The Mysterious Alfred Valdmanis

Nova Scotia probably dodged a bullet in 1950 when a proposal by Alfred Valdmanis to build a gypsum manufacturing facility did not work out. Unfortunately, Newfoundland was not as lucky.

Latvian Alfred Valdmanis (1908-1970) was a high-profile but mysterious figure in Europe, and later, Canada. As Richard Gwyn wrote in his book about Newfoundland premier Joey Smallwood, “There are two versions of Valdmanis’ career.”

In the first, Valdmanis served as Latvia’s Minister of Economics, Finance and Trade for several years prior to World War Two. He was appointed at the age of 29, the youngest such minister in Europe, and Latvia’s economy flourished under his leadership. He had multiple university degrees, spoke numerous languages, and was an up-and-coming intellectual with excellent connections throughout Europe.

Then World War Two started and Valdmanis was allegedly arrested and tortured by the Russians when they occupied Latvia in 1940. He escaped and hid in the woods, but was arrested by the Germans for being a leader of Latvia’s resistance movement when they occupied Latvia in 1941. Valdmanis was spared execution by the intervention of Hermann Goering, one of Hitler’s top commanders. After the war, he worked for the British and Americans as an advisor as plans were being made for post-war Germany and Europe.

In the second version of Valdmanis’ career, his education was less significant, and he was Minister of Finance for only nine months before being fired for political reasons. He allegedly worked for the Russians during the war – he was not imprisoned and tortured by them – and later worked for the Germans, leading efforts to produce cement, limestone and gypsum. He also allegedly helped recruit Latvians to fight for the Germans against the Russians.

So, Valdmanis was either a hero or a Nazi collaborator, a huge success or a failure, depending on which version you believe. Valdmanis’ true story was “Obscured by the fog of wartime memories and personal vendettas,” as Gwyn put it.

Whatever he did before, we know that Valdmanis immigrated to Canada in 1948 with his wife and children and set about trying to build his fortune. He began by working for Carleton College in Ottawa as a lecturer and became a consultant to the federal government on immigration and industrial development.

Valdmanis cut an impressive figure in his early 40s – smart, handsome, athletic, and with an air of intensity about him. He was an excellent dancer, pianist, tennis player and a connoisseur of wines. Many found him very charming although some saw him as arrogant and pompous.

While working at the federal Department of Trade and Commerce, he became aware of Nova Scotia’s interest in further developing its gypsum industry. Gypsum mining started in Nova Scotia in the late 1700s when farmers extracted blocks of it from their farms, hauled it by horse and cart to shipping points near Windsor and sold it to local traders. The gypsum was then exported to the east coast of the United States for use as fertilizer.

Since then, the province has historically been one of the world’s largest suppliers of gypsum, mainly for wallboard production. Gypsum is the key ingredient in plaster, and starting in 1918, plaster sandwiched between two sheets of paper – wallboard - revolutionized the construction industry. Today, an average home has about seven tons of gypsum in its walls.

Gypsum is 21% water at the molecular level and is fire-resistant, so it helps keep our families safe.

Claiming expertise in gypsum and related industrial development, Valdmanis became an advisor to the Nova Scotia Research Foundation, a provincial government agency that had direct involvement of several Nova Scotian business heavyweights, including Roy Jodrey (Minas Basin Pulp & Paper Company) and J. C. MacKeen (Royal Securities Corporation).

The Foundation was investigating the possibility of establishing a gypsum manufacturing and wallboard plant to further take advantage of the province’s world-class gypsum deposits.

Valdmanis knew a team of Latvian industrial experts, including Ernest Leja, that was working in Germany at that time. They were interested in immigrating to Canada to rebuild their lives post-war and hoped that their specialized knowledge would help them in the immigration process.

Leja, whose expertise was in gypsum, cement and lime production, also had another reason to immigrate to Canada. According to Gerhard Bassler’s book about Valdmanis, Leja’s first wife and two sons were deported to Siberia in 1940, and he was afraid they might return and discover that he had remarried and fathered another child. Leja wanted to relocate to Canada with his second wife as quickly as possible to avoid charges of bigamy.

The Latvians claimed to have developed a new method of manufacturing gypsum – the pneumatic method – and had built several gypsum plants in Germany.

