There are really only two phases to a big military program: Too early to tell, and too late to stop. Program advocates like to keep bad news covered until they have spent so much money that they can advance the sunk-cost argument; that it’s too late too cancel the program because we’ve spent too much already.1

The Conservative Government of Prime Minister John Diefenbaker and the Avro Canada CF-105 Arrow Programme.

Prime Minister John George Diefenbaker and his MND, Major-General George Pearkes,2 inherited three thorny defence problems from the Liberals: the NORAD agreement; a NATO request that the RCAF Air Division in Europe be re-assigned from air defence to nuclear strike-reconnaissance; and the air defence of Canada and the role of the Arrow programme in it.3 As John Treddenick wrote, “all of their choices - or non-choices - were to turn out to be controversial; all involved unduly high political costs, leading to a serious erosion in the working relationships between government and the military, and ultimately, to the defeat of the government itself.”4 But it would be the Arrow programme in particular, as J.L. Granatstein remarked, that “caused the Diefenbaker government no end of heartache and no end of political unpleasantness.”5

The CSC was particularly anxious that the Conservative government approve the already negotiated NORAD agreement as soon as possible because it feared a deterioration in Canada-US relations if it was not. However, as General Charles Foulkes, Chairman of the CSC, would later comment, the new government:

particularly the Prime Minister, was allergic to the procedures used by the previous administration. It would appear that it suspected senior officials, many of whom had served the Liberal administration for a number of years, of being of sympathy with the new regime. Consequently, there was a tendency to avoid the usual methods and procedures for dealing with defence matters. In fact it was some time before the Prime Minister would agree to set up a Cabinet Defence Committee. Although the Committee was eventually set up, the Prime Minister continued to display a lack of enthusiasm for discussing problems with the Chiefs of Staff, even though, as at times became quite obvious, their defence implications were not fully understood. Political aspects were given much higher priority. The impression remained that the Prime Minister preferred to work out his own solution and, without seeking military advice from the Chiefs of Staff, to take it straight to Cabinet.6

Diefenbaker’s initial lack of enthusiasm for constituting a CDC was confirmed by Pearkes: “ Diefenbaker didn’t want these committee meetings....He didn’t want to discuss in front of the Chiefs of Staff all the various problems. He hated talking in front of generals and he had never been a strong committee man.”7

Under these circumstances, in July 1957, Foulkes (who coincidentally served under Pearkes during the Second World War), brought the CSC’s recommendation on the NORAD agreement straight to Pearkes who in turn took it directly to Diefenbaker. Acting solely on Pearkes’ recommendation and without consulting the Department of External Affairs (DEA) or Cabinet, Diefenbaker approved the NORAD agreement.8 As Foulkes later admitted in testimony before the House of Commons Special Committee on Defence: “I am afraid that we stampeded the incoming government with the NORAD agreement, and as it had a very rough passage in the House, the administration was very chary at taking on some of the other tough military problems.”9

Diefenbaker had casually committed Canada not only to joint planning for continental defence with the US but also to a joint command, and, consequently, to the supranational integration of the RCAF and the USAF ADCs. An American would command NORAD, while a Canadian would serve as deputy commander, the first of whom was Air Marshal Roy Slemon (1957-1964). In reality, this merely formalized a situation that had existed for years and which the RCAF and the CSC had long advocated.10 This was not a surprising state of affairs given that the respective civil and military authorities in both countries viewed the national security of Canada and the US as virtually inseparable.11 Consequently, as Joseph Jockel observed:

The two air forces had every reason to co-operate. They were faced with a common military threat. As airmen, they shared an outlook which created a similar identity and even an emotional bond. They were interested in convincing civilians of the danger to the continent. Both the RCAF and the USAF were locked in struggles with their sister services for defence funds. Finally, for the RCAF, the USAF was a source of funding for radar stations and a source of pressure on Ottawa to recognize the importance of air defence.12

Thus “junior partnership,” as David Cox confirmed, “operationally speaking, was an extraordinarily valuable status that the RCAF was zealously committed to maintaining.”13

Nevertheless, a storm of criticism over the hasty manner of the approval of the NORAD agreement (rather than the agreement itself) erupted in the House of Commons. Diefenbaker’s response, stated Jon McLin, was “an early example of a Diefenbaker trait which was to show itself on later occasions: he found it easier and/or more congenial to attack the former government or the Opposition than to explain what his own government was doing.”14 But this unanticipated and unwelcome political backlash had one lasting effect: it accentuated the Diefenbaker’s intensely partisan suspicion of the “Pearsonalities”15 - those who had served the previous Liberal governments. Unfortunately for the Arrow programme, counted amongst the “Pearsonalities” were the members of the CSC16 and the management at A.V. Roe whose corporate ranks included former CAS Air Marshal Wilf Curtis and former Air Vice-Marshal John Plant.17 Donald Fleming, Minister of Finance and Chairman of the Treasury Board (1957-1962), later confirmed this hostility on the part of Diefenbaker toward the military:

I saw these officers [of the CSC] frequently, and never had the slightest reason to doubt their fitness for the high positions they held I never understood why, but Diefenbaker in his dealings with these senior officers in the Defence Committee meetings and outside always acted as though he had a chip on his shoulder. In my opinion, they showed him proper respect; equally, in my opinion, he did not show them proper respect, and this I regarded as unnecessary and lamentable.18

However, Foulkes’ opinion of the organizational abilities of the Conservative government was perhaps too harsh: differences between the Liberals and the Conservatives were, at least initially, more about style than substance. The influence the CSC enjoyed through the MND throughout 1957-1958 continued more or less unabated, albeit in an atmosphere of political mistrust and administrative inexperience on the part of the government. But Patrick Kyba later confirmed the existence of a Cabinet which was destined to become more and more hobbled by an environment of consensus decision-making:

there is a great deal of evidence to indicate that Diefenbaker did not have firm opinions on everything he wanted his government to do, and that he was prepared to accept the guidance of his colleagues on many matters. The documents for the period show items of all sorts recurring on the cabinet agenda month after month, referrals of the most important issues to standing or special committees of cabinet, and deferrals of many decisions until after further deliberation. The record also indicates that the prime minister seldom tried to impose his views on cabinet and that decisions on most matters of import were made by the entire cabinet, almost always after study by and recommendation from a committee or subcommittee of cabinet. The process should have worked better then it did. The use of small committees to investigate issues and report back to cabinet should have provided the information and direction required to make decisions quickly and efficiently. However, as witnessed by the long delays over the Avro Arrow, the BOMARC...and many other important questions, this simple did not occur.19

The Conservative government first discussed the Arrow at the 115th CDC meeting on 19 September 1957.20 There was one theme to this meeting: “Pearkes recommended that consideration be given to all areas where economies were possible so that progress could be made in preparing defence estimates for the next fiscal year.”21 The Arrow programme was not scheduled for review until the next month, but the improved Canuck and the eleven existing auxiliary squadrons did not escape the CDC’s attention. The improved Canuck could not enter service before the Arrow was deployed because the Sparrow II programme was behind schedule. Therefore, the CDC recommended the cancellation of the improved Canuck, an action which the CSC described as calculated risk. At the 20 September 195722 Cabinet meeting, the CDC’s recommendations were approved.

