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Date: 1862-12-23
By: Louis-Victor Sicotte, William Howland
Citation: Despatch from Louis-Victor Sicotte and William Howland to the Duke of Newcastle (23 December 1862) in UK, HC, Return to an Address of the Honourable The House of Commons, dated 30 June 1864; for Copy of Correspondence between any of the North American Provinces and the Imperial Government, relating to their Application for Assistance in raising a Loan for an International Railway (1864).
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THE undersigned, representing the Government of Canada, as Delegates specially deputed to arrange with the Imperial Government the terms of the loan to be effected upon the Imperial guarantee offered, as well as the nature of the security, concerning the construction of the International Railway between Halifax and Quebec, have the honour to submit to your Grace the following Memorial.

On the part of the Government of Canada, they must again assert—what has been admitted at every period of the negotiations both by British statesmen and by Colonial Governments—that the construction of a Railway connecting the British North American Colonies ought to be regarded as a matter of Imperial concern, and, to use the words of the late Colonial Minister, as a great national road.

A brief review of the opinions expressed by public men, and of the views entertained by the different Governments of Great. Britain and of the Colonies since 1839, is perhaps necessary now, to explain fully the conditions proposed on the part of the Imperial Government as well as on the part of the Colonial Governments.

In 1839, Lord Durham, in an answer to the Secretary of State for the Colonies, instructing him to turn his attention to the formation of a road between Halifax and Quebec, in connexion with the determination of the Imperial Government to establish steam communication between the former port and Great Britain, strongly recommended the construction of a railway between the two cities.

During Sir Robert Peel’s Administration, in 1843, they caused a survey of a military road, but, when nearly completed, it ‘as abandoned by the Imperial Government in favour of railroad.

In 1846 Mr. Gladstone, then Colonial Secretary, organized a survey for the Railroad at the joint expense of Canada, New Brunswick, and Nova Scotia, and the Imperial Government.

Major Robinson, in his report, expresses himself as follows, as to the nature and object of such a Railroad: “In a political and military point of view, the proposed Railroad must be regarded as becoming a work of necessity.

“The increasing population and wealth of the United States, and the diffusion of railroads over their territory, especially in the direction of the Canadian frontier, renders it absolutely necessary to counterbalance, by corresponding means, their otherwise preponderating power.

“It is most essential that the Mother Country should be able to keep up the communication with the Canadas at all times and all seasons. However powerful England may be at sea, no navy could save Canada from a land force.

“Weakness invites aggression, and as the Railroad would be a lever of power by which Great Britain could bring her strength to bear in the contest, it is not improbable that its construction would be the means of preventing a war at some more distant period.”

The expense of one year’s war would pay the expense for a Railway two or three times over.

In 1848, Earl Grey, in transmitting the report of Major Robinson to Lord Elgin, stated in his Despatch:—

“I have perused this able document with the interest and attention it so well merits, and I have to convey to you the assurance of Her Majesty’s Government that we fully appreciate the importance of the proposed undertaking, and entertain no doubt of the great advantages which would result, not only to the Provinces interested in the work, but to the empire at large, from the construction of such a Railway ; but, great as these advantages would be, it is impossible not to be sensible that the obstacles to be overcome in providing for so large an expenditure as would be thus incurred would be of a very formidable kind.

“Before, therefore, Her Majesty’s Government proceed to consider the question as.to whether any steps should be taken to carry this plan into effect, it is necessary that we should be informed how the several Provinces would be prepared to co-operate in its execution.”

Lord Elgin declared in his answer to that Despatch:

“It is obvious, that as soon as Railway communication is extended throughout the Provinces, a smaller military force than is now requisite will suffice for their protection.

“But, looking to the anxiety which your Lordship bas repeatedly expressed, that a diminution in the expenditure incurred by Great Britain on this account should be effected at the earliest period, I am prepared to go a step further in this direction, so confident am I that the mere undertaking of the work in question will tend to raise the Colonists from the despondency into which recent changes in the commercial policy of the empire has plunged them; to unite the Provinces to one another and to the Mother Country, to inspire them with that consciousness of their own strength, and of the value of the connection with Great Britain, which is their best security against aggression, that I would not hesitate to recommend that an immediate and considerable reduction should take place in the force stationed in Canada, in the event of the execution of the Quebec and Halifax Railway being determined on.”

