JANUARY 27, 1966
A Troubled Artery
AN ADDRESS BY Stuart D. Armour,
PRESIDENT AND GENERAL MANAGER GREAT LAKES WATERWAYS DEVELOPMENT ASSOCIATION
CHAIRMAN The President,
Lt. Col. E. A. Royce, E.D.
Reverend Sir, distinguished guests, gentlemen:
The first railway in Canada was constructed one hundred and thirty years ago between St. Jean, Quebec, and Laprairie with the object of shortening the journey between Montreal and New York. Before that time railways did not exist in Canada and the rivers and lakes provided at once the easiest system of communication and the only system over which heavy freight could be moved. From the earliest days of French Canada, the fur trade had followed the rivers and early exploration was almost entirely dependent on them.
Since our speaker today will be dealing with the St. Lawrence River and the Great Lakes System, I should like to mention that the Indians, describing the St. Lawrence to Jacques Cartier, said, "This is a river that has no end," and, in fact, his early efforts to find where the river entered the Straits of Belle Isle were unsuccessful. Finally, on 10th August, 1536, he discovered "Baye Saint Laurens" which proved to be the mouth of the river which later took the name of the St. Lawrence. In 1603 we find Champlain establishing a settlement at Tadoussac at the mouth of the Saguenay and by 1608 another at Quebec. In the next eight years he explored the whole river system as far as Lake Huron but reached it by way of the Ottawa River. Years were still to pass before white men reached the head of Lake Superior and were able to determine that the same water that bathed these shores flowed over the two thousand miles of the Great Lakes and St. Lawrence System to enter the Atlantic far beyond Quebec.
With the development of the West came the extension of the railways but the need for the passage of cargo ships between the Great Lakes and salt water was recognized long before. The rulers of New France did not do much about it for they were interested largely in the fur trade and found a ready outlet through the Ottawa River. However, in 1700 work was begun on a canal to bypass the worst part of the Lachine Rapids. The superior of the Sulpician Order of monks let the contract for the excavation of a canal about a mile in length, twelve feet wide at the surface and having a depth of eighteen inches at low water in the St. Lawrence. Unfortunately, the contractor became bankrupt in the following year just as he was about to finish the canal and it was, in fact, never finished.
With the British era and the settlement of Upper Canada, the importance of water navigation rapidly increased and in 1839, Lieutenant-Colonel George Philpotts of the Royal Engineers, acting under the instructions of Lord Durham, submitted two reports recommending the enlargement of all canals between Lake Erie and tidewater and proposing a standard size lock two hundred feet in length, fifty-five feet in width and having nine feet of water on the sills. Not all of Philpott's recommendations were accepted but a good start was made to develop the system as we know it.
Turning to the power aspect, we find Charles, Marquis de Beauharnois--Governor of New France in 1726--constructing a small irrigation canal to connect Lake St. Francis and the St. Louis River and so increase the flow of the St. Charles River for the purpose of hydraulic development. This was a fourmile diversion canal and is still in operation. You will recall that the name Beauharnois later acquired a rather unattractive significance but this had nothing to do with the old Marquis!
The romance of the Seaway in the years leading to its final construction is part of Canadian folklore now and perhaps no decision in recent years has reflected greater credit on our country than the decision to carry out the project alone if our American neighbours were not prepared to join us. In the end, of course, it was a joint undertaking and it has now been in existence long enough for some interesting conclusions to be reached. Our speaker today knows more about the Seaway or at least the transportation aspect of the Seaway than any man in Canada. He is an old friend of many of those present who have known him in one of the several roles in which he has distinguished himself. For sixteen years he was with the Steel Company of Canada, as Economic Adviser to the President. In World War I he was wounded twice and received the Distinguished Service Order and the Belgian Croix de Guerre. During the Second War he was with the Department of National Defence for Air and with the Department of Munitions and Supplies. He has been a student of the Canadian economy for years and associated with the Chamber of Commerce movement and the Canadian Manufacturers Association for a good part of his business life. He is now President and General Manager of the Great Lakes Waterways Development Association and, as such, is dedicated to the fostering of economic development by means of low-cost transportation through the Seaway and throughout the Great Lakes.
Gentlemen--may I present a brave soldier, a business man of distinction and an expert on the subject on which he will speak today-Mr. Stuart Armour.