The issue of the auxiliary squadrons requires further explanation. By 1955, the RCAF had determined that interceptors such as the Canuck and the Arrow were too technologically advanced for the auxiliary squadrons to operate. A joint RCAF-USAF ADC plan recommended disbanding the auxiliary squadrons and expanding to eighteen regular squadrons and bases. The CSC, however, thought fifteen regular squadrons and bases were sufficient, of which several could be equipped with BOMARC, all to be funded within the anticipated defence budget. The plan was predicated, however, on a cost-shared extension northward of the existing American ground environment,23 requiring additional heavy radars, gap filler radars, and related command, control, communication, and intelligence (C3I) facilities. The CDC considered the plan at the 109th CDC meeting on 9 April 195624 and the 110th CDC meeting on 13 June 1956,25 whereupon it was approved in principle.

However, at the CDC meeting in February 1957, Slemon reported that the US could not participate because of financial and manpower limitations. The plan was shelved, but the disbanding of the auxiliary squadrons would proceed. This was confirmed at the September CDC and Cabinet meetings. The impact of this decision on the Arrow programme was immediate: the number of Arrows required had dropped from an original estimate of a minimum of 500-600 to a maximum requirement of approximately 169 in nine regular squadrons at five existing bases. Due to economies of scale, as the number of Arrows required dropped the per unit cost of production rose, and, with the cancellation of the improved Canuck, the costs of the Sparrow II programme were now be charged entirely against the Arrow programme.26

On 4 October 1957, Pearkes unveiled the first Arrow prototype, “a symbol of a new era for Canada in the air,”27 at a roll-out ceremony in Malton. His speech to the gathered crowd must have sounded reassuring to the RCAF, Avro, and Orenda:

Much has been said of late about the coming missile age and there have been suggestions from well-intentioned people that the era of the manned aeroplane is over and that we should not be wasting our time and energy producing an aircraft of the performance, complexity, and cost of the Avro Arrow. They suggest that we should put our faith in missiles and launch straight into the era of push-button war. I do not feel that missiles and manned aircraft have, as yet, reached the point where they should be considered as competitive. They will, in fact, become complementary. Each can do things which the other cannot do, and for some years both will be required in the inventory of any nation seeking to maintain an adequate “deterrent” to war. However, the aircraft has this one great advantage over the missile. It can bring the judgement of a man into the battle and closer to the target where human judgement, combined with the technology of the aircraft, will provide the most sophisticated and effective defence that human ingenuity can devise.28

As if to emphasize the opposing point of view, on the same day as the roll-out the Soviet Union launched Sputnik into orbit. A complacent West reacted with shock and disbelief and, symbolically, Sputnik drove the Arrow programme from the headlines. If the Soviets had the capability to launch a satellite into orbit, they could also launch an ICBM at targets in the West. Overnight fears of a “missile gap” between the West and the Soviets replaced fears of a “bomber gap,” and the Central Intelligence Agency’s National Intelligence Estimates (NIE) began to confirm that the Soviet bomber threat was indeed diminishing rapidly.29 In response, the strategic rationale behind Western defence policy shifted from an emphasis on defence to deterrence.

Though there would never be any doubt that the Arrow and the Iroquois were state- of-the-art, from this point on the RCAF faced increasing criticism from those who believed, as Simonds had earlier declared, that manned aircraft would soon be rendered obsolete. Duncan Sandys, the British Minister of Defence,30 had not aided the RCAF’s case any when he released an influential UK White Paper supporting this viewpoint.31 In the Soviet Union, Premier Nikita Khrushchev made a similar pronouncement about the manned bomber.32

Though rumours of the death of both the manned bomber and the manned fighter proved to be somewhat exaggerated, such was the prevailing contemporary opinion. “All over the capitalist world,” Robert Bothwell, Ian Drummond, and John English wrote, “the smaller airframe makers and the ‘national’ airframe industries were in trouble”33 as the US, UK, and other NATO countries cancelled aircraft programmes and the aircraft manufacturers that could shifted their resources into missiles. This is a situation that American economist Joseph Schumpeter termed “creative destruction.”34

Incredibly, five years after development began, in October 1957 the RCAF finally set up a special project office to monitor and coordinate all aspects of the Arrow programme. Prior to this event, there had been no single body overseeing the project. As the head of the special project office, Group Captain Ray Foottit, Assistant for the Arrow Weapons System, later stated:

Until they set up the Arrow weapon system office, costing was done by somebody in somebody’s else’s place, equipment was purchased someplace else, contracts were all let separately...these things were all being done by all kinds of people in the government, it was never co-ordinated. Now, one lesson that came out of the Second World War was that you had to haveproject management. Project management is now something everybody knows and everybody does but within the air force in the early days it was parcelled out in different directorates and with different people doing different things.35

At the 613th CSC meeting on 24 and 25 October 1957,36 the new CAS, Air Marshal Hugh Campbell (1957-1962), recommended that the twenty-nine remaining Arrows be ordered and that the Sparrow II programme continue. Despite doubts, Foulkes concurred, adding that every effort should now be made to speed up the much delayed project, otherwise “a great deal of money was being spent on an aircraft and its associated missile system and ground environment which could be outmoded before it became fully operational.”37 However, Lieutenant-General Howard Graham, CGS, and Vice-Admiral Harry DeWolf, CNS (1956-1960), wanted the RCAF and the DRB to conduct a study of the Soviet threat, the RCAF’s and NORAD’s air defence programme and their impact on anticipated defence budgets, and any air defence alternatives. Foulkes replied that the CSC did not have the time to undertake such a study. The CSA and the CNS acquiesced, and the CSC agreed to seek authority to continue the Arrow and Sparrow II programmes.

In an unusual turn of events, the CSC’s recommendation appears to have gone directly to Cabinet as there is no record of a CDC meeting. Cabinet, in the meantime, had been dealing with the fallout from its previous decision at meetings on 24 and 25 October 1957.38 At the latter meeting, Pearkes reported that he, Fleming, Raymond O’Hurley, the Minister of Defence Production (1957-1963), and the Minister of Transport had met with Avro and Orenda management who had informed the ministers that 3000 employees (out of almost 15,000)39 would be layed-off over the next six months, of which about one-third were the result of the cancellation of the improved Canuck. Furthermore, Avro and Orenda “declared that they were almost entirely dependent on defence contracts for their operation. They were waiting for a decision with respect to the CF-105. If this programme were also cancelled, both companies would have to go into liquidation.”40 Cabinet was worried about the political repercussions of such unemployment being attributed to the government’s actions, especially since they were a minority government and “the three Conservative Members of Parliament involved had been elected on a programme that there would be no lay-offs.”41 The Minister of Labour in particular thought the companies’ attitude was “vindictive.”42

At the Cabinet meeting on 29 October 1957,43 Cabinet approved Pearkes’ solution. The Arrow programme would continue until 1959 at a cost of $172,612,000, in addition to the $226,260,000 which would be spent by 1958. As well as the twenty-nine remaining Arrows, twenty extra Canucks were ordered, the Iroquois programme accelerated, and additional work transferred to Avro and Orenda from other divisions of A.V. Roe and Hawker-Siddeley. This reduced the lay-offs to 1525, largely handled through attrition.44 It was as much a political decision by Cabinet as a military one by the CSC, and “a tremendous gamble. $400 million would have been spent before it was known if the aircraft could be put in the RCAF. However, there was no time to study and weigh the programme in its entirety. Meanwhile, the situation could be closely watched and the programme stopped if necessary.”45

