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Men of Hants, — In the speeches addressed to you, previous to the General ^ Election, I almost invariably defined three lines of action : ' 1. To dofeat the Delegates who had framed the British American Act. 2. To endeavour to get that Act repealed ; and 3. Should we fail in the effort to repeal the Act, that we should endeavour to modify and improve it. To accomplish the first I strained every nerve. Besides my labours in Hants, of which you were witnesses, I \isited Archibald in Colchester, fought Tupper all round Cumberland, and in Queen's and Digby, by timely negociations, endeavoured to establish the discipline which ensured success. Other gentlemen, who now pro- fess to «peak for the whole country, stayed at home and did nothing, outside their own counties, to secure the victory, the fruits of which they have ever since enjoyed. You will remember that in 1867 1 had laboured, in conjunction with Messrs. Annand and McDonald, for many months in England, to prevent the passage of the Act. In 1868, as a member of ano- ther Delegation, I laboured with equal zeal and energy to repeal it. On both occasions every faculty of my mind was strained to its utmost tension to accomplish objects so deeply inte- resting to our people, and to restore to our country the Constitution which, associated with patriotic men in the early portion of my public life, I had laboured to build up. Others might desire to defend or to restore what they believed to be valuable. I toiled with the zeal of an artist, passionately bent on guarding or recover- ing the work he had designed, with the parental feelings of a father struggling for the life of his own child. Both tfiiose missions failed. That they did is not surprising, when the odds against us are calculated and taken into account ; and when I returned from England in July last, it was with the full conviction that further appeals would be hopeless, and a settled determination never to go on any such errand again, unless a union of the Maritime Provinces (afterwai'ds reported to be impracticable) '• • could be arranged. My own observations and experience were con- firmed by the opinion, frankly expressed, by our tried friend and advocate, John Bright. From the day that I returned home I never concealed my con- victions from anybody, and have never changed my opinion. Others encouraged the belief that a change of government in England would give us repeal, and for six months the people of Nova Scotia have been deluded with hopes as baseless as a vision of the night. 1 would not lend myself to this deception, and became involved in a controversy with those who wished to conceal the truth. Minutf.s of Council and Kesolutions were framed and sent to England, and another Delegation was promised. Threats of violence were held out, never intended to be realized, and a conflict was provoked with the Lieutenant-Governor, ending in apologies and humilia- tions not pleasant to contemplate. With these movements 1 had nothing to do. In the Despatch which the Duke of Buckingham addressed to Lord Monck in June last, while distinctly refusing to repeal the Act of Union, he threw upon the Canadian Ministers the obligation to /"quire into the working of that Act, with a view to such modifi- dons and changes as would make it more acceptable to the people of Nova Scotia. On leaving England I had but slender hopes that they would make any serious attempt to discharge themselves of this obligation in good faith, but when some of those Ministers came down here in August, and solemnly pledged themselves before a committee of the Convention to make the attempt, I claimed for them a fair hearing and due consideration of any propositions they might make. In taking this line I acted in the spirit of my third proposition, that " if we failed to accomplish the repeal of the Act, we should endeavour to modify and improve it." The negociation thus opened with the consent of that Committee, was followed up by a letter addressed to me by Sir John A. Macdo- nald on the 6th October. That letter demanded from me the most grave consideration. Had I refused to receive or reply to it, I should have assumed a responsibility of which, by no after act of my life, could I have discharged myself in the face of this country. Her Majesty*s Government would have been informed that Nova Scotia refused negociation — a very large sum of money, now happily with- in our reach, would have been lost ; and when the Local Legislature met, they would have had no alternative but to raise that money by dii-ect taxation, or to let the Eoads and Bridges go down. I would not assume that responsibility, and if I had I should have been held to a sharp account by the Electors of Hants, to whom 1 had prc- TBiised, at twenty public meetings, to modify and amend the Act if I 1 I a a t n ure by uld eld jrc- t if it could not be repealed. I therefore replied to Sir John A. Mac donald's Letter, and the correspondence only closed on the 26th of January last. All through the autumn this correspondence was denounced by certain parties as treasonable and dangerous. I append it to this letter that you may read it and judge for yourselves. Those who denounced it, have wasted six months of life, and have got nothing to shjw but an infinite amount of boasting, and the two Despatches by which they have been rebuked by both the great parties in Eng- land, and in one of which they have been sternly told by a Cabinet, with John Bright in it, just what I have been telling them for half a year, that any further appeal to England will be utterly fruitless and vain. I should be wanting in common justice if I did not acknowledge the infinite obligations which the country and myself are under to Mr. McLelan for the share he was kind enough to take in this nego- ciation. The results are now before you. In addition to the $60,000 added to the Quebec scheme by the labours of the Dele- gates sent to England in 1866, we have now obtained for ten years a sum amounting, in round numbers, to $160,000 per annum, ma- king, since I put my hand to this work, $220,000, or £55,000 a year recovered for Nova Scotia. Before the ten years expire, should it appear that, from any cause, injustice is being done in money matters, the Canadians have now shown that they can be relied upon to reconsider the whole case, and to do substantial justice. You will perceive by the Correspondence, that in August last the Premier offered me a seat in the Cabinet. That offer was re- newed, and pressed upon me again in October. But I felt that it would be time enough to think of honors and emoluments for my- self when I had tosted the sincerity of his professions to do justice to my country, within the scope and boundary of his acknowledged powers of action. He did do justice. All that Mr. McLelan and I could fairly ask, on the basis we had laid down of perfect justice to the other Provinces, after