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Date: 1865-08-29
By: Province of Canada (Parliament), Morning Chronicle
Citation: “Provincial Parliament. Legislative Assembly. Tuesday, August 29th” [Quebec] Morning Chronicle (30 August 1865).
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Note: All endnotes come from our recent publication, Charles Dumais & Michael Scott (ed.), The Confederation Debates in the Province of Canada (CCF, 2022).

LEGISLATIVE ASSEMBLY

Tuesday, AUGUST 29, 1865[1]

The Budget

On motion of Alexander Galt [Sherbrooke, Minister of Finance], the House went into Committee of Ways and Means—Thomas Street [Welland] in the Chair.

Alexander Galt [Sherbrooke, Minister of Finance] was sure that on this occasion he would meet the wonted indulgence of the House, while laying before it the statement he was about to make. In this case, as in previous years, he had to consider the annual balance sheet of the Province,—to state what had been the results of the past labor and industry of the country, and to observe what might be the prospects for the future; but on this occasion he had to review a larger period than usual, and to consider the transactions, not merely of twelve months, but, he might say, of eighteen. During that time we had seen some important changes affecting the condition of the Province. At the commencement of the period the neighboring country, the United States, was convulsed by the greatest civil war the world had ever seen—a war which interfered not only with its industry, but also with our own; and it would be interesting to observe what its disturbing effect on ourselves had been.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—Before considering that effect, however, he would state what had been the extent of our import and export trade. The imports of the half year, ending June, 1864, amounted to $23,882,000, of which coin and bullion amounted to $2,475,000, so that the imports exclusive of coin were $21, 406,000. The exports for the same period were $13,883,000, less coin imported, $704,000, leaving as the balancer $13,179,000.

The total imports and exports for these six months were, therefore, $34,586,000. It should be observed that during this period the imports largely exceed the exports. Whether this had affected the subsequent revenue of the country he was not prepared to say, but the probability was that the excess had exercised influence on the condition of trade during the next few months.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—The imports for the year just closed, ending June 30^th, 1865, was $14,620,000, less coin, $4,763,0000, leaving as the value of ordinary imports, $39,852,000. During the same year the exports were $42,481,000, less coin $1,588,000, leaving a balance of $40,792,000. The total trade had thus been $80,644,000. He was happy to observe that while during the first half the year the exports had not equaled the imports, during the second half there had been an excess of nearly half a million.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—If we considered the disturbing causes that had existed, we should find cause to congratulate ourselves that we had passed through these difficulties with so little injury. Though, if peace had been maintained, our trade might have been larger, it was satisfactory to note that our trade had been maintained at about the same volume as before. He would now proceed to advert to the revenue and expenditure of the country for the period which is past.

Before doing so he thought it necessary to refer to the remarks which he had the honor of addressing to the Committee at the time the estimates were submitted, the results of which they were now about to consider. On the 10^th of May, 1864[2], the Government stated that they had to propose to the House a change in the financial year, so that it should commence with the 1^st of July following, and that consequently they had on that occasion to submit estimates of the revenue and expenditure of the six months, of which four had then expired, and the twelve months following.

Having read form the speech he made in May 1864[3], remarks showing that, in the circumstances under which the change was adopted, there must necessarily be more of less an intermingling of the two accounts for the six months and the twelve months, he said he recalled these remarks to the attention of the House to explain why the abstract of expenditure now brought down was an abstract for eighteen months.

The accounts for the six months were laid before the House last session, and those for the twelve months were now in course of preparation, and would soon be ready. He was sorry there were now in the hands of the members, but he could scarcely offer an apology for this to the Committee, because they must know it was perfectly impossible to have the accounts prepared within seven weeks of the termination of the financial year.

He had, however, prepared an abstract of the expenditure and income, which he presumed was in the hands of every member of the Committee. He would proceed, then, to submit to the House a statement of the revenue and expenditure of the country during the six months, and during the 12 months treating them separately, and then treating them collectively. And he proposed to refer to the estimates submitted in May ’64, that the Committee might judge, in the cases where they had been to some extent exceeded, the reasons for such excess; and in other cases, where the expenditure had fallen short of the estimate, the reasons for this also. For the present, he would exclude the items belonging to the redemption of the public debt, so as to present a comparison of the ordinary revenue and expenditure.

For the half year ending 30^th June, ’64, the estimated income was $4,774,000, and the actual receipts were $5,664,000, the excess being $690,000. For the year ending 30^th June, ’65, the estimated income was $10,663,000; the actual receipts, $10,528,000, the receipts for the year being less than the estimate by $135,000. The total excess of estimates over the income was therefore $555,000; but it was his duty to draw the attention of the Committee to the fact that there were included in that income certain items which appeared on the other side of the account as payments, and, therefore, strictly speaking were not before the House at the time the estimates were submitted, and did not form part of the ordinary income of the year.

He referred to the refunding of duties and payments connected with the Provincial Penitentiary. The refunding of duties amounted to $185,683. There was another point to which he should allude—namely, the arrangements now made, by which all monies received by public officers were carried to the account of the Receiver General of the Province [Narcisse Belleau]. They had been endeavoring, year by year, to approach as near as possible to an absolute order that no public money should be paid out except through the Receiver General’s Department, and he thought they had now arrived at a system as nearly perfect as possible in this respect. In the accounts of the past year a new item would be found of $42,000 from labor of convicts in the Provincial Penitentiary, which appeared on one side as a receipt, and on the other as a disbursement, and which did not so appear, nor was it so regarded at the time when the estimates were before the Committee. The amount of refund was, as he had stated, $185,000, and of expenditure on Penitentiary, $65,000.

Then there was an item of American money received for postage, which was estimated at its par value, but upon which, as the House had learnt from the public accounts in June 1864, there had been a loss of $84,000, which had since been increased to $100,000. It appeared, therefore, that while on one side of this item was still entered at par, on the other, under the head of premiums and discounts, would be found discount that had to be paid on this money. When, consequently, he stated the excess of income over estimates to amount to $555,000, he found it necessary to deduct the amount of duties refunded and expenditure upon the Provincial Penitentiary, leaving actual excess of $296,319 as compared with estimates submitted to the House.

He would now refer to the outlay of the half-year, which had been estimated $5,223,000. The actual outlay which took place was $4,930,000. The estimates for the whole year amount to $10,486,000, and actual outlay to $11,541,000, making excess of expenditure over estimates of $1,000,000, or deducting the receipts which appeared also on the other side of the account, the refunds and loss on discounts to $475,000. This excess had been caused by disbursements connected with the militia and police on the frontier, and also on account of the necessity of making good the sum of which the St. Alban’s banks had been robbed—all of which disbursements the Committee, when it last sat, had no reason to apprehend would arise. These items amounted altogether to $500,000, which was within a fraction of the excess over the estimated expenditure.

He would now refer to actual results, and would give the Committee the results as compared with the estimates. The expenditure for the half year was $4,991,425; for the year, $11,541,339: total $16,532,764. Income for half-year, $5,464,099; for year, $10,527,932: total, $15,991,941. Deficiency as compared with outlay, $540,823, against the estimated deficiency for 18 months of $272,000: difference, $268,823. In referring to the deficiency of $540,823, he thought he might be warranted in drawing the attention of the Committee to the fact that included in that are two items that could scarcely belong to the ordinary expenditure.

He referred, in the first place, to the sinking fund, and the payment to the Grand Trunk for postal service of $101,120, that sum being a debt which was owing. These two amounted to $442,758; and if we consider this as apart from the ordinary expenditure of the country, it would reduce the deficiency of $98,065. Under the expenditure were included items not contemplated by the country or the House at the beginning of the year, namely, that already mentioned for the frontier police. And he might also draw attention to the fact on the Ottawa buildings, which was a public work, in eighteen months, we had $715,000 disbursed.

