CANADA 'AND THE \VAR

THE HYDE PARK DECLARATION

Cooperation '111 Eco nomic D efence

ST :\TE:'IIE:\T TW

Righ t Hon. \\" . L. :\I.-\ CK E:\ZI E KI:\G, 1\ I.P.

HOLSt: OF CO \L\I ONS, APR IL 2S, 19-H

I ssued by th e Dirrclnr of 1'11/; /ic !nf,m mfi,n , ()llr11m,

under Ollihnrity of /I nn . ./ . (;. (/n rr/in er, .\Iini.sler of .\"a liollrrl ll"ar 8 arices

OT T .-1\1".-1 F:D ~I fl:'\0 C' LOI "TIER

PnT :'\TER TO THE 1\1:'\G"S .\1 0:-iT E.\ C EI.JJO: :'\T ~ 1 . \ .I E!-'·;· y 1041

CA lAOA AN D TH [ \\ 'A R

THE

HYDE PARK DECLARATION

Cooperat.[o n -in Economic Defence

ST :\TE:\11·: :\T ll Y

Right Hon . \V. L. l\1 \ '1'-Et\ZIE KJ.c\C, l\ l.P. /' rim,· .\linislcr of Conaria

H ouse of Commons, Apri l 28, 1941

On l\Iarch 1:2, l described th e l ' nit ed !-\tate::­Lease-Lend 1\ ct as one of th e mile tones of freedom, pointing the \\·ay to ultimat e and certain Yi ctory. The Lease-Lend :\ ct _cttlcd th e prin ciple of l"nitecl States assistance to Britain and th othrr democracies. It did not. ho\Ye,·er, olve all of the com plex economir problems in voh·rcl in th e mobili zat ion of the rc ources of the l ' nit ed ~tatrs and Canada in ord r r to render to Britain, in the pecclie t manner . the mo"t cffecti,·c assistancp and vllpport.

One of the rca on. for my recent , .J ·1( to th e l ' nitccl. tates and my conference. "·ith th P Pre ident. was the urgent need for Canada to find an immediate olu tion of ome of the problem, involved in our

war-time economic relation " ·ith the l ' nitecl tate and wi th the l'nited E:ino·dom. Before indicating th e extent to \\·hich a olution has been fou nd in th e Hyde Park Declarat ion, I hall outline bri efl y the problems themsch cs.

~5476- 1 1

Th e War E xchaii (JC' pro/)/cm

It ,,·ill ])(' readil y rcco.rni zcd that ,,·c . in Canada, co ul d not po~ !' ihl y ha ve embarked upon o11r exi ·t ing programlll c of war produ ct ion if we had not li\·ed ide I y F' ide ,,·ith th e grea test ill(lu. trial natio n in the ,,·oriel . \\"ith out ready arce to the industrial pro­duc t ion of th e l' 11it ed States. and particularly U1 e mac hi ne tools a nd ot her ~pec i a li zed eq uipm ent o 11eces!'ary in prod u e in ~ the com pl ex inst rument · of modem \rar. Ca nadn's ,,-a r effort ,,-otJld have been ·eri ously retard ed. \\"e would haYe bee n forced to e1nbark up011 the prorlu ct i(l ll of llla ny art ielcs \rhich. l,eeau!'c of lillli tcd dema nd . t·u uld o1tl _v ha \·e bec 11 produ ced a t high cos t. a nd over a C'O IL'iderablr period of ti1n e. Canada also lac k. certain essent ial ra\r ma trrials \\· hich mu t I e proe urcd from the l' ni tecl ~tatcs . Sin ce t he outbreak of war, \\·e h:we teadily ex pa nded our purchases in the ni ted . ' tate of hei'c es!"t'nt ial too l. . machin e.: and ma terials \\·hich

,,·C'J'e ref] uircd bot h for ou r own Ca nadia n \\·ar effort. a nd in the produ ction of ,,·ar upplie · for Brit·ain.

