Chapter XII
Mission Accomplished

The tasks assigned to U.S. forces in Canada and related Canadian activities changed frequently as the battle lines receded farther from North America and as the broader logistical requirements and situations shifted accordingly. Certain of the tasks were finished and others were canceled even before the necessary facilities had been fully completed and long before victory was won on the fighting fronts. Still other tasks arose only upon the termination of hostilities in the combat zones. The reduction of the U.S. establishment was thus not an immediate consequence of V-J Day but began long before that date and lasted over a period of years. The arrangements for disposing of U.S. installations and equipment during the U.S. withdrawal differed markedly from the arrangements initiating the activities. Whereas in the early wartime years the military considerations were overriding, many other factors needed to be taken into account in working out the disposal arrangements. This complicating element was compensated for by the fact that, in place of having to reach decisions quickly, those working out the disposal arrangements could take adequate time to study thoroughly the problems involved.

Beginning the American Roll-up

The year 1943 saw the transition from a situation in which northern North America was vulnerable to enemy attack to one of relative security and the use of northern North America principally as a logistical base for overseas operations. By the end of the year the Allied position had improved substantially. The Japanese had been evicted from the Aleutians, the Axis submarine menace was being reduced, and the Allies had seen major successes in the Mediterranean and on the eastern European fronts.

During the latter half of 1943 the United States reduced its garrison in Newfoundland from about 10,000 to half that number. Canada also began to reduce its garrison in Newfoundland. In Canada, Canadian antiaircraft and coastal defense forces were scaled downward. The 7th and 8th Canadian Divisions were disbanded, while the 6th was partially reduced in strength. Similarly, Canadian air base defense detachments were withdrawn from the Northwest Staging Route and other bases. This progressive reduction of

the defensive garrisons begun in 1943 continued throughout the remainder of the war.

In the changing situation parts of the U.S. logistical organization and system of installations in Canada for support of the overseas effort became surplus. By mid-1943 the United States was prepared to abandon the uncompleted western route of the CRIMSON Project, together with the supporting meteorological and communications networks, and to curtail the work at other bases of that project. On the Pacific coast, the elimination of 1943 of the Japanese threat to Alaska and the Aleutians reduced certain of the missions and operations of the logistical facilities in that area. Likewise, the completion of the military phase of the construction of the Alaska Highway and Canol Project resulted in the withdrawal, beginning in early 1943, of a large part of the Engineer troop construction force, which had reached a strength exceeding 10,000.

These withdrawals were largely offset by two new developments. The task of completing the projects from which these troops were withdrawn passed to the hands of civilian contractors whose employees had gradually been increased for the purpose. In September 1943 the number of U.S. civilians employed on the Alaska Highway alone reached a peak exceeding 10,000. Throughout the rest of 1943 the civilian force, too, was drastically reduced as the projects neared completion. The second development was the establisment in September 1942, and continued expansion thereafter, of the Northwest Service Command, the logistical organization charged with operating the various U.S. installations, facilities, and services as they were completed or established. By August 1943 the strength of this command exceeded 10,000.

Other circumstances militated against reductions of U.S. forces in the Canadian northwest. The United States assumed an active role in air-base construction during 1943 and 1944 which absorbed a large part of the construction force released from the completed projects. Then, too, operations for ferrying lend-lease aircraft to Alaska for the USSR reached their peak during 1944. Concurrently, the strength of the Alaskan Wing of the Air Transport Command reached its peak of 9,987 in November 1944, and still amounted to 7,032 on V-J Day.¹

Victory in Europe brought new missions for the forces and facilities in Canada. The North Atlantic Ferry Route was sheduled to play a new role in the movement of air units and personnel in the general redeployment of forces from the European to the Pacific theaters. The Prince Rupert port,

on the Pacific coast, was slated to perform a vital function in stepping up the movement of tonnages required in the Pacific area for the intensification of operations against Japan. The early surrender of Japan caused both of these operations to be dropped. In a slightly different form, operations over the North Atlantic Ferry Route did figure importantly in demobilization by speeding return from Europe of Canadian and U.S. fighting forces.²

In anticipation of the adjustments and reductions that would be necessary in the U.S. logistical structure in Canada, some consideration had been given to the problem of disposition of surplus property before the end of 1942. The facilities fell naturally into two groups--the fixed and immovable facilities, and the movable facilities, equipment, and supplies. Neither category included such facilities as the Alaska Highway and the Canol Project, for which appropriate arrangements as to disposition had been included in the original agreements.

Shortly after the Canadian Government suggested that the disposition of items not already provided for be arranged, the Permanent Joint Board on Defense examined the problem, at its 3 November 1942 meeting. The Canadian Section of the Board presented a draft recommendation on the subject in furtherance of the Canadian desire that governmental agreement be based upon a formal recommendation by the Board.³ Why Canada desired the Permanent Joint Board to take up the matter the Canadian Section did not state. The reason may have been that because the disposal operation would undoubtedly be closely examined by the public and legislatures of both countries a background of Permanent Joint Board consideration would minimize the impact on each of the governments. Although the Board unquestioningly accepted the task, the matter of working out disposal procedures appears to have been an administrative problem, to a large extent free of defense considerations, and perhaps properly outside the purview of the Board. In some instances the question of residual military and defense value needed to be considered, but this aspect was only a small part of the larger problem.

One purpose the Canadian Government had in pressing for a Board recommendation on postwar disposition of facilities was the desire to present a recommendation to the House of Commons when it met on 20 January 1943. The Canadian purpose was illuminated on 1 February, when the Prime Minister laid the recommendation before the House. The recommendation and his accompanying statement were an effective method of allaying growing Canadian concern as to the status of U.S. activities in Canada in the

postwar period. After pointing out that, as a purely wartime arrangement, the United States had provided materials for, or defrayed the cost of, the construction of a number of projects in Canada, he stated:

It is not contemplated that the contribution which the United States is thus making to the common defense will give the country any continuing rights in Canada after the conclusion of the war. Indeed, with regard to most of the projects that have been undertaken in this country by the United States, agreements have already been made which make the postwar position completely clear.⁴

The Permanent Joint Board's Twenty-eighth Recommendation, based on the Canadian draft and approved on 13 January, was approved by the two governments in an exchange of notes on 27 January. It provided, for facilities or matériel for which no other disposition had been made, that (a) immovable installations would become the property of Canada or of the province, unless other arrangements were agreed within one year after the cessation of hostilities, and (b) movable facilities could be removed from Canada or be offered for sale to Canada during the same period. If these options were foregone, the United States could sell the facilities on the open market, any sale to be subject to approval by both governments.⁵ On the surface this arrangement seemed to favor Canada. Unless it agreed to some other arrangement, all immovable installations covered by the recommendation automatically became Canadian property when the year following the termination of hostilities expired. As it turned out, the Twenty-eighth Recommendation was not to be applied in the initial detailed disposition arrangements concluded after its adoption, and, in fact, its provisions were to be amended before it had ever been applied.

The Northern Airfields Settlement

During the first months after Pearl Harbor, when Canada undertook to construct facilities on the Northwest Staging Route at the request of and for use by the United States, it followed the policy set forth in the recommendations of the Permanent Joint Board on Defense by which each government financed the work within its own geographic jurisdiction. In April 1942 Canada modified this position and agreed to pay for the construction of all work requested by the United States when the work was of continuing value to the air route, while the United States was to pay for facilities over and above Canadian standards and needed solely for U.S. military purposes.⁶ This policy prevailed for about a year.

In the face of ever-expanding U.S. construction requirements for facilities on the staging route, the Canadian Cabinet War Committee in late March 1943 initially considered reimbursing the United States fully for its payments, but in the next month it decided to withhold such action. After further consideration, the Canadian Government on 31 May 1943 advised the United States that it would no longer submit claims for payment and proposed instead that the whole matter of the settlement of the construction accounts be postponed and worked out at the end of the war.⁷ The United States accordingly suspended its payments to Canada on the construction account. Seven months later, on 18 December 1943, the Canadian Government advised the United States that it had again revised its decision. Canada would henceforth bear the cost of construction of all permanent facilities or improvements carried out on airfields in northwest Canada at the request of and for the account of the United States and would reimburse the United States for its expenditures for such construction.⁸ The United States would continue to finance such of its projects as had no permanent value.

