Escape Hatch: Newfoundland’s Quest for German Industry and Immigration, 1950–1970

Escape

Hatch

Newfoundland’s Quest for German Industry and Immigration,

1950–1970

Gerhard P. Bassler

Flanker Press Limited

St. John’s

Library and Archives Canada Cataloguing in Publication

Bassler, Gerhard P., 1937-, author

Escape hatch : Newfoundland’s quest for German industry

and immigration, 1950-1970 / Gerhard P. Bassler.

Includes bibliographical references and index.

Issued in print and electronic formats.

ISBN 978-1-77117-613-2 (softcover).--ISBN 978-1-77117-614-9 (EPUB).--

ISBN 978-1-77117-616-3 (PDF).--ISBN 978-1-77117-615-6 (Kindle)

1. Industries--Newfoundland and Labrador--History--20th century.

2. Industries--Germany--History--20th century. 3. Germans--Newfoundland

and Labrador--History--20th century. 4. Immigrants--Newfoundland and

Labrador--History--20th century. 5. Newfoundland and Labrador--Emigration

and immigration--History--20th century. 6. Newfoundland and Labrador--

Economic conditions--1949-1991. I. Title.

HC117.N4B38 2017 330.9718009’045 C2017-900358-5

C2017-900359-3

—————————————————————————————————————— ——————————————————

© 2017 by Gerhard P. Bassler

all rights reserved. No part of the work covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic or mechanical—without the written permission of the publisher. Any request for photocopying, recording, taping, or information storage and retrieval systems of any part of this book shall be directed to Access Copyright, The Canadian Copyright Licensing Agency, 1 Yonge Street, Suite 800, Toronto, ON M5E 1E5. This applies to classroom use as well.

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Cover design by Graham Blair

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We acknowledge the [financial] support of the Government of Canada. Nous reconnaissons l’appui [financier] du gouvernement du Canada. We acknowledge the support of the Canada Council for the Arts, which last year invested $153 million to bring the arts to Canadians throughout the country. Nous remercions le Conseil des arts du Canada de son soutien. L’an dernier, le Conseil a investi 153 millions de dollars pour mettre de l’art dans la vie des Canadiennes et des Canadiens de tout le pays. We acknowledge the financial support of the Government of Newfoundland and Labrador, Department of Tourism, Culture and Recreation for our publishing activities.

The publisher gratefully acknowledges the financial support of the Gill Ratcliffe Foundation.

Contents

Abbreviations and Glossary

Introduction

Part 1

Develop or Perish: Immigration and Industrial Development

in Post-Confederation Newfoundland

Smallwood’s quest for industry

Smallwood and Valdmanis

The Latvian connection

The German connection

German industry networks

The system of incentives

Bottlenecks

The New Industries after Valdmanis

Part 2

From Cement to Chocolate: The New Industries

North Star Cement Company Limited

Atlantic Gypsum Limited

Atlantic Films and Electronics Limited

United Engineers and Constructors Limited

Newfoundland Tanneries (Wm Dorn) Limited

Canadian Machinery and Industry Construction Limited (CMIC)

Atlantic Hardboard Industries Limited (Newfoundland Fibrply Limited)

United Cotton Mills Limited

Superior Rubber Company Limited

Atlantic Gloves Limited

Terra Nova Textiles Limited

Gold Sail Leather Goods Limited

Hanning Electric Company Limited

Koch Shoes Limited

Eckhardt Mills Limited (Brigus Knitting Mills Limited)

Adler of Canada Limited

Newfoundland Hardwoods Limited

PART 3

We built half the city here: The social and economic integration of German-speaking immigrants

Immigrating

Oh my God!

Germans resented?