He now proposed to show how the deficiency was to be provided for, and would refer first to the balances. There were on the 1^st Jan., $2,603,840; 1^st July, 1865, $3,440,531; increase, $540,741; were paid off, $[?],087,456; sold, $3,737,538; took from balances, $299,908, leaving $540,823 as the difference between the income and the total outlay. In estimating the expenditure on this occasion, everything was brought in up to the 30^th June. No items were allowed to stand over. The whole comes in within the financial year. It was well to know that the total result comprehends all incomes of the country up to the 30^th June. He thought he might congratulate the Committee and country that, notwithstanding that we had sustained a most serious falling off in Customs’ revenue and increased charges upon revenue, we had been enabled to surmount these difficulties.

He would now proceed to revert to the estimates for the current year; and he would first propose to take up the question of the estimated income of the country. The principles we had endeavored to carry out in submitting those estimates had been to from a reasonable and moderate view of what was likely to be the income of the country for the incoming year, and endeavor to estimate the expenditure within the estimated income. He therefore felt it his duty to go more fully into the reasons that induced the Government to frame the estimated income than had been done on former occasions. He thought that in consequence of the principle the Government were endeavoring to carry out in this matter, it was his duty to five the Committee grounds upon which the estimate of the income were based.

He would first revert to what had been the principle sources of income in this country—the Customs duties; and would repeat the statement of the Hon. Attorney General East [George-Étienne Cartier], that it was not the intention of the Government to propose any alteration in those duties. It is true there were items connected with the rates of duties imposed under the present Customs’ Act[4] which the Government might desire to call attention to. But looking at the controlling influences in operation at this moment—looking at the fact that we should have undoubtedly reconsider many points of our customs and excise duties in connection with negotiations shortly to take place with the United States, and also looking at the fact that we would have to consider, conjointly with our sister provinces, the assimilation of our Customs and excise duties, he thought it would not have been wise for the Government to attempt to disturb the existing rates. Those duties had now been in operation a considerable period, and it would not be desirable to disturb our trade in regard to those matters, when possibly, it might be subjected to still another disturbance within twelve months.

It was necessary that he should refer to the course of the customs duties during the last year and a half or two years. The House would find, on turning to the statement laid before them in March last an abstract of the expenditures and income up to 31^st Dec. last, from which it appeared that the Customs duties for the whole of 1864 amounted to $6,666,000. On comparison of the imports of the present year, from 1^st January up to 1^st July, with those for corresponding period of 1864, it would be observed that very considerable falling off took place, amounting to $940,376. This loss had fallen on the year just closed.

We had next to consider what we might fairly estimate the Customs duties at from 1^st July last. We found the causes that produced the falling off in the early part of 1865, as compared with the same period of 1864, arose from two things. First, the bad harvest, and second—to which the decline might be more immediately attributed—the feeling of insecurity and depression existing in this country, and which prevented the merchants from making their ordinary importations of goods. He had consulted the Government collectors at Montreal, Kingston, Toronto, Hamilton and London—at which nineteen twentieths of the whole imports of the country arrived, and had obtained information as to the views of the merchants generally in regard to the fall trade; and in view of the abundant harvest which it had pleased Providence to grant this country, and the low estimate of stocks of goods existing in all parts of the country, and the universal report received as regards stocks of groceries, which yield a large proportion of our revenue—tea, sugar, etc.,–it was expected there would be much larger importations this fall than ever seen before. With regard to dry goods, although there was reported to be an over-supply of certain kinds, it was represented that the general importations would equal those of past periods.

As to spring trade, estimate was more conjectural, but opinion seemed to be that the importations of next spring would be very much larger than this and previous years. He believed the sources of income to which he had turned attention were most likely to guide us correctly in estimating revenue from Customs; and when we found revenue from Customs last year reaching $5,661,000—speaking of the fiscal year ending 30^th June, 1865, the whole tenor of the reports received was indicative of there being considerable increase in that trade.

He proposed now to take estimate of Customs for 1864 as from 1^st January to 31^st December, which amounted to $6,666,000, and deduct from that $500,000, which, he thought, would certainly bring the estimates for Customs within the limit to which it was likely to attain. He believed the reports received would indicate the collection of a larger revenue than that.

Luther Holton [Chateauguay]—In the fiscal year?

Alexander Galt [Sherbrooke, Minister of Finance]—That is from 1^st July 1865 till next 1^st July, covering the fall and spring trade. He might mention in reference to this subject that, although the fiscal year was not far advanced, yet he already began to find the Customs revenue reviving, in proof of which he would give the House a statement of the receipts from Customs for the corresponding periods of 1863, 1864, and 1865—the receipts for 1864, he must remark, were the largest that had ever been received at the same period of the year. The revenue from Customs from July 1^st to August 26 were

The amount for the month of July, this year, was less than in 1863, but the receipts in August had made up the deficiency, and somewhat more, though they were about $300 000 less than in 1864, when very exceptional circumstances existed.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—He might also take this opportunity of stating, though the figured belonged more properly to the next part of his remarks, that receipts from excise had been $83,414 for the same period (8 weeks) of 1864, and $250,371 in 1865. He, therefore, thought the estimate the Government had formed of the receipts from Customs was likely to be a safe one, viz.: that they would only be $300,000 less than in the natural year of 1864, notwithstanding the loss of $1,000,000 on a comparison with the first six months of the fiscal year now closed.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—With reference to the excise he proposed to estimate the receipts from licences at $65,000—they might be a little less or a little more—but they would not vary much from these, the figures of last year. With reference to spirits, the receipts last year were 30 cents per gallon 3,000,000 gallons, the exact sum being $891,000. The estimate had been based on an expected distillation of 3,200,000 gallons, but duty had been received on 3,000,000 only.

In forming the estimate for the current year, the Government had had reference to what was considered the regular consumption of the country, as indicated by the experience of several years past, making allowance for exceptional causes. One of these was that a large amount of spirits had been taken out of bond before July 1^st, 1864, to avoid the anticipated increase of duty, though the Government had secured a good deal by having the duty collected from the time the resolutions were first introduced to the House. The average amount distilled was from 3,600,000 to 3,800,000 gallons. A deduction had been made in last year’s estimate of 400,000 gallons to allow for the evasion of duty, diminished consumption, &c., but he thought the probability was that the distillation of spirits would be somewhat larger this year than last. He did, indeed, think it would be considerably larger, but he had only estimated on a basis of 3,250,000 gallons. The distillation might exceed this amount, but a good deal was being sent out of the country, some legally, and some, perhaps, illegally.

He proposed to estimate the excuse on beer at $160,000. He found it had not varied much from that amount for some time. In the case of tobacco, the House was aware that a considerable revenue had been anticipated last year from this source, but the House would remember that it had been resolved not to levy duty on tobacco then manufactured, and, as had been stated at the time would be the case, this had seriously affected the revenue for the year just expired. There had been a large stock then on hand, which had gone into consumption, consequently the country was deprived of a good deal of what would otherwise have been realized.

Under these adverse circumstances, the revenue collected during the fiscal year had been $115,500, but he might state that in addition to this, there was a duty accruing on tobacco in warehouse of $75,180. All this might not be received, because some of the tobacco might be exported and thus not pay duty, but this was the amount leviable on the quantity in bond on July 1^st.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—In estimating the receipts from excise on tobacco, he had to be governed somewhat by reference to the ordinary imports of manufactured tobacco in former years. In 1860, it was 3 ½ millions of pounds. Before the American war there was a large import of manufactured tobacco. During the American war, the import of manufactured tobacco fell of very much, while that of unmanufactured tobacco largely increased, so much that it amounted in one year to 15,000,000 lbs. A large proportion of that had been consumed in the country, though a good deal had been exported.

The revenue received during the past year undoubtedly indicated that the consumption had been mainly supplied from stocks on hand—the amounts imported and manufactured having been small. Under these circumstances, we might reasonably anticipate that the amount of tobacco yielding revenue to the country would approximate somewhat to the consumption of the country. The consumption could not be put down at much less than five or six millions of pounds. But in practice it was found that the law was not, perhaps sufficiently strict, and that in some cases frauds were successfully committed. It was better, therefore, to make a low estimate, and he accordingly put the consumption of tobacco for the current year at 3 ½ millions pounds, yielding $350,000.

