support him—would be inflation. An increase in the volume of money beyond need to facilitate the country’s war or

other business. The beginning of the spiral that would make goods and services dearer in terms of money; with resulting decrease in the workingman’s real wages, and disaster for the man on a fixed salary, and worse disaster for the man with savings, or with a pension, or with an insurance policy. This, argues Mr. Ilsley, w'ould be the most iniquitous sort of taxation, and the most unfair and most dangerous; and this also, holds Mr. Ilsley, would be just kidding people into belief that there’s some easy way —without belt-tightening—to pay for the war.

Whether Mr. Ilsley is right or wrong, or whether Mr. Hepburn is an inflationist or a non-inflationist, or merely doesn’t know what he is talking about, is immaterial to this Notebook. The real point is that Mr. Hepburn and Mr. King have their hatchets still unburied, with Mr. Hepburn wielding his more menacingly all the time. In other words, there is no war co-operation between Toronto and Ottawa —or co-operation of any kind.

Mr. King, his path with Mr. Hepburn strewn with Munichs, views the position sorrowfully. But Mr. King, apparently, has neither the will nor the opportunity to do anything drastic about it. He has no Ontario ministers strong enough to fight Mr. Hepburn. He has no Ontario parliamentary following willing to fight Mr. Hepburn. Mr. Hepburn has too much patronage. Ask the average Ontario M.P.

When Quebec’s Maurice Duplessis began making war trouble for Ottawa. Mr. King’s Quebec ministers—Lapointe, Power, Cardin—buckled on their armor, put him to rout. But in Duplessis' case there was an alternative— Mr. Godbout. In Ontario, in Mr. Hepburn’s case, the only alternative is Colonel Drew'. Mr. King isn’t sure that the alternative would be a safe one. Mr. King, in fact, doesn’t like Conservative alternatives. Thus, on the surface, the position seems hopeless.

One remedy — seemingly sane — is being suggested. This is that with the session of Parliament over. Mr. King should call another Dominion-Provincial conference. It wouldn’t deal—say its sponsors—with theSirois Report, nor with any other report; nor with any cut-and-dried plan whatsoever. There would be no agenda. Mr. King would simply call the provincial leaders to Ottawa, say to them: “Gentlemen, we all want to win the w'ar; let us get together to win it. We can’t help win the war, can’t put Canada’s full strength in it, if we go on warring against one another. I want you. therefore, to sit down with me and see what we can do; how each and all of us may help. Let us, as Canadians, close our ranks before the enemy.”

Rightly or wrongly, Ottawa believes that this plan would get somewhere; that it is at least worth trying. Mr. King, seeing the dangers of the existing position, with its threat of growing worse, may be induced to try it.

Staggering Budget In Sight

\^EANWHILE experts, financial and military, work on the coming budget. Watch out for it. Estimates for the Army alone are understood to top $800,000,000. Add to that more than $300,000,000 for Air; add more

than $250,000,000 for the Navy; add the hundreds of millions that must go into war supply contracts; and then add finally the more than $400,000,000 for ordinary government costs, and the total sum reached is up over $2,000,000,000. Indeed, the prediction here—and by the most conservative observers—is that war and ordinary outlays in the coming fiscal year will be well around $2,500,000,000.

The figure is staggering; seems impossible. It doesn’t seem so impossible when it is realized that for tanks alone the estimated outlay is $110,000,000. The truth is that with all services expanding, the rate of war expenditure is growing from day to day. In many cases, it is impossible to estimate

accurately what costs will be; making the task of budgeting desperately difficult. Mr. Ilsley may make an error of between $200,000,000 and $300,000,000 one way or the other, without inviting blame.

Whence the money?

Not more than $1,000,000,000 of it can come from taxes. The balance—whether it be another $1,000,000,000 or more— must come from the War Savings campaign, and from loans. There is no way out of it.

To say that the Government isn’t anxious over the matter, would be wrong. The Government is anxious; desperately anxious. Also, there is some questioning of the fact that the bulk of the money needed is to go to the Army. The Air Force was supposed to be our big war contribution. We were to put our greatest strength in the Commonwealth Air Training Plan, in the training of fliers. Yet the Army is to take twice as much money as the Air Training Plan; take more than the Air and the Navy combined. Minister of Defense Ralston, it is understood, defends the change. As Mr. Ralston talked to Mr. Churchill, he is in a position to argue.

Many hold, and with increasing insistence, that our war effort is too scattered, too diffused. Their contention is that many of the things we are doing, or attempting, aren’t vital; that we are spending vast sums on nonessentials that should go into essentials; that both from the standpoint of immediate aid to Britain and the future defense of this continent, much that we are doing isn’t useful.

