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Catalogue Reference:CAB/24/244
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HIS DOCUMENT 13 THE PROPERTY OP H I S BRITANNIC MAJESTY'S GOVERNMENT)
E C R E T.
.P.
275
Copy No.
(35),
C A B
I N E T,
NEWFOUNDLAND,
Draft
White
Paper,
( C i r c u l a t e d hy d i r e c t i o n
Chancellor
Treasury
Cn^ainers
s
of the
ScW.,l*.
14th November,
1933,
?
of
the
Exchequer).
i i 4
DRAFT
WHITS
PAPER,
NEWFOUNDLAND a
Papers
relating
to
the Report of
Commission (Cmd,
1
of
the R e p o r t o f
While g r e a t l y
they f e e l
it
conclusions
consideration
t h e R o y a l Commission on N e w f o u n d l a n d ,
impossible
the s i t u a t i o n which has
to. d i s s e n t f r o m t h e
and r e c o m m e n d a t i o n s
arrived
The n e e d s o f
Royal
i n the view o f
are b o t h c o n s t i t u t i o n a l
the c o l l a p s e
is
w i t h which the c o u n t r y
s h o u l d b e made by
the
co-operation of
financial;
to
avert
threatened,
His Majesty's
the U n i t e d Kingdom i n t h e e x e c u t i o n o f
of
reconstruction
embracing both the
an
Newfoundland
in
financial
Commission
the
and
in order
the
main
a t which t h a t
and the Commission recommends, t h a t ,
immediate appeal
arisen,
0
the Island,,
Commission,
Government f o r
the
United
t h e i r most c a r e f u l
regretting
has unanimously
1933)*
.Government i n
H i s Ma j e s t y ' s ..Government i n t h e
to
Royal
November 2 1 s t ,
' Mea/orand.um b y , H i s M a j e s t y ^
b r i b e d Kingdom.
Kingdom h a v e g i v e n
the
Government
a joint
plan
constitutional
and
spheres.
Under t h i s p l a n t h e e x i s t i n g
g o v e r n m e n t w o u l d be r e p l a c e d ,
I s l a n d may become
form
until
self-supporting
government under the s u p e r v i s o r y
such t i m e a s t h e -
a g a i n , b y a form
control
Government
i n t h e U n i t e d Kingdom, w h i l e
would, f o r
their part,
the f i n a n c e s
o f ,the
practicable
reduction in
with a view
of
the
His
of
Majesty's
latter
assume g e n e r a l r e s p o n s i b i l i t y
Island
make such a r r a n g e m e n t s
of
and w o u l d , i n
particular,
as may b e deemed j u s t
to
securing
the p r e s e n t b u r d e n o f
for
and
to Newfoundland
the p u b l i c
debt.
a
His Majesty
would t h i n k
Colony
it
s Government
1
little
less
than a d i s a s t e r
i n t h e B r i t i s h Empire were t o
obligations,
On t h e
present
of
burden
Newfoundland
o t h e r hand i t
the debt
can f o r
t h e utmost e f f o r t .
part
the debt
of
is
w i t h an o p t i o n t o
no change
in
the v a l u e
reducing the
debt
In
Majesty's
the h o l d e r
if
holders
the
the
of
unaided
greater
or in
dollars
at
could help
par,
in
i n the
view
of
His
i n t h e U n i t e d Kingdom t h e
Newfoundland
to
offer
to
the nominal value of
a security
of
is
placed
market
the e x i s t i n g
way N e w f o u n d l a n d would i n e f f e c t
situation
in a position
value
corresponding
debt;
in
be paying 20/-
this
in
£.
Subject
therefore
N e w f o u n d l a n d Government
recommendations
Government
of
the
acceptance by
and L e g i s l a t u r e
t h e Commission H i s
of the present
is explained
the Prime M i n i s t e r
printed
to
of
the
t h e main
Majesty's
i n t h e U n i t e d Kingdom h a v e f r a m e d a p l a n
the reduction
plan
that
the p e o p l e
sterling
dollar
the circumstances,
only
its
t o demand s t e r l i n g
the
oldest
burden.