Avro and Orenda had skilfully used their strong bargaining position to their advantage. As Denis Smith stated: “This was expensive damage control. Above all, it indicated to A.V. Roe that the Diefenbaker government was politically sensitive and that it capitulated easily under pressure.”46 However, Smith also noted that while Avro and Orenda may have been reassured, Pearkes was not:

I am having a study made of the nature of the threat. Present indications are that it is quite possible we may have to make radical changes. For instance, it is not at all clear that we need to proceed with the construction of the CF-105. If next summer we have to cancel development of this aircraft, the aircraft industry at the Avro plant will be seriously dislocated with possible large-scale layoffs of personnel. This would of course affect our Members who represent constituencies in that area.47

In January 1958, an interesting meeting occurred between Norman Robertson, Canadian Ambassador to the US, who had been engaged in a desperate campaign to interest the Americans in the Arrow, and senior American officials, who proved to be more than sympathetic to Canada’s defence conundrums. Robertson opened the meeting by mentioning that the ultimate fate of the Arrow programme was linked to the joint Canada-US evaluation of the Soviet bomber threat, the rate of development of newer and superseding weapons, and the question as to “whether it made sense for us to commit such a major portion of our resources and money to a weapons system which would become virtually obsolescent by the time it was operational.”48 In response, James Douglas, the US Secretary of the Air Force, reiterated that the US would like to see the Arrow deployed by the RCAF’s NORAD squadrons, perhaps in even greater strength than anticipated. But he quickly added that there was no place for the Arrow within the USAF as the US had comparable interceptors in their inventory. Douglas added that the USAF was going ahead with its F-108, an aircraft interceptor even more advanced than the Arrow, the cost of which made the latter "look like something which might be picked up in a department store."49

However, Douglas then suggested that the US could possibly purchase several squadrons worth of Arrows and give them to the RCAF for NORAD deployment. It was hypothesized that this might be accomplished through NORAD indicating an essential requirement for more RCAF squadrons than those presently planned. The Arrows to equip these extra RCAF squadrons could then be purchased outright by the US or swapped in exchange for Canada undertaking to finance other NORAD installations such as Strategic Air Command (SAC) refuelling bases. Despite the fact that Canada had and would continue to insist upon similar cost-sharing arrangements for the purpose of continental defence, this intriguing proposal was immediately rejected by Robertson as being politically unacceptable because “this would pose certain problems against the background of Canada having remained aloof from Lend Lease and from the acceptance of aid from the US or any other country.”50 He added that Canada wanted to participate in the common defence as a participant, not a beneficiary. Thus this generous American offer was pursued no further, no doubt in part due to another unstated reason: a few extra squadrons worth of Arrows would not result in a production run sufficient to substantially reduce costs.

On 25 March 1958, the Arrow finally took its first flight, proving its airworthiness (though hundreds of hours of testing and evaluation were still required). Six days later voters returned the Diefenbaker government to office with the largest electoral mandate in Canadian history. Shortly thereafter, the established pattern of decision-making behaviour between the military and their Liberal and Conservative political masters which had existed since the Arrow programme was initiated began to fall apart, and the CSC would never again enjoy such influence over the CDC and the Cabinet. The breakdown would commence at the 623rd CSC meeting on 10 June 1958,51 when Campbell informed the CSC that, to ensure project continuity, work on the thirty-seven preproduction Arrows should continue and production initiated before the end of 1958. The CSC agreed to seek such authority from the CDC, but before this could be done the CGS, who had been absent from the meeting, intervened. In a July letter to Foulkes, Graham complained that no action had ever been taken on his requests for a study of the air defence programme in general and the Arrow programme in particular:

I am convinced that it would be a grave mistake to continue the development of the CF-105 and I again urge that a tri-service group be set up at once, probably under the chairmanship of a representative of the Defence Research Board, to examine alternative plans for our contribution to the air defence of North America. My reason for urging that all three services and DRB be included is because, first, each could make a valuable contribution to such a study and, secondly, because I believe that if one service (no matter which) assumes the responsibility, there will be a natural tendency to be biased toward the weapon with which they are most familiar.52

Graham’s letter proved to be a catalyst for opposition to the Arrow programme withinthe CSC. An ad hoc committee was immediately formed, and it tabled its review at a Special meeting of the CSC on 15 July 1958.53 The CGS, CNS, and Chairman of the CSC concluded from the review that if the Arrow programme proceeded as envisaged by the RCAF there would not be sufficient funds to acquire new frigates for the RCN or new armoured vehicles and surface-to-surface tactical nuclear missiles for the army. Furthermore, the CAS was now concerned that its estimated defence allocations would be inadequate to re-equip the NATO Air Division for the nuclear strike-reconnaissance role and build NORAD BOMARC bases if the Arrow programme continued. The CSC’s consensus on the project collapsed in the face of this inter-service - and intra-service, in the case of the RCAF’s NATO and NORAD officers - rivalry.54

The CSC was clearly divided over the Arrow programme, and at this Special meeting it was agreed to present Pearkes with a number of alternative air defence programmes outlining the military, financial, and even political advantages and disadvantages of cancelling the Arrow programme or proceeding with it (with or without the Astra and Sparrow II programmes) in quantities of thirty-seven, sixty, or 169. Foulkes later wrote that “in order to cover up dissension”55 between the CAS and the rest of the CSC, no recommendation was made as to which was the preferred alternative. But even if it was not explicitly stated, it was implicit that cancellation was favoured course of action. After considerable discussion between Pearkes and the CSC over the next month, both agreed that the cost of the Arrow programme was too high. Pearkes would recommend the cancellation of the project to the CDC even though, as Foulkes later acknowledged, he and the CSC knew that this was “a very bitter pill for the government to swallow.”56

In the face of such a consensus between the other members of the CSC and Pearkes, the CAS finally acquiesced. However, the reason for Campbell’s initial dissension was made clear in an August 1958 letter from Campbell to Pearkes: RCAF reluctance to support abandonment of the project stemmed not from any unflinching commitment to the Arrow programme but rather from the RCAF’s concern that the need for an alternative interceptor - as opposed to alternatives to interceptors - be accepted and explicitly stated by the government:

It is clearly not my responsibility to comment on the Budget or its size. It is, however, my responsibility to recommend to you the military requirement as I see it in order that the Royal Canadian Air Force may be capable of carrying out its responsibilities. I believe that we must maintain an air defence component of the North American air defence system that will assist in maintaining and preserving our peace....I cannot, however, associate myself with your decision to cancel the 105 programme but must recommend that it proceed as it is presently planned or, alternatively, to couple the cancellation of the 105 with the procurement of a supersonic interceptor to fill the gap....if no action is taken to replace the CF-100 aircraft with a supersonic interceptor Canada will be the only nation in NATO having an Air Force that is not equipped with such an aircraft.57

The RCAF would not do itself any favours, however, when Slemon subsequently publicly reaffirmed this operational requirement for interceptors like the Arrow from his post as Deputy Commander of NORAD. Diefenbaker was “shocked”58 when this occurred, adding:

It was not a question of whether Slemon’s remarks have been misinterpreted or not but whether he should have made a statement of that kind at all. Avro had put on a tremendous publicity campaign and this played right into their hands. If the government decided to continue development it would be accused of giving in to a powerful lobby.59

