April 28, 1941

THE WAR

REVIEW OF BALKAN CAMPAIGN AND RECENT DEVELOPMENTS

LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

Mr. Speaker, as this House of Commons reassembles to-day, after an adjournment of less than three weeks, hon. members will no doubt wish me to review the events of the last eighteen days, and to say a word as to their significance.

Hon. members may recall that speaking on the day prior to adjournment, in reference to the Balkan campaign which began on April 6,

I stated that the attacks on Yugoslavia and Greece marked the launching in deadly earnest of the 1941 military campaign. I said that we must be prepared for a bitter struggle in the new phase of the war which had then actually begun. I added that there was certain to be frightful destruction of life and property, and that we must be prepared for setbacks and disappointments. By pointing out that the enemy's superiority w7as so formidable as to appear "almost overwhelming", I sought to prepare the public mind as to what seemed, at the time, the all but inevitable result of the enemy's sudden attack with vastly superior numbers of men and machines. What I did not forecast at that time, and what no one could venture then to predict, was the rapidity with which the nazi forces would be able to occupy the whole of Yugoslavia and the mainland of Greece. Events have now told that story.

The Balkan campaign began on April 6. By April 9, the Germans had broken through to the Yardar valley in Yugoslavia, and taken the Greek port of Salonika. Organized resistence in Yugoslavia lasted barely four days. On April 15, the Yugoslav army capitulated, and the country's king and government fled to Greece. On April 10, the Germans broke through the Monastir gap into northwestern Greece and, at the same time, effected a junction with the Italians in Albania. Despite heroic resistance, the Greek armies and the British expeditionary force which had come to their assistance were driven steadily back. On April 23, the Greek army, retiring from Albania, found its retreat barred by the Germans, and surrendered. The same day King George II and his government withdrew

The War

The Balkans

to Crete. Within the past forty-eight hours, the Commander-in-Chief of the Greek army has resigned his command, and the German troops have entered Athens.

It will be recalled that, on April 7, I stated that the Balkan campaign might well be the prelude of a great battle for the whole Mediterranean basin. The governments of the United Kingdom and the dominions have never been under any illusion that the campaign in 1941 would be any less terrible than the nazi campaign of 1940, or that the 1941 campaign would not follow, in all essential respects, the pattern of last year. I think I emphasized the fact that the great nazi army was still intact, and still undefeated. I also stressed the further fact that the earlier victories in Africa and in Albania were victories against the Italians, not against the Germans; that we could not afford to be misled by the successes, however great, scored against Italy.

In Africa, the events since adjournment have amply demonstrated the difference between German might and Italian weakness. On April the 5th, the nazis recovered Bengasi in Libya for the axis. Within eight days, German forces had recovered, with the exception of Tobruk which continued to be held by the British, the whole of the Libyan territory overrun by the British earlier in the year. Since April 14, they have been halted at Salum on the Egyptian frontier. At the moment they are attempting an advance into Egypt. The lightning nazi thrust on land was partially offset by British naval attacks upon axis communications. On April 16 the Admiralty announced that an important enemy convoy was destroyed on the way to Libya, and on April 21 the harbour of Tripoli was subjected to a terrific naval bombardment.

On the day Bengazi was captured by the Germans, the British and South African troops entered Addis Ababa, the capital of Ethiopia. On April 8, the port of Massawa in Eritrea was taken from the Italians. The fall of Massawa marked the end of effective Italian resistance in East Africa. This fact was recognized by the proclamation of President Roosevelt on April 11, which opened the Red sea and the gulf of Aden to United States ships. News has been received this morning of the fall of Dessie in Ethiopia. The virtual disappearance of effective Italian resistance in East Africa has released for duty elsewhere in the middle east a great part of the British forces engaged in that region.

On April 19, growing unrest, and the potential threat to the oil fields of Mosul and the pipe line to Haifa, occasioned the landing of British troops at Basra, in the Persian gulf, to protect British communications in Iraq.

While these events have been proceeding with dramatic suddenness in the Balkans, Africa, and the middle east, the nazi air attacks over Britain have been intensified, and the grim battle of the Atlantic has not lessened in seriousness.

As respects the far east, probably the most significant event was the recent visit of the Japanese foreign minister, Mr. Matsuoka, to Berlin, Rome and Moscow, and the signing at Moscow, on April 13, of the Neutrality pact by the Soviet union and Japan. What these events really signify remains a matter of speculation. The growing tension in the far east was reflected in the announcement, on April 24, of the landing of another contingent of Australian troops at Singapore.

Those who have studied the military situation as a whole will not have been greatly surprised, save as respects its rapidity, at the success of the nazi campaign in Yugoslavia and Greece. The odds against both countries were overwhelming. In the case of .Yugoslavia, the situation was made the more hopeless by the prolonged vacillation of the government under Prince Paul, and by the virtual encirclement of the country resulting from nazi collusion with Hungary and the occupation of Roumania and Bulgaria. When the new government was established by General Simovitch on March 27, it was given barely ten days to organize the defences of the country before the nazi onslaught. The difficulties of effective defence were increased by the long-standing friction between the Serbs and the Croats, and by uncertainty as to the loyalty, and subsequent refusal of a part of the Croatian troops to engage in hostilities. Until the very end, the anxiety on the part of Yugoslavia to preserve the strictest neutrality, and to give Germany no excuse for an attack, prevented the working out in advance of joint plans with the British and the Greeks, even after the hopes of a larger allied Balkan front had vanished.

In Yugoslavia, the familiar pattern of the nazi blitzkreig was repeated. It was Norway, Holland and Belgium over again. Without pre-arranged plans, British aid was necessarily less than might otherwise have been furnished, and also less effective when supplied. While greater aid might have prolonged the campaign, it is, however, only too true that it could scarcely have changed the result.

The Yugoslav army, with inferior mechanical equipment, a divided and distracted country and a civilian population subjected to all the ruthless violence of terrorism, was doomed to surrender after a brave but unsuccessful resistance. Yugoslavia and the world which applauded its honour and its

The War-The Balkans

courage, will some day know that the results of its resistance will be of far greater significance than they now appear. For freedom is not lost in defeat; it can only be lost in the unwillingness to defend it.

One aspect of the campaign in Yugoslavia is deserving of careful attention. Nothing could have demonstrated more completely the vital importance in modern war of superior equipment. According to the information available, the nazis did not have overwhelming superiority of man-power in Yugoslavia. They may even have had fewer troops engaged than the Yugoslavs. Their decisive superiority was in striking power-in machines and weapons of war.

The campaign in Greece reinforces the military lesson of the campaign in Yugoslavia. The British and Greek forces combined were much less numerous than the Yugoslav troops. But they were better equipped and better armed.

Whatever may be the purely military arguments for and against sending a British force to Greece, it will, I am sure, be generally agreed that the British were in honour bound to help the Greeks if they undertook to resist the Germans. The Greeks, by their dauntless courage in the long Albanian campaign, had more than earned all the aid which could possibly be given.

In the Balkans for six months the Greeks more than resisted the weight of the Italian attack. Although, according to ordinary mathematical and military calculation, the overwhelming comparative strength of the Italian empire made almost inevitable the early defeat of Greece, the Greek army, by heroic achievement and magnificent strategy, comfounded the prophecies of disaster.

The Greeks, of course, profited by air, land and sea power of the British in their fight against the Italians in North Africa. In the Mediterranean itself, Italian strength was also diverted by British activities. Nevertheless, Greece, with a spirit of independence, fighting alone on land, for six months, resisted and repulsed the vaunted might of Italy.

In carrying on by themselves, in Greece and Albania, the fight against their Italian aggressors, the Greeks had ever present, to their minds, the necessity of avoiding, if possible, a German attack upon Greece. During many months of Balkan intrigue there was the prospect that such an attack might come, but there was also the hope that it might be avoided. It was not until the German attack appeared inevitable that British military assistance was accepted. The plain fact is that the heroic Greeks, as long as Italy

was the only nation in arms against them, gravely resolved, and magnificently succeeded, in fighting their own battles.