Government
can be met
of
on
discharge
A s by f a r
in
the
clear
i s more than
expressed
if
default
is
the time b e i n g
despite
the
i n t h e U n i t e d Kingdom
in the
i n more
second p a r t
His M a j e s t y ' s
exchange f o r
of
the debt.
i n the
telegram
This
sent
on t h e 1 9 t h N o v e m b e r '
t h i s P a p e r and may
briefly
Government
i n t h e U n i t e d Kingdom
at Westminster
for
authority
a new 3 p e r c e n t , s t e r l i n g N e w f o u n d l a n d
of
to
-
would ask the P a r l i a m e n t
with a l i f e
detail
o f Newfoundland
be d e s c r i b e d as f o l l o w s
to guarantee
burden of
for
t e n to t h i r t y
the outstanding
years
t o be o f f e r e d
s t o c k and bonds o f
in
the
Stock
N e w f o u n d l a n d Government o t h e r
are Trustee
this
stock
securities.
in place
of
o t h e r words they would
i n market
to
value to
them.
than t h o s e w h i c h
Holders would
their
existing holdings;
receive
the f a c e
a year.
Authority
will
a security
value of
T h e "burden o f t h e
Newfoundland would i n t h i s
debt i n t e r e s t
way be
also
be s o u g h t
debt a f t e r
the
service
c o n v e r s i o n w o u l d be made
f r o m the U n i t e d Kingdom Exchequer,,
that
free
three
any amount
to
exchange
account o f
interest
public
available
It
years should be
to
is
proposed
in
this
treated
take advantage o f
or principal
any p a r t
way
as
Exchange
out
(2)
on
there
o f t h e new g u a r a n t e e d
of these
the
undertakings.
of Telegrams between His
Governments i n N e w f o u n d l a n d
(1)
the
so l o n g as
o r any o b l i g a t i o n b y Newfoundland t o
U n i t e d Kingdom a r i s i n g
lie
the
w o u l d r e c e i v e no payment
remains o u t s t a n d i n g
stock
of
Government
grants.
H o l d e r s who f a i l
offer
guarantee
Trustee
any amounts a d v a n c e d t o N e w f o u n d l a n d
during the f i r s t
of
to
w h i c h may be r e q u i r e d b y the N e w f o u n d l a n d
to discharge
due
reduced by £
Under t h e s e a u t h o r i t i e s
to enable i t
in
corresponding
the debt
t h o s e Newfoundland S e c u r i t i e s which a r e
securities.,
receive
Ma.1eaty s
t
and t h e U n i t e d Kingdom..
Any t e l e g r a m w h i c h may be r e c e i v e d
Mr.
Alderdioe.
Mr,
Thomas t o Mr.
1933
from
A l d e r d i c e , 1 9 t h November^
:
Your
telegram No.
Chairman o f R o y a l
.
Commission on h i s
return
from N e w f o u n d l a n d i n f o r m e d me o f
conclusions
main
and recommendations
at
C o m m i s s i o n had u n a n i m o u s l y
arrived
together with a
the
summary o f
grounds
on which t h o s e w e r e b a s e d and I
that
of
you w i l l
the
am s u r e '
appreciation
c a r e and t h o r o u g h n e s s w i t h
the l o y a l
whole
s h a r e our
which
which
Commission h a v e i n v e s t i g a t e d
the
situation,
I
need not e n t e r i n t o d e t a i l s
the C o m m i s s i o n ' s r e c o m m e n d a t i o n s
of
since
t h e i r Report, which i s being
communicated
b y t h e Chairman to
Governments
concerned w i t h
publication
the
three
a view to
in St
0
simultaneous
John's,
O t t a w a and L o n d o n
I
on the 2 1 s t N o v e m b e r , w i l l
be r e a c h i n g
After
I
to
you
understand
to-morrow.