E \·e11 in norm al times Ca nacla pu rchascs much more from the l -nit ed :-; tate': tha n ,,-e ell to our neighbour ·. In peace t ime \\"C were able to make up the defi cit by com·ert ing int o l -nit ed State doll ar · the urplus te rlin g w recein d a.- a re ·u lt of the sale of goods

to Bri tain . But from th e outse t of \\·ar, thi has been impo sible . The government rea li zed a t once that Canad::t \\"Otd I be faced wi th a grO\\·in p; shortarre of

ni ter! State do ll a~· · to pay for our e sent ial \rar purchases. T o con erve the necessa ry exchange the Foreign E xcha nge Control Board wa established on ·"l' ptember 15. 1939. As the need ha. grO\m , increas­ingly tri ngent mea ·ures have bee n adopt ed to reduce

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the un essential demands for F nit ed :-; ta tcs doll ars it t order to conserve sufficient funds to ma kP our pay­ments fo r essential ,,·ca pon · a nd : tl pplie · of war. These \Yar purcha es could not be reduced "·i thou t a correspond ing. or perh aps an e\·cn more . eri ou reductio n in our war etrort. Despite the drnst ic measmes taket1 to co nserve excha nge. the lack of Uni ted State: doll ars was becomin ).!; . a one wri te r expressed it. on e of the mo:t "erio u " bottlenecks" in Canada'· war effo rt.

Ri ·k of 1t'a,steftLl d71JJ/ical ion of ]Jrodu clion

The problem of exchatwe wa. th e nwst urrrent problem we faced in our economic rPla t ions \Yi th thr l ni ted State . Bu t we also realized a growing danger of po sible unnecessary duplicat ion of produ ction fa cili­tiPs on the 1\orth American cotttinent . " ·ith consequctlt undue pressure on scarce labour ami ma terials if Canada and the Uni ted State each tried to make it.-elf "·holly sclf-sufficien t in the fi eld of war supplies. \V e felt it im perat ive to a \·oid such \\·aste, "·hich mip;h t well haYe had the mo t : eriou conseque nces. T he experience of the Depa rtment of \Iuni t ions ami Supply, and the tudie · of the PermanPnt Joint Board on Defence. both suggested the . :11 ne ~o l ut i on . That _olution was the co-ordina t ion of the prod uct ion uf war materials of C' ::.lll acla a nd the "Cn ited States. This was in reali ty a silll ple and logical cxtett ion, to the economic ·ph ere, of t hf' Ogden. bu rrr .-\ grPemen t .

The practical experience of a year and a half of organizing and develop ing war product ion in .anada reYcalecl that ma ny of the essent ials of war could be made in the comparat ively mall rtuantities requirPd by Canada only at a prohibitin' eo. t . T hey could.

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ho,,·ever. be producrcl econo tnica lly in th e nited , 'tat e where th e d mand wa lar~e etwuo·h to r ult in th r economic. of Jn.rcre-._cale production. On the oth er hall(], the production of oth er weapon · and materiaL had 1 e n dp\·elopecl in Canada to the point "·here outpu t cou ld be 'xpattclecl more quickly, and prohai Jly 1nore economically . than new product ion fa('ili t ic.· coll ld be o r~anized in th e 1.· ni tcd :-Jtat es. It was, tlwrcforc. only common nse to ext nd to the prod uc· tion of ,\·nr tnat crials the ·amc recipro ·ity in " ·hich . a t Ogden bu rg in :\ u~u t last, om t\,.0 countrie h:1d pe rlll ~lliPntl y plac d thrir drfencr .

I "isi / ln llw { "nil d .~tal s

During my Ea ter vi it. I had th e opportuni ty f preliminar~· di!'cu ~.jon with the ~ccre ta ry of , 'tate.

~lr. Cordell Hull , and the , 'ecretary of the Trea ury. ~lr . :\lo r~cnthau , a L \Ya ·hington. I al o, later, had an opportun ity of confrrring \\·ith :\Ir. Harry Hopkins. who ha::; lJeen entru ted \\·ith immediat e direction and upcn ·ijo tt of the mea ure to be taken under the

Lea c-Lcnd .-\ ct. On ~unclay. April :20 , I pent th e day with th C' President at H yde Park. At th e clo e of the vi sit . I l!a.\·e to th e pres a tatement of th e UIH.!Pr­

·tandino· which the Prc: id t' nt and I had reached reo-a rcli ng th e problem. 1 kn·e mentioned. That stat em nt it i · proposed tu cal l th e H yde Park Dec lara! ion .