The receipts on tobacco this year since 1^st July indicated a receipt at the rate of about $275,000. The receipts on tobacco this year since 1^st July indicated a receipt art the rate of about $275,000 for the year. But it was clear that the consumption, which would become productive to the revenue, would increase, month by month, inasmuch as the stock of tobacco in the country was gradually becoming less, and consumers would be obliged to purchase that which had been subjected to excise duty. These four items, licenses and excise on spirts, beer and tobacco, would give altogether $1,550,000.

The Post Office last year produced $470,000. The receipts from postage were, year by year, increasing. The increased population and increased business of the country naturally told on the postal receipts, and we might fairly estimate some addition under that head. He had preferred, however, putting the estimate at the same figure–$470,000.

The Public Works last year produced $395,000; this year he estimated them at $450,000. He might here give a very brief explanation with regard to the question of canal tolls. The policy of the Government as regards the tolls was the policy adopted at the time the President of the Council [George Brown] joined the Government. That, like some other questions, was felt to be entirely subordinate to the great point of settling the constitutional difficulties of the country.

He (Mr. Galt) at that time held his own views, and he held them still, as to the policy of making our inland navigation as free from burdens as possible, and he believed the President of the Council [George Brown] equally held to his expressed views. When he (Mr. Galt) came into office, the tolls had been reimposed by his hon. friend behind him (Mr. Howland) and maintained by the hon. gentleman opposite (Mr. Holton). They were afterwards slightly modified by himself (Mr. Galt).

There might be some minor changes to meet the requirements of trade, but the Government did not intend to alter the rates or the principle on which they were now administered. The increased estimate of $55,000 was what he believed would arise from the much more productive harvest which the Western country had had, and which he thought we might reasonably hope would yield that increase of tolls, which was only half the excess of the previous year over last year. In the previous year the receipts were upwards of $500,000; last year $395,000.

For this year he took the medium between those amounts $150,000, and he had every confidence the estimate would be justified by the result. The estimate for ocean postage was an average of the last two or three years, $70,000.

The territorial income last year was $830,000. But included in that was a considerable payment from the Canadian Land and Navigation Company, which bought a large quantity of land in the district between Lake Huron and Ottawa, and completed their payment of a sum of nearly $200,000 in the past year. We could not presume on an equal sum this year, and there was a reduction therefore in the estimate of the current year of $180,000. It was estimated we would received $850,000 instead of $830,000.

Taking the hopeful view which we were justified in taking of the position of settlers throughout the country, we might hope there would be a much larger amount of arrears collected this year than last year. He had not made any estimate, however, in the receipts of the present year. Stamps yielded $119,000 during the fiscal year just closed, somewhat more than the estimate. The data were then exceedingly imperfect. The returns obtained from the banks gave an estimate of $90,000, and he had estimated an increased revenue of $10,000. The receipts had been considerably greater, having yielded $119,000.

It would be his duty before he sat down to move a resolution on the subject of stamp duties. It was found that the limitation of stamped bills and promissory notes to $100 was productive of very great evasion. Notes were divided to a very great extent. No one gave a note for $100, but it was divided so as to escape the duty altogether. This was not fair to the rest of the community, and certainly it was not desirable to allow people to evade the revenue in this way. It was therefore proposed that all bills and promissory notes of whatever value should bear a stamp, one cent on notes of $25 and under, 2 cents on $50 and under, 3 cents on $100 and under. By that means expected some increase would be derived.

There were also some minor amendments of the Stamp Act[5], which he would embody in a bill to be brought before the House this session so as to remove some doubts which had arisen as to interpretation of the Act. This bill would provide also, as far as possible, for the use of stamped paper instead of affixed stamps, the revenue being undoubtedly subject to some amount of fraud, by the use of stamps, not thoroughly defaced, taken off the notes.

While on the subject of excise he might remark it was also his intention to introduce a Bill, of which he had given notice, for amending the excise law, so as to provide for some cases which he did not think were sufficiently provided for under the present act. It was quite evident now that the excise were considerably augmented, as they had been from 5 to 30 per cent within a few years, that the temptations to commit fraud were so much increased; and government required to have all the additional power with which the Executive could arm the excise officers, for the purpose of checking these frauds. The Government had, he might say, determined in all cases to put the full force of the law into effect against parties who were found violating it.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—Before he left the subject of stamps he ought to give some information with regard to the operation of the act imposing law funds formerly existing in Upper and Lower Canada. He would read the figures showing the state of the various funds for each year since 1861, omitting fractions. In 1861 the Upper Canada Fee amounted to $47,000; in 1862, $51,000, in 1863, $58,000; and last year it had increased, through the operation of stamps, to $68,000.

The average receipts for the previous three years having been $52,000, showed the increase in 1864 to be $16,000. Then the Consolidated Fund in 1861 amounted to $32,000; in 1862 to $30,000; in 1863 to $29,000,m showing a gradual decrease until last year, when under the stamp law it rose again to $35,000, considerably above the highest receipts in 1861. The receipts of the Law Society in 1861 amounted to $20,000; in 1862 to $16,000; in 1863 to $14,000; but under the stamp law they rose to $20,000 again in 1864, being equal to the receipts of the highest previous year, 1861.

These items, with a large number of others, were included in the term miscellaneous, but he did not purpose to delay the Committee by going over them seriatim[6]. The municipalities fund, the Indian fund, and collection under the Municipal Loan Fund formed the principal items, while with these there was a variety of minor sources of income which produced altogether in the years of 1864-65 the sum of $1,670,000. He purposed to estimate them all as producing next year $1,650,000, being a reduction of $10,000.

He then, in connection with the purpose of the Government as to the mode of expending these sums, adverted to the operation of the Audit Act[7], and stated to the Committee certain modifications of form which Government were adopting, with a view of creating a greater check upon public expenditure. There was no doubt we were gradually approaching a more perfect system in this respect. It had taken us several years to do so, as it must necessarily do in any country, but it was a system more perfect that that adopted in any country of which he had knowledge. It was certainly more perfect than that of England or the United States, but he could not speak with the same knowledge as to the systems of other countries.

Under the principle of the Audit Act the authority of Parliament was required for every expenditure, and so far it was perfectly good and carefully carried out. To that extent this House had control over the expenditure, but as a matter of fact Parliament continually made appropriations which ought to be and necessarily were, subject to discretion of Government as to whether they should be afterwards expended. Appropriations for the Ottawa buildings were of this nature, as well as many others made by Parliament.

Well, it was proposed as a regulation which he thought would work beneficially for the purpose of checking the expenditure to require that all the disbursing affairs of the Government throughout the country should make monthly returns to the Government of the sums they intended to expend out the Parliamentary appropriations. The effect of this, the Government anticipated, would be that they would have a better check upon the progress of public works and in arresting any expenditure that might be saved, and it would afford the furth advantage to Government of controlling the demands which were being made from time to time upon the public exchequer, which demands had often to be met unexpectedly and at inconvenient periods.

While speaking of this, he might say the time at which the payments of the Province matured was somewhat inconvenient—the 1^st of January and 1^st of July, especially the 1^st of July. At these periods the Government had not only to provide for interest on public debt, but also for the distribution of the municipalities’ money, the educational grant to Upper Canada and other appropriations. Consequently large sums fell due at the beginning of every half year, and it was a question with the Government whether these periods of payment could not be altered, not to deprive any one of money due him to spread disbursements over the year and make them due at more convenient periods.

The amount of public debt to be redeemed this year was $1,100,00, of which the greater part was the final payment of the Imperial loan. It was now all paid off with the exception of £14,000 sterling, and the Government held that amount of India bonds to pay it. The remainder of the amount consisted of small debentures which were now falling due, amounting to between $300,000 and $400,000. The interest on charges on public debt were $[?3?],890,000, including sinking fund.

Charges embraced under the head of Civil Government were all mentioned in the estimates already in the hands of members, and amounted to $4,633,000. A good deal was provided for by statute, and was therefore not shown in the estimates in members’ hands. It was proposed to expend for Militia during the past year $500,000, which would be more fully explained by the Minister of Militia [John A. Macdonald] on Thursday next.