an exhaustive sifting of the whole sub- ject, was yielded, and then Sir John A. Macdonald, with some show of reason, pressed me again to take office. He said, we>have now done justice so far as we could in monetary matters, and are pre- pared to deal fairly with Nova Scotia in all other Branches of the Public Service, as rapidly as we get the power ; but I want your advice and assistance in order that this may be effectually done ; and, what is more, I want some guarantee to give to Parliament that, when they have voted this money, the arrangement will not be" repudiated by Nova Scotia. I felt the fairness of this argument. Our American Trade was of deep importance to our people : Should I hesitate to aid the government in its recovery ? The Intercolonial Railway was to be constructed. Nova Scotians, who might tender, should be protected. In all the Departments there was influence and patronage to be exercised and dispensed, and was I not bound to see that Nova Scotia was fairly treated ? While much influenced by these considerations, I knew that a good many persons still clung to the belief that Gladstone's Govern- ment would repeal the Act, and my determination was to return home — consult my friends — and wait till the I.ocal Government got their answer. Unexpectedly, but very opportunely, the Despatch came while I was at Ottawa. I print it with this Letter. It is short and decisive, and gives the answer to all the nonsense written in the autumn. I could no longer hesitate. The plain path of duty lay before me. All rational repealers had professed that the battle was to last only till the answer came from Gladstone's Cabinet. The an- swer was here. The battle was over. Had I come home, I must have gone back to Ottawa to be sworn in, and then returned to Nova Scotia to run my election. The Governor-General was to leave on Monday, and on Saturday afternoon I was sworn in as President of the Privy Council, to avoid a double journey, to and fro, of sixteen hundred miles. This oflnice, men of Hants, though the technical formalities make it mine, is in your gift, and to be of any value to me I must receive it at your hands. I could have accepted it with a seat in the Senate, and enjoyed it without your sanction. But you trusted me, and I am not afraid to trust you. On a calm review of all the circum- stances, I believe that you will ratify by your suffrages my conduct .and policy. I cannot condescend to defend myself from the mean charges and insinuations with which those who have been for more than a year fattening on the public treasure, have already defiled the Press ; but I shall be prepared to meet any of those persons before the Electors of Hants, to defend my own conduct, and perhaps to do wliat I have not hitherto done, make some inquisition into the correctness of their own. Apart altogether from the mere personal question, you ha\e got now to decide whether Nova Scotia shall raise £40,000 a year by direct taxation, or whether, by this negociation, ratified by the Ca- nadian Parliament, our Roads and Bridges, and other public services, shall be amply provided for without any such necessity. You have also to decide whether there shall be a just and fair adminis- tration of public aflfairs, by your own Representative, who has seen some service, and gathered some experience, or whether Nova Scotia is to have no influence in conducting the Government of the r ,11 Dominion, to the authority of which, by law, her people are bound to submit. I hope to get into the County soon, and will then be prepared to answer any questions you may ask, or to give any further infor mation that this paper does not supply. In the meantime. Believe me. Yours truly, j/' JOSEPH HOWE. • t (Private.) Ottawa, October 6th, 1868. My Dear Mr. IIowe, — Now that the Legislature of Nova Scotia has been prorogued, and the exciting discussions on Constitutional questions for a time ended, I think the time has come when I can again ask your aid and infiuence in endeavouring to allay the feeling that unhappily exists in Nova Scotia, and to give the Union Act a fair trial. For that purpose, I desire to repeat, shortly, the material portions of the Statement that the Committee of the Convention, of which jou were Chairman, were kind enough to allow Sir George Cartier and myself to make. In the first place I will say, on behalf of the late Province of Canada, that in the question of Union we acted in good faith. The Delegatious from the several Provinces were appointed by their respective Govern- ments, and we had reason to believe that the Governments of Nova Scotia and New Brunswick as fully represented their people as the Canadian Government did. I regret extremely the present unfortunate state of affairs, and my colleagues and myself are prepared to do all that we can to put an end to it. By the Despatch of the Duke of Buckingham to Lord Monck, of the 4th June last, in answer to the Address of your House of Assembly, the Governor General and his advisers are precluded from even entering upon the consideration of the question of the repeal of the Act of Union. His Grace declares that the measure is not only oonducive to the strength and welfare of the Provinces concerned, but important to the interests of the whole Empire, and states that the Queen's Government feel that they would not be warranted in advising the reversal of this great measure of State. He, however, draws the attention of Lord Monck and his Government to the points raised in the Address relative to taxation, the regulation of Trade and the Fisheries ; and he expresses a confidence (which I am sure is well founded) that it will be the care and wish of that Govern- ment, and of the Parliament of the Dominion, to relax or modify any arrangements on those subjects which may prejudice the peculiar interests of Nova Scotia and the Maritime portion of the Dominion. On this point I can only repeat what I stated before the Commit ,;e, that the Canadian Government is not only ready but anxious to enter upon a frank and full discussion of those points, and are prepared, in case the pressure of taxation should be shewn to be unequal, or unjust to Nova 6 Scotia, to relieve tliat pressure by every means in tlieir power. They are al.so ready to discuss any Financial or Commercial questions that may be raised by the Nova Scotian Government or yourself, and the repre- sentatives of Nova Scotia in the Parliament of the Dominion. You may remember tliat 1 suggested to the Committee that Mr. Annand, the Finance Minister of the Province, or any other gentleman or gentlemen selected for the purpose, should visit Ottawa and sit down with the Finance Minister here, for the purpose of ascertaining whether any inecpiality or injustice exists, the extent of such inequality and the best remedy. And I now reiterate the assurance I then gave, that the Government here will consider the question not in a rigid, but in the most liberal spirit, with