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Les diagrammes suivants illustrent la mAthode. i errata d to It le pelure, pon A n 1 2 3 32X 1 2 3 4 S 6 DESPATCH rnon rir georoi: artrur to lord olenelg, IN RELATION TO THE FINANCES OF THE PHOVINCE, WITH SUNDRY DOCUiMENTS; TOGETHER WITH THE ANSWER FROM HIS LORDSHIP TO HIS EXCELLENCY THE LIEUTENANT GOVERNOR, GEO. ARTHUR. The Lieutenant GovEtiNon trati!imitv dm «' Secretary of State." This Despatch, having been submitted to the House of Assembly by my Predecessor, formed the subject of an address to him from that Body, enquiring "if ho would bo prevented from giving the Royal Assent to any Bank Bill in future;" wliich Address, together with his reply to it. Sir Francis Head transmitted to your Lordship in his Despatch, No. 10, of the 5tli of February, 1837, — the receipt thereof being acknow- ledged in terms of approbation In your Lordship's Despatch, No, 162, of the 19lh of April following. Fully concurring in the view taken by Sir Francis Head respecting your Lordship's instructions, as stated in his reply to the Aililrcss n-ferred to, I am desirous ofnilhering to them ns strictly a>; I am able; but, irn the very peculiar circumstances of the Province may render unavoidable some departure from tlieni, I wish to be prepared to meet possible conlingencies. 1 venture, llierefore, to suggest to your Lordship, llial in the event of siiili a measure being proposed in tlie Legislature, I should be provitfionnlly autliorisiil in (live the Royal assent to any Provincial enactment, iiHviiig for its object to allow the Receiver General to issue, on the credit of the Govcniineiit, bills or notes, piiyablc in Toronto at twelve months alter date, to the aiiKiunt of jC101),UOU; to bo used as a ('irculating Rledltmi, and made chaig(!able on the pro-iprrtive r.n\Mine of the Province. That such, or a similar measure, may be rendered n^ressiiry by events, I consider highly probable; and it appears to me, as far as I can judge at this moni'il, llint no other so well calculated, by its simpliri'y to ell'i t the desired object, could be convenientlv resi.rteil to. Though the cases are not exactly parallel, yet in illus- tration of .iie principle, and as nlfonling a precedent for such a coui'se of proceeding, I would instanci: the circumstance, that, during the last war in these Colo- nies, bills of the description I Imve irentioned were issued by the Provincial Government, and were found, as a temporary resource, of the ut^lo^t \alue to the public service. Dclxintures payable in the Province arc altogciber unsaleable from the want of local capital : and de- bentures payable in London, where alone t':,/ me negotiablc, have been already Issued to a larger amount than has yet found purchasers. With reference to these Debentures, the accompa- nying letters from the Ri'ceiver-General, (inclosing others addressed to him by Messrs. Baring.) and Re- port of the Executive Council on the subject of their contents, »'ill put your Lordship in possession of c\ery necessary information respecting the rircunistaiins under which they were issticd; and your Lordship \\,\\ at once perceive that, however powerful — and ler- tainly they are very forcible — may 1k' the arguments used by ftlessrs. Barings against the minle of their m go- liation, yet that they could only have been made available for tlic immediate and tirgent wanls of the Province, through the medium of the local Banks, '.ii the manner which was practised. In drawing the attention of your Lonlehip lo the measure here suggested, I would wish to impress upon your Lonlahip that, viewed as a continued system, I consider the issue of Government |iaper, not converti- ble info specie, to lie detrimental to the credit of llio Province, and calculated to displace the more whole- some convertible currency. Unless, therefore, I could see liefore me a prospect of financial relief, fouMded upon a sound and simple basis, I should not look for any goal result from mere temporary expedient. Though large in proportion to its actual revenue, the debt of this Province has been mainly incurreti through incidental causes — namely, the construction of the public works, the outlay on which is commensurate less witlj the country's present productive wealtli than with the dcvclopcmeiit of which its vast natural re- 2 Despatch and Documents, nuiirccs an: nusceptible. Thence, (lie invettment not lying inimediately profitable, the burden of the intcrcit puynhlu on the public loan is thrown on the ordinary rovuniie raiiwd by means of taxes intended to meet only tlio current public expenditure. As compared, however, with similar public debts incurred by dilTeront SlnlMof the neighbouring Repub- lic fur tliu promotion of national objects, the debt of Ibis Province is but small ; while future resources, and tlio vvimt.1 of an increasing population, have been here iinticipalcd to a far less extent. Tlio AmRricniia have also borrowed money on mere ili!