You will recall that when this subject was recently considered by Cabinet no final decision was made.¹⁶⁴ It was thought that before a conclusion could be reached it would be necessary to have further information regarding the provisions of the Charter of the Company, possible amendments which might be made in the Telegraphs Act to enable the Government to enforce conditions attached to any licence, and the judgment of the Canadian military authorities on the defence aspects of the application. In these circumstances, it was not possible to say anything very precise to the Company or to the U.S. Embassy.

2. Mr. Ritchie of this Department was, therefore, not very well placed to deal with a telephone enquiry which he received on January 4 from Mr. Gordon MacLaren, the Company's legal adviser. Mr. Ritchie did not feel free to disclose the particular aspects of the question which were being investigated further and was not, of course, able to inform Mr. MacLaren concerning the probable outcome or even concerning the date by which a decision might be made. He merely observed that the application raised a considerable variety of pretty complex questions and that, although he appreciated that the application had been filed four months ago, there was still nothing definite that could be said about it.

3. Mr. MacLaren was obviously not happy with the reply which he received, and he remarked that this was an important and urgent matter, as evidenced by the fact that the U.S. State Department and Department of Defence were taking an interest in it. Mr. Ritchie assured Mr. MacLaren that the importance and urgency of the question were fully appreciated. He went on to say that no doubt the same kinds of considerations which accounted for the interest of several U.S. Government Departments also explained why various Canadian Government Departments were having to examine the question pretty carefully. Mr. MacLaren did not see why this should take so long, since, in his view, the Company was merely asking to be allowed to do something which was already permitted under its Charter.

4. Mr. Ritchie later spoke with Mr. Baldwin of the Department of Transport and with the Privy Council Office concerning the stage which had been reached in the consideration of this application and concerning the answer which should be given to enquiries of the kind which he had received. It would seem quite apparent that it will take some time to complete the studies relating to the application. (In particular, the views of the military authorities are not likely to be available until the end of the month). In the meantime, it will be difficult to deal consistently with the enquiries which can be expected from the representatives of the Company, and the Company may later be able to allege that it had been put off or misled.

5. I understand that Mr. Baldwin will be considering the matter further and will probably be recommending to his Minister that some interim reply be given to the Company at an early date. Mr. Marler may, accordingly, raise the question in Cabinet in the near future.¹⁶⁵

6. In the light of the previous Cabinet discussion, we have not felt free to say much to the American Embassy. In particular, we have not thought that it would be appropriate for us to tell the Embassy that, if the U.S. Government saw fit to present an alternative proposal of a strictly military character, we would be prepared to give it the same expeditious consideration as is normally given to defence matters between our two Governments. It seems to us that it would be rather pointless to make such an offer to the Embassy before we are able to say what is likely to be the fate of the C.C.C. application. It it is decided by Ministers that some interim explanation should be given to the Company, it may be well to decide at the same time that a similar explanation (together with an offer to consider quickly any strictly defence project which might be put forward) should be made to the U.S. Embassy as well.

7. Mr. Marler may mention this subject to you within the next few days (and you may also, of course, receive a call from Mr. MacLaren).

J. L[ÉGER]