Written by Alex Souchen

During the Second World War, Canadian factories produced an astonishing amount of munitions and supplies, including some 800 ships, 16,000 aircraft, 800,000 military-patterned vehicles, and 4.4 billion rounds of ammunition and shells. The industrial front also manufactured many other goods, from bedframes and uniforms to cutlery and typewriters. However, the accumulation of such a massive inventory of government-owned assets created a major problem when hostilities ended in 1945. When victory was won, the Canadian state encountered a logistical crisis: how was it going to dispose of all its surplus munitions and supplies?

My book, War Junk: Munitions Disposal and Postwar Reconstruction in Canada (UBC Press, 2020), examines how the Canadian state reversed wartime logistics to dispose of its surplus assets, and the ways in which Canadians responded to the unprecedented divestment of public property. This blog post will cover one part of this larger history by discussing disposal operations in reference to a particular interest group – veterans – in order to demonstrate how disposal functioned and supported postwar rehabilitation.

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Disposal operations took place under a microscope of intense political, economic, and social pressures, and inevitably became entangled within wider debates about social welfare and the role of the state in society. After all, the government had birthed a major industrial war machine with public money, so once victory was achieved it couldn’t just relinquish its assets haphazardly. It needed a plan. Across the whole political spectrum, people had opinions on how divestment should proceed. Conservatives and business leaders called for the wholesale liquidation of state-owned assets and a return to private enterprise after years of high taxes and heavy government regulation. Some business associations even demanded large-scale destruction programs to protect their industries from any unfair competition caused by the flood of second-hand goods.

By contrast, left-wing progressives and social democrats wanted the state to retain ownership and not pander to corporate greed. Instead of destroying the leftovers, they wanted surplus goods redeployed to ease material shortages, improve housing and social services, and outfit the state’s postwar reconstruction and rehabilitation programs. In the end, the Liberal government of Prime Minister William Lyon Mackenzie King steered a middle ground: liquidating ownership of as much as possible, while retaining some strategic assets and generally following the economic principles outlined in the White Paper on Employment and Income.

To help navigate this emerging minefield of competing interests, the Liberals established the War Assets Corporation (WAC) in November 1943. The WAC was a crown company responsible for administrating all surplus declarations from within the federal government and formulating disposal policies in consultation with an inter-departmental committee, the Crown Assets Allocation Committee (CAAC). The WAC also handled the physical aspects of disposal by collecting, storing, appraising, selling, and/or destroying surplus assets. In July 1945, the chairman of the CAAC, John Berry, took over as president of the WAC, to become the most important person in Canada’s disposal administration.

Berry spent most of his early tenure developing an administration that could control the deluge of surplus declarations, sell the mountains of merchandize, and accommodate the political and economic stakeholders. Because of pressure from the right and left, Berry designed a system that catered to business interests by default, but possessed a policy mechanism for strategic allocations. Strategic allocations were based on a four-tier hierarchy of “priority holders” that gained access to supply channels ahead of corporations. Ranked first were other federal departments, second were provincial governments, third were municipal governments, and fourth were “public bodies” (hospitals, schools, etc.). In this hierarchy, each level could submit a claim for an asset, and if no higher priority holder laid claim, the item(s) could be purchased ahead of corporations.

If surplus goods were not claimed by priority holders, they were passed on to the WAC’s Merchandizing Department, which used a wide network of agents and established businesses to make sales in accordance with the WAC’s mandate. Among other things, the WAC’s mandate required it to sell at price-ceiling levels, move surpluses into the economy as efficiently as possible, and prevent speculators and deflation from flourishing. In effect, the WAC operated a system of reverse logistics that redistributed surplus goods back into the economy through pre-existing supply channels and, often, the businesses that had just produced them for the war effort. Thus, Berry positioned the WAC to be a wholesale distributor that never sold directly to end users, unless a priority claim was exercised or a special auction sale was authorized. Many people in postwar Canada were unhappy about these arrangements, and the WAC was heavily criticized for not operating a network of government-run retail stores.

On the surface, the WAC’s sales policies and strategic allocations might seem cumbersome and unnecessary, but they allowed surplus assets to be reused and recycled into productive purposes without the fear of causing deflation or enabling speculators. Experience after the First World War suggested that restrictions on public access were critically important to a successful postwar transition and economic demobilization. When looking back on disposal operations in 1919, policymakers in the 1940s saw only failures and mistakes. Faulty policies had allowed unregulated fire sales to take place, which flooded markets and deflated prices. This had equipped speculators with the goods to supplant regular supply chains and robbed legitimate manufacturers of markets for future production. As Berry later told Parliament, no doubt with the roaring twenties and Great Depression in mind, the best way to prevent a “false boom and its subsequent evils” was to integrate disposal operations into pre-existing trade networks and use established businesses to support the status quo.^[1]

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The WAC’s selling strategy was not conceived with the needs of veterans in mind. As a result, over the summer and fall of 1945, the Royal Canadian Legion sought to remedy the situation by lobbying the government for a veterans’ priority-level. To make its case, the Legion collected examples of how the WAC was failing veterans. Many of the examples focused on motor vehicles and demonstrated how the WAC’s agents and intermediaries were abusing the system with hidden fees and price gouging. For instance, one soldier told his army councillor in Ottawa, that “I have been to several dealers. They will not talk to me unless alone and then persist in stating the necessity of extensive repairs on all vehicles taken over from the government. They refuse to consider a sale until I agree to pay the repair bill in cash.” Another veteran, who confronted similar deviousness but agreed to pay the dealer, stated: “I bought [the taxi] at $690, the ceiling price but had to pay a $210 repair bill on the quiet in order to get the car.”^[2]