At the 120th CDC meeting on 15 August 1958,60 Pearkes outlined the various scenarios the CSC had examined:

The present programme, which called for the re-equipping of the nine RCAF all-weather squadrons in Canada with CF-105 aircraft, presented a requirement, with training and backup, for a production order of 169 CF-105 aircraft at a forecast total expenditure of over two billion dollars during the period 1959-1960 to 1963-1964. In consideration of the heavy costs of this programme, and of the need for making provision for such future requirements as defence against inter-continental ballistic missiles, the Chiefs of Staff had given consideration to several alternative plans. They had advised that production of 60 CF-105 aircraft for the equipping of five squadrons was unacceptable because the costs per aircraft for this smaller number would be increased to $9 or $10 millions, not including amortization of development and preproduction costs. Consideration had also been given to the hope that a return could be obtained from the funds already spent on the project, but this plan was considered unacceptable because even at a cost of about $475 millions not enough aircraft would be provided to form and maintain one effective operational squadron.61

Pearkes then stated that he and the CSC agreed that the only feasible course of action left was to cancel the Arrow programme in favour of an alternative American interceptor and to begin negotiations with the US to site two of its projected chain of BOMARC bases in Canada along with its complementary Semi-Automatic Ground Environment (SAGE) C3I system,62 and additional heavy and gap-filler radars, all cost-shared with the US. It was explained that such negotiations would necessarily also include an arrangement whereby the US would supply nuclear weapons for the BOMARCs and the interceptors. Pearkes added that the decision to recommend cancellation had been influenced by a number of factors: the heavy financial burden of the project; the rapid Soviet shift of resources from bombers to ICBMs; the availability of comparable American interceptors at approximately half the cost of the Arrow;63 the cheaper and more efficient nature of missiles versus aircraft; and the lack of any foreign interest, especially from the US, in purchasing the Arrow. Denis Smith confirms the existence of these influences and adds several unstated ones:

There were now at least five compelling influences on the decision: escalating costs that seemed beyond the capacity of the Canadian government; doubts about the technical nature of the Soviet threat, whether bomber or missile; a military preference for tactical atomic weapons for defence as well as attack; an interest - both economic and political - in maintaining a large andsophisticated Canadian aircraft industry; and an overriding American influence on the shape of Canadian defence policy. The government responded by simultaneously inching sideways and forwards. In the process, the prime minister preferred not to sort out too clearly what policies the government was actually pursuing.64

Foulkes later described this CDC meeting as “acrimonious,”65 and they culminated with Diefenbaker ordering the preparation of a second reappraisal report:

The Prime Minister questioned and cross-examined the Chiefs of Staff and Defence Production officials for prolonged periods. The Chiefs of Staff were accused of not providing all the relevant information. It was alleged that the officials were holding back to cover up the shortcomings of the previous Administration in failing to curb the expansion of this enterprise which had become so completely out of hand before the present Government had assumed responsibility. The Prime Minister demanded that the Chairman of the Chiefs of Staff Committee immediately produce a dossier on the whole project from 1952 to date, showing a complete documentation of all decisions, studies, reports, cut-backs, submissions and yearly expenditures. The document was prepared without delay, but with some qualms about the propriety of furnishing confidential information of the previous administration; this was contrary to normal practice.66

This reappraisal report was duly prepared and tabled at the 121st CDC meeting on 21 August 1958.67 Graham was still not entirely happy, however, and he had one more complaint to make about the RCAF. He demanded a further clarification as to just who the Arrow was supposed to defend - Canadian citizens or SAC:

one is left with the impression that our air defence plan is designed for the defence of Canada. My understanding is that our air defence plan is not for “the Defence of Canada,” but is a part of a Canada-US plan for the defence of North America. This Canada-US plan places first priority on the defence of SAC bases, second priority on certain other installations, and only third priority on certain centres of population in North America, of which four are in Canada, namely Montreal, Toronto, Hamilton, and Vancouver.

I think it is wrong to leave the impression with the Minister and the Government that our air defence plan is primarily for the defence of Canadian territory when, in fact, any defence of Canadian territory is but a by-product or extra dividend to the main purpose, which is the defence of SAC bases and Northeastern United States.68

The reappraisal report had the desired effect of confirming for the CDC the bleak situation that Pearkes had previously outlined. But the CDC proved to be as reluctant to explicitly support termination as the CSC had earlier been. The CDC agreed to recommend that Cabinet approve Pearkes’ and the CSC’s recommendations - with one exception. Rather the recommending the cancellation of the Arrow programme, the CDC only tendered their advice that “consideration be given to...abandoning the CF-105 (Arrow) programme and the associated fire control and weapons projects.”69 Cabinet would have to decide the ultimate fate of the project for themselves.

Cabinet discussed this issue at six meetings in August and September 1958.70 Approval was given to the CDC’s recommendation on BOMARC, SAGE, and the additional heavy and gap filler radars without much debate.71 As for the Arrow programme, there was extensive discussion at every meeting, but at no time did Cabinet challenge the military and financial logic which led to Pearkes’ and the CSC’s recommendation to the CDC. The country was in an economic downturn, and for a government elected on the promise of expanded social programmes, reduced public expenditures, and lower taxes, the costs of the Arrow programme were appalling. Fleming was blunt in his recitation of the financial implications of continuing the Arrow programme:

If the CF-105 were not abandoned, it would mean an increase in the defence budget of $400 million a year for several years. Even without this the deficit in 1959-1960 would be as much as the current year. If it were at all responsible, the government would have no alternative but to increase taxes should the 105 be put into production. Adding it to the present overall rate of deficit would mean the wrecking of Canada’s credit and the stimulation of inflation.72

Another unique opinion expressed during the extensive discussion was that the Arrow programme might actually be harming the cause of Western defence: “The USSR had always said that western economies would ultimately collapse. Carrying on a project like this involving so much of the taxpayers’ money and whose returns were questionable was surely only playing into Russian hands. The money could be put to better use elsewhere.”73

At another meeting Pearkes also reported that he, Diefenbaker, Fleming, and O’Hurley had met several times with Avro and Orenda management. The latter had recommended, not surprisingly, that the Arrow and Iroquois programmes be continued but that an existing Hughes MA-1 electronics system and the Douglas Falcon missile replace Astra and Sparrow II. This substitution was supposed to reduce the cost of 100 production Arrows from $1,261.5 million to $896 million. Pearkes pointed out that this lower figure did not include cost of completing the development programme and that it was still almost twice as much as comparable American interceptors. Fleming added that if an American electronics system and missile were good enough for Canada, an American airframe and engine should be as well. Cabinet concluded:

It would be better to cancel it now than to be confronted with no more work for Avro, and the other companies involved, after production of 100 aircraft was drawing to an end in 1961 or 1962. It was unwise to encourage the aircraft industry to continue to produce equipment that could quite well be obsolete by the time it was available.74

Foulkes would later confirm that it was not only the government that did not believe Avro and Orenda’s claims that costs could be reduced: “The RCAF did not repose much confidence in the A.V. Roe Company’s proposal to develop a relatively cheaper version of the CF-105.”75

