The Cancellation of the Arrow was done for a number of reasons IMHO.
It was far ahead of its time, and would have had a major impact on the aircraft industries of the U.S. and G.B.
The US and GB were never going to buy or support it. It would have been economically dangerous to do so.
Bottom line was the $$.
The Canadian governmnet couldn't see spending the $$ to keep the program alive, given that the 2 largest potential customers wanted nothing to do with it.
A decision I whole heartedly disagree with, but nonetheless it is there.
As far as cutting them up, I think it was done partly to prevent the sale of any of them to the US or GB. Literally everything about the Arrow was destined to be destroyed, not in the interest of national security, rather more of an economic issue again. ( and to a large extent I am sure to stop someone else from copying the aircraft).
We should have kept the Arrow, and equipped the RCAF with it. It would have spoken for itself, and probably lead to many contracts for the purchase of the Aircraft.
Short sightedness on the part of Diefenbaker for sure.
The Rat Bastage.
Had we carried on with the Arrow, the Canadian aviation industry would look quite different today, I am sure.
Sad chapter in our history.
RTR