How Serious is the DEFENSE SCANDAL?

Does the Currie report represent one of many rotten apples or a lone rotten apple in an otherwise healthy barrel? The truth lies somewhere in between, this Maclean’s report on our military spending indicates

FRED BODSWORTH February 1 1953

How Serious is the DEFENSE SCANDAL?

Does the Currie report represent one of many rotten apples or a lone rotten apple in an otherwise healthy barrel? The truth lies somewhere in between, this Maclean’s report on our military spending indicates

FRED BODSWORTH February 1 1953

How Serious is the DEFENSE SCANDAL?


Does the Currie report represent one of many rotten apples or a lone rotten apple in an otherwise healthy barrel? The truth lies somewhere in between, this Maclean’s report on our military spending indicates


AS PARLIAMENT began the grave and perhaps politically decisive job of dissecting the Currie report, most Canadians had made certain interim conclusions of their own.

Until the RCMP moved in to force a clean-up, one of Canada’s largest military camps had become a happy hunting ground for crooks and looters wearing the disguise of public servants. If other army camps escaped the corruption uncovered at Petawawa it was in many cases because of accident and the innate honesty of most Canadian servicemen, rather than because of proper safeguards against corruption. At some administrative or policy level yet to be determined, someone who is paid to protect the taxpayer’s money and the nation’s military security had fallen down on the job -—inexcusably and disgracefully. •

Leaving the Petawawa disclosures out of it entirely, nothing else could explain the startling fact that between 1950 and 1952 the chief auditor of the Department of National Defense, during his routine checks on spending at eighteen other military camps between Halifax and Victoria, had reported, with small or no apparent result, a total of one hundred and forty-five other breaches of the regulations designed to guard against misuse of military funds.

But the Petawawa scandal and the evidence of neglect and carelessness at other depots serviced by the Army Works Services still left unanswered the big question: Were the conditions found in the Works Services an isolated product of the special pressures within that fast-growing and heavily burdened branch of tho army? Or were they symptomatic of methods and attitudes prevalent elsewhere in the nation’s military forces? Did the affaire Petawawa represent one of many rotten apples or a single rotten apple in an otherwise healthy barrelful?

The Government had been under a crossfire of criticism over its handling of the defense budget for several weeks before George S. Currie’s blockbuster descended. The Opposition had been accusing it of tossing around billions of defense dollars recklessly and wastefully. It had been charged that defense contracts had been used to make political friends in by-election ridings; that mountains of unneeded material were being bought to subsidize slack industries; that Government buying sprees had swamped military-supply depots with surpluses of clothing and barracks stores which would gather dust for years.

These accusations get deeper into the defense effort than the limited field covered by the Currie investigation. Maclean’s was well along with an investigation of its own into the broad field of defense expenditures when the Currie report cast a new and foreboding shadow across an already turbid scene.

For a complete and honest appraisal, Canada’s defense effort takes a lot of looking. Even the royal commission now being demanded by the Progressive Conservatives could never scrutinize the six hundred new purchasing contracts a day being let on behalf of the armed forces. Its size alone makes a full examination of defense spending by anyone outside the government or the services almost impossible. There is also the barrier of security regulations which keeps much of the picture permanently blacked out. Maclean’s doesn’t profess to have anything approaching a complete and

final answer to the question: are we getting our money’s worth in defense? But during its own enquiries this magazine has amassed a great deal of evidence, some of it reassuring, some of it dismaying.

Defense is by far the nation’s biggest single business and biggest single expense. In 1952 it accounted for two billion dollars; from every federal tax dollar last year, fifty cents went to pay for the thousands of items from ships to shoe laces which are being woven into the kaleidoscopic fabric of Canadian defense. (Ships: eleven million dollars apiece; shoe laces: two cents a pair.) And defense may cost us more than ever this year.

