Provincial Government: The Smallwood Years, 1949-1972
When Newfoundland and Labrador joined the Canadian federation just before
midnight on 31 March 1949, a form of responsible government came into operation,
but somewhat different from that which had existed prior to 1934. It remains the
The Crown’s representative is a lieutenant-governor effectively appointed by the
Government of Canada, rather than a governor appointed by the British government.
The Legislative Council disappeared, so the legislature since 1949 has consisted
only of the House of Assembly. The leader of the largest party in the Assembly is
appointed premier, and selects the other members of the Executive Council or
cabinet. The government remains in office for four years, or until a general
election is called. The people of the province have a small voice in setting
federal policy. Newfoundland and Labrador has seven representatives in the House
of Commons and seven Senators, and by convention at least one Newfoundlander is
appointed to the federal cabinet.
Terms of Union
The Terms of Union between Canada and Newfoundland followed the general lines
of the British North America Act of 1867. They set out which areas of government
fell under federal, and which under provincial jurisdiction. Fisheries, criminal
law and banking, to take three examples, became federal responsibilities. The
province retained control over areas that did not have a direct effect upon other
provinces, such as health care, social services and education.
There have been periodic tensions between the two levels of government over
questions of jurisdiction - the question of who owned the resources on the
continental shelf is a prime example. The collapse of the cod fishery in the
1990s convinced many Newfoundlanders that the provincial government should have
had jurisdiction over offshore resources. As divisive as some of these issues
proved to be, the principal flaw in the confederation terms has been the
financial arrangements. Before Confederation, the Newfoundland government had
depended on customs duties as the principal source of revenue. After 1949 this
became a federal tax area, as did income taxes. Yet three of the most expensive
fields of responsibility - health care, social services and education - were
left to the province. The problem was exacerbated by the new province’s
relatively small tax base - that is, its limited ability to generate enough
When negotiating the Terms of Union, both sides recognized this dilemma, and
attempted to rectify the situation in two ways. There would be a special
transitional grant to the new province for the first eight years, while it made
its taxable capacity similar to that in the Maritime Provinces. This grant would
then be subject to review by a Royal Commission, under the clause known as Term
29. Second, the Province of Newfoundland would receive transfer payments from the
federal government according to the formula that applied across the country. The
large portion of the province’s revenue that came in the form of transfers from
Ottawa was a source of embarrassment and even with the federal money the
province’s expenditures often outstripped its revenues.
The Liberal Regime of J.R. Smallwood
On the date of union, the federal government appointed a lieutenant-governor,
Sir Albert Walsh. He then invited Joseph R. Smallwood to form an interim
government until the first provincial election could be held. Smallwood had led
the campaign for confederation and had helped to negotiate the Terms of Union.
He quickly established a provincial branch of the Liberal Party of Canada - also
the majority party in the Canadian Parliament - with himself as leader.
Smallwood’s anti-confederate opponents, as a result, became Progressive
Conservatives. The third federal party, the Commonwealth Cooperative Federation
(later the New Democratic Party) was unable to find a foothold.
||Joseph R. Smallwood (1900-1991), n.d.
Smallwood led the campaign for confederation and helped negotiate the Terms of Union.
Courtesy of the Centre for Newfoundland Studies Archives
(J.R. Smallwood Collection 075, 5.05.061), Memorial University of
Newfoundland Library, St.John’s, Newfoundland.
As premier, Smallwood had many advantages in the first election campaign.
Federal government transfers to individuals, such as the child benefits and old
age pensions, were now extended to Newfoundlanders and Labradorians, and
Smallwood took personal credit for the cash flowing into many households. Most
candidates running for the Conservatives had opposed confederation, and seemed
to be fighting a battle they had already lost. The victorious Liberals dominated
island constituencies outside the Avalon Peninsula and Labrador, which had been
confederate areas in the 1948 referendums. The Conservatives won seats in former
anti-confederate strongholds in St. John’s and elsewhere on the Avalon Peninsula.
This pattern of rural support for the Liberals, and Conservative support in St.
John’s and the capital region lasted through subsequent elections, and helped
Smallwood and the Liberals to remain in power for the next 22 years.
New Industries and Modernization
Smallwood wanted to create an industrial economy, and encouraged foreign
capitalists to invest in the development of new industries. Making use of the
connections of the Latvian-born Director of Economic Development Alfred
Valdmanis, the government enlisted the help of a number of German industrialists
to open factories in the 1950s. Though backed by the provincial government, there
were few successes and Valdmanis admitted having solicited bribes from would-be
investors. The failures and corruption did much to diminish Smallwood’s
reputation. This was followed by larger projects that Smallwood hoped would
kick start industrial development. But his government’s support for a third pulp
and paper mill in Stephenville, and an oil refinery in Come By Chance, for
example, resulted in large costs to the taxpayers and disappointing results.
The same can be said of the gigantic Churchill Falls hydro-electric development
in Labrador, where it soon became apparent that under the terms of a long-term
sales agreement, most of the profits would go to the Québec-owned utility,
Churchill Falls, ca. 1980s
This view was taken after much of
the water was diverted to the hydro-electric plant.
Reproduced by permission of Brian C. Bursey. From Brian C. Bursey,
Exploring Labrador (St. John’s, Newfoundland: Harry Cuff Publications, ©1991) 33.
The Liberal government also spent large amounts of money on infrastructure -
roads, schools, hospitals and electrification, for example - that would
“modernize” the province. This investment was badly needed, and improved the
quality of people’s lives. However, in order to provide adequate services to
everyone, the government implemented controversial resettlement programmes.