One factor influencing the decision was the importance Canada attached to the northern airfields. Minister of Munitions and Supply C. D. Howe, in reporting the Canadian decision to the House of Commons on 29 February 1944, pointed out that the Northwest Staging Route was "one of the most important in the world. . .as part of an international air route." Execution of the new policy would make the staging route and its permanent facilities wholly Canadian property, constructed by Canada with the co-operation of the United States but financed entirely by Canada. Still later, in reporting on the final arrangements to the House of Commons, Prime Minister King stated that "it . . . had been thought undesirable that any other country should have a financial investment in improvements of permanent value, such as civil aviation facilities, for peacetime use in this country." He cited this factor, together with the Canadian desire to finance the facilities as part of the Canadian contribution to the war effort, as the two considerations prompting Canadian action.⁹

Another factor entering into the Canadian decision was its rapidly mounting U.S. dollar balance, which had by the end of 1942 almost been restored to the September 1939 level and had during 1943 jumped from $319 to $649 million. Because of the rapid rate at which Canada had been accumulating U.S. dollars, the United States in early 1943 had considered it necessary to

work out an informal arrangement with Canada which would put a limit on Canadian holdings of U.S. dollars. Under the arrangement, called the Morgenthau-Ilsley agreement, the U.S. dollar balance was to be kept within an agreed range through control of the flow of production orders to Canada and other measures. The continued rapid build-up of Canada's exchange position which took place during 1943 prompted the United States to invoke the provisions of the agreement in early 1944. Accordingly, Minister of Finance J. L. Ilsley and Secretary of the Treasury Morgenthau jointly developed a program of measures designed to reduce Canada's current holdings and future receipts of U.S. dollars. Payment to the United States for its expenditures on permanent airport improvements became an important element of the arrangement. Fortunately, this large dollar expenditure was feasible and even desirable at a time when Canada wished to assure its control of the northern airfields. On the U.S. side, no responsible official had envisaged a position of special privilege for the United States in Canada as a result of the wartime operations there, and therefore the offer of unanticipated paym0ent for U.S. expenditures was readily gratefully accepted.¹⁰

During the months after the December 1943 decision, additional discussions took place between Canada and the United States as to the scope, form, and other details of Canadian payments for construction on the northern airfields. The United States proposed a lump-sum settlement that could be adjusted upon termination of hostilities. Canada preferred to itemize expenditures insofar as possible, leaving a relatively small amount of uncompleted construction for the adjustment process. The United States also requested that, at an appropriate time, discussions take place concerning

post-war use of these and other fields on a reciprocal basis, and Canada acceded to this request.¹¹

During the discussions of the airfield settlement and as a consequence of the Morgenthau-Ilsley arrangement, the scope of the proposed agreement was broadened to include (a) the airfields in eastern Canada as well as those in northwestern Canada, (b) the telephone land line that had been constructed as part of the Alaska Highway, (c) Canadian construction on U.S. account at the Goose Bay air base in Labrador, and (d) certain additional construction on the Northwest Staging Route by Canada for U.S. account. The final agreement was embodied in an exchange of notes dated 23 and 27 June 1944.¹² It provided among other things that existing arrangements for the maintenance, operation, and defense of the facilities would continue in effect for the duration of the war. Upon relinquishment of facilities, all items at the installations, nonpermanent as well as permanent, were to be turned over to Canada.

Table 7 presents a summary of the expenditures on the northern airfields by both countries. Of the total U.S. expenditures of $90,683,571 at the installations covered by the agreement, the United States was reimbursed $76,811,551 by Canada for improvements having permanent value. The Canadian expenditures authorized at the same installations amounted to $29,600,643, to which Canada added funds estimated at $5,161,000 to cover the completion of additional construction work desired by the United States.

Not long after the June settlement was concluded the United States began to transfer facilities covered by it to Canada. The Canadian Department of Transport took over the flight strips of the Mackenzie River route on 1 November 1944. In late August and in September the United States had reported its desire to relinquish its facilities at Calgary, Grande Prairie, Fort St. John, Watson Lake, Namao, and Prince George. During October the transfer of facilities at these points began and was completed by the end of 1945. At that time U.S. personnel remained only on the airfields at Edmonton, Fort Nelson, and Whitehorse; the U.S. facilities at these places, together with the telephone land line, were turned over to Canada at a ceremony at

TABLE 7--CANADIAN-UNITED STATES EXPENDITURES ON THE NORTHERN AIRFIELDS,
DETAILED BY PROJECTS

Project	U.S. Expenditures to 24 April 1944 (U.S. Dollars)		Canadian Expenditures (Canadian Dollars)
	Total	Of Permanent Value	Authorized to 31 March 1944	Expended to 31 March 1944	Balance to Complete Construction
Grand Total	$90,683,571	$76,811,551	a$29,600,643	$22,051,477	$7,549,166
Northeast Staging Route	$39,494,300	$31,631,310	$11,240,690	$7,516,406	$3,724,284
The Pas, Manitoba	415,000	415,000	1,253,850	921,650	332,200
Churchill, Manitoba	9,385,700	6,206,800
Southampton Island, Northwest Territories	7,043,200	5,318,870
Frobisher Bay, Northwest Territories	8,065,700	6,833,190
Fort Chimo, Quebec	9,756,500	8,686,470
Mingan, Quebec	4,285,200	3,627,980	36,160	35,000	1,160
Goose Bay, Labrador	543,000	543,000	9,950,680	6,559,756	3,390,924
Northwest Staging Route	37,320,226	31,311,196	a18,359,953	14,535,071	3,824,882
Aishihik, Yukon Territory			1,021,921	824,159	197,762
Beatton River, British Columbia			941,407	418,620	522,787
Calgary, Alberta	28,517	28,517	512,178	392,448	119,730
Edmonton, Alberta, air base	5,248,822	2,836,835	a3,634,759	3,017,350	617,409
Namao, Alberta (Edmonton satellite field)	6,853,683	6,264,495	200,000	144,053	55,947
Fort Nelson, British Columbia	186,892	5,477,354	a1,070,822	649,535	421,287
Fort St. John, British Columbia	4,415,441	3,974,683	1,297,132	1,297,132
Grande Prairie, Alberta	1,968,015	1,719,956	a1,255,110	960,126	294,984
Kamloops, British Columbia			1,037,237	769,953	267,284
Lethbridge, Alberta		142,274	41,427	100,847
Prince George, British Columbia	164,732	164,732	438,761	417,903	20,858
Regina, Saskatchewan			135,975	134,646	1,329
Smith River, British Columbia			1,018,398	813,130	205,268
Snag, Yukon Territory			855,399	645,095	210,304
Teslin, Yukon Territory			862,100	784,493	77,607
Watson Lake, Yukon Territory	4,156,695	3,448,743	a1,218,685	1,035,374	183,311
Whitehorse, Yukon Territory	8,297,429	7,395,881	2,717,795	2,189,627	528,168
Flight strips along Alaska Highway	3,262,687	3,262,687
Mackenzie-Athabasca route	1,264,150	1,264,150
Telephone line, Edmonton to Alaska boundary	9,342,208	9,342,208

^a Additional construction work undertaken by Canada in 1944 on the Northwest Staging Route at the request of the United States is estimated to have cost $5,161,000 in Canadian funds as follows: Edmonton $1,250,000, Grande Prairie $1,500,000, Fort Nelson $1,803,000, Watson Lake $608,000.

Source: Canada at War, No. 40 (Sep 44), p. 37. Details of the above expenditures are to be found in CTS, 1944, No. 19.