The story of the battles recently fought by the forces of Australia, New Zealand and Great Britain, and the final result of their reembarkation to new battle grounds, is not yet fully known. It can be said, however, that one of the great actions of military history has been fought with superb courage. It is with a sense of proud kinship with her sister nations in the British commonwealth, that Canada records her admiration of the daring and bravery of the Australian, New Zealand and British forces who fought for freedom in the mountains and valleys of Greece.

In a war waged on so many fronts and divisible into so many phases, it is impossible at this time to estimate not only the ultimate result, but even the primary result of the various campaigns.

Although resistance to the nazis in the Balkans was not successful, it would be wholly wrong to imagine that, by fighting, nothing has been achieved for the allied cause. The alternative was a bloodless nazi conquest. The nazi losses in men and material have certainly been great. But that is not all. The devastation of Yugoslavia and Greece also marks loss for the Germans. The nazis had hoped to be able to exploit those countries as they have exploited Roumania. That Yugoslavia and Greece proved to be obstacles in the nazi path certainly made the way harder for the nazi war machine. Above all else, the resistance of these two peoples obliged Hitler materially to alter his general plan of campaign.

There are other important results from the Balkan campaign which we will do well at this time to remember. Germany has gained important military objectives, but as I have already said, her armies and air forces have suffered heavy losses. For the Italians, the Balkan campaign brought only defeat to their forces, and national humiliation. For Britain, the campaign has had some quite definite advantages. Had Germany's armies and air forces not been used in the Balkans, additional striking force would have been immediately available for use against Britain. Germany's preoccupation in Roumania, Bulgaria, Yugoslavia and Greece has given Britain additional time; and time is of the essence of this phase of the war, when British resistance and American help are the implacable powers over which Germany must triumph if Hitler is to impose his will upon the world.

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Apart also from tangible and material things, there is ever present the conviction that every time there is heroic resistance against great odds, every time men steel their hearts to preserve a nation's soul, the legions of freedom advance. It has often been said that, in the last analysis, the character of free peoples will decide the issue. Who will say that the heroism of Greece, the honour of Yugoslavia, and the dauntless spirit of Britain and the British dominions have not served to maintain the morale of the world?

On April 7, I pointed out that Germany was seeking the subjugation of the Balkan peninsula as a step in the outflanking of Britain's position in the Mediterranean. I suggested also that it might well be the beginning of a great battle for the whole Mediterranean basin. It is now clear that the nazi thrust across Libya, which had already begun before Greece and Yugoslavia were attacked by Germany, was more than a mere military diversion. The attacks in Libya and the Balkans were, in fact, two arms of the same design. They constitute a vast pincer movement directed against Egypt, the Suez canal and the pipe line at Haifa in Palestine, which supplies the British navy in the Mediterranean with oil.

The actual territory lost in Libya has relatively little value. It has been said that warfare on the desert is like warfare on the sea; what matters is the destruction of the enemy and the maintenance of one's own strength. The destruction of Graziani's army in Libya was clear gain. In Libya, as in Greece, the major partner has been obliged to take on the task which the minor partner failed to perform.

No one should underestimate the importance of other British successes in Africa. Eritrea, Somaliland, and Ethiopia have been severed from the Italian empire. Even if German occupation of the mountains of Greece and subsequent developments in North Africa bring a new menace to Egypt and the Suez canal, the menace of this hour cannot be what it was before the great Italian armies were captured or destroyed.

It would be unwise, however, to minimize the added danger to Alexandria, Suez and Haifa of the presence of nazi forces in Libya, or the demonstration of the ability of the enemy to move his forces to North Africa. While events have shown that naval power is the most effective British weapon in the present Libyan campaign, we must not lose sight of the fact that a fleet cannot continue to operate without bases or without an assured fuel supply.

The growing unrest in Iraq, Syria and the Arabian desert is a threat to the oil supplies

of the British- navy in the Mediterranean. As already mentioned, it was to defend her communications and her vital oil resources that Britain recently landed troops at Basra in the Persian gulf. We should not overlook the fact that the threat to British interests in Iraq is also a menace to Turkey. The now familiar nazi technique is, once more, in evidence. Instead of making a frontal attack, Hitler, clearly, is seeking to outflank and isolate the Turks. The success of this movement would mark the realization of the "Berlin-to-Bagdad" dream of the Germans in 1914, and would open to German exploitation the great oil fields of Mosul. Such a move by the nazis has long been expected. Hon. members may recall that, on November 12, I told the house that the problem of oil might well account for the interest which the enemy was showing in Iraq and Iran, and in the control of the Mediterranean basin.

The enemy is not limiting his interest to the eastern Mediterranean. The presence of a nazi force in Libya also constitutes a potential threat to the French possessions in North Africa. By turning westwards, the nazis might use their force in Libya as the left flank of a pincer movement directed against Gibraltar, which is already menaced by the nazi army in the Pyrenees, ready, if a chance offers, to strike through Spain.

Hitler has certainly not overlooked the possibilities of closing the Mediterranean altogether. This he may attempt by an attack through Spain, seeking control, not of the fortress, which may prove impregnable, but of the straits which are far more vulnerable. Germans and Italians in the guise of tourists and experts of the armistice commission, have already been infiltrating into North Africa. I give this appraisal of the general situation in order that due account may be taken of the enormous burden which the obligation to guard so many strategic points at one and the same time has placed upon the shoulders of Britain.

The Germans obviously regard the control of the Mediterranean as the key to the domination of the rest of continental Europe, of the middle east, and of North Africa. British naval power in that sea remains the most formidable obstacle to nazi ambition. Realizing the impossibility of defeating the navy in open combat on the waters of the Mediterranean, the nazis are evidently seeking to effect their end by encircling the fleet, cutting its line of communications both at Gibraltar and Suez, and gaining control of its supplies of fuel.

Let me add this: The nazi design in the Mediterranean is, again, not merely an end in itself. It is another stage in Germany's plan

The War-The Balkans

to achieve world domination. A nazi drive to the Persian gulf might, if concerted with military action in southeast Asia, constitute a vast axis pincer movement against the whole continent of Asia. In estimating all possible contingencies, we cannot, amid the uncertainty of rapidly moving events, ignore the . possibility of an attack on Singapore taking place at the same time as attacks on Gibraltar and Suez, and an attempted invasion of Britain. We must never forget that the destruction of the British empire is the supreme aim of the enemy. The world-wide threat to Britain is the measure of the magnitude of her task.

I had meant to say something of the other side of the picture, as it has developed since adjournment. I wished to refer to the steady growth of the strength of the defences of Britain against invasion, and of the improvement in the outlook for the Battle of the Atlantic.

I intended particularly to refer to the two ways in which United States aid is being made more effective: one, the coordination of production by the United States and Canada; the other, the patrol of the Atlantic by the United States. I intend, later to-day, to make a statement on the coordination of production as effected by the Hyde Park declaration. The importance of the patrol was set forth clearly, yesterday, in the stirring radio broadcast of Mr. Churchill. Mr. Churchill's speech is still fresh in the minds of all. I shall therefore content myself, for the present, with citing a few of his words. "It therefore was with indescribable relief," he. said, "that I learned of the tremendous decisions lately taken by the president and people of the United States. The American fleet and flying boats have been ordered to patrol the wide waters of the western hemisphere, and to warn peaceful shipping of all nations outside the combat zone of the presence of lurking U-boats or cruisers belonging to two aggressive nations. We British will therefore begin to concentrate our protecting forces far more upon the routes near their home, and to take far heavier toll of U-boats there."

Mr. Churchill went on to say that he could not believe the United States would allow the product of their skill and labour to be sunk to the bottom of the sea; that it now seemed the Americans were going to put their aid within British reach; and he then added these significant words: "That is why I feel a very strong conviction though the Battle of the Atlantic will be long and hard, and its issue by no means yet determined, it has entered upon a more grim, but at the same

time, a far more favourable phase. When you come to think of it, the United States are very closely bound up with us now, and have engaged themselves deeply in giving us moral, material, and, within the limits I have mentioned, naval support."

In these words Mr. Churchill disclosed the significance which Britain attaches to the naval and air patrols foreshadowed by Mayor LaGuardia in his speech in Ottawa on St. George's day (April 23). The recent speeches of Colonel Knox and Mr. Cordell Hull are likewise the clearest evidence of the determination of the United States that Britain shall not lose the Battle of the Atlantic.

