5 GOVERNMENT COVER-UP

On his return from the dominions office on February 1935, Simpson was trying to peg out a financial safety net for the government. Aided and abetted by Lodge, Simpson put his plans in motion for taking control of the companies, which did not happen in the case of the two Cardiff -based companies (Jayo Shipping Limited and J O Williams Limited). Simpson wanted to make sure that should the logging operation fail then the British government would at least have some compensation for their loans.
On 9th March 1935 with reference to the £40,000 colonial development loan for Williams,

"advance will be secured by First Mortgage on all properties on the Labrador Development Company including…some 200 houses to be constructed with the help of amount provided by loan during this spring, in addition to first mortgage on J O Williams Limited, Cardiff”[9]

On 27 March 1935 the first government loan of £40,000 was formally approved but not on the original basis for housing. The first instalment of £24,400 was advanced before 31 March 1935 on Simpson’s assurances about the adequacy of the security offered and on the basis of a satisfactory company forest policy to the commission of government. Williams produced a glossy brochure about The Labrador Development Company that presented a misleading picture about the general standard of living for the loggers and fishermen and their families in Port Hope Simpson, 1934–1935.
By 18 April 1935 the British government had found that John Hope Simpson, their own commissioner of natural resources and acting - commissioner of justice in Newfoundland, had first recommended Williams for a colonial fund loan in 1934 only to find that he was now recommending that Williams should transfer to the commissioner of natural resources all of the capital of the two companies.
On 4 June 1935 in a very confidential letter marked

“secret and personal”

Sir John Hope Simpson wrote that 200 families were being settled at the Alexis River site. Less than two weeks after Simpson wrote the above letter, the Newfoundland–based commission of government had supposedly taken over complete financial control of all properties in both of Williams’ companies. That Simpson had moved so quickly in making such preparations is in direct contrast to the previously supportive way in which he had dealt with the company. In a letter on 5 July 1935 to Bridges, Clutterbuck at the dominions office wrote that plans were in sight for a permanent settlement. Two weeks later, Simpson wrote that the loggers were earning great wages of about $3.00 per day. In fact they were only earning at the very most about $1.30 per day. By
September of that year, Simpson revealed he was looking for excuses to leave the scene in Newfoundland altogether.
In October 1935, after 20 months in his post, the 67-year-old Sir John Hope Simpson gave notice he wished to resign although his request wasn’t granted until September 1936. He had spent three of the 20 months back in England from November 1934 to February 1935 and a change in his attitude to J O Williams was noticeable upon his return. In fact, it was already too late to undo the damage done to the government’s business relationship with Williams by Simpson’s favouritism.
Simpson's actions had changed the basis on which the original loan was allocated from one of housing to one of relying upon his personal recommendation regarding financial security and meeting the commission's forestry requirements, both of which he controlled. Furthermore, Simpson offered the necessary security for the loan because he had arranged for Williams to mortgage two of his companies to the government. Although a variety of names do appear in the J O Williams company's list of directors it has not been found that a government director was on the board at any time from 1934 to 1939 when Williams was in a position of extreme liquidity. The British government was still very uncertain about the strength of the security for its loans and about the recipient’s ability to repay what he owed it. For example, on 25 May 1938 a load of pit props at queen's dock Cardiff, held by the Great Western Railway Company for Williams was mortgaged or charged to Barclays Bank for an amount not exceeding £10,000 as the Government attempted to cover their outlays.
In February 1940 when Claude Fraser, secretary to the commissioner of natural resources was ordered to the appointment of government director of the Labrador Development Company (soon to be followed by Thomas Lodge) could it be truly said of the commission that it was in a position to be fulfilling its elected duty in regulating the company’s activities. Unfortunately the Dominions office had got themselves into such an unholy mess by that time on Simpson's say–so about supporting J O Williams, that government loans continued to be allocated to J O Williams.
Williams' confidential letter to Yonge in 1941 in which he admitted that he had the money but wanted to get as big a concession from the government as possible before disclosing his financial strength indicates his level of deception. It was only after Williams and the Labrador Development Company had left Port Hope Simpson in 1948 that the people could set about bettering themselves, but by this time many had moved away in search of work.
How does Simpson fit in with the events of the early hours of 3 February, 1940 when Eric and Erica died? Even once back home in England, Simpson still continued the struggle that he eventually won: to keep the Newfoundland Rangers Force away from the authority of the department of justice. This was not a matter of departmental
jealousies as suggested by Horwood but the actions of a man with a
tarnished reputation who was set on a damage-limitation mission for
the rest of his life, for himself personally; for the office of commissioner and for all those who followed him; for the dominions
office and the whole of the British government.
Simpson valued Claude Fraser very highly as his loyal secretary of natural resources, a position described as being equivalent to that of a deputy minister. What really revealed Simpson's position was when Fraser, who was still secretary of natural resources at the time, was ordered to take up the additional post of government director on the St John’s board of the Labrador Development Company on 2 February 1940; exactly the same day on which Eric and Erica died. But by then it was too late to cover the fact that the commission of government had been neglectful in its duty of making sure they had their own representative on the company's board of directors to regulate what was going on at Port Hope Simpson. The fact that there was no government director from July 1939 to 2 February 1940 highlights the position of the officials concerned in the particular combination of circumstances surrounding the deaths of Eric and Erica.
Frank Chesman was the director most in contact with Yonge in the time leading up to the deaths, yet he never acted to stop the so-called “Yonge Contract” between Keith Yonge, the manager and Eric Williams, J O Williams’ eldest son, from going ahead. Instead Chesman was enjoying an extra income from the company with the personal use of a motor car and a salary increase around the time of the two deaths. The Yonge Contract drawn up in the fall of 1939 gave Yonge the right to cut and sell pit wood for his own personal benefit to the Labrador Development Company whilst he was still employed as manager of the company.
On 10 January 1936 Simpson and Howley returned to St John’s with the new governor, vice-Admiral Sir Humphrey Thomas Walwyn, who was not a popular appointment with Simpson. By 30 January 1936 it was clear that Simpson had had more than enough of the commissioner’s job and Thomas Lodge had also received instructions to proceed to England. By March 1936, the Labrador Development Company had built only 14 company houses in Port Hope Simpson despite £40,000 (or 16.7% of the total colonial fund development loan allocation) having been arranged to be paid into the Newfoundland account of the bank of Montreal in London for the company by 18 March 1936. On 29 May 1936 the dominions office announced that Simpson would be relinquishing his appointment as a member of the commission of government of Newfoundland in September to be replaced by Robert Ewbank. Unfortunately, commissioner Ewbank was soon to make his own blunder when he authorised the use of part of the government loan to purchase the right to cut timber on the Tobin Limits. In 1936 the