Whitehorse on 3 April 1946, at which each government was represented by its chairman on the Permanent Joint Board on Defense. The United States, which had been training Canadian personnel for the land-line operation since November 1945, retained personnel for this purpose with that facility until 1 June 1946.¹³ The airfields in eastern Canada, which had been largely constructed, financed, maintained, and controlled by the United States, were released beginning in August 1945.¹⁴

Disposals Under the Thirty-third Recommendation

The dispositions effected by the June 1944 settlement, together with those provided for specifically as part of project authorizations, reduced considerably the facilities and matériel to which the principles of the general settlement set forth in the Twenty-eighth Recommendation might be applied. In early 1944 questions arose as to the application of the provisions of the recommendation that led to the working out of new arrangements. Canadian authorities had expressed the view that, under the Twenty-eighth Recommendation, within one year after the cessation of hostilities all remaining U.S. immovables would become Canadian property. United States authorities differed with this view on the basis that the recommendation provided for the conclusion of agreements to provide suitable reimbursement for selected facilities and that such agreements had been anticipated for certain of the facilities.¹⁵

To clarify the disposal arrangements, the U.S Section of the Permanent Joint Board on Defense introduced a new draft recommendation on the subject at the 28-29 June 1944 meeting. At the subsequent Board meeting on 7-8 September, the new recommendation, the Thirty-third and the last agreed upon during the wartime years, was approved.¹⁶ The Canadian and U.S. Governments approved the recommendation in September and November 1944 respectively, and thereafter it was confirmed through an exchange of notes.¹⁷

According to the recommendation, the United States was to supply within three months after its approval, a list of the immovable facilities not already provided for, for which it desired to be reimbursed. The fair market value of these facilities was then to be determined by a joint appraisal, in which an agreed third appraiser was to fix the value if the joint appraisers could not agree. The agreed fair market value was to be paid by Canada to the United States. The remaining facilities not so listed by the United States were to become Canadian property automatically one year after the termination of hostilities. The revised arrangement gave the United States a free hand to determine the immovable facilities for which it should be reimbursed, whereas the Twenty-eighth Recommendation had permitted a reimbursement only when Canada was willing to agree thereto. The new arrangement relieved Canada of the onus of determining the installations for which the United States should be paid, and instead put upon the United States the burden of stating its wishes.

As to movables, Canada had been somewhat concerned over the provision of the Twenty-eighth Recommendation that would under certain circumstances have put the United States into the business of selling surplus property in Canada. This possibility was eliminated by arranging that property not removed from, or purchased by, Canada was to be transferred to a Canadian Government agency for disposal and reimbursement to the United States. To safeguard U.S. interests, a U.S. officer was to have a voice in the disposal of such property. The Canadian Government soon designated the Crown Assets Allocation Committee and the War Assets Corporation, Limited, two governmental agencies, as its agents for carrying out the provisions of the Thirty-third Recommendation. Declarations of surplus were made to the Crown Assets Allocation Committee, and, when portions of such surplus were declared also surplus to the needs of Canadian governmental agencies, they were transferred to the War Assets Corporation, Limited, for sale or other disposition.¹⁸

Immediately after the governments had agreed to this recommendation, the question was raised as to payment of customs duties on surplus property sold in Canada. Canadian authorities had earlier expressed the view that these duties should be paid and should be assessed on the basis of the value of the property when sold. The U.S. view was that, since the property had

been used for the mutual benefit of both countries in the prosecution of the war, the amount recovered by the United States should not be diminished by any duties that would accrue to Canada. At the January 1945 Permanent Joint Board meeting, U.S. Chairman LaGuardia strongly urged that the levies be waived in the interest of good U.S.-Canadian relations. The next month Canada accepted the U.S. view.¹⁹

The United States, as required by the Thirty-third Recommendation, on 11 February 1945 submitted the list of immovable facilities for which it desired reimbursement on the basis of the jointly agreed fair market value. Even before final agreement had been reached on the Thirty-third Recommendation, the United States had already reported as surplus to its needs the railroad depot at Dawson Creek, and Camp 550 and the Jesuit College at Edmonton. In general, the facilities listed included all U.S. weather stations, command installations, storage and water facilities, and similar installation's throughout Canada. The following major items appeared on the list:

Camp 550, Edmonton
Jesuit College, Edmonton
Depot and appurtenances, Dawson Creek
Bechtel-Price-Callahan Building, Edmonton
Military hospital, Edmonton
Railhead and appurtenances, Edmonton
Railhead and appurtenances, McCrae, Yukon Territory
Weather and communications facilities, at 57 sites throughout Canada
Alaska Highway relay stations (14)
Headquarters and base facilities, Whitehorse
Standard Oil Company office and housing facilities, Whitehorse
Prince Rupert Subport of Embarkation, including the Port Edward staging area and Watson Island ammunition storage facilities

An American and a Canadian appraiser proceeded to place valuations upon the immovable facilities that had been listed by the United States. In no instance was it necessary to use a third appraiser, since the, two were in each instance able to reach agreement on a fair market value.

Disposition of movable equipment and facilities proceeded concurrently. Large quantities of U.S. equipment and supplies were returned to the United States. Where such materiel was surplus to U.S. needs and was desired by one of the Canadian governmental agencies, transfers were made on a

reimbursable basis. When there was neither U.S. nor Canadian official need for the surplus matériel, it was put up for public sale with corresponding reimbursement to the United States.²⁰

By the beginning of 1946 transfer of a considerable part of the total list had been completed. The United States had been reimbursed $770,000 (U.S.) for the first four items--Camp 550, Jesuit College, the Dawson Creek depot, and the Bechtel-Price-Callahan Building.²¹ Disposition of a small number of the minor facilities had also been arranged. Appraisal of the immovable facilities had been substantially completed even though some of the more complex ones, such as the McCrae railhead and the facilities in and near Prince Rupert, had only been declared surplus by the War Department in October 1945.²²

In early March 1946 Canadian authorities suggested that all remaining U.S. property, movable and immovable, be disposed of under a single agreement at the governmental level, in order to permit completion of the transaction by 31 March, the end of the Canadian fiscal year. This timing would, in turn, permit use of funds available in the old fiscal year, whereas doubt was expressed that funds would be available for the purpose in the new fiscal year. Such an over-all settlement promised greatly to simplify for Canada the task of appraising and taking over the remaining U.S. Government property, which involved, besides the War Assets Corporation, the Departments of National Defense for Air, National Defense (Army), and Transport. In this task Canadians had been encountering administrative difficulties and a considerable duplication of work.²³ Both sides had to make some broad estimates in order to work out an agreement within the time available, but by and large most of the needed basic data was compiled. The notes effecting the agreement were signed on 30 March 1946. The

arrangement, according to the notes, was based on the underlying principles of the Thirty-third Recommendation, yet it permitted a speedy and expeditious closing out of the bulk of the outstanding disposal problems. By the agreement, the United States was reimbursed $12 million (U.S.) for installations and matériel whose original cost had been as follows:²⁴

Total original cost		$58,906,844
Immovable facilities		27,882,825
Movable property		26,674,302
U.S.Navy property lend-leased to the United Kingdom but left in Canada		4,349,717

Under the agreement U.S. forces could recapture or continue to use such facilities and matériel as they needed, subject to the provision that appropriate reimbursement would be made to Canada for any property recaptured. For its part, the United States was not to abandon any property until Canada had been given a reasonable opportunity to arrange for its custody. Under this and earlier agreements, all immovable facilities awaiting disposition had been accounted for.