Though it is clear that Cabinet readily accepted the military and financial arguments against the Arrow programme, it was preoccupied with the short-term ramifications termination would have for the economy, particularly but not exclusively in southern Ontario, and thus for the government’s ongoing political fortunes. The adverse effects of cancelling the Arrow programme were listed as the cessation of operations at Avro and Orenda, the potential lay-off of 25,000 workers at the two companies and their subcontractors, the dispersal of their team of skilled engineers and technicians, and the psychological factor of damage to national pride and prestige. Cabinet also saw the abandonment the Arrow programme in favour of an American interceptor as potentially being “a serious political mistake.”76

The Conservative Party, right from Confederation, had always been a vigorous protagonist of the theory that Canada’s needs should be met from within Canada. To abandon the CF-105 even though it was expensive and might be obsolete would be hard to explain. On the other hand, it would be equally hard to explain, in three or four years, why the government had spent vast sums of money on a relatively small number of aircraft which might by then be virtually useless.77

Cabinet clearly knew what had to be done, but could not agree on how to go about doing it until Diefenbaker proposed a compromise solution which Cabinet quickly seized upon. The Astra and Sparrow II programmes were cancelled in favour of their existing American counterparts. However, because of a severe unemployment problem in the Toronto area and the danger of a recession, work on the thirty-seven Arrows that had been authorized would continue and a decision on the cancellation of the Arrow programme deferred until the end of March 1959. Barring any radical change in the international situation or the Soviet threat, Cabinet believed the project would be terminated at that time, although this was not publicly stated. In the interim, the CSC was instructed to “investigate and report upon the requirements, if any, for additional air defence missile installations in Canada and for interceptor aircraft of the nature of the CF-105 or alternative types.”78 The public was informed of this revision of Canada’s air defence requirements through a press release on 23 September 1958 (see appendix I).79

Fleming later wrote of the one year extension and the six month deferral that “as an unemployment measure it must be one of the most costly on record,”80 adding:

Had we grasped the nettle in September 1957 we would have saved $200 million. We bought time, but at a heavy price. The A.V. Roe Company had nothing to lose by delay, for they were enjoying the benefit of a cost-plus contract, which had been awarded them by C.D. Howe. Nothing, however, was solved. The mammoth problem remained. There was to be no escape from making one of the most difficult decisions the cabinet ever faced.81

This postponement of the inevitable may also have been due in part to the lobbying of Toronto-area Conservative MPs and Conservative shareholders of A.V. Roe stock. As well, Ontario’s Conservative Premier Leslie Frost , whose provincial organization had proven invaluable to the federal Conservatives during the 1958 election, had also weighed into the debate by writing to Diefenbaker expressing his concern about the impact of cancellation on Malton.82

No doubt well-informed through leaks from the military and the government, in the aftermath of Diefenbaker’s press release the media largely acted as if the decision to cancel the Arrow programme had already been announced. And the most vocal press critic of all was Blair Fraser of Maclean’s. In an article entitled “What led Canada to junk the Arrow,” Fraser argued the project was far too expensive and that the entire defence picture had changed since 1953 due to the missile. Fraser concluded that the advice governments the world over should heed was that “the manned aircraft is as dead as the muzzle-loading musket.”83 He then lauded the government for its decision:

The plain truth is, nobody thought the government would have the courage to make such a painful decision. The fact that the decision was right didn’t carry enough weight. It meant an early end to more than twenty thousand jobs, most of them in the very heartland of the Conservative Party. It went against the emotional urges of all Canadian air-force men, and of most air-force veterans. It disappointed a big Canadian industry with many big Conservative shareholders. In short, it was political poison of a kind to scare any politician out of one year’s growth.84

Crawford Gordon Jr., A.V. Roe’s President and General Manager, reacted angrily to Fraser’s pronouncement in an article entitled “We should and will go on building Arrows.” Gordon condemned publications and self-appointed experts who, “in their eagerness to see this admittedly costly (though essential) program abandoned...maintained that it already has been [italics in original] abandoned; and if by any chance it has not been abandoned, they contend it should be abandoned because, according to their dicta, it is already obsolete.”85 He then pointed out that the missiles were not intended to be a substitute for interceptors, but rather a complement, and that the RCAF (and the USAF) wanted both in their inventories.

But Fraser was correct in his analysis of the government’s announcement; Gordon was simply attempting damage control. There is little doubt that Cabinet had determined in September that the Arrow programme would be cancelled as soon as it was politically expedient to do so. However, Cabinet also erroneously assumed that the deferral would be a signal to Avro and Orenda to prepare for the contingency of cancellation. Instead, though all of the signs clearly pointed toward the project’s demise, the companies saw what they wanted and acted as if they had been granted a reprieve. And, despite the fact that Avro and Orenda’s future was precariously staked on one military contract, the parent company continued to prosper. By 1959 A.V. Roe had assembled a giant industrial empire - according to Michael Bliss, “a single-company military-industrial complex”86 - becoming the third largest corporation in Canada, a diversified conglomerate comprising thirty-nine companies and directly employing over 41,000.87

Meanwhile, in December 1958, Pearkes and Fleming made the last in a long series of attempts to sell the Arrow to the UK and the US during a meeting of the NATO Ministerial Council in Paris - and failed again.88 “Had the Soviet Union itself come through with an offer,” James Eayrs later joked, “the Canadian Government might have been tempted to accept.”89 Pearkes' distress over the project was only compounded when he discovered from the British that they were rather anxious to interest Canada in their own ill-fated TSR-2 aircraft for the RCAF Air Division in Europe.90 The truth was that when the St. Laurent and Diefenbaker governments endeavoured to sell the Arrow to the Americans or the British or other NATO allies, they came up against the same logic that led Canada to develop its own aircraft industry in the first place: these countries had their own unique operational requirements to satisfy and their own aircraft manufacturers to support. There is no convincing evidence (as is often claimed by “Arrowheads”) that the US administration conspired with the American aircraft industry to exert pressure the Diefenbaker government to cancel the Arrow programme in favour of their own products. This lack of direct American intervention can in part be explained by the fact that the Arrow never represented an export threat which could compete with American aircraft. Few countries had any need for an interceptor like the Arrow, and fewer still could have afforded the Arrow even if they had Foreign interest in the project was never more than academic in nature. As J.L. Granatstein wrote, that “if Canada wanted to fly the Arrow, it would have to pay the shot,”91 a situation which Pearkes later confirmed in testimony before the House of Commons Special Committee on Defence Expenditures:

at no time did the United States make any firm commitment that they were going to purchase this aircraft. They expressed interest in it; they liked it. But never at any time was any firm commitment given.

That applies to the United Kingdom and France, and any other country....It was a purely Canadian project.

