Province of Canada, “Report of the Finance Minister, on a despatch from the Lieut. Governor of Nova Scotia, concerning a proposition for inter-colonial free trade” in Sessional Papers, No 14 (1863)

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Date: 1863-02-28
By: Province of Canada
Citation: Province of Canada, Parliament, “Report of the Finance Minister, on a despatch from the Lieut. Governor of Nova Scotia, concerning a proposition for inter-colonial free trade” in Sessional Papers (1863).
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26 Victoria. Sessional Papers (No. 14) A. 1863



The Governor General transmits, for the information of the Legislative Assembly, copies of Dispatches and other Documents on the subject of the Intercolonial Railway.

Quebec, 28th February, 1863.

SIR,—We have the honor to submit, for the information of His Excellency the Governor General, the following statement with the correspondence referred to.

By the Order in Council of the 22nd, October last, we were deputed to England to confer with the Imperial Government upon the matters described in that Order.

Immediately on our arrival in London, acting in conjunction with the Delegates of Nova Scotia and New Brunswick, we put ourselves in communication with His Grace the Duke of Newcastle, Secretary of State for the Colonies.

After several interviews with His Grace, and the Officers of the Treasury, we submitted on the 2nd December to the Colonial Secretary, a paper signed by all the Delegates, being our joint proposal, as to the terms and conditions upon which the guarantee offered by the Imperial Government would be most acceptable and least onerous to the Colonies.

We had all along stated our decided objection to a Sinking Fund, which had been admitted as just by the Colonial Office, and the simple engagement of the Provinces to repay the loan at the periods agreed upon, have been acknowledged as a sufficient security for the Imperial Government.

The Colonial Secretary being anxious to have this paper to bring it before his colleagues, the same day it was prepared, no copy was kept; but the only difference between this joint Colonial proposal, and the one submitted and signed by the Canadian Delegates alone, is, as to the intervals of payment, which were in the first proposal, 20, 30, and 40 years, and as to the net profits of the road being applied in extinction of the principal.

On the reception of the joint Colonial proposal, it was found that the Right Honorable the Chancellor of the Exchequer, strongly objected to the terms of payment and to the absence of a Sinking Fund.

As the Duke of Newcastle, on account of his health had to leave London, till “probably the middle of January,” he advised us to see the Chancellor, and endeavour to overcome the difficulties which had thus arisen.

An interview was accordingly had, the question of the Sinking Fund discussed, and the objections to it explained and urged by Mr. Sicotte, who attended at this interview, Mr. Howland being absent from illness.

The loan was represented as a loan to promote and protect Imperial interests as well as Colonial, and a proper case, as had been done in some other instances, for granting this loan, not of money but of a simple guarantee, without the embarrassments and losses of a Sinking Fund, whether in the old form, or in the new one, prepared by Mr. Tilley. The Chancellor promised to consider these views, and give us an early reply.

The Imperial answer and conditions proposed was communicated to the Delegates on the 13th of December, during our absence of a week from London.

The Honorable Mr. Tilley left London on the 13th, and in his letter of that day expressed his hope that the Chancellor would be induced to reconsider the matter of the Sinking Fund, and trusted that the Colonies would be enabled to convince Parliament that under all the circumstances of this peculiar case, a Sinking Fund should not be insisted upon.

The Honorable Mr. Howe in his letter of the 19th December, declared that he concurred in all that Mr. Tilly had said or that Messrs. Sicotte and Howland could say on the subject of the Sinking Fund and hoped that Parliament would be induced to rely upon the honor and ample revenues of the Provinces, for the prompt payment of the instalments as they became due.

We quote these two passages of these letters, to prove how all the Colonies were agreed in condemnation of the Sinking Fund.

The inconvenience, the trouble, the inevitable loss of a Sinking Fund, were fully discussed at the conference held in Quebec in September last, and all present agreed in their disapprobation of such an arrangement.

As stated by Mr. Howe, we canvassed with him over again, on our return to London, the whole subject and informed him that we would submit our formerly expressed views in writing, to the Colonial Secretary before leaving London, which we accordingly did in our Memorial of the 23rd December.

It was also our duty while in London to bring under the consideration of the Imperial Authorities, the opportunity of opening communications into the North-West Territory, and we addressed ourselves with that object to the Secretary of State for the Colonies, asking the co-operation of the Imperial Government.

We had also interviews and communications upon this important matter with Capitalists of the highest standing. The result of these interviews was a proposal of a Company composed of such persons to construct from Canada to the Pacific, telegraph lines and wagon express communications, upon condition that Canada would guarantee half of the interest at the rate of four per cent., upon a capital of not more than half a million sterling.

