Rogue Tory

by Denis Smith

  Amory presented the British scheme to Diefenbaker and Fleming on September 9, but Fleming did not report the delicate issue to cabinet until eleven days later. Amory, he told cabinet,

  had been authorized to put forward a proposal that Canada and the U.K. enter a free trade area. The U.K. would reduce as soon as possible its present quotas on Canadian products and manufactured goods but beyond that had nothing to offer. In exchange, British manufacturers would have free entry into the Canadian market. The suggestion had been thoroughly examined and before Mr. Heathcoat Amory returned to London he had been informed that it was too radical and one-sided to be acceptable…

  During the discussion, the very slight advantages and the positive disadvantages to Canada in a free trade area with the U.K. were mentioned. Canada simply could not be led into a position which had the appearance of subservience to the U.K. No doubt, however, the U.K. government was under heavy pressure to show the British public that they regarded the 15 per cent diversion suggestion seriously and had, therefore, made the proposal they had.44

  For Diefenbaker and Fleming, the British offer had not merited consideration by the Canadian cabinet. It was rejected outright following a meeting with senior officials. The prime minister’s unthinking overture had brought an unexpected and embarrassing response - “a bombshell,” in Fleming’s words. The Canadians hoped to dispose of it quickly, silently, and, if possible, unexploded.45

  The British felt no similar compunction. For one thing, the cabinet in London was told that two Canadian ministers disagreed with the decision to reject and there was perhaps a slight chance it was not final. But above all, UK ministers

  emphasised that the Government should not allow themselves to be placed in a position in which they were unable to reply to public criticism in this country, based on the mistaken belief that they had failed to respond constructively to the offer by the Canadian Prime Minister to divert a substantial proportion of Canadian imports from the US to the UK. There might be some advantage, therefore, in allowing the proposed Anglo-Canadian Free Trade Area to be further explored in the discussions with Canadian Ministers, if a suitable opportunity arose. We should also seek to ensure that this proposal received sufficient publicity to illustrate our readiness, in principle, to engage in a continuous and long-term effort to foster Anglo-Canadian trade.46

  On the opening day of the Commonwealth finance ministers’ meeting at Mont Tremblant, the London Daily Express exploited a carefully timed leak and gave the free trade proposal the publicity the British cabinet sought. When Peter Thorneycroft and Donald Fleming met the press together the next day, Thorneycroft confirmed that the idea had been proposed by Britain. Fleming brooded unhappily beside him. Now the scheme was certainly dead.47

  Perfidious Albion had outwitted John Diefenbaker. He knew he had stumbled into something awkward, but seemed unaware of what had happened. While others were embarrassed by Canadian ineptitude and annoyed by the signs of British cynicism, Diefenbaker was easily flattered by the attentions of Harold Macmillan. As Macmillan’s ministers prepared the unwelcome offer, he wrote privately to Diefenbaker that he shared the Canadian desire for expanded trade “in full” and that the Canadian initiative “has caught the imagination of people here.”48 At the same time, he recommended to the queen - and quickly saw to completion - Diefenbaker’s appointment to the United Kingdom Privy Council. From September 23, Diefenbaker could style himself “Right Honourable.”49 By the end of September, with Diefenbaker placated, Britain could turn its attentions once more to its plans for entry into the European Free Trade Area.

  For a short time the prime minister lamely kept up the pretense of major trade diversion to the United Kingdom. At cabinet in early October, ministers opposed any open rejection of the British offer and suggested that a joint Canada-UK trade communiqué should mention “the government’s declared objective to shift 15 per cent of Canada’s imports from the United States to the United Kingdom.”50 When Gordon Churchill led a delegation to Britain in November, Diefenbaker said to a reporter that he still believed in shifting 15 percent of Canada’s imports. “I would never have enunciated such a principle last July if I had not thought it possible.”51 A few months later, as imports from the United States continued to grow faster than those from the United Kingdom, he told an interviewer that the figure had never been an expression of government policy: “At no time did we say that we were going to divert 15 percent. I said, as an example, that if 15 percent were diverted the result would be to bring about a reasonable deficit in our trade with the U.S. and, at the same time, assure us markets that are virtually non-existent today.”52