It’s not too difficult to size up the situation on the “two-cent” items, the shoe laces, neckties, forks and teapots. But on defense wares such as ships, planes and electronic equipment the enquiring layman finds information hard to get because of legitimate security checks. Often even the information that is available is so technical that only a handful of experts within or close to the Government knows what it all means. The Government’s political opponents are subject to the same limitations. If they seem to dwell unduly on trivia such as neckties and teapots it is not because these items are of great importance in themselves, but because they are relatively easy to study. If silly blunders can be made in the simple purchasing of forty-nine-cent serving forks for messes— as certainly has happened—then conceivably the same blunders are possible with things like aircraft which cost a million dollars each.

An illustration of security’s impenetrable screen was contained in a list of more than five hundred defense orders compiled by the Government for the special parliamentary committee on defense expenditures last spring. Under “Aircraft” twenty-one individual contracts were listed with details of type of plane, the producer and cost. These contracts came to about $220 millions. But lumped together in the twenty-second aircraft item was an undisclosed number of contracts the total value of which was $670 millions. The only details provided under this item covering three quarters of our aircraft spending were: “Supplier: various; description: aircraft; date of order: various; number of units: classified.”

There, in a single indecipherable item, was the equivalent of almost one third of this year’s total defense budget. And the parliamentary committee has not been permitted to ask a single question about it.

The portion of the record around which the current debate hinges started in February 1951. Communist China had entered the Korean War about two months before. A “war by ’52” hysteria was sweeping the Western world. On Feb. 5 Defense Minister Brooke Claxton announced Canada was going to pour five billion dollars into a three-year military program far bigger than we had ever attempted in peacetime. The outbreak of war in 1939 had found Canada so unprepared that we didn’t even have uniforms for the men who rushed to recruiting depots. It wouldn’t happen again, Claxton promised. A rapid expansion of recruiting and equipment-production would double the hitting power of Canada’s standing forces by 1954 and, in addition to this, the program called for widespread stockpiling of all essential equipment.

To get the five-billion-dollar program started, the $800-million defense appropriation of 1950-51 was doubled to $1,600 millions for 1951-52, and later boosted again to more than $2,000 millions for 1952-53. Army, navy and air force were instructed to requisition the clothing and barracks stores they would need (a) for the men they expected to recruit immediately, and (b) for the mobilization stockpile that would be required during the first three months in the event of war. These requisitions are reviewed by the Department of National Defense, then passed along to the Department of Defense Production which does the actual contracting and purchasing.

Without warning, this interlocking military and civilian organization was called upon to handle a budget suddenly doubled. In the rush they pulled some real boners. They stockpiled thousands of simple housekeeping items; they calculated many of their requirements on World War II standards and estimates, forgetting that circumstances had altered; they made simple errors in arithmetic costing hundreds of thousands of dollars.

The military brass apparently responded with a lot of hasty arithmetic. They took the list of their World War II supplies holus-bolus and in many cases ordered a complete refill. The orders appear to have then been whisked through Ottawa with little serious checking.

One navy order, for example, was for enough hat bands bearing the legend HMCS to create a stockpile that will fill present peacetime requirements for twenty-seven years.

An RCAF order for dish towels— one official described the quantity as “out of this world”—was checked by Defense Production Minister C. D. Howe. It was discovered that a misplaced decimal point had made the order ten times greater than it should have been. The contract had been let but there was, fortunately, still time to cancel a large portion of the order.

The prize army boner in this class involves teapots. The army ordered 29,630 aluminum one-and-a-half-quart teapots from a Long Branch, Ont., firm for $88,000. Then someone remembered that most of the new barracks had cafeteria-style messes and there was little need for table teapots. By this time most of the teapots were ready for delivery. Defense headquarters had one consolation—at least the boner was caught in time to stop similar teapot orders then being prepared by the air force and navy.

Defense authorities almost walked into the same trap a few months later with an order for serving forks. The original contract was for sixty-two thousand forks. Before production had started the order was cut to forty thousand, reportedly because a simple error in arithmetic had been discovered. Then the switch to cafeteria-style messing was remembered and the order chopped again, this time to fourteen thousand five hundred. Now the Defense Department admits that“maybe” there was no need to stockpile an item like serving forks.

