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Canada and Newfoundland

Trade Conditions and Relations




[Canadian Annual Review , 1922; for the full citation, see the end of the text]


Newfoundland lay so close to Canada, its history and growth were so nearly related to Canadian development and interests, the strategic importance of its position was so vital to Canada, that, aside from political relations, they were almost one - though there were not, of course, the sympathetic trade and financial relations which a closer union would naturally produce. It controlled, strategically, the Atlantic pathways of trade and the Naval position of the Canadian Dominion; it owned Labrador, the strip of cold and little known territory - rich in pulpwood and water powers - which spread along Canada's Atlantic coast from Nova Scotia to Hudson Straits; it had great possibilities in production with vast iron resources in Belle Isle - a tributary part of its coast line - and with varied riches in fishing, in general mining, in lumbering and in agriculture.


With a healthy climate and picturesque and beautiful scenery; with great forests and pulp-wood and splendid Fisheries; with 4,000,000 acres of excellent agricultural land available and a trade which grew from $30,200,000 in 1912-13 to $51,000,000 in 1920-21 and by 50 millions in the decade; with a revenue which had doubled in 8 years; with unusual sporting facilities for fisherman and hunter and good railway accommodation; the Island had a fine basis for progressive prosperity. In these later years, however, it had been passing through a severe depression - fisheries, lumbering, mining, railways, revenues and trade had all been affected. In 1922 conditions slowly improved with a population placed by the new Census at 262,938 or 20,000 more than in 1911.


Negotiations, early in the year, were under way with British capitalists for the establishment of a large water-power development and the erection of paper mills in the Humber Valley ; the project promised 235,000 horse-power with a mill having a capacity of 400 tons of newsprint a day. The Newfoundland Products Corporation, which had this development in hand, asked the Armstrong-Whitworth firm to act as their technical advisers and to assist in the financing and management, and this was agreed to. The timber limits were carefully cruised and the amount of wood available estimated to be 10,500,000 cords, or enough wood on the limits to supply the mill for 50 years. The cost of the whole development including site, pulp-wood, construction of mill, material, machinery, etc., was put at £4,000,000 and the project involved expenditures of $14,000,000 in two years.


In August the Great Lakes, Newfoundland Atlantic Company, Ltd., was incorporated at St. John's with $10,000,000 capitalization to take over the assets of a concern started in 1914 but which had not proceeded with a project which embraced the construction of a railway from Rantem Bay, Trinity, to Little Southern Harbour, Placentia Bay, the operation of a train ferry service to Louisburg, N. S., and the construction of a railway from Humbermouth, Bay of Islands, to Southwest Arm, Green Bay, and a train ferry service from Bay of Islands to Gaspé, Quebec. The Lumber interests controlled by M. E. Martin were, in October, taken over by the North American Trading Co., with $500,000 capital. Sir Richard Squires, Prime Minister of the Island , was in London during August as were Hon. W. R. Warren , K.C., Hon. R. K. Bishop and Hon. J. D. Ryan of the Government. Speaking to the press (Aug. 5) Sir Richard stated that business conditions were improving greatly and a spirit of optimism was prevalent; at a Dinner, on Aug. 2nd, he stated that a project was in hand for co-operation between the British and Island Governments for combined support in certain large developments. The Premier described Newfoundland as a stepping-stone between the Old World and the New in settlement, in the Atlantic cable, in aviation, and in wireless, telegraphic, and telephonic communication.


At this time Sir W. L. Allardyce was appointed Governor in succession to Sir C. A. Harris. On Nov. 8 it was definitely announced in connection with the Newfoundland Produce Corporation and its great Pulp project that the British Government had agreed to a $9,000,000 subsidy and that of Newfoundland to a similar amount ¾ subject to approval of the Legislature. At Montreal , on Dec. 7, Sir Richard Squires confirmed the statement, said that it involved the production of 400 tons of Newsprint daily in perpetuity and would revolutionize the industrial life of Newfoundland . Of the electric power lying idle it was planned to utilize 80,000 to 100,000 h.-p. for the newsprint plant, while the remainder would be devoted to other industries, one of which was ore-smelting. If the Legislature approved the plan, the Armstrong-Whitworth firm would attend to the Hydro-electrical development and to the construction of the mills. At the close of the year it was stated that over 1,000,000 tons of ore shipments had gone from Bell Island to Germany ¾ the largest export on record.


Politically, Newfoundland continued its ever-heated discussions, though the Squires' Government maintained its position. The estimated Revenue for 1921-22 was $8,404,500 and Expenditures $8,307,795. The legislation of the Session - April to June - included the authorization of a Loan of $6,000,000 for Public Works, Railway liquidation account and general purposes; an Act for the Protection of Neglected Children and one to regulate the trade in Opium and other Drugs; ratification of an Agreement selling the Submarine Cable Line between Newfoundland and Nova Scotia to the Commercial Cable Co., of New York for $60,000; an Act to facilitate the reciprocal enforcement of judgments, etc., in Newfoundland and other parts of the Empire; an Act to Encourage Ship-building under a Bounty system and an elaborate measure reviewing and re-organizing War Pensions; an Income tax measure running from 5 to 8 per cent. on small incomes and up to 35 per cent. on $100,000 a year.