“Tobin Writ”

was issued against the Labrador Development Company by the government.
According to her birth certificate, Erica Anitoff Williams was born on 15 July 1936 to Eric and Olga at 29 St. Isan Road, Heath, Cardiff. However, an aerial photograph [10] dated March 1937 and oral history prove conclusively that no house had even started to be built at 29 St Isan Road, Cardiff until 1939 at the earliest and that the first person to live there in 1939 was a Mrs Watson. [11] The building of 29 St Isan was not completed until after the war according to David Elliott its current owner. Erica was not born at 29 St Isan Road because there were only fields in the area in 1937. Discrepancies numbers three and four now become clear: Eric had recorded a false address for his daughter’s place of birth and his own place of residence when he registered the birth two years later on 31 August 1938. Since his father didn’t want to give the game away about where he and Eric were living at the time of Eric’s death so discrepancy number five occurred, this time in the Jayo Shipping Company records where Eric’s place of residence was entered. The company records show, that he had recorded Eric’s place of residence on 13 February 1940(ten days after he first knew of his son’s death) as 29 St Isan Road, Cardiff instead of 23 Kenilworth House, Castle Court, Cardiff, Wales where Eric had last been living before he left for Port Hope Simpson in 1939.
The most obvious thing for Williams to do was to omit any reference at all to Eric and Erica’s address on their tombstone and that’s exactly why the sixth discrepancy occurred: he instead instructed the stone mason to inscribe the inaccurate, different address for Ethel and himself of Labrador House, Southerndown, Wales instead of 14 Dunraven House, Castle Court, Cardiff, Wales which was their main address on the day that Eric and Erica died. Williams maintained the secrecy about the location of their permanent address even after the deaths.
On 4 September 1936 John Hope Simpson’s resignation was accepted. He received royal licence to wear the Insignia of the Order of the Brilliant Jade from the Republic of China for his service as director general of the Chinese national government flood relief commission and by December 1936 he had been invited to distribute prizes at his old Liverpool College. Further honours followed. By February 1937 The Times had announced that Simpson had been awarded the KBE.
No honours were bestowed on Thomas Lodge. The dominions office had announced on 8 December 1936 that he would be replaced in February 1937 by Sir Wilfred Wentworth. Back in Port Hope Simpson by the end of 1936, the company had arranged for the men to build themselves about 60 small houses for rent but most Labradorians chose not to live in the company housing due to their rental costs, living instead about a quarter of a mile away on the opposite side of Black Water
brook. Three years after the commission had started its work, questions were asked of Macdonald, Secretary of State for dominion affairs, in the house of commons in London about the extreme poverty still in existence in Newfoundland (17 March 1937). After three years of a
government-subsidised Labrador Development Company in Port Hope
Simpson very few quality houses had been built for the loggers and
their families and very poor wages had been paid. False impressions
had been created not only about the age of the commissioner
responsible for promoting the company in the first place but also about
the general living conditions in the settlement by the company’s own
glossy brochure. All this was much like the window dressing of an
answer given by the Secretary of State who was more or less told by
Mr Ellis Smith,