What have for long been ominous probabilities, are, now, upon us as stem realities. The area of conflict widens every day; its intensity increases every day; losses on sea, in the air and on land will continue to mount; the scenes of terror and destruction which live in the memories of many lands free, beleaguered and invaded, will be repeated and renewed. In steadiness of heart, of hand and of vision we shall find our present strength and the path to victory. If we are depressed by the picture of to-day or to-morrow, we shall be unworthy of our allies and ourselves. Wars of endurance are not lost by the accidents of a day, or a week or a month. They are lost only by the steady disintegration of the moral fibre of a people. The stuff of which the peoples of the British commonwealth are made is not that kind of fibre. Let us therefore calmly and confidently continue to look at the facts steadily and as a whole, not bowed down by the failure of to-day, not unduly elated by the success of to-morrow.

Let me say that from now on as never before it is of the utmost importance that we should view the whole struggle in perspective, and seek to preserve a true sense of proportion. We must be prepared for the exten-tion of fighting over wide and wider areas, for a rapidity of movement at times, and in other places, not unlike what we have already witnessed in the Balkan campaign; and for an intensity and ferocity of warfare resulting in terrific destruction and in heavy losses of human life. Regardless of where the conflict may spread or how rapid may be the movement of forces, or how intensive and destructive the struggle may become in other parts of the world, we must keep ever in our mind the truth that so long as Britain stands no reverse will be decisive.

Britain is fighting with every ounce of her strength, every fibre of her being. We, in Canada, will strive more earnestly than ever to do our utmost on sea, in the air and on land; to work to produce, to manufacture,

Hyde Park Declaration

as we have never worked and produced or manufactured before. The news received yesterday of the landing in Britain of further contingents of Canadian troops, and airmen trained in the great commonwealth plan, should increase our confidence in the ability of Canada to help effectively in the decisive struggle. For the world it is renewed evidence of Canada's determination to spare neither her material resources nor her manhood in the battle for the world's freedom.

Topic:   THE WAR
Subtopic:   REVIEW OF BALKAN CAMPAIGN AND RECENT DEVELOPMENTS
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HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN

LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Right Hon. W. L. MACKENZIE KING (Prime Minister):

I should like now to

proceed with the statement I wish to make in regard to the so-called Hyde Park declaration.

On March 12, I described the United States lease-lend act as one of the milestones of freedom, pointing the way to ultimate and certain victory. The lease-lend act settled the principle of United States assistance to Britain and the other democracies. It did not, however, solve all of the complex economic problems involved in the mobilization of the resources of the United States and Canada in order to render to Britain, in the speediest manner, the most effective assistance and support.

One of the reasons for my recent visit to the United States and my conferences with the president, was the urgent need for Canada to find an immediate solution of some of the problems involved in our war-time economic relations with the United States and with the United Kingdom. Before indicating the extent to which a solution has been found in the Hyde Park declaration, I shall outline briefly the problems themselves.

It will be readily recognized that we, in Canada, could not possibly have embarked upon our existing programme of war production if we had not lived side by side with the greatest industrial nation in the world. Without ready access to the industrial production of the United States, and particularly the machine tools and other specialized equipment so necessary in producing the complex instruments of modern war, Canada's war effort would have been seriously retarded. We would have been forced to embark upon the production of many articles which, because of limited demand, could only have been produced at high cost, and over a considerable period of time. Canada also lacks certain essential raw materials which must be procured from the United States. Since the outbreak of war, we have steadily expanded our purchases in the United States of these

Mr. Mackenzie King.]

essential tools, machines and materials which were required both for our own Canadian war effort, and in the production of war supplies for Britain.

Even in normal times Canada purchases much more from the United States than we sell to our neighbours. In peace time we were able to make up the deficit by converting into United States dollars the surplus sterling we received as a result of the sale of goods to Britain. But from the outset of war, this has been impossible. The government realized at once that Canada would be faced with a growing shortage of United States dollars to pay for our essential war purchases. To conserve the necessary exchange the foreign exchange control board was established on September 15, 1939. As the need has grown, increasingly stringent measures have been adapted to reduce the unessential demands for United States dollars in order to conserve sufficient funds to make our payments for essential weapons and supplies of war. These war purchases could not be reduced without a corresponding, or perhaps an even more serious, reduction in our war effort. Despite the drastic measures taken to conserve exchange, the lack of United States dollars was becoming, as one writer expressed it, one of the most serious "bottlenecks" in Canada's war effort.

The problem of exchange was the most urgent problem we faced in our economic relations with the United States. But we also realized a growing danger of possible unnecessary duplication of production facilities on the North American continent, with consequent undue pressure on scarce labour and materials if Canada and the United States each tried to make itself wholly self-sufficient in the field of war supplies. We felt it imperative to avoid such waste, which might well have had the most serious consequences. The experience of the Department of Munitions and Supply, and the studies of the permanent joint board on defence, both suggested the same solution. That solution was the coordination of the production of war materials of Canada and the United States. This was in reality a simple and logical extension, to the economic sphere, of the Ogdensburg agreement.

The practical experience of a year and a half of organizing and developing war production in Canada revealed that many of the essentials of war could be made in the comparatively smali quantities required by Canada only at a prohibitive cost. They could, however, be produced economically in the United States where the demand was large enough to result in the economies of large-

Hyde Park Declaration

scale production. On the other hand, the production of other weapons and materials had been developed in Canada to the point where output could be expanded more quickly, and probably more economically, than new production facilities could be organized in the United States. It was, therefore, only common sense to extend to the production of war materials the same reciprocity in which, at Ogdensburg in August last, our two countries had permanently placed their defence.

During my Easter visit, I had the opportunity of preliminary discussions with the Secretary of State, Mr. Cordell Hull, and the Secretary of the Treasury, Mr. Morgenthau, at Washington. I also, later, had an opportunity of conferring with Mr. Harry Hopkins, who has been entrusted with immediate direction and supervision of the measures to be taken under the Iease-lend act. On Sunday, April 20, I spent the day with the president at Hyde Park. At the close of the visit, I gave to the press a statement of the understanding which the president and I had reached regarding the problems I have mentioned. That statement it is proposed to call the Hyde Park declaration. The declaration reads:

"Among other important matters, the President and the Prime Minister discussed measures by which the most prompt and effective utilization might be made of the productive facilities of North America for the purposes both of local and hemisphere defence, and of the assistance which in addition to their own programme both Canada and the United States are rendering to Great Britain and the other democracies.

"It was agreed as a general principle that in mobilizing the resources of this continent each country shoidd provide the other with the defence articles which it is best able to produce, and, above all, produce quickly, and that production programmes should be coordinated to this end.

"While Canada has expanded its productive capacity manifold since the beginning of the war, there are still numerous defence articles which it must obtain in the United States, and purchases of this character by Canada will be even greater in the coming year than in the past. On the other hand, there is existing and potential capacity in Canada for the speedy production of certain kinds of munitions, strategic materials, aluminium and ships, which are urgently required by the United States for its own purposes.

"While exact estimates cannot yet be made, it is hoped that during the next twelve months Canada can supply the United States with between $200,000,000 and $300,000,000

worth of such defence articles. This sum is a small fraction of the total defence programme of the United States, but many of the articles to be provided are of vital importance. In addition, it is of great importance to the economic and financial relations between the two countries that payment by the United States for these supplies will materially assist Canada in meeting part of the cost of Canadian defence purchases in the United States.

"In so far as Canada's defence purchases in the United States consist of component parts to be used in equipment and munitions which Canada is producing for Great Britain, it was also agreed that Great Britain will obtain these parts under the lease-lend act and forward them to Canada for inclusion in the finished articles.

"The technical and financial details will be worked out as soon as possible in accordance with the general principles which have been agreed upon between the President and the Prime Minister."

The immediate purpose of the joint declaration is set out in its first paragraph, which might be described as the preamble. It states that the president and I discussed measures by which the most prompt and effective utilization might be made of the productive facilities of north America. Let me emphasize the two words: prompt and effective. They indicate that while recognizing the short-run necessity of speed, the vital importance of the time factor, we have not lost sight of the long-run necessity of the utmost efficiency in the organization of our war production.