Knowing the great interest felt in Canada on that point, we assured these Capitalists that our opinion was, that the Government of Canada would agree to guarantee half the interest at that rate, provided the sum would not exceed five hundred thousand pounds sterling, and that the interests of the public were fully secured.

The different papers concerning these negotiations accompany this statement.

We have the honor to be,
&c. &c. &c.

(Signed) L. V. SICOTTE

The Provincial Secretary, &c. &c.
Quebec, 27th February, 1863.


CANADA, No. 93.

DOWNING STREET, 12th April, 1862.

MY LORD—You are aware that I duly received your Despatch No. 4 of the 31st of October last, reporting that at a meeting in the Council Chamber at Quebec of members of Councils of Canada, Nova Scotia and New Brunswick, it was resolved that those three governments should renew the offer made to the Imperial Government on the 26th of October, 1858, to aid in the construction of an Intercolonial Railway between Halifax and Quebec, and that a delegation from the Provinces should proceed to England with the view of promoting this object.

You reported to me that the Honorable Phillip Vankoughnet was appointed to represent Canada, and not long afterwards this gentleman associated with the Honorable Joseph Howe from Nova Scotia and the Honorable Samuel Tilley from New Brunswick, arrived in England.

I had several interviews with these gentlemen, who urged with great ability the project committed to their charge, and eventually embodied their views in a Memorandum communicated to me in a letter dated the 2nd of December, 1861. But owing to the urgency of business connected with the threatening aspect of affairs in the United States, I was unable to bring the subject under the consideration of Her Majesty’s Government before the Deputies were obliged to return to their homes, and other urgent matters have hitherto prevented the adoption of a decision. The subject has now been before Her Majesty’s Government and I need scarcely assure you that they have examined it with the care due to the importance of the question, to the high authorities from whom it has emanated in the Province, and to the character and position of the Delegates by whom it has been so powerfully presented to notice in this country.

The length of Railway necessary to complete the communication between Halifax and Quebec is estimated at 350 miles, and the cost after deducting the right of way which the Provinces will provide, is estimated at three millions sterling, such being the data supplied by the deputation, the project is that the Imperial Government should join the three Provinces in a guarantee of four per cent. upon three million pounds, in which case the Provinces are ready to pass bills of supply for sixty thousand pounds a year, (twenty thousand pounds in each Province,) if the Imperial Government will do the same. The selection of the route is left solely to the British Government. Should the sum of three millions be found insufficient nothing very definite is said on the essential point of the provision to be made for the completion of the Railway.

I much regret to inform you that after giving the subject their 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. This was the mode of action contemplated by Earl Grey in the year 1851, and is the same method which was adopted by Parliament in the Act of 1842, in order to afford to Canada the benefit of British credit in raising the money with which she, has completed her great system of internal water communications.

The nature and extent of the guarantee which Her Majesty’s Government could undertake to recommend to Parliament must be determined by the particulars of any scheme which the Provincial Governments may be disposed to found on the present proposal, and on the kind of security which they would offer.

I fear that this course will not be so acceptable to the Provincial Government as that which the Delegates were authorized to propose for consideration. It is, however, the only one in which Her Majesty’s Government, after anxious deliberation, feel that they would be at liberty to participate. I trust that the proposal will, at all events, be received as a proof of their earnest wish to find some method in which they can co-operate with the Provinces in their laudable desire to complete a perfect Intercolonial communication over British territory. And it will be a source of sincere pleasure to me if adverting to all the different bearings of the subject and to the condition of their respective finances, the Provincial Governments should end by finding it in their power to make use of the present offer, and to propound some practicable scheme, for applying it to the attainment of the desired object.

I have addressed a similar despatch to the Lieutenant Governors of Nova Scotia and New Brunswick, and I must now leave the subject in the hands of the several Provincial Governments who will best know, in case they prosecute the subject further, how to provide for the requisite mutual consultations.

I have, &c.


Governor Viscount MONCK, &c., &c., &c.


Halifax, N.S., 3rd May, 1862.

This Resolution has not been received by the Governor General.

MY LORD—Referring to your Despatch of 1st February, 1862, I have now the honor to enclose to Your Excellency a copy of a Resolution which was passed by the House of Assembly, by which the Provincial Government are authorized to arrange by negociation with the neighboring Province, a reciprocal interchange of manufactures, duty free, provided such interchange can be accomplished without serious loss to the revenue.

My Government will, therefore, now be prepared to give to any proposal that Your Lordship may wish to make on this subject, their most careful and favourable consideration, with a view, if possible, of carrying out this most desirable object.

The fiscal difficulties to be overcome, will, I fear, be great, and it appears to me that for the purpose of fairly and fully considering such obstacles, it would be desirable that a Delegation from the Provinces should meet in order that a full consideration of the subject may take place, and I would therefore propose, should this course meet with your Lordship’s approbation, that you should arrange with the other Provinces for the meeting of such delegation.