Being wise after the event, I think in 1958 I would have said it would have been highly desirable had it been possible to have arranged for the sale of this aircraft to other countries before the operation had started, or to have got other countries to share in the cost of the development; but that is being wise after the event.93

With the coming of 1959 the end of the six month extension was fast approaching. During this time, H. Basil Robinson later wrote, Diefenbaker “carried the worry [about the Arrow] with him around the world - he always hoped that postponements might beget miracles - but the inevitable could not be stemmed.”94 Diefenbaker later confirmed his state of mind in his memoirs: “I had listened to the views of various experts; I had read everythingI could find on the subject; I thought about it constantly; and, finally, I prayed for guidance.”95

At the 28 January 1959 Cabinet meeting,96 Fleming pointed out that as soon as he tabled the main estimates for 1959-1960 it would the Opposition and the press would know that there was no provision for expenditures on the project beyond 1 April 1959, except for cancellation costs. In light of Fleming’s warning, at the next Cabinet meeting Diefenbaker suggested that it might be advisable to make an early decision on the Arrow programme. Cabinet agreed, noting that“the sooner the decision was made on the Arrow, the more money would be saved on cancellation charges and could be made available for other purposes. It was quite evident what the decision would be. Nothing would be gained by deferring it any longer.”97

At the 122nd CDC meeting on 5 February 1959,98 Pearkes reported that the CSC had confirmed that there were no new military factors regarding the international situation, the Soviet threat, or the means to defend against it that would have any bearing on the Arrow programme. Foulkes also took the opportunity to reiterate the position of the CSC:

[The CSC] were still of the opinion that the changing threat and the rapid advances in technology, particularly in the missile field, along with the decreasing requirements for manned interceptors in Canada, created grave doubts as to whether a limited number of aircraft of such extraordinarily high cost would provide a defence return commensurate with the expenditures. Therefore, the Chiefs of Staff went along with the recommendation that had been made, on the understanding that they should present at an early date their recommendations for air defence requirements, based on the investigations which they were now making....99

In reply to a question as to whether interceptors would be needed in addition to BOMARCs, Campbell answered that the RCAF definitely needed both and that he was still “thinking in terms of 100 to 115 aircraft, which would provide the necessary fighters for six squadrons and the usual back up. Where they would be obtained was the big question.”100 Ominously for the RCAF, the CDC then complained that Canada should not be expected to provide every type of defence for its territory:

The defence of North America was a matter of mutual defence and Canada was making her contribution by the provision of air space, expenditures on warning systems, communications, BOMARCs, and with respect to a share in the ballistic missile early warning system. The NORAD agreement would enable US squadrons of interceptors to be stationed temporarily in Canada, but if the risk of attacks from manned bombers was declining quickly, as many believed it was, such stationing might never be required, let alone the provision of interceptors by Canada itself.101

Pearkes then informed the CDC that from September 1958 to January 1959 the Arrow programme had cost $60,000,000, and if development was continued until March 1959, a minimum of an additional $45,000,000 would have to be spent. However, if the Arrow project were abandoned by mid-February, a saving of $15,000,000 would be realized once cancellation charges were factored in. Pearkes also noted:

The Avro Aircraft Company had now submitted a new proposal which estimated the cost of 100 operational aircraft at being $781 million, or $7.81 million per aircraft. This excluded termination charges for the Astra/Sparrow system from September 1st, which was estimated at $28 million. Although these costs had been reduced from $12.6 million per aircraft to this figure, it was still considered that the production of 100 such aircraft could not be justified at this price.102

The fact that the re-equipping of the RCAF Air Division might cost “in the neighbourhood of $500 million”103 also did not escape the attention of the cost-conscious CDC. At the conclusion of the meeting, the CDC recommended that Cabinet make a decision to discontinue the Arrow programme before the end of March.

For many ministers the final Cabinet deliberations over halting the project was the most difficult experience of their political careers. “I am sure,” Fleming later admitted, “few decisions ever taken by a Canadian government have been so meticulously examined in every detail and from every angle.”104 Cabinet, seemingly unwilling to confirm a decision it had in effect already taken, met again and again throughout January and February 1959, agonizing over the effect their decision would have on the RCAF, on the aircraft industry, on unemployment, on the economy, and on Canada’s sense of national achievement and pride.105 Robert Bryce, the Clerk of the Privy Council and “almost the only mandarin Diefenbaker trusted,”106 described these Cabinet meetings as “frustrated, not heated, but not entirely calm.”107 At every meeting Pearkes repeated what he and the CSC had told the CDC. When the question as to whether both BOMARCs and alternative interceptors were necessary was asked again, Pearkes was more equivocal than Campbell. He answered that this was dependent on the nature of the Soviet bomber and ICBM threat, but that in the case of the BOMARC bases “some insurance premium had to be paid against the possibility of bomber attack and this premium was cheaper by far than the CF-105.”108 Cabinet was also informed that Avro and Orenda were asking for more money, having informed the government that costs were “likely to exceed the financial limitations that had been previously set for the programme, and that, unless these financial limitations were increased, it would be necessary for them now to begin laying off personnel until such time as the contract was extended or terminated.”109 Another particularly sensitive topic of discussion was that the abandonment of the Arrow programme in favour of American BOMARCs and interceptors would lead to accusations that Canada was dominated by the US:

As regards the point that cancellation would mean that Canada would be still further “under the wing of the US, it should be remembered that maintaining freedom from US control was a continuous struggle. It might appear that the present decision was a retrograde step. But there would be other opportunities to assert Canadian sovereignty and independence.....

It would be unwise to blame the US for the outcome of the Arrow contract.110 In the end, however, the cold hard financial and strategic facts coming from Pearkes and the CSC buried any nationalistic viewpoints, and “no member of Cabinet present was opposed to the termination of the development of the Arrow.”111

On 20 February 1959 - “Black Friday” as it known to “Arrowheads” - Diefenbaker announced to the House of Commons the cancellation of the Arrow and Iroquois programmes (see appendix II).112 Cancellation charges brought the total costs of the project to $470 million. Avro and Orenda were ordered to cease work immediately; they responded by laying-off 14,000 workers, which Diefenbaker later described as “a callous act.”113 Though it was a bonus for Avro and Orenda’s management that the sheer magnitude of the firings served to embarrass the government, they knew that the cancellation was irreversible.114 Cabinet, however, was infuriated:

The lay-offs had been particularly abrupt, the excuse given by Avro being that the company had received no advance notice of the Prime Minister’s announcement. This was unfair and misleading. The company officers were well aware, or they should have been, that the contract might be cancelled and should have been making preparations accordingly.

Avro claimed that, since the Prime Minister’s announcement of last September, the company had proposed alternative programmes to the government but that the latter had not seen fit to discuss these matters or consult with Avro’s officers in any way. This was not true. Avro’s officers had spoken to ministers frequently in the past few months....In fact, during this period no such proposals had been made by the company to the government.115

In the emergency House of Commons debate that followed Diefenbaker’s announcement, the Liberals, led by Opposition Leader Lester Pearson (1957-1963) and defence critic Paul Hellyer, attacked the Diefenbaker government on how the decision was executed (rather than the decision itself) in that no effort had been made to provide alternative projects for Avro and Orenda.116 Hellyer, a Toronto-area MP, found this to be a particularly onerous task, as he later admitted:

The cancellation of the Avro Arrow provided my first major test in the role. Mike [Pearson] insisted that I speak for the party in the House, which would have been fine if he had let me take a clear and unequivocal stand. I wanted to condemn the government outright. Both the Arrow airframe and its Iroquois engine were monumental, world-leading achievements, and throwing in the towel on their production was a national disgrace. But [Pearson] would neither condemn nor condone. He wanted to keep our options open by planting one foot firmly in each camp. So for half an hour I had the dubious honour of viewing with alarm, pleading for generosity to the workers, and saying all the obvious things that fence-straddling politicians do. My Liberal colleagues seemed pleased, and the subsequent press reaction was quite favourable; but for me it was a most uncomfortable assignment.117

The reason for Pearson’s line of attack is clear - the Liberals believed the cancellation to be justified and they would have terminated the project themselves had they been re-elected. In planning the Liberals’ response to the likely cancellation, Pearson had sought the advice C.D. Howe (who had been defeated in the election of 1957). In a private letter to Howe in January 1959, Pearson inquired:

Would it be too much to ask you to send me a note of your views on the CF-105 question? It would certainly be of great help to me in making up my own mind as to the course we adopt when this question comes before the House for discussion.