The 1946 agreement proved a useful tool to Canada in another connection. The Canadian armed forces desired to purchase certain surplus U.S. matériel from stocks outside of Canada. Through use of the agreement and some of the funds available in fiscal year 1945-46, Canada deposited $7 million (U.S.) with the U.S. Government to be used for this purpose. The amount proved to be in excess of the funds needed for the available surplus matériel of the types desired, and of the amount the Canadian Government later decided should be expended for the purpose. On 10 October 1947 Canada requested the return of $1 million of the deposit and, on 24 January 1948, the return of an additional $2.2 million, thus reducing the account to $3.8 million.²⁵

Special Dispositions

Separate arrangements were made for two major U.S. undertakings, the Alaska Highway and the Canol Project, in accordance with the terms of the original agreements with Canada authorizing these projects. In the case of the Alaska Highway project, the United States had agreed that it would maintain the highway for at least six months after the termination of the war, and that the portion of the highway in Canada would become an

integral part of the Canadian highway system. No provision was made for reimbursement to the United States for its expenditures.²⁶

The terms of the Alaska Highway agreement were applied to other agreements connected with the road. When the construction of the HainesChampagne cutoff road was authorized, it came under the terms of the basic agreement. Eight flight strips had been authorized and constructed under still another agreement, which also made the strips subject to the terms of the basic Alaska Highway agreement. Constructed under the basic authority of the original Alaska Highway agreement, although not mentioned in the notes exchanged, were many other immovable facilities such as relay stations, construction and maintenance camps, convoy parking sites, and the like.²⁷ Insofar as disposal arrangements were concerned, auxiliary facilities that were associated with the construction of the highway, such as the construction and maintenance camps, were treated as being covered under the highway disposal plan. Others, which were operational adjuncts to the highway such as the relay stations, were disposed of under the procedures of the Thirtythird Recommendation and the 30 March 1946 exchange of notes.

Arrangements were made for transfer to Canada of the Canadian sections of the Alaska Highway and the Haines cutoff on 1 April 1946. In accordance with the terms of the original agreement, Canada made no reimbursement to the United States, which had expended over $100 million on the highway construction. Perhaps because of policy considerations that were applicable to the northern airfields settlement as a whole, Canada had already elected to bring the eight flight strips of the highway project under the airfields settlement. Accordingly, the United States was reimbursed $3,262,687 (U.S.) for its expenditures on the strips, which would presumably have been transferred to Canada gratis had it insisted on the application of the original highway agreement. The decision probably reflected, in part, the Canadian attitude that the northern airfields would undoubtedly be a significant adjunct to the transportation resources of northwest Canada, whereas no such general conviction then existed about the highway.

Although under no legal obligation to do so, Canada decided to continue to maintain the highway, which was part of the road net redesignated the Northwest Highway System. The Canadian Army was assigned the maintenance responsibility for the system, and it established an organization with headquarters at Whitehorse for the purpose. In December 1946 the Canadian Government decided against further work and maintenance on the

Haines cutoff road, although it proceeded to consult with the United States as to its view in the matter.²⁸

The other major unilateral U.S. undertaking in Canada, the Canol Project, had also been covered by special disposal arrangements embodied in the original agreement authorizing the project. This agreement had provided that on the termination of hostilities the pipeline and refinery should be appraised at their current commercial value by two appraisers, one selected by each country, and by an umpire to resolve disagreement if necessary. If the Canadian Government did not act within three months to purchase the facilities, they were to be offered for sale to private companies with the appraised value as the reserve price. In the event that no private company desired to purchase the facilities, their disposition was to be referred to the Permanent Joint Board on Defense for recommendation. That body was also to be consulted in the event either government wished to dismantle the facilities, or to allow them to be dismantled.²⁹

As agreements were reached for the construction of the supplementary Canol facilities, somewhat more flexible disposal provisions were incorporated. These arrangements provided only that, upon termination of hostilities, either government could initiate discussions with a view to agreeing to the manner of disposition of the supplementary facilities, which comprised the Prince Rupert storage and loading facilities and the Skagway-Whitehorse, Carcross-Watson Lake, and Whitehorse-Fairbanks distribution pipelines. As with the basic project, no dismantlement of the facilities was to be permitted unless the Permanent Joint Board recommended such action.³⁰

The first step indisposing of U.S. Canol installations was taken in April 1944 when the United States negotiated a new contract with the Imperial Oil Company, which was accepted by the two governments in an exchange of notes in June. Under the new contract the United States transferred to the Imperial Oil Company all its facilities, movable and immovable, together with all equipment, machinery, and spare parts in the Norman Wells area and along the Mackenzie River valley transportation routes to that area.³¹

When hostilities terminated, Canada displayed no interest in acquiring the refinery and pipeline installations of the Canol Project, whose wartime utility had been questioned and whose peacetime capabilities were far in excess of foreseeable needs. As a means of simplifying disposal of the Canol

facilities at Prince Rupert, the United States suggested in December 1945 that they be treated together with the Prince Rupert port and staging facilities, which were being processed under the Thirty-third Recommendation and without reference to the Permanent Joint Board. Canada agreed to this proposal.³² The remaining Canol facilities were not to be disposed of so easily. Operation of the refinery and the crude-oil line from Norman Wells had been discontinued in March 1945. The United States, desiring to dispose of facilities no longer needed, proposed in February 1945 that the two governments proceed with the appraisal of the commercial value of the facilities, as had been contemplated in the initial agreement on the Canol Project. Canada agreed to the proposal, and the substantial task of inventory, inspection, and appraisal was begun.³³ However, by midsummer the Canadian Government had concluded that it did not desire to exercise its option to purchase the facilities. It consequently suggested to the United States that, since a joint appraisal no longer appeared useful, plans for continuing this appraisal should be dropped. Canada also waived the provision that would then have offered the facilities for sale to private companies with the appraised value as a reserve price. In taking these actions Canada expressed the hope that they would aid in the disposition of the Canol facilities.³⁴ On 30 June 1946 the last facility of the project still in use, the SkagwayWhitehorse-Fairbanks distribution line, was placed in a nonoperating standby status. But neither this nor the Watson Lake distribution pipeline had yet been declared surplus, so that the only facilities in the surplus category were the refinery and the crude-oil pipeline from Norman Wells. As of 30 June 1946, no disposition of any of the Canol facilities, other than those at Prince Rupert, had been arranged.In November the United States presented new proposals to facilitate the disposal operation:

1. Since the facilities no longer had defense value, any restrictions as to dismantlement should be lifted.

2. Canada should guarantee such riparian and other rights as might be required by a purchaser for operation of the facilities and waive payment of duties and taxes by a purchaser.

3. The United States or a purchaser could remove any of the facilities from Canada.

4. Any facilities not disposed of during a two-year period following agreement on the proposals could be left in place and considered as of no value.

Canada agreed to the proposals, which were made effective 1 March 1947.³⁵ Armed with the proposals, the United States, which had by this time concluded that dismantlement would be necessary to obtain the maximum monetary return, proceeded energetically through its Foreign Liquidation Commissioner to arrange a disposition.³⁶

In August 1947 the refinery and related equipment at Whitehorse, having an original matériel cost of approximately $6 million, were sold to the Imperial Oil Company, Limited, of Toronto, for $1 million. In November the crude-oil pipeline between Norman Wells and the refinery, the parallel telephone line, and road-repair equipment scattered along the pipeline were sold for $700,000 to the L. B. Foster Company of Pittsburgh and the Albert and Davidson Corporation of New York City.³⁷

The distribution pipelines from Skagway to Fairbanks and Watson Lake remained under the ownership of the U.S. Government, without being declared surplus. In fact, as the other Canol dispositions were being completed, postwar requirements for fuel deliveries to Alaska began to increase and to justify restoration of the Skagway-Fairbanks pipeline to operational status, which was later done.³⁸

One transaction remained to complete the disposal settlements. Under the Thirty-third Recommendation, quantities of surplus movable property had been transferred to Canada for sale by the War Assets Corporation and reimbursement to the United States. Negotiations throughout most of 1948 to settle this account were finally completed as of 31 December. Under the settlement, Canada paid $576,562 for property sold for the United States and purchased a small unsold residue for an additional $4,437.³⁹

The final balance sheet for the government-to-government transactions, exclusive of the foregoing final settlement follows:⁴⁰

Transaction	Original Cost	Paid by Canada
Total	$211,320,000	$93,061,000
The northern airfields settlement	90,683,000	76,811,000
Thirty-third Recommendation transactions
Army-Navy Liquidation Commissioner	22,696,000	1,251,000
Foreign Liquidation Commissioner	39,034,000	2,999,000
30 March 1946 bulk transaction	58,907,000	12,000,000

All in all, the disposal operation was carried out to the satisfaction of both countries. All U.S.-built or-financed installations were transferred to Canadian control or otherwise disposed of by the United States in a manner that with minor exceptions eliminated the United States as a titleholder to real property and facilities in Canada. Through the disposals and settlements Canada acquired numerous airfields, structures, and facilities, in some instances at only a fraction of their original cost. These capital acquisitions represented a substantial augmentation of the transportation and other resources of northern Canada. The United States also fared well in that it obtained reimbursement on a larger scale than had been anticipated under the original authorizing agreements.