These were designed to move people from small, remote settlements to “growth centres”,
where employment would be available on the trawlers and in the fish
plants spawned by an industrialized fishery. The jobs in these growth centres
proved elusive, and many people resented the heavy-handed approach the government
had used to force people out of their home communities.
Port Elizabeth, Placentia Bay, ca. 1980s
Between 1969 and 1971, after a period of prolonged decline in population,
the remaining families were resettled in Red Harbour and other Burin
Reproduced by permission of Brian C. Bursey. From Brian C. Bursey,
Exploring Newfoundland (St. John’s, Newfoundland: Harry Cuff Publications, ©1989) 17.
The Smallwood government’s first major crisis erupted in the late 1950s. At
home, Smallwood - who had been a socialist - bitterly attacked the International
Woodworkers of America, a union which was organizing loggers in central
Newfoundland and had supported their strike for better pay and conditions of
work. Though Smallwood managed to rally support locally for his anti-IWA
campaign, the Conservative government in Ottawa was unwilling to send police
reinforcements, and a bitter war of words followed. Smallwood’s reputation as
a friend of labour had ended. This dispute also coincided with the review of the
province’s financial position mandated by the Terms of Union. The provincial
government was outraged at a financial offer which was far lower than it had
expected, and a serious rift developed between the two governments -
demonstrating that Smallwood could not always deliver generous assistance from
In spite of all these disputes and difficulties, Smallwood personally
dominated the provincial political scene during the 1950s and 1960s. He chose
the Liberal candidates for provincial ridings, practically determined the
province’s representation at Ottawa, and manipulated patronage to Liberal
advantage. Within the cabinet, he tolerated no dissent. It was a highly
personal government, and Smallwood himself called the regime a “democratic dictatorship.”
Smallwood’s opponents, whether disaffected Liberals or members
of other political parties, proved to be ineffective.
Political Changes, 1968-1972
By the late 1960s, though, the political scene was changing. Since the
Conservatives in the House of Assembly were ineffectual and Smallwood
effectively muzzled dissent within the Liberal party, the press and the
university community became the only opposition. Former Smallwood ally Harold
Horwood had earlier criticised Smallwood’s development strategy in the St.
John’s Evening Telegram. In the same newspaper, Ray Guy’s satirical columns
now made insulting fun of Smallwood and his cabinet and - importantly - appealed
to Newfoundlanders and Labradorians to remember their distinctive traditions
and identity. Guy’s columns made Smallwood a figure of fun rather than someone
to be feared, and helped galvanize a new generation of politicians to challenge
Smallwood’s hegemony over government. His jibes appealed to a new generation
which came of age after the Confederation wars, and which was becoming deeply
concerned about its dual Canadian-Newfoundland identity. While faculty at Memorial
criticised such heavy-handed programs of social engineering as the Resettlement Program,
many students turned to the Tories in hope that they could spark a generational
change in provincial leadership.
Smallwood attempted to revitalize his party by bringing into the cabinet
younger men with considerable talent - such as John Crosbie, Clyde Wells, Edward
Roberts and others - but he was unable to relinquish power, and few of these
people remained in the cabinet, and under Smallwood’s control, for long. There
were setbacks in his economic development programme and the Liberals lost seats
in the 1968 federal election and in a provincial by-election in Gander. Smallwood
announced his retirement in 1969, but he could not bring himself to relinquish
power, particularly to the front-runner, John Crosbie, who had earlier resigned
from caucus. Smallwood therefore ran for the leadership. A remarkably bitter
leadership contest pitted the younger generation, which supported Crosbie,
against an older generation of Smallwood loyalists. Although Smallwood won on
the convention floor, many Liberals defected to the Conservatives rather
than remain in Smallwood’s party.
John C. Crosbie, 1966
Crosbie ran for Liberal leadership
against Smallwood in 1969, pitting the younger generation, which supported Crosbie, against
an older generation of Smallwood loyalists.
Photo by Garland Studio. Courtesy of the Centre for Newfoundland Studies Archives
(J.R. Smallwood Collection 075, 5.05.354), Memorial University of Newfoundland Library, St. John’s,
During this period the Progressive Conservatives emerged as a genuine
alternative government. No longer tarred as anti-confederates, and attracting
able candidates with impeccable credentials - such as Crosbie and Frank Moores -
there was a real chance that the Opposition could break the Liberal supremacy.
The 1971 provincial election was a hard-fought contest between Smallwood and
those who wanted to remove him from power at long last. The result was uncertain
and contested. Twenty-one Conservatives were elected to 20 Liberals, with one
independent. Smallwood refused to resign while judicial recounts and the prospect
of members changing party allegiance held out the hope that he could hold on to
power. Another provincial election of 1972 returned a clear majority for the
Progressive Conservatives under the leadership of Frank Moores. Although he
attempted a return to political life in 1975, Smallwood’s personal hegemony had
J.R. Smallwood was the dominant figure in 20th century politics. He used his
close relationship with the federal Liberal government to ensure a flow of both
federal and provincial patronage that bolstered his personal hold on power. But
when the Conservatives were elected federally in 1957, Smallwood was no longer
able to deliver federal programs as if they were his own and a new generation of
potential leaders was unwilling to do nothing while Smallwood monopolized power.
The period between 1968 to 1972 marked a generational shift, as well as a
significant change in political style.
©2001, Jeff A. Webb