  Trade diversion was off the table; it had been a three-month wonder benefiting no one. But the Canadian government still wished to demonstrate its interest in Commonwealth trade by promoting a major Commonwealth conference on the subject. That was the sole purpose of the meeting of Commonwealth finance ministers at Mont Tremblant. The British, who were anxious not to offend further, were warm supporters of the Canadian proposal, and it sailed through with unanimous agreement. The Commonwealth Trade and Economic Conference would be held in Canada in 1958. Donald Fleming and John Diefenbaker were pleased to have fulfilled an election promise and took credit for that. But they remained frustrated by the press’s concentration on the fiasco of trade diversion and the British offer.53

  THE PRIME MINISTER’S ABSENCE FOR TWO WEEKS AS THE NEW GOVERNMENT BEGAN its work meant that there were many loose ends to be picked up on his return. Under the chairmanship of Howard Green as acting prime minister, cabinet held six meetings while Diefenbaker was in London. The first few sessions were long, and after one week in office Green told cabinet that several ministers had complained that “meetings had been so frequent and lengthy that little time was left for individual ministers to attend to their own departmental business.” Members agreed with him that, for the interim, pending the prime minister’s adoption of regular procedures, no items except urgent ones should be placed on the agenda without one day’s notice and submission of an explanatory memorandum.54 That seemed to make little difference. The intense schedule was maintained on Diefenbaker’s return, and in the remaining twenty-six days of July cabinet met eleven more times. Indeed, except for gaps during short summer holidays and election campaigns, Diefenbaker kept his ministers at this exhausting pace for his entire term of office. In less than six years the cabinet met eight hundred and twenty-six times, or, on average - year in and out - almost three days each week.55

  Diefenbaker’s first display of mistrust towards ministers came on July 11. He was “deeply disturbed” that there had been leaks of information after recent meetings. In particular, the press had learned prematurely of George Drew’s appointment and of the prime minister’s proposal to visit President Eisenhower. Diefenbaker warned that he would ask for the resignations of ministers who did not respect cabinet secrecy.56 In October he told cabinet he was “very disturbed” by accurate press reports about proposed increases in old age security. “Nothing,” the minutes said, “would be more upsetting for him than to have to ask a Minister to resign.”57

  Cabinet secrecy was a matter, primarily, of partisan prudence, a means of depriving opponents of information that might give them political advantage. There was another level of security policy involving the shielding of Canadian “secrets” from the agents of foreign powers - which meant, during this era of the Cold War, chiefly spies serving the Soviet intelligence services. Soon after his return from London, Diefenbaker was provided by Bryce with detailed briefing papers on that aspect of government security.58 One part of the policy dealt with the classification and secure handling of documents; Bryce gave the prime minister a booklet outlining “all the minutiae of physical security” that had been approved by the previous government’s Security Panel and commented that these procedures offered no serious problems. On the other hand, the policy on “the loyalty and reliability of people” raised “one of the more difficult and unpleasant pr
oblems of our times.” This policy was contained in “Cabinet Directive No. 29,” approved by the Liberal cabinet in December 1955. Bryce outlined its features in his own memo and enclosed a full copy of the directive for the prime minister. The document noted that security was “a part of good administration,” normally to be dealt with at the departmental level. Good administration, it suggested, might be threatened “either by persons who are disloyal or by persons who are unreliable because of defects in their character.” Disloyalty was defined essentially as membership or belief in the Communist Party.