a desire to do even more than justice for the sake of securing the co-operation of the people in Nova Scotia in working the new Constitution. We will enter upon this enquiry whenever it suits your convenience, and the Canadian Government engage to press upon Parliament, with all the influence they possess, the legislation required to carry out any financial readjustment that may be agreed upon. I am aware that even if the Union Act were accepted, objections are taken by leading politicians in Nova Scotia to some of its constitutional (and non financial) provisions. Now the Constitution is a new one, and to a considerable degree experimental, but it seems to me that it should have a fair trial, before we pronounce it so defective as to call for immediate alteration — still, that is altogether a matter of opinion. The proper, indeed the only place for discussing any such changes is in the Parliament of the Dominion, and the able men who represent Nova Scotia will have full opportunity of pressing their views in their places there. It is so obviously the interest of the Government and Parliament of the Dominion that the Union should work satisfactorily, that the Nova Scotian representatives may rest well assured of every suggestion of theirs being fully considered. Meanwhile, I would desire to impress upon you the great injury that is caused to the material interests of Nova Scotia by its not being fully represented in the Government of the Dominion, and by the position of isolation assumed by yourself and your co-representatives in the Parliament here. Questions of the greatest importance in the administration of affairs are continually arising, in which Nova Scotia should have a potential voice — and I may instance the rights of our Fishermen, the subject of Reciprocity and other matters of almost equal importance. The Canadian Government, I see by the anti-Union papers, are charged with an unwise administration of public affairs, so far as Nova Scotia is concerned. All that I can say is, that we act according to the best information that we can obtain, and that if mistakes are made the fault is not ours. I have already invited you to give us your aid and advice as a Minis- ter, and regret extremely that you do not see your way to taking that position. I trust that you may be able to do so — the sooner the better. Mean- while, why do youj and those who act with you, not pursue a course t' c similar to that of O'ConncU ? IIo was sincerely desirous of afTcctiag tho repeal of the union between England and Ireland, and, as you know, spared no effort for that purpose. But he did not stand aloof in Parlia- ment. On the contrary, while still preserving his opinions as to repeal, ho gave a general support to the administration of the day, and thereby secured for himself a potential voice in the administration of Irish affairs. At present matters stand thus : — Tiie Canadian Government must either act without advice from Nova Scotia (which is of course inadvisable) or consult with those who, it is stated, have not the confidence of tho major- ity of the people, which continues the irritation now existing. Let mo urge upon you to put end to this unfortunate state of things. In tho hope that this might soon be the case, the Canadian Government has, as much as possible without injury to the public service, postponed filling up the more important offices connected with Nova Scotia, and will continue to do so, although these delays are made causes of attack upon us for neglect of our duties. I write with the approbation and concurrence of my colleagues, and this letter, although marked " private," and not to be used as an official documeut, cau be shown by yon to any friends that you think proper. Believe me, &c. &c. (Signed) TiiE Hon. Joseph Howe, Halifax, Nova Scotia. JOHN A. MACDONALD. Halifax, 21st October, 1868. My Dear Sir Johx, — ^Yonr Letter of the Cth inst. reached me a fcAV days ago. I at once informed Mr. Annand of its arrival, but did not ask him to read it, or to compromise himself or his colleagues by taking part in the Correspondence. The Members of the Local Government and Legislature have already, as you are aware, re-asserted their deter- mination to obtain the Repeal of the British North American Act, and have sent forward their Resolutions and Minute of Council. They are hopeful that the new Parliament will do to Nova Scotia more substantial justice than the old, and, when the Elections are over, may despatch another Petition and Delegation to England. Heartily desiring, as I do, the repeal of the Act, I must confess that I am less sanguine. I used to believe that in a case involving vested interests. Constitutional rights, and great sums of money, British Statesmen and Legislators would do justice, though the Heavens should fall. With deep sorrow, and a sense of humiliation not easily described, I now am compelled to acknowledge that I have cherished a delusion. Whether it be that the British Ministers yield to the representations of the Governor General, and to the paramount influence of Canada, or sin- cerely believe that the interests of the Empire are, in some mysterious way, which I cannot discover, bound up with this Confederation ; or whether, as I shrewdly suspect, the men who represent the Railway and Financial interests to be affijcted by this measure, dominate and control both II0US03, I approliond thftt unless some mnrvcllous clinrigo is wroun;Tit by the new constituenoiea, wc shall hftvo as little chnnco of obtaining justice from the now rnrliamcnt as wo bad from the last. My friends hero are more hopeful, and I shall be delighted, should they make a fresh appeal, to find that I have been mistaken. A new House of Commons may take a more enlightened view of the flubject, but Mr. Gladstone, who will bo the leader, if the Liberals win, has twice spoken and voted against us. As matters stand, then, wo have not a very cheerful outlook, nor are the remedies, which are now freely talked of all over this once loyal Province, plensaat to contemplate. I have for months set ray face steadily agains* revolutionary movements, annexation intrigues, or open resistance to the law, but I will not disguise from you that it may be very dilTicult to stem the tide of public opinion that the rejection of enquiry by a new Parliament may set in motion, unless, in the meantime, some large and substantial measure of reparation and justice is oflFered by the Government of the Dominion. Holding these opinions and foreseeing the dangers to bo encountered, I am content to take the risk of this correspondence, of which I am quite aware that persons more sanguine of success will entirely disapprove. I have shewn your letter to a few judicious friends here, and shall show it to others, including, of course, the Membeis of the House of Commons as they come up to town ; and I intend to make no secret of the fact that such a correspondence is going on. I am asked every