By Matthew Ehret

At the end of 2018, I wrote a three part history series entitled “Origins of the Deep State in North America” with part one ending in 1940 with the deaths of the Laurier Liberals O.D. Skelton, and Ernest Lapointe who had kept Canada’s Department of External Affairs free of the nests of Rhodes Scholars desperately trying to take over Canadian foreign policy. As we saw in that story, with their deaths, Prime Minister William Mackenzie King lost whatever reasonable council he had access to and fell hopelessly under the sway of British intrigue during the war years while Canada’s Department of External Affairs became a Rhodes Scholar/Fabian society run hub.

Part two of the Origins of the Deep State series began in 1945 and showcased the meticulous takeover of Canada’s science, culture and economic policies over the 30 post-WWII years leading up to the era of globalization and post-industrialism of the 1970s.

Many readers have asked me what happened to the period of 1940-1945? Was Canada’s experience during the war simply not a story worth telling?

With the 75th anniversary of WWII now upon us, and the need to re-activate the National Bank as an instrument for national development amidst the looming financial meltdown, the time has come to finally tell the story World War II.

The Buildup to the War

In the years leading up to World War II, Canadian nationalists who strove for true self determination outside of the will of the British Empire and its nests of Rhodes scholars then infesting the layers of Canadian bureaucracy and foreign policy, largely centered in the form of the “Laurier Liberals”. These were men of influence who had served under the great Prime Minister Sir Wilfrid Laurier during his reign from (1896-1911), and head of the opposition from (1911-1919) and thus shared his hope for a modern industrialized Canada working in alliance with the great republic to the south. They also shared Laurier’s suspicions of British intrigues which had so nearly destroyed Canada in World War I.

During WWII, the center of this fight was found in O.D. Skelton and Justice Minister Lapointe’s attempts to keep the Rhodes scholars from infesting the Department of External Affairs as had already long happened in Britain and was in the process of occurring in America’s State Department. [1]

The battle to control Canada’s foreign policy was not isolated to the Laurier Liberals O.D. Skelton, Ernest Lapointe and William Lyon Mackenzie King. Even Clarence Decatur (C.D.) Howe, the American engineer and Minister of Munitions and Supplies during the war, had felt the bite of London as early as 1936 when his attempts to rehabilitate Canadian National Railway was met with full resistance by Sir Edward Peacock, then head of Canadian Pacific Railway and the Barings Brothers of London in charge of managing the Monarchy’s finances and Sir Edward Beatty. Beatty and Peacock tried to hold the government of Canada at bay with the threat of destroying the nation’s credit, were it to attempt to continue with C.D. Howe’s designs [2].

Though never fully comprehending what he was running up against, C.D. Howe was again hammered by the British Empire’s anti-progress ideology in the Spring of 1940. Strained by demands to increase war production, and with the prospect of revolutionizing Canada’s highly underdeveloped economy, C.D. Howe’s requests for blueprints, designs and secret industrial processes so necessary to build up the Canadian war industries were blocked by the British government of Chamberlain. The blockage was justified by the claim that “the British could do the job themselves”, and that the “profitability of British private enterprise would be harmed”.  [3]

The reality is of course, that the British Empire has never permitted its colonies to develop their productive powers unless her own existence was existentially threatened were such progress not permitted otherwise [4]. While Neville Chamberlain was still in power, the policy of a British-Nazi alliance under a King Edward VIII, returned to the throne after his 1937 abdication was still on the agenda.

King Edward VIII, Wallis Simpson and Hitler in 1935

This existential threat reached its peak when Hitler became an uncontrollable Frankenstein monster, and began to pose a threat to his former handlers in London. At this moment, Chamberlain was scrapped and Sir Winston Churchill was appointed Prime Minister in his place. Churchill, still an unrepentant racist eugenicist who had earlier pledged his support for Mussolini’s corporate fascism, was deemed less tainted in the eyes of the world by pro-Nazism as Chamberlain, and the previously deposed Nazi King Edward VIII.

