The Indispensable Ally

(See Cover)

Upon the whole surface of the globe, there is no more spacious and splendid domain than Canada open to the activity and genius of free men. --Winston Churchill, Ottawa, Jan. 14,1952

In Wall Street last week, barely five weeks after it had been freed from controls to establish its own value, the Canadian dollar hit par with the U.S. dollar. Across the world, in the free markets of Paris, Milan, Tangier and Beirut, Canadian dollars were suddenly in such brisk demand that money-changers priced them at 101 U.S. cents. In the confused hippodrome of international finance, the wide, moss-green Bank of Canada banknote was running neck & neck with the U.S. dollar as the world's most desirable currency.

The robustious Canadian dollar was a symbol of Canada's growing strength, and the diploma for her industrial coming-of-age. In twelve years, Canada has undergone the most impressive industrial development of any nation in the world, a surge of industry and prosperity that Wall Street's conservative investment firm of Lehman Bros, calls "the biggest business story of this decade." Since 1939, Canada has:

P: Quadrupled her national production, climbing from a lowly par with Norway and Sweden to a point where she nearly triples the output of these Scandinavian countries and rivals that of France.

P: Made a 50% advance in the Canadian standard of living, raising her average income for a family of four to $4,000 a year--$622 above the corresponding U. S. average.

P: Kept her finances in splendid solvency (for the first nine months of 1951, she had a $721.6 million government surplus).

Though still dwarfed by the productivity of the U.S., Canada's growing industrial muscle has expanded her world influence to an extent never before achieved by a country of 14 million inhabitants. The swelling flood of foodstuffs, metals, oil, newsprint and goods flowing from her fields, forests, mines and factories has given Canada a position of importance in the free world's councils subordinate only to the U.S. and Britain. Canada now supplies:

P: More than 90% of the free world's nickel, and an important share of the zinc, copper, aluminum and other strategic metals for the West's defense.

P: Half the world's newsprint; three out of five of the world's newspaper pages are printed on Canadian paper.

P: A growing share of North America's oil and natural gas from the new-found Alberta fields, the "Texas of the North."

P: A substantial (but highly secret) supply of uranium for U.S. atomic bombs.

P:The world's second-biggest export wheat crop, a source of food for 71 nations.

Canada's vast area (next in size to the Soviet Union and China) throbs with industrial action. In bleak Ungava, where only the rashest prospector ever ventured a decade ago, a new railway is thrusting through the wilderness to tap an iron-ore lode larger than the state of Connecticut, and perhaps as rich as the famed Mesabi Range in northern Minnesota. Above an Indian village named Kitimat, in the stony heights of British Columbia, engineers are damming half a dozen mountain lakes, creating a waterfall 15 times as high as Niagara, to power the world's biggest aluminum plant. In Northwestern Ontario, engineers are draining a 150-ft.-deep lake; when it is dry, they will dredge away 70 million tons of clay and gravel from the bottom to get at an iron-ore deposit that lies underneath.

Even in the dead of winter, when temperatures drop 50DEG below zero, the search for oil continues on the Canadian prairies. Winter has actually speeded development in Northern Manitoba; a whole town is being moved overland by tractors and sleighs to the isolated site of a new nickel mine. Another town, Uranium City, is springing up in the far north of Saskatchewan near the shaft of a new uranium mine that will be the biggest in North America, and may be the richest in the world when it goes into production late this year. Meanwhile, Canada's big cities--Montreal, Toronto, Vancouver, Hamilton and Winnipeg--are growing upward with modern skyscrapers, and outward with bright-roofed new industrial suburbs.

Not the biggest, but perhaps the most significant of all Canadian enterprises now afoot is the St. Lawrence Seaway, a canal system linking the St. Lawrence River and the Great Lakes to enable all but the biggest deep-sea vessels to sail upstream into North America's industrial heartland. This project has been pressed and attacked on both sides of the border for more than 50 years. Canada has been anxious to build it; all U.S. Presidents from Coolidge to Truman have advocated it (see NATIONAL AFFAIRS). But the U.S. Congress, hobbled by minority interests (railroads and East Coast shippers), has never given its consent. Canada, feeling her newly won strength, has now announced that if Congress does not agree to a joint project before May, she will build the $300 million seaway alone. Henry Ford II, president of the Ford Motor Co., hailed the Canadian seaway plan last week as "an example of initiative and imagination in action--the spirit of contemporary Canada."

This spirit of growing confidence, both at home & abroad, has helped attract an ample supply of fresh capital to keep the boom going. Canadian investors, who were once somewhat timid about their own prospects, last year plowed back a record 22% of their national income into new development. United States, British and Swiss capital is rushing into the bullish Canadian market. American investors have put more than $7 billion into Canada, the heaviest U.S. stake in any foreign country. And the flow is increasing steadily, as Canada shows that she has both the wealth and the men to work it.