day if I have taken office, or " accepted the situation " as the phrase goes. My answer is that I have accepted nothing, but recognizing the obligation imposed by the Imperial upon the Canadian Government, I mean to dis- cuss the whole subject with them in a frank and earnest manner. Some of my friends here are apprehensive that the fact of such a correspon- dence going on, will weaken their chance of getting Repeal from the new House of Commons. If I thought so I would break it off to-morrow, but, as it must close long before the time arrives for making that appeal, I am content to continue it, in the belief that no harm ■will arise out of a free interchange of our opinions. Whether we remain united, or ultimately separate, it is of the utmost consequence that the feelings of exasperation which recent events pro- voked among the people of British America should be allayed. The arrogant, petulant and hasty manner in which this measure was, from the first, forced upon our people aroused their passions. The visit of the Canadian Ministers here was the first movement in the right direction, and in your letter of the 6th inst. 1 recognize a spirit of fairness Avhich I am prompt to acknowledge. From the first we were much alarmed by the financial aspects of the scheme, your assurance that these shall be revised and substantial justice done is very satisfactory. Mr. Annand cannot go to Ottawa, somebody else may, but as the distance is great, we may be able to arrive at com- mon conclusions by a simpler method. Mr. McLelan has already sent to Mr. Rose the substance of a speech which he delivered in the House of Commons last session. Enclosed you will find copies of a speech made by Mr. Annand. Glanoiog over those papers you will perceive that, it not Confede- and some jrood Sir h i 9 / I /^> pro- The Tom f the cition, ichi rated, Nova Scotia could have met all her obligations, and, under her old Tariff, have hud a small surplus in the Treasury. That by imposing one per cent, upon imports, could have raised money enough to keep up our roads and bridges, now left almost without any provision though our tariff has been raised to fifteen per cent, and sundry direct taxes have been imposed. It appears to mo that the claim for $3,000,000, on ac- count of our public works, is a fair one, to say nothing of another based upon the disproporticu of our annual consumption per head and that of your people. I do not wish to trouble you with many figures, or to involve you in financial discussions which can bo more easily conducted by others, but I may observe that we oujrht not to be charged interest on 1022,458 of Province Notes, circulated and sustained for years on the public credit. Will you be good enough to ask Mr. Rose or Mr. Lang- ton to examine Mr. Annand'a speech and Mr. McLelan's figures, and inform me if the calculations are accurate or to what extent they agree with them. If there is a per contra side to the account let it be sent down. As this letter is already so long, I may perhaps trouble your with another on the constitutional aspect of the question. I quite recognize the narrow limits to which you are confined by the Duke of Bucking- ham's despatch, but we both know that the colonial office would sanction, and Parliament approve of, any changes which experience might suggest, and I would rather discuss these with you iu a friendly way now, be- cause I fear that, without the approval of the Government, I would have but a small chance to win favor for them in the House of Commons. I note what you say in reference to my taking office, and to the ex- ample of O'Connell. My position is certainly not a very profitable or a very enviable one, but I prefer to hold it just now. I have been driven into it by a sense of duty and by the force of circumstances which I could not control. The responsibilities resting on me are not light, and I can only relieve myself of them by maintaining for the present a position of personal in- dependence. As regards the present Government of the Dominion, I did not last ■winter factitiously oppose them. Should I go to Ottawa again, (reserving the question of Repeal, if there is a chance in our favor), ray action ■would be governed by yours. If you do justice I will give you credit for it. The choice of the route for the Intercolonial Railway meets my entire approval, and if you can place our commercial relations with the United States on a satisfactory footing, either by treaty or reciprocal legislation, and arrange the financial aspects of the question equitably, I think I may safely say that the gentlemen who may go from Nova Scotia to Ottawa would be justified in giving a fair support to your Government. Believe me. My dear Sir John, Yours very truly, Sir John A. Macdonald. &c. &c. &c. JOSEPH HOWE. ifede- <■ ^ , \ 10 In November, the Hon. John Rose, Finance Minister of Canada, laid before the Governor General, a series of Reports and Papers, bearing upon the question of Nova Scotia Finance. These papers are too vohiminous and detailed (covering forty folio pages) to be re-printed here. They M'ill be furnished to the Public Departments, when copies come on from Canada. I subjoin the table of contents, that you may see what care and labor have been bestowed on this enquiry. PAGE I. — Report of Minister of Finance to His Excellency the Gover- nor General i to viii IT. — Report of Auditor General to the Mijister of Finance 3 to 17 III. — Appendix 1, Containing: 20 to 36 A. Statement, Debt of Nova Scotia and annual inter- est thereon 20 B. Details of debt 21, 22 C. Deficit and Surplus in Revenue 23 D. Gross annual receipts and expenditure since 1864.. 24, 25 E. Receipts and expenditure on Services now under Dominion, since 1864 26, 27 F. Receipts and expenditure under Local Government. 28, 29 G. Analysis of Dominion and Local expenditure as given in statements D, E, and F 30, 31 H. & I. Statement of gross Imports and duties per head since 1864 32,33 J. Table in detail of articles imported, distinguishing free from duty paying goods, during same period. 34, 35 K. Difference, between debt of Nova Scotia as assumed by Dominion, and as claimed by Nova Scotia.... 36 L. Deficit of Nova Scotia during first year of Union.. 36 IV. — Appendix II. Reply of Statements of Mr. Annand, Pro- vincial Treasurer 39,40 V. — Appendix III. Statements of Revenue per head of popula- tion in various Provinces from all sources 42 to 44 yi. — Appendix IV. Statement of estimated expenditure of vari- ous Provinces, distinguishing amounts voted by the Legislatures for principal services, from sums raised by Local Taxation 45 Halifax, December 4, 1 868. Sir,— I have had the honour to receive the Printed Papers forwarded to mo by the last mail, and I have read with deep interest the elaborate reports pre- pared by yourself and Mr. Langton. They appear to me to be vjonceived and expressed in a candid and judicial spirit. You are aware of the line taken here by the members of the Local Government. As they are trammelleu by their action prior to the receipt by me of Sir John A. Macdonald's letter of the 6th Oct. and by their subsc- In Shown ''hen 1864, Jrty ^f, Ainada ff t'Xpi tpft wit Jhole we abs( l^nnapc V 11 Canada, Papers, 5 papers 3) to be .rtments, contents, ou this PAOB 1 to vni 3 to 17 20 to 36 • • • • 20 21, 22 23 24,25 r t. 20, 27 28, 29 IS • • 30,31 sr • • 32,33 d. ;d 1.. 