The 12 February 1947 Statement

The collapse of Hitler's Germany in May 1945 signaled the approach of a new phase in the military co-operation between the United States and Canada. Japan had yet to be defeated, but plans for the final operations against Japan were in an advanced state of preparation. And, as the war entered its closing stages, it was apparent that it would be necessary to determine the nature and scope of postwar military co-operation between the two countries. Yet the new situation and the requirements for co-operation in the posthostilities period had not been examined, either by the Permanent joint Board on Defense or by any other official machinery. Such an examination soon became a matter for active consideration by the Board.

At the June 1945 Permanent Joint Board meeting, not long after V-E Day, General Henry, the Senior U.S. Army Member, outlined his views of the future of defense collaboration. To General Henry, who as a result of his additional responsibilities in the field of military co-operation between the United States and the American republics had had considerable experience with the difficulties stemming from the great diversity of types of matériel, organizational and training methods, and the like, it appeared that Canada should become a member of the "military family of American nations" envisaged in the Act of Chapultepec. Although he recognized that Canadian public opinion might not yet be ready for postwar steps toward

standardization of Canadian and U.S. forces and that Canada's Commonwealth ties presented complications, General Henry felt that such steps would have inescapable merit and should be explored. He also recommended that the Board examine the continuing value to continental defense of the facilities developed in northwest Canada during the war.⁴¹

General Henry's presentation provided the springboard for a full discussion of these problems at the next meeting of the Permanent Joint Board, held in early September soon after the Japanese surrender. On this occasion, the personal and tentative views of the Canadian Section of the Board on the points raised by General Henry were in turn outlined and discussed. As for Canadian participation in inter-American military collaboration, this appeared to be, in the Canadian view, a political question. As to northwest Canada, many of the facilities developed there would certainly have some continuing defense value, the extent of which would be apparent when a military estimate of the situation for northern North America could be prepared.

In the view of the Canadian Section, as outlined by General A. G. L. McNaughton who had succeeded Mr. Biggar as Canadian chairman, a real case for standardization of matériel and organization between the forces of the two countries could not be made. On the other hand, standardization as well as fuller co-ordination of military supply operations between the United States and the British Commonwealth as a whole would be a substantial step toward the common security and international peace. Canada would in the future exert such influence as it could to that end. Thus the Canadian Section made explicitly clear that the dual and sometimes dichotomous position of Canada as a North American state and as a member of the British Commonwealth would continue to be a factor to be taken into account.

On one point the two sections of the Board were agreed. The authors of the Ogdensburg Declaration had used the term "permanent" in the title of the Board advisedly. Military co-operation should be continued within the framework of that declaration. There was no reason why a new appreciation or estimate of the joint defense situation should not be prepared as a step preliminary to revising ABC-22, the basic defense plan, to meet the requirements of the new situation. The Canadian Section suggested that the chiefs of staff of the two countries might on some occasion meet to survey the situation.⁴²

Although the Canadian response indicated some receptivity to the

proposals of the U.S. members of the Board, its tone was cautious and deliberate. Nevertheless, the designation of General McNaughton to chair the Canadian Section of the Board indicated that Canada did not expect the Board to lapse into a subsidiary role. With the addition of this eminent and experienced soldier-statesman-scientist, the Canadian Section was prepared to deal with the highest questions of politico-military policy.

On the U.S. side, the proposal to revise ABC-22, the 1941 plan that had met adequately the requirements of World War II, received the approval of the Joint Chiefs of Staff. In examining the procedure for drafting the new estimate of the situation (appreciation, in Canadian parlance) which would provide the basis for drafting the new joint defense plan, the Permanent Joint Board on Defense and chiefs of staff of both countries felt that the former needed to be supplemented by a similar body on the service level. Whereas the Board, responsible to the President and Prime Minister, was a suitable forum for policy deliberations, a mechanism more closely tied in with the defense departments was needed to co-ordinate the increased amount of consideration that would be necessary. Accordingly, a Military Co-operation Committee was established in February 1946 comprising representatives of the service departments, but also including officers from the Departments of State and External Affairs, and, in addition, the Secretary of the Canadian Cabinet Defense Committee. The sections of the Military Co-operation Committee were made responsible to their respective chiefs of staff. Dayto-day liaison between service authorities was to be maintained through the service attachés in the two capitals and the Canadian Joint Staff in Washington, which continued to operate in the postwar period.⁴³

At its very first meeting, held in Washington 20-23 May 1946, the Military Co-operation Committee considered drafts of (a) a study of the requirements for Canadian-U.S. security and (b) a security plan. During the course of succeeding months these documents were finalized and approved and subsidiary plans initiated. These plans were undertaken under the guidance of the Military Co-operation Committee as part of its assigned responsibility of preparing, continuously revising, and submitting recommendations for implementation of the basic security plan and its subsidiary plans.⁴⁴

Concurrently with this joint strategic planning, the earliest measures of practical postwar collaboration were being taken. Exercise MUSKOX, the movement of a mechanized force some 3,000 miles through Arctic Canada

during the early months of 1946, was carried out with participation of U.S. observers and use of some U.S. matériel. The experience and test observations obtained on all equipment were made equally available to both countries. During the same period experiments authorized by Canada were carried out by U.S. B-29 aircraft over Arctic Canada in the use of the loran (long range) radio navigation system, which was similar to that which had been used so successfully over ocean areas during the war.⁴⁵

Although the mutuality of the security problem common to the two countries appeared to justify such joint measures, military co-operation with the United States had not yet become a clear-cut facet of contemporary Canadian foreign policy. This policy was fundamentally one of full support for the search for security through the United Nations, and one of minimizing bilateral or multilateral regional arrangements as detracting from the maximum potential of the United Nations for peace. However, during the immediate postwar period, this policy was implemented not actively but passively, and until early 1947 Canada played a retiring role on the international stage.

During 1946 the United States and the USSR came to be increasingly recognized as the protagonists and antipoles of a developing bipolar world situation. A significant body of Canadian public opinion was expressing the view that it was unwise for Canada to act jointly with the United States in measures that might antagonize the USSR. This view had received expression as early as December 1943 at the Montebello Conference of the Canadian Institute of International Affairs, when a substantial number of those present felt that Canada should abandon the Permanent Joint Board in the postwar period as constituting an irritant in relations with the USSR.⁴⁶ Canadian attitudes in the postwar period on this point were not improved by occasional injudicious press releases on the part of the U.S. military services in connection with their activities in Canada.