'f'hr H yde Pa rk Da laral ion

Th e Declaration r ad ·:

":\ mong other import ant matter , the Pre ident and the Prim ~li ni!'t e r cli!'cus eel measure by "·hich th e mo. t protnpt and effec ti,·e uti li za tion might be

(j

made Jf th e product ive fa cilit1e · of .:\orth :\111 erica fo r the purposes both of loca l and hemi: ph erc defence , and of th e assi:-: tancc \\·hieh in nddition to th eir 0\\'11 pro­''l'lllllme loth Ca nada :111(1 th e Cn il ed :-itat e a rc rendering to Grent Bri ta in a11d the other denwcracie .

"It 11·as agreed as :t ge n ra l prin ciple that in mobilizing the resom ces of t hi ::; con t i ncllt each co un t ry ·hould pro1·id the othr r 1rith the ddencc article. 1rhich it i · IJ e~ t able to produce . nJJ tl. aboYe all. produce quickly, and that produetion progra1nnws should br co-ordin ated to this r nd.

" \\'bile ( ·annda ha~ expand ed its producti1·c capacit y Jlla ni fo ld since th e beo·inning of the 11·a r. there are : tillnun1erou defe nce a rt icle. \\'h ieh it Jnu:t obtain in the L"nit ed Stat e:. and purehases of thi: eharacter by Canada \\'ill be e1·en greater in th e coming year than in thr past. 011 the oth er hand . th ere is existing a•Hl pote ntia l ea pat·i ty i11 ( 'a11ada fo r the -pecdy prod uction of ce rt ain ki1Hi s of Jnunitions. strat egic materi al..:. a luminiu1n and "hips. 1rhid1 are urgently rrqui red by thr l ' ni trd :-itatl'::i for its u\1' 11 purpo .. es.

" \\'hi le exact es t i mat c. ea n11 0t yet be 1nndC' . it is hoped that dmin~ thr 11rxt t\\' r h ·c month s Canada can suppl~· th e l ' nit ed State" 11·ith 1)('1\l·c·rn S200.000,000 and s:~on .ooo.ooo \\'Orth of . ueh defence articles. This unt is a smal l fra et io11 of th e tota l defence programme of th e l ' nit ed Stnt e;; . but man y of the article. to be pro1·id<: cl arc of Yital i111portance. In addition. it i. of great importa 11ee to th e economic and financial rf' lat ions bet\\·ceJJ the t11·o co unt rie that payment by the L' ni tcd :-it ate· for these uppli c::; \rill materially as i. L Canada in 1ne ting part of the

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cost of C'tw adi a n defeJJ CC purch ases 111 th P. "Cn ited :-;tate .

" In so far as Ca nada's defence purcha ·es in th e 1' nit cd :-it at e · consi ·t of com pon e1t t parts to be usf'd in cq uipm f' nt a l'.d munit io11 " ·hid1 Canada is produein~ for C real Brita in . it ,,·as also agreed that Crcat Britnin ,,·il l obtnin tlwse part s und('J' the Lease­Lend .-\ ('( and fon,·a rd th em to Canada for inclusion Jn th e fini . heel a rt iC'l f' .

'·Th C' technica l and financia l detail s \\'ill be ,,·o rk ecl Cll i t as ·oon a. pos. ible in acemdance ,,·ith th f' gCnf' ral rrinc·ipJrs \\·hich ha\·e been a~reed upon beh,·ecn t11f' Preside1it a nd th e Prin1e ~I in i ·tcr. "

! ll l lll ('(l ia t r purpu '('of th e J) ('clamtion

Th e immediat e pu rpo c of the joint Declaration IS et out in it first pa ragraph. ,,·hi ch 1night be de.-c ri bed a th e preamble. It states that the President a nd I di se u ~·scd mcnsures by ,,·hich th e 1nost prompt and effec t i,·e utilization ntight be made of th e producti,·e fa cili t ie::; of ::\orth :\1ncriea. Let 111 e f' mphasize th e 1\\·o ,,·on!.: pro1npt and dfect ivt'. Th ey ind ica te that . ,,·hile recognizing th e short-run necessit y of spf'cd. the ,·ita! importaJIC'C of th e ti1nc fact or. \\·c h a ,·e not lost sight of the long-run nece.-s it y of th e utmost effiC'i cncy in th e orga niza tion of our " ·a r product ion.