34,35 36 36 a- ri- by (na 39,40 42 to 44 45 sequent condemnation of the correppondence in which we are engaged, it would be hopeless to expect from any member of the Government any aid ia the rather difiScult task of adjusting our financial difficulties with the Domi- nion on an equitable and satisfactory basis. It is therefore fortunate that I can call to my assistance a gentleman, who is not unknown at the seat of government, and in whoso integrity and financial skill the people of Nova Scotia have entire confidence. A. W. McLelan, Esq. M. P. for Colches- ter, has given much time to the investigation of all the branches of the gene- ral subject covered by your reports. I have sent them to him. When they have been digested, we will meet you either at Portland or elsewhere, and endeavour in a free and full discussion to arrive at sound conclusions. I am afraid that neither of us can leave home till after New Year, but when we are ready the time and place of meeting can be arranged by telegraph. In the mean time permit me to say that, having discussed the whole sub- ject with Mr. McLelan, we both concur in the opinion that nothing that would be unfair to the other Provinces should bo asked of the Dominion Govern ment. We seek only justice to our Province, and are quite satisfied that any fair and equitable reconsideration of the financial arrangements made in London will prove that the exceptions taken to those arrangements by the people of Nova Scotia can be sustained. I have the honour to be, Sir, Your obedient servant. The Hon. JOHN ROSE, Minister of Finance. JOSEPH HOWE. Ottawa, January 20M, 1869. i Sir,— I The undersigned, having given careful and anxious consideration to the * Reports submitted to them, and having discussed with yourself and with f other members of the Cabinet the important questions which those Reports I embrace, deem it their duty to state, with as much precision as possible, the I general principles which they conceive ought to govern any satisfactory re-ad- justment of tbe financial relations between the Province of Nova Scotia and fthe Dominion of Canada. r 4, 1868. led to me by reports pro- be conceived of the Local ihe receipt by y their subsc- 1. — Debts and Assets. In the adjustment of debts regard should be had to the population, as fehown by census, and to the amount of property thrown into common stock. When $8,000,000 were assigned as the recognized debt of Nova Scotia in 1864, the actual expenditure did not exceed $5,000,000, representing pro- jrty which might have been considered a fair offset to the Asstts held by ilanada ; and had the Provincial Government funded the difference, instead %i expending it, they might have applied the interest to local services, now |pft without any adequate provision. But they exponded more than the ihole amount in the construction of the Railway to Pictou, which becomes 10 absolute property of the Dominion, and in promoting the Windsor and nnapolis. whinh is nronerlv an extension of and will be an important feeder \ I 1 / 12 to all tho lines that the Dominion has assumed. Those works cost more than $3,000,000, exclusive of the right of way. They are of local advantage ; but, as the other Provinces, since the Conference, have made no large expen- ditures on works which become Dominion property, it would be unfair to charge the whole cost of ours to tho Province, and it would be but just that $2,000,000, or two-thirds of the whole expenditure, should be carried to our credit by the Dominion. A result equivalent to this, would be obtained by another process, equally legitimate. The Auditor General estimates at 046,- 667,501, all the properties which Canada threw into common stock, as an offset to our railways, which, including the recent expenditures, cost $7,395.- 000, besides the right of way paid for by the counties. If, with this amount of property, the Canadas were taken into the partnership with $62,500,000 of debt. Nova Scotia would be entitled to enter with a debt of $9,930,874. 2. — Pdblic Buildings. In addition to the sum expended upon railroads, after the adjustment of existing debts and assets, nearly a quarter of million of dollars was expended by tho Provincial Government upon a new Public Building in the city of Halifax, intended to accommodate Departments, tho control of which, by the North American Act, is now divided between the Local and General Govern- ments. If it be assumed that, under tho Act, that portion of tho property created by being contracted for just prior to the Conference, although the expenditure was subsequently made prior to the adjustment of the debts and assets, reverted to the Dominion, than we would urge that Nova Scotia is entitled to claim whatever sum was paid subsequent to that adjustment. If, however, the full amount be not allowed, on the ground that a con tract, signed just before the Conference, constituted a Provincial liability, we would remind you that that contract was cancelled, by failure on the part of the contractors, and that the building was completed last year under later arrangements. 3. — Province Notes. Nova Scotia, for nearly half a century, has, from time to time, issued Province Notes, which formed a cheap circulation, costing no interest, as they were received in payment of duties at all the Revenue oflBces, and redeemed out of such specie as flowed into the Treasury, or in Bank paper equivalent to gold. At the time of tho Union this circulation amounted to $622,000, on which sum the Dominion would have to pay no interest, and we would therefore urge that on it none should be charged. It is fair also to assume that, in the lapse of half a century, a considerable pioportion of this paper has been burnt at fires, lost at sea, or been otherwise destroyed, and it is but just that the Dominion, on assuming the circulation, should make to Nova Scotia a fair allowance for that proportion which it will never bo called upon to redeem. source, the Pn sufficior instituti prior to j In t] ithe tim( ivinces h lour own itigated i it'inance As tl fepcy, a; •djustm( Kova So Thee tion, rati « P-^sst ings Bank, which bear but 4 per cent, of interest, and will henceforward^*^ '^^"^ enjoy whatever benefit may be derived from obtaining money through thishey would' 13 t more than advantage ; large expon- )e unfair to lut just that irried to our obtained by ates at $46,- stock, as an lost $7,395.