Churchill immediately reversed the previous British blockade against Colonial industrialization and permitted all that Howe requested, knowing that if Hitler won the war, contrary to the appeasement policy, Britain would be reduced to junior partner in the New World Order, if it were permitted to exist at all. For Britain to be saved, Canada’s productive and scientific potential needed to be unleashed post haste.

Beyond the aforementioned inner circle of Prime Minister King’s Cabinet that led the anti-British/pro-American dynamic, other personalities within the Cabinet also butted heads with minions of the Empire at various points before and during the war [5]. It were these personalities, and the lessons learned by their battles with the British agenda, that Prime Minister King had been induced to nationalize the Bank of Canada in 1937 [6]. This nationalization of the previously privatized central bank was ushered in with the following words:

“Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government   and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”                                                                                                                                                          

-Prime Minister William Lyon Mackenzie King, upon nationalizing the Bank of Canada in 1937 [7]

The Churchill Reflex Thwarts the Hope for a Canadian Credit System 1940-45

As the war began, the logic of money no longer ruled, but rather it was the mission to win the war that governed economic planning… to a point. The British Empire, through its vast Privy Council powers stretching across the commonwealth nations were forced to adopt a new policy during the war known henceforth as the “Churchill Reflex”.

Across the commonwealth, this “Churchill reflex” complicated the British Empire’s strategizing as it involved the double sided challenge of: 1) unleashing creativity and industrial development in its dominions on the one side, while 2) not allowing the application of American System practices and cultural tendencies to become the dominant characteristic of the nation and its people on the other. Said otherwise, the imperial paradox can be formulated this way: “how can we achieve 1) the material effect of progress in order to save the empire from its Nazi Frankenstein monster, while 2) halting the true cause of progress whose self conscious manifestation will necessarily destroy the empire?”

The reality which any imperialist cannot face and the cause of this paradox, is to be found in the fact that very act of suppressing a culture of creative reason, and lowering the energy flux density of that society’s powers of successful survival, necessitates not only programs of genocide to rein in excess “useless eaters”, but also forces the collapse of that system as a whole, in which the imperialist find themselves. The species characteristic of an imperialist is thus, absolute self extermination by attempting to suppress the singular principle upon which our species’ survival rests.

The second factor embedded in the Churchill Paradox above was highly contingent on the control of the culture, of which Canada’s historic anti-American sentiments proved the best line of defense for the British to exploit. As noted by Frank Underhill, Rhodes Scholar and co-founder of the Fabian Society of Canada’s League of Social Reconstruction [8]: “Canadians were the first anti-Americans, the ideal anti-Americans, the anti-Americans as they exist in the mind of God”.

That is to say, if technological development and nation building were to be permitted and if a compromise were necessitated such that American System practices in the domain of economic planning had to be accepted by the British, then additional energy had to be invested in amplifying the anti-American cultural identity that had so long been a crutch on Canada’s sovereign potential. This was the role assigned to Vincent Massey (former High Commissioner of Canada to Great Britain), and his French Canadian assistant George Henri Lévesque who were to both later lead the anti-American Cultural operation to form a new Canadian identity with the 1949-1951 Royal Commission on the Arts and Letters in Canada.

This Delphic technique of adaption to the form of the Good with the intention of subverting its essence at the first opportune moment was a craft honed by the oligarchy since the ancient days of Babylon [9]. This fact must be kept in mind when investigating all war-time and post-war nation building initiatives undertaken by Britain and her Dominions, and their relations to the American republic. This is also necessary if one wishes to understand the multi-layered fallacies of identity which embraced the minds of many genuine yet misinformed lovers of progress in Canadian history who often had no idea of the degree to which they unwillingly served instruments of an evil will they themselves never understood nor agreed with.

While C.D. Howe, the brilliant yet pragmatic engineer and businessman was much wiser than the mystical flake William Lyon Mackenzie King, (genuine lovers of progress both), he was still but one among a variety of such well-intentioned nation builders who still fell under the web of this Delphic manipulation [10].