Th e prefun hlc gof' s on to recog ni ze a h\·ofold object in en.- u rin g this prompt and eA'ec t i ,.e uti li zation of th e product i,·f' fa cilities of bot h co un tries. Kot onl y doc:- it eJI\·isage th e ex tcn ·ion of the scope of our joint defence arn.1ngf' 1nents to th e cconomie

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phere. but it recorrnizc the advantage. of co-ordinat­ing the me of the resource of both cou ntrie as a Jllea n of . pceding up and increa ing th e volume of aid to Britain from thi continent.

Let me ·tate this in anoth r way. The Hydt· Park Declarat ion i. more tha n an exten. ion of th e O~rd n. burg 1\ p;rremrnt for h rmi~ ph e 1 ic dcfpncP. It i.: al o a joint agrerm n t bet ween Canada a nd t hP rnit d ~·t ate for aid to Britain.

The basic principl : Coop ration w production

Th e ba ·ic prin ciple und rlyinl!: th e agree n1ent i · et out in the ·econd paragra ph. It i a rectwnition

of th e fact that rach country ha spPcial ad va ntages for the production of CC'I'tain war material whieh are lacking in the other. and that both cou ntrie 'rill benefit by each producing for the oth er. a w 11 a for it elf. the defence article "·hich it i be t able to produce. lt constitutes a n acceptan ce of the conomic int er-dependence of Canada and th e ·nit ed

.'tate as the fou ndation of the prcwramme of war production in both countries. It repre en t th e application to war production of the prin ciple. recognized by Canada and the l · nit ed , 'tate in the trade agreement of p ac time. that the excha nge of oocl i of mutual benefit.

Th e third paragraph of th e Declara tion i a n amplifica tion of the ba. ic prin ciple of the agrerment. It recorrn ize , on the one hand. the vital ncce sit y. for Canada 's war prooTamme, of obtaining cert ain defence articles from the l · nit ecl 'tate ; on the other hand. it indicate the pos ibilitie . of the peecl y expan ion of 'anadian produ ction of other defence

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article , munition. and tratcgic material . It is not without icrnificance that aluminium a nd hip are specified by name in t he declaration.

Praclical operation uf the agreement

One que tion which may ari e in connection wi th the H yde Park D eclaration i : how can Canada spare to the l Tniled State· any defence artic·le or muni­tion . '? 'u rely. it ,,·ill be aid, all ou r war product ion i. needed either for Canada or for Britain! The a n wer 1 that we have advanced ·o far in the product ion of cer ta in article that ex pan: ion beyond Briti h a nd Canadian need ca n be readi ly aecom­pli h ed. That i tru e of certain type of ma ll arm , gu n · a nd a mmunition, cert ain explosive. a nd chemical . certain armed fighting ,·chicle . a luminium a nd certain other metal a nd materials. merchant ~hip and naval ve el of th e type " ·c ha ve been bu ilding, namely, c01·vet te and min e- \H'CJWr . There a rc in add it ion certain type of clothing an d textile . certa in leat her. ru bber and timber products, and cer ta in ecrct device in ,,·hich Canada cou ld probably make an impor ta nt contri bu tion, if the.-r were de ired. On the othN hand . the product ion of engine for a ircraft in Canada would be a low procC's , co tly both in tim e and in tho. c tyJ e of killed labour and peciali z: d equ ip­tnen t of which no ·urplu exists. ~Ioreover, thi i a field in which not one but many type a rc needed to fill lh nuicd demand. and improvement in de. ign t hat arc con tant ly occmring.

The fact that Canadian war product ion i · o well organized in many field a to enable Canada to meet peedily many "Cn ited . 'tate requ irements i a high

tribute to Canadian indust ry and Canadian labom.