In regard to public works, the buildings at Ottawa, and completement of the enlargement of the Welland Canal were the chief. It was expected that the total outlay of the Board of Works would be $600,000. The collection of revenue was put down at $1,350,000—That concluded the refund, which, if included on one side as revenue had to be included on the other as expenditure. These amounted to $100,000. The aggregate of these outlays, exclusive of redemption of public debt, was $11,074,000, against an income of $11,1360,000, leaving a surplus of $62,000. In regard to it the Government had exercised every economy.

There was no doubt that, in a country like Canada, increasing so rapidly, there must necessarily be a gradual increase in the cost of the Government. It was impossible to govern three millions for the same sum as two millions. He alluded specially to the great influx from the States during late years, causing an increase of population which was very troublesome and expensive to us. The Government was obliged to provide for a good many sources of expenditure which, perhaps, were omitted before, but which could not now appear in unprovided items. The expenditure of them had ceased, and might not again arise. They asked for appropriations under that belief, and the determination of the Government was to exercise every economy in the expenditure of the sums which Parliament might place at its disposal. The Audit Act[8] would be supplemented by such restrictions as would give the Government stricter control than ever before exercised.

He went on to allude to the necessity of making additional provision for the Toronto Lunatic Asylum; $25,000 would be expended on that up to 30^th June next, in commencement of two wings. As to the balances, on 30^th June last, they were nearly $3,444,000. The House had already clothed the Government with power to dispose of four millions of debentures, but that had not been exercised, the debentures being lodged with the Bank of Montreal, for sums of money obtained from that institution. The balances due to the London agents had been considerably reduced, since January 1864.

On the other hand the Government had obtained temporary assistance from the Bank of Montreal, to the extent of $1,262,000, at the commencement of the new year. The Government had already paid off $250,000. Seven per cent was the rate, while that of the London agents was five per cent. With regard to these balances the Government had not proposed to ask the House to make any financial provision. They did not think there would be any difficulty in carrying over these balances at such time as might be convenient for the public service. The London agents at once assented to carrying over these till January 1^st.

The Government would not like to sell their securities at their present rates for the purpose of covering this. They had every confidence that the credit of the country would very speedily be improved. They had indications of that already, and there could be no doubt, now that peace had been restored in the United States that confidence in our securities would rise to the former rate. The Government would exercise its authority under the supply bill of last year, in reference to the issues of debentures; built on some favorable opportunity arising for placing debentures in the market. Without going further at length into those subjects treated of, he would feel it his duty to answer any question which might be submitted respecting them, and to give the fullest information required.

He would now advert, at some short length, to our present relations towards the United States, and what we might term our foreign trade generally. He thought the Committee would agree that, when we considered the Reciprocity Treaty[9] might possibly expire on the 17^th March next, under terms of the notice given, it would be felt that in anything he said as to the position of the country during the current year, it would be regarded by the Committee, if he had omitted to notice a cause that might prove one of superior disturbance to our trade, and seriously affect the conclusions to which we had arrived, and it would be considered, if he took his seat without adverting in some degree to the position of our trade with the United States, and, generally, to what we hoped to be the result of the negotiations with that country, as also to throw out such suggestions as might be useful—that he would not be acting within the discharge of his duty.

Our trade with the United States consists of two kinds. One was independent of the Reciprocity Treaty altogether, and the other that existing under it. As to the former, the privileges applying to the most favored nations would apply in our case in every particularly. But the great bulk of our trade, and that which created greatest apprehensions in the minds of our people, was the belief that we are to a very large extent dependent upon them for market for our produce.

He would not desire to diminish or derogate from the importance of the trade enjoyed with that country. It was impossible that two kindred nations, speaking the same language, actuated by the same feelings, could exist alongside of each other without having intimate commercial relations and intercourse, and it was evident it could not be interfered with by either nation without seriously injuring both. But, while he acknowledged the importance of the trade with the United States, it was not our interest, nor was it his duty to exaggerate its importance, in view of the possibility, and, as many thought, probability, of that treaty being abrogated in March next.

It was desirable for the House and country to look somewhat into the condition of the trade as it now exists, and into the reasons which induce us to believe it would be continued and extended on the one hand, and to consider the position we should, on the other hand be placed in, if our anticipations in that respect should prove to be unfounded. He had a statement of our trade with the United States, since 1850; but would not now go into all the figures. He would merely advert to what that trade has been for some short time past, beginning with 1860.

This was, in proportion to our whole imports, 50, 49, 52, 50, 37 and 37 per cent, respectively. So that, for the last 18 months our import trade with the United States has been 37 per cent of our whole important trade, as respects all nations.

The relative proportion this trade here to our whole export trade was thus shown:—53, 35, 50, 5{?1?], 54, and 59 per cent, respectively. He would now take the figures for the year, for the purpose of looking into the operations of our trade with the United States under the treaty. He would take the year ’64-’65, for this reason, that in that year our imports from the United States were proportionately the lowest, and our exports proportionately the highest. There was no year since the treaty was enacted, in which our export trade and our market in the United States was so large as in 1864.

The leading articles in our trader with the Untied States under the treaty, were first the products of the forest. These amounted last year to five millions of dollars. In considering the value of that trade to us and to the United States, regard must be had to the present state of the supply in the United States market. It would be found, he thought, that the obtaining of that lumber from Canada was quite as essential to the consumers in the United States, as it was to ourselves.

He might advert to the average prices of lumber as indicating this. The prices were raised from $7 and $7.75 per thousand feet to $8 in ’59, $9 in ’60, $9.50 in ’61, $9.75 in ’62, and $10 in ’63. Now the districts from which the United States obtained their supply of lumber, exclusive of Canada, were the State of Maine, some portions of the Western States, Michigan, and States  bordering on the appear waters of Lake Michigan and Superior, and the Southern States.

The trade with the Southern States had of course been completely stopped for several years past, which had given vitality to the trade here, from our being called upon to supply them with ship-building timber to a large extent during the rebellion. But that portion of the United States which consumed timber was not that which produced it. Large districts of New York and Pennsylvania, and the New England States, were dependent for lumber on importations from other parts of their own country and from Canada. Even in the new Western States a very considerable market for lumber existed.

Now, what would be the effect of the United States imposing a duty on lumber? It would either raise the price so as to induce the article to be brought from portions of their own country, whence it cannot at present be brought on account of the distance, or they would have to import it from this country, paying the duty themselves, and paying us the same price as now. They might raise the cost of the building material used in their houses and ships, but they could only do so at the expense of the consuming interests, without injuring the producing interest. Unless the effect of the increased cost was to diminish the consumption, they must necessarily go either to Canada, or to the more remote districts of their own country for the supply.

He contended that where a country was compelled to consume an article on which they charged duty, they not merely paid the duty themselves, but absolutely made a present of a similar amount of duty to all the producers of the article within their own country. There would be an increase of price on the whole product of lumber in the United States; and he believed that in the case of so bulky an article, which would not bear a long carriage, they could not supply their market without coming to Canada for it to a very great extent.

The exports of the next class, animals and their products, reached a very large and exceptional amount in ’64-’65. In that year there were no less than $1,800,000 worth of horses and $1,781,000 worth of cattle exported to the United States. If anything were wanting to shew the extent to which the Northern States were exhausted by the war, it was the exceptional amount of exports from Canada under head of animals during the past year. In 1861, they amounted to $1,397,000; in 1862, to $1,262,000; and in 1864-65, to $4,478,000, being an enormous and exceptional amount of export in that year, and one which we could not reasonably expect to continue, now that the cause to which it could incontestably be traded had been removed. It was clear that, being compelled to come to Canada for this large supply, if they had put a duty on it, they would have had to pay it themselves.

As regarded meats, we had only exported to the United States one-half of what we imported. The imports were $876,000; the exports $484,000. The effect of their imposing a duty would be, that instead of our exporting to them our $484,000 worth of meats, and importing $876,000 worth of beef, bacon and pork, chiefly pork, for our lumbering establishments, our lumberers would get their supplies from our own farmers, instead of buying Western pork. Of butter and cheese, the exports and imports were almost alike in amount, but with this singular difference, that we exported $340,000 worth of butter to them, and they exported $396,000 worth of cheese to use.