The Bank of Canada’s only approximate use as an instrument of productive credit similar to that of the American System function was witnessed during the period of 1940 to 1945 with the issuance of Victory Bonds. The man who must be credited during and after the war with doing the most to use those victory bonds in a way that uplifted Canada from an agricultural to a modern industrial economy is C.D. Howe. Historian Michael Bliss wrote that “for Howe and other entrepreneurial spirits interested in the creative uses of government power, the war was a kind of ultimate megaproject, a great development job. Money didn’t matter, production did.” [11]

This was the spirit which animated the functioning of any proper Hamiltonian national bank and the Bank of Canada was no exception during this time.

From 1940-1943 Canada had produced over 600 ships, 1100 aircraft, and half a million cars and trucks. Canada was renowned for having the fourth largest Air Force and the third largest Navy by 1945, and one of the most able scientific bodies under the National Research Council.

Howe’s success as Minister of Transportation before the war, Minister of Munitions and Supplies during the entirety of the war and then Minister of Reconstruction afterwards was based on two factors: 1) His dedication to the idea that Canada could produce anything as good as any other nation with the assistance of the United States committed to similar aims, and 2) his entire disdain for bureaucratic parliamentary procedure in favour of a process of informed top down decision making. Both factors guided Howe’s use of Crown Corporations as public instruments around which to organize the economy, of which Howe created 28 during the war alone [12]. Howe knew that without such national instruments, then economic progress driven by the advancement of civilian nuclear power, aviation, aerospace, industrial innovation, nor major infrastructure works could ever occur as “the markets” left to their own devices tend always towards momentary profits without any consideration for the future needs of society. In real terms, no free market system can ever exist as long as private central banks and international cartels can politically manipulate nations of the world.

While under the influence of pro-development leaders like C.D. Howe or FDR (featured above), William Lyon Mackenzie King was able to be a functional statesman

The uncharacteristic lack of any direct resistance to progress by agents of the British Monarchy during this time and after the war is due entirely to the fact of the Delphic technique referred to above.

Much like FDR and following the lead of American System methods of thinking, Howe was a dirigist capitalist, NOT a free market monetarist as today’s authoritative sources portray him (including those directors of the right-wing think tank named after him). The system of Crown corporations created by Howe also allowed him to bypass parliamentary red tape, and make direct decisions without submitting to bureaucratic machinery, or political hackery so powerful within the Westminster Party System upon which the Canadian Parliament is based. It has always been the top down decisions made by strategic statesmen bearing insight into the nature of mind and their commitment to progress which have represented the greatest threats to the British Empire. Howe and FDR’s orientation embodied the type of thinking that gave nightmares to such characters as were found within the Rhodes Trust, Fabian Society and CIIA networks, and due to the weakness of the Imperial system at this point, they largely had to accept it. The greatest weapon used to subvert this orientation at this time went by the name of John Maynard Keynes. These networks had continuously attempted to impose fixed system Keynesian thinking upon Canada’s productive planning and have all but destroyed Canada for their efforts.

Keynes Destroys Canada. Roosevelt Saves It.

Canada is renowned for being the first country to completely adopt Keynesian economic practices into its national programming. Contrary to the belief that this was the reason for Canada’s ability to coordinate itself, it was actually a painful crutch. The failure of Canada to adapt to a Rooseveltian mode of economic practice resulted in two crises that nearly saw the collapse of the Canadian economy, and in both cases was saved by Franklin Roosevelt’s interventions.

Needing to produce much more than the financial resources of Canada would permit, and nearly snapping under the pressure of the lack of American dollars, two emergency agreements were reached via FDR’s intervention into Canada. The first was the Ogdensburg Agreement of August 18, 1940 which saw America provide a gift of fifty Destroyers in exchange for the stationing of U.S. Military bases in Newfoundland, and Bermuda [13]. This was followed soon after by the Hyde Park Agreement which was signed on April 20, 1941 providing a U.S. contract for $200-$300 million worth of defense articles to be produced by Canadian industry paid in American dollars.

