Canada and the Cost of World War II

Canada and the Cost of World War II: The International Operations of Canada's Department of Finance, 1939-1947

Robert B. Bryce
Edited by Matthew J. Bellamy
Foreword by Gordon Robertson
Afterword by J.L. Granatstein
Copyright Date: 2005
Pages: 440
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  • Book Info
    Canada and the Cost of World War II
    Book Description:

    Bryce chronicles in splendid detail how the tiny and overburdened department in Ottawa worked behind the scenes to deal with the critical public policy challenges that accompanied World War II and postwar reconstruction. Canada's financial aid made it possible for Britain to wage an effective war and then deal with the destruction it wrought. Bryce details how Canada's Department of Finance can also be credited with overcoming some of Britain's most pressing balance-of-payments problems after the war.

    eISBN: 978-0-7735-7305-5
    Subjects: Finance

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-xii)
    Gordon Robertson

    Robert Bryce’s contributions during the forty years that he spent as a public servant, from 1938 to 1978, were profoundly important during his times and continue to be so in our present century. No one thought more deeply than he did about the role of the public service as a neutral, permanent, and professional body committed to working with whatever government the democratic process returned. Bryce saw the parliamentary system as an effective reconciliation of the democratic assertion of the preference of the voter, on the one hand, and the continuity of the values and interests of the state as...

  4. Preface
    (pp. xiii-xvi)
    Kevin G. Lynch
  5. [Illustrations]
    (pp. xvii-xxvi)
  6. Introduction
    (pp. 1-10)

    This book is a history of the international problems and activities of Canada’s Department of Finance during World War II, from 1939 to 1947. These include a variety of arrangements for financing Britain’s requirements for Canadian munitions and food and the division of costs of the British Commonwealth Air Training Plan. They also include the arrangements for conserving and supplementing Canada’s supply of us dollars, including exchange controls and the Hyde Park Declaration with the United States. It covers the financing of relief to the liberated population of Allied nations through both military and civilian channels, and also the department’s...

  7. CHAPTER ONE The Unprepared Beginnings
    (pp. 11-29)

    Canada was not ready for the war that came in 1939 except in the one most essential political requisite, that her government, her Parliament, and her people were prepared, without serious division or objection, to accept the decision to participate. This was Prime Minister Mackenzie King’s triumph, but he obtained it at the cost of a “no commitments” policy that prevented many of the lesser but important and tangible preparations from being made. Canada did not enter the war for constitutional reasons, as some experts feared it would; rather, as J.L. Granatstein reasonably concludes, “the fundamental reason for this Canadian...

  8. CHAPTER TWO The eac and Trade Problems
    (pp. 30-40)

    On 14 September 1939, by order-in-council, the government established an Advisory Committee on Economic Policy, broadly mandating its duty to be, “of its own motion or upon request of any Minister of the Crown, to investigate, report and advise upon questions of economic and financial policy and organization arising out of Canada’s participation in the war, and to report to the cabinet Committee on General Policy, on Supply or on Financial Questions as the case may be.”¹ Normally this committee reported to cabinet’s War Committee, which became the name of the Committee on General Policy referred to in the order,...

  9. CHAPTER THREE The Air Training Plan Negotiations
    (pp. 41-51)

    The British Commonwealth Air Training Plan was the largest military task undertaken by Canada in the early years of the war. It began on 26 September 1939, only a week after the announcement regarding the Canadian defence programs. The prime minister received a very persuasive personal telegram from the prime minister of Britian, urging Canada to be the centre of a very large advanced air training program, which would train men from Canada, Australia, New Zealand, and Britain.¹ The Canadian high commissioner, Stanley Bruce, had initiated work on this proposal with the British Air Ministry. Massey also assisted in drafting...

  10. CHAPTER FOUR Financing Britain
    (pp. 52-84)

    Canada’s financing of British wartime requirements was one of the few subjects that the appropriate authorities in Britain and Canada had discussed in the months before the war broke out. It was evident that financing Britain would present a problem because in peacetime Britain had a trade deficit with Canada (even in the 1930s it had carried a deficit on its balance of payments with Canada). These deficits usually were financed by Britain through payments of us dollars to Canada, in amounts within the current account surplus that the sterling area had with the United States. Canada used these us...