The Railway question continued to be a troublesome one. In 1921 the Government had arranged with the Reid-Newfoundland Co. to pay operating losses up to $1,500,000 for the year of June 30, 1922. The Government advanced the Reids $1,000,000 of this amount in the first half-year to enable them to lay in coal and supplies for winter operation, and in the first quarter of 1922 another $250,000; finding, however, that the losses on operation were less than expected and that this sum would be more than enough to cover the deficit, it refused to pay any more. The Reids replied that their agreement was for the full amount, that their financing was based upon it, and they were owed large amounts which could not be collected promptly, that they were without sufficient cash to meet the monthly pay-roll of $125,000 and that if the Government would give them the remaining $250,000 they would refund the unused portion after June 30. To this the Government replied that it would not, as the Reids already owed it $517,000 on other accounts which the Government had tried to collect for the past 10 months.


To this the Reids rejoined that they had a counter-claim against the Government for a far larger amount. The net result was a tying up of the whole system at two separate periods; an offer from the Company to sell the Railway to the Government ¾ which had the legal right to take it over in case of default for $2,500,000; the alternative, a legal arbitration with a $6,000,000 Railway claim. There was a compromise and a temporary Government advance and in June a further arrangement under which the Railway and its allied Steamship services were to be operated by R. C. Morgan of Winnipeg, an official of the C.P.R., on behalf of the Government, and by R. G. Reid of the Reid-Newfoundland Co., with Morgan as General Manager; the Government was to meet the expenses of operation, but all revenues were to be applied against operating costs.


As to Canada , there were some important developments of this period. Sir R. Squires was in Washington during January to try and modify the new Tariff impositions; he went on to Ottawa to discuss various matters with Mr. Premier King. Trade conditions between the countries were being vitally affected by U. S. competition; yet in both cases the American tariff excluded their products wherever possible. In the 12 months ending Mch. 31, 1914 (before the War) the Island trade included $4,508,090 of Imports from Canada and $1,840,523 of Exports to the Dominion; in 1922 the figures were, respectively, $9,317,639 and $1,387,766. In figures submitted to the North Sydney , N. S., Board of Trade early in 1922, it was shown that out of 212 subdivisions of commodities in Newfoundland trade, the United States led in 103, Canada in 92 and the United Kingdom in 15. Out of 42 principal commodities the United States led in 26 and Canada in 12. For the year ending June 30, 1922, Newfoundland 's Imports from the U. S. were $6,127,958 and its Exports to that country only $1,911,749; as to Great Britain the Imports were $2,036,512 and the Exports $4,866,821; the total Imports were $18,209,853 and Exports $19,478,417. A resident Trade Commissioner from Canada to Newfoundland was urged.


A matter brought up by the Island Premier, when in Canada during July, was an alleged discrimination against the Island through Canada increasing her postage rate to Newfoundland from 3 to 4 cents for a one-ounce letter, while mail going from Canada to the United States enjoyed the three-cent rate. It was pointed out unofficially, in reply, that the Universal Postal Union had in 1921 decided that all countries should increase their rates and that most of them had done so; that the rate imposed by Canada up to October, 1921, was 3 cents for a one-ounce letter to any point within the Empire, whereas the initial letter rate from Great Britain, Australia and New Zealand to Canada had for over a year been 4 cents; that for this reason and that stated above, Canada's postal rate was duly increased to 4 cents for a one-ounce letter to any point in the Empire, including Newfoundland; that the U. S. rate stood as it had for years and was kept at this rate as a convenience to the people of Canada. The legal dispute as to Labrador and its Canadian boundaries continued during the year; in April Rt. Hon. C. J. Doherty, K.C., was appointed Canada 's Counsel in the case when it should come before the Judicial Committee; Sir Patrick McGrath visited Canada in July to investigate certain points on behalf of Newfoundland . Overtures were made to Jamaica for the extension of its Canadian Preference on fish to those of Newfoundland . During the year, also, (Aug. 27) a Newfoundland War Memorial was unveiled by Sir R. A. Squires at Amiens, France, and its Memorial Park at Beaumont Hamel further improved.


Source : J. Castell HOPKINS , " Canada and Newfoundland ; Trade Conditions and Relations", in The Canadian Annual Review of Public Affairs, 1922, Toronto, The Canadian Review, 1923, 1046p., pp. 206-210.




© 2004 Claude Bélanger, Marianopolis College