In 1851, Lord Stanley, in the House of Lords, reviewing the scheme propounded by Earl Grey, stated in a speech, which was accepted by the Colonies as the expression of the opinions and feelings of the people of England . We hold, therefore, that the establishment for a line of communication between Halifax and Quebec, for a distance of about 700 miles through an exclusively British territory, rendering two points and two points essential for the power of this country, which are now separated by a vast extent of wilderness on the one side, and by a difficult, and for a great portion of the year, frozen coast on the other, rendering their communication from being what they now are, most uncertain, most difficult, and most dilatory, rendering it rapid, easy, and constant, that, he said, was an object in itself of primary importance to the interests and to the Imperial power of this country on the Continent of America.

“But it was also a matter of incalculable importance. that we should open to the teeming thousands and- millions we were pouring out from this country, where they were unable to obtain a livelihood, that we should open to them in a healthy climate, and within a very limited distance from our own shores, which did not exceed a 12 days’ passage by steam, and the rapidity of that passage was every day increasing; it was of the highest importance, whether we looked at it as affording a relief for our pauperism, or an increase of our power in those regions, that we had 11 or 12 millions of acres of unoccupied lands, fertile, and possessed of great mineral wealth, and which at the same time would be the means of extending our military power and securing the permanence of oi empire in America. This has no ordinary case of a Railway project where the question very properly might be, would the line pay or not? But it is a Railway which, even in a pecuniary sense, lie had sanguine expectations would pay if they took into consideration not merely the traffic on the Railway, but the adjuncts they would raise by the formation of it. But lie said if it would not pay 1s. for the 100l. in a pecuniary point of view for the next 10 years to come, the interposition of this country, not for the purpose of involving itself in an enormous and needless expense, but for the purpose of aiding with its credit, if not by more than its credit, those who were anxious to the utmost of their power, and even beyond their power, not for a local but for an Imperial object, this was a subject. well worthy of the consideration of the Imperial Parliament, and was not to be looked upon as a matter of pounds, shillings, and pence.

“Now he felt that to grant our aid was a Wise, a sound, and even an economical course in the end, even though in the first instance it would involve an outlay; and sure he was that it would confer immense benefits on the Colony, and bestow incalculable advantages on this country itself, and confirm its territorial power in North America.

“And if the noble Earl would only say which course lie should be prepared to take, and if the Government would give any sanction and assistance for the execution of what these Colonies could not accomplish unassisted, although lie believed a comparatively small aid on the part of the Government, or its liberal guarantee for the capital required, on account of which guarantee they would never be called upon to pay a single shilling; such an amount of assistance from the Government, he firmly believed, would enable the great work to be carried to a successful completion, and equally certain lie was that unless our Government and our Parliament did interfere, these advantages would be indefinitely postponed, the communication between two most important points would be permanently cut off, the stream of emigration would continue Io be directed, as it was now directed, from this country and Ireland, not to our own Colonies but to the territories of the United States; the communication between Halifax and Quebec would ultimately be through the United States, be wholly dependent upon then, and liable at any moment to be cut off in the case of hostilities, while the United States would be able to reap all the advantages of the transit in times of peace.

“Now we had the option whether we should give to the United States these great advantages, and at the same time deprive the subjects of this country of the opportunity of receiving a useful and most valuable population settling in our Colonies, and by their emigration relieving the overburdened Mother Country of its surplus labour, or whether we would by a prompt and liberal course of action, which would ultimately cost us nothing, enable our dependencies to complete that which would cement a stronger union between our North American possessions, and to teach them to feel that they were regarded by the Imperial Government and Parliament as an integral portion of the Empire.” On the other hand, we beg to recal [sic] to your Grace’s recollection the fact that—

The Legislature of the Colonies and their Governments have always represented the road as a necessary means for the defence of the country, and as a work of national concern.

“On the 6th January 1849, the Legislative Council of New Brunswick passed a series of resolutions from which the following extracts are made:—

“Viewing the relative positions of the North American Colonies, and the great importance, in a national point of view, of improving the facilities for mutual intercourse, we consider it a matter of the greatest moment for the permanency of British interests in this Continent that a, Railway should be laid down to connect the Lower Provinces with the interior of Canada.