>ndvuntagcous terms than those obtained by this I'mviui-e, the existing laws of which only permit tlio (iovurniiioiit to negotiate in London loans at pat, bearing five per cent interest ; whereas, the Americans liavo not hesitated to raise money on the best terms (hat could be obtained, and which latterly have been proiUictive of a lo?s varying from five to ten per cent on tilt! amount of the borrowed capital. The unhappy troubles with which this Province has l)eon visited ; the doubts that iiavo been raised as to iho permanency of its political institutions, assisted by the e.xpresbion of opinions in (|uarters whence the CoUinies justly looked for support ; and the threats of nrmod interference in our ailairs by the American Citizens, with the attempts made to carry tlicm into execution on various occasions, arc circumstances which have naturally tended to induce a feeling of insecurity and a consequent dejireciation in the value of property which is beginning to be most severely felt. Tlin present inconvertibility of property leaves with- out the means of meeting their engagements those who have become indebted on its security ; and compara- tively trilling liabilities are thus found suflicient to worii tlie ruin of individuals hilhcrto believing them- trlvcH opulent, anil who would actually be s» could tlicy realize what they own. Ily the same unhappy causes, the ordinary influx of immigration and British Capital has licen suspended ; sii that anticipated income from public works has not l)een forthcoming from tlio \vant of means to complete ibcm. Your Lordship may give me full credit, when I assuro you that it is this state of things, more than any tliconUio diflerencc in regard to politics, which renders tlio government of this Country to the satisfaction of the community so diflicidt as to be almost impossible; iiixl I cannot blame, or be surprised at, the discontents of a people who, though connected with the most powerful Empire on the earth, are nevertheless en- during evils usually attendant only on the prostration of national strength ! It is not ill my power, my Lord, to retrieve the almost withered hopes of Upper Canada ; nor will the HutVering inhabitants be able of themselves to sustain ilieir forlitiido in the immediate neighbourhood of a powerful hostile population and in the rear of a rebel- lious Province. I see very clearly that if the present >'tate of things be sulTercd to continue for a much longer period, thero must be a general wreck of properly ; ami nllliough eventually public provperitv may l>e rectoreil, and may give to the young, ardent, and tlio unencum- hered an opportunity of growing rich, yet it will not ii'rttore to those who have been prosperous the well- enrned fruits of former industry, nor replace the present holder of property in the possessions which will have pas.-.'d from him. The effects of the moral deterioration which, it is to be feared, all this is working in the people, will finally make these Provinces indeed untenable and worthless; since the energies of their inhabitants, which can alone render them of sufficient value to bo worth retaining, will be unavailing, unless supported by the /€c/in^ that the protection and security which Iho governed ntta- rally look for from their Government are afforded ti> their full extent. The means, my Loni, of averting these impending evils are not to be sought for in the Province, but in the Mother Country ; and all will depend upon the opinion of the British Government as to the desire am) power of England to retain the country in the face of all opposition. The present friendly professions of thu Government of America may bo sincere, however con- tradicted by the outrageous conduct of her border citi- zens. But there is no real security for their continu- ance ; and the quci^tion is not whether Canada can he held, during u time of peace — but, whether in peace or war it is to bo protected or contended for with the (Hiwer of the Empire. Assuming that Your Lordship holds an affirmative opinion in this matter, the briglit side of the proE^pect presents itself, and I see littlu difficulty in producing the most desirable results from the bold and decided measures that must follow. It must be obvious to Your Lordship that the pros- perity of the Colony must mainly hinge upon the pro- gressive devclopement of its rcbouiccs by the united agencies of immigration and British capital. The preliminaries to the efficient employment of these great means will lie comprised in placing the Province in a stale of complete defence, and in raising the credit of tlie Colony in liie British markets. This will attract capital, seeking profitable investment — that will inspire confidence as well to the borrower as the lender ; for, my Lord, it must be remembered that ca- pital is diverted from the country into other channels merely because a doubt has been engendered as to the permanency of its jiolitical institutions. To induce immigration on a scale commensurate with the