In both cases, America was not yet in the war and due to political restraints imposed by the Neutrality Act, could only contribute to the war effort indirectly via Canada. The Ogdensburg Agreement is notable for striking an end to British preferred free trade status and a large reduction of Canada-USA tariffs, alongside the creation of the Joint Board of Defense. These measures effectively achieved much of what Laurier’s Reciprocity Treaty of 1911 [14] was kept from doing 30 years prior, and brought Canada-U.S relations into a new dynamic of cooperation which catalyzed the unprecedented growth, and creative technological advancement of the Canadian economy during the coming years.

By the end of the war, the economic miracle led by Howe’s program and FDR’s guiding vision, resulted in Canada becoming the fourth largest productive power in the world (following only America, Russia and Great Britain). The close ties which Canada cemented with the USA unleashed a blast of progress unseen in history and a profound optimistic faith in humanity’s ability to overcome all problems natural or man made. Even the highest echelons of the Canadian establishment were forced to bend to the reality that the population no longer accepted the conditions of imperial servitude under zero-growth forms of monetarism that had so long held back Canada’s development.  1943 Liberal Federation manifesto reflects the influence FDR and the successes of his anti-Monetarist policy which read:

“Financial considerations have not been permitted to limit the national war effort… the National Liberal Federation believes that the use of public finances and the national credit to promote the welfare and prosperity of the country in peace time will be limited only by the measure of agreement attained by the Canadian people on national objectives and by the united will to achieve them… these objectives cannot be achieved on pre-war levels of national production, national income and national revenue. Fiscal policy should be designed to promote rather than to retard the expansion of national production and national income”. [15]

The Sabotage of the C.D. Howe Impulse

The Liberal Party remained in power until 1957, during which time, it continued to employ this orientation towards progress and greater USA cooperation. During this important interval of time, many of the enemies of progress who secretly yearned to destroy America used Canada’s increased economic alliance with the republic in order to infiltrate its agents into positions of influence all over the continent, preparing the whole time for the ripe moment in which to strike.

This ripe moment came during during the period of 1957-1963. It was during this interval that a CIIA-run coup led to the Liberals fall from power and the rise of John Diefenbaker’s Conservatives. During this interval, not only did C.D. Howe and Prime Minister St. Laurent pass away, but a systemic purge was conducted of the federal Liberal Party of all “C.D. Howe Liberals”. The agents assigned by Vincent Massey to carry out this purge were Walter Lockhart Gordon and his underling Lester B. Pearson, soon-to-be Finance Minister and Prime Minister of Canada respectively.

The key shift in this process lay in the 1963 assassination of President John F. Kennedy, and the last self-conscious representative of the true constitutional principles of the American system of political economy occupying the presidency of the United States. The same Rhodes Trust networks that strove to sabotage Diefenbaker’s Northern Vision program, while simultaneously purging the Liberal Party of its C.D. Howe impulses, were also providing the logistical planning for the assassination of Kennedy, as seen in the vital role played by British Intelligence’s Major Louie Mortimer Bloomfield and his Montreal-based Permindex assassination bureau. [16]


(1) See the previous issue of the Canadian Patriot for the full story.

(2) Recounted in Robert Bothwell and William Kilbourn, C.D. Howe: A Biography, Toronto University Press, 1979, p.99

(3) Bruce Hutchison, The Incredible Canadian, Longmans, Green and Company, Toronto, 1952, p. 280

(4) An earlier example of this British phenomenon can be witnessed in the National Policy of Sir John A. Macdonald in 1867, a policy which adopted measures of protectionism and rail construction used against Britain by the United States for a century, and now had them applied by Canada against the United States in order to destroy the potential won by American System Canadian statesmen like Isaac Buchanan and Thomas Coltrane Keefer in moving Canada closer towards sovereign nationhood and closer ties with Lincoln’s America through rail development, industrialization, and investments into science.