The Legion’s efforts resulted in several productive meetings with officials from the Wartime Prices and Trade Board, National Defence, Veterans Affairs, and the WAC. At meetings on the 6 and 11 September, they drew up potential arrangements for establishing a veterans’ priority. These included, among other things, the creation of a list of items veterans needed most and the requirement that the WAC keep those items on hand for 30-days so the Legion could buy them on behalf of veterans or to allow individual veterans the time to submit a claim, inspect the goods, and make purchases. Summing up the recommendations J. W. Johnson, an official with Veterans Affairs, stated, “I think the draft is excellent. The suggestions we have put forward there in, I think are practical and if accepted should go a long way towards solving a vexatious problem.”^[3]

Unfortunately, on 6 December A. E. McMaster, the WAC’s general manager, replied to Johnson with some bad news. After conferring with Berry, it was clear that a veterans’ priority was “administratively impossible.”^[4] Although sympathetic to veterans’ issues, at that point the WAC was having a difficult time managing the postwar flood and the priorities were already holding up sales to the detriment of everyone involved. So, Berry was very concerned by the mandated 30-day hold. In the margins of Johnson’s original memo, he scrawled: “This envisages ‘blind buying’ of course, which was what we are trying to avoid. Suppose the vet is dissatisfied with the article when he sees it at the dealers? I fear I have no solution.”^[5] In other words, holding items on the speculation that veterans would want them, not only delayed final disposal, but turned the veteran into an authorized speculator.

Veterans were out of luck and could not get privileged access to surplus assets. Instead, they had to purchase them, like every other customer, through established businesses and dealers. This meant that no discounts were possible and that dealers added their costs and commission to the final price tag, thereby ensuring that second-hand items were sold at the highest prices allowed. For veterans, hoping to acquire items for their rehabilitation during a period of severe material shortages, this often meant expending their entire gratuity payments on second-hand materials that were sometimes inferior in quality or worn out. Moreover, it also put veterans and civilians in direct competition for goods, a situation that favoured the civilian who had earned higher wages in Canada’s bustling wartime economy.^[6]

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Although veterans were unable to gain special concessions as individuals, as a group they benefitted tremendously from disposal operations because many priority holders acquired surpluses to outfit rehabilitation programs. For instance, by March 1951, over 130,000 veterans received financial support to attend university or Canadian Vocational Training (CVT) programs across the country. As historian Peter Neary has explained, this investment proved fundamental to Canada’s future political, economic, and social fortunes.^[7] However, at the time, universities and CVT programs faced daunting challenges to both house and teach the sudden influx of student veterans.

At school, veterans were often able to double up on their service by using their wartime experience as a starting point for their education and civilian careers. Yet the size of cohorts strained capacity, as the number of students far outpaced the growth of facilities. Between March 1945 and March 1946, the CVT program underwent a 10-fold expansion, while some university classes went from 50 students in one year to over 300 in the next. Consequently, educational institutions spent over $2 million on surplus equipment, tools, buildings, and real estate to establish new classrooms and dormitories. In fact, one of the WAC’s biggest customers was the University of British Columbia. As part of a $5 million postwar construction program, UBC bought at least 112 surplus army huts for student housing and classrooms. In the years following the war, it was difficult to go anywhere on campus without seeing these converted buildings on the West Mall (See Photos 1 and 2).

There is no small irony that the veterans using these makeshift facilities as students were also, possibly, the same people who had worked and lived in the huts during the war. Yet this situation was precisely the type of conversion and reuse that policymakers wanted: it diverted government surpluses into social and educational dividends, while simultaneously supporting economic recovery and expansion.  For Berry and his staff, making the most out of war junk was the primary goal of disposal operations, but this objective was always tempered by the politics of competing interest groups, the asset’s depreciating nature, and the WAC’s mandate.

[1] Canada, House of Commons, Special Committee on War Expenditures and Economies, Minutes of Proceedings and Evidence, Statement by John Berry, 22 November 1945 (no. 2, book 2), 46.

[2] LAC, RG24, reel: C-5196, file: HQ 8350-56, E. M. Greaves, “Complaints – ex-service personnel concerning purchase of vehicles,” 6 August 1945.

[3] Ibid, J. W. Johnson to H. C. Chadderton, 26 September 1945, “Recommendations of Committee Set Up to Study Means of Obtaining Priority For Ex-Service Personnel Wishing to Purchase Goods Distributed Through War Assets Corporation,” J. W. Johnson to J. H. Berry, 22 October 1945.

[4] Ibid, A. E. McMaster to J. W. Johnson, 6 December 1945.

[5] Ibid, “Recommendations of Committee Set Up to Study Means of Obtaining Priority For Ex-Service Personnel Wishing to Purchase Goods Distributed Through War Assets Corporation” marginalia by John Berry, no date.

[6] Ibid, “Surplus War Assets and the Veteran” Brief by Legion, no date.

[7] Peter Neary, On to Civvy Street: Canada’s Rehabilitation Program for Veterans of the Second World War (Montreal and Kingston: McGill-Queen’s University Press, 2011), 198-207.