The preamble goes on to recognize a twofold object in ensuring this prompt and effective utilization of the productive facilities of both countries. Not only does it envisage the extension of the scope of our joint defence arrangements to the economic sphere, but it recognizes the advantages of coordinating the use of the resources of both countries as a means of speeding up and increasing the volume of aid to Britain from this continent.

Let me state this in another way. The Hyde Park declaration is more than an extension of the Ogdensburg agreement for hemispheric defence. It is also a joint agreement between Canada and the United States for aid to Britain.

The basic principle underlying the agreement is set out in the second paragraph. It is a recognition of the fact that each country has special advantages for the production of certain war materials which are lacking in the other, and that both countries will benefit by each producing for the other, as well as for itself, the defence articles

Hyde Park Declaration

which it is best able to produce. It constitutes an acceptance of the economic interdependence of Canada and the United States as the foundation of the programme of war production in both countries. It represents the application to war production of the principle, recognized by Canada and the United States in the trade agreements of peace time, that the exchange of goods is of mutual benefit.

The third paragraph of the declaration is an amplification of the basic principle of the agreement. It recognizes, on the one hand, the vital necessity, for Canada's war programme, of obtaining certain defence articles from the United States; on the other hand, it indicates the possibilities of the speedy expansion of Canadian production of other defence articles, munitions and strategic materials. It is not without significance that aluminium and ships are specified by name in the declaration.

One question which may arise in connection with the Hyde Park declaration is: how can Canada spare to the United States any defence articles or munitions? Surely, it will be said, all our war production is needed either for Canada or for Britain 1 The answer is that we have advanced so far in the production of certain articles that expansion beyond British and Canadian needs can be readily accomplished. That is true of certain types of small arms, guns and ammunition, certain explosives and chemicals, certain armed fighting vehicles, aluminium and certain other metals and materials, merchant ships and naval vessels of the type we have been building, namely, corvettes and mine-sweepers. There are in addition certain types of clothing and textiles, certain leather, rubber and timber products, and certain secret devices in which Canada could probably make an important contribution, if these were desired. On the other hand, the production of engines for aircraft in Canada would be a slow process, costly both in time and in those types of skilled labour and specialized equipment of which no surplus exists. Moreover, this is a field in which not one but many types are needed to fill the varied demands and improvements in designs that are constantly occurring.

The fact that Canadian war production is so well organized in many fields as to enable Canada to meet speedily many United States requirements is a high tribute to Canadian industry and Canadian labour.

In the declaration itself a rough estimate was made of the value of the defence articles which it is hoped Canada will be in a position to supply to the United States in the next twelve months. The estimate is between

$200,000,000 and $300,000,000 worth. We may be able to do better than this, but obviously detailed negotiations will be necessary with the appropriate purchasing departments or agencies of the United States government, in order to determine how best they can use the surplus capacity, existing and potential, of Canadian industry. The immediate significance to Canada of the sale of these defence articles is, of course, the provision of the United States dollars to help us in paying for Canada's essential war purchases in the United States.

While these United States purchases will assist us very materially in meeting our deficit, they alone will not solve the whole problem. A further important contribution to its solution is contained in another paragraph of the declaration which provides that Canadian purchases in the United States of materials or components to be used in equipment and munitions being produced by Canada for Britain will be made available to Britain under the terms of the lease-lend act. Hitherto it has been necessary to Canada to find United States dollars to pay for these purchases on British account. These purchases have materially added to the growing deficit in our balance of trade with the United States.

The combination of United States purchases in Canada and the lease-lending of defence articles for Britain will go a very long way toward the solution of Canada's acute exchange problem. It is, however, not anticipated that the whole deficit will be covered in this way. Essential Canadian purchases in the United States will still exceed United States purchases in Canada. There would, therefore, appear to be little prospect of relaxing any of the existing foreign exchange conservation restrictions without causing a new deficit which would imperil Canada's war effort.

The final paragraph of the declaration provides for the working out of the technical and financial details as soon as possible in accordance with the general principles set out in the declaration itself. Officials of the two governments are at present engaged upon the task of working out these details. Until that task is completed it will not be possible to say exactly what Canada will supply the United States or what the United States will supply Canada. I have already indicated certain articles which it is anticipated will be included in the list to be supplied by Canada.

Hon. members will, I am sure, be more interested in the broad significance of the Hyde Park declaration than in its technical aspects.

Hyde Park Declaration

Its most immediate significance is that, through the coordination of war production in both countries, it will result in the speeding up of aid to Britain by the United States and Canada. As a result of the better integration of North American industry, the proposed arrangement will, through increasing total production, have the further effect of increasing the total volume of aid to Britain. It will have a corresponding effect upon Canada's war effort. Full utilization of the production facilities we have built up, and specialization on those things which we are best fitted to produce, will increase both our national income and our own armed strength, as well as increasing our capacity to aid Britain.

As I have already said, the agreement will go a long way towards the solution of the exchange problem and, in this way, will remove one of the financial obstacles to the maximum war production programme of Canada and the United States. We, in Canada, have reason to be gratified at the understanding shown by the president and by the secretary of the treasury, of Canada's difficult exchange problem. We may, I am sure, feel an equal confidence that in the working out of the detailed technical and financial arrangements, Canadian officials will find the same generous measure of understanding and the same spirit of cooperation.

I have spoken thus far of the immediate significance of the declaration, of the effect it will have in speeding up aid to Britain in the critical months ahead, and of its importance in assisting us to meet our exchange problem. But beyond its immediate significance the Hyde Park declaration will have a permanent significance in the relations between Canada and the United States. It involves nothing less than a common plan of the economic defence of the western hemisphere. When we pause to reflect upon the consequences, in Europe, of the failure of the peace-loving nations to plan in concert their common defence, while yet there was time, we gain a new appreciation of the significance for the future of both Canada and the United States of the Ogdensburg agreement and of this new declaration which might well be called the economic corollary of Ogdensburg.

For Canada, the significance of the Hyde Park declaration may be summarized briefly as follows: first, it will help both Canada and the United States to provide maximum aid to Britain and to all the defenders of democracy; second, it will increase the effectiveness of Canada's direct war effort; and finally, through the increased industrial efficiency which will result, it will increase our own security and the security of north America.

It is appropriate at this point to emphasize the fact that, while the agreement will increase the effectiveness of our war effort and our assistance to Britain, the self-imposed burden upon the Canadian people will nevertheless remain as great as ever. The sacrifices which we are called upon to make will not be reduced by the Hyde Park declaration, but the results achieved by our sacrifices will, we believe, be considerably greater. At the same time, the risks of delays and breakdowns will be materially' reduced. The utmost effort of the Canadian people is more than ever needed in the present phase of this terrible struggle; but in making that effort we shall have, as the result of the agreement, the added satisfaction of knowing that we are making a greater contribution than otherwise would be possible to the cause of freedom.

In referring to the passage of the lease-lend act, I expressed in this house the view that "Canada's example, as a nation of the new world, actively participating to the utmost limit in the present struggle, has also had its influence in arousing the people of the United States to their present realization that freedom itself is at stake in this war."

Unhesitatingly, to-day, I would go one step farther and would say that the example given by Canada has, I believe, aroused the admiration of our neighbours and made them ready to accept this new partnership.

Last November, I said to hon. members of this house that the link forged by the Ogdensburg agreement was no temporary axis, formed by nations whose common tie was a mutual desire for the destruction of their neighbours. The Hyde Park declaration is, I believe, a further convincing demonstration that Canada and the United States are indeed laying the enduring foundations of a new world order, an order based on international understanding, on mutual aid, on friendship and good will.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Hon. R. B. HANSON (Leader of the Opposition):

Mr. Speaker, I am sure we have all listened with the utmost interest to the long and comprehensive statement which the Prime Minister (Mr. Mackenzie King) has just made. To me it divides itself naturally into three parts. The first was a historical narrative, with which I think most of us will be in agreement. Even if I were able, I would not attempt at this time to touch upon that. What admiration we have had for that noble little band of Grecian soldiers who have withstood the onslaught of the terrible Hunt What admiration we have had for that gallant band, fewer in number than any of us thought or anticipated, who stood so long side by side with the soldiers and compatriots from the

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sister dominions at the pass of Thermopylae and other historic places! Even the most stout-hearted and optimistic among us could not have foreseen any other result than that which has ensued. The only regret I have is that as yet there is no news of the safety of the British expeditionary force in Greece. Let us all humbly pray that they may survive what must be a most tragic occasion.