“Can we have an answer to the questions stripped of all the trimmings?”[12]

In line with the English civil service tradition of keeping a discretionary silence, on 27 August 1937 Simpson bade his own farewell to Newfoundland; nine days after Eric Williams married Olga D’Anitoff at St Margaret’s Parish Church, Roath, Cardiff.
The outcome was the opposite for Thomas Lodge, who had the courage to speak out against what he understood, was going on in the commission. For breaking ranks he was pilloried because he had undermined the great value attached by the civil service its own tradition of discretion.
From 1937 to 1938 Keith Yonge, manager of the Labrador Development Company at Port Hope Simpson, had disregarded Williams’ instructions to keep the 1937–1938 cut of wood to a minimum. Huge surplus stores were ordered and the company’s liquid position was further strained. However, on the issue of houses for its workforce Commissioner Ewbank stated that,

“The failure of the Company to erect 400 houses involved no breach of contract” [13]

No evidence of a legal contract between the Newfoundland Government and Williams has been found.
J O Williams was also earning his money from other sources as well as Port Hope Simpson. For example, his own company records show that from April 1937–April 1938 he imported 17,768 fathoms of wood into Cardiff from Newfoundland; 19,242 fathoms from Finland; 1,929 fathoms from Latvia; 2,231 fathoms from Poland; 1,022 fathoms from Germany in addition to the 10,466 fathoms from Labrador. From 1937–1938 the total winter population of Port Hope Simpson stood at its peak of about 500 including about 150 women and children. In justification of the good works done by J O Williams, Williams’ counsel at the public enquiry in 1945 emphasised that the company had rendered every possible service at considerable cost to provide work for the people of Newfoundland and the needy families of Labrador. By so doing it was claimed it had adhered to the agreement made with the commission of government on 30 April 1934 that the government wished to do everything it could to help develop the Labrador and the company. Williams’ counsel claimed that after years of work; the company had stabilised and had built up an efficient unit of workers who took an interest in their work and their employers.
By 15 March 1938 J O and Eric, each a director of all three companies, had by now moved to live in expensive Westgate Street, Cardiff city centre near Cardiff Castle. Williams lived at 14 Dunraven House, Castle Court and Eric lived next door at 23 Kenilworth House, Castle Court. The name “Dunraven” had an associated meaning:

“There are many legends of smuggling…associated with this dramatic spot.”[14]