So far, although I have said a good deal about it, I have been completely non-committal as to the decision which the Government should make and haveconfined my remarks to attacking them for their tactic and fumbling words.118

Howe wrote a letter to Pearson the next day:

There is no doubt in my mind that the CF-105 should be terminated - costs are completely out of hand. The electronic equipment, which is an essential part of the project, has never been ordered. This by Government decision taken several months ago.

The proper line of attack should be directed to the Government’s temporizing and fumbling with this decision. You will recall that when the matter was last discussed by our Defence Committee in 1957, it was decided to continue the project for the time being, and have a complete review of the matter in September 1957. I had then recommended that the project be terminated due to runaway costs, but there were obvious reasons then why the decision should be deferred until autumn. Since then, costs have continued to mount, and the results of the test flights have been far from conclusive, both as to the aircraft and its jet engine, which is also a development project.

I think you have been right in being completely non-committal as to the decision to continue or terminate, which is obviously one for the Government of the day, but you have a wide open field for showing the cost to the country of the delay in the decision, should the decision be to terminate.

I would suggest the question on the order paper asking the expenditures on the Arrow project and its jet engine from the beginning of this Government’s first Session of Parliament to the date of termination, including estimated termination costs. The reply to such a question will give you a basis for your criticism about delay in the decision. You can also point out that it is a very expensive way to prevent unemployment of the staff involved in the threatened layoff.

You can also point out that when the Government decided not to proceed with the fire control and electrical equipment for this aeroplane, the Government had then decided not to proceed with the aircraft and engine. Subsequent expenditures on both aircraft and engine were definitely an unemployment relief measure, and an expensive one.119

Pearson would later summarize his opinion of the Arrow programme, perhaps more diplomatically than Howe:

It was not in the area of foreign affairs, however, but in domestic administration that we were able in these early years to exploit mistakes made by the government. Notable among these was the decision to abandon the Canadian-built and designed fighter, the famous Avro Arrow....There were reasons of defence and economics that could have been advanced to justify this decision but none to justify the way it was done. Suddenly, on February 20, 1959, without any effort to keep together the fine professional team of scientists and engineers which had been assembled, Mr. Diefenbaker pronounced his government’s policy.120

In the press, most of the Toronto-area media not surprisingly condemned the Conservative government. Theirs was the story of the ruination of two companies on the cutting edge of aerospace technology, the disbandment of a team of the world’s finest engineers and technicians, and the untimely end of a great national project. Outside of the Toronto, however, editorial and public opinion was largely in favour of cancellation, applauding Diefenbaker for his political courage in finally killing the obsolete and costly boondoggle. The latter publications were joined by the national magazines, Maclean’s and Saturday Night, which had never been fans of the Arrow programme. The Arrow myth that would later enthral Canadians had not yet arisen; in 1959, its termination was a southern Ontario story of little concern to other Canadians. Diefenbaker could thus console himself with the fact that the further he travelled away from southern Ontario, the more muted the criticism became.121 But the Arrow would have its revenge. According to Douglas Harkness, who succeeded Pearkes as MND (1960-1963), the manner in which the Arrow programme was handled “really started the lack of credibility in the decisiveness and the ability of the government.”122

The Arrow weapons acquisition process had finally come to an end - much to the relief of the CSC, CDC, and Cabinet. In the end, and despite the interminable debate, the decision to abandon the Arrow programme was, according to Denis Smith:

not a particularly troubling one. [Diefenbaker] had a united cabinet and caucus, and faced an opposition reluctant to criticize the government’s logic. The press, too, was broadly sympathetic and took the prime minister’s cue in calling for real American concessions on the sharing of defence contracts. Diefenbaker was in good spirits, still exhilarated by his mastery of parliament and his command of the headlines.123

The RCAF and the CSC, however, were less than enthused by the ramifications of the decision. In the RCAF’s opinion, though the Soviet bomber threat had lessened, it still existed and represented an enemy which had to be met by interceptors as well as BOMARCs. After all, the missile was intended to serve alongside of, not instead of, the interceptor. However, according to Foulkes, the government always appeared “intrigued by the possibility that the relatively cheap BOMARC offer by the United States might reduce if not eliminate the need for additional interceptor aircraft.”124 Thus the RCAF and the CSC were ill at ease that Diefenbaker, in his misleading September and February statements, had relied on military arguments emphasizing the diminishing Soviet bomber threat and the advent of the missile - arguments the CSC had specifically opposed - to justify the cancellation rather than economic arguments emphasizing the extraordinary costs of the Arrow programme. Jon McLin believed such disingenuousness over the course of the Conservative government’s involvement with the project was a part of a strategy to associate its military advisors with the decision:

All of this could have been avoided, and a considerable saving achieved of mental gymnastics needed to defend contradictory arguments, by a frank admission of the fact that the Arrow was cancelled because it was too expensive for Canada to buy. Such an admission, however, required the recognition, psychologically and politically difficult, that Canada could no longer pay the price which advancing technology exacted to remain a producer of the more sophisticated military equipment. Unwilling to recognize the loss of power and prestige involved, the politically-sensitive Diefenbaker government obscured the issue. This made the future adjustment more difficult and lengthy without rendering it less painful.125

Campbell in particular had demanded that the cancellation of the Arrow programme be coupled with an announcement that a comparable American interceptor would be quickly procured. However, the RCAF’s and the CSC’s worst fears were soon realized: the procurement of an alternative US interceptor immediately following the cancellation of the project proved to be politically unacceptable to the Cabinet.126 As Diefenbaker stated almost a year later:

If the [CDC] reported that security demanded the acquisition of these aircraft, then that would have to be the decision. To purchase them, however, would cause great difficulties. It would place him and the Minister of National Defence in impossible positions. On the other hand, failure to re-equip would be bad for the morale of the RCAF. He thought the public had been convinced of the wisdom of the government’s decision to cancel the Arrow. To obtain other aircraft now in the face of statements that the threat of the manned bomber was diminishing and that the day of the interceptor would soon be over would be most embarrassing unless a reasonable explanation could be given. Additional BOMARCs in Canada might be an alternative. The [CDC] should first examine carefully what had been said publicly by himself and other Ministers about cancelling the Arrow and, in the light of that, consider what was possible. In any event, the safety of the nation should be the paramount consideration no matter what the consequence. He had been against cancelling the Arrow but had been persuaded otherwise.127

The decision on an alternative US interceptor was thus delayed, and it would be July 1961 before the RCAF’s five remaining NORAD squadrons were re-equipped with sixty-six surplus ex-USAF Voodoos.128

As for Avro, its last chance for survival was the contract to licence-build the aircraft which had been chosen to re-equip the Air Division, the Lockheed California Company’s CF- 104G Starfighter.129 At a 14 August 1959 Cabinet meeting,130 Cabinet observed that the “award to A.V. Roe would make certain the operation of the Malton plant for at least two or three years, and would offset the local disappointment about the abandonment of the Arrow programme.”131 However, Cabinet acknowledged that “Canadair had taken the initiative of seeking private orders, whereas A.V. Roe had failed to do so and had merely disintegrated.”132 Moreover, Cabinet believed:

Even if A.V. Roe received the contract it would merely postpone the evil day. It would inflate the working force for a brief period, with a serious readjustment of employment being required once again in a relatively short time. An award to Canadair, on the other hand, would help to provide the basis for a stable aircraft industry.133

Cabinet considered Canada’s aerospace industry to be over-expanded. Therefore, Canadair, having submitted a lower bid, received the contract, although Orenda did receive the contract to licence-build the Starfighter’s engine.