Our export of wool was considerable, and was growing. Last year it amounted to $1,350,000, against an import of $174,000. The description of wool we exported to the United States was essential to their manufacturers, and they took it from us because they could not get a better article, or one more suitable for their purpose anywhere else. If they imposed a duty, so as to exclude our wool, they would have either to change their mode of manufacture, or to find wool that would answer their purpose in some other part of the world.

Of other products of animals, there was an import of $814,000, against export of $391,000. With respect to agricultural productions, the trade was naturally two-fold, consisting in wheat and flour, the prices of which were governed by the consumption of the European market, and in coarse grains, of which the price was chiefly fixed by the consumption of this continent. The trade in wheat and flour might be considered as a transit trade. The price was not regulated by the American market, and the American market did not consume these articles. The United States exported to the Maritime Provinces about as much as they imported from us.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—Being a transit trade, the Americans reaped the benefit of it—they had the advantage of transporting it and of the commercial profits that arose from transacting it. The effect of preventing the continuance of that trade would be that if we succeeded, as he trusted we should, in establishing proper commercial relations with our maritime brethren, the trade would be conducted directly with the Lower Provinces instead of, as now, with Boston and New York.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—As to the trade in coarse grains, the case was somewhat different, but the same argument held good which he had used with reference to lumber. Indeed, it applied more strongly to coarse grains than to lumber. If lumber could not be carried far, except by water, it was clear that grains likely barely and oats could not. Now, the market for these articles was to be found in the manufacturing districts of the United States, and we knew that by imposing duties on them the cost of manufacturing would be enhanced, in which case it was plain that while the New England manufacturers were now complaining of the difficulties of competing with the foreign manufacturers still more would they complain then.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—We should hear an outcry from them which the American Government would have to meet, either by allowing these grains to enter again free, or by increasing the Customs’ duty on foreign manufactures, which increase the North-west would resist and resent.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—But while we exported a large amount of oats, barley, &c., worth about 4 ½ million dollars—we imported nearly $800,000 worth of Indian corn. Now Indian corn was used to a great extent in this country in our distilleries, and if the Americans refused to take our coarse grains, it would become necessary for our distillers to use them. The American distillers, in Ohio and other States preferred our barley, which was better than any they could grow themselves. Well, they would have to use their own Indian corn instead. The Americans now grew corn cheaper and better than us, while we grew barley cheaper and better than them. To interfere with the exchange would be inconvenient to both parties, nay, it would be injurious to both, but the principal effect would be to change the nature of the distillation carried on on either side of the frontier.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—There were other articles affected, but he would not detain the Committee long by an extended reference to them. The produce of the mine was not an important interest as yet though it was a growing one. If we had not free access to the American market for our ores, we should loose the advantage of a market with which we could communicate by telegraph in a few hours and by mail in a couple of days, but at the same time it was not the American market which gave its value to the produce of the mine. This was given by the demands of the world at large, and though the Americans might deprive us of the privilege of selling our ores in their market, and force our trade in minerals into a different channel, they could not prevent us from raising our ores and disposing of them abroad.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—In the case of the fisheries, it was singular that we imported from the States a great deal more than we exported, the exports being $89,000, while the imports were $275,000. He presumed the imports were of fish and fish oil that had come from the Lower Provinces by way of the United States. Our imports of manufactures were of course very much larger than our exports, but it was worth notice that we had exported last year $460,000 worth of manufactured goods to the United States. It was impossible to tell whether they were of Canadian make or not, but he was aware that latterly considerable orders had been received from American houses, and it was gratifying to know that our manufacturers were in a position to sell goods to the American market, even after paying the 40 or 45 per cent duties to which they were subjected. This was a good sign, and indicated that the period was arriving when they would require no protection at all to enable them to carry on their business.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—To sum up. The exports to the United States which might be said to be dependent on the Reciprocity Treaty[10]—that was the balance of exports over imports—was—

[The trade in animals was much larger last year, but this was about the average.]

Thus a balance of about 10 ½ millions of our export was more or less dependent on the Treaty. That was about the amount they could effect by levying taxation on the different productions of this country. He would not repeat any of the arguments with respect to each article, but the peculiar position of that portion of the American market which was supplied from Canada was such that he did not think they would find it to their interest to impose duties on our products; but if they did, they would not merely increase the cost of every one of those articles raised in their own country, but they will have themselves ot pay the duty on the supplies they obtained from abroad, essential for their consumption.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—He might further say in reference to this trade of $[?1?]0,000,000, that though it was certainly very important, still, if we were compelled by circumstances to look at the possibility of its being diverted, we should not look so much at the proportion it bore to the total exports or imports of the country as to the proportion it bore to the whole products of the industry of the Provinces.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—We ought not to conclude that because, say 25 per cent of the industry of the Province would be paralyzed if they did not go there. The worst result would be the change that would have to be made in a certain amount of the productive labor of the country. Labor rendered remunerative in one direction must be made productive in another. It was so in manufacturing pursuits; it would be so in others. Apart from the derangement of commercial transactions, which would undoubtedly be a source of annoyance, the only consequence would be that if we had an absolute interruption of the American trade, we should have to change the character of our produce before sending it to market—our productive industry would not be paralyzed.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—He thought the Committee would agree with him that we could do no greater service to the cause of Reciprocal Free Trade with the United States—we could do nothing better calculated to bring about such a state of feeling in the United States as would lead to the renewal of the treaty—than to do away with exaggerated views and ideas on one side or the other. When the Americans found that the loss of their trade would not affect us so seriously as to change the allegiance of the people of this country, they would in all likelihood, commence to extend commercial facilities again.

In this connexion we must remark that when a gentleman occupying the important position of the chief representative of the commercial interests of the United States in Canada asserted that the loss of free trade with them would affect our allegiance, he shewed a most lamentable ignorance of the state of that trade and that country.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—He (Mr. Galt) could not think such views were sanctioned by the authorities to whom that gentleman was responsible.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—To do away with such views as he expressed it was essential we should here it clearly and perfectly understood that we are not so dependent on this treaty as was supposed. The political question was quite distinct from the commercial one. The Americans said themselves that they desired us to be in such relations with them that more commercial intercourse would follow. They did not desire a suspension of trade with us. If then we could show them that the trade was not of such magnitude that its interruption would produce a complete change in our hopes and aspirations, and render us willing to abandon our whole future, we should remove one of the greatest obstacles to the re-establishment of intimate trade-relations.

Again, it was clear that another class of people we had to meet was these who were honestly convinced that the trade under the Treaty[11] was very much more advantageous to Canada than to the United States; so advantageous, indeed, to Canada that we should be willing to make any sacrifice in a commercial sense—not a political sense—to retain it.

Now it was not a good way to enter into a bargain with the United States by laying down our hands and saying we must concede everything they asked. He contended that this was not the position of Canada. He admitted that the Treaty was important—that there were important interests which would suffer if it were interfered with—but he denied that they were so important that we should give up everything in a commercial and financial sense to have it renewed.

Some Hon. Members—Hear.

Alexander Galt [Sherbrooke, Minister of Finance]—We were called on by the Detroit Convention[12] to enlarge our canals—to give them certain assurances with regard to the use of these canals—also to alter our Customs’ and other duties in the sense which they thought would be more advantageous to their manufacturing interests than at present.

Now, we are prepared to enter into discussion on all these points; he said we were satisfied with the Treaty, though it was not so advantageous for us as we could wish, and asked them if they did not desire an absolute suspension of commercial intercourse, to tell us the points which in their opinion, demanded modification. Now, if taking the Detroit Convention as an exponent of the views of the United States, we now see that the enlargement of our canals was one of the points urged by them.—The position of the Government on this subject was clearly and intelligibly stated the other night.

We have no trade ourselves which requires such enlargement—no trade which of itself would justify us in enlarging the canals. We could only be repaid for such improvements by obtaining the American trade and making it pay tolls, or otherwise contribute to our revenue. If, then, the Americans don’t want to have any trade with us, it would clearly be the greatest mistake in the world to enlarge our canals; that should only be done in the event of the Americans desiring to send their produce by our routes.