  It remains an essential of Canadian security policy that a person who is a member of a communist party, which is substantially subservient to the dictates of a foreign power, or a person who by his words or actions consistently shows himself to believe in Soviet communism, or in any other ideology which advocates the overthrow of government by force, should not when known be permitted to enter the public service. Such persons discovered within the public service must not be allowed access to classified information. It is a matter for consideration in such cases as to whether it is desirable to remove such persons from the public service.59

  “Unreliability” was defined more vaguely, but seemed to be a euphemism for homosexuality: “Persons who are unreliable from a security standpoint, not because they are disloyal, but because of defects in their character which may lead to indiscretion or dishonesty, or may make them likely subjects of blackmail, must not be employed in any position where they may have access to classified information. Such defects of character may also make them unsuitable for employment on grounds other than security.”60

  The policy provided that government departments should carry out security reviews of all persons having access to classified documents and making use of information supplied to them by the security agencies. After careful examination, departments were instructed to resolve any remaining doubts about loyalty or reliability “in favour of the state,” not the individual. Quarterly reports were to be filed with the Security Panel listing the numbers of persons dismissed, permitted to resign, transferred to other posts, denied access to classified information, and denied employment.61 The policy was applied widely, to the military services, “mass communications,” and the defence industries as well as the public service.

  Bryce pointed out to Diefenbaker that “perhaps the most distinctive feature of security policy in Canada” was that a person denied access to classified materials or dismissed from employment “is not normally told that action has been based on security grounds; and as a result there is no appeal or official review system of the kind used in the U.K. and the U.S.” While a review system had been studied, the Security Panel had recently decided that it would involve too many “practical disadvantages” and should not be put into effect.

  Bryce recognized that the right of appeal, and the right to know the reasons for an employment decision, arose from “principles of natural justice.” But he cited three grounds for ignoring such principles: an appeal process would usually mean “some public knowledge” of cases, possibly embarrassing to the individuals concerned; it might compromise the sources of information relied on by the security services; and it would tend to limit the discretion of officials ruling in individual cases. These were remarkably self-serving justifications for a confidential vetting system that deprived its subjects of elementary justice. Bryce took comfort from his view that the RCMP security service was a reliable source of information, and that departmental security reviews were conducted with “maturity and prudence” under the oversight of the Security Panel.62

  John Diefenbaker, whose public reputation was built on his defence of civil liberties, read and marked the Bryce memorandum. He underlined key sections of Bryce’s summary of the rule relating to the employment of members of, or sympathizers with, the Communist Party - and wrote in the margin “Norman.” This seemed to be an implied criticism of Pearson’s support for the beleaguered diplomat rather than a comment on the rule itself. Beside Bryce’s report that the Security Panel had recommended against an appeal system, Diefenbaker placed a question mark. And beside Bryce’s claim that an appeal system “ideally” would give the appellant access to the information on which the decision was based and thus might reveal intelligence sources, the prime minister wrote “?Why?” Such signs of scepticism were fully consistent with Diefenbaker’s long-standing belief in the right of appeal against administrative acts. But he did not pursue his doubts; the existing policy was maintained without reference to cabinet. For Diefenbaker, it seemed, the communist challenge to the state overrode the normal claims of civil liberty, just as the threat of a wartime enemy had done for him in 1940. This time, the power of decision was in his own hands, and he chose caution. On the subject of Herbert Norman, Diefenbaker now possessed one further bit of evidence in the wording of the security policy - but it related to Pearson’s potential political embarrassment rather than to Norman’s rights as a public servant.63

  For Diefenbaker, filling out his cabinet was a more pressing preoccupation during the summer of 1957. In early August he named Douglas Harkness as minister of agriculture and Paul Comtois as minister of mines and technical surveys; two weeks later Waldo Monteith became minister of national health and welfare, and Alvin Hamilton minister of northern affairs and national resources.64 Harkness was a decorated veteran from Calgary and a member of the House since 1945; Comtois was an undistinguished agronomist; Monteith was a chartered accountant from Perth, Ontario; and Hamilton was one of Diefenbaker’s successors as party leader in Saskatchewan.