These thousands of teapots and serving forks, incidentally, are used by nowhere near the full strength of one hundred thousand men now in Canada’s armed forces: only forty thousand men eat in army messes; the rest live out.

The Defense Department claims doggedly that the fifteen thousand raincoats it recently obtained for a Canadian Women’s Army Corps force that is now slightly over one thousand is not a purchasing blunder. Officials explain: 1, They are about to launch a

big CWAC recruiting drive because the Canadian Army is soon to have a new and as yet secret role for its women members; 2, The uniform is a big attraction for recruiting of women and, if the uniform isn’t there, many potential CWACs don’t enlist.

It would take an electronic brain to straighten out the traffic jam in defense neckties, for the Department of National Defense, the Department of Defense Production, Prime Minister St. Laurent and Defense Minister Claxton don’t even seem to agree on the cause or immensity of the jam. A return tabled in the House last June reported that approximately one million ties then on order would cover the needs of the armed forces, including reserves, for two years and nine months—thus into 1955. Yet, in spite of this almostthree-year supply, Defense Production contract lists show another eight hundred and seventy thousand neckties on order since then. These ties have cost us $667,101.

The real irony of our present defense shopping spree is that we are now paying millions of dollars for the same varieties of materials that just five to seven years ago we were practically giving away through the War Assets Corporation. It is painfully obvious now, with hindsight, that War Assets was all a horrible blunder, but, drunk with the dreams of permanent peace as we were in 1945, perhaps no one can be blamed.

In some cases we are not merely rebuying the same classes of material, we are buying back exactly the same pieces we sold at knock-down prices. The Babb Company, of St. Johns, Que., bought a large supply of spare parts for Harvard aircraft from War Assets in 1945. Now the Defense Department is rebuying the same spare parts—at current prices, not the 1945 War Assets prices.

We wound up the war with seven hundred and sixty thousand men in uniform. Every man had two blankets, so at the very minimum there was a military supply of a million and a half blankets. Most of these were sold at a dollar or two each. In the past two years we have spent $13,202,700 on new blankets, which, even at ten dollars a blanket, would represent at least thirteen hundred thousand of them. This is practically up to the 1945 supply—for a force, including present reserves, that is only one quarter as large as the 1945 active force.

Many artillery veterans suspect the Defense Department was hoodwinked in a deal involving our stock of 25pounder guns. As part of the weaponstandardization program Canada agreed to dispose of its 25-pounders and stock up with the U. S. 105-millimetre gun instead. Over the last two years we have sent two hundred and forty 25-pounders to Europe under the mutual-aid program. But the standardization program bogged down and, at last official report, we had received only one hundred and thirty-eight 105-millimetre guns from the U. S. in replacement. The 25-pounder, regarded by many artillerymen to have been the best gun used in World War II, was made in large quantities in Canada.

Although aircraft production and purchases are high up on the security scale, it is nevertheless one of the larger and costlier defense items on which enough information has trickled out, officially and unofficially, to make a tentative appraisal possible. Three of our aircraft ventures are worth looking at. Oddly enough, they consist of one which is probably our costliest defense mistake, another that may be our finest defense achievement to date, while the third—as yet too embryonic to appraise profitably—may eventually become either our greatest blunder or our greatest accomplishment.

What looks like our biggest and ! costliest defense mistake so far was the I Government’s backing of the Avro jetliner development program by A. V. Roe Canada Limited, at Malton, near Toronto. Between 1947 and 1951 the Avro project cost about nine million dollars—six and a half million in outright government subsidy, the remainder company funds.

The project was well along toward large-scale production when the De; partment of National Defense decided it needed fighters instead of jet transports and called the whole deal off. A. V. Roe was ordered to concentrate on development of its jet fighter, the ! CF-100. Then the Department of Defense turned around and, at a cost of three and a half million dollars, ordered j two de Havilland Comets, another jet transport, from de Havilland of England. The Government has insisted that the Avro jetliner was dropped because the CF-100 project was more urgent and A. V. Roe couldn’t, work full blast on both. What it. hasn’t said much about is that England’s Comet has a range almost three times that expected from the Avro jetliner.