Here was freedom

Little Germanys

And then we started to work

Had my fingers in every major building

Resident immigrants attract more immigrants

From TV repair to hearing aids

Architect for MUN

Consulate and church for newcomers

You can’t be a Newfoundlander

Conclusion

Acknowledgements

Sources

Bibliography

Index of Names

ABBREVIATIONS AND GLOSSARY

AA: Archiv des Auswärtigen Amts (German Foreign Office Archives), Bonn

AFE: Atlantic Films and Electronics

AHI: Atlantic Hardboard Industries

AVP: Alfred A. Valdmanis Papers, Montreal

BA: Bundesarchiv (German federal archives)

BRINCO: British Newfoundland Development Corporation

BSA: Benno Schilde Archives, Bad Hersfeld, Germany

CMIC: Canadian Machinery and Industry Construction Ltd

CNS: Centre for Newfoundland Studies Archives at Memorial University of Newfoundland, St. John’s.

DP: Displaced person

FRG: Federal Republic of Germany (West Germany)

GDR: German Democratic Republic (East Germany)

HHA: Hubertus Herz Archives, Kirchseeon, Germany

IRO: International Refugee Organization

MIAG: Mühlenbau- und Industrie-Aktiengesellschaft

NAC: National Archives of Canada, Ottawa

NALCO: Newfoundland and Labrador Corporation

NKVD: People’s Commissariat of Internal Affairs. Soviet political police from 1934 to 1954 (from 1922 to 34 known as GPU).

SC: Joseph R. Smallwood Collection in the CNS

SS: Schutzstaffel (Nazi elite organization)

UNRRA: United Nations Relief and Rehabilitation Administration

INTRODUCTION

Beggars cannot be choosers. We wanted just companies, we gave a damn who they were, we had no prejudice against them. We went to Germany because Europe was scared of Soviet Russia and saw a communist revolution coming. The German industrialists were particularly scared. In 1950, I was the first public visitor who came to Germany from any country. The leaders of the German companies all spoke excellent English. I was impressed. I took every opportunity to speak to them and tell them that they should come to Newfoundland: I’ve got an escape hatch for you, get established in my part of Canada, start a branch of your company in Newfoundland so you can have an escape hatch. It was shrewd on my part. It fitted their mood.

— Joseph R. Smallwood, 24 November 1983

Within the first half decade of Newfoundland’s Confederation with Canada, close to 1,000 German speakers arrived in the new province, mostly skilled, single men and women, but also a smaller number of skilled men with families. Unlike most previous immigrants, they did not come to fish or work in a branch of the island’s fishery-based economy. Instead, as operators or associates of some 15 new land-based manufacturing industries, they were supposed to supply the technical know-how to help Newfoundland achieve in a decade what the rest of Canada achieved in a century, according to Joseph R. Smallwood, premier of the province from 1949 to 1972.

From today’s vantage point, it now seems a foregone conclusion that these objectives would not be achieved. Smallwood’s so-called New Industries Program of the 1950s is generally considered a failure. It was destined to fail, its political and academic critics have argued. In the words of disgruntled former Smallwood cabinet minister Herbert Pottle’s 1979 autobiography,

the so-called New Industries were in effect thrown at Newfoundland—they did not naturally belong. They were alien corn or, in another manner of speaking, they were like beach rocks in the Newfoundlanders’ porridge. And because they did not belong, they had no hope of ever becoming knit into the old sod . . . they were machine-centred rather than people-centred. . . . They were in fact and in effect foreign to the Newfoundland landscape.

In addition to being wrongly conceived and poorly planned by Smallwood, the New Industries Program was ineptly and corruptly executed by its European entrepreneurs. So went the standard argument presented in books by Richard Gwyn and Doug Letto, though each in different but equally superficial ways. To date, these are the only published viewpoints on the topic. In public memory, the New Industries of the 1950s and the immigrants who came with them have left no other marks on Newfoundland history than their association with the Valdmanis scandal, that is, the 1954 conviction of Alfred A. Valdmanis, Smallwood’s director of economic development from 1950 to 1953, on charges of fraud and embezzlement.

These widely held convictions—derived from mere cursory observations of the historical scene—are often dressed up with references to several well-publicized scandalous incidents relating to the rubber plant and glove factories, and academically infused with heavy doses of social scientific theory pertaining to dependency and underdevelopment. To date, no one has undertaken a close look at the New Industries Program, or even at least some of its industries, although detailed documentation in Smallwood’s official correspondence and Premier’s Papers have been available to researchers since the 1980s. Several questions about the New Industries need to be asked: Under what specific circumstances did Smallwood recruit these industries? What challenges did they face? And why did some last for only five and others for nearly 50 years?