  11. CHAPTER FIVE Scarce us Dollars and the Hyde Park Declaration
    (pp. 85-116)

    Before the war, it was clear that Canada’s participation in a major conflict allied with Britain while the United States remained neutral would lead to a Canadian shortage of us dollars. There were two reasons for this. The first involved the structure of international trade and payments. Canada characteristically had a deficit in her balance of payments with the us, which largely was covered by us dollars received from Britain as payment of her respective deficit in balance of payments with Canada. Britain, in turn, was largely dependent for her own supply of us dollars on the sales that sterling...

  12. CHAPTER SIX Us Economic Arrangements and Dollars Galore
    (pp. 117-145)

    The devastating Japanese attack on the us Pacific Fleet at Pearl Harbor early in the morning of 7 December 1941 extended the war around the world. Hider’s alliance with Japan led, albeit surprisingly, to his declaration of war on the United States thereby unifying that country.

    The entry of the United States into the war with Germany, and that of Britain and the Commonwealth into the war with Japan, gave assurance to Britain of ultimate victory, at least outside Europe. It required the British, however, to reach agreement with Roosevelt, his vast administration, and the us army and navy on...

  13. CHAPTER SEVEN Mutual Aid to Allies
    (pp. 146-188)

    As 1942, the year of crises, drew to its close, we had to turn our attention urgently to devising another major measure to succeed the billion-dollar gift to Britain. We were relying on the gift to finance Britain and indirectly to finance Canadian supplies on a small scale for Australia and Russia, but we did not regard a second similar “gift” of money to Britain as suitable or even feasible. This was partly due to criticism in Quebec, but there was another, more significant reason. Our minds were now on wider, more positive plans in which the government of Canada...

  14. CHAPTER EIGHT Financing Britain Further and Keynes’s Visits
    (pp. 189-224)

    After the government had given notice to Parliament on 28 March 1944 of its resolution to request a Mutual Aid appropriation of $800 million for the fiscal year 1944–45, we in Finance began once more to consider what other new measures we might work out to finance Britain further in obtaining war supplies from Canada. Those of us in the department and on the Mutual Aid Board knew that the appropriation would be inadequate. We took it for granted that we could and would finance the other recipients of our Mutual Aid out of the $800 million appropriation; there...

  15. CHAPTER NINE Working up to Bretton Woods
    (pp. 225-253)

    In 1941 and 1942, experts in positions of authority or influence in both Great Britain and the United States (and by good fortune in Canada, too) came to the fore on the issue of monetary reform.³ As early as the beginning of 1942, in London, John Maynard Keynes, adviser to the Treasury, and in Washington, Harry Dexter White, assistant to the secretary of the Treasury, both had drafts of plans for a post-war international monetary system. These plans were the proposals of the experts themselves; they had no government approval, although both the British cabinet and the us secretary of...

  16. CHAPTER TEN International Institutions
    (pp. 254-282)

    As the tide of war turned in favour of the Allies early in 1943, more and more attention was put to the shape of the post-war world. International co-operation was regarded by many as the key to a lasting peace, and the mid-1940s gave rise to what since has been described as “a relatively Golden Age of international political inventiveness and institution building.”¹ The Allied governments and their officials drew up plans and began a round of negotiations and conferences that resulted in the formation of new international organizations, including the United Nations, the International Monetary Fund, the International Bank...

  17. CHAPTER ELEVEN The 1946 British Loan and Settlement
    (pp. 283-322)

    The billion-dollar loan made by Canada to Britain in March 1946 had its origins in August 1944. Early in that month, during discussions of British requirements of Mutual Aid supplies from Canada, the ministers on the Mutual Aid Board and senior financial officials learned from John Maynard Keynes the full measure of the uk’s international financial difficulties. In part, these difficulties were immediate: the need for more arms, munitions, and food in that fiscal year 1944–45 and extending into the period we called stage II of the war, when hostilities in Europe were finished but the war against Japan...

  18. AFTERWORD The Finance Department and the War at Home
    (pp. 323-332)
    J.L. Granatstein

    As Robert Bryce’s book has made clear, the Department of Finance that fought World War II was a tiny department. The key officials who shaped policy were an even smaller group, a handful or two. Clifford Clark, the deputy; W.A. Mackintosh, brought in from Queen’s University; and Bob Bryce himself were the stars. Around them were a second group of generalists, including Mitchell Sharp and A.F.W. Plumptre; a number of academic and private sector experts brought in from outside the civil service; as well as departmental specialists in tax and trade policy, such men as Kenneth Eaton, Harvey Perry, and...

  19. Notes
    (pp. 333-376)
  20. Bibliography
    (pp. 377-384)
  21. Index
    (pp. 385-392)