19. The Minister of Transport, referring to discussion at the meeting of December 29th, 1951, said an exchange of notes on the St. Lawrence development project had taken place on January 11th between the U.S. Secretary of State and the Canadian Ambassador at Washington.87 These notes had referred to the understanding reached by the Prime Minister and President Truman at Washington on September 28th, 1951, and to subsequently enacted Canadian legislation relating to both the seaway and power phases of the project. The Canadian note had suggested, and Mr. Acheson had agreed, that, to avoid delay in proceeding with the all-Canadian seaway in the event Congressional approval of the 1941 Agreement was not gained at an early date, steps be taken in the immediate future to prepare concurrent applications to the International Joint Commission in respect of power development in the International Rapids Section based on the assumption that the deep waterway would be developed unilaterally by Canada. To this end, it was agreed that a series of meetings between appropriate Canadian and U.S. representatives should begin towards the end of January either at Washington or Ottawa.

Before concurrent applications to the I.J.C. were put in final form, however, agreement would have to be reached between the Federal, Ontario and Quebec governments on the one hand and the United States on the other as to the detailed conditions governing the manner in which water was to be used for power purposes in the International Section. With this in mind, the Continuing Committee on the St. Lawrence Seaway and Power Project had recommended that, as had been done in 1941, a Board of Engineers comprising nominees of the Federal, Ontario and Quebec governments be established immediately to prepare the Canadian application and ancillary governing conditions to the I.J.C. in respect of the power phase of the project.

The Continuing Committee had also examined the two St. Lawrence resolutions concurrently before the U.S. Congress seeking approval of the 1941 Agreement, and had recommended that the Canadian Ambassador at Washington be requested to pass on informally, to the U.S. State Department, Canadian views on certain of the provisions in these resolutions which appeared to be unacceptable to Canada. The principal change suggested would be the elimination from both resolutions of provisions which would make it possible to charge tolls only on the 27-foot waterway and not on the all-Canadian 14-foot waterway. It might well be that the Canadian government would wish at some time to impose tolls on the 14-foot waterway since otherwise encouragement might be given to the perpetuation on a large scale of shallow draught shipping which would likely result in the Welland Canal reaching the congestion stage much earlier than might otherwise be the case. Mr. Wrong should also, in the Committee's view, be asked to point out to the U.S. State Department that the formulae for the allocation of the cost of "common works", as presently set out in the Congressional resolutions, would undoubtedly have an effect on the negotiations of an agreement with Ontario in this respect. The Committee thought that it would be best to base the tolls on the cost of works undertaken solely for navigation as was the case under Federal legislation providing for an All-Canadian seaway. It was appreciated, however, that Congress might not be prepared either to assign the entire cost of the common works to power or to have some portion of that cost not subject to amortization. If this was the view of the U.S. State Department, it was felt that the resolutions should be reworded in such a manner as to make more explicit their apparent intent that the investment by each country shall include expenditures made on works constructed after 1941 and required for navigation or for both power and navigation, whether made by the Federal governments or State or Provincial governments or by Agencies thereof, and shall also include compensation to be paid by Canada to Quebec for common works at Soulanges constructed prior to 1941.

An explanatory note was circulated.

(Memorandum, Continuing Committee on the St. Lawrence Seaway and Power Project, Jan. 23, 1952 - Cab. Doc. 15-52)^?

20. The Secretary of State for External Affairs felt that comments on current U.S. legislation along the lines suggested by the Continuing Committee should probably be passed on informally to the U.S. State Department. It was important, however, that any amendments to the resolutions which might result from these comments should appear to originate not with the Canadian government but with the U.S. administration itself, since otherwise President Truman, who had publicly stated that he would support the all-Canadian route in the event Congress failed to approve the 1941 Agreement, might be placed in an awkward position if it could be made to appear that Canada itself had made the joint seaway impossible by insisting on changes in the authorizing resolutions which were unacceptable to the United States Congress.

21. The Prime Minister pointed out, in this connection, that the Canadian government had always taken the stand that it would prefer development of the seaway to be on a joint basis as contemplated in the 1941 Agreement. That Agreement, however, made no provision for the amortization of the scheme through the imposition of tolls. The situation would be substantially altered if the United States now proceeded to alter the 1941 Agreement by attaching thereto toll provisions which were clearly unacceptable to Canada.

22. The Minister of Trade and Commerce questioned the advisability of appointing a Board of Engineers as recommended by the Continuing Committee before the St. Lawrence Seaway Authority was established under the terms of the legislation enacted at the last session of Parliament. In view of the numerous conflicting interests involved, he feared that a Board of Engineers might possibly reach a stalemate and for this reason it would be useful if the Authority could be appointed in the near future to exercise some overall control over the Board of Engineers.

23. Mr. Chevrier suggested that it might not be possible to consider establishment of the St. Lawrence Seaway Authority for a few weeks at least. In the meantime, however, there was a considerable amount of technical work urgently required in connection with the preparation of power applications to the International Joint Commission. He thought, therefore, that a Board of Engineers should be established immediately comprising three members appointed by the Federal government and one each by the Provinces of Ontario and Quebec.

24. The Cabinet, after considerable further discussion:

(a) approved in principle the establishment of a Canadian Board of Engineers comprising three members appointed by the Federal government, one by Ontario and one by Quebec; draft terms of reference for such a Board to be prepared and submitted by the Continuing Committee; and,

(b) agreed that the Canadian Ambassador at Washington be directed to pass on informally to the U.S. State Department comments along the lines suggested by the Continuing Committee on certain provisions contained in U.S. legislation presently before Congress, the message to the Ambassador in this connection to be subject to the approval of the Minister of Transport and the Secretary of State for External Affairs.

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