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Letter No. 8 of Joseph R. Smallwood on Confederation



Editor Daily News,

Dear Sir,


There are several questions which cannot receive a categorical answer except in direct negotia­tions with the Dominion of Canada.


The Public Debt - Each one of the nine Provinces, as it entered the Confederation, had its Public Debt assumed by the Dominion. This subject has a long and complicated history which it would take too long to describe here, and it must suffice to say that the Dominion cannot take over our entire Public Debt. They could, in fact, under existing schedules, take over no more than $9,000,000 of it. They could actually take it all over, but on that portion of it exceeding $9,000,000 we should still have to pay the annual interest which we could not afford.


The bulk of our Public Debt is owned in Great Britain by banks, trust companies, insurance companies and individuals. At the present the British Govern­ment, as part of the deal whereby we lost self-govern­ment, guarantees our Debt both as to principal and interest.


If we revert to Responsible Government, the British Government may or may not continue to guarantee our Debt. I have heard it suggested in high quarters in this country that whatever happens, whatever constitutional changes we make, Britain will continue back of our Public Debt: and that what Attlee and Addison meant when they spoke of not being anxious to increase Britain's commitments to Newfoundland was that they were already guaranteeing our Debt, would continue to do so, but hesitated to do anything else for us.


I cannot speak with assurance on this point, but in any case the matter must obviously become the subject of negotiation between us and the British Government. I do not doubt that they will agree to take over our Debt; or, if we enter Confederation, that portion of it which Canada cannot assume.


I feel that Britain would be willing to make this final contribution toward the success of constitutional stability in Newfoundland ; but I feel even more confident that she would do it as part of a Confedera­tion deal.


The Railway - This is one of our greatest problems. I am not clear as to whether the Dominion would automatically take over the railway and coastal-boat system. It might have to be the subject of negotiation. Certainly it would be a great gain for Newfoundland if financial liability for our public transportation system were assumed by the Dominion, and its opera­tion made the direct responsibility of, say, the Cana­dian National Railways. Operated in close collabora­tion with Canada 's mainland system, our system would clearly show a marked increase of efficiency and public service. Nor would the railroaders themselves, or coastal boat operatives, lose by the transaction.


Local Industries - It must not be assumed that Confederation means inevitably the collapse of local industries. Confederation will not hurt, but help our industries of pulp and paper manufacture, lumbering, sawmilling and mining. These industries would flourish under lower costs of production, and in any case would continue blithely along under any form of government which did not drive the cost of living to extremes. These industries embrace thousands of our people. The "local industries" comprise:

Beer and soft drinks


Bread, biscuits, cake

Automobile servicing and repairs

Clothing repairs and pressing

none of which would be hurt, but would be helped by Confederation through lowered costs of living and of production, and higher purchasing power; and


Tobacco and cigarettes


Lines and twines




Stoves, castings


Doors, sashes, etc.


all of which, on first sight, would be hurt by Confederation.


But is it inevitable that these would be hurt?


Would it not be practicable and economic for these local factories to become Newfoundland manufacturing branches of much larger Canadian manufacturing firms, to the advantage of both, and of the local employees, and of the general public of Newfoundland ? Some of them are already virtually that - local branches of Canadian manufacturing concerns - and all or nearly all the others surely could be.


Agriculture - As I see it, some branches of agriculture (using the word comprehensively) would be hurt; some might even benefit; and some might be mortally hurt.


Dairy farming would not be hurt, for it is hardly conceivable that local fresh milk producers will ever have to compete with such milk produced on the mainland. A local feed mill would prove a great help. Hay would be cheaper. And of course the greater purchasing power of the general public, would be a distinct benefit to dairy farmers, as to everyone else.


Producers of root crops and/or of eggs for sale would be in a different position. Without tariff protection, and exposed to the competition of root-crop products and eggs from the mainland, would they find it difficult to survive? The only "protection" they would have would be the transportation costs of getting the competing articles brought here from the mainland. As these transportation costs would likely be lowered (through our inclusion in the great freight-equalization scheme of the Dominion Government) this would not prove very great protection. On the other hand, the cost of living would be much lower under Confederation; which means that such local producers would actually need much less income to enable them to hold their present standard - that is, they could sell their products for probably more than two-thirds cheaper than they could without Confederation. I ask each egg and/or root-crop producer to imagine these situations


1) Canadian-produced eggs and root-crops come into Newfoundland duty-free.


2) Those products have to bear the cost of transportation to Newfoundland, as well as mercantile handling charges and profits here.


3) The local producers can sell their own products locally, at one-third less than without Confederation.


In those circumstances could they compete?


I know a little about farming, and a lot about stock-raising in Newfoundland . In the past two years I have raised, slaughtered and marketed over a hundred thousand dollars worth of pork in the form of fresh pork, ham, bacon, spare ribs, fat back, sausages, and lard. I know something about pork production in Canada. I know that with the cost of living lowered by one-third in Newfoundland I would produce pork and pork products in competition with the rest of Canada, especially if the duty were abolished on hogs and on other raw materials and implements used in pork-production.


To what extent this applies to egg producers and root-crop producers I confess frankly I do not know. I suspect that such producers would survive.


Source: Joseph R. SMALLWOOD, Letter to the Editor, The Daily News, March 11, 1946.


© 2004 Claude Bélanger, Marianopolis College