However, living back in Cardiff or on holiday in South Africa in 1938, Williams was too often removed from the scene of his Labrador operations. He also had to run his two other businesses in Cardiff. He always borrowed too much given the small amount of security he could offer; he was gambling with other people’s livelihoods as well as with his own. He was living at a prestigious address in the centre of Cardiff whilst his Labrador Company was living more and more beyond its means to repay its government loans. On top of this, he had rentals and the expense of the Tobin timber trespass filed against him to pay for. The department of natural resources had never properly surveyed timber boundaries, which had added to, if not caused problems do with illegal cutting in Labrador.
Williams had failed to build sufficient houses at Port Hope Simpson and admitted he and the government had under-estimated the cost of establishing a new settlement. He was a pioneer entrepreneur, trying to establish himself in challenging physical conditions. Even with his great experience in the Baltic and Scandinavian countries, he had not managed and properly paid his workers in Port Hope Simpson who quite understandably went on strike. He appointed managers who could not handle the situation properly and even sent out his son Eric later in 1939 instead of going out himself. Huge sums of money had been wasted on court cases, and a public enquiry. That Williams’ private scheme was never sufficiently funded from the start, was one of the judgments handed down from the public enquiry report in 1945. By 1938, he had become well versed in creating a false impression about what was really going on as he misrepresented the reality of the wages he was paying. The beginning of 1934 had been a year of great optimism for Newfoundland, at least in the Press of the time when the commission of government was to take Newfoundland onto a sound financial footing and sure enough, five years later, The Times reported how the economic conditions there had improved. The report went on to say that, the incomes and standard of living of its people were closely tied up with

“external economic factors”.