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Alleviation of the Exc·hang problem

In th e D clarat ion it: If a rou rh est imat e wa made of th e va lue of the d fence article which it i hoped 'a nacla ,,·ill be in a po ·it i n to upp ly to th

nit ed . ' ta te in the next tw lve month . The e ti­llla te i bet we-n ,"' :200.000.000 a ntl ."300.000.000 worth. \\' may b able to do better than thi. , but ob \·iou ly detai led nr<rot iat ions will be nece ·. a ry with the ap pro-priat purcha in u· depa rtment or agencie of th l ' nit cd ~tat e Go\·cmment. in order to deterruin e how be t th y can u e the urplu capacity, existing and potential, of Canadian indu try. Th - immediat ig­nifi ancc to Canada of the alP of the ·e defen ce art ie! i . of cot ir c. th e provi ion of the nited ~tat e

dollar to help us in paying for Ca nada 's e!E entia! ~Y a r purch a. e: in the Fn ited . ' tat s.

\\ 'hi! these nited • ' tale · purcha e. will a<:si t u \·err 1nat eri ally in meeti ng ou r lefic it, they a lone ~Yilln o t oh·c the whole prollem .. \ furth er importan t co ntributio11 to it olu tion i cont t in ed in anot her paragraph of the Dec larat ion which ])I'O\·ide tha t C'ana !ian purcha es in th U nit ed , ' ta le of mate ria l. or component to be u din equipment and muni t ion bein ,. produced by Canada for Bri ta in will be made available to Britain under the term · of th e Lea e-Lend Act. Hitherto it ha b en nece. :ary to Canada to find Unite I . ' tate. doll ar to pay for the e purcha e on Briti. h acco unt. The~e pur ·ha e ha\·e materia lly added to th e gro\\·ing deficit in om balan c€! of trade ~Yi t h the rnit ed ' tate .

Th e combinat i n of 'L"n it d ~ tate purcha e 111 Canada and the lea -lcnd ill'" of defence article for Bri ta in will go a \·ery Juno- way tow:u· l the olu tion

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of Ca nada's acute excha nge problem. It i , ho\\·e,·er. not anticipated that the ,,·hole defi cit \\'ill be covered in thi ,,·ay. E:se ntial Canad ian purchases in the U nited ~tal es ,,·ill st ill exceed l ' ni ted 'tates pur­cha es in C'anada. Th ere ,,·ould. therefore, appear to be li tt le prospect of relaxing any of the exi tincr foreirrn excha nge eon ·en ·ation rt':t rict ions ,,·ithout caLL ing a ne,,· defi eit ,,·hieh \\'{lu ld imperil Canada's ,,·a r effort.

Th e fin al paragraph of th e D eclara ti on provide for the \\'orkin g out of th e technical and financial deta il as oon as po ible in accordance \ri th the rreneral principle set out in th e Deelaration itself. Officials of the t,,-o gu,·ernment are at present engaged upon the task of \\' Orkin g out· these deta il . l 1ntil that task i co mpleted it ,,-ill not be pos ible to say exact ly ,,·hat Ca nada will upply the ni ted , 'tate or ,,-hat th e U ni ted . 'tate: ,,·ill upply anada. I have already indicated certa in art irlc. ,,-hich it i anti cipated \\'ill be inrluded in the list to be supplied by Canada.

8ignificrmce of the f) pc/aralinn

H un. members \\'ill. I am sure. be more in te rested in th e broad sip:nifi canre of th e Hyde Park Declaration than in it s technica l a. pects.

Its mo:t immed iate signifi ca nce i that, through the co-ordinat ion of \\' a r prod uct ion in bot h coun trie, it ,,·ill res ult in the speeding up of aid to Britain by the l:n ited State· and Canada. .-\ a res ult of the better int egrat ion of Korth America n indu try, the proposed arra nge ment ,,-ill , through in creasing total prod uction, ha,·e the fur ther effect of increa ·ing the

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tota l 1·olunw of aid to Bri ta in . J t 11·ill htw c a orrc-pondi Jw ellt'cl upon Canada·. 1nu effort. Fu ll

ut ilization of tlw product ion faci litie: IYC haYc built up, and . pccializat ion on tho. c th i n~ ll' hich 11·c arc bet fi t! d to produce. ll'ill increase I o!h our national income and um lii' JJ an ned ~ t rcngt h. a 11· II a · increasing our cnpacity to a id Brita in.

