Canada. Dept. of Munitions and Supply : During the first parliamentary session of 1939 the government passed the Defence Purchases, Profits Control and Financing Act,(3 Geo. VI, c.42), which took effect on July 14, 1939. This Act established the five-member Defence Purchasing Board,(DPB), as a central agency responsible for procuring supplies and materiel for Canada's role in the coming war.['Notes on the work of the War Supply Board', RG 28 Vol. 6 file 17] The DPB had sole authority, with the consent of the Governor-in-Council, to sign contracts valued at more than ,000, while the Department of National Defence retained the right to sign smaller contracts. Because time was short, the government staffed the DPB by recruiting its purchasing staff predominantly from Canadian National Railways' purchasing department, while clerks were drafted from throughout the civil service, with other employees being hired from outside. Expediency was rewarded; the DPB's first meeting was convened on July 18, 1939, and DPB orders for materiel and supplies, appeared almost as swiftly. Following the war's outbreak, DPB's authority was amended to include emergency purchasing, and sole power to negotiate contracts valued at less than ,000, as a result of which the contracts division of the Department of National Defence was transferred to the DPB.[The Industrial Front, January 1942, p. 5.] War spurred DPB activity, as more than two thirds of all orders placed during the Board's lifetime were made after the war's start.[Bothwell and Kilbourn, C.D. Howe, p. 123.]
On the heels of declaring war, parliament, believing that a government department and not a quasi-independent body would be required to coordinate manufacturing and purchasing, created a central supply department. However, because the extent of Canada's war commitments were not yet clear, an interim agency was established, by Order-in-Council on September 15, 1939. This temporary agency was the five-person War Supply Board, (WSB), which was to remain in place until the formation of a permanent body. The WSB was organised in two weeks, and, on November 1, 1939 it assumed the DPB's entire staff and duties, alongside wider powers to control industry.[`Memorandum to all heads of departments and employees of the Defence Purchasing Board,' 31 October 1939, RG 28 Vol 33, file 1-1-1] The WSB reported to the Minister of Finance until November 16th, when Prime Minister King, believing that C.D. Howe, the Minister of Transport, was the government's most capable industrial organiser, transferred it to his department. Meanwhile, the definition of essential war supplies was broadened, detailed contracting procedures were codified, and the WSB was empowered to purchase supplies and materiel on behalf of the UK and France.
The Department of Munitions and Supply, (DMS), the department-level coordinating body which the government had anticipated- was created by the Department of Munitions and Supply Act (c.3, 1939 as amended by c.31, 1940). Despite having been passed in September 1939, the Act was proclaimed on April 9, 1940 -the day that Germany ended the `phoney war' by invading Denmark and Norway. The DMS inherited all of its predecessors' responsibilities, and outstanding contracts. A smooth transfer was assured by Howe's appointment as Minister of Munitions and Supply and the simultaneous appointment of several WSB members to the new ministry.[Letter; Comptroller and Secretary to Edwin Wakefield, 10 May 1940, RG 28, vol 47, file 1-1-43] The DMS was charged with making all defence purchases, mobilizing and coordinating industry, and conserving supplies of vital resources.
The DMS's stature within government, which relied greatly on the force of Howe's personality, was manifested in strong interventionist powers, including the right to appoint `Controllers;' expert managers drawn from private business, who oversaw particular industries, materials or companies. The DMS was empowered to demand that corporate records and accounts be produced in order to identify inefficiencies, which controllers would then be appointed to combat. As a purchasing body, the DMS could compel suppliers to accept `fair and reasonable prices' for anything which had been deemed necessary for the war's prosecution. Much of DMS's success resulted from Howe appointing some of Canada's most able business leaders -for a salary of one dollar each per year- as Controllers and heads of various DMS branches.[Bothwell and Kilbourn, pp. 129-131]
This influx of businessmen into the civil service changed the way the Canadian government functioned. An amendment to the DMS Act on May 18, 1940 empowered the Minister to create crown corporations in order to facilitate the department's mandate and specific production requirements. [C.P. Stacey, Arms Men and Government, p. 502. Also `Amendment to the DMS Act', 18 May 1940, RG 28 Vol 47, file 1-1-43] Crown corporations had first been suggested to Howe by Gordon Scott, the former Treasurer of Quebec, who had been drafted in to the DMS. Scott, who believed such corporations would provide a familiar corporate structure for Howe's businessmen, defeated sceptics by arguing that the CBC and Trans-Canada Airlines, both wholly government-owned, were crown corporations in all but name. Despite being ostensibly independent entities, crown corporations did not operate for profit, the Minister was sole shareholder, the Privy Council approved finances, and the Auditor General inspected accounts regularly. Directors were appointed for their knowledge of a particular industry.[Stacey, pp. 501-502] Crown corporations were created to buy, produce and administer raw materials, as well as manufacture weapons, ships, planes and vehicles of every size. In order to prevent speculation or price-fixing, many of these corporations were owned anonymously.