“We believe that no measure can be devised which will so certainly consolidate the Colonies and perpetuate our connection with Great Britain; while without it we fear that our position as Colonies will be of short duration.

“We think the plain broad question on this subject is, ‘Do the people of England wish to retain the North American Colonies or not?’ If they do, the Trunk Railway is indispensable, and should be completed at any cost.

“On the 1st May 1858, the Legislature of Nova Scotia addressed Her Majesty as follows:—

“This great enterprise of National, no less than Colonial importance, has been through many years pressed upon the consideration of Your Majesty’s Government.

“The benefits of the measure, both in its National and Colonial relations, are acknowledged.

“The gigantic work has been facilitated by the efforts and expenditure of the Provinces, but its accomplishment is beyond their unaided resources, and on the efficient assistance of Your Majesty’s Government depends the great result.”

In 1858, the Legislature of Canada passed the following Resolutions:—

1. ” That the construction of an Intercolonial Railroad, connecting the Provinces of New Brunswick and Nova Scotia with Canada, has long been regarded as a matter of national concern, and ought earnestly to be pressed on the consideration of the Imperial Government.

2. “That, during several months of the year, intercourse between the United Kingdom and Canada can only be carried on through the territory of the United States of America, and that such dependence on, and exclusive relations with a foreign country cannot even in tine of pence, but exercise an important and unwholesome influence on the State of Canada as a portion of the Empire, and nay tend to establish elsewhere that identity of interest which ought to exist between the Mother Country and her Colonies.

3. “That while the House implicitly relies on the repeated assurance of the Imperial Government that the strength of the Empire would be put forth to secure this province against external aggression, it is convinced that such strength cannot be sufficiently exerted during a large portion of the year from the absence of sufficient means of communication, and that should the amicable relations which at present so happily exist between Great Britain and the United States be ever disturbed, the difficulty of access to the ocean during the winter months, might seriously endanger the safety of the province.

4. “That in view of the speedy opening up of the territories now occupied by the Hudson Bay Company, and of the development and settlement of the vast regions between Canada and the Pacific Ocean, it is essential to the interests of the Empire at large that a highway extending from the Atlantic Ocean, westward, should exist, which should at once place the whole British possessions in America within the ready access and easy protection of Great Britain, whilst by the facilities for internal communication thus afforded, the prosperity of those great dependencies would be promoted, their strength consolidated and added to the strength of the Empire, and their permanent union with the Mother-Country secured.

In 1861 the Colonies pressed again upon the Imperial Government the advantages and necessity of constructing the Railway.
Their delegates strongly urged that—

“Without that road the provinces are dislocated and almost incapable of defence for a great portion of the year, except at such a sacrifice of life and property, and at such an enormous cost to the Mother Country, as makes the small contribution sink into insignificance. With that Railroad we can concentrate our forces on the menaced parts of our frontier, guard the citadels and works which have been erected by Great Britain at vast expense, cover our cities from surprise, and hold our own till reinforcements can be sent across the sea; while, without the Railway, if an attack were made iii winter, the Mother Country could put no army worthy of the national honour, and adequate to the existence of the Canadian frontier, without a positive waste of treasure far greater than the principal of the sum the interest of which she is asked to contribute, or rather to risk.

“The British Government have built expensive citadels at Halifax, Quebec, and Kingston, and have stores of munitions and warlike materials in them; but their feeble garrisons will be inadequate for their defence, unless the provincial forces can be concentrated in and around them. An enterprising enemy would carry them by coups de main before they could be reinforced from England, and once taken the ports and roadsteads which they have been erected to defend, would not be over-safe for the naval armaments sent out too late for their relief.

“That the subject should be looked upon and dealt with mainly to the consideration of permanent connection between Great Britain and the provinces, and the relative positions of England and the United States, in the event of hostilities between them.”
The Imperial Government gave a final answer to all these demands and considerations, by the Despatch of your Grace of the 12th April 1862, in which your Grace says,—

“I much regret to inform you that after giving the subject the best consideration, Her Majesty’s Government have not felt themselves at liberty to concur in this mode of assistance. Anxious, however, to promote. as far as they can, the important object of completing the great line of Railway communication on British ground between the Atlantic and the westernmost parts of Canada, and to assist the provinces in a scheme which would so materially promote their interests, Her Majesty’s Government are willing to offer to the Provincial Governments an imperial guarantee of interest towards enabling them to raise by public loan, if they should desire it, at a moderate rate, the requisite funds for constructing the Railway.”