Nevertheless, the undeniable merit and self-evident necessity of further military co-operation prompted official approval of continuing forward planning and modest steps in that direction. As joint strategic planning got under way, the Permanent Joint Board began to consider the areas in which postwar collaboration might be useful, together with the adequacy of the existing mechanisms for that purpose. A recommendation by the

Permanent joint Board on the principles for continuation of defense collaboration was first considered at the 29 April 1946 Board meeting. During the ensuing months the statement of principles was reviewed and revised, emerging on 20 November as the Board's Thirty-sixth Recommendation. Not long afterward, the approval of the two governments was made known through the release on 12 February 1947 of an agreed statement. The release declared that limited defense collaboration based on the following principles had been authorized:

1. Interchange of personnel.

2. Co-operation in maneuver exercises and development and tests of new matériel.

3. Encouragement of standardization.

4. Reciprocal availability of military facilities.

5. No impairment of control by each country over all activities in its own territory.⁴⁷

Although the principles established could be utilized to provide a basis for broad co-operation, their wording indicated that such broad co-operation could develop only within the limits and restrictions that either country might wish to impose. On the Canadian side particularly, these limitations provided a flexibility that might be used to meet the needs of the domestic and international situations. In presenting the arrangement to be House of Commons, Prime Minister King pointed out that collaboration of this type had long existed between the nations of the British Commonwealth and that Canada's geographical position made it important that such measures should be undertaken with both the United States and the United Kingdom.⁴⁸

The U.S.-Canadian Military Co-operation Committee established a year earlier became the principal mechanism for co-ordinating the actions worked out pursuant to the principles of the 12 February 1947 statement. By this time the revised estimate of the situation and the new security plan had been completed and the committee was able to relate the practical measures to be taken to the detailed requirements, immediate and longer term, that emerged from the plan. These arrangements proved eminently suitable in the light of the contemporary international climate. In addition, they provided a flexibility that allowed for increasing amounts of collaboration as the two countries began to accept the inescapable conclusion that the Soviet

strategy left no alternative but to broaden the defensive collaboration designed to guard North America from Soviet aggression.

The Lessons of World War II

With the Allied victory in World War II important changes took place in the power positions of the major nations of the world. The two leading members of the World War II Axis were for the time being eliminated from their positions as foremost military powers. The USSR emerged as the unchallenged single contender against the United States for primacy as the world's most powerful nation. The United States and Canada, despite substantial expenditures of men and treasure, came out of World War II stronger and more vigorous than ever. Other nations, such as the United Kingdom and France, lost in relative power and position. Technological advances, particularly in the fields of electronics and weapons such as the atomic bomb, made far-reaching changes in the military capabilities of the world's Powers. But other fundamental factors changed little or not at all.

A salient feature of the relation between the United States and Canada during World War II was the wide disparity in their resources in manpower, material, and productive capacity. From this disparity often flowed U.S. notions that the needs of the United States should be accepted without challenge since the U.S. interests at stake were so much greater, and that the U.S. view should predominate when differences arose. Such a position would of course be unacceptable to the smaller of any pair of sovereign states professing adherence to the tenets of international law. And Canada was free to take an unyielding and divergent stand because it was secure in the knowledge that the United States would never, except under near-catastrophic circumstances, employ forces to impose its will. So long as Canada could, in the given situation, withstand the political, economic, and psychological pressures that might be applied, it remained a free agent.

On the other hand, where Canada was the seeker its relative size left it in a poor bargaining position. Canadian efforts to gain a stronger place in the war councils, for example, could only be successful to the extent that the United States, in consultation with the United Kingdom, would allow. In the case of a problem relating to one of the major war theaters, the Canathan position was even weaker, for the United States considered the United Kingdom to be the principal partner and Canada only a subsidiary of the partner. This stemmed from Canada's position in the British Commonwealth, in which the United Kingdom was exercising war leadership not only because of its historical and material pre-eminence but also because the events of the war had placed it in the most forward positions on the

diplomatic and military fronts. Canada's relative size and resources also made it dependent on the United States or the United Kingdom for the supply of much of the matériel with which to equip Canadian forces and for equipment to expand its production base. Finally, the disproportion between the war efforts of the two North American partners sometimes provided occasion for query whether the junior partner was pulling its weight, and for embarrassment in instances where Canadian lack of skills or other resources necessitated a one-sided effort in a project of joint interest.

A second major element of the Canadian experience in North American co-operation in World War II was the extent of the U.S. intrusion on Canadian soil in an area remote from the combat theaters and peopled by Canadians engaged in reasonably normal pursuits. The substantial U.S. garrison operated in Canada independently of Canadian control and legal jurisdiction to an extent considered unwarranted by many Canadians. This garrison constructed, maintained, and operated bases and facilities as if they were on U.S. soil. Command organizations with their independent signal communications systems were established over segments of Canadian territory. Strenuous U.S. efforts were made to have Canadian forces placed under U.S. command on Canadian soil. All these arrangements presented to Canadians serious questions of domestic policy, which were aggravated by sundry accompanying complications--occasional lapses of soldier discipline that outraged the Canadian citizenry, competition for scarce housing and rationed supplies, and concern as to whether U.S. commercial construction, air transport, and similar enterprises might not gain a postwar advantage. Too often it seemed to Canadians that U.S. requests for arrangements that resulted in these intrusions into Canada, as well as U.S. motivations in other dealings, were based exclusively on military requirements, without adequate consideration of the political factors involved.

A perennial state of affairs that conditioned the nature of the U.S.-Canadian relationship was the common amiable ignorance and disinterest on the part of Americans toward Canada. The impact of this ranged from the annoying, when exhibited by individuals in responsible positions, to the serious. There were surely many Americans who failed, or perhaps chose not, to understand that Prime Minister Churchill could in no wise speak for the Canadian Government, and that Canada was fully autonomous and coequal with the United Kingdom within the British Commonwealth. Lack of understanding of the nature of the British Commonwealth, of the nature of the Canadian Confederation, and of some Canadian historical, geographical, and similar background could not fail to introduce errors, discords, or irritations in the policy

consideration or operational handling of problems concerning U.S. activities in Canada. Too frequently, such lapses were compounded by an ineptitude on the part of U.S. officials in even the highest positions who violated the basic rules of the "how to win friends and influence people" technique.

A basic factor influencing postwar U.S.-Canadian military collaboration was the impact of advanced weapons and techniques on the Canadian "privileged sanctuary" position. By the end of World War II the development of aircraft, guided missiles, submarine warfare, airborne techniques, and the atomic weapons had advanced warfare to the threshold of a new era. In this new era North America ceased to be relatively immune from assault from other continents. The H-Hour ground assault in Europe could be matched by an H-Hour atomic bombing of Detroit and Windsor or of Washington and Ottawa. The mastery of the Atlantic and Pacific and the barrenness of the Arctic no longer prevented penetration of these barriers, and their value as buffers of time and space had been drastically reduced.

Under these circumstances the utilization of North American resources for and the role of Canada in the defense of the Western Hemisphere as a whole, within the framework of a joint U.S.-Canadian arrangement, assumed increasing importance to Canada. For some time before it entered World War II the United States had a well-developed interest in the defense of Latin America and visualized the danger of military action there as greater than in North Atlantic territories such as Newfoundland, Greenland, and Iceland. After Pearl Harbor the United States allocated substantial military resources to several of the larger Latin American nations. To Canada, the U.S. preoccupation with Latin America and use of resources there probably did not appear warranted by the military situation. Canada learned, too, that dependence on sources of military equipment outside of Canada made dubious the availability of essential supplies in an extreme emergency, such as that resulting from the 1940 German blitzkrieg, when the sources of military equipment for Canada dried up.

Theoretically, two choices were available to Canada in 1940: it could attempt to become self-sufficient in military supplies; or, it could continue to draw upon outside sources for certain items. Within the production base established in Canada by the end of World War II, the first choice might have been feasible. But in 1940, as a practical matter, it was out of the question, and Canada necessarily elected the second choice. In fact, in the working out of the Hyde Park Declaration, Canada strove for adoption and implementation of a concept under which Canada and the United States would correlate their production programs so that each would be completely

dependent upon the other for items assigned each country for production. Such an arrangement visualized a balanced mobilization effort with joint production collaboration in the interest of efficient specialization and would, in effect, have bound Canada and the United States into a closely integrated security union at least for the duration of the war.