Avro’s CF-100 has been much praised and much criticized. There’s no doubt in the minds of the Opposition I that the CF-100 project has dawdled along so slowly that the plane is either a dud, or if not a dud, will be obsolete I anyway before we manage to get any I I numbers in the air. They claim that it ; i has developed into the biggest and j costliest of all defense boners. Claxton j i is just as sure that the CF-100 is close j to becoming Canada’s crowning defense ; achievement. The truth is something I that only a handful of top Avro, RCAF | and Government experts know.

In any case, the CF-100 has cost us a pile of money. By last June payments 1 to A. V. Roe had exceeded $121 millions. Contracts signed since then | have come close to an additional I $70 millions. Most of this has been for the CF-100 or for the Avro-designed Orenda jet engine with which the CF-100 is being powered.

The CF-100 story started about five years ago when the RCAF sized up the U. S. and U. K. designs available fori jet interceptor aircraft, and decided there was nothing there that filled the bill for Canada. Long range was our j first and paramount requirement to guard against attack across the Arctic. ¡ The plane developed had to be an all! weather fighter, equipped with electronic devices that would find enemy bombers in Arctic fog or darkness and automatically aim and fire its guns when the unseen target was in range. I It had to be capable of warming up and taking off quickly and possess terrific speed.

It was a tall order for a nation that had never before designed a warplane of its own. Early in 1949 A. V. Roe was told to get to work on the CF-100. Two years later the first prototype was turned over to the RCAF for testing. There were cheerful reports that mass deliveries of CF-100s would soon follow. But in a few days the prototype was returned with orders to correct several “bugs” or operating weaknesses.

In 1951 the Government’s defense hierarchy, evidently none too happy about Avro’s progress, first ordered Avro to forget its jetliner and put all j its technicians to work on the CF-100, ; and it followed this up with a wholesale : government-engineered dismissal and replacement of Avro’s top management. ‘

One report that is said to have originated with an RCAF test pilot blames the original delay in the appearance of the first prototype on a changeover that became necessary in the CF-100’s intricate electronic equipment. Defense Production ordered a supply of U. S. electronic apparatus to be installed in the CF100’s nose for allweather fighting. The CF-100’s airframe was designed especially for this apparatus when only the electronic equipment’s weight and dimensions were known. For the CF-100’s speed, the electronic gear—which takes over from the pilot and flies the plane on its target—has to have an effective range of two miles.

After Avro’s aerodynamicists had worked for months on the CF’-100’s design an RCAF pilot was sent to the southern U. S. to test the electronic equipment on order there and found that it had a reliable range of about a quarter of a mile. When another satisfactory electronic aimer and rangefinder was obtained, it was either a different weight or different size which threw all the earlier aerodynamic calculations into a muddle. The CF-100 airframe had to be largely redesigned.

Reports that the present CF-100 is still nose-heavy may be a hangover of this earlier electronic gear mix-up that hasn’t yet been totally corrected.

Whatever happened, RCAF men are said to have commented privately that the CF-100 program is at least a year behind what they had hoped for when the first prototype was delivered. Meanwhile, some RCAF squadrons which were originally planned as CF-100 squadrons have since been converted to F86 Sabre jet fighters instead.

What is probably more important than the money involved or the mere delay in acquiring squadrons of a plane we badly need is the fact that the CF-100 will be a year or so nearer to obsolescence before it gets into the air in squadron strength.

There are some signs now that the critics may be too extreme. Mass deliveries of the CF-100, which have been promised for a year and a half, are apparently getting started. Exacting RCAF performance tests have been going on for months and there have not even been hints or rumors that the present CF-100 falls short to any serious extent from the rigid demands originally laid down by the RCAF’. Claxton told Maclean’s that the first CF-100 squadron of at least twelve planes would be fully equipped for action by March or early April.