  There was speculation in the country about who Diefenbaker might eventually appoint to External Affairs; some writers proposed innocently that Pearson should be called back to the ministry by his political opponents.65 That must have struck the prime minister as vaguely sinister: the department, after all, was the home of the “Pearsonalities” and needed special watching. One of Diefenbaker’s friends in the consular service, Leo Dolan, wrote to him confidentially that autumn that External Affairs was distributing press excerpts critical of Diefenbaker and favourable to Pearson: “I still would watch the ‘Pearson cult’ in External … Since when should your department publicize the prospective leader of your opposition?”66

  Diefenbaker enjoyed the element of uncertainty created by his temporary stewardship of the department and sought in these early days to impose his permanent control over it. His plans for the office were uncertain, and one of his own stories suggests a casual outcome. Early in September he realized that he would be expected, as minister, to attend the annual session of the United Nations General Assembly. That would mean another extended absence from Ottawa, leaving Howard Green as acting prime minister during the crucial early months while the government’s program was being developed. Diefenbaker decided not to risk that, but instead to appoint a minister who could go at once to New York for the General Assembly. When the prime minister spoke at Dartmouth College in early September, Sidney Smith, the president of the University of Toronto and sometime would-be candidate for the Conservative leadership, was in the audience. Diefenbaker asked him to take the job, and within a few days Smith had been plucked from academe to become secretary of state for external affairs.67

  The appointment did not begin well. At the press conference following Smith’s accesion, the prime minister promptly rebuked him for supporting Liberal policy on Suez and insisted this was not government policy.68 The press greeted the nomination of a distinguished public figure with praise, but Smith’s lack of political experience and Diefenbaker’s own attraction to the international stage meant that the minister remained in the prime minister’s shadow for the eighteen months before his sudden death in March 1959.69

  THE PRIME MINISTER’S FIRST FORAY INTO THE UNITED STATES OCCURRED ON September 7, 1957, when he received an honorary degree from Dartmouth College and chose the occasion to talk about the “neighbourly problems” of the Anglo-Canadian-American community - the old North Atlantic Triangle in which
Diefenbaker saw Canada’s place. He had a message of both friendship and candour. The natural friendship of the two countries, he said, had grown out of their shared heritage of freedom, and was now deepened by their common defence of democracy against “the Red Menace.” In face of that menace, “unity is the only certain hope for the survival of freedom everywhere in the world.” The parallel interests of the two countries meant that they could trust one another and speak frankly about their differences. In that spirit, he wished to “deal with one or two economic matters that are causing unrest within my country.”

  Canada, he noted, was a major trading nation, yet 60 percent of its exports and 73 percent of its imports were accounted for in cross-border trade with the United States. Canadian exports to the United States were primarily raw or partially manufactured materials, because US tariffs blocked sales of most manufactured goods. This concentration of trade, and its nature, had “inherent dangers for Canada. It makes the Canadian economy altogether too vulnerable to sudden changes in trading policy at Washington.” Canada also suffered a continuing and increasing deficit in commodity trade with the United States, amounting to $1.3 billion in 1956. Canadian grain exports were declining in the world because of unfair American surplus disposal programs. As a result, Canada had an unsold wheat surplus in 1957 of 700 million bushels. The overriding challenge of military and economic aggression by the Soviet Union, he argued, demanded economic as well as military cooperation in the west. He hoped that the joint US-Canadian cabinet committee on trade and economic questions - due to meet in Washington in October - would resolve the issue of surplus agricultural disposals.

  His second concern echoed that of the Gordon Commission on Canada’s economic prospects. There was, he said, “an intangible sense of disquiet in Canada over the political implications of large-scale and continuing external ownership and control of Canadian industries.” More than 60 percent of Canadian manufacturing, mining, and oil production was owned in the United States, and most American-owned firms did not offer stock to Canadians. Yet Canadians expected American companies to serve Canadian interests and not to undermine Canadian independence.