(5)Various anecdotal stories have been preserved of battles with British policy waged on all fronts by members of King’s cabinet such as Minister of Defense Ralston’s battles with British puppet Gen. MacNaughton regarding MacNaughton’s prolonging the war under Churchill’s orders by the bungling the failed Dieppe raid of 1944 and Minister of Finance Harold Ilsley’s fight with Churchill over Britain’s demands that Canada turn in French gold being held in Canadian banks.

(6) Whether it can be stated with full confidence that the nationalization of the Bank of Canada harbored an honest intention is still uncertain, as the potential yet still exists that a greater power for good may have been available before this maneuver occurred. It can certainly be said that the provincial control over credit directed to progress was at various intervals preferable to a federal control of finance committed to control and sabotage progress, which has tended sadly to be the effect of Britain’s vast control of Canada’s federal bureaucracy, while the provinces have enjoyed a large degree of sovereign autonomy due to section 92 of the BNA Act of 1867. Provincial nation-building case studies can be seen in B.C. Premier W.A.C. Bennett’s creation of the Bank of British Columbia in 1964 to attempt to finance his lifelong dream of northern development, and Quebec Premier Daniel Johnson Sr.’s fight to develop the hydroelectric potential of Quebec. In each case, republics governed by bold statesmen catalyzed and supported the sovereign rights of these provinces to develop, where they would have failed had they attempted their programs all on their own. Where John F. Kennedy supported Bennett in the case of the Columbia River Treaty and Peace River development, President Charles de Gaulle supported Daniel Johnson’s cause.

(8) The LSR was instituted as a think tank in 1932 by a nest of Rhodes Scholars and London School of Economics trained Fabian Society operatives by the names of Graham Spry, Eugene Forsey, Frank Underhill, F.R. Scott, Escott Reid and J.S. Woodsworth. Woodsworth, a self professed eugenicist was selected to head up the LSR’s political party named “The Cooperative Commonwealth Federation (CCF), later to be renamed the New Democratic Party (NDP).

(9) This strategy is also the root of the old adage “When you can’t beat em, join em”.

(10) Other figures in Canada’s struggle for development included Prime Minister Louis St. Laurent, and Prime Minister John Diefenbaker. For more on this phenomenon, refer to Diefenbaker and the Sabotage of the Northern Vision, by this author, Canadian Patriot #4, Jan. 2013.

(11) Michael Bliss, The Right Honourable Men: The Descent of Canadian Politics from Macdonald to Chretien, Toronto, HarperCollins Publishers, 2004, p.165

(12) Among the most important Crown corporations were Atomic Energy Canada, A.V. Roe (Supersonic jets), Air Canada, and Polymer Corporation

(13) It is probable that Roosevelt’s intention to have American military bases stationed in Newfoundland and Bermuda was a part of the Post-Imperial Grand Design which FDR’s son laid out in his 1946 book “As He Saw It”.  Newfoundland was renowned as the only part of Canada that had rejected the Articles of Confederation of 1867 and was the most likely British territory to join America after WW2.

(14) The failed Reciprocity Treaty of 1911 was the attempt by Prime Minister Wilfrid Laurier to secure free trade with the Americans on agricultural products alongside a substantial continental protective tariff against British dumping of cheap product. Laurier’s ouster from office was led by a vigorous campaign by the Masonic Orange Order, as well as the newly formed Round Table Movement of Lord Alfred Milner. After falling from power, Laurier wrote:

“Canada is now governed by a junta sitting at London, known as “The Round Table”, with ramifications in Toronto, in Winnipeg, in Victoria, with Tories and Grits receiving their ideas from London and insidiously forcing them on their respective parties.”

(15) 1943 Liberal Party platform cited in Bruce Hutchison’s The Incredible Canadian, 1952, pg.329

(16) Jeff Steinberg and Joseph Brewda, Permindex Ties Revealed to JFK Murder, 1001 Club, published in the Feb. 2013 issue of the Canadian Patriot, p.37