With respect to the battle of the Atlantic, the second division of the address of the Prime Minister, I think that those of us who listened yesterday to Mr. Churchill and who heard the remarks of the Prime Minister to-day will take heart for the future. A little later on I intend to refer to this matter again. In passing, I should like to refer to what is of particular importance to us as Canadians, namely, the Hyde Park declaration.

I am sure the whole nation read with great interest-for myself may I say that it was with great satisfaction-the joint statement issued by the President of the United States and the Prime Minister of Canada on Monday, April 21. To me that declaration, taken in connection with the aid-to-Britain measures passed by the congress of the United States, meant the closing of the ranks of the democratic nations to meet a common peril. Judged by that standard, it shows the strength of democratic solidarity, which is something for which we ought to be devoutly thankful.

To me it means the mobilization of the wartime resources of the north American continent in the cause of freedom. To Canada particularly it will mean the easing of the exchange situation as between the two nations and the extension of the provisions of the lease-lend act to munitions and to war equipment which Canada is now producing and will hereafter produce for Great Britain and which involve the purchase of materials in the United States. Without question, it will go a long way toward solving what must be an acute problem in international finance.

If Canada is able to sell to the United States during the coming year $300,000,000 in munitions, war equipment and raw materials, our deficit in United States exchange will at least be partly overcome. In any event this will ease the steady drain upon our United States dollar resources. In particular it will relieve Canada of the necessity of providing United States dollars for financing, in part, British orders in Canada which are based upon United States production, such as aeroplane engines. Heretofore we have been obliged to find not only the necessary Canadian dollars but the United States exchange as well. This is indeed important assistance and will go a substantial distance toward maintaining unim-

paired the independent financial position of Canada.

As the Prime Minister indicated in the course of his remarks, there would appear to be at least two declarations of principle, if not three. The first declaration which he has read is easily understood. It is agreed in principle that in mobilizing the resources of this north American continent each country shall provide the other with the defence articles which it is best able to produce and produce quickly, and that production programmes should be coordinated to this end.

I do suggest to the Prime Minister that he should elaborate this principle and state to the house and the country concretely just what defence articles it has been decided that Canada is best able to produce and produce quickly and which would be of advantage to the United States.

The second declaration, with respect to the expansion of existing capacity, is not quite so clear. The statement proceeds with the declaration that "there is existing and potential capacity in Canada for the speedy production of certain kinds of munitions, strategic materials, aluminum and ships, which are urgently required by the United States for its own purposes." In my view, this requires elaboration in order that we may properly comprehend its import, and I invite the Prime Minister to clarify that statement. Does it mean that we are to establish new plants in Canada? If so, are they to be Canadian plants, or are they to be plants established here as branches of United States factories? This portion of the position, I think, should be clarified as speedily as possible.

The country has welcomed the announcement that appropriate steps will be taken to acquaint the people of the United States with the nature and extent of Canada's war effort. May I express the hope that this will be done and done aggressively, so that there may be no misunderstanding of our position.

Recently the Prime Minister delivered an address which was intended to show the nature and extent of the effort of the Canadian people in their determination to carry on an all-out effort. By and large, I think that speech of the Prime Minister should have a good effect, but I am wondering if it was properly put over to the people of the United States. Recently, the lieutenant governor of the great province of Ontario visited New England. I think more of our outstanding citizens should be encouraged to go down there and address the American public.

I do think that we should have an aggressive campaign to inform the people of the United States as to what Canada is attempting to

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do in connection with this war. In this connection, may I express the hope that early action will be taken to do away with restrictions on travel between the two countries? I do not mean by this purely pleasure travel, but normal travel on the part of citizens of both countries so that the average citizen in each country may make known to his friends in the other the common determination of our democracies.

Within the past few days, public opinion, both in Canada and in Great Britain, has been calling for an empire conference with regard to the war.

A press cable from London intimated that the British government hoped for a joint conference. It has been reported that at Mr. Churchill's request the Prime Minister of Australia agreed to prolong his stay in England and that the Prime Minister of New Zealand was on his way to Britain. A further dispatch indicates that empire representatives would probably be invited to sit in with the British cabinet "to give precise information on what the dominions might be able to contribute to any particular move and to advise on both offensive and defensive measures."

So far as I am aware, it has not been indicated that any formal invitation has been issued for such important consultations, but if it is the considered opinion in England and in the dominions that such consultations should be held, with the supreme objective of facilitating swift action, then undoubtedly Canada should be represented by the Prime Minister. The chief dominion should, without question, take a foremost part in any such conferences.

Some weeks ago I indicated that in my view close personal consultation was desirable, but the Prime Minister was quick-too quick, in the view of many people-to rebut the suggestion. He then indicated that his duty was here in Canada-that the transatlantic telephone and communication via the high commissioner's office was all-sufficient. That would no doubt be true if events were normal, but they are not normal. Information may be received and given over a triangular route of this character, but true consultation, understanding, and effective advice can be given only around the conference table.

There must be many urgent problems to discuss. If it was considered necessary for the Prime Minister to visit the President of the United States, and I believe it was wholly desirable, then how equally vital it must be for the Prime Minister to confer with Mr. Churchill. Telephone and telegraphic communications were not good enough in the 14873-145

one case, and they are not good enough in the other.

Nothing but good could come of such a visit. How heartening to the hard-pressed British people to know at first hand that Canada is determined upon an all-out war effort! Then there are our Canadian forces in Britain, straining at the leash to go into action. How reassuring to them to know from the lips of the Prime Minister that Canada is determined to play a major role in defence of the empire and in destroying the common enemy! And how important at this juncture, when the armed forces of the other dominions are in the heart of the conflict, and our troops are not.

I suggest to the Prime Minister that there is need now for all empire statesmen to gather in a round table conference and decide what is to be the future course of action for all the British peoples. Furthermore, I suggest that it is the duty of the Prime Minister to lead the way for such a conference; as the senior dominion, Canada can well do this. Excuses will not do. They only add to the suspicion entertained in many quarters of the bona fides of our professions for an all-out war effort. Positive action on this point would allay such suspicions.

Really, I do not understand why the Prime Minister should either hesitate or refuse. Public opinion will support him if he goes. If he refuses, public opinion will not be satisfied.

Putting the matter in another light, what an invaluable gesture it would be to the people of Britain and to their morale, if the Prime Minister were to go to Britain and tell the people there that the senior dominion was behind them to the utmost of our abilities, and what an aid to national unity here in Canada!

Finally, I assert that the Prime Minister cannot justifiably absent himself from such a conference-and for this reason: The theatre of war is over there. The real centre of all war activity is over there. Our own first defence line is over there. All the most momentous decisions must be made over there. There and there only the need for and distribution of the troops and other war resources for the successful conduct of the war may be discussed. That, undoubtedly, is the reason why the Minister of National Defence (Mr. Ralston), with the chief of staff and other high officers, went to Britain last autumn. There and there only future successful action may be discussed and agreed upon.

Let the Prime Minister take the lead in calling for such a conference. If he does, all

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Canada will applaud him. If he does not, there will be wonder and dismay. Such action on his part would indicate to Hitler in no uncertain terms Canada's resolution and determination to continue the struggle for freedom to the end.

Yesterday we all listened to- Mr. Churchill's address. He declared that the key to victory lay in the winning of the battle of the Atlantic. I was cheered by his prophecy that the eventual defeat of Hitler and Mussolini was certain, in view of the declared determination of the British and American democracies; and that nothing that is happening now is comparable in gravity with the dangers through which we passed last year. Then he added:

Nothing which can happen in the east is comparable with what is happening in the west.