While final judgment of the CF’-100 must wait, the F86 Sabre program undertaken by Canadair of Montreal can go down on the record as probably the defense item from which Canadians have obtained more defense per dollar than any other.

Three years ago the RCAF adopted the supersonic-speed, U. S.-designed, swept-wing Sabre jet as its generalpurpose fighter, pending development and test of the CF-100. U. S. production of the Sabre could do no more than fill Uncle Sam’s own needs so Canada was forced to plan a Sabre production program of its own. Canadair at Montreal got the job and, with Government help, began tooling up with the U. S. designs. The engines and a few other components were to be produced in the U. S.

Canadair’s Sabre production records have beaten, in many respects, those of the California plant which created the plane in the first place. The last im| proved model, the F86E, was being Í rolled out by Canadair before the ! Americans got it in production them! selves. Production figures are supposed I to be top secret, but it has been announced that by the middle of this year, when the changeover to the 1 Avro-built Orenda engines is planned,

Canadair will have produced about seven hundred Sabres.

Canadair, already rolling off Sabres faster than the RCAF can use them, is now also producing surplus planes for Britain and the U. S. The U. S. air force is flying Montreal-built Sabres in Korea, and Canada expects to deliver up to four hundred Sabres to Britain within the next year. The six RCAF Sabre squadrons in Europe currently form the elite of NATO’s air strength there.

At least some of the criticisms fired at the Defense Department have backfired on the critics.

One of the favorite strategies of anti-Government newspaper editorial writers is to take the year’s total defense budget of two billion dollars, divide it by the active armed forces’ strength—one hundred thousand men —and say that every Canadian soldier is costing $20,000 a year. The same equation applied to other nations reveals that a U. S. soldier costs about $13,000 a year, a Netherlands soldier about $5,000. Actually, the Defense Department claims to be pleased with these figures, although it points out that comparisons are probably so inaccurate that they are practically meaningless.

In the first place, Ottawa officials claim that, aside from stockpile purchases, the department is also buying equipment for the reserves, and for a cost-per-man figure the budget should be divided by at least 200,000 instead of 100,000. Furthermore, they say that the U. S. defense budget does not include many of the U. S. mutual-aid expenditures of a type that come under Canada’s defense budget.

But even if we are spending more on defense per man in uniform than a majority of other nations—and they admit we probably are—Defense authorities insist we should he thankful, not critical, for it means that Canada is holding up its end with dollars instead of flesh and blood. Ottawa authorities are not too eager to stress the point for they figure it’s a good bargain for Canada and we would not be too wise advertising it loudly internationally. They claim that Canada’s present international defense role is one in which the emphasis is on war production instead of uniformed manpower. Canada has already fully equipped with transport and weapons at least three European divisions—in Belgium, Holland and Italy.

Some cynics have suggested Canada could save money by paying every soldier $15,000 a year and telling him to clothe, house and equip himself. Actually, a big lump of Canada’s defense costs this fiscal year have had no direct connection with the size of the forces on active service. Here are some illustrations: $385 millions for aircraft production and repair, $352 millions for mutual aid and other NATO costs, $245 millions for construction of barracks and airfields. The Defense Department claims that much of Canada’s spending of the past two years has been on capital account items such as these which will not be a recurring annual cost.

About a year ago the army’s own public relations staff released a story about barracks construction at Shilo, Man., which had Canadians asking if we were building palaces for soldiers. According to the story, a $2-million barracks block was being constructed at Shilo to shelter two hundred men— a cost of $10,000 per man. The corrected version of the story which obtained far less publicity was: There were two barracks blocks involved for 250 men each, a total of 500 men to be sheltered instead of 200; and the final cost was $1,700,000 instead of $2 millions. The Shilo barracks, therefore, cost. $3,400 per man instead of $10,000.

Claxton says that when all the capital-account spending is deducted and you get down to the bare essentials of pay, pensions, clothing, food, barracks maintenance, medical and dental care, a Canadian serviceman costs $3,022 per year, an American GI about $5,000, and a French or Dutch soldier about $600.