Even less research has been done on post-Confederation immigration and its impact on the society and economy of Newfoundland. The integration of urban, middle-class immigrants into Newfoundland society is a major aspect of the New Industries Program. After all, the addition of 1,000 German-speaking immigrants to an ethnically more or less homogeneous, native-born population of 347,000, mostly fishermen of British and Irish descent, was not an everyday event. In its 500 years of history, Newfoundland had never had any sizable immigration from anywhere except the British Isles. From 1951–56 the newcomers of German-speaking origin accounted for an estimated 50 per cent of net in-migration into greater St. John’s. In the main areas where the New Industries were established—St. John’s (1951 population: 53,000), Conception Bay (6,640), and Corner Brook (12,000)—the immigrants formed between 0.6 and 1.0 per cent of the population in 1955. Indeed, until 1981, the Canadian Census identified German speakers as the third-largest linguistic and ethnic group on the island, after the British and French groups.

The association of economic development with large-scale immigration and the history of the New Industries must be considered within an international context. To do so opens up new global perspectives on this episode of Newfoundland history. Thus, this is the first in-depth account of how and why the Smallwood government was able to acquire its 17 so-called New Industries and the immigrants who accompanied and followed them. The book traces the recruitment of each individual New Industry from the Newfoundland Government’s and the German industrialists’ perspectives and examines the conditions under which each of these industries operated. It also documents why three of the industries lasted barely five years, and why six had a lifespan of up to 40 years. One was still in operation in 2015, albeit under different ownership. An important theme running throughout the book is an evaluation of the spinoff impact the immigrants had on the Newfoundland economy and society of the 1950s and 1960s.

The title Escape Hatch encapsulates the book’s main argument, namely that the New Industries and the immigration that accompanied them were products of an historical coincidence. In 1950–1953, Premier Smallwood was acutely aware of this unique window of opportunity—Newfoundland’s urgent quest for industry coincided with postwar Germans’ and Latvians’ equally urgent quest for immigration to and investment in Canada. For his deliberate exploitation of this short-lived opportunity, he himself coined the term escape hatch in a 1983 interview with the author. It is thus a fitting epithet for the book’s title and one of its central themes.

The available evidence for this thesis is compelling. Most of the New Industries created with the help of Germans and Latvians were largely the result of the brief but intense Cold War scare of communism in Germany and Austria following the outbreak of the Korean War in 1950. Newfoundland offered incentives to German industrialists eager to invest in Canada when other provinces and German export regulations still made it difficult for them to gain a foothold elsewhere in the country. Furthermore, Newfoundland opened its doors to German immigrants before Canada had removed all postwar restrictions imposed on them. The few industrialists, and the immigrants accompanying the industries, might never have come to Newfoundland, and Canada, otherwise.

The surprise was, therefore, not that a few of these industries died in Newfoundland as soon as they had been set up, and that many of the immigrants returned to Germany or moved on to the mainland after the Korean War ended. What is surprising is that some of the New Industries survived for decades against great odds and that a sizable number of the immigrants decided to stay in the province. In interviews with the author, some 100 immigrants identified both their motives and reasons for staying and the active roles many of them ended up playing in Newfoundland’s post-1949 developing economy.

The interviews document how and why Newfoundland became an escape hatch not only for German industries, but also for German, Latvian, and Austrian immigrants. They reveal some of the hidden spinoffs of these industries by suggesting that these industries’ overall record and legacy cannot be judged without taking into account the social and economic integration of those skilled workers who came with them and stayed, as well as other immigrants who came after them and because of them.

The main sources for this study are the Papers of Premier Smallwood at the Archives and Special Collections Division of Memorial University’s Centre for Newfoundland Studies, and the author’s interviews of 100 mostly German, Latvian, and Austrian immigrants and 15 Newfoundlanders associated with the New Industries of the 1950s. Most of the interviews were conducted in the 1980s and included such major Newfoundland politicians as Joseph R. Smallwood, Gregory Power, Don Jamieson, James Chalker, Baxter Morgan, Gordon Pushie, and William J. Browne. Also evaluated were 16 interviews conducted in 2004–2005 by Scott Walden for his photography project New Industries and published online in 2005.