c o n s u l t a t i o n w i t h my
am now a b l e
to
the a p p r o v a l
i n f o r m you
of
colleagues
that
subject
Parliament His
Government i n
the U n i t e d Kingdom
prepared,
their part,
for
main r e c o m m e n d a t i o n s o f
and t h a t
if
Government
the
effect
should
Newfoundland
and L e g i s l a t u r e
to i n v i t e
the
Commission
they would
p r o p o s e i m m e d i a t e l y on b e i n g
that
are
to accept
these recommendations
be a c c e p t e d a l s o b y t h e
Majesty's
informed
Parliament
the l e g i s l a t i o n n e c e s s a r y
to
give
to
to
pass
effect
t o theme,
Such l e g i s l a t i o n w o u l d b e
-4­
two-fold
i n character
The f i r s t
(l)
constitutional
p a r t would a u t h o r i s e
L e t t e r s Patent
(2)
financial.
the issue of
new
i n a c c o r d a n c e w i t h the r e q u e s t
t h e N e w f o u n d l a n d Government and L e g i s l a t u r e
the
second p a r t would g i v e
financial
general
recommendations
shape t o
t h e Commission^
the f i n a n c e s
of
may b e c o m e
the
whereby
the
self-supporting
on a b a s i s which w o u l d s e c u r e t o
a reduction
and
assumed b y the U n i t e d Kingdom^
such t i m e as i t
again,,
of
responsibility for
I s l a n d would be
until
concrete
of
i n the p r e s e n t burden of
Newfoundland
the
public
debt.
The f o l l o w i n g
of
the
Memorandum i s
a c t i o n which H i s M a j e s t y ' s
U n i t e d Kingdom,, s u b j e c t
ment w o u l d be p r e p a r e d
constitutional
to
A.
each o f
the
Parlia­
two
which
heads
9
is
other,
CONSTITUTIONAL.
The a d m i n i s t r a t i o n
t e m p o r a r i l y under the
U n i t e d Kingdom,
supporting
t a k e under t h e
9
summary
Government i n
the a p p r o v a l of
and f i n a n c i a l
c o n d i t i o n a l upon t h e
lo
to
a detailed
of
general
and u n t i l
again the
the I s l a n d would be
supervision
of
t h e I s l a n d becomes
existing
form of
placed
the
self­
government
w o u l d be r e p l a c e d as an i n t e r i m measure b y a new
form o f g o v e r n m e n t u n d e r w h i c h f u l l
legislative
e x e c u t i v e power would be v e s t e d i n t h e
acting
on t h e
advice
Commission o f
2.
a specially
Governor
created
Government o v e r w h i c h H i s
would p r e s i d e .
t i v e Council
of
The e x i s t i n g L e g i s l a t u r e
would f o r
the
Excellency
and E x e c u ­
time being be
The G o v e r n o r - i n - C o m m i s s i o n w o u l d b e
to His Majesty's
Government i n
the
and,
United
suspended.
responsible
Kingdom f o r
general
the
good government
supervision
State
Patent
for
and R o y a l I n s t r u c t i o n s
issued in their
3.
the
Government i n
t h r o u g h the
Dominion A f f a i r s .
new L e t t e r s P a t e n t
the I s l a n d ,
of His Majesty's
U n i t e d Kingdom b e i n g e x e r c i s e d
of
of
the
Secretary
The e x i s t i n g
Letters
w o u l d he suspended and
and R o y a l I n s t r u c t i o n s
w o u l d he
place.
The Commission o f
Government w o u l d he
of
of
s i x members, e x c l u s i v e
of
the Commission w o u l d b e a p p o i n t e d by H i s M a j e s t y
the a d v i c e
of His Ministers
members o f
the
land,
the Governor.
composed
chosen f r o m
f r o m t h e U n i t e d Kingdom.
would be p a i d from Newfoundland funds,
U n i t e d Kingdom
The
former
the l a t t e r
w i t h the
advice of
would take e f f e c t
disallowance
of
t h e Commission o f
immediately
would be r e s e r v e d
i n Newfoundland would
under
t h e new f o r m o f
v a r i e d by
5.
Advice
tendered to His
continue
government,
case o f
Majesty
The l a w s
t o be
in
in
force
e x c e p t as they
legislation,
the Governor would a c t
Commission o f
Government.
powers in e x e c u t i v e
own
t h e power
might
legislation.
