Future Isolation Should Be Forbidden, While Present Independence Should Be Accorded.

"2. The above assumption tends to throw doubt upon the desirability of establishing a Crown Colony, separate in all respects from Canada, and able to shut out or let in Canadian produce and manufactures at its pleasure.

This is a danger to be foreseen and avoided.

"The new Colony, placed between Canada and the Pacific, must be essentially British, in the sense of its forming one secure link in a chain of British nations, or, in the interests of Canada, it had better never be organized. The power and prestige of the Crown is essential to this end, and a separate Colony, even, would have many advantages per se. It would also save Canada the cost of a new Government at a time when financial pressure and political majorities would be in the way. A Crown Colony could not be looked upon with jealousy in Canada, while government by the Hudson's Bay Company would be so regarded.

"3. But a Crown Colony with such a federation as would not alter the political balance of Upper and Lower Canada, and with a system of free trade with Canada, would appear to solve the whole difficulty; and if so, the scope of the federative principle would be matter to be settled between Canadian statesmen and the Colonial Office. The interchange between the North-west and Canada appears to be an absolute necessity in the interest of the latter. As Government, however, would require taxation, the new Colony must, in all probability, have its Custom- house; and it should be considered whether the Custom-house of Canada would not serve, as far as the eastern frontier is concerned, for the new Colony. If so, why should not duties, on a scale to be agreed upon under constitutional powers to agree, be levied on imported foreign goods, by Canada, and the duties be divided between the two powers in agreed proportions? Were this done, at least in the beginning, expense would be saved to the new Colony, a revenue would be easily collected for it, through existing machinery, and Canada would obtain the revenue and trade. Of course the scale of duties must be moderate, so as not to excite dissatisfaction, by establishing dear prices, and it would be the interest of Canada to make them so, for the more she stimulated the growth of the new customer, the better for the trade. On the other hand, the new Colony would be insured a market and an outlet for its own productions, and would be content, therefore, to accept a reasonably high scale of duties, levied for revenue purposes only, on its articles of foreign consumption."

I discussed the question involved at length with the Honorable George Brown and with his brother Gordon, at Toronto. I felt the importance of having the views, and, if possible, the concurrence of the leader of the "Grit" party. He led me to think that he concurred with me; and I sent him a copy of this document.

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