The multiplicity of matters in connection with the gold fields which require the constant attention of my Government would render it very inconvenient for any of them to proceed to Canada at the present moment. I would therefore suggest that as the Delegation last year on the subject of the Railway took place at Quebec, the present one should meet, if possible at Halifax, or if not, in New Brunswick.

I have, &c.

(Signed) MULGRAVE.

His Excellency the Governor General of Canada,
&c. &c. &c.


Halifax, N.S., 23rd May, 1862.

MY LORD—I have the honor herewith to transmit to your Lordship the copy of a Resolution on the subject of Intercolonial Free Trade in Manufactures, which was unintentionally omitted in my despatch of the 3rd instant.

I have, etc.,

(Signed,) MULGRAVE.

His Excellency Viscount Monck, etc., etc., etc.

Passed 11th April, 1862.

Resolved, That the Provincial Government be empowered to arrange by negotiation with the neighboring Colonies a reciprocal interchange of manufactures, duty free, if it shall appear upon enquiry that the same can be accomplished without serious loss of revenue.

QUEBEC, 15th August, 1862.

MY LORD—In a despatch which I have received from the Duke of Newcastle, dated. April 12th, 1862, containing the conditions under which Her Majesty’s Government propose to assist the Colonies in the construction of a Railway connecting Halifax with Rivière du Loup, His Grace mentions that he had sent at the same time identical despatches to Your Excellency and the Lieutenant Governor of New Brunswick.

It is very desirable, in order, to return a satisfactory answer to the despatch in question, that the Ministers of the three Provinces interested, Canada, Nova Scotia, and New Brunswick, should come to a distinct understanding as to the part which each of those Provinces will undertake in reference to the execution of the proposed work.

I think this end will be best attained by a personal conference between the members of the Administrations of the three Provinces.

I am aware that it is the intention of Your Excellency to visit Canada in the beginning of next month, and I expect the Lieutenant-Governor of New Brunswick will be here about the same time.

It appears to me therefore that the time which I have mentioned offers peculiar advantages for holding the proposed consultation, and I shall feel much obliged if Your Excellency will arrange with such members of your Administration as may be deputed to assist at the conference, to attend at Quebec on Wednesday, September 10th, for that purpose

The question of Intercolonial Trade will probably be discussed at the same time.

I have addressed a despatch of the same import as this communication to the Lieutenant-Governor of New Brunswick.

I have, etc.,

(Signed,) MONCK.

His Excellency the Earl of Mulgrave, etc.,etc., etc.
Nova Scotia.

Copy of a Report of a Committee of the Honorable the Executive Council, approved by His Excellency the Governor General in Council on the 10th September, 1862.

The Committee have given their attentive consideration to the annexed Report of the Hon. the Minister of Finance on a dispatch dated 3rd of May, 1862, from His Excellency the Lieutenant Governor of Nova Scotia, enclosing copy of Resolution of the Legislative Assembly empowering the Government of that colony to arrange, by negotiation with the neighboring Province, a reciprocal interchange of manufactures duty free, and suggesting that Delegates from the Province should meet to consider it.

The Minister of Finance submits a series of tables exhibiting the export and import trade with the Lower Provinces, the nature of the imports from the United States for each colony, the tariffs of the several colonies, &c., and expresses his opinion in favor of entering into negotiations, having in view the greater freedom of intercourse between the Colonies, and he recommends that a proposal be made for the reciprocal free admission of all articles, the growth, produce, and manufacture of Canada, Nova Scotia, and any other Province becoming a party to the agreement that may be founded on this proposal.

He further submits that the meeting of the delegates from Nova Scotia and New Brunswick about to be held hereto consider the question of an Intercolonial Railway would be a favorable opportunity to consider also the question of intercolonial trade. The Committee concur in opinion with the Hon. the Finance Minister and submit his suggestions for Your Excellency’s approval.

(Certified,) WM. H. LEE, C.E.C.

To the Honorable the Minister of Finance &c., &c. &c.


Report to the Honorable the Executive Council on the subject of Intercolonial Reciprocity.

Quebec, 8th September, 1862.

In reference to the Despatch from the Lieutenant Governor of Nova Scotia to His Excellency the Governor General which contains a copy of a Resolution of the House of Assembly of Nova Scotia, empowering the Government of that Colony to arrange by negotiation with the neighbouring Provinces a reciprocal interchange of manufactures, duty free—invites a proposal on the subject from Canada, and suggests that delegates from the Provinces should meet to consider it—the Minister of Finance has the honor to report.