A schooner sailed to England from this City in 1855 and Toronto became the second ocean port on the Great Lakes. Kingston beat Toronto by seven years, having sent a vessel overseas in 1848.
Both Toronto and Kingston, along with Buffalo, Chicago, Cleveland, Detroit and a score of other Great Lakes Cities in Canada and the United States, were able to become ocean ports because in 1848 there was opened an allCanadian St. Lawrence Seaway from Montreal to Lake Erie.
That first Seaway had a uniform minimum depth of nine feet-five feet deeper than the then famous Erie Canal-and it was approximately 364 miles long. It was not until eight years after the opening of that first all-Canadian Seaway that the Grand Trunk Railway was completed from Montreal to Toronto in 1856.
Last year, there were 1,138 passages of ocean-going ships through the Western Gap into the port of Toronto. Since they all got out before freeze-up, that meant the same number left for overseas. So in the 237-day navigation season on the Seaway in 1965, there was an average of more than nine passages through the Western Gap by arriving or departing ocean-going vessels.
When he introduced our Seaway Act in Parliament in 1951, which authorized the enlargement of the then existing all-Canadian Seaway in collaboration with the United States, the then Minister of Transport said it was not anticipated that ships from overseas would be large users of the new facilities. That wrong guess is only one of many reasons why I have given my remarks today the title "A Troubled Artery".
Those ocean-going vessels which sailed in and out of Toronto harbour last year, carried a total of just under 1.5 million net tons of cargo to and from the far places of the earth. In addition there were handled cargoes arriving or leaving by Great Lakes carriers amounting to 4.6 million net tons, although many of these reached Toronto by way of the Welland Ship Canal rather than by the Seaway.
Taken altogether, the cargo handled by the port of Toronto in 1965 amounted to 6.1 million net tons. Our Department of Transport estimates that each ton of bulk cargo handled yields a direct benefit to a port of from $1.50 to $5.00 a ton, while general cargo yields direct benefits of from $14.00 to $20.00 a ton.
You can realize from such figures that the port of Toronto is itself an important factor in the economy of this region. But in addition to the direct benefits accruing to the port, it has been estimated that on bulk cargo alone, a community benefits to the extent of another $4.89 a ton.
In a recent speech to the Transportation Club of Toronto, Hon. Mitchell Sharp in his then capacity as Minister of Trade and Commerce, cited our overseas shipments of wheat as an example of the close relationship between transportation and trade.
Most of us realize the importance of those wheat shipments to our National economy, but not everybody fully realizes the extent to which shipments of manufactured goods have now joined shipments of food-stuffs, forest and mineral products as what Mr. Sharp called "the four main pillars of Canada's export trade".
Indeed, on Canadian manufacturing has been placed the task of ensuring a high level of employment and income, which was declared in 1945 to be the objective of Government policy. But if our manufacturers are to fulfill the task of increasing job opportunities, production and the tax revenues which are now so essential, they must not be shackled by rising costs of getting their products to market.
Mr. Sharp in his Toronto speech said "our transportation industry provides a stimulus to trade itself. Quicker, better and cheaper transportation increases the advantages of International specialization", and that "specialization in manufacturing is becoming of major importance".
Despite what Mr. Sharp had to say and the figures I have given you, it is very apparent that the average resident of Toronto gives little, if any, thought to the fact that he lives in a City which has already achieved stature as an ocean port. Yet the achievement is really very spectacular when you remember that Toronto is classed as an inland community.
How did it come about that a City so far removed from the entrance to the Gulf of St. Lawrence was a port of call last year for 1,138 ocean going vessels?
It came about because in 1829 a group of Ontario business men opened the first Welland Canal to by-pass Niagara Falls, and thereby proved that it was feasible to lift sailing vessels, and not just barges, 326 feet over the escarpment between Lake Ontario and Lake Erie. As has been the case throughout the whole history of the St. Lawrence Waterway, that first Welland Canal was beset by many problems. However, the existence of that Canal did inspire an insistent demand that canals and dredged channels and locks of equivalent or greater dimensions be provided in the St. Lawrence River between Montreal and Lake Ontario.