As i n t h e
matters
Laws
t o His Majesty,
i n t h e U n i t e d Kingdom.
force
and
Government.
on e n a c t m e n t b u t
such l a w s w o u l d b e
by his M i n i s t e r s
be
from
funds.
Laws w o u l d be e n a c t e d b y t h e G o v e r n o r by
in respect
Three
Newfound­
4.
of
on
i n t h e U n i t e d Kingdom.
Commission w o u l d b e
and t h r e e
The members
on t h e
so i n
advice
executive
of
He w o u l d , h o w e v e r ,
matters
to act
the
be
given
i n e m e r g e n c y on h i s
initiative.
6.
All
appointments
to,
and p r o m o t i o n s
P u b l i c S e r v i c e , w o u l d be made by the
subject,
in
c a s e s where
the
salary
the
Governor-in-Commission,
of
the
the p r i o r
office
exceeded a s p e c i f i e d
figure,
Majesty's
i n t h e U n i t e d Kingdom.
Government
to
in
approval
of
His
7.
The members o f
would t a k e
t h e Commission o f
charge o f ,
good w o r k i n g o f
and would b e r e s p o n s i b l e
the v a r i o u s Departments o f
T h e s e would a c c o r d i n g l y b e d i v i d e d
e a c h under t h e
and s u b j e c t
control
to the
whole
Commission.
8.
All
matters
Government
of
a member o f
collective
w o u l d bo d e c i d e d ,
six
the
and a l l
t h e Commission o f
by u n a n i m i t y o r ,
if
on any m a t t e r
given.
each e x e r c i s e
9.
the
tho
of
the
Governor
Commission a c t u a l l y p r e s e n t
normally proside
would
the
at meetings of
in his
absonco,
Governor
would
t h e Commission
a Vico
Chairman
of
elected
from among t h e N e w f o u n d l a n d members would
preside.
10.
absent
from
In the event
the I s l a n d ,
permission,
or
of
either
Justice,
tho
Governor b e i n g
on v a c a t i o n o r
in the event of
Governor b e i n g v a c a n t ,
accordance
the
his duties
special
of
ojould be assumed,
.vho would t h e r e u p o n p r e s i d e
Government.
by
office
,vith t h e e x i s t i n g p r a c t i c e ,
Commission o f
and
one v o t e .
As a l r e a d y i n d i c a t e d ,
Government.
the
Government
votes
event,
of
other
s h o u l d n o t bo u n a n i m i t y by a m a j o r i t y
e a c h member o f
groups,
Commission,
there
In the l a t t e r
the
Government.
responsibility
l a w s would be e n a c t e d ,
coming b e f o r e
into
for
by tho
over
the
Chief
in
Bo
1.
FINANCIAL.
The f i n a n c i a l
Government
conditional
Majesty s
5
upon t h e a c c e p t a n c e
by the Government
recommendations
contained
Commission and o f
of
which His
i n t h e U n i t e d K i n g d o m would b e p r e p a r e d
undertake are
entirely
obligations
o f Newfoundland
in the Report
the p r o p o s a l s
t h i s Memorandums
set
of
of
their
the
the
main
Royal
out under b o t h
and upon t h e p a s s i n g o f
l e g i s l a t i o n by the P a r l i a m e n t s
in
to
the
heads
necessary
o f N e w f o u n d l a n d and
of
t h e Uni t e d Kingdom.
2.
As Newfoundland
to provide
i s unable,
the i n t e r e s t
responsibility
for
the
f r o m h e r own r e s o u r c e s
on t h e p u b l i c
control
of
debt,
general
the finances
of
I s l a n d w o u l d be assumed b y t h e U n i t e d Kingdom,
such t i m e a s N e w f o u n d l a n d may become
the
until
self-supporting
again.
3.