It was very well for them to ask us to enlarge our canals, whether they used them or not; but he thought that when they came to ask for it, we might very fierily refer to some points which required to be altered in our interest. There was, for instance, the registration of shipping, and the admission of our vessels to their coasting trade. The Government of Canada contended that the interests of the Maritime Provinces were identical with those of this country.

Well, we should have to consider whether the facilities we were asked to furnish to the North West to reach a foreign market were not of such values as to justify us in making that our vessels should be admitted to a participation in their coasting trade.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—The Registration of Shipping was of great importance to the interests of the very place in which the House was now sitting. It was to be hoped the American Government would take a different view in future from what they had taken heretofore. Large numbers of American ships had been transferred to English owners during the late war, and it would be very difficult, if he understood their law aright, to get their registers changed.

An Hon. Member—They can’t do it.

Alexander Galt [Sherbrooke, Minister of Finance]—Another form was this. It would be quite plain to any one who looked at what was passing in the United States that the question of their revenue had a most important bearing on our commercial relations with them. That country could not maintain very high duties on a variety of articles, without a great deal of illicit trade being carried on from Canada to the United States.

He thought, and his colleague, too, thought, that Canada ought to perform the part of a friendly neighboring country; that we should, as far as possible, prevent their revenue being subject to fraud, but it was at the same time clear that the check which could be exercised by us on smuggling from Canada into the United States was next to nothing—it must be checked from the American side, not from ours. There was only one way in which it could be effectually prevented—the selection of certain articles on which the duties should be so nearly assimilated as to present no inducement to illicit trade.

The Americans had now a Commission sitting to revise their revenue laws, which Commission was invited by the Detroit Convention[13] to confer with the Finance Ministers of the British Provinces. Any suggestion that might be made by them would be considered in the most friendly spirit; but if we were to be met by an absolute Chinese wall of restriction; if there was to be no intercourse between the two countries, well, then, let them look after their own frontier; we would have such duties as we pleased, and let them have the duties they liked.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—He would now leave the question of our trade with the States, and would like to be permitted to occupy the attention of the Committee for a few moments by a reference to the state of our foreign trade; that was our trade with other countries besides Great Britain and the United States; and in the first place he would refer to the trade of the maritime Provinces. That trade had not been so large as had been desired, nor increased so rapidly as might have been expected, because under the Reciprocity Treaty[14] they had obtained in the American markets those articles they might have obtained from us, which had been sent by us into the United States, and by the United States exported to the maritime Provinces.

The actual results, as comparing several years, were that we had imported in 1860 goods worth $393,864, while in the fiscal year ending June 1865 we imported $511,570. Our exports had increased during the same term from $723,534 to $1,065,057—an increase of about 25 per cent. From the British West Indies the increase in trade had been more considerable. Our imports were $15,802 in 1860, and $209,327 in 1865. So there had indeed been a renewal of the West India trade we formerly enjoyed. The exports to the Maritime Provinces had risen from $723,000 in 1860 to $1,065,000 in 1865, and to the West Indies they had risen from nil in 1860 to $41,000 in 1865.

But while that had been the case with our own West India Islands our trade with the foreign West Indies was beginning to assume somewhat considerable dimensions. This was particularly the case as regarded Cuba, and he found the total value of articles imported from the foreign West Indies, in 1864, was no less than $1,480,000, of which there had come by way of the St. Lawrence. $255,000; by way of the United States, $660,000, and by way of Nova Scotia, $126,000. The general foreign trade of Canada amounted to so little three or four years ago that it was scarcely worth of notice. In 1860 the total import trade of Canada from foreign countries, except United States, was only $9[?9?]5,000, and in 1865, notwithstanding the depressing influence of the American war, it had risen to $3,274,000, an increase of nearly four-fold in that short period.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—It now amounted to eight per cent of our whole exports instead of only 2 ½ per cent. It was gratifying to the Government, and he was sure it must also be gratifying to the House and the country, to know that, at a time when we were threatened with the interruption of trade relations with the United States, we had trade with ither foreign countries independent of British possessions, which was growing with the rapidity indicated by these returns—a trade that now amounted to about one-tenth of the whole industry of the country, if trade with the United States were put an end to to-morrow.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—These observations respecting our trade with the United States, the Reciprocity Treaty, and our trade with foreign countries generally, acquired perhaps additional importance at this moment, because we know that, under instructions from the Imperial Government, representatives from the different Provincial Governments would meet in this city during the month of September next. It was peculiarly happy that, at this moment, such a meeting was to take place, because we had to consider two points in reference to our trade with the United States.

We had to consider first—what action should be taken in case the American Government should undertake to enter into negotiations for the renewal of the Treaty; and we had to consider, in the second place, what action should be taken if it declined to negotiate at all. Now it must be clear, with reference of the trade of the Maritime Provinces with Canada, that it is most important that this meeting should be held, and that a common understanding should be arrived at by the representatives of the different Governments. He did not apprehend that there would be the slightest difficulty in negotiating, or coming to an agreement, upon either one point or the other.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—The Canadian Government did not desire to engross the negotiations that might take place respecting the Treaty. If they stood alone, they would as much consider the interests of the Maritime Provinces as their own, but on this occasion, they would have these interests represented by gentlemen from the Governments of those Provinces themselves; and they would have the advantage of obtaining from those gentlemen information on points relating to those interests, and by this means he did not doubt that they would be able to unite in placing before the representative of the Imperial Government at Washington the united views of the Governments of all the colonies, in reference to trade with the United States, and especially with reference to the fisheries of the Gulf of St. Lawrence and Nova Scotia, which formed such an important part of that trade.

But if, unfortunately, we should be disappointed in our anticipation that the American Government will enter into negotiations for the renewal of the treaty, then it would become more than ever necessary that an understanding should be had with the maritime Provinces, in reference to the future of our trade. It would become necessary with regard to the supplies they now obtained from the United States, and also with regard to the means of transporting their products by way of the St. Lawrence to the West; for he did doubt that, even if the treaty were not renewed, the fish and other productions of the Lower Provinces would find a large sale in the Western States.

It would also become necessary to understand what articles they wanted with which we could apply them, and what it would be advantageous to receive from them. This Government certainly felt that it would be advantageous to meet their representatives at this time on these and other grounds, and they hoped that this meeting would have results even beyond that. He did not refer now to political results, but to commercial simply, and he thought that they would be able, by putting their views and opinions together, to see how far it was possible to assimilate their several commercial systems, and to provide that the industry of one Province might have access to another without meeting any obstacle or burden whatever.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—Again, they had reason to believe that the European trade of the Lower Provinces could receive very considerable development, by an extension to them of the concessions which the French Government with great liberality had made to Canada. To this country only of all the British Provinces, had been extended the privileges of the commercial treaty between France and England, under which our ships and lumber were admitted into France on the same footing as into England.

This privilege has been given to Canada alone, because, probably it was looked upon as the largest and most desirable colony with which to cultivate commercial relations. Under it an extensive trade had been growing up with France which amounted last year to about three quarters million dollars. The meeting might be instrumental in obtaining a similar advantage for the Maritime Provinces for whose productions France afforded a very considerable market. He then alluded to information collected with regard to our trade with the West Indies and South America in the event of its being necessary to seek new outlets for our commerce.

In conclusion he thought he would be warranted in referring for a few moments to the altered position in which the House now meet from that under which they had last separated. For some months before the House rose we had been suffering in common with the neighboring country from the vast civil war there raging, and which had not approached that period when any one could prophecy its termination. It had produced, among other lamentable causes, a very great and increasing degree of bitterness between that great country and ourselves, and at that moment we were suffering, not only from the direct effect of the war in the United States, but also from a feeling of insecurity which sprang out of it, and out of the irritation in the American mind against this country in consequence of the raids that had taken place on the frontier.

Consequently, we were suffering, not only from the depression produced by the war, but from the fear of hostilities extending to ourselves also. Every one would remember that, from the time the Government announced its intention of sending a delegation to England[15], the feeling amongst the public was one of misapprehension. Defences and fortifications were the common talk from one end of the Province to the other.