As one of those external factors, Williams was a short-term economic developer. Although he had shown that providing work other than fishing was quite possible on the Labrador he had provided few community facilities for the general good.[15] He claimed to have paid for the building of the Anglican school and contributed $250 per year towards the buildings and the salaries of two schoolteachers and $60 for that of a postmaster. He also claimed that he had paid out for the hospital and the roads. But sadly it was another tissue of lies because the Ranger reported in May 1941 that no roads had been built, and the original correspondence showed that Williams had been granted government aid to pay salaries which he dishonestly implied he had paid himself.
Williams sent Eric out in the spring of 1939 after notice had been received on 30 April that surplus stores worth $80,000 were at the store in Port Hope Simpson. The average profit on the stores was claimed to be $12,000 by Williams’ side but for the year in which Keith Yonge took them over they showed a loss of $8,000. Mr Hudson, secretary of the Labrador Development Company, also cast doubt on Yonge’s trustworthiness. On 25 August 1939 Williams wanted an investigation into Yonge’s activities and his true motives about planning to take over the Company exposed.
By April 1941 Keith Yonge had offered his services to the War Office, only to be turned down, and J O Williams was complaining that Yonge had not even sent him the measurement of his son's tomb. He remained highly suspicious of Yonge's motives and actions. By September 1942 Williams had even resorted to seeking the commissioner of natural resources, Peter Dunn’s permission for Yonge to send him the measurements of his son’s tomb, complaining that he had already made three requests without reply. Dunn replied that Yonge had said he had forwarded the measurements several times. Yonge was not prevented by the government from communicating directly with Williams on personal matters. It is known that a personal letter from Keith Yonge was received by J O Williams at around the time of the deaths but its contents are kept as a family secret. [16]
In September of 1943, Yonge had suggested to J O Williams that the operation at Port Hope Simpson should be converted into a co - operative venture as he did not see how the Labrador Development Company could carry on. He stated there was not enough timber for the company ever to pay its way. Subsequently he made another proposal to the local directors whereby he was to acquire certain stocks for cash and the right to cut timber on his own account. Both proposals were rejected. By this time, however, the Newfoundland government had appointed a receiver director for the Company.
J O Williams’ view of Eric was that there no question of appointing him as manager. He considered that in his absence, Eric practically owned the company. However, when Eric intervened at Port Hope Simpson by sending $62000 worth of surplus stores back to St. John’s, Yonge threatened to resign and Eric was recalled by the government to St. John’s. Then after funds were cabled from Cardiff, Eric returned to Port Hope Simpson with little time to prepare for the season and decided to make a contract with Keith Yonge to cut wood for the company. By October 1939 Yonge had in effect taken over the operation at Port Hope Simpson for himself whilst still employed as manager of company.
In November 1939 J O Williams opinion was that the government had humiliated his son by supporting the manager against the owners of the company and that Yonge had tried to grab the company for himself. Eric on behalf of his father had made the best of a bad job when he made the Yonge contract. When Keith did not wish to carry out Eric’s instructions he appealed over his head to the board of directors in St John’s. By March 1940, Yonge’s accounts for the company store actions were exposed by the government’s auditor as not having been independently verified. The auditor also doubted that the relevant documents for the store had been destroyed by a fire and he suspected over $25,000 would have been chargeable to Yonge had he kept proper accounts.
On the other hand, Wilcox from the British Treasury stated that the Newfoundland government had failed to exercise enough supervision over operations as required by the loan from the colonial development fund.
Eric realised that the financial prospects for the company were looking bleak indeed. He had advised his father in the fall of 1939 that the management in St John’s should be left to himself and Chesman and that the Labrador Development Company was fast losing ground. Despite what his son had advised and the attempted Government take-over of his companies, J O Williams persisted in exercising control over matters from Cardiff.
There were still only 26 company houses and only a few other facilities in Port Hope Simpson in January 1940. Instead, Williams had chosen to invest his fortune in new houses in Wales whilst he always claimed to have invested a great deal of his wealth in developing business in Newfoundland and Labrador. By 1940, the government had claimed control of his business, but he remained its legal owner. There had been no real lasting partnership of any kind between the commission and Williams except for in 1934 when the new business had been started up in such a celebratory style. Sir John Hope Simpson in a memorandum to the commission dated 18 April 1935 had informed them that Williams had agreed to the government director being given practical control, including a veto on any increase in the salary of the managing director. No evidence has been found to show that this ever took place. About a month before the deaths, Williams complained that the Bank of England was responsible for holding up his wage payments amounting to $11,000 for further enquiry. No annual meeting of the Labrador Development Company was held from 1938 to 1941 and the auditors complained of the unsatisfactory way in which accounts had been kept in certain respects although Bradney, the government’s auditor, did not absolve the company’s government director of blame in that regard.
On 15 January 1940 Williams claimed that the money for wages had now been remitted and Chesman was referring to both Eric and Keith as company Number Twos, in his exchange of cables and letters with Williams. Chesman implied there was confusion about who was in charge and he stressed to J O Williams that there was a need for him to pay the wage cheques. Yonge remained isolated and unable to pay the employees at Port Hope Simpson and therefore was in trouble with his work force.
He wanted arrangements in place to give him sole control of the Labrador Development Company after Eric’s death.
J O Williams stated that it was only the death of his son that made the contract so profitable for Yonge because there was nobody to control it. J O Williams was deliberately kept in the dark about the business situation of the company in Port Hope Simpson by Yonge who was being supported by Chesman in St John’s. Chesman kept on telling Williams how bad things were from his point of view, but his salary increase and other increased company expenses only heightened Williams’ suspicions that he was collaborating with Yonge against him. Chesman’s suggestion that Williams should hand over practical control to either the local board of directors or Yonge and himself showed that he was seeking to use the situation to his personal advantage.
Eric Williams was a director of Jayo Shipping Company, J O Williams and Company and the Labrador Development Company when he died on 3 February 1940. Although Eric was not the main partner or actual owner of the parent Company, J O Williams Limited when he died, he was definitely the chosen one. His father was not exaggerating when he viewed Eric’s position in the company as almost equivalent to his own when he went out to Port Hope Simpson in 1939. Eric had been groomed by his father to take over the running of at least one if not all of his three companies. If anything happened to J O Williams then Eric would have taken over. Or if anything had happened to Eric then Keith Yonge, would have been free to make his own move into Eric’s, his good friend in his father’s mind, business position.
The Evening Telegram in St John’s reported the tragic deaths of Eric and Erica on Saturday 3 February 1940. The paper continued the story two days later and included an editorial column as its tribute. [17]
Williams was obviously grief - stricken and bitter. It is rumoured that many locals believed that Keith Yonge may have taken the law into his own hands with the assistance of Mrs Olga Williams (with whom it was reported he was having an affair at the time) as terrible revenge against the man who had brought so much misery to Port Hope Simpson.
Unfortunately, Fraser died before the public enquiry took place so he took his secrets to the grave with him. But what is known is that Chesman was the closest director to Yonge in the time leading up to the deaths. Yet he had never acted to stop the Yonge Contract between Eric and Keith from going ahead. Faced by an agreement between the owner’s eldest son and the company manager he did not intervene. Evidence clearly shows that he was benefiting at the Company's expense instead.
According to Bradney, reporting to the public enquiry in 1945, the Labrador Development Company was always in debt every year until 1940, apart from its first year of operation. He considered its prospects as a pit – prop production business were hopeless and it had no choice but to cease operations. It had no funds for production purposes while the market for pit props was no longer open owing to wartime control.
By 9 August 1943, it had become clear that J O Williams and Company continued to buy wood from the Labrador Development Company. The articles of association of both the Williams’ companies had not been changed by Sir John Hope Simpson nor by later commissioners to prevent that from happening. Coupled with the other material evidence about the value of the stores at Port Hope Simpson, the size of the government loan, the import of wood from other countries and his domestic arrangements taken together, all point towards the fact that J O Williams was not the impoverished businessperson.
On 3 June 1940 Chesman, government director of the Labrador Development Company claimed that Claude Fraser had instructed him to wire J O Williams stating that unless rentals were paid at once and other outstanding amounts arranged,