Minister for Everything. Among these men, the one who has contributed most to Canada's recent progress is U.S.-born Clarence Decatur Howe, 66. Officially, Howe is Canada's Minister of Trade & Commerce and Minister of Defense Production. Canadians, with good reason, call him "Minister for Everything."

An engineer who made his million before he was 40, Howe entered the Canadian cabinet as a political novice in 1935. Ever since, he has been its hardest-driving member. He reorganized the government-owned Canadian National Railways, North America's biggest railroad, and saved it from bankruptcy. He built the country's national airline (TransCanada) and its countrywide, government-owned radio system (CBC). In World War II, he took command of Canada's industrial effort and transformed the largely agrarian Canadian economy into a high-powered industrial unit. After V-J day, he presided over the return to a well-balanced peacetime economy. He runs Canada's atomic-energy program, directs its national scientific research, sells its billion-dollar grain crop. As boss of all foreign trade, he has helped make Canada the fourth largest of the world's trading nations, surpassed only by the U.S., Britain and France. Since the Korean war, he has also been bossing the country's defense production.

With all these responsibilities--and all these accomplishments--it is not unnatural that Howe should occasionally betray a consciousness of his own worth. Once, when one of his government projects was under discussion in Parliament he snapped: "That's not a public enterprise, that's my enterprise." An impatient man of few words, he has sometimes enraged or alarmed his opponents into calling him "fascist" and "dictator."

He has also been called (by Socialists) "the greatest Socialist in Canada." Although he has made public ownership pay, Howe is no Socialist, but a member of Canada's Liberal Party. The party has been in uninterrupted power for 16 years, and its ideology, except in fiscal policy, is roughly akin to that of the Democrats in the U.S. Says Howe: "I'm all for private enterprise, but you can't go without something just because private enterprise won't build it."

Howe is a restless man of great administrative ability who wants to get things done. But he has none of the air of haste and bustle that surrounds some U.S. businessmen. He is deliberate in manner, though quick in judgment. There is little fat on his chunky (5 ft. 10 in., 200 Ibs.) frame. He has what New Englanders call a "down-East memory," and uses phonetic spelling, e.g., his lunch chit at Ottawa's Rideau Club once read: "plane omelet and rasin pie." He is an optimist, especially about Canada. Of his first view of Canada in 1908, he says: "I knew right away that I wanted to be a Canadian. I liked the people, the atmosphere, the possibilities of a thinly settled country."

High Marks. Howe was born in Waltham, Mass, to a family whose ancestors had been Americans for more than 200 years. U.S. Naval Hero Stephen Decatur was a collateral relative; Julia Ward Howe, who wrote The Battle Hymn of the Republic, was a distant cousin. Howe's father was a carpenter who built small houses, one at a time. Howe went to Massachusetts Institute of Technology, got high marks, and stayed on for a year as an instructor in engineering.

He left M.I.T. for a teaching job that paid better--$2,000 a year--at Nova Scotia's Dalhousie University in Halifax. When he arrived in Halifax, aged 22, he was almost broke and had to borrow $100 to tide him over until his first payday. One of his colleagues recalls: "He was a typical good young M.I.T. graduate--vital, clean-cut, tireless, very, very fit, and very, very pleasant." He was also a good teacher.

In 1913, the Canadian Board of Grain Commissioners offered him the job of chief engineer. Howe declined: "No, thanks. I've never seen a grain elevator." But when the offer was renewed, Howe took out his Canadian citizenship papers* and left Nova Scotia for the West.

Wooden storage buildings were just being replaced by modern concrete terminal elevators when Howe first went to Western Canada. "I knew nothing about elevators," says Howe, "so there was nothing to hamper me." He worked out new ways of speeding up construction and designed cost-cutting improvements. To replace the slow process of unloading grain with hand shovels, he developed the Howe Car Dumper, a machine which can lift a boxcar full of grain off the railway track, tip it over and empty it in eight minutes. It is still in use at most Canadian terminals.

Howe's fame as an elevator engineer spread through the grain country, and he decided to cash in on the demand for his services. In 1916, he set up his own engineering firm in Port Arthur, Ont., Canada's main Great Lakes grain terminal. Later in the same year, he married Alice Martha Worcester, a friend of his M.I.T. days and the daughter of J. R. Worcester, designer of the Boston subway.

Quick Rejection. Both marriage and business prospered. The Howes had five children--three daughters and two sons--in six years. C. D. Howe Co. Ltd. drafted plans for 85% of the grain elevators built in Western Canada, designed bridges, docks, factories, flour mills and industrial buildings in all of Canada's provinces and in the U.S. Howe's work took him as far afield as Argentina, where he designed several of the great grain terminals that still tower over Buenos Aires' waterfront. "When I build them," says Engineer Howe, "they stay built." In an era of relatively light taxes, his firm grossed $10 million a year; overhead in the modest Port Arthur headquarters was low.