And in closing he quoted two verses from Arthur Hugh Clough's poem "Say Not the Struggle Naught Availeth"-thoughts, as Mr. Churchill said, "which seem apt and precious to our thoughts to-night." May I repeat them:

For while the tired waves, vainly breaking, Seem here no painful inch to gain,

Far back, through creeks and inlets making, Comes, silent, flooding in, the main.

And not by eastern windows only,

When daylight comes, comes in the light;

In front the sun climbs slow, how slowly!

But westward, look, the land is bright!

Mr. Churchill and the people of Britain are looking to the west, to Canada and the United States. Shall we fail them? Never! Never! That is the answering cry of Canada. That, I am sure, will be the answering cry of the great President of the United States. That will be the answering cry of the people of the United States.

Already things are moving rapidly over there. The Atlantic patrol is on duty, releasing Britain's hard pressed navy and air patrol for more effective service nearer Britain. That is most heartening, and we as Canadians, in common with our kith and kin, tender our heartfelt thanks.

More will follow. "Give us the tools and we will finish the job," declared Mr. Churchill on February 9 last. Public opinion in the United States rapidly crystallizing will see to it that the tools are delivered.

And what of Canada?

Are we contributing to the maximum of our capacity? I do believe that with repect to such implements and equipment as we can readily produce we are reaching a high state of production, which will bring increasing aid and support.

Shortly the 1941 victory loan will be launched. Then we shall have to ask ourselves, each one of us, searchingly, truthfully, "What is it worth to be a free man in a free land?" I have no doubt of the answer. This loan cannot and will not fail.

To-morrow we are to have the budget and we shall know the measure of the additional taxation which we shall have to bear. We shall not flinch. In terms of money and material things Canadians will play a man's part. We shall thus show to the dictators Canada's determination to pay for freedom as well as fight for it.

But have we mobilized our man-power in sufficient numbers to meet the needs of empire? On April 8, both in his statement to the house and in his radio address, the Minister of National Defence stated, "Man-power and morale are paramount factors in this war."

Are we meeting this problem of man-power realistically? What success has attended the recruiting campaign? In my view it has been a failure: 5,000 to 6,000 men were called for, allotments were made to each military district. According to press reports only one military district has measured up to its allotment and produced its quota. The method of recruiting from the non-active army has not measured up to requirement and we should have an explanation from the minister.

I am supported in this view by the fact that as late as Saturday last the minister held a hurried press conference in which he announced that graduates from the four months' training camps will not be released at the end of the period of training but will go right into coast defence and internal security units instead of being demobilized as was originally intended. This is ample proof of failure to attain the objective aimed at in April. The men in the active army thus replaced will be available for overseas service. That is encouraging, but in my view it is not good enough.

Attempts have been made to have men attached to the militia units join up voluntarily for overseas service. Methods approaching compulsion and duress were used. Men were sent a questionnaire. They were requested to say whether or not they would join the active army. Reply was compulsory and if in the negative, reasons were to be given. The men were instructed to parade before their commanding officer and answer, and if it were "no," then to give their reasons for saying "no." Surely this is approaching compulsion. Why will not the government meet the situation realistically? Why not

Hyde Park Declaration

approach the situation directly through the front door, rather than by the back door or indirect method?

The reason why the men in the non-active army units do not come forward is that under the mobilization act the trainees are not required to serve overseas, and men in the non-active army are asking, "Why should we go when the government said those training do not have to go?"

Let us be honest each with the other. Let us be realistic when such a grave situation is confronting us. Let us face it fairly and frankly and do our duty in the face of a common peril.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

I know, Mr. Speaker, that the observations of the leader of the opposition are not debatable, but he has made one or two personal references with respect to which, perhaps, it might be well that I should express appreciation and state my views.

May I first of all thank my hon. friend for the cordial manner in which he joined me in respect of what was said in the statement which I made to the house regarding the existing situation. It must be apparent, from the words of the leader of the opposition and myself, that each of us holds the same view of the gravity of the situation in the world at the present time, and the same view with respect to the duty of Canada and the obligation and desire of Canadian citizens to play their full part in the endeavour to meet that situation.

I wish to thank my hon. friend for his references to what I said respecting the Hyde Park declaration. I am pleased indeed to know that the provisions of the declaration commend themselves so strongly to him. I believed they would. I hope that in all parts of the house there will be a realization that the matters there set forth are of a character upon which all can agree. While there may be shades of differing opinion touching certain aspects anyone who understands the economic problem with which the country is faced in its war effort will realize, I believe, that what was accomplished by conference during the Easter season will be helpful in meeting a very difficult situation.

My hon. friend has referred to the question of imperial councils. He said there seems to be strong public opinion that I should go to England to attend a conference of Prime Ministers, and he adds that this opinion has found expression in the press. I have read the press rather carefully. I have seen one or two communications sent anonymously to this side with regard to some of the matters to which my hon. friend has referred, but as

yet I have not received any official communication which would lend colour to the view that Mr. Churchill or the British government desires a conference in England at the present time of Prime Ministers from different parts of the empire. Since the war commenced the matter has been a subject of consideration and of communications between the British government and the governments of different parts of the empire, and up to the present time it has been the general consensus of view that it would not be advisable to bring to London the Prime Ministers of the several dominions for a conference there.

I think I answer the question fully when I say that no invitation lias been extended? from the British government up to the present time. When extended, if one is, it will be most carefully considered, and, I need hardly say, considered in the light of the full responsibility which I have in the matter not only as the one immediately concerned as Prime Minister, but of the full responsibility of Canada to the great war effort of the British empire.

Only recently in the House of Lords, in the last few weeks, in fact, there was a debate on this very question. Lord Elibank brought up the question in the Lords of the advisability of a conference of Prime Ministers. Lord Cranbourne, Secretary of State for the Dominions, speaking for the government stated at the time-the record is there-that it was not thought advisable by the British government, to call a conference at the present time.

May I say that I fail to understand fully-just what are the grounds on which eertaim people are so anxious to have me out of Canada at the present time. I know what the criticism will be the minute I leave: that if I had understood my duty aright I would have-stayed in my own dominion at this time,, seeing to affairs here. My hon. friend has referred to the battle of the Atlantic. May I say to him that I think I can best serve this country and help this country to play its part in the battle of the Atlantic by being in this parliament and speaking to its members, and in this country and speaking to its people as-occasion may arise. I am in communication-with the British government every day, in communication with the Secretary of State for the Dominions, in communication with the Prime Minister of Great Britain-not with the-Prime Minister every day, but whenever he wishes to communicate with me or I desire to-communicate with him. I am also in communication with the British government through our high commissioner in Great Britain and through the High Commissioner for the United Kingdom who is resident in this city-

Hyde Park Declaration

There is not a day passes that many communications do not go back and forth between some of the different persons I have mentioned and myself.

There is this advantage about my being in Canada, in the consideration of all matters, that I can give an immediate reply to the British government on any matter of concern by being where I can immediately consult with my colleagues in the government. We have, as hon. members know, a war committee which meets continuously, frequently almost every day; there matters are discussed of immediate and vital concern, decisions are reached and given without any delay whatever. If larger questions of policy arise which require the consideration of the entire cabinet, members of the entire cabinet are here to be consulted. The minute I cross the ocean and am obliged to give views to the British government on matters of policy, and to make decisions, that moment I shall no longer be in a position to say I am speaking with full authority, and that I am sure that the views I am giving are those of my colleagues in this country. I can be much more sure of their views when I am in this country than if I ventured to express an opinion myself at some round-table conference in the old country. In matters affecting Canada at a time of war, the views of one member .of the government should not be permitted to supersede those of the entire cabinet.

