The Tenth Province: Newfoundland joins Canada, 1949


Melvin Baker (c)1987

(a version of this article was originally published in Horizon, vol. 10, Number 111 (1987), 2641-67.

"I never thought I'd see the day," Joseph R. Smallwood exclaimed in 1949 when Newfoundland, which proudly styled itself England's oldest colony, became Canada's newest province. Smallwood, who had led the campaign for Confederation, became the first premier of the tenth province. The decision to join Canada had not been an easy one for Newfoundlanders. It came after several years of debate on their political future, capped by two referendums in 1948. Since 1934, they had been ruled by a Commission of Government appointed by Britain. During the 15 years of the Commission's administration, Newfoundland experienced social and economic changes that raised the people's expectations of a higher standard of living, more public services and greater economic security in international trade. It was hoped that union with Canada would help to meet these expectations.

In a Hole
Newfoundland was in desperate straits in 1934 when the Commission of Government, replacing parliamentary democracy, was given the mission of digging the country out of its hole. The economy and public finances were on the rocks; conditions for the population in general, never cushy, were rendered even bleaker by the Depression.

It was predominantly a society of small fishing outports; there were 1,292 settlements strewn along the coast, only 100 of them with populations of more than 500. St. John's, the capital, had 39,886 inhabitants in 1935. Although the value of fish exports had declined steeply as a proportion of total exports - from 81 percent in 1910 to 25 percent in 1936 - the fishery employed 40 percent of the male labor force.

A large employer, the fishery offered a poor living. In normal times, fishermen could supplement their incomes through part-time work as loggers for the island's two pulp and paper mills, and as sealers in the spring. Some outport residents worked as sailors on the vessels that carried fish to the markets of southern Europe and the Caribbean.

Wage labor was found in the papermaking towns of Grand Falls and Corner Brook; in the mining centers of Bell Island, Buchans and St. Lawrence; and in St. John's where there was a small civil service, some secondary manufacturing, and a sizeable labor force involved in marine-related activities. A high birthrate was offset by a high mortality rate, a function of the island's poverty. In 1934, the death rate was 12.1 per thousand of population, compared with 9.5 in Canada. The island had only 450 hospital beds available; according to a health survey conducted in 1934 by the St. John's Rotary Club, this represented one bed for every 644 persons, whereas in the U.S., there was one bed for every 130 people.

The economy was completely dependent on the export of fish, minerals and forest products. The Depression, beginning in 1929, struck hard. Total exports fell in value from $40 million in 1930 to $23 million in 1933. The value of fishery exports alone fell from $16 million in 1928 to $6.5 million in 1932. The number of people receiving the dole, or able-bodied relief, of six cents a day rose sharply. During the winter of 1932-33, one-quarter of the population depended on the government for the necessities of tea, flour, pork and molasses.

Decreased revenues and increased expenditures on relief created a debt crisis for the government. In 1933, for instance, about 65 percent of government revenues went to pay the annual interest charge on the debt. The debt had grown rapidly since 1920 because of borrowings to finance public works and services. From $43 million in 1920-21, it had risen to $101 million in 1933.

The Liberal government of Sir Richard Squires, in 1931 and 1932, had attempted to meet the annual interest payments through retrenchment in the public service and loans from Canadian banks. On June 11, 1932, Squires' government was defeated by Frederick Alderdice and his United Newfoundland Party, who promised to appoint a committee to examine the feasibility of placing Newfoundland under a "form of commission government for a period of years."

Newfoundland avoided defaulting on its debt payments on Dec. 31, 1932, when Alderdice obtained a joint loan from the British and Canadian governments. In return, he consented to the establishment of a British royal commission whose role would be to suggest ways for the island to meet its debt obligations and to plan its economic reorganization.

The findings of this inquiry, reported to the British House of Commons on Oct. 4, 1933, were that Newfoundland politics were corrupt and that the island needed a respite from parliamentary politics until it was again self-supporting. Faced with the alternative of default, on Nov. 28, the Dominion of Newfoundland asked the British government to replace the existing elected government by an appointed commission.

The charge that Newfoundland politics were corrupt was highly unfair; they were no more so than Canadian politics. But in corruption, the inquiry had found an easy justification for the suspension of democracy. Had the inquiry focused more closely on the real cause of Newfoundland's economic problems - the international depression - its case for the abolition of representative government would have been harder to make out.

Efficient Government
The Commission, consisting of three Newfoundland and three British appointees plus the governor, assumed office on Feb.16, 1934. The Commissioners saw their main task to be the provision of efficient government. This meant, for instance, that they dropped old political and religious criteria in the hiring and promotion of civil servants. With the help of imported British functionaries, the Commission made merit the sole basis for promotion. Young Newfoundlanders with professional training were also encouraged to join the civil service.

The Commission made its greatest strides in the educational and public health fields. It established a summer school program at Memorial College for teachers and increased their salaries. It left the denominational school system unchanged, fearing that any tampering would provoke widespread disapproval. But it did make textbooks and school supplies available on loan to pupils, and tried to improve their health by providing free, nutritional cocomalt - a cocoa-milk powder.

Medical services were improved after 1935 through the creation of a cottage hospital system in the larger outports. By 1938, the government operated 10 cottage hospitals containing a total of 130 beds. This system was the first instance in North America of a government establishing a subsidized medical-care plan on a pre-payment basis. To help combat tuberculosis, a new wing was added to the St. John's Sanatorium in 1938, and a mobile Health Unit was formed to visit communities and check residents for the disease.