When Canadians on their own initiative and at their own expense constructed the necessary facilities, the first Seaway was opened for traffic in 1848, and every community on Lakes Ontario, Erie, Huron and Michigan immediately became a potential ocean port. When the United States got around to opening an adequate lock at Sault Ste. Marie, Michigan, in 1855, Lake Superior joined the other Great Lakes as part of North America's "fourth sea-coast".
In the years following 1848, Canadians improved the Seaway from Montreal to Lake Erie, and by 1900 there were canals and channels and locks built and owned and operated by Canadians with a uniform minimum depth of 14 feet.
So impressive was the contribution of that 14 foot all-Canadian Seaway to our progress and prosperity, that the pressure was insistent for further improvements. In 1913 construction was started on the present Welland Ship Canal, the fourth canal constructed in Ontario to by-pass Niagara Falls, and in 1932 it was completed. This fourth canal, known officially as the Welland Ship Canal, had a uniform minimum depth of 25 feet, and it was designed, constructed and paid for solely by Canadians.
Since it cost $132 million to build, and our population when construction started was only 6.5 million, and when it was finished, 10.5 million, you can readily appreciate what a marvellous Canadian achievement it represents. Even today, there is no canal in all the world to compare with the Welland Ship Canal, the eight locks of which lift ships 730 feet long, 75 feet wide and weighing with their cargoes up to 40,000 tons, over a natural obstacle sufficiently forbidding to daunt the most courageous.
The coming into operation of the present Welland Ship Canal in 1932 was of enormous benefit to the whole Canadian economy. It not only made it possible for Canada to become a great grain exporting nation, but provided low-cost transportation for the raw materials needed by the heavy manufacturing and other industry located in the so-called Golden Horseshoe from Oshawa to Niagara Falls. However, it also called into being, opposition of the most vicious kind from powerful United States interests.
Until the present Welland Canal came into operation in 1932, more than twice as much Canadian wheat for export was shipped overseas from United States Atlantic Coast ports such as Boston, New York, Philadelphia and Baltimore, as was handled by Montreal, Saint John and Halifax.
That Canadian wheat for export through United States ports was hauled from the head of Lake Superior to Toledo, Cleveland, Fairport, Erie and Buffalo, and then shipped by United States railroads to the United States Atlantic Coast. After the opening of the Welland Ship Canal in 1932, the bulk of Canadian wheat export went down the St. Lawrence to Montreal and Quebec, although most of it had to be transhipped at Toronto or Kingston or Prescott.
You can well imagine the rage of United States Atlantic Coast ports and the United States railroads which serve them at the loss of that highly lucrative export grain traffic. As a consequence, when Canada and the United States signed an agreement in 1941 to jointly enlarge the Seaway from Montreal to Lake Ontario from a 14 foot water artery to one having a uniform minimum depth of 27 feet, the United States opponents of that great venture organized themselves into scores of bodies capable of exerting powerful influence in Washington.
In 1964 no less than 270 million bushels of Canadian wheat for export were shipped from the ports of Montreal, Three Rivers, Quebec and Baie Comeau. There was also a very considerable tonnage of United States grain for export handled by those same Canadian ports. As far as can be ascertained, no Canadian wheat for export was handled through any United States Lake Erie port last year or the year before. The rage of the opponents of the Seaway has consequently increased rather than decreased.
The Agreement signed by Canada and the United States in 1941 called for completion of the enlarged Seaway by 1948, just 100 years after the opening of the first allCanadian Seaway.
But alas for fond hopes. Even before the United States Congress could ratify the Agreement, the opposition had proved so powerful that in 1947 Washington informed Ottawa that if favourable Congressional action was to be secured, Canada must agree to the principle of collecting tolls to repay the capital costs of construction plus escalating yearly administration, maintenance and operation costs within fifty years.
Although acceptance by Canada of the demand of the United States that an attempt be made to recover the costs of the enlarged Seaway through tolls meant abandonment of our traditional policy of toll-free navigation facilities, Ottawa in its anxiety to get on with the project, agreed to Washington's terms. At that point the St. Lawrence Waterway became a truly troubled artery, and it has retained that unenviable position right down to the present day.