Actually, the arrangement as conceived by Canada was never carried out. The United States strove to develop the production capacity needed to supply at least some of its requirement of all items, and it utilized Canadian capacity quantitatively to agument its supply of selected items. Canada also departed from the Hyde Park concept. Although it purchased much of its military matériel from the United States and the United Kingdom, Canada broadened its production base and technical know-how until it was producing items in almost every category of military equipment. But with the end of World War II, Canada still remained faced with the question of how it should plan to procure its military equipment in peace and in war, and from what countries the equipment not manufactured in Canada should be procured.

The failure on the part of the United States to take into account political, psychological, economic, and similar factors in dealing with problems relating to Canada made for decisions and actions that were not always in the best U.S. or joint interest. Two examples were the questions relating to unified command and to the Canadian staff mission in Washington. This failure was a basic weakness in the over-all U.S. politico-military conduct of its relations with Canada in World War II.

More problems would have arisen had it not been for the civilian chairmanship of the two sections of the Permanent Joint Board on Defense. This arrangement interposed a civilian between the military of either section and the other government and its Permanent Joint Board representation. Properly selected civilians were competent to act as interpreters and moderators of the needs of their military colleagues and to insure that some account was taken of political and other nonmilitary factors. The civilian chairmen could thus make a useful contribution toward seeing that project requirements were brought within the limits of feasibility. In addition to exerting a moderating influence on the military of his own section, each chairman was in a better position than the military to press the other section harder for acceptance of some project in terms of the nonmilitary as well as the military urgency.

On the other hand, it does not appear from the World War II record that the civilian chairmen of the Permanent Joint Board and other civilian leaders were more inclined than military leaders to commit the two

countries to intimate collaboration. To be sure, the basic impetus to U.S.-Canadian military collaboration was given by the civilian heads of the governments when they joined in making the Ogdensburg Declaration. But in practice thereafter civilian officials took the lead in pushing only one major project, the plan backed by Canada for co-ordinated North American aviation training, and then with only indifferent success.

The record of U.S.-Canadian wartime military collaboration shows that the Permanent Joint Board on Defense established at Ogdensburg proved useful beyond the expectations of President Roosevelt and Prime Minister King. It was born more out of political considerations than of military necessity, at least from the U.S. point of view, for neither the War nor the Navy Department was consulted before its establishment, nor had either department indicated a need for such a body. Nevertheless, the Board proved itself an excellent forum for a continuous and informal exchange of views and exploration of common problems, as well as for the conduct of broad studies as contemplated by Roosevelt and King. Through the give-and-take and mutual confidence that marked the functioning of the Board, many problems were solved harmoniously and effectively. Moreover, the. Board became useful in handling the day-to-day operational details of a large number of field projects, thereby performing an essential staff function not otherwise provided for.

The problem of integration of the intricate pattern of U.S. activities in Canada and of their co-ordination with the Canadian authorities was a persistent thorn. By dint of continuing adjustment of such organizations as were established, and of extensive liaison between the Canadian and U.S. officials concerned, the problem was kept within manageable bounds. It had several aspects. The foci of the co-ordinating authorities for the numerous U.S. activities in Canada were in Washington and not only physically removed from Canada but also separated by several echelons of command. At few if any of these levels was there an adequate appreciation of Canadian political and other' problems that should have been taken into account in reaching decisions and molding troop attitudes.

For lack of better machinery, the Permanent Joint Board on Defense came to have a substantial operational function in the co-ordination of arrangements between the two countries and among the various U.S. agencies involved. The scope of this function was limited, since the U.S. Section could exercise no command authority. Nevertheless, in handing a multitude of routine and administrative details, the Board seemed to fill an essential need in providing some co-ordinated direction to the U.S. projects in Canada.

The Canadian Government, too, experienced such a need and met it by creating the office of Special Commissioner for Defense Projects in Northwestern Canada. Except in the area of major policy, his office provided a Canadian focal point for that part of Canada in the co-ordination of matters of joint interest. This experience suggests that the establishment of a U.S. theater-type headquarters, charged with the conduct of all U.S. activities in Canada and Newfoundland, would have been very useful to both countries. Such a headquarters could have dealt with a single Canadian commissioner for defense projects, and could have provided integrated direction to and supervision of the U.S. activities.

An alternate solution might have been the establishment of a joint U.SCanadian theater-type headquarters, with appropriately balanced representation from both countries. Such a headquarters, located in or near Ottawa, would have provided a single focus of policy and operational control for the related U.S. and Canadian activities in Canada. Such integrated direction would have made these activities more responsive to the requirements, military and otherwise, of the situation on a continuous basis and would have provided a ready means for joint review of project requirements and implementation of programs. Some faltering steps were taken in this direction. From the Canadian point of view, there were probably as good arguments against as for such an arrangement. On the U.S. side, the many agencies operating in the field in Canada were naturally content without the interposition of such an authority over them. That the need for such a headquarters did not become urgent was probably only the result of the fact that, except in a narrow sense in Newfoundland, the wartime activities in Canada were all of a logistical and not an operational nature. And, although the conduct of those activities involved co-operation between the two countries, the majority thereof were fundamentally unilateral U.S. projects, rather than joint ones in the sense that they were jointly developed and executed to meet a common requirement.

The foregoing conclusions tend somewhat to obscure the full compass of the successful collaboration between the two countries and should not be allowed to do so. For both Canadians and the Americans stationed in Canadian territory the situation was sometimes an awkward one. Both were serving the war effort of their countries, yet within the sphere of their activities, they were far removed from the battle fronts. The many engineering works of permanent value carried out through joint efforts give ample testimony to the success of wartime military co-operation.

There were other and more significant accomplishments that were realized

through the efforts of the two partners. Canada is today on the threshold of becoming a world power. In part this emergence is due to the tremendous postwar development of Canadian natural wealth and resources. This development undoubtedly received a major stimulus during World War II as a result of the extensive U.S. operations in Canada, which broadened the knowledge of Canada's northern territories, improved the transportation facilities there, and opened up areas that had been infrequently penetrated by white man. Canada's productive capacity received a substantial boost from the Hyde Park Declaration, which not only generated a flow of orders but collaterally provided for Canadian acquisition of the machine tools and other equipment necessary to fill those orders.

The United States, and to a-lesser extent Canada, can take credit for the economic rehabilitation of Newfoundland. In addition, as the question of Newfoundland's political future came to the forefront, the United States and U.S. officials maintained a perfectly correct attitude. Canada was prepared to welcome Newfoundland to the Canadian Confederation. In Newfoundland, there was sentiment for union with the United States, which had been the major fountainhead of its economic well-being, as well as for union with Canada. In no way did Americans try to influence public opinion or take a part in the solution of the problem, which was resolved in favor of admission of Newfoundland to Canada as a new province.

The history of wartime collaboration between the United States and Canada was a record of solid accomplishment with only minor notes of discord. The best testimony to the success of Canadian-U.S. wartime military co-operation is the fact that both countries were prepared, in the immediate postwar period when peace appeared to be a reality and demobilization was proceeding apace, to continue their military co-operation on a revitalized basis.

Table of Contents
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Footnotes

1. Carr, Great Falls to Nome: The Inland Air Route to Alaska, 1940-1945, pp. 97-98.

2. See above, Ch. VII.

3. Journal, PDB 124; Ltr, Hickerson to Robins, 11 Nov 42, PDB 150-2. 456178 O-59--22

4. H. C. Debates, 1 Feb 43, pp. 20-21.

5. Appendix A, below. The exchange of notes is in EAS, 391, and CTS, 1943, No. 2.

6. See above, Ch. VIII.

7. Alaskan Division, Historical Record Report, Nov 42-Dec 43 volume, p. 222; Cdn Leg Note 288, to Secy State, 31 May 43, PDB 126.