The Colonies held, in consequence, a conference at Quebec in September, and then by their delegates agreed,—

1st. “That whilst they had learned with very great regret that Her Majesty’s Imperial Government bas finally declined to sanction the proposals made on behalf of these provinces in December 1861, and at previous periods, they at the same time acknowledged the consideration exhibited in substituting the proposal of an Imperial guarantee of interest towards enabling them to raise by public loan, if they should desire it, at a moderate rate, the requisite funds for constructing the Railway.”

2d. ” That with an anxious desire to bind the provinces more closely together, to strengthen their connection with the Mother-Country, to promote their common commercial interests, and to provide facilities essential to the public defences of these provinces, as integral parts of the Empire, the undersigned are prepared to assume under the Imperial guarantee the liability for the expenditure necessary to construct this great work.

3d. “That, in arriving at this conclusion, the undersigned have been greatly influenced by the conviction that the construction of the road between Halifax and Quebec must supply an essential link in the chain of an unbroken highway extending through British territory from the Atlantic to the Pacific, in the completion of which every Imperial interest in North America is most deeply involved.”

The Colonies have declared their willingness to assume the whole liability of the cost of the road, provided they are assisted in raising the requisite funds for its construction at a moderate rate of interest by the Imperial guarantee. It may fairly be said that the proposal now is, not of a loan of Imperial monies to the Colonies for Colonial purposes only, but of a mode involving no actual liability to the Imperial Government, to facilitate the construction of a great national work in the interest of the Empire, as well as of the Colonies.

The only question involved, as regards Great Britain, is the sufficiency of the security offered by the Colonies to cover this distant liability resulting from the Imperial guarantee.

If their past condition, compared with the present, does not establish fully their ability to repay the loan in the periods proposed, such a comparison would only prove more strongly than any other fact that this admittedly necessary work of military defence ought to be adopted by the Imperial Government alone.

But to make evident the ampleness of the security offered by the Colony, it is sufficient to compare the Revenue of the Colony in 1842, when the first Imperial Guaranteed Loan was effectuated with the Revenues in 1861.

In 1842 it was 365,605 l. currency ; in 1861 it was 1,785,156 l., after deduction of the costs of collection.

After several interviews with your Grace and the Chancellor of the Exchequer, when the conditions of the loan, the nature of the security, and the arrangements of a sinking fund were discussed without coming to any positive understanding, the delegates have now been officially informed that the Imperial guarantee will be given on certain conditions stated in the annexed document.

The delegates regret to state that, in their opinion, some of these conditions are of a nature to render the Imperial guarantee of no advantage, and others to render its availableness so remote or encumbered with difficulties that the Colonies could not accept it, as an assistance towards an undertaking, and a measure to provide facilities essential to the public defences of the provinces as integral parts of the Empire.

The stipulation that the loan is to be the first charge after the interest of existing debts seems to them shaped so as to operate against the payment of other debts coming due before the repayment of the loan.

The annual repayment of the loan renders the period of payment much shorter than the period proposed; and, beside the loss it involves, it deprives the Colony of a large sum which, employed during such a period towards internal improvements, would afford a greater security than this annual payment, by the development of the resources and of the wealth of the country. In any arrangement the Colonies ought not to be fettered by conditions of payment through any form of sinking fund, which would make this Imperial guarantee an impediment to future internal improvement, while, by increasing the rate of interest and by the expenses and loss incurred in its management, the Imperial guarantee would thus cease to be of any real aid and advantage.

The investment of these annual payments into colonial securities will not give a better security than the engagement of the Colonial Government to pay a fixed sum at a fixed period.

These investments into colonial securities, “as Her Majesty’s Government shall direct, and the Colonial Government shall approve,” will lead to difficulties which, if not of a graver character than those that have already arisen out of the disposal of the sinking fund created for the first Imperial guarantee, fully satisfy the delegates that these arrangements are not more favourable than the former.

