"'As the whole subject, however, is now before Congress for
consideration, the Commission do not consider it as within their
province to submit any specific recommendations; but would content
themselves with merely pointing out that, under certain circumstances,
conditions of great advantage to the United States, in a revenue point
of view, might be secured.'
"Mr. Derby's report contains much that is sensational, and many curious
admissions, but its general tenor is strongly in favour of a new
treaty, regard being had to the revenue necessities of the United
States; i.e., that articles admitted into the United States from
Canada should pay a duty equivalent to the internal revenue tax on the
same articles charged in the States. This is just as if Great Britain
said that brandy from France coming into England should pay a duty
equivalent to the English excise duty upon spirits, which would be
quite fair.
"The next fact in the history is that delegates from Canada, New
Brunswick, and Nova Scotia, are found at Washington on the 24th
January, 1866, and that they remain there till the 24th February, on
which day they report that after many days' discussion they have failed
to do anything, and that the Reciprocity Treaty is finally at an end.
"Our Government having done nothing, the Provinces, it would appear,
had, at the last moment, to send 'delegates' themselves to negociate; a
mode of procedure altogether very unlike the action of 1854.
"The following papers give a resume of the discussion : -
"WASHINGTON,
"February 7th, 1866.
"'SIR,
"'We have the honour to inform Your Excellency that our negociations
for the renewal of Reciprocal Trade with the United States have
terminated unsuccessfully. You have been informed from time to time of
our proceedings, but we propose briefly to recapitulate them.
"'On our arrival here, after consultation with Your Excellency, we
addressed ourselves with your sanction to the Secretary of the
Treasury, and we were by him put in communication with the Committee of
Ways and Means of the House of Representatives. After repeated
interviews with them, and on ascertaining that no renewal or extension
of the existing treaty would be made by the American authorities, but
that whatever was done must be by legislation, we submitted as the
basis upon which we desired arrangements to be made the enclosed paper
(marked A).
"'In reply we received the Memorandum from the Committee, of which a
copy is enclosed (B). And finding after discussion that no important
modifications in their views could be obtained, and that we were
required to consider their proposition as a whole, we felt ourselves
under the necessity of declining it, which was done by the Memorandum
also enclosed (C).
"'It is proper to explain the grounds of our final action.
"'It will be observed that the most important provisions of the
expiring treaty, relating to the free interchange of the products of
the two countries, were entirely set aside, and that the duties
proposed to be levied were almost prohibitory in their character. The
principal object for our entering into negociations was therefore
unattainable, and we had only to consider whether the minor points were
such as to make it desirable for us to enter into specific engagements.
"'These points are three in number.
"'With regard to the first - the proposed mutual use of the waters of
Lake Michigan and the St. Lawrence - we considered that the present
arrangements were sufficient, and that the common interests of both
countries would prevent their disturbance. We were not prepared to
yield the right of interference in the imposition of tolls upon our
canals. We believed, moreover, that the privilege allowed the United
States of navigating the waters of the St. Lawrence was very much more
than an equivalent for our use of Lake Michigan.
"'Upon the second point - providing for the free transit of goods under
bond between the two countries - we believed that in this respect, as in
the former case, the interests of both countries would secure the
maintenance of existing regulations. Connected with this point was the
demand made for the abolition of the free ports existing in Canada,
which we were not disposed to concede, especially in view of the
extremely unsatisfactory position in which it was proposed to place the
trade between the two countries.
"'On both the above points, we do not desire to be understood as
stating that the existing arrangements should not be extended and
placed on a more permanent basis, but only that, taken apart from the
more important interests involved, it did not appear to us this time
necessary to deal with them exceptionally.
"'With reference to the third and last point - the concessions of the
right of fishing in provincial waters - we considered the equivalent
proposed for so very valuable a right to be utterly inadequate. The
admission of a few unimportant articles free, with the establishment of
a scale of high duties as proposed, would not, in our opinion, have
justified us in yielding this point.
"'While we regret this unfavourable termination of the negociations, we
are not without hope that, at no distant day, they may be resumed with
a better prospect of a satisfactory result.
"'We have the honour to be,
"'Your Excellency's most obedient Servants,
"'A. T. GALT, Minister of Finance, Canada.
"'W. P. HOWLAND, Postmaster General, Canada.
"'W. A. HENRY, Attorney General, Nova Scotia,
"'A. J. SMITH, Attorney General, New Brunswick.
"'To His Excellency, SIR FREDERICK BRUCE, K.C.B., &c., &c., &c.'"
"'MEMORANDUM A.
"'The trade between the United States and the British Provinces should,
it is believed, under ordinary circumstances, be free in reference to
their natural productions; but as internal taxes exceptionally exist in
the United States, it is now proposed that the articles embraced in the
free list of the Reciprocity Treaty should continue to be exchanged,
subject only to such duties as may be equivalent to that internal
taxation.