In November-December 1949, Valdmanis and Leja wrote a proposal for a large, 200-ton per day, pneumatic plaster plant combined with a large wallboard plant. The facility would be located near Windsor, close to a gypsum quarry, and would cost $1.5 million to build. Its main market would be the Maritimes but would also include Newfoundland and eastern Quebec, as well as potential exports to Latin America.

A group of 10-18 Latvians would immigrate to Nova Scotia to run the facility and Canadians would fill the sales and accounting positions, according to the proposal. Valdmanis assumed he would be the company’s president.

An April 1950 memo by the Foundation said, “This team developed a special technique of calcining gypsum in Latvia and operated a plant of this nature from 1936 to 1944. During the latter part of 1948 they began construction of an improved version of the Latvian plant in British-occupied Germany. This plant has been operating since its completion in the first half of 1949. The claim for the process is that operating costs are lower and that quality is more readily controlled due to the continuous nature of the operation. The method is considered secret in view of the impossibility in recent years of establishing patents in Germany.”

(Calcining means to heat a mineral to the point of changing its mineral structure. It is part of the process of turning raw gypsum into plaster so it can be used in products like wallboard, mouldings and casts.)

The Nova Scotia Research Foundation memo said the Government of Nova Scotia had committed to investing up to $750,000, half the cost of the facility.

The potential Canadian investors had concerns about the deal, including some of its specific terms, Valdmanis’ potential role as president, shipping costs of the finished product, and whether this mysterious pneumatic method would prove as inexpensive and high-quality as promised. (In fact, the key characteristic of the pneumatic method – continuous feeding of calcined gypsum into a wallboard mill – has become common in the industry.)

In the end, the deal collapsed. In June 1950, J. C. MacKeen confirmed that the private financing could not be arranged even after the investors approached three different banks, according to Bassler.

With his Nova Scotia hopes dashed and his career stalled, Valdmanis next turned his attention to Newfoundland, which had just joined Canada the year before. Newfoundland’s first premier, Joey Smallwood, was a wheeler-dealer who had big dreams of turning around the new province’s economy and halting the out-migration of its residents.

Smallwood and Valdmanis hit it off and Valdmanis became Newfoundland's Director-General of Economic Development in 1950, with a five-year plan to build plants and create new industries in Newfoundland.

Smallwood paid Valdmanis $10,000 per year – more than the $7000 Smallwod was paid as premier. Still, it wasn’t enough for Valdmanis. He asked for a raise the following year and Smallwood started paying him the exorbitant sum of $25,000 per year.

Valdmanis argued that Newfoundland needed to catch up to the rest of Canada, and promised to build flour and feed mills, a fur processing plant, a leather tannery, a marine oil processing plant, a fish cannery, two 500-ton paper mills, and a steel or chemical industry. This was in addition to cement and gypsum plants built on the west coat between 1951 and 1953.

There were early successes thanks to Valdmanis’ Latvian and German contacts — and provincial government money being invested in the projects. Companies like Atlantic Gypsum, Atlantic Hardboards, Newfoundland Tanneries, North Star Cement, Superior Rubber, and United Cotton Mills had all opened their doors for business by 1952.

However, companies started running into trouble and the Newfoundland government had to keep giving them money each year to keep them from going out of business.

Frictions between Smallwood and Valdmanis grew as many of the Latvians’ big promises did not pan out. Smallwood asked for his resignation in 1953.

Things got worse for Valdmanis. It came to light that he had been telling German investors they were required to pay kickbacks to Smallwood’s Liberal Party, but Valdmanis just kept the illegal donations for himself. He was arrested in April 1954 and eventually sentenced to four years in prison for fraud worth $200,000.

Still angry at his former friend and embarrassed by the whole debacle, Smallwood later refused to support Valdmanis’ application for parole.

Valdmanis served 27 months, and his fellow inmates were sad to see him go when he was released – they said he was the best cook the prison ever had.

Afterwards, Valdmanis eked out a living in Montreal and later, Edmonton, but had to declare bankruptcy in 1969.

Valdmanis died in a car accident in 1970. After hearing the news of his death, Smallwood remarked that Valdmanis was “a brilliant but tragic figure.”

We are sometimes asked why Nova Scotia still exports raw gypsum instead of manufacturing a product like wallboard here. The answer is that while some small-scale manufacturing of wallboard and plaster has been done in Nova Scotia, there is generally not a business case for doing that manufacturing so far from major markets, especially since it is so much easier to ship raw gypsum than finished products which are more likely to be damaged in transport. Learn more at https://notyourgrandfathersmining.ca/Iona