The experience of Canada is strongly adverse to a sinking fund; it created annoyances and difficulties, made the rate of interest higher than she would have paid by borrowing on her unassisted credit.

The delegates are informed that ” it is of course understood that the assent of the Treasury to these arrangements pre-supposes adequate proof of the sufficiency of the Colonial resources to meet the charges intended to be imposed upon them.”

When, after more than 20 years negotiation, the offer of an Imperial guarantee was made, the Colonies had sone right to believe that the sufficiency of their revenues to meet these increased charges was known and acknowledged, as all information which they could give is already in the possession of the Treasury, and is set forth in the fullest detail in the statistical table annually published by Her Majesty’s Government. No survey, no legislation, can take place before the Colonies are made aware that adequate proof has been made of the sufficiency of their revenues to meet the intended charges; and it would be important for the Colonies to be informed, at the earliest period, what further proof is wanted.

The 8th condition is, that fitting provision is to be made for the carriage of troops, &c. &c.

If it is meant that the troops are to be carried free of any charge, the delegates must observe that, when this vas offered by the Colonies, it was as a part of the scheme then proposed, that England should contribute half the cost of the construction of the road.

When it is now proposed that the whole cost should be borne by the Colonies, it cannot be expected that they must also relieve the Imperial Government from all expenditure attending the transport of troops, &c.

All these conditions pre-suppose that the Imperial government has no interest to serve, or no policy to uphold in the construction of this great railway, that the Colonies must be treated as any other government asking a loan from the Imperial Treasury; proof is required, as it is enacted from any unknown debtor, as to the sufficiency of his means to meet his engagement. With an ordinary debtor, when this sufficiency is established, he may do what he pleases with the monies borrowed; but, in this instance, the funds are to be applied to an undertaking admitted by all to afford an immense development to the wealth of the creditor, enabling him to maintain more efficiently his power and supremacy, with the control even of directing the location of this work where, in his opinion, it will secure all these advantages most efficiently, although the cost to the debtor may be much increased and the pecuniary advantages made much less, if not a great loss, thereby.

The Treasury proposes another condition, which must greatly delay al the arrangements, and may, after all the expenses attending the requisite surveys, the trouble and the difficulties of carrying the necessary legislation in the different Colonial Legislatures, render all this trouble, all this expenditure, all this legislation, useless and of nu avail, leaving certainly a strong feeling of dissatisfaction in the minds of the inhabitants of the Colonies.

“The Imperial Government is not to be asked for this guarantee. until the line and the surveys shall have been submitted to and approved by Her Majesty’s Government, and until it shall have been proved to the satisfaction of Hr Majesty’s Government that the line can be constructed without further application for an Imperial guarantee.”

The proposed guarantee is limited by the Treasury to 3,00,000 l. It is possible that the railroad may cost half a million or more above this fixed sum of 3,000,000 l., and this, by the fact of a selection of a route chosen for its military advantages and upon consideration certainly as Imperial as Colonial. And then the Colonies, before obtaining this guarantee, must prove to parties not always showing too much confidence in their wealth, that the line can be constructed without further application for an Imperial Guarantee.

Another period of many years will probably elapse before the discussions upon this point close.

The Schedule pre-supposes that the rate of interest is fixed by the Treasury at four per cent., while it was demanded by the delegates, after consultation with the fiscal agents of the province, that the rate should be fixed at 3 per cent., and that the debentures should bear that rate of interest.

The surveys and the selection of the route must be settled as preliminary proceedings to any legislation prepared to carry out the offer of the Imperial guarantee in the Colonial Legislature.

By the proposal of the Treasury, it is only after the surveys and after the selection of the route that the provinces can act in regard to their guarantee, if the cost is established at no more than 3,000,000 l., and when information is given to the Colonies that their resources are judged sufficient to bear the charge.

If the cost of construction is above 3,000,000 l., proof must be made, to the satisfaction of Her Majesty’s Government, that the line can be constructed without further application for an Imperial guarantee. Pending the discussion which may follow during a long period, to establish this fact or this possibility, no action, no legislation, can be adopted.