Intercolonial Reciprocity commanded the attention of both the Imperial and the Canadian Governments in 1860. In that year the Lords of the Committee of Privy Council for Trade expressed an opinion somewhat adverse to it. The Finance Minister of Canada however, stated the views of our Government in reply, and as no answer to his arguments was ever made,* it is to be hoped the Imperial authorities were thereby convinced that the project is not of the character they feared, and that no opposition need be anticipated to any measure having for its object the enlargement of Free Trade between the neighbouring dependencies of the Empire. Reciprocal freedom from intercolonial duties on a variety of articles already exists, between the British North American Colonies, and future enactments can but extend a principle already sanctioned.

*Subsequently to the presentation of the Report a despatch came to the knowledge of the Finance Minister, in which the principle is fully conceded.

For the purpose of properly considering the subject of Intercolonial Trade, the undersigned has caused several Tables to be prepared which are hereto appended. They contain statistical information to the latest available dates.

The first series of statements numbered I, II, and III, compiled from our own Trade and Navigation Returns, exhibits the extent of our Import and Export trade with our sister Colonies for the past four years. It seems small compared with our total commerce; but it is neverthelest worthy of consideration, and as facilities for communication with them extend, and their population increases, it will undoubtedly grow in importance.

Lest, however, the small extent of our trade with these Provinces should give rise to erroneous ideas as to their commercial activity, attention is directed to the Table No. IV., which, with the following, is made up from their official statements, and shows that, in proportion to their population, the Imports and Exports of each—excepting Prince Edward Island—exceed those of Canada; if, as the undersigned believes, this is due to the fact that their agricultural resources and manufacturing capital are both more limited than ours, it furnishes a reason why, with increasing means of intercourse, their trade with us may be expected likewise to increase.

Table V. exhibits in contrast the Tariffs of the several Provinces. The articles selected for comparison are those on which we collected duty to the extent of $10,000, on the total Import of the year 1861, and as these comprised 94¾ per cent. of the whole, the rest may be left out of consideration. The following articles, viz: Brandy, Coffee, Dried Fruits, Gin, Molasses, Rum, Soap, Sugar, Tea, Tobacco and Wine, are charged with specific duties in some of the Colonies, and these have been reduced to their ad valorem equivalents on the basis of value supplied by our own Trade and Navigation Tables.

With a more extended trade between Canada and the Lower Provinces, we should compete in their markets, not with the productions of Great Britain, but with those of the United States. Tables VI, VII, VIII and IX, show the exact nature of the imports from the United States for each colony, and table X gives the aggregate. An examination of these statements plainly shows that a large proportion of the goods which the maritime provinces now buy in the States could be supplied by Canada. They consist mainly of agricultural produce, in raising which we excel, and of articles the manufacture of which is rapidly increasing here. It would also be manifestly advantageous to all the Provinces, if colonial merchants and forwarders could secure a share of the business which is now almost exclusively confined to the Americans.

In view of all these facts and considerations, it appears desirable to enter into negotiations having in view the establishment of greater freedom of intercourse between the colonies. If a complete Customs Union could be formed between the Provinces, under which they could interchange without restriction all goods, the produce and manufacture of whatever country, it would have a beneficial effect. But as, to carry such a Union conveniently into effect, greater uniformity in the tariffs of the several colonies must be secured, which would be almost impracticable under their present political condition, the undersigned contents himself for the present with recommending, that in answer to the Despatch of the Nova Scotia Government, a proposal be made for the reciprocal free admission of all articles the growth, produce and manufacture of Nova Scotia and any other Province becoming a party to the agreement that may be founded on this proposal.

If such an arrangement can be affected, it will undoubtedly increase Intercolonial Trade, and open the way for the establishment of more intimate political relations between these important dependencies of the British Crown. The chief difficulty in bringing it about will probably be found in the indisposition of all the Provinces to sacrifice revenue. It is not to be expected that a large trade will spring up all at once; it will take years for its development, and ample time will be afforded to supply from other sources any deficiency which nay thus arise. That the present sacrifice would be insignificant, will be seen by tables XI, XII, XIII and XIV. Regulations would of course be framed for the protection of the revenue of each colony, to prevent the free admission of other goods than those coming within the scope of the convention.

Referring to the proposal of the Lieut. Governor of Nova Scotia that a delegation should meet to consider this subject, either in Halifax or New Brunswick, the undersigned submits that the meeting of Delegates from Nova Scotia and New Brunswick, about to be held here, to consider the question of an Intercolonial Railway, would be a favorable opportunity to consider also the question of Intercolonial Trade.

The whole nevertheless submitted for the consideration of the Hon. the Executive Council.

(Signed,) W. P. HOWLAND,
Minister of Finance

To the Hon. the Executive Council.

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