This study is based in addition on record and manuscript collections in the National Archives of Canada and the German Federal Archives (Bundesarchiv and Politisches Archiv des Auswärtigen Amts), the proceedings of the Newfoundland House of Assembly for the 1950s, and media reports from the Newfoundland dailies Evening Telegram, Daily News, and Western Star.

This book does not claim to be the final word on Smallwood’s New Industries. Not every detail of the interviews could be corroborated, or corrected if necessary. The memories of the interviewed, though skewed with the passing of time, have to be accepted as subjective experiences arising from historical situations and shaping these in turn. Much of this book is therefore oral history, that is, the study of historical information gathered through interviews about everyday experiences. The main methodological objective is to show how within a broad international, political, economic, and social framework developments evolved, interacted, and followed the course they did. The aim is to present all sides of the story and to allow all the available evidence to speak for itself.

The original idea for this book was an illustrated history of the New Industries from the large collection of available photographs, some of them donated by the interviewees and some copied from the Smallwood Collection. Brief captions and short introductory comments about each industry would accompany the illustrations. This is now the book titled Develop or Perish (Flanker Press, 2017). On the other hand, Escape Hatch has taken a more thorough approach with the detailed archival information and the author’s 118 hitherto unexplored interviews on the topic.

The book is divided into three parts. Part 1 introduces the background and identifies the issues considered relevant in an historical analysis of the New Industries. These issues range from Newfoundland’s quest for industry after Confederation, the relationship between Smallwood and Valdmanis, and their European connections, to the German industry networks available and the system of incentives employed to recruit German industries. Part 1 also draws attention to the bottlenecks these industries faced in Newfoundland and discusses their survival in the light of evidence provided in interviews with J.R. Smallwood, Gordon Pushie, Albert Jekste, and Arnis Lucis.

Part 2 consists of brief essays reviewing the economic and social history of each of the 17 New Industries. Included are two New Industries not recruited from German-speaking Europe—Newfoundland Hardwoods, launched by local building supplies dealer Chester Dawe, and A. Adler’s chocolate factory, transferred from the United Kingdom. Particular attention is given to the ways the New Industries were recruited and the problems they encountered under their original (European) management. The essays are based on evidence derived from archival documents and interviews and examine the industries’ operational, marketing, and social aspects in varying detail, depending on the availability of pertinent sources.

Part 3 deals with the main spinoff of the New Industries—the arrival of a wave of German speakers unprecedented in Newfoundland history, their adjustment, and their social and economic integration. Drawn almost entirely from interviews with the newcomers, this part is structured to highlight key themes in the process of adjustment and integration, as experienced by the interviewees. Their collective experience is presented as a progression ranging from the desire to emigrate to Canada from war-ravaged Europe, shocking first impressions of Newfoundland, fear of local resentment, experience of freedom after arrival, initial cultivation of German customs, to German-style immersion in work, and successful local marketing of their skills.

The central themes in Part 3 bring out the immigrants’ pioneering impact on industrial and technological developments in Newfoundland for which many of the male newcomers tended to take credit. The final theme deals with the ways the interviewed perceived their identities after they had settled in. It covers issues ranging from the extent of their cultivation of German customs, and difficulties of social and cultural adaptation, to various critical perspectives most had acquired on their native German and Austrian lands.

Smallwood in Bonn, the capital of West Germany, on 9 October 1950. Next to him is German Minister of Economics Ludwig Erhard and Vice-chancellor Franz Blücher. Behind them is Alfred Valdmanis with Newfoundland cabinet ministers Herbert W. Quinton and James Chalker.

Die Welt, 6 October 1950

Smallwood was the first Canadian politician visiting West Germany in search of immigrant entrepreneurs and skilled workers.