- this amount ^62,500,000 $9,930,874. i source, at that low rate of interest. But it is obvious that it should allow to the Province, either in the form of a suspense account or in a round sum, i sufficient to cover the amount which the experience of our own or of other ■ institutions renders it fair to assu) no will never bo called for by depositors prior to the transfer. 5. — Stores. , In the Board of Works and Railway Departments there was deposited, at ^the time of the Union, a considerable amount of stores. If the other Pro- jvinces have property of this description, which, to some extent, would offset |our own, we assume that, under the Act, their claims and ours will be icves Aigated and adjusted, as matter of account between your Department and the {Finance Ministers of the Provinces. 6. — Difference in CcRRENcr. As the debts of Canada and New Brunswick are calculated in one cur- fepcy, and ours in another, we claim that they shoulci, in any fair general idjustment, be brought to the same basis, as the revenue is now collected in Kova Scotia in Canadian currency. idjustment of jvas expended in the city of ?hich, by the aeral Govern- the property although the the debts and 7.— Increased Taxation. ova Scotia is The claims above enumerated an, so evident and equitable that calcula- stment. tjon, rather than argument, is required to sustain them. It is not so easy to id that a con (ktermine the amount which Nova Scotia should receive in consideration of ,1 liability, we tfje increased taxation to which she has been subjected. It is apparent, how- the part of eter, that at no period of her historj' has she been embarrassed for the want under later of money. That, if her revenues fell off, as they did, for a single year, at t|c commencement of (he American civil war, light additional taxation soon iBlod her treasury ; and that, though in tho two or three years just preceding confederation, her resources had been strained by a somewhat too rapid exten - . -1 »4on of her railways, her credit was so good, at home and abroad, and her ' thev ^f^'^ ^*^ ^°^' *'^** ^^® could, by a slight increase of taxation, have met her ^"^T ' A pmed %'^'^'^i^s ^^^ provided for all services, general and loQal.* (cr eciiivalent From 1864, when the Quebec Scheme was arranged, to the 30th June, $622 000, 1868, a period of three years and three quarters, the receipts in Nova Scotia, iid we ^ould '''•'" ^°^^^^^ °f 1^®^®°"® "o^ transferred to the Dominion, were sufficient, Iso to assume '*i^<^*' ^ *o" P^"" cent, tariff" on enumerated articles, to meet the cost of services of this paper '*l^ under the charge of the General Government, and to have paid the sub- and it is but *S'®^' ^®*^'"S * '^'^''P^^^ of $328,565. If then, as has been asserted, we ake to Nova'^"^*^ ^"^^ required to increase our import duties, irrespective of Confedera- gjjjlg^ ypQQtk||), the money would mainly have been required for local services; and, »H|Bn heavy additions have been made to our specific and ad valorem duties, wteen the rate of discount at the banks has been increased, and stamp aud )e Note. — It has been said that some of her Bonds were unsa'eable in England prior 'rovincial Sav •* **•* passage of tlie Act of Union. This is a mistake. Those Bonds, paid to Railvay I f 1 jOBtractors, reached the London market in an unusual and irregular manner, hencetorwarc ^^ ^^^ forwarded through the proper channel to the London agents of the Pri ■ through thiSh^jf would have been promptly sold. Had rovince. II 14 newspaper taxes have been imposed, it is obviously unfair to leave the local services without adequate provision. That the British America Act does this is 'jasily determined by reference to the Nova Scotia Estimate for 1868 and 1869. The direct returns to the Dominion Treasury, from this increase of taxation, can only bo correctly ascertained in future years ; but the increase must be large, and the advantages secured to your manufacturers ought not to be overlooked. The average import of dutiable goods into Nova Scotia for the four years preceding Confederation, amounted to S23.50 per head of her pop- ulation. Canada impoited but $12.25. This difference, annually amount- ing, on our population, to $3,722,141, is a largo sum on which to collect duties, over and above the ordinary consumption of Canada, and warrants us in claiming, irrespective of the monies due to Nova Scotia, as stated under the preceding heads, a liberal provision for her local services. Should your Manufacturers annually supply our people with goods to the extent of this $3,722,141, even although those goods come in free of duty, it is obvious that, if they cannot be furnished as low by the Manufacturers of Great Britain and the United States, the Nova Scotians must pay higher prices on this consumption. Wo have endeavored to tate the claims of Nova Scotia thus freely and succinctly. The facts On which they rest, apart altogether from political con- siderations, challenge enquiry, and will, we have no tloubt, induce the Gov- ernment to honorably redeem the pledge conveyed in the letter addressed by Sir John A. MacDonald to Mr. Howe, on the 6th of Oetober last. We have the honor to be. Sir, Your very obedient servants, JOSEPH HOWE, The Hon. JOHN ROSE, A. W. MoLELAN. Minister of Finance. [Copy.] Ottawa, 26th January, 1869. G KNTLEMBN, Since I had the honor to receive your communication of the 20th instant, the subject of it has, as your are aware, continued to engage the serious atten- tion of the Government. They have not failed to give the fullest consideration both to the proposi- tions contained in your letter, and to the further explanations which, during our discussions in the intermediate period, have been from time to time offered by you. I have now the honor to apprise you of the conclusions at which the Gov- ernment have arrived, and wHich are such as they believe will commend themselves to the approval of Parliament. I can but add, on my own part, the expression of my sincere hope that they may be satisfactory to the people whose interests you have so untiringly ad- vocated. I have, &c., JOHN ROSE, The Eon. J. HOWE, M. P., M. F. A. McLELAN, Esq., M. P., Russell House, Ottawa. f cave tlie local Act doos this for 1868 and ie of taxation, ;ase must he lit not to be Scotia for the id of her pop- lally amount- ch to collect d warrants us ,ted under the goods to the ree of duty, it nufacturers of ist pay higher us freely and I political oon- duce the Gov- addressed by St. I HOWE, oLELAN. lary, 1869. 