A kind of natural selection had occurred within Canada’s aviation industry. During the six-month extension, Avro and Orenda engaged in an exercise of wishful thinking and did little to prepare for possibility of the Arrow programme’s cancellation. Indeed, much of what they had done was counterproductive, such as blackmailing the government with threats of massive lay-offs and hiring Cockfield, Brown, and Company (a Liberal advertising firm) to conduct a high-profile and very public lobbying campaign.134 Pearkes later recollected that the government felt “besieged by the A.V. Roe people,”135 and Diefenbaker told the House of Commons that “no one will ever know the strength of the pressure that was brought against the cabinet to force it to do that which was not fair to the Canadian people.”136

Essentially, Avro and Orenda conducted their business, at best, as if they were still wartime crown corporations, at worst, as if they were an arm of the RCAF. Fred Smye, the President and General Manager of Avro, claimed that "Avro and Orenda were the industrial arm of the RCAF and servants of the government, as is any purely defence contractor. The companies had fulfilled this role solely from their inception and for a period of fifteen years."137 Thus Diefenbaker may have been correct when he noted “the company seemed horror-struck at ever having to compete in a normal marketplace situation.”138 Michael Bliss was harsher than Diefenbaker in his judgement of the companies: “The evidence suggests that A.V. Roe was a classic promotional company...built on wild optimism, taxpayers’ money, media gullibility, and Canadians naive patriotism.”139 And Julius Lukasiewicz was critical of everyone involved in the Arrow weapons acquisition process:

Canada’s venture into high-speed aeronautics was characterized by technical and managerial incompetence, inept organization, and bureaucratic inefficiency. But the failure of the enterprise resulted from a more fundamental cause: the unrealistic goal of achieving industrial and military sovereignty and self-sufficiency in military aviation. Throughout the 1950s, Canadian decision makers in the military, political, and bureaucratic domains allowed themselves to be swayed by visions of prestige and national pride. They failed adequately to assess and appreciate the resources, experience, and large markets necessary to pay for research and development costs. Erroneously, the country’s record as a wartime manufacturer of aircraft was regarded as significant foundation for original design work. Even private ventures such as Avro - a new company with imported talent and generous government funding - badly misjudged the extent of the task before them.140

Both companies now suffered the consequences for gambling their future on a single defence order. In Avro and Orenda’s defence, however, they were not solely at fault for the poor state of relations between the companies and the government. Cabinet had a hostile attitude toward company management (though the feeling was mutual) which did not facilitate proper communication. In addition, despite Diefenbaker’s later belief that “in effect, [we] gave Avro a year and one-half’s notice for what, in hindsight, was the inevitable,”141 the government had sent a mixed message to Avro and Orenda by delaying production for six months and asking them to explore the substitution of American electronics and missile systems. Though the tone of the government’s September announcement indicated to the House of Commons, the press, and most of the public that the Arrow programme was about to be ended, it did not say so conclusively enough for Avro and Orenda, who continued to operate as if the excellence of their product alone guaranteed its production and their corporate future.142

Between 1959-1962, Avro’s operations wound down, its management and workforce personnel departing for positions with other Canadian, British, but mostly American companies or agencies, with many making an invaluable contribution to prestige projects such as the Anglo-French Concorde programme and NASA’s space programme.143 “They’re hanging crepe at Malton and ringing their bells at Boeing,”144 wrote James Minifie of the end of the Arrow programme and the departure of the technicians and engineers. But though Avro died, taking with it almost twenty-five per cent of employment in the aerospace sector, the diversified parent company, A.V. Roe, survived.145 In 1962 it was renamed Hawker-Siddeley Canada Limited, the name under which it still operates.

“Ironically,” Dan Middlemiss wrote, “it was the failure of the centrepiece of this ‘go-it-alone’ defense industrial strategy - the CF-105 Arrow jet interceptor program - that prompted the Canadian government to seek another accommodation with the United States in the defense economic field.”146 In 1958-1959, the Diefenbaker government negotiated with the US the Defence Production Sharing Agreement (DPSA), acknowledging that in the case of major modern weapons systems, Canadian research and development would thereafter be integrated with - and in compliance with the strategic principles of - Canada’s closest ally, the US. Colonel Charles P. Stacey, the great Canadian military historian, put it another way: “ This dramatic affair made it painfully clear to the Canadian public that in the future Canada, whether she liked it or not, was likely to be militarily dependent on the United States to an extent unknown in the past.”148 Melvin Conant summed up the reason for this dependency:

Canadians have been victims of the sweeping and extraordinary rapid revolution in weapon systems, a change so extensive and of such headlong pace that no nation lacking an enormous industrial capacity, sizable reservoirs of technical skills, great wealth and technological and research facilities of impressive number can ever hope to contribute in a significant manner towards the requirements of strategic air or missile defence. A nation not so endowed, and associated with a global power, can hope only to make a moderately useful and modest contribution towards their common defence. In weapon development Canadians became subject not to the whims of the US Defense Department but to the scope of the American effort...No one would ever deride the quality of Canadian research and weapons development, but the scale on which these programmes must be conducted precludes most nations, including Canada, from participating meaningfully in the race.149

With the DPSA, Canada effectively abandoned the independent design of complete weapons systems such as the Canuck and the Arrow, accepted the reality of procurement reliance on the US, and profited through guaranteed access to the enormous and lucrative US defence marketplace in a manner analogous to the Canada-US Auto Pact of 1965.150 And, in no large part due to the DPSA, Canada’s remaining aircraft manufacturers survived by producing components of American weapons systems. In the end, as Robert Bothwell observed, “Canadian defence needs were satisfied with less costly American aircraft, and Canadian defence industrial needs were met by the conclusion of a defence production-sharing agreement with the United States, and by the stipulation that weapons bought by Canada involve some manufacturing in Canada.”151 Defence policy, like foreign policy, turned out to be the art of the possible. But the survival of the aviation industry led to a state of affairs in Canada where, in 1997, “if it no longer makes the world’s best warplane, it makes the world’s best commuter airplane.”152

The six existing Arrows were offered to the NAE, NACA, and the RAE for research purposes, but they were rejected because it was deemed simply too expensive to keep such a small number of aircraft flying. These six Arrows and thirty-one others in various stages of completion on the assembly line were stripped of all classified material and scrapped by DDP, not out of Diefenbaker’s vindictiveness as “Arrowheads” have often claimed, but simply due to bureaucratic standard operating procedure for reasons of national security and - on a very small scale - partial cost-recovery.153



Copyright Russell Steven Paul Isinger, 1997. All rights reserved.