PART 1

Develop or Perish: Immigration and

Industrial Development in Post-

Confederation Newfoundland

Smallwood’s quest for industry

Smallwood’s detractors have accused him of embarking on his New Industries Program without any clear plan or development strategy. They have criticized him for refusing to build on Newfoundland’s strengths, that is, its fishing industry. They imply that he had alternate development options or was free to choose from a variety of possible strategies. This kind of argument ignores the prevailing historical exigencies. In reality, Smallwood’s decision was conditioned by domestic and foreign constraints over which he had little or no control.

In 1949, the situation looked rather grim. The anti-Confederate Water Street merchants were refusing to co-operate with the new provincial government, and major international investors showed zero interest in the province. The salt fish industry, the backbone of the Newfoundland fishery, was in rapid decline. Newfoundland’s small population of around 360,000, 63 per cent scattered in some 1,300 nearly inaccessible outports along the coast and 28 per cent in towns of less than 10,000, had managed for generations to eke out a meagre living from fishing, but the traditional fishery seemed doomed. As an unreliable occupation with obsolete methods, it yielded low productivity and low levels of individual return. In short, the traditional fishery seemed out of touch in the new cash economy tied to North American consumption levels and patterns.

What worried the provincial government most was the unexpected mass migrations of Newfoundlanders to urban centres and to the mainland. True, Newfoundland fishermen have been migrating to the mainland for centuries, but the lifestyle Newfoundlanders had observed at the wartime American bases followed by union with Canada in 1949 triggered a social, cultural, and psychological revolution of unparalleled dimensions. Newfoundland’s people were no longer satisfied with life centred around outport fishing. The Evening Telegram (5 March 1953) reported that they were abandoning hundreds of secluded settlements for larger urban centres to obtain such amenities as schools, roads, electric lights, water and sewer facilities, and for social life and entertainment. Large numbers were migrating to other parts of Canada in search of jobs. No country can afford to lose a large number, the Daily News of 22 May 1950 warned, without a progressive impairment of its economic prospects.

Smallwood and his colleagues were clearly haunted by the future spectre of Newfoundland as a collection of old people waiting for the old-age pension cheques to come from Ottawa, as Smallwood recalled in his memoirs. They were not alone. They enjoyed the support of a wide consensus across the dividing lines of political parties, economic interest, social class, and competing media that Newfoundland needed industrial development. Only in this way could Newfoundland provide a higher standard of living and hold its population.

The depth of Smallwood’s commitment to development has often been misunderstood and misrepresented. However, no more compelling and moving articulation of his mindset exists than the verbatim transcript of his radio address of 12 October 1951:

My real reason for starting confederation was that I knew we could get economic development. . . . The moment I became premier I turned my mind and my body to one single job of getting Newfoundland developed. People have said that I fought for confederation with a single-track mind, letting nothing else interest me or interfere with me. Perhaps I did . . . but there is no perhaps about it when I say that I am fighting for economic development with a single-track mind. I sleep it, I eat it, I dream it . . . because to me it is as plain as the nose in my face that the one real job for the premier and Government of Newfoundland in the first few years after Confederation is the job of developing Newfoundland. That comes first. Everything else comes after. We must develop or perish. We must develop or people will go in thousands to other parts of Canada. We must create new jobs or our young men especially will go off to other places to get the jobs they can’t get here. Develop, develop, develop . . . that’s my slogan, and that will remain my slogan. . . . I want to get Newfoundland on the map. I want Newfoundland to be strong and prosperous, and not a drag on the rest of Canada.

And earlier in his budget speech of 9 May 1951 he had elaborated further that economic development was not an end in itself; rather, raising the standard of living in Newfoundland had always been his ultimate objective.

When I speak of standard of living I mean something more than just food; something more than clothes. I am thinking of our schools and colleges, of our roads and streets, of our hospitals and clinics, of electric light and power, of playgrounds and swimming-pools and parks, of newspapers and magazines and radio, of hotels and tourist cabins, and of a score of other things which, when they are all taken together, are the measure of our civilization. I am thinking of people who are well-fed, well-clothed, well-housed, well-educated, well-informed. I am thinking of people who are too well educated, and too well informed to be humbugged and deceived by charlatans and demagogues—an educated, alert-minded people who take deep pride in their homeland and in their nation. . . . This is a philosophy of Newfoundland with which all Newfoundlanders must agree. . . . Can it be realized? This government is sure that it can, and this surety is the mainspring of our faith and of our programme . . . and this is the strength that gives such urgency to our course of action. . . . We feel there is no time to lose, no time at all. . . . And so, in spite of criticism, in spite of skepticism, in spite of jeering when we miscalculate or fail, we shall continue to press forward with all our strength and all our energy to the realization of the great good goal we have set before us.