Some of these conditions. and demands are a strange commentary upon the official statement made by Earl Grey, in 1848. “Her Majesty’s Government fully appreciates the importance of the proposed undertaking, and entertains no doubt of the great advantages which would result not only to the provinces interested in the work, but to the Empire at large, from the construction of such a railway; but before proceeding to consider the question whether steps should be taken by Her Majesty’s Government to carry this plan into effect, it was necessary that they should be informed how the several provinces were disposed to co-operate in its execution.”

These demands, rather ungracefully unsay the eloquent words of Earl Derby, that to grant an Imperial aid was a wise, a sound, and even an economical course in the end, even though, in the first instance, it would involve an outlay ; and sure he was that it would confer immense benefits to the Colonies, and bestow incalculable advantages on this country itself, and confirm its territorial power in North America.

The question of the public defences of the Colonies, as integral parts of the Empire; the question of the maintenance, of the extension of the political and social influence of England over the whole of her immense possessions in North America; the economical questions of so vast magnitude to the welfare of the nation; the question of unemployed capital, of surplus labour, underlie every link of the great and national road which Canada is anxious to build by the largest and most liberal contribution, from the Atlantic to the Pacific.

They had a just right to ask the co-operation of Great Britain, and when she only demands an advance of’ guarantee, which can by no eventualities involve the liability of a single halfpenny, to use the language of Earl Derby, she has certainly fair grounds to expect a prompt and liberal course of action.

If the different groups of population spread over British America, and which will numerate at least 12 or 15 millions in twenty-five years, are allowed to proceed in different directions, to have no common tendencies, without any centralisation of their political existence, no other bond but their disjointed interest, fostered by different commercial policies, and settled upon principles of localities, they must continue weak and powerless, and an easy prey to the powerful Republic girdled round these Colonies.

Bind all these small communities by closer intercourses; make a whole strong by its unity of interest, of tendencies, of political organisation, of common views; create by commercial relations mutual interests amongst themselves and with England, direct the minds towards a general and comprehensive policy; you will thus benefit the industry, the wealth of England, extend your power of civilization, and lay the foundations of large and important States, friendly and grateful.

The Canadian Government does not press this undertaking because it is popular with their people; on the contrary, they have to encounter a strong and popular opposition; but fully appreciating the strength and the importance it will eventually give their country, and more particularly the facilities it will provide for the public defences of their part of the Empire, they have not hesitated to adopt a policy which appeared to them sound, highly national, and conducive to the greatness and the defence of the Empire at large.

As a measure of defence, Canada will cheerfully bear her share of the large burden imposed by the construction of the road. But if the policy of the Imperial Government in relation to this work is practically a declaration that they are not disposed to treat it as a measure of national concern and of public defence of a portion of the Empire, the enterprise will not become more popular.

The views and the policy involved and following out of the conditions attached to this so distant liability of the Imperial Exchequer, are so much at variance with the views and the policy entertained by Canada, that the undersigned have considered themselves bound to review these long pending negotiations, and to contrast the views of the Colonies as to the military and Imperial character of the work, with the Imperial policy refusing to contribute towards it, and arranging, not an advance of money, but of a simple guarantee, which the work alone would sufficiently protect, in a manner illiberal, obstructive, and which refuses to acknowledge any corresponding duty on the part of the Mother Country.

They will hasten to submit to their Government the conditions and arrangements proposed by the Imperial Government to carry out the offer of an imperial guarantee, with the hope that upon the pressing instances of the Colonies this aid of an Imperial guarantee will be given in the manner explained by the Delegates at their different interviews with your Grace and the Treasury.

These conditions, urged by the Delegates, and detailed in the annexed paper, in enabling the Colonies to borrow the requisite funds at the low rate of ai per cent. would render the Imperial guarantee a real and tangible assistance, accepted as an equivalent to the contribution of the Imperial Government towards a work of national concern and a measure of public defence. The actual and future wealth of the Colonies are ample and sufficient securities to the Imperial Ex- chequer against the possibilities, even the most remote, of any loss, and a satisfactory proof that the road would be constructed if these conditions were accepted.

We have, &c.
(signed) L. V. Sicotte.
Wm. P. Howland.

London
23 December 1862.