Federal Aircraft

IRCRAFT production? Aircraft pro duction remains the Government's big headache. Biggest pain of all has been the “company” which was set up to dispense contracts to the aircraft producers; to provide, most of all, the bomber training planes known as Avro Ansons. Launched last July, this “company,” known as Federal Aircraft, has failed to get anywhere. It was supposed to evade the red tape which impedes government effort. Instead, it tangled itself in red tape of its own; failed month after month to produce plans for improved Avro Ansons; finally decided to produce fuselages on its own. In a basement of the Montreal Baseball Club’s stadium (owned by well-known Liberal Senator Raymond and leased for a reputed price of $12,000 a year), it set to work. Just how much progress it has made is not clear. What is clear is that it has not got on amicably with aircraft companies; also—and more distressing—that it has not produced Avro Ansons.

In the absence in London of Minister of Munitions Howe, an attempt was made to scrap Federal Aircraft. Acting Minister Angus Macdonald favored such action, as did Director of Aircraft Production Ralph Bell, and H. R. MacMillan, chairman of the War Requirements Board. Prime Minister King, the grief laid before him, was willing, but a cable sent to Mr. Howe brought the request that the scrapping be withheld until his return home.

Now, with Mr. Howe home, and the trouble all examined, Federal Aircraft remains. Mr. Howe, apparently, took the ground that Federal should be given a further chance; that to scrap it would be to lose whatever experience it had gained; that a new seiup might mean further delay. This, admittedly, is a truce with trouble; a sort of compromise; and Ottawa’s best belief is that if Mr. Howe gets away with it he will be lucky.

If there be comfort in the thing at all. it is in the Government’s insistence that, no matter what Federal Aircraft does, or fails to do, there will be an adequate supply of planes for the Air Training Plan. They are to come from another source.

The MacMillan Crisis

OBSCURE at this writing is the position of H. R. MacMillan. Most potent “dollar-a-year” man recruited to war service, Mr. MacMillan came to Ottawa on the invitation of Minister of Munitions Howe. Mr. Howe made him Timber Controller, and MacMillan, biggest timber exporter in the British Empire, did an admittedly great job. Later on, when they were forming a War Requirements Board, MacMillan was picked to head it—which brought trouble. Taking his job seriously—he is that sort of a man —MacMillan began probing into the activities of the Department of Munitions and Supply; examined contracts in the light of such things as basic supplies of steel; challenged contract specifications by the Department of National Defense; became “tough” alike with contractors and officials, delved into aircraft production.

Intolerant of inefficiency, and with a restless vigor, he wasn’t overly tactful. Ottawa began to hear stories of officials who had the misfortune to incur his disapproval; stories, as well, of Cabinet Ministers and other “powers” who didn’t relish his methods. No one questioned his ability.

With the return of Minister of Munitions Howe from London, MacMillan’s activities, plus his demands, created a small-sized crisis. He was asking that Federal Aircraft be blotted out; that General Motors Harry Carmichael be given charge of war production; that a priorities board be set up; and that various other high munitions officials be either “let out” or shifted.

Mr. Howe, almost as determined as MacMillan, though perhaps not so ruthless, sought a compromise. There were long deliberations in the Cabinet; conferences and discussions; and in the end a decision to keep Federal Aircraft.

MacMillan, apparently, accepted the Federal Aircraft decision, but insisted on a priorities board and upon Carmichael being made chief of war production. There followed at least two fairly tense interviews between Howe and MacMillan, with MacMillan winning a partial victory. A priorities board—which Mr. Howe described as “unnecessary” only a few days before—was accepted, and Mr. Carmichael succeeded E. P. Taylor as chief of armaments production, Taylor taking the post left vacant by the late Gordon Scott. What remained obscure was the position of MacMillan himself. As merely a member of a priorities board—one without executive authority—would he be able to satisfy his restlessness for action? Or, realizing the difficulties of our democratic processes, plus the whole Ottawa setup, would he be content to go along as best he might, using his prestige to get his way.

The guess of this Notebook is that Mr. MacMillan will stay in Ottawa. Mr. Howe, purely objective in his thinking, and with no talent for spite or underhand dealings, wants him to stay; wants to use his abilities. Moreover, Ottawa is beginning to learn that differences between business tycoons and “dollar-a-year” men are not the same as differences between Cabinet Ministers or ordinary politicians. The businessmen have more “bargaining” ability; are more ready to accept propositions; to concede something here in order to gain something there. Despite rumors and headlines in the press, we should hate to go out on a limb and predict Mr. MacMillan’s retirement.

St. Lawrence Seaway

THERE is some trouble—not yet visible on the surface—over the St. Lawrence Seaway. Quebec’s Mr. Godbout has told Mr. King that he is dead set against it. Mr. Roosevelt has told Mr. King that he is dead set for it. Which puts Mr. King in a quandary. Mr. King doesn’t want to deny his good and great friend Mr. Roosevelt. Not at this juncture. But Quebec—well. Quebec has to be reckoned with in Mr. King’s electoral college.