20th instant, serious atten- the proposi- ^hich, during ;o time offered hich the Gov- will commend lope that they untiringly ad- ROSE, M. F. 15 COVY^ of a Report of a Committee of the Honorable the Privy Council^ approved by His Excellency the Governor General in Council on the 2bth January^ 1869. The Committee have given their attentive consideration to the annexed Report of the Honorable the Minister of Finance, having reference to and submitting certain correspondence that has taken place between him and Messrs. Howe and McLelan, together with certain reports, on the subject of the readjustment of the financial conditions attending the admission of Nova Scotia into the Union ; and concurring in the suggestions of the Minister of Finance, they respectfully advise that a measuio be submitted to l^arliament at its next session providing — 1st. That the debt of Nova Scotia, on entering the Union, be placed at $9,186,756, and that that Province be relieved from any charge of interest, unless her debt exceed that sura ; and — 2nd. That for ten years, from the 1st July, 1867, an annual subsidy of S!82,698 be paid to that Province. The Committee further report their concurrence in the recommendation of the Finance Minister that Nova Scotia be debited, after the completion of the Province Building, with interest on the cost of that building, until it shi 11 have been placed at the disposal of the Dominion. (Certified) WM. H. LEE, C. P. C. FINANCE DEPARTMENT. Ottawa, January 28, 1869. The undersigned has the honor to bring under the consideration of His Excellency the Governor General in Council, the Confidential Report made in the month of November last, on the affairs of Nova vScotia, and to state the result of the communications which, with the assent of the Council, have since taken place. In that Report the undersigned stated his opinion as the result of hia enquiry into the affairs of Nova Scotia as follows : 1. That the principle on which the debts were arranged by the Union Act operates with some unfairness to Nova Scotia. 2. That in the division of the property, local assets and revenues, or be- cause the assets possessed by her were not of a character to be available, Nova Scotia is less favorably situated than the other Provinces in respect to Local Revenues. 3. That the increase of Revenues presses more directly on Nova Scotia than the other Provinces, but this apparent increase and the consequent pressure, it is believed, will be mitigated every year, as goods which she for- merly imported from abroad, and which were chargeable with duty, are pro- duced in other portions of the Dominion, and will now be available to her for consumption free of duty. 4. That she must have raised about ^400,000 annually by way of addi- tional taxation if she had remained out of the Union. 5. That the amount raised by the Dominion from Revenue from Customs and otherwise is about adequate, if the results of last year continue in future the same, to meet all the current expenditure the Dominion is celled on to 16 make on her account, but less by $100,563, if Nova Scotia is to be cbarged a per Capita contribution to the cost of tbo Civil Government and Legislation of the Dominion. 6. That the Local Sources of Revenue at present possessed by Nova Scotia are inadequate to carry on the Services devolving on the Province. The Report in question having been communicated to the Hon. Joseph Howe, various meetings subsequently took place with that gentleman and Mr. McLelan, at which the difficulties were fully discussed in a frank and temper- ate epirit. These gentlemen, from the outset, disclaimed any desire to seek Financial concessions which were not warranted on grounds of strict justice ; or any modification of the original terms of Union which would place Nova Scotia otherwise (ban on a footing of equality with the rest of the Dominion, or beyond what would enable that Province to mejt the expenditure indispen- pibly necessary to carry on its Local affairs, without having recourse to a system of direct taxation new to its inhabitants, and to which none of the other Provinces of the Dominion required to subject its people. The numerous objections which have, from time to time, been urged in the interest of Nova Scotia, were fully reviewed, and the result has been a limit- ation of the points of controversy to those stated in the accompanying letter from Messrs. Howe and McLellan, which are still strongly pressed, and which may be succinctly stated to be : 1. That a just apportionment of the debts of the several Provinces, based on the amount of assets which each contributed, would entitle Nova Scotia to enter the Union with a debt of $9,980,874. 2. That an allowance should be made for the new Province Building erected since the date of the Quebec Conference, at a cost stated to be nearly $250,000. 3. That an allowance should be made for the Provincial Note circulation of Nova Scotia, amounting to $622,458, both on the ground that it bears no interest, and that a portion of the circulation may fairly be considered to have been lost, and that it will not be presented for redemption. 4. That a deduction should also be made from the Savings' Bank depo- sits, amounting to about $657,610.04, of such an amount as it may fairly be supposed will never be called for by depositors. 5. That an allowance should bo made to Nova Scotia for stores on hand at the time of the Union. 6. That the debt of Nova Scotia, being in a different currency, should be brought to the same basis as that of the other Provinces. 7. That Nova Scotia, being subjected to increased taxation urder the Union, to an extent which it is contended would have sufficed to meet the interest on her increased debt, and also made adequate provision for her local expenditure had no Union taken place, is entitled to ask that these services shall be provided for by a grant from the Dominion. After giving the fullest and most anxious consideration to the various points which were raised, and to the additional information furnished, the undersigned sees no reason to depart from the general conclusions enumerated in his former Report. But he has been enabled to estimate the practical extent of the inequalities to which he adverted, and to form an opinion as to the modifications which would be required to meet the exceptional circum- stances in which Nova Scotia stands, and to place her under the Union in a position of financial equality with the other Provinces. 17 arged a islatioD the Province had Dominion had to swelled her debt It may be convenient, in the first instance, however, to consider seriatim the seven hoads of claim preferred by Mr. Howe and Mr. McLellan. 