Most of the twenty-eight crown corporations formed between 1939 and 1945 addressed specific wartime needs. These corporations were dissolved at war's end, though others, like the Polymer Corporation, which manufactured synthetic rubber at Sarnia, Ontario, continued as commercial entities after 1945. Still others, like Eldorado Nuclear which had already existed in 1939, and had been nationalised because of their importance to the war effort, continued to exist after 1945.[Letter; J. De N Kennedy to J.R. Nicholson, 27 November 1947, RG 28 Vol 6, file 16] With victory in sight in late 1943, the DMS established The War Assets Corporation to sell crown corporations -whose value would depreciate rapidly when the military market shrank- to the highest bidders. Overall, crown corporations proved to be a flexible and effective response to wartime needs.[Stacey, p. 502]
Initially, the DMS was predominantly occupied with purchasing supplies and materiel, but with the fall of France in June 1940, more than one hundred programmes and corporations were implemented rapidly in order to create industrial facilities capable of producing all types of munitions. The DMS Act, and subsequent amendments, steadily increased Controllers' powers to purchase, expropriate, manufacture and take virtually any steps required to further the war effort. The Wartime Industries Control Board, (WICB), of which every Controller was a member, was formed on June 24, 1940 to coordinate industrial policies and ensure an uninterrupted supply of raw materials. The WICB remained in place until August 1941, when its duties were integrated closely with the Wartime Prices and Trade Board, (WPTB). From this point on the WPTB controlled prices, while the WICB controlled materiel. The Chairmen and selected Controllers, the bulk of WPTB and WICB members, sat on both bodies.[The Industrial Front, pp. 7-8]
The DMS also coordinated international cooperation. For expediency, many products manufactured in Canada incorporated American parts, especially engines, which were imported despite America's official neutrality. Many of these goods were destined for Britain, and so in mid-1940 the DMS opened a London office to coordinate this triangular business. As a means of respecting neutrality legislation, in August of that year the American Secretary of State Henry Morgenthau suggested that war supplies from American plants should be purchased by the DMS rather than directly by the Canadian military. The government subsequently continued adhering to this practice of civilian procurement of military supplies. Continental coordination of industrial production, which the DMS handled for Canada, began once the United States entered the war in December 1941. The DMS subsequently oversaw the Hyde Park Agreement.
Morgenthau's suggestion was readily accepted because the DMS already purchased supplies and materiel on behalf of the Canadian Armed Forces, the UK, the Dominions, other Allied governments and the Commonwealth Air Training Plan. Goods were selected and inspected by their intended users, before being bought by the DMS on behalf of its clients. Purchasers paid for their goods by transferring money directly to the Department of National Defence or the Canadian Treasury. Only the Department of National Defence, which, until the DMS assumed this duty in March 1942, retained some autonomy by procuring naval supplies in the United Kingdom through the High Commission.[Stacey, pp. 496-503]
In July 1942, by which time it had attained its full powers, the DMS explained its role succinctly as `the business of providing ships and tanks, planes and guns, ammunition and explosives for use by the United Nations on battle fronts the world over; the business of purchasing all the requirements of the Dominion's armed services, from rifles to rubber stamps, from candles to carpets.'[The Industrial Front, p. 3]
The DMS was a necessary wartime department, however, by 1944 the government began planning for peace. On January 31 of that year the Canadian Export Board was established within the Department of Trade and Commerce to procure civilian supplies for allied governments. The government anticipated a four year long post-war period during which Canadian industry would be retooled for peace, and so a Department of Reconstruction was created on July 30, 1944, under the Department of Reconstruction Act, (8 Geo. VI, c.18). The new department was charged with converting industry, along with public works, and community planning projects designed to help demobilised men and women readjust to civilian life.[Memorandum; R.A.C. Henry to C.D. Howe, 29 October 1944, RG 28 Vol 179]
There was little need for the DMS after the armistice, and so on December 31, 1945 it was merged with the Department of Reconstruction, under the Department of Reconstruction and Supply Act, (9-10 Geo. VI, c.16), to become the Department of Reconstruction and Supply, (DRS).
Powers once held by the DMS were gradually dispersed throughout the government over the following years. In May 1946 the Canadian Commercial Corporation, (CCC), a crown corporation, replaced the Canadian Export Board.(10 Geo. VI, c. 40) In February 1947 the procurement duties once held by the DMS were transferred from the DRS to the Department of Trade and Commerce, which acted through the CCC. In November and December 1948 many of the remaining crown corporations which had once belonged to the DMS, were transferred from DRS to the Department of Trade and Commerce by Order-in-Council.
The Department of Reconstruction and Supply was replaced by the Department of Defence Production in 1951.