:\ : I ha1·c nlrPa rl.1· :::a id . th e agrP mcnt ll' ill I!O a lono ll'ay t o ll'a rd .~ thP ::olut ion of the exchange prob­lem and , in thi 11·ay. ll'i ll rcmo1·c one of the finan cia l ob tack;: to the Jn axi JnUJJJ 11·ar produc t ion prograJnnH' of Canada and the l.init ccl :-;tat ·. \\' c. in Canada . han' reason to he ).!;ratifi('cl at the undcrsta ndino shown by the Prc::: idcnt and by the :-;ecrcta ry of thr Trca ury. of Canada·.- diffi cult exchange problem. \\' c may, I am ·ur . feel an equa l confidence that in the working out of the detailed te ·hn ica l and finan cia l arranoemcnt. . Canadian offi cial 11·ill find the ame <renerou mea ure of understanding; and the amc spirit of cooperation.

1'h J:;conn mic ornllary of (Jgd C' n8bw·g

I have spoken thu far of the imme liat e sio·nifi­caiiC'C of thr Declarat ion. of the effec t it 11·ill ha 1·c in pe ding; up aid to Bri tai n in th cri tical month .

ahead , and of iL importance in a . i, tinrr u to m et our cxchan <re pr blem. Bu t bey ncl it - immed iate jrrnificancc th e H~·de Park Dec larat ion ll' ill ha1·c a permanent irr11 ifi cancc in th - rela tion - bet ll'een an-a Ia and the 'Cnited . ' ta te__ I t invoh· not hinrr l e~

than a c 111111 011 pia 11 of the conomie defence of the we tern h mispherc. \\' hen ,,. pau_ to refl ct upon the con. eq u nee . in Europe, of the fai lure of the peac -lovin rr nation to plan in conce rt their common

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defen ce, ,,·hile yet there wa time. we gain a n ". appr ciation of the . io-nificance for the future of both Canada and the "Cn itccl ,' tate of the Ogden bur

gr C'ment and of thi ne\1· Declaration which mi ht well be called the economic eorollary of Qrrden bur .

For Canada, the ignificance of the Hyde Park Declarat ion may b ummari z d briefly a follow : fir t, it will help both 'anada and the United tat to provide maximum aiel to Britain and to all th de fender of rlcmo racy; ~econrl , it "·ill inC'rea e th cff ti ,·en of anada'. direct war effort; and finally, through the increased inuu trial fficicncy which will rc ult , it will in crea e our O\\' ll curity and the ccur­i ty of I ort h America.

It i appropriate at th i poin t to empha iz the fact that , while th agreement will increa e th eff tivenc of our war effor t and our a i tance to Britain, the lf-impo d burden upon th anadian people \\·ill nc,·crth lcs r main a great a c,·er. Th acrific . which we arc cal l d upon to make will not

be r clue d by th e Hyd Park Declaration , but th re ull ach iev d by our sacrifice wi ll , ''"e b li ve, be con id rably greater. . t th am time, the ri k f d lav and breakdown will be materially red uced. The utmo. t effort of th e anacl ian people i more than ever needed in t hC' pre. en t ph a c of thi terrible trugglc; but in making that effort n·e hall han'.

a the re ult of the agr ment. the added ~at i faction of knowin that n·e arc making a reater contribu­ti n than otherwi e would be po . ible to the cause of freedom.

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Fuundalions of a !Y ew W orld Urdcr

In referring to the pa ·sage of the Lea e-Lencl .-\ ct , I expre eel in this hou e the view that "Canada 's example, as a nation of the new world, act ively par­ticipa ting to the utmost li mit in the pre ent st ruggle, has also had its influence in arousing th e people of the Uni ted State to their pre ent reali zat ion thaL freedom it elf is at stake in thi war."

"C"nhesitatingly, to-day, I would go one step far­ther and would ay that the exa mple gi,·en by Ca nada has, I believe. arou eel th e ad miration of our neigh­bours and made them ready to accept thi new part­nership .

La.t November, I . aid to hon. ll1t' Jn br rs of this house that the link forged by th e Ogdensburg .-\ gree­ment wa no temporary axis, form d by nat ion. \Yh o e common tie was a mutual I ire for the de truct ion of their neighbours. Th e Hyde Park Declarat ion is, I believe, a furth er cmwincin o· demon tration tha t Canada and the "Cnitecl State. are indeed laying the enduring foundation of a new world order, an order based on interna tional understanding, on mutual a id, on friendship and good will.

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