His engineering career gave him something more valuable than money. He gathered a knowledge of Canadian economics that few native-born citizens could match. He became "a walking Who's Who, encyclopedia and atlas of Canada's businessmen, production problems and geographic situations."

One man who cast an appreciative eye at this knowledgeable engineer was Canada's Veteran Liberal Prime Minister, Mackenzie King. In 1935, King called Howe in for a chat and asked him to stand as a Liberal candidate in the upcoming federal election. Howe, wary of politics, politely refused, but canny old Bachelor King had an ace up his sleeve. He phoned Mrs. Howe, and shrewdly suggested that as an M.P., her husband would have much more time at home than as a busy engineer. Says Howe: "So I ran, was elected, and I've hardly been home since." Once, returning home after a long day on Parliament Hill, he was met at the door by his entire family. "Children," said Alice Howe, "this is your father. I'm sure you've often heard me speak of him."

The first professional engineer ever named to the Canadian cabinet, Howe got two portfolios--Minister of Railways & Canals and Minister of Marine. For efficiency, he combined them into a single Ministry of Transport. Next he tried to interest private capital in an all-Canadian airline. When no one would take a chance, he put the government into the aviation business by founding Trans-Canada Airlines. T.C.A. started with a 122-mile route and 23 U.S.-trained pilots. Now it is one of the top ten international airlines, with an unexcelled safety record; it is also one of the most successful government-owned airlines in the world ($4,000,000 net in 1951)

When World War II began, Prime Minister King gave Howe full authority to expand Canada's adolescent industry for war production. There was ample room for growth; the country was then producing 252 planes a year and a few thousand rifles. Only 4,000 men worked in all Canada's shipyards.

First Nibble. Howe's first move was a ruthless raid on private industry for administrative talent; he brought droves of dollar-a-year men bustling into Ottawa. Many of them left just as quickly, after being judged unfit. Howe, unhampered by politics, was determined to have a good team.

Howe's first nibble at a foreign war order was a long British query on whether Canada could turn out some 40 items of military equipment never before produced in the Dominion. Howe and his staff sweated through a weekend figuring out answers, planning factories, estimating costs. They cabled a detailed answer on Monday morning. A few days later, with no reply from Britain, Howe's impatience asserted itself. He issued orders on his own authority to produce the war tools. "If we lose the war it won't matter that we acted without authority," he said. "If we win, it will all work out."

Thanks to Howe's impetuosity, goods and weapons were rolling off the assembly lines just when Britain suddenly found that she needed them desperately. Said Lord Beaverbrook, then Britain's Minister for Aircraft Production: "Britain owes Howe a debt for splendid assistance."

Eight Hours at Sea. Howe's impatience led him into a dangerous spot in late 1940. When war orders were delayed by the reluctance of British firms to release patent rights, Howe sailed for Britain on the liner Western Prince to break the bottleneck. In the North Sea the ship was torpedoed and sunk by a German submarine. One of Howe's chief aides, Gordon Scott, was killed at his side. Howe and other survivors drifted for eight hours in a lifeboat before being rescued. At the dockside in Britain, a newsman asked Howe whether his whole life had flashed before him as he faced death. "Hell no," barked Howe. "I was too damned busy bailing the boat." Howe landed, apparently unshaken by his experience, went straight after what he had come for and got the orders he wanted.

During the next four years, Howe geared up the high-speed expansion that is still going on in Canadian industry. New factories were built to turn out more than $10 billion worth of guns, planes, ships and shells. Canadian aircraft output rose to 4,000 a year. The shipyards took on 122,000 men and built more than 8,000 ships.

Uranium for Bombs. From the outset, Canada was a close partner with the U.S. in the atomic-bomb program. Howe took over the subArctic Eldorado mine and stepped up its output to provide uranium for the first bombs. His production skill and quick thinking won him high regard in Washington, even though he was a notably tough bargainer for Canada. "What a quarterback C. D. Howe would have made," said F.D.R. "If one play fails, he always has another one up his sleeve."

Howe's gift for improvisation was taxed to the limit when the war ended. Canada had gone into the struggle a raw-material-producing nation, and had emerged from it with a fully manned industrial machine dominating the country's economy. Since the machine was largely government-owned, the government had to decide whether to shut it down, leaving hundreds of thousands jobless, or try to keep it running for peacetime purposes. Prophets of doom were sure that the factories would be deserted, that a heartbreaking depression would sweep the country. Taking over as Minister of Reconstruction, Howe thought otherwise. Said he: "If there is any country in the world where unrestrained optimism is justified, that country is Canada."