Gn t h e a s s u m p t i o n o f
i s proposed that
Newfoundland
categories
other
Newfoundland
stock
that
Kingdom.
of
to
by
the
of
the Government
their
and i n any c a s e
and g u a r a n t e e d b o t h
existing
after
the
i n the
at
option
than
and
United
under t h e T r u s t e e
security
of
bonds
n o t more
as t o p r i n c i p a l
Government
The new s t o c k w o u l d ,
Kingdom.
of
this part
10 y e a r s a t
t h e U n i t e d Kingdom, be a T r u s t e e
United
within
it
stock bearing i n t e r e s t
any t i m e a f t e r
by His M a j e s t y ' s
debt
10 o f
exchange
i n t o a new s t e r l i n g
30 y e a r s ,
falling
s h o u l d be o f f e r e d
Government,
interest
the public
i n paragraph
the r i g h t
3% r e d e e m a b l e a t
of
of
than debt
specified
t h e Memorandum,
or
holders
such a r e s p o n s i b i l i t y
of
Acts
the
4.
P r o v i s i o n w o u l d b e made f o r
of
a s i n k i n g fund
of
one p e r
of
t h e new s t o c k ,
to
commence not
the d a t e
of
issue,
cent,
the
establishment
p e r annum i n
later
than 5 y e a r s
t h e annual a p p r o p r i a t i o n
g u a r a n t e e d by H i s M a j e s t y ' s
Government
respect
to
in the
from
be
United
Kingdom.
5.
Exchange would b e made on t h e b a s i s
t h e new 5% G u a r a n t e e d N e w f o u n d l a n d
o f t h e nominal
of
sterling
value
of
t h e N e w f o u n d l a n d Government
e x i s t i n g bonds e x p r e s s e d i n
the nominal
6.
Newfoundland,
States
existing
or,
at
for
of
e v e r y £100
stock
or bonds
case" o f
e v e r y £100
par of
of
exchange.
in the P r e s s
Canada and the
immediately a f t e r
necessary l e g i s l a t i o n
r e m a i n open f o r
for
w o u l d be a d v e r t i s e d
t h e U n i t e d Kingdom,
of America
in the
dollars,
sterling equivalent
The o f f e r
Stock,
of £100
the p a s s i n g
in
United
of
the
i n t h e U n i t e d Kingdom and w o u l d
a period
of
at
least
one c a l e n d a r
month
thereafter.
7.
It
is
intended that
i n t r o d u c e d by t h e Government
the
issue
of
debt
holders
that
period
prescribed
Government
guarantee
or
o f Newfoundland
t h e new l o a n p r o v i s i o n
t o whom t h e o f f e r
signified
their
so l o n g
any payment
acceptance of
interest
he
authorising
a p p l i e s who had n o t
the
of
that
within
offer
in the
interest
as
c o n t i n u e s t o be made b y H i s
i n t h e U n i t e d Kingdom i n r e s p e c t
of
to
s h o u l d be made
manner s h o u l d r e c e i v e no payment
or p r i n c i p a l
(a)
i n the l e g i s l a t i o n
and s i n k i n g
fund o f
of
the
Majesty's
their
new 3?a s t o c k
(ID)
t h e r e remains
outstanding
by t h e Newfoundland Government t o
on a c c o u n t
of
guarantee of
of
interest
any f u r t h e r
give
to
a d v a n c e s made ( i )
in respect
or
(ii)
such
in
respect
the
aforesaid
guarantee in
Government
the p r i n c i p a l
of
order­
to provide
for
the guaranteed
stock
maturity.
8.
The a d v a n c e s made by H i s M a j e s t y ' s
i n t h e U n i t e d Kingdom t o
may b e made i n a c c o r d a n c e w i t h
t h i s Memorandum d u r i n g
t r e a t e d as f r e e
grants.
as might
Treasury
9.
t o b e made by
ment would b e c o n d i t i o n a l
in
Government
the debt
that
this
part
any such
be
advance
prescribed
t h e U n i t e d Kingdom.