In its first few years, the Commission tried to implement an ambitious land- settlement scheme, emphasizing agricultural development as an alternative to the island's reliance on the fishery. This scheme was the creation of Thomas Lodge, a strong-willed English commissioner who imposed his idea of "social reorganization" on a reluctant Commission. By 1938, he had established 11 settlements involving 340 families, but the harsh climate, rocky soil, and inexperienced farmers meant that success was far from complete. The Commission therefore dropped this expensive program, and concentrated its efforts on the fishery.

The Commission encouraged fishermen to form cooperatives, and gave them financial assistance to enable them to purchase boats, engines and other supplies. In 1936, the Commission set up the Newfoundland Fisheries Board, which was given complete control over licensing, exporting and marketing.

Despite these improvements, the fishing industry continued to perform poorly during the 1930s, largely because of economic and political problems in some of the main export markets. In 1938, for instance, the value of salt cod exports was lower than at any other time during the century. Consequently, there was an increase in the number of people on the dole. Between 1934 and 1940, the average monthly number of people receiving the dole rose from 31,899 to 39,802, with 85,000 on the relief rolls during the winter of 1938.

Prosperity at Last
By 1939, public disillusionment with the Commission was strong. Government was more efficient, but hopes for economic development and a substantially higher standard of living had not been realized. The outbreak of war in Europe, however, changed all that. Strategically located in the North Atlantic, Newfoundland became an important defence base in the Allied war effort.

Through a series of defence agreements with the Commission, Canada established installations in Newfoundland at a total cost of over $65 million. These included air bases at Gander, Torbay and Goose Bay, and a naval base in St. John's for which the British Admiralty provided the funds. The number of Canadian garrison troops peaked at nearly 6,000 army personnel in 1943. This figure does not include the thousands of seamen serving on naval convoy duty, which operated out of St. John's. Nor does it include the airmen stationed at Gander and Goose Bay who were involved in the Atlantic Ferry Command.

Under agreements reached in 1940-41, the Americans were permitted to establish military bases in Newfoundland for a tenure of 99 years. The major facilities they built included an army base at St. John's, a naval base at Argentia, and an air force base at Stephenville. They also shared the use of the Gander and Goose Bay bases with the Canadians. By April 1943, American construction expenditures totaled $105 million.

At its height in September 1942, the American and Canadian construction boom employed 19,752 Newfoundlanders. They earned an average annual income of $1,500 - considerably more than the $333 to be had in the fishery in 1941. There were jobs now for all who wished to work. But the Newfoundland workers did not receive wage parity with their American civilian counterparts, because the Commission of Government did not wish to drive up wages in other industries.

Increased exports and foreign military expenditures during the early 1940s finally ended the Commission's budget deficits, which peaked at $4.8 million in the 1939-40 fiscal year. Thereafter, budget surpluses enabled the government to make $12.3 million in interest-free loans to Britain while continuing to make improvements at home, notably in the fields of education, health, housing and local government.

Getting Together
In the face of the large American presence in Newfoundland, the Canadian government kept a close watch on its economic and military interests there, appointing a High Commissioner in 1941. But if the links between Canada and Newfoundland were strengthened during the war, the idea of a political union aroused little public interest. Reporting on Newfoundland public affairs to the Dominions Office in London in 1943, Gov. Humphrey Walwyn observed that the people were "so dazzled by American dollars, hygiene and efficiency that many of the public rather play up to America in preference to Canada."

In planning for the postwar restoration of democracy to Newfoundland, Britain was concerned that the island Dominion would regain its political independence only to slip back into a state of economic dependence. Britain therefore proposed to fund a 10-year economic development program in Newfoundland, while keeping a tight rein on the island's finances.

That plan fell apart, however, when the British government found in 1944 that it could not afford to pay for Newfoundland's development. By 1945, it was clear to Britain that under the circumstances, Newfoundland's best hope lay in union with Canada. The Canadian government, concerned at the prospect of growing U.S. influence in Newfoundland, easily saw eye to eye with Britain. Britain wished to divest itself of the financial and administrative responsibility for Newfoundland, and confederation was an attractive alternative. On Dec. 11, the Labor government of Clement Atlee announced that a "National Convention" of 45 delegates, elected from all parts of Newfoundland and Labrador, would be held the following year to consider the economic and political situation and to recommend constitutional alternatives that might be submitted to the public in a referendum.

Joey Smallwood, a journalist, former popular radio host and delegate from Bonavista Center, was the leader of the confederate cause. He saw union with Canada as a means of giving the people "a half decent chance in life," through the introduction of "North American standards of public services" and social welfare. As part of the larger Canadian trading bloc, Newfoundland would also benefit in international trade.

Anti-confederates favored a return to the pre-1934 system of responsible government. Supported by the St. John's mercantile community and led by Maj. Peter Cashin, a former member of the legislature, they appealed to local patriotism, and warned their fellow countrymen that confederation would mean selling their birthright for the Canadian "Baby Bonus." Newfoundlanders would also have to "take on a burden of taxation, the like of which they nor their fathers have never known."

In pursuit of a common policy with Canada, London kept pointing Newfoundland towards Canada by repeatedly warning that Britain had no financial help to give. Canada's role was simply to open its arms. When the National Convention urged that Newfoundlanders be asked to choose in a referendum between responsible government and commission government, Britain tacked on a third possibility - confederation with Canada - even though the convention itself had voted down a motion to place confederation on the referendum ballot.

In the referendum of June 3, 1948, 44.6 percent of voters supported the restoration of responsible government, 41.1 percent voted for confederation with Canada, and 14.3 percent opted for the existing system of government by commission. A second referendum was held July 22 to settle the issue, whereupon 52.3 percent voted for confederation, versus 47.7 percent for a return to the pre-1934 system. On March 31, 1949, Newfoundland officially became part of Canada, and on the following day, Smallwood was sworn in as the first premier.