Luther Holton [Chateauguay]—For which you are responsible.

Alexander Galt [Sherbrooke, Minister of Finance] thought the responsibility might rest as fairly upon other people as upon the Government. The irritation in the United States had given rise to a hostile commercial policy towards this country. We had been subjected to all the interference and annoyance caused by the passport system; never known on this Continent before. Our trade with the United States had also been subjected to the greatest possible inconvenience by the Government requiring Consular certificates, which were both expensive and troublesome.

They had given notice of the abrogation of the Reciprocity Treaty[16]; and this hostile commercial feeling many feared would change to hostility in a material sense. We were also suffering from bad harvests, which were considerably below the average, and the country, from all those causes, was in a generally depressed state. Politically a very serious check had been given to the policy which the Government, with the sanction of a very large majority in the House and the country, had endeavored to carry out successfully, the policy of Confederation. They received a check to that policy to which they looked for the termination of our sectional difficulties, by the result of the elections in New Brunswick[17].

At the same time, too, instead of having the support and encouragement of English public opinion, we had it to a great extent against us. Those who advocated a change in the colonial system and the severance of the tie which bound the colonies had got hold, to a great extent, of the public mind in England, and, consequently had produced a tone of feeling adverse to the colonies, and which this country had not been accustomed to see prevail in England.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—Those causes combined had unfortunately produced on the public mind a feeling of insecurity and discouragement which was producing the most unhappy results in every possible way. There was a conviction in the public mind that a change was coming, and every one feared it would be attended with great disaster, perhaps with bloodshed and war. At any rate, the whole state of the country was one of expectancy on the other hand, and depression and uncertainty on the other.

The Government did not profess to take credit to themselves for changes beyond their influence; it might well, however, become him to congratulate the House, the Committee and the country on the fact that we now met Parliament only a few months after the period of this uncertainty, with almost an entire change in most respects. We had to congratulate our neighbors of the United States on the termination of their civil war, and upon their return to the habits of peace, with an infinitely less disturbance of their industry and trade than what could have been expected.

The American war, from the beginning to the end, had certainly occasioned constant surprise, but in no respect greater than in one which gave us the greatest pleasure, namely, the restoration of peace over a country convulsed with a most gigantic and destructive war.

As to ourselves equally with them had the fears of war been dissipated. We no longer stood in dread of armed bands crossing our frontier to ravage and destroy, or of having to expend large sums of money to send volunteers for the deference of that line and to prevent raids into our own country. Besides being relieved from those burthens and fears, we found most happily an improved feeling towards us growing up in the American mind.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—He thought that good feeling was increasing rapidly, and that the irritation which our neighbors felt towards us—not so much our account as on that of Great Britain, but which was reflected upon us, was disappearing quickly. He thought the Americans were beginning to see that the Government and people of this country had discharged their duties towards them, under circumstances of great difficulty, with a degree of honesty and straightforwardness which, he believed, they would see and appreciate fully in the time to come.

He believed they would see that no step our Government could have taken was omitted to prevent the outages and losses which had been inflicted upon them; that with our limited revenue we did all we could to preserve peace upon our borders with our neighbors; and we were now able to find an acknowledgment on their part in published dispatches that we had done our duty in this matter. When that came to be generally recognized by the American people he believed that the irritation arising from hostile acts complained of would be entirely removed, and that we would be separated from any responsibility for those unfortunate acts, and that the Americans would recognize that they owed us gratitude and thanks for the way we had performed our duties throughout the late conflict, when a different course on our part would have entailed upon them serious difficulties and losses.

Then in regard to the state of feeling in England he thought it would not be denied that there had been a manifest change in the ideas of the people there, and that the class of politicians who looked upon the colonies as a burden instead of an advantage to the mother-country was no longer leading public opinion, but that the time had again come when England regarded her colonies as a great source of her greatness, and that her proper policy was to consolidate and unite them more closely with herself, as in this position she would be able to stand the brunt of any attack or any difficulties to which she might hereafter be subjected.

Some Hon. Members—Cheers.

Alexander Galt [Sherbrooke, Minister of Finance]—He believed further, that England considered that the feeling of Canada was one she might fully depend upon, should danger ever come.

Some Hon. Members—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—With regard to Confederation, he need only refer to the despatches before the House[18], which fully answered the boast of the hon. member for Chateauguay [Luther Holton], that the check it had received in New Brunswick[19] was fatal to the scheme.

Luther Holton [Chateauguay]—What is the answer?

Alexander Galt [Sherbrooke, Minister of Finance] thought that the complete sanction given the scheme of inviting the colonies, not only by the Imperial Government, but by the people of England, and the unmistakable way in which it had been mentioned in the Address from the Throne[20], was an answer to the taunt of the failure of Confederation.

He thought we did, therefore, stand in widely different position from that occupied in March last, when one of the Lower Provinces pronounced against the scheme, and when we were quite uncertain as to the view England would take upon it, or as to her future policy thereon.

Luther Holton [Chateauguay]—Yes, the policy of coercion.

Alexander Galt [Sherbrooke, Minister of Finance]—The coercion was that kind of coercion the mother-country was entitled to exercise in exchange for the burden of defence of the colonies. It was the kind she could fairly exercise and which was exercised in Canada in times past.

Luther Holton [Chateauguay]—Hear, hear.

Alexander Galt [Sherbrooke, Minister of Finance]—If the Imperial Government was only to be burdened with the expense of defending these colonies, and if she was to be considered as coercing us in expressing the opinion that the Union would help us and promote the work of defence, then he maintained that was a coercion she was fully entitled to exert. But the coercion the member for Chateauguay [Luther Holton] meant to insinuate as being exercised was not an appeal to the reason, loyalty or interest of our fellow-colonists, but an interference with their rights and privileges and a use of stern compulsion.

Luther Holton [Chateauguay]—That is not the compulsion the Imperial Government, but that you wish for.

Alexander Galt [Sherbrooke, Minister of Finance] said we did not desire to exert any such influence, but one that would make them go heart and hand with us and do everything for the common good. We desired to appeal to their interest and patriotism, believing that in so doing we were using the strongest kind of coercion.

Some Hon. Members—Cheers.

Alexander Galt [Sherbrooke, Minister of Finance]—He would not have referred to this subject, but for the interruption of the hon. member for Chateauguay [Luther Holton]. He was going to remark that in addition to peace being restored and the dread of war removed, there was a prospect—that we believed was now stronger than ever—of the union of these Provinces being accomplished.

Some Hon. Members—Cheers.

Alexander Galt [Sherbrooke, Minister of Finance]—Instead of having a feeling of want of reliance on the colonial system in England, we found the contrary was now the case. Besides all that we in Canada itself had to thank Providence for, having given us an abundant harvest, he might certainly look to this to restore general prosperity to the land. We might, and must believe, that the feeling of the people, after having suffered from bad harvests and the fear of an interruption of our trade by war, being now reassured, and those disadvantages no longer existing—that while their fields were clothed with abundance—that peace and contentment would overspread the land.

Some Hon. Members—Cheers.

Alexander Galt [Sherbrooke, Minister of Finance]—We believed our farmers might enter on the new financial year with a much greater confidence in the resources of Canada than they had felt for many seasons. They had seen a period of great peril pass, and the approach of the prospect of a settlement of our constitutional difficulties, and at the same time they would now, he (Mr. Galt) trusted, find in that abundance with which their fields were clothed, the reward of their industry, which, from some cause or other, for two or three years past it had pleased Providence to withhold. The hon. gentleman concluded by moving—That in addition to the stamp duties now levied there be hereafter levied on every promissory note of $25 and under one cent, and on every promissory note of $50 and under two cents, and on every promissory note of $100 three cents.

Some Hon. Members—The hon. gentleman resumed his seat amid loud cheers, having spoken nearly three hours.