To achieve that end, Smallwood was not afraid to pursue unconventional avenues and associate with anyone willing and able to help him.

Smallwood’s first challenge in 1949–50, however, was how to get development that would keep the people on the island. Initially, Smallwood had been dealing with such big names in the world of North American business, investment banking, and industrial development as Nelson Rockefeller and his IBEC (International Basic Economy Corporation), and Sir William Stephenson, head of World Enterprises. But none of these had new ideas or concrete proposals. Most discouraging was the lack of interest shown by Canadian, American, and British industrialists in risking investment in this remote island-province with its rural lifestyle and a pre-industrial fishing economy. Newfoundland had a reputation as a cold, poor, backward, inaccessible place. Why would anyone want to invest?

Smallwood was under growing pressure to do something sooner rather than later but lacked sound advice on how to proceed in the face of Newfoundland’s negative image. Unable to find anyone in Newfoundland with the competence to devise and direct a strategy of development, Smallwood’s friend Albert Perlin advised turning to Ottawa for help. C.D. Howe, Minister of Defence Production, and his director of industrial development, G.D. Mallory, thought Alfred Valdmanis would be a suitable candidate. Everything about his known record seemed to recommend him for the job. A finance minister in pre-war Latvia and recipient of Canada’s prestigious Lady Davis fellowship, he was acting as a consultant for two federal departments and was currently advising the Nova Scotia Research Foundation on the establishment of a cement plant. (More biographical information on Valdmanis can be found in the author’s 2000 book, Alfred Valdmanis and the Politics of Survival.)

Smallwood and Valdmanis

Smallwood avidly embraced the idea of starting a program of industrial development with the same kind of cement plant Valdmanis had previously designed for Nova Scotia. The plant would be built with government funds, then sold, and from the proceeds the next industry would be financed. It all sounded so simple and reasonable that Smallwood, himself more of a visionary than an economist, saw no reason not to entrust the evolution of his New Industries Program to Valdmanis. Before the contract for the cement plant was signed, similar deals for a gypsum plant and a birch mill were struck, and the sale of these plants became a secondary issue. Smallwood’s top priority throughout was the creation of urban employment opportunities for as many people as possible. Whether the New Industries were economically sound and viable in the long run became a less important concern.

Smallwood decided that his new Director General of Economic Development should serve directly under him. Initially appointed Advisor on Economic Development on a contractual basis, the continuance of his services was to be reviewed after one year in the light of the tangible results he had been able to accomplish. Apart from employing a local typist, Valdmanis was allowed to hire multilingual Olga Leikucs as his secretary in July, Latvian economist Arnolds L. Graudins as assistant in August 1950, and three more staff members in 1951. Smallwood’s cabinet ministers, envious of the special position and powers Smallwood conferred upon Valdmanis, viewed the foreign intruder with a mixture of suspicion and dislike.

For Valdmanis, life and work in Newfoundland was anything but normal. To a Latvian acquaintance, Leikucs offered a rare glimpse of the conditions Valdmanis and fellow immigrants encountered in 1950. When I arrived I found Valdmanis in a smallish dim basement office, where besides a local stenographer-typist his company consisted of a dozen mice, she wrote to a fellow Latvian in 1953. Valdmanis had no data of any value to work with, except the knowledge that the island produced only dried cod. Anything else needed for existence had to be imported, and past efforts to bring about changes had failed.

Valdmanis had to do all the groundwork himself, Leikucs maintained. He had "to trek through bush and swamp looking for sites suitable for the factories. He himself had to negotiate the financing and construction of the new plants. And while at the same time he had to prepare surveys and evaluate natural resources for further development, his