1. That the assets contributed by Nova Scotia would entitle her to enter the Union with a debt of $9,980,874. It is undoubtedly true that at the time of the Quebec Conference, in Oct., 1864, the debt of Nova Scotia was only about $5,000,000. Between that time and the date of the Union, in 1867, expended in money, or contracted engagements, which the meet [but with which Nova Scotia i^ chaiged], that have [subject to certain adjuptments,] to $9,300,000. That outlay was mainly on works which became the direct property of the Dominion, and among which may be enumerated the following : A. Outlay on Truro and Pictou Railway. B. Province Building. C. St. Peter's Canal. D. On Halifax and Truro Railway — four works on which an outlay, amounting in the aggregate to about $2,600,000, took place in the interval ; and, besides these, about $1,100,000 has been expended, or is in course of payment, for the Windsor and Annapolis Railway, which will not become the property of the Dominion, but, it is urged, will form an important feeder to the Dominion linen. It is also urged that of the rest of her debt, amounting to about $5,500,- 000, the principal part had been previously incurred on the railways from Halifax to Windsor and to Truro, which are also assigned by the Act of Union to the Dominion as its property, and that this sum is exclusive of the right of way, which, by the legislation of Nova Scotia, was furnished at the expense of the localities ; whereas the land for the other parts of the Interco- lonial Railway is being provided at the public charge. It was therefore strongly pressed, as is now repeated in the accompanyiog letter, that a comparison should be instituted of the value of the entire pro- perty which each Province brought into the Union, and that it should have a corresponding claim ou the Dominion Exchequer. Whatever justice there may be in principle in this proposal, such a comparison obviously involves many particulars, which would make it diflScult, and even impossible, to arrive practically at an equitable solution. The advantage of particular works to the localities as compared with their advantage to the Dominion could hardly be estimated. The geographical situation rai^Tht enable one Province to contribute, at a smaller cost, an asset more directly productive in itself, but which might still be dependent for that productiveness on another more costly, and less directly remunerative, con- structed by another Province. 3 he question whether one 'Province had not procured these works on bet- ter terms by the adoption of a different system than the others would arise. The prospective productiveness, and whether that productiveness might not depend on the development of the natural resources of the several Provinces at their own cost, and various other elements, all equally conjectural, would likewise have to be considered. The undersigned therefore submits that it could not result in any practical good, but on the contrary would lead tc em- barrassing comparisons with the other Provinces, to endeavor to adjust the claims of Nova Scotia on any such principle. 18 The undoubted facts to which reforonco has been made, give it, it will be conceded, a fair claim to consideration, but it is believed that the relief may be given in a way less calculated to raise complicated issues, and which, un- der circumstances believed to be parallel, has already been accepted by Par- liament as an equitable arrangement in the case of one of the other Provinces. 2. — New Province Building. It would seem at variance with the pr'ivisions of the Union Act to make any speoial allowance on account of the Province Building at Halifax, It is true that this building, intended for services now under Dominion control, has been erected since the Quebec Conference, and has never been used by the Province of Nova Scotia, and that its cost goes to make up the total debt of Nova Scotia. But it is, nevertheless, Dominion property, as much as the Railways — portions of which have been constructed in the same interval — and it therefore stands on the same footing ; except, perhaps, as to any outlay since July, 1867, which raay form the subject of equitable adjustment. 3 AND 4, — Provincial Note Circulation and Savings Bank Deposits. The points advanced touching the special character of these items, compos- ing part of the debt of Nova Scotia, and as entitling her to be relieved from any charge of interest in respect of them, merit fair consideration. It is stated that the Provincial Notes of Nova Scotia in circulation, amounting to $622,458, bear no interest at all, and that the Dominion ought not, therefore, to debit Nova Scotia with a charge for interest which is not paid, atd that besides some of the notes have been issued 40 years ago, and will never be presented for redemption. Then as regards the Savings Bank deposits, amounting to $657,610i^, it was urged that they bear only 4 per cent, interest, and that a considerable per centage of the gross deposits would never be demanded ; that, therefore, the Dominion ought not to charge more interest than if paid, and should ab- solutely reduce the capital of these two items of the Provincial debt. The undersigned cannot wholly acquiesce in the view of the case as urged l)y Nova Scotia, but after a careful examination into the state of these ac- counts, he believes that a moderate per centage, not exceeding 10 per cent, of oach, may, with propriety, be placed to a suspense account ; that on this per (ientage no interest should be charged until the Dominion is called on for it by I he holders or depositors. The fact that the Provincial notes bear no interest, if it stood alone, might i)e a good ground for exempting Nova Scotia from a charge of interest on ;iny sum beyond such per centage of the circulation as it was prudent to keep in bullion. But a consideration of this question obviously involves a comparison of the rate of interest which the Dominion is called on to pay on the total liabilities of the several Provinces. Canada had a considerable circulation of Provin- l a\ncove boi\» r'' caic rtt; The I ttVt. the \n »o ( i 7 a tiow ia/f of lb. 21 [Cop\.] Ottawa, January 29, 1869. Sir.— We lifive liad the honor to receive your letter of this day's date, enclosing your report to His Excellency the Oovernor-Genoral, and the Minute of Council thereupon. These papers close the nogociations opened by Sir John A. Macdonuld's letter of the 0th of October. The decision of the Government up')n the points raised in our correspon- den !e, as discussed at Portland and in Ottawa, is, on the whole, satisfactory to us, and will, we believe, be re'j;arded in Nova Scotia as evidence of a very sincere desire on the part of the General Government to meet the just expec- tations and provide for the local services of the Province. Permit us to express our sense of the very fair and judicial spirit in which both yourself and the Auditor Goneral have conducted this intricate and deli- cate nreg.'-u'ation, and for the courtesy which in every stage of it wo have re- ceived at your bjinds. We have, &c., JOSEPH HOWE, A W. McLELAN. The Hon. JOHN ROSE. Minister of Finance. EARL GllANVILLE'S DESPATCH TO THE GOVERNOKr-GENEaAL. Downing Street, 13th January, 1869. Sir, — I liftve the honour to acknowle:l;^o the receipt of your despat.ih of the I'Jth ult., tiMus iiittiii'.; copies of certiiiii resolutions ailre.ssed by tiie House of Assembly to the Lieut. -Governor _f Nova Suotia respectinjj the recent Confeleration of the North American Provinces, and of a statement on the sime subject addresseil to the Lieuton- aat-Governor by th". Est•ou^ive CounciL The statement of the Executive was forward- ed to the Secret iry of State in Lord Monck's ilespatches of the 8th September, which was acl