Luther Holton [Chateauguay], who appeared to be laboring under a severe cold, now rose, and was understood to say that he proposed to speak only briefly to-night, and must postpone a more lengthened review of the various points comprised in the statement, which, he was bound to say, was delivered with great clearness, calculated to elucidate various subjects with a view of putting the House in a better position to discuss the question. We had learned that a stamp duty on promissory notes and bills under $100 was the additional taxation which was to take place. This was a satisfactory statement, no doubt. But, how hopeful must the hon. gentleman be when he assumed that this would be adequate not only to guard against all possible danger of the ensuing year, but to make up present deficiency. It would have been more instructive if he had given some proposition as to the unfunded debt.

Some Hon. Members—Hear, hear.

Luther Holton [Chateauguay]—He (Mr. Galt) did not lack courage or resources, but to-night he assumed the philosophic attitude of Micawber, and waiting for “something to turn up.”[21]

Some Hon. Members—Hear, hear, and laughter.

Luther Holton [Chateauguay]—The deficiency to be made up was nearer five millions, as now admitted by the Hon. Finance Minister [Alexander Galt], than three and a half, as before pretended. He (Mr. Holton) would read from the list of liabilities, as furnished in the printed statement put in the hands of members. Glynn, Mills & Co., $1,462,723; Baring Bros. & Co., $[?1?],331,651; Bank of Montreal, special account, $1,250,000; Crown Land Department, suspense account, $90,947.—Total, bank accounts, $4,135,323. No provision was to be made for interest on the Imperial sinking fund, which would have to be added to the unfunded debt.

Some Hon. Members—Hear, hear.

Luther Holton [Chateauguay]—He (Mr. Holton) maintained that these large sums had to be provided for—that the Finance Minister [Alexander Galt] could not reduce these bank balances beyond what was here stated, and therefore that the real amount of the unfounded debt was represented by these figures, which he (Mr. Holton) had just put before the House. He considered it very unsatisfactory to leave these large sums as they now stood.

Some Hon. Members—Hear, hear.

Luther Holton [Chateauguay]—The Finance Minister [Alexander Galt] had stated, and he had no doubt such was the case, that the financial agents in London had acted liberally in carrying over to the 1^st of January, but suppose that the December, as last year, money went to eight, nine or ten per cent, what was he going to do with that large sum in January? Of course the rate of interest would be advanced, and he was liable to have his securities sold at a very inconvenient time. Then, with regard to the loan from the Bank of Montreal, he (Mr. Holton) thought he ought to have stated to the Committee what arrangements he proposed to make in regard to that large sum.

Some Hon. Members—Hear, hear.

Luther Holton [Chateauguay]—The failure to make some arrangement had embarrassed the bank and the trade as well. The state of affairs was not only unsound as regards the Government, which might be suddenly called upon for this money, but the present position of it was fraught with very great inconvenience to the trading community of the country.

He would not go over the points of the hon. gentleman’s speech to-night, in his state of health, but would only say that they very fact that he (Mr. Galt) had borrowed this sum from the Bank of Montreal showed that he had that deficiency at the beginning of the year, and we had nothing before us to show that the debt of the Province to the London agents had not been reduced at all since January, 1865. He believed that the whole of this money—one million and a-half, and something more—had been borrowed about the first of January, 1865, and therefore it was futile to try to delude the country.

The broad fact remained that he had to borrow this money to pay his July interest in London, and left his work in balances as before. Notwithstanding the able co-operation of the President of the Council [George Brown], he had to admit that the difference between the revenue and expenditure was as large as when he took office three years ago, and that he had not, as he had a year ago, a surplus on hand. After alluding to congratulation with which the Finance Minister [Alexander Galt] met the House he went on to ask whether the $107,000 included any of the subsidy to the Grand Trunk since the passing of the Arrangement Act[22]?

Alexander Galt [Sherbrooke, Minister of Finance] said that a reference to the Public Accounts to the 30^th June, 1864, would show that the $107,000 stood in the balance of the Province as due to the Grand Trunk for postal money. That sum had been paid.

Luther Holton [Chateauguay] asked if it formed part of the money credited to the Grand Trunk, as against the special advance made by the present Finance Minister [Alexander Galt] in 1861, and for which preferential bonds were held?

Alexander Galt [Sherbrooke, Minister of Finance] said it was true it appeared from the published correspondence with reference to these bonds that a doubt existed in the minds of the Government whether they had not a right to keep the postal money after the passage of the Arrangements Act. That point, however, was brought under the consideration of the law-officers of the Crown, and they were unanimously of opinion that the money belonged to the creditors under the Arrangement Act, and it was paid accordingly.

A desultory discussion continued for some time on the various points referred to by the Hon. Finance Minister [Alexander Galt] and Hon. Mr. Holton—Hon. Mr. Dorion, Hon. J.S. Macdonald and Hon. J.A. Macdonald taking part.

Finally, the Alexander Galt [Sherbrooke, Minister of Finance]’s resolution respecting bill-stamps was carried, and the Committee rose, reported progress and obtained leave to sit again.

The House then—at 20 minutes to one a.m., adjourned.

ENDNOTES

[1]      Source: “Provincial Parliament,” [Quebec] Morning Chronicle (Aug. 30, 1865).

[2]      Legislative Assembly (May 10, 1864), p. 133-134.

[3]      ibid.

[4]      An Act respecting Duties of Customs and the Collection thereof (Province of Canada, 1859). For the newest changes, see An Act further to amend the Act respecting Duties of Customs and the Collection thereof, and to alter the duties on certain goods (Province of Canada, 1864).

[5]      An Act for the Collection by Means of Stamps, of Fees of Office, Dues and Duties Payable to the Crown upon Law Proceedings and Registrations (Province of Canada, 1864).

[6]      i.e. “point by point.”

[7]      An Act to amend the law respecting the Public Accounts, and the Board of Audit (Province of Canada, 1864).

[8]      An Act to amend the law respecting the Public Accounts, and the Board of Audit (Province of Canada, 1864).

[9]      Canadian-American Reciprocity Treaty of 1854 (Elgin-Marcy Treaty). The United States passed a Joint Resolution abrogating the treaty in Jan. 1865. It was formally terminated on Mar. 17, 1866.

[10]    Canadian-American Reciprocity Treaty of 1854. Supra footnote 9.

[11]    Canadian-American Reciprocity Treaty of 1854. Supra footnote 9.

[12]    The commercial convention held in Detroit (Jul. 11-14, 1865) was attended by the Boards of Trades and Chambers of Commerce from across the United States and British North America. It was one of the measures meant to save the Reciprocity Treaty in 1865. The most impactful speech was given by Nova Scotian delegate Joseph Howe on Jul. 14, 1865. For the proceedings of this convention see Proceedings of the Commercial Convention, Held in Detroit, July 11th, 12th, 13th and 14th, 1865 (1865).

[13]    Detroit Convention (Jul. 11-14, 1865). Supra footnote 12.

[14]    Canadian-American Reciprocity Treaty of 1854. Supra footnote 9.

[15]    The Canadian delegation consisted of John A. Macdonald, George-Étienne Cartier, and Alexander Galt. They drafted a report on their discussions with the Imperial Government on Jul. 12, 1865 and it was presented to the Legislative Assembly on Aug. 9, 1865, p. C:15.

[16]    Canadian-American Reciprocity Treaty of 1854. Supra footnote 9.

[17]    Facing considerable suspicion and fierce hostility to the Quebec Scheme in New Brunswick, Tilley did not submit the scheme to the provincial parliament and a general election on its adoption was inevitable. The legislature was dissolved on February 9^th 1865, and writs were issued for a general election be returned in March 1865. Tilley’s Ministry was soundly defeated, with the Premier himself losing his seat in the legislature, and an anti-confederationist ministry led by Albert Smith was brought into power, taking 35 of 41 seats in the Legislature. Fears of higher tariffs and debt, in addition to lack of clarity on the intercolonial project, and a competing railway project to the United States, raised distrust in the confederation project.

[18]    The Confederation despatches were presented to the Legislative Assembly on Aug. 18, 1865, p. C:21.

[19]    Supra footnote 17.

[20]    Lord Monck, Legislative Council, Speech from the Throne (Aug. 8, 1865), p. D:1.

[21]    Phrase associated with Wilkins Micawber. Charles Dickens, David Copperfield (1850).

[22]    The Grand Trunk Arrangements Act, 1862 (Province of Canada).