I may say to my hon. friend that I appreciate very much the compliment he has paid me in saying that my judgment would be of such great value at the conference table in London, and my opinion would be so helpful to all parties concerned, if I were there. I just wish he would extend to me on the floor of this parliament the same degree of confidence with respect to my judgment and opinions. In reference to what the leader of the opposition has said about the encouragement that would be given the British public by my appearing in London or other parts of Great Britain and making speeches there on Canada's war effort, may I ask if it would be possible for me in any words I could utter abroad to give to the people of Britain as convincing an assurance of what Canada is prepared to do and is doing as I have given by speaking on Canada's war effort as I have to-day in this House of Commons with the approval of hon. members from every part of Canada? I am, I hope, fully conscious of my responsibility at this time. If I believed that as Prime Minister of Canada I could render a greater service to Canada and the empire in this war by being in London, than I can by 'being in my own country and in its parliament at a time when it is most necessary

to keep the country united and its war effort promoted as rapidly and fully as possible, I would not wait to be invited to cross to London; I would send word myself to the Prime Minister of Great Britain that I believed I could render a greater service in London than in Canada. But up to the present time I have felt, and I feel very strongly, that with situations as they arise and change from day to day, and above all, enjoying to the extent I happily do the confidence of the president and members of the government of the great country to the south, which is more and more actively aiding Britain, and ourselves-I say the more I consider the matter, the more I feel that my opportunity of greatest service for the present, at least, is in Canada, doing all that it is possible for me to do here and on this side of the Atlantic.

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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Before we leave this part of the proceedings may I ask the Prime Minister if the declarations given in the Hyde Park interview are all the commitments? I have been disturbed by reading an article in the Christian Science Monitor of last Thursday, which, if true,-and I do not suggest that the report is true; I do not know-indicates that the report given out by the President and the Prime Minister following the Hyde Park conference does not include the whole arrangement, but that it goes far beyond that announcement.

Perhaps the Prime Minister has not seen the newspaper report to which I refer, but it is a very significant statement. I should like to know whether there is any basis for it.

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LIB

William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)

Liberal

Mr. MACKENZIE KING:

I am very grateful to my hon. friend for bringing up this question. I had not seen the report in the Christian Science Monitor, but I have seen one or two communications or articles which appeared in some of our own newspapers, which probably had their inspiration in the source my hon. friend has just mentioned, and which suggested that there were other matters that were understood and which really in some way are related to this declaration. May I say at once that any thought of anything of the kind I should regard as a reflection upon my own integrity and also upon the integrity of the President of the United States. There is nothing with respect to the Hyde Park declaration in the way of an understanding with respect to anything except what appears within the compass of that declaration itself. There were no reservations, no conditions, no assumptions, no undertakings, express or implied, of any kind. The

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declaration speaks for itself, and there is nothing that does not appear on the surface of it.

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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Hon. J. L. RALSTON (Minister of National Defence):

Mr. Speaker, I know that what my hon. friend has said is not debatable. I intended at some time to say a few words regarding it-I think it was the last subject I discussed before the house adjourned. But since my hon. friend has said what-he has, perhaps I might be permitted to remove at least some misapprehension which he seems to have regarding the situation and regarding the matter of recruiting and man-power.

Let me say to him and to the house that in this matter of man-power we have at the present time practically 70,000 men outside of Canada and in Canada about 118,000 for overseas service. And those were from voluntary enlistments, aggregating almost 200,000 men.

My hon. friend mentioned a recruiting campaign. He will realize that as yet in Canada during this war there never has been put on a recruiting compaign, so-called. Last July I spoke to the people of Canada and told them that we needed 40,000 men, and the 40,000 men came forward within two months without any recruiting campaign of any kind. From time to time quotas were asked for to supply wastage, and I think up to October or November those quotas were supplied. But we stopped asking for men in any large numbers, and I know my hon. friend and some other hon. gentlemen in this house felt that it was a mistake to do so. We stopped asking for large numbers of men because-this is a matter of public knowledge now, I think, so that there is no reason for not mentioning it-there were not ships to take men overseas, and also because there were practically no war casualties. We did not start asking for men in any large numbers until, I think, February. At that time we sent out a quota to the districts, a comparatively small quota in order to take care of wastage-that is to say, men who had been discharged for medical reasons or because they were not regarded as likely to make efficient soldiers.

Parallel with the recruiting of those reinforcements, however, there was the filling up of new units. Units were gradually being built up in order to fulfil the commitments that we had made when I was overseas; that is, the commitment with regard to the third division, the commitment with regard to the army tank brigade, the commitment with regard to the fourth division, and the commitment with regard to the armoured division. Those units were gradually built up. There was very little difficulty about that, because

the units were built up by the system of mobilizing the militia units. It is true that not one hundred per cent of the personnel in the militia units volunteered for overseas service, but generally speaking the units were filled up fairly quickly. So that on the one hand the quota was being gone on with for the purpose of reinforcements, and on the other hand the filling up of these units was being gone on with by means of the reserve units. The February quota was nearly filled,

I think, but the March quota was not filled; as a matter of fact that quota was increased somewhat. There seemed to be some tightness in the matter of recruiting, and we indicated to the reserve units that we thought those units in the various districts ought to regard as their first responsibility the provision of reinforcements for overseas service. Then the situation arose to which my hon. friend has referred.

I do not know to what particular reserve unit the man belonged to whom he was speaking, but it was reported to us by the reserve units that they found difficulty in getting their men to volunteer for overseas service. Why? Not because of the fact that there was not compulsory mobilization for overseas service, but because of the fact that the men who had enlisted in the reserve units generally speaking were of the type who could not immediately go overseas, who were not medically fit to go overseas', who had enlisted for the purpose of being ready to do their bit in case of an emergency, occupying a place somewhat similar to that occupied by the home guard in England; or they were business men who had certain responsibilities in connection with their work and who felt that the time had not come for them to go. That is to say, they were not the rank and file of ordinary young men in these reserve units; many of their men regarded themselves as more or less fulfilling the role taken in England by the home guard. That is by no means true in all cases; some very striking instances of reserve units supplying reinforcements come to my mind, which I need not mention this afternoon. Generally speaking, however, that was the attitude; and' in an endeavour to meet their obligation the reserve units were going onto the streets and asking men directly to come in and enlist, that is, men who had not been members of the reserve units at all. The result was that we found these quotas were not being completely filled.

I think I indicated to the house that there was a shortage in the March quota, but it must be remembered that this quota was primarily for the purpose of providing the normal requirements in regard to reinforcements from the point of view of wastage'.

Hyde Park Declaration

But something else occurred to increase the *quota, as I explained to the house before the adjournment. That something else was this: our units overseas, and particularly the artillery units, the signal units, the army service 'Corps units and the ordnance units, to mention four-not the infantry-had their establishment changed. That is to say, it was thought that larger numbers should be on the establishment of these units. The British had changed their establishment, and the result was that the Canadian war establishment was [DOT]changed similarly, which meant that men in the holding units in England, maintained for the purpose of reinforcements, were used to Build up these establishments. Remember, Mr. :Speaker, that right along we have had overseas in the holding units three months' reinforcements for these various units, and in 'Canada we have had a certain proportion of reinforcements as well, a certain percentage having regard to each arm of the service, that percentage being higher in regard to one arm than in regard to another because the casualties are likely to be higher. Men were taken from these holding units in order to increase the establishment, which meant that the monthly quota became larger. The March quota was not completely filled, and the deficiency in that monthly quota had to be added to the next monthly quota, which meant that this was increased to that extent, plus the increase which came about because of the fact that we had to provide other men to take the places of those who had been taken from the holding units.

There was no recruiting campaign of any kind; this recruiting was being done through the districts, but even at that fifty per cent more men, in numbers, were enlisted in the March quota, the one which was being filled when the house adjourned, than were enlisted >in -the first quota. The deficiency was due to the fact that the quota itself had been Increased, though more men actually enlisted *voluntarily for the third quota than for the first one.

Topic:   HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN
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NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Was the third quota filled?