In his book on the St. Lawrence Seaway published in 1959, Hon. Lionel Chevrier, former Minister of Transport, first President of our Canadian St. Lawrence Seaway Authority, and now our High Commissioner in London, wrote: "The Seaway was the most controversial construction project the world has known... Few projects have been so desperately needed while being delayed for so long."
If the Association of American Railroads, the United States Atlantic Coast Ports Association, and such organizations as the National Association for a Non-Subsidized Seaway with headquarters in Baltimore, Maryland, and with a United States Congressman as its President, had had their way, the present enlarged Seaway would never have been built.
But it was built, and it has proved one of the principal means by which Canada has achieved her present position of long-sustained prosperity. For without the Seaway our Government could not have entered into agreements to supply huge quantities of wheat to Russia and her European satellites. Without the wheat deals of the past three or four years, the general level of business activity across Canada would be far lower than it is today.
That level of business activity has, in its turn, created new demands by our manufacturers for raw materials, which, in its turn, has resulted in spectacular developments not only throughout the Lower St. Lawrence Valley, but in Ontario as well.
Fittingly enough, the diversion of traffic away from United States ports and railroads to the St. Lawrence Waterway, has been of enormous benefit to Canadian railways and truck operators. Every pound of the 43 million tons carried through the Seaway, and of the 53 million tons which transitted the Welland Ship Canal last year, was carried to or from the St. Lawrence Waterway by rail or truck. Indeed, the St. Lawrence has proved a complementary factor in the field of Canadian transportation.
Transportation by water is the cheapest means of carrying goods known to man. It is to be hoped, therefore, that nothing will be done to curtain its ability to provide that "cheaper transportation" which, as Mr. Sharp has pointed out, is so essential to our export trade. Obviously tolls on the Welland Ship Canal and/or the St. Lawrence Seaway do nothing toward making transportation cheaper, and that is why our Association is so opposed to them.
Cargoes handled by the Welland Ship Canal and St. Lawrence Seaway in the navigation year just closed, embraced the entire range of Canadian exports-forest products, grain and other farm products, iron ore and manufactured goods. They also embraced very large cargoes of coal imported from the United States without which Canadian heavy and other industry in Central Canada could not function in the highly competitive world of today. There was also a substantial upbound movement of manufactured goods from all parts of the world, as well as of imports of certain essential raw materials not to be found in Canada. In addition there was a large and growing volume of Canadian manufactured exports shipped downbound to overseas markets.
But, and there always seems to be a but in the affairs of man. The high level of our prosperity which is reflected in the figures on cargo tonnages transitting the Seaway and the Welland Ship Canal last year will only increase the danger that inimical actions may threaten the future of those two transportation arteries vital to our progress and prosperity, unless Canadians are made aware of what is afoot.
Let me now try to enlighten you as to what those inimical actions may be.
Sixty-three years ago Canada abolished tolls on all our inland waterways, and in 1909 the International Boundary Waters Treaty declared that "all navigable boundary waters shall forever continue free and open for the purposes of commerce to the inhabitants, ships and vessels" of both Canada and the United States.
Yet in 1959, when the enlarged International St. Lawrence Seaway was opened from Montreal to Lake Ontario, the all-Canadian Welland Ship Canal was subjected to tolls. Our Association came into existence in 1959 to work for the abolition of tolls on all our inland waterways, and we spearheaded the effort which resulted in Welland Ship Canal tolls being suspended in 1962. In 1964 we again threw our weight against the reimposition of tolls on the Welland Ship Canal, and they were re-suspended "for the present" on March 26th of that year.
However, you can all appreciate the uncertainty which today confronts every user of the Welland Ship Canal, be he African, American, Asian, British, Canadian, European or Latin American, when he tries to figure out what "for the present" may mean. All the user knows is that Ottawa on its own initiative imposed tolls on the Welland Ship Canal in 1959, and that they have only been suspended or re-suspended but never removed right down to the present day.
While the matter of tolls on the all-Canadian Welland Ship Canal is one for Canadians alone to decide, this is not true of the International St. Lawrence Seaway. Tolls on the Seaway first imposed in 1959, are to remain at their present level until the close of navigation in 1966. But before July 1st of this year, the Canadian and United States operating entities are required to adopt a new schedule of user charges, and these are under International consideration at the present time.