Propellers into Boats. One by one, Howe carefully sold off the government-owned plants to private industries that could run them. A Winnipeg factory that had been turning out airplane propellers switched to making trappers' boats. Aircraft plants began producing Canadian-designed planes: Beavers, the Avro Jetliner, and an all-weather jet fighter, the CF-100. In Quebec City, 140 acres of factories were converted to a privately owned industrial center. By 1948, practically all the government plants, except some unconvertible explosives factories and the $75 million Polymer synthetic rubber plant at Sarnia, Ont, had been sold. The explosives plants are useful now in the rearmament program; the Polymer plant has been earning a steady profit for the government since 1944.

Through the postwar boom years, as the war plants were converted, Howe had to develop new secondary industries around them, and keep them in such balance that the economy would not be upset by overproduction in one field, shortages in another. In Canada's free economy, Howe had no direct power to stop any citizen from launching any legitimate business. But he had the power to grant or withhold priorities, tax write-offs and government loans.

Using these powers, Howe handed out more than $100 million in government aid for business expansion, and transformed Canadian industry from an awkward war-born phenomenon into a peacetime economy as well-balanced as any in the world. Howe also had a strong hand in forming Canada's postwar fiscal policy, conservative to the core. Ignoring the example of the U.S., Canada refused to impose direct controls on prices and wages, putting its faith instead in strong credit controls and increased production. The policy worked. At the start of the Korean war, Canada's cost of living rose faster than the U.S.'s; now it is on the decline, while the U.S.'s is still rising.

Smooth Team. Howe is trusted with his enormous powers partly because of his use of them in the past, partly because of his freedom from political ambition--a characteristic he shares with Canada's newly appointed Governor General, Vincent Massey (see below). He has made it clear that he does not aspire to the prime ministry. When Mackenzie King was ready to retire in 1948, several of Howe's friends tried to talk him into making a bid for the job. Howe turned them down, and from the outset supported Louis St. Laurent for the post. St. Laurent, in turn, made it a condition of his own acceptance that Howe stay on to handle the business side of the government. Today, St. Laurent and Howe work as a smooth team, with St. Laurent in the role of the suave chairman of the board and Howe as the hard-boiled general manager.

Labor and consumers, as well as business, have shared the benefits of Canada's faster industrial tempo. The average industrial work week has been cut from 48 to 41.8 hours; the supply of consumer goods has been increased. Cars are coming off the assembly lines at 2 1/2 times the prewar rate, refrigerators at nine times; production of radios and electrical appliances had been trebled. Today, three out of five Canadian families own a car, five out of seven have telephones, 19 out of 20 have radios. In the cities of Toronto and Hamilton, 30,000 homeowners have already bought TV sets, on the chance of picking up a snow-flaked image from distant U.S. stations, while waiting for Canadian television to begin in August.

Under the new order of things that Howe has labored to bring about, he himself is one of the few Canadians who can show no gain in his working and living conditions. Howe sold his profitable engineering business when he entered public service, giving up his $100,000-a-year salary and the dividends on his stock. In Ottawa, he earns $18,000 a year. He is still hard-pressed to find time for the conventional relaxations of a busy businessman--bridge (which he plays well enough to have partnered U.S. Expert Charles Goren), golf, which he plays unpredictably, ranging from 80 to 100 plus. He still gets up every morning at 7 o'clock for tea and an hour with the newspapers and government reports. On the dot of 9 he is at his desk, in a nondescript "temporary" frame building, thrown together for office space early in World War II.

Toughest Job? After girding his country for war, then converting it to peacetime production, C. D. Howe is now tackling a new assignment. Named chief of defense production after the Korean outbreak, he is in full charge of placing contracts and speeding the fulfillment of orders for Canada's threeyear, $5 billion defense program. Howe is the only World War II production boss still on the job in any allied country. But even with the backlog of his hardbought wartime experience, the new job shapes up as the toughest of all his tasks.

Because of Canada's vastly increased industrial strength and the depletion of their own reserves in the war, her allies are depending on her more heavily than ever. The U.S. and Canada have signed a joint defense agreement tightly meshing the two countries' war production. Canada's geography, her new industrial plant and her natural resources make her the indispensable ally for the U.S.

The free nations overseas also look to thriving Canada for assistance. She is the only member besides the U.S. who can pay her own way and help the other eleven countries of the North Atlantic alliance. Canada has already shipped $1454 million worth of arms to NATO allies and has sent troops to Korea and Europe. But more is expected, and from a nation of Canada's strength and promise, more will surely come. Said Winston Churchill, when he visited Ottawa a fortnight ago (and, by his own request, sat next to his old friend C.D. Howe at dinner): "With one hand clasped in enduring friendship with the U.S., and the other spread across the ocean . . . you have a sacred mission to discharge. That you will be worthy of it, I do not doubt."

*When he applied for a passport in 1940, several newspapers published the erroneous report that Howe was only then applying for citizenship, and had been serving in the Canadian cabinet for five years while still a citizen of the U.S.

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