Topic:   HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

No, it was not; that is what I am saying. Then we felt that this was the situation which ought to be dealt with: we got in touch with the reserve units and with the recruiting officers in the various districts and said, "How about this? Are the reserve units going to be able to supply these [DOT]men?" Some units were able to supply one 'hundred per cent of the men they were asked to supply. Others were not able to do so; so

{Mr. Ralston.]

we decided that if the reserve units by themselves could not supply the numbers wanted the thing to do was to put on a recruiting campaign, in the sense of indicating to the people of Canada generally that men were needed. In that same connection we felt, as I intimated to the press the other day, that in addition to the monthly quota we might just as well ask the public for the additional twenty thousand men who would be required to fill up the Canadian units and the formations which eventually would go overseas. As I have said many of these 20,000 would be supplied by mobilizing reserve units. Included in that number would be men required to replace others who had been boarded out of the third division. So, as I indicated to the press the other day, between twenty and thirty thousand men will be required altogether during May and June and possibly July. After that there will be a certain quota each month in order to keep up the reinforcements. And when I mention the need for reinforcements hon. gentlemen will realize that we are not basing our requirements in that connection on actual casualties but on the only standard we can use; that is, what the British consider a safe and normal reserve to provide for the purpose of reinforcements.

So at the present time what we are doing is this: we are going on with a recruiting campaign to indicate to the public of Canada that we will need from twenty to thirty thousand men in the next month or two, or perhaps the next three months; probably something over 30,000 men altogether. Most of those men will be, I hope, comparatively easy to get, because many of them will be men who will be coming as whole units, as part of some of these formations which are being formed, to go overseas. Of course the difficulty is to get reinforcements for the odd unit-that is to say, to get a man to come to some unit he does not know. That is always the difficulty with reinforcements. We have had much difficulty in the past, and with a proper effort we should not have a great deal of difficulty in the future in that regard. That is the situation with respect to recruiting.

So, do not let my hon. friend think that a recruiting campaign has been put on and that it has failed, because no such thing has happened at all. We shall tell the people of Canada what is to be done. We are going to put on the necessary campaign in order to inform them. We will ask, as a matter of fact, for citizens' committees in each province. We shall probably make allotments to each province, and ask that citizens' committees

British Columbia Telephone Company

be set up, and ask them to help get these men for the armed forces of Canada. I little doubt that the men will be provided. And when my hon. friend speaks of going by the back door instead of by the front door, I say to him that he might as well tell the Minister of Finance (Mr. Ilsley) that he ought not to go by the back door and form loan committees throughout Canada to ask for loans, when he asks the people to lend their money to Canada. He might as well say that the Minister of Finance ought to go by the front door and put a compulsory levy on everybody in Canada, requiring each to subscribe a definite amount to its war loan, regardless of whether they want to or not.

There is no occasion for anybody to feel jittery with regard to the man-power situation. As I said the other day to the press, this matter ebbs and flows. We have been concerned vitally with material. We have been wondering where the material would come from. It is coming. I have been down in the east, in various training camps throughout the eastern part of the dominion, and I know it is coming. Now there is need to give attention to the question of men, not so much for units already formed, but for the formation of new and additional units, and for the keeping up of reinforcements. That is what is being done at the present time.

I want to ask this house and my hon. friend-I want to ask hon. members to give us help in connection with this matter. It is drab; it is unspectacular. It is not the same as passing a resolution, laying down a policy, or anything like that. But I would ask that hon. members give the necessary help from the point of view of indicating to the men that the time has come when they are needed. The fact is that they are needed in artillery, ordnance, and signal units perhaps considerably more than in infantry units.

Speaking of infantry, I am thinking of a unit, one which in fact my hon. friend must know. I found that that unit had about two hundred men under training as reinforcements in Canada. I am sure it has two hundred to two hundred and fifty men as reinforcements overseas. I was informed on the training ground that they had about two hundred more available in the depot. That is six hundred men for reinforcement of a unit which have not yet been required. So that there are cases where infantry units have surplus requirements. Artillery and other units took some of them, when they increased their establishments in addition to taking men who had been held as reinforcements for these particular units.

In order that we may help in that respect, in order that we may make no greater drain

on the man-power of Canada than was necessary, in order that industry might not be unduly disturbed I stated to the press the policy that as the men who are trained for four months leave their training they will be detailed to the units which are doing coastal defence duty in Canada, thereby enabling the men in the coastal defence units in Canada to go overseas, to join overseas units. In addition to that, if we. find it necessary, the men who have been enlisted for overseas service, and have been posted to one arm of the service, may probably be posted to some other arm where they are needed.

I feel it is part of the day's work of the Department of National Defence to get these men. It is part of the day's work to get these men in, have them realize their duty and realize the need. And I have little doubt that we will be successful, and that the number of men required will be obtained.

Topic:   HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN
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CON

Norman James Macdonald Lockhart

Conservative (1867-1942)

Mr. LOCKHART:

Will the men who trained for thirty days be included?

Topic:   HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN
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LIB

James Layton Ralston (Minister of National Defence)

Liberal

Mr. RALSTON:

No policy has been laid down with regard to the thirty-day men, as yet. The men who have been trained for thirty days have not been trained sufficiently to take part in coastal defence.

Topic:   HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN
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CON

Norman James Macdonald Lockhart

Conservative (1867-1942)

Mr. LOCKHART:

There seemed to be some misunderstanding in that connection.

Topic:   HYDE PARK DECLARATION-COORDINATION OF WAR PRODUCTION IN CANADA AND THE UNITED STATES-ACCELERATION OF AID TO BRITAIN
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PRIVATE BILLS

BRITISH COLUMBIA TELEPHONE COMPANY


Mr. G. G. McGEER (Vancouver-Burrard) moved the first reading of Bill No. 27 (from the senate) respecting the British Columbia Telephone Company.


NAT

Richard Burpee Hanson (Leader of the Official Opposition)

National Government

Mr. HANSON (York-Sunbury):

Explain.

Topic:   PRIVATE BILLS
Subtopic:   BRITISH COLUMBIA TELEPHONE COMPANY
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LIB

Gerald Grattan McGeer

Liberal

Mr. McGEER:

This is a bill to amend the charter of the British Columbia Telephone company, which was granted in 1916. At thac time the company, having a dominion charter, brought together practically all the telephone operations of the province, with the exception of the Okanagan valley. At that time there were some 39,000 telephone services in the province. A capital of $10,000,000 was provided in the twenty-five year interval, the company having absorbed all available capital. The services which were temporarily delayed during the depression have now recovered and a demand is being created in the province for new services at the rate of about 5,000 to

6,000 a year. The cost of the installation of such services runs from $1,000,000 to $1,250,000 a year.

The situation is that if the company is to meet the demands for new services it must have the power to increase its existing capital.

229S

British Columbia Telephone Company

The bill provides that the company shall have the power to apply from time to time to the board of transport commissioners for the right to issue new capital. Under its present powers this board has the right to set the terms, the amount and the conditions under which such issue may be put forth, should it be authorized. The public institutions primarily connected with this service are the cities and municipalities of the province, particularly the city of Vancouver. The matter has been placed before the city council of Vancouver and before the union of municipalities of the province of British Columbia. With the stipulation that they will have the right to be heard when any application is made to the board of transport commissioners for an increase in the capital issued, no objection has been raised to the amendment proposed. The matter has come before the finance department and the department of taxation, and no objection has been raised in these quarters provided they are given the right to appear before the board.

I should like to make it clear that this amendment does not authorize an increase in the company's capital by another $10,000,000; it merely authorizes the company to make application from time to time to the board of transport commissioners as new capital issues are required to sustain the progress of its service.

There are some other minor changes to be made. The increase in the board of directors from nine to eleven is proportionate to the increase in the company's business. There is an amendment providing for the redemption of the preferred shares. The fact is that the preferred shares issued already by the company were issued in the terms of a contract which is redeemable. Technically the powers which the company enjoys under its present charter do not permit them to carry out the terms of that contract.

There is a provision to permit the company to enter certain realms of modern communication activities. The operations of this company in British Columbia are provincewide. They supply to the radio services the communications which exist for broadcasting between communities. In addition the company has kept abreast of the times and has supplied the Pacific coast of British Columbia with a radiotelephone service. This is used not only by the logging and tugboat industries, but in a great many other places where it is not possible to lay a telephone line.

I had understood the first reading of this bill would go through automatically and that an explanation could be given on its second reading. I was not prepared to-day to do

more than recall what memory I had of the matter. If there are any other questions to be asked I shall be glad to answer them.

Motion agreed to and bill read the first time.

Topic:   PRIVATE BILLS
Subtopic:   BRITISH COLUMBIA TELEPHONE COMPANY
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April 28, 1941