In 1964, when Seaway tolls were under review, Canada suggested they should be raised but the United States refused to go along with that strange suggestion-strange because St. Lawrence has always meant far more to Canada than to the United States.
The St. Lawrence furnishes Canadians with their only water highway into the heartland of their Country. On the other hand, there are a whole series of rivers giving access to the interior of the United States from her coastal areas, such as the Columbia, Delaware, Hudson, Illinois, Mississippi, Missouri and Ohio, all of which are completely tollfree.
In fact, the only part of the 27,000 miles of navigable waterways in North America which is not toll-free is the St. Lawrence Seaway from Montreal to Lake Ontario, a distance of 124 miles.
Canadian manufacturers are being constantly urged by Government to increase the volume of their exports, and our continuing balance of payments problem make this a National must. Yet by reason of an inconsistent and discriminatory policy of Seaway tolls, the competitive position in overseas markets of those Canadian manufacturers whose plants are located anywhere in the Great Lakes area are worsened.
In August last year, a single ship-load of general cargo from Britain destined for a United States Great Lakes port, paid $17,134 in cargo tolls alone, plus 4 cents a ton on the unknown gross registered tonnage of the vessel. If that same ship had carried a downbound cargo of Canadian manufactured goods destined for overseas markets, it would also have had to pay a cargo toll of more than $17,000 for the privilege of transitting a navigational facility which was all-Canadian and virtually toll-free for the 111 years, 1848 to 1959.
To the total charges for getting those Canadian manufactured goods to market via the Seaway must be added the toll charges on the raw materials from which they were made. The toll on bulk cargoes such as coal, forest products, grain and iron ore transitting the Seaway is 40 cents a net ton plus 4 cents a ton on the gross registered tonnage of the vessel. A ship of the largest size capable of transitting the St. Lawrence Waterway (and they are now virtually all Canadian ships), fully loaded with coal or farm or forest products or iron ore, must pay $12,400 in cargo and vessel tolls each time it travels in either direction between Lake Ontario and Montreal.
All those raw materials enter into the production of manufactured goods of one kind or another. Hence the cost of transporting them affects the prices paid by consumers in all parts of Canada, as well as in export markets.
Moreover, Canadian manufactured goods made from Canadian raw materials on which tolls have to be paid must compete with similar United States raw materials which still move toll-free within Lakes Erie, Huron, Michigan and Superior. This seems a strange way of trying to make Canadian goods more competitive, which is the declared goal of Government policies.
The Association of American Railroads goes so far as to advocate the imposition of tolls on all North American Waterways. In pursuit of that objective, the Association of American Railroads in January last year asked Congress to increase Seaway tolls and to impose tolls on United States inland waterways. Then in March 1965, the International Railway Brotherhood with headquarters in Cleveland, Ohio, urged our Government "in the best interests of the Canadian people" to raise Seaway tolls. You can well imagine the howls of indignation which would greet any suggestion by a Canadian labour union to the United States Congress that it take some action in the best interests of the American people. But the effort of a labour union with headquarters in the United States to influence our Government over the heads of the Canadian people drew no rebuff.
President Johnson, in a message to Congress last May, asked for legislation imposing a toll by way of a tax on the fuel used by all self-propelled vessels having a draft of 15 feet or less which use United States Coastal, Great Lakes and Inland Waterways. If such legislation is enacted by Congress this year, it would bring within its scope all United States waters, including those in the Great Lakes area.
The ease with which such legislation could be extended to cover vessels of any draft, and the effect of such an extension upon traffic transitting the United States locks at Sault Ste. Marie and the river channels connecting the Great Lakes, hardly needs emphasis by me today.
Continued existence of tolls on the 124 mile International St. Lawrence Seaway from Montreal to Lake Ontario, furnishes a most dangerous precedent for the imposition of tolls elsewhere, including the now toll-free all-Canadian Welland Ship Canal.
Perhaps you can now begin to realize why our Association, with a varied Membership from the Maritimes to the Rockies, including the three Prairie Wheat Pools, is so opposed to tolls on all Canadian Waterways, be they coastal or inland.
But a reversion to our traditional policy of toll-free waterways will not come about unless the people of Canada make their wishes in this respect abundantly clear. That is why I have ventured to address you on this important subject today.
Thanks of the meeting were expressed by Mr. F. Gerald Brander.