“They will stop any export and take necessary action PROTECTION”.[18]

By “PROTECTION”, Fraser was referring to the British government’s need to defend its position against any claim for compensation that Williams might make against them. The telegrams implied that Fraser was carrying a heavy burden,

“He(Fraser) forced to resign and place full position before Government.”

In November 1943 Williams and his solicitors had felt they had a good claim for compensation against the government for their three years of mismanagement from 1940 to 1943 and for damage to Williams's reputation.In their view the government directors,

"Have been negligent in the performance of the duties imposed upon them by virtue of their office, and it may well be that they have laid themselves open to charges of a more serious nature.”[19]

At a time of war, Claude Fraser was concerned about protecting the British government from J O Williams making any claim for compensation against them and from being given any opportunity of enquiring too deeply into Eric and Erica’s deaths. So he used what he knew best – the civil servant’s tradition of keeping his mouth shut and spreading a veil of silence and mystery over what had really happened. The fact that there was no full police investigation into the deaths at the time says volumes about the cover–up by Fraser and others that obviously went on. Fraser threatened the Labrador Development Company with his resignation because he was caught in a moral dilemma of trying to keep on hiding the John Hope Simpson

“unsavoury inheritance”[20]

whilst also trying to act in the best interests of the Labrador Development Company which he knew was mainly responsible for the unsavoury nature of the business relationship in the first place. He was caught between the devil and the deep blue sea. The full position included telling the government about the corruption of

“the Hope Simpson group”[21]

which had been hidden all along by civil service tradition and above all else by Fraser’s silence. By June 1943 Fraser, the loyal, dedicated civil servant had been committed to an asylum in St John’s and died not very long afterwards.
In 1940 Williams’ counsel at the public enquiry had wrongly stated that Thomas Lodge was the first government director of the Labrador Development Company. Lodge had in fact taken over from Fraser who was trying to deal with problems facing him on a number of fronts. Lodge’s appointment was a typical dominions office response to his past indiscretions. He was given a strict order to keep the lid on things. He was faced with the death of the owner’s eldest son and grand–daughter in mysterious circumstances; a commission of government that had been negligent in not making sure that 400 houses had been built and not having made sure that one of their own people was on the Labrador Development Company’s board of directors from July 1939 to February 1940; his own government, which was wide open to a successful claim being brought against them by J O Williams for his loss of earnings whilst they were supposed to be in control; Williams had not kept up to date with his loan repayments; there remained unpaid wages in Port Hope Simpson; people were starting to leave the settlement for higher earnings elsewhere; a logging operation had completely fallen apart; the Second World War had started; trans–Atlantic ships were unavailable and so no pit props could be shipped out even if they had been able to produce them; Chesman, a part–time government director approved of by Williams, had been taking more expenses than he should have done; a manager in Port Hope Simpson who wanted to take over the company for himself and an owner who always pretended to be short of money. By 7 June 1940 Williams remained under pressure to settle his debts on top of which Chesman and Yonge were trying to take over control of his company. On the next day, Williams appeared to have handed over complete control to the commissioner of natural resources.