8. Cdn Leg Note 643, to Secy State, 18 Dec 43, D/S 842.7962/121.

9. H. C. Debates, 29 Feb 44, pp. 980-81, and 1 Aug 44, pp. 5706-08.

10. Ltr, Ilsley to Morgenthau, 24 Mar 44, cited in "Report of Meetings in Washington, D.C. on 25-26 April 1944," PDB 150-4. For the Morgenthau-Ilsley agreement on the dollar balance question, see F. A. Knox, "Canada's Balance of International Payments, 1940-45", Canadian Journal of Economics and Political Science, XIII (August 1947), 345-62. Lingard and Trotter, Canada in World Affairs, III, p. 215, speculate that the concurrent investigation by the Special Senate (Truman) Committee Investigating the National Defense Program (see above, pp. 233-35) rendered the United States amenable to the Canadian proposition. This appears to be unlikely since in northwest Canada that committee investigated only the Canol Project. Of the total Canol expenditure of about $135 million Canada brought within the airfield agreement only the Mackenzie River flight strips at a cost of $1,264,150, which represented less than 2 percent of the amount finally transferred under the airfield agreement. The validity of the theory is further challenged by the fact that, despite a strong contrary Truman Committee recommendation, the War Department proceeded in the early months of 1944 to expend an additional $19 million on the Canol Project. For Canadian policies and statistics on its U.S. dollar position, see Canada, Foreign Exchange Control Board, Report to the Minister of Finance, March 1946. United States figures are to be found in Department of Commerce, Bureau of Foreign and Domestic Commerce, International Transactions of the United States During the War, 1940-45 (Washington: Government Printing Office, 1948), pp. 122-31.

11. Note, Berle to Cdn Ambassador, 24 Feb 44, and Reply, 20 Mar 44, D/S 842.7962/121 and /134.

12. EAS, 405, and CTS, 1944, No. 19. Only the latter contains the appendixes that list in detail the Canadian and U.S. expenditures on the facilities covered by the agreement. Accounts of the negotiation are to be found in The Canada Year Book, 1945, pp. 705-12, and Canada at War, No. 40 (Sep 44), pp. 28-37, as well as in the statement of the Prime Minister, H. C. Debates, 1 Aug 44, pp. 5706-08. The statement is also published in Department of State Bulletin, August 6, 1944, XI, 139-41. On the broadening of the settlement pursuant to the Morgenthau-Ilsley arrangements, see statement of Ilsley in H. C. Debates, 21 Apr 44, p. 2227.

13. To meet its continuing requirements for telephone and telegraph communications services in northwest Canada and to Alaska, the United States arranged to lease some of the available channels at a rental of $271,000 annually. (TIAS, 1966; CTS, 1948, No. 6.)

14. The airfields in eastern Canada were released on the following dates:

Churchill		1 August 1945
The Pas		2 August 1945
Southampton Island		7 September 1945
Mingan		-October 1949
Fort Chimo		-October 1949
Frobisher Bay		1 September 1950

15. Memo, Parsons for Hickerson, 11 Jul 44, D/S 842.20 Defense/7-844.

16. Journals, PDB 124.

17. EAS, 444; CTS, 1944, No. 35. See Appendix A.

18. War Assets Corporation, Limited, was established under authority of the Dominion Companies' Act by Privy Council 9108, 29 November 1943, which also authorized establishment of the Crown Assets Allocation Committee. The former agency was succeeded by a new War Assets Corporation established on 12 July 1944 under the statutory authority provided in the Surplus Crown Assets Act, which came into effect 30 June 1944.

19. Journal, PDB124; Ltr, Hickerson to Pearson, 20 Dec 44, D/S 842.20 Def/12-2044, and Reply, 9 Feb 45, D/S 842.20 Def/2-945.

20. Privy Council 3432, 15 May 45.

21. Camp 550 was so designated because it was a housing facility having a capacity for 550 persons. The headquarters of the Northwest Division of the U.S. Army Corps of Engineers was located at the Jesuit College, which had been improved and enlarged for that purpose. The Bechtel-Price-Callahan Building had been used for office space by the prime contractor for the Canol Project.

22. Responsibility for disposition of U.S. property in foreign areas had, by Executive Order 9630, 27 September 1945, been transferred from the War and Navy Departments and the Army-Navy Liquidation Commissioner to the Department of State as of 20 October 1945. The responsibility was discharged by the Foreign Liquidation Commissioner, who established a field organization that included a Deputy Field Commissioner in Ottawa. The actual physical custody of property and administration of the disposal arrangements continued to remain with the U.S. service agencies in Canada. See Department of State, Office of the Foreign Liquidation Commissioner, Report to Congress on Foreign Surplus Disposal, April 1946, (Washington: Government Printing Office, 1946), and Department of State Bulletin, March 3, 1946, XIV, 350.

23. Memo/Conv, R. M. Macdonnell and Parsons, 7 Mar 46, PDB 150-2; Privy Council 1189, 29 Mar 46.

24. TIAS, 1531; CTS, 1946, Nos. 12 and 31. Lists appended to the notes set forth in detail the facilities find supplies included under this settlement. Canadian Government approval of the transaction was granted in Privy Council 1189, 29 Mar 46.

25. TIAS, 1981; CTS, 1948, No. 8.

26. EAS, 246; CTS, 1942, No. 13.

27. EAS, 381; CTS, 1942, No. 26, and EAS, 382; CTS, 1942, No. 21.

28. House Committee on Foreign Affairs, Alaska Study Mission, Committee Print (Washington: Government Printing Office, 1948), p. 7. See also H. C. Debates, 13 Mar 47, p. 1326, and 17 Mar 47, p. 1409.

29. EAS, 386; CTS, 1942, No. 23.

30. EAS, 387; CTS, 1942, No. 24, and EAS, 416; CTS 1944, No. 16.

31. EAS, 416; CTS, 1944, No. 16. See also Ch. VIII, above.

32. TIAS, 1565; CTS, 1946, No. 1. See above, pp. 325-29. As a matter of fact, the five storage tanks had been removed by the United States in November 1944, leaving only the loading dock and other minor facilities.

33. TIAS, 1695; CTS, 1945, No. 3.

34. TIAS, 1696.

35. TIAS, 1697; CTS, 1946, No. 41.

36. Department of State Bulletin, February 9, 1947, XVI, 256.

37. H. C. Debates, 18 Feb 48), pp. 1348-49; House Committee on Foreign Affairs, Alaska Study Mission, p. 10.

38. H. C. Debates, 18 Feb 48), p. 1439; Department of the Army Press Release, 21 Jan 48).

39. Report to Congress on Foreign Surplus Disposal, January 1948, p. 23, and January 1949, p. 16; TIAS, 2352; CTS, 1949, No. 16.

40. Report to Congress on Foreign Surplus Disposal, April 1946, pp. 20-21, and July 1946, pp. 25-26. On the basis of the tabulated data, these and other of the quarterly reports cite a return on the order of 40 percent of the cost value of the surplus property. However, if the airfields settlement under which Canada voluntarily paid 100 percent of the cost of permanent facilities is extracted, it would appear that the return in the negotiated settlements was on the order of 13 percent for these transactions.

41. The memorandums are appended to the Journal, 4-5 Sep 45 PJBD meeting, PDB 124.

42. Journal, 4-5 Sep 45) PJBD meeting, PDB 124.

43. JCS 1541, approved 19 Oct 45; Canada, Department of National Defense, Canada's Defense Program (Ottawa: E. Cloutier, King's Printer, 1949), p. 38.

44. U.S. Department of Defense, Organization Manual, Office of the Secretary of Defense (Washington: 1952, Processed.), p. 11.15.

45. For a full account of actions in the field of defense co-operation in the period immediately after V-J Day, see F. H. Soward, Canada in World Affairs, IV, From Normandy to Paris, 1944-1946 (Toronto: Oxford University Press, 1950), Ch. IX.

46. Grant Dexter, Canada and the Building of Peace (Toronto: Canadian Institute of International Affairs, 1944), pp. 165-67.

47. Full text at Appendix E, below.

48. H. C. Debates, 12 Feb 47, pp. 345-48.