the N e w f o u n d l a n d
upon a c c e p t a n c e b e i n g
v / i t h i n t h e p r e s c r i b e d p e r i o d from
p r o p o r t i o n of
advances
3 y e a r s w o u l d be
Thereafter
by H i s M a j e s t y ' s
Government
the terms of
the next
w o u l d be made on such t e r m s
The o f f e r
Government
the Newfoundland
i n December 1932 and June 1 9 3 3 , and any
of
of
w h i c h t h e U n i t e d Kingdom may
e n a b l e t h e Newfoundland
t h e r e d e m p t i o n of
on
of
obligation
t h e U n i t e d Kingdom
and p r i n c i p a l
guarantee
in fulfilment
any
Govern­
received
the h o l d e r s of
t o b e c o n v e r t e d as H i s
i n t h e U n i t e d Kingdom m i g h t
such
Majesty's
consider
adequate.
10.
Holders of
debt
the f o l l o w i n g
would r e c e i v e
(i)
special
portions
treatment
Loans which a r e T r u s t e e
of
the
existing
-.
securities
in
the
U n i t e d Kingdom^
These comprise t h e t h r e e
1905,
1910 and 1 9 1 2 , r e d e e m a b l e
respectively,
redeemable
sterling
The
total
of
i n 1 9 4 5 , 1950 and 1952
a n d t h e b% s t e r l i n g
i n 1943.
loans
loan
of
amount i s
1923,
£2,014,000.
- L ii id
It
is
intended that holders
retain their
His Majesty's
and i n t e r e s t
Government
(ii)
02,500,000 at
v/hich w o u l d he
at
their
existing
L o a n , 1 9 3 2 , amounting
, i s repayable
is
guaranteed
rates
by
As i t
is
i n t h e U n i t e d Kingdom,
at
s e c u r e d on t h e p r o c e e d s
monopoly, i t
should
S p e c i a l l y ^secured Loans.
The P r o s p e r i t y
once,
these stocks
existing holdings
as t o p r i n c i p a l
specially
of
intended that i t
to
any t i m e .
of
the
petroleum
s h o u l d he p a i d o f f
at
t h e n e c e s s a r y c a s h t o be p r o v i d e d by an i s s u e
by
t h e N e w f o u n d l a n d Government
of
t h e new guaranteed" 5%
stock.
Advances
t o an amount o f ^ 6 , 2 2 5 , 0 0 0 v/hich have
b e e n made t o t h e N e w f o u n d l a n d Government b y
banks a r e s p e c i a l l y
s e c u r e d by a g e n e r a l
customs r e c e i p t s
the
these
of
Island.
Interest
payments f a l l i n g
His M a j e s t y ' s
would propose t o
provide for
of
is
l i e n on t h e
intended
a d v a n c e s s h o u l d be r e p a i d f o r t h w i t h ,
c a s h b e i n g r a i s e d i n t h e manner
11.
It
the advance
indicated
(i)
(ii)
necessary
above.
i n t h e U n i t e d Kingdom
to Parliament
an e s t i m a t e
t o t h e Government o f
such amount as may be n e c e s s a r y
be made
the
that
due 1 s t J a n u a r y 1934.
Government
submit
local
to
to
Newfoundland
e n a b l e payment
to
­
t o h o l d e r s of l o a n s w h i c h a r e a l r e a d y T r u s t e e
s e c u r i t i e s o f t h e U n i t e d K i n g d o m , of t h e i n t e r e s t
due on 1 s t January 1 9 3 4 , on t h e due d a t e ;
t o h o l d e r s of d e b t t o whom t h e p r e s e n t c o n v e r ­
s i o n o f f e r i s i n t e n d e d t o a p p l y , end who
a c c e p t t h a t o f f e r , o f i n t e r e s t a t such r a t e a s
t h e y w o u l d h a v e r e c e i v e d on t h e 1 s t J a n u a r y i f
t h e c o n v e r s i o n had b e e n c a r r i e d t h r o u g h b e f o r e
that d a t e
Payment o f i n t e r e s t i n t h e s e
c a s e s w o u l d be made to i n d i v i d u a l s t o c k a n d
b o n d h o l d e r s as soon as may b e a f t e r t h e y had
complied with the procedure f o r c o n v e r t i n g
their holdings.