Some Canadian newspapers have been mystified as to why a soldier’s personal kit which cost $137 in 1945 costs $400 today—an increase of almost two hundred percent—whereas in the same period the cost of living index for clothing has jumped only about seventy percent. National Defense’s answer is i hat the man who enlists today is handed a fuller kit than he would have received in 1945. New items added to the kit since 1945 include a $60 summer dress uniform, two pair of $3.27 pyjamas (“We gave them bedsheets, so we had to give thèm pyjamas to cut bed-linen laundry costs”), a pair of $1.10 rubbers. According to the Government’s figures, while civilian clothing costs have increased seventy percent this factor has accounted for only fifty-seven percent in the increased cost of a soldier’s kit because of the large volume buying the Government does. The other forty-three percent of the increased kit cost is due to the new items added.

A Defense Department head said frankly: “Canada is the only major NATO country that doesn’t have conscription. With a voluntary recruiting program, we have to give the boys more or we don’t get them.”

Another criticism that the Government refuses to admit is that it has been handing out defense contracts for political advantage in ridings where by-elections were being held. It has been suggested that political conniving was involved in two necktie contracts placed with Kitchener, Ont., firms and a contract listed as “face cloths” placed at Farnham, Que. Kitchener is in the riding of Waterloo North, Farnham is in Brome Missisquoi, in both of which by-elections were held on May 26, 1952. The questioned contracts were let just a few weeks before the by-elections.

All of the documents relating to these contracts were placed before a Maclean’s investigator. The story of the Kitchener neckties starts in March 1951, almost fifteen months before the by-election, when the Department of Defense sent along to Defense Production a contract demand for eight hundred thousand neckties. The cloth didn’t become available until October 1951, tenders were asked for on Oct. 22, and twenty-three tenders were received before the Nov. 6 deadline. The order was so large it had to be divided among the six lowest tenderers; one of the Kitchener firms entered the lowest,

the other Kitchener firm the third lowest.

Defense Production officials say the Farnham, Que., contract was erroneously called “face cloths” in the publicized lists—it was actually for seven thousand yards of “woolpile double-face cloth” for parka coats. On March 20 invitations to tender were sent out to seven Canadian firms that could produce this cloth. Only two tendered—the Farnham firm at $4.67 a yard and a Woodstock, Ont., firm at $4.97. On April 16 the Farnham tender was approved and the contract let.

Last year Opposition hecklers jumped on the Government when they learned Canada had purchased twenty wartime U. S. Sherman tanks at $150,000 each when we were obtaining new Centurion tanks from Britain at $135,000 apiece. The Sherman is an older and all-round inferior tank to the Centurion. Why did we buy second-rate tanks at a higher price? The answer: Canadians in Korea needed additional tank support. The only tanks immediately available in the Korean theatre were U. S. Shermans in Japan. They were on the ground, all transportation costs already paid. So we bought them, and Defense people don’t think the price was too bad.

Another defense expenditure that Opposition members have ridiculed privately is the purchase of about five thousand .22 rifles at a price close to $60 each. They say this price on a bulk purchase as large as that would represent a normal retail price of around $100. Retail prices for .22 rifles run normally from $9 to about $70. The explanation: The rifles are especially made so that they can be broken down and packed in survival kits for aircraft flying in the Arctic. They are an emergency gun that an airman down in the Arctic, can use for shooting game. Said a Defense Department official: “Those guns have occasionally been the difference between survival and starvation. They are the best that money can buy. I don’t think we have to apologize for th&t.”

If the whole vast defense record could be examined item by item, probably it would not reveal a very different pattern than this pattern of inexcusable boners and bungling side by side with some fairly commendable achievements. Perhaps—and the Currie report hinted at this too—it is partly an illustration of what happens when an organization’s responsibilities and duties are suddenly doubled in an international atmosphere that might start raining atomic bombs any moment.

In any case, two things are apparent. If the officials charged with spending our defense dollars deserve handsome accolades, they still haven’t proved it. If they deserve sweeping and unqualified condemnation, that hasn’t yet been proved either.