im- fortancc of the object which it is intended to promote, would retipectfiilly suggest to Your Lordship that it should be directly facilitated as a great national mea- sure, and considered as that Lest calculated to preserve, at perhaps the least expense, the C'- nncxion of the Colony with the Parent State. Your Lordship is aware to how narrow an extent the resources of this Province have hitherto been tried in the way of taxation levied on the trade of the coun- try. Were the imports increased to even one half of the amount in proportion to property raised throughout the American Union, the Provincial Revenues — pro- vided that tranquillity and confidence were restored — would be in a nourishing condition, and the interest on the public debt could be met with facility ; but unfor- tunately the want of a sea-port places it beyond tiie power of the local Government and Legislature to make any addition to the import duties : and even if this could be elTected, tiie want of confidence that is at present felt would prevent the measure from being attended with an iiiiP'pdiate beneficial efiect upon the public credit. Without now discussing in what manner Upper Ca- nada is to be pcrinitttcd to have a port of her own, I trust I am not wrong in supposing that the giving her access to llic sea will form a prominent feature in any rcmedint tneoinire^ tlmt may he propoi>ed in her behalf in the British Parliament. When this is accomplished, the Revenue may be at once materially increased with- out the slightest injury to trade, without anticipating future resources, and without proilucing any discontent. The very best security would be at the same time available to the public creditor, as a certain portion of such revenue might be inalienably set aside for the li- quidation of the public Jebt. I look, my Lord, upon this prospect as a substantial foundation for the measure I nm about to propose. The preservation of this Province as a Colony is es- sentially in ttio hands of England. Let England then f Relating to the Finances of the Province. 8 f ■•Mme the nociininry rcipunmbilitjr and ofTcr the mcu- rity which the Pruviiicu cannot fiirniih of thu (terma- nencjr of ita Gnvvrnniciit. Let it not ro«t oi a mere mailer of opinion amongst money lendeni, hut upon the broad basin of Orilinh guarantee. The sum which would he required lo liquidate the tvholu public ilclil of the Province in sinali in coniporiiion witli the inlc- KUlti which \vou!il lio aocuretl and promoted by that liquiilutiun ; and the Brilifh Treasury niiglil ncgocialo a loon upon its own security in London ut little more than half the rate pnid at prcpciit by the Province. The benefits accruing to the Province from such a measure would he incalculable. The public works in progress might be complclod and n'adc productive; all doubts [..■spccting the inlenlions of the Mother Country would bo removed ; and when pcocc was rcptorcil, the immigration of men of pro|)crty to Upper Canada would ror^inmcnce instead of contributing to swell the re- sources of a foreign and nn unfriendly country. Nor ■liould we then see, ns now, the labouring population of the Province drawn into the United Slates, lo be there employed widi money raised in England. My Lord, I have good reason lo know that many thousands of Her Majesty's subjects have merely pass- ed through this Province, and crossed into iho United States, because English capital, which was to nllbrd them the means of profitable employment, was to be found there instead of here. AVbilc such is the case, it is unjust to eulogize the United States, as being so excellent a market for Brilish manufacturer ; for, were tJic facts reversed, in proportion as we bad ]3ritish ca- pital, so should wo employ it profitably to ourtelvcs and to the advantage of those investing it. By means Kuch as these, the country would rapidly increase in value and importance lo England, and perhaps at come future period prevent the loss of the American trade from being fell, when by the employment of Brilish capital and British nrtiitnnH the United States shall have IxKsn enabled to cslablibii rival manufactories within her own territory. To be cntctual, such a measure of relief as is hero suggested, fboiild, in my opinion, be immcdialc ; for if it be delayed until the general settlement of other mat- lera relating lo the Colonies, ihe time I fear will be gone by when its application would prove most salutary. The payment of one or two years' interest from the capital advanced would not, 1 trust, be considered suf- ficiently objectionable lo warrant the rejection of a plan whereby so much good may be accomplisl ed ; and I can assure Your Lordship that by causing it lo he jiromptly and dceidcilly carried into elVect, Her Majesty's dovernment would ac(|uire the lasting grati- tude of a whole people, whose happiness and prospe- rity they would have been, in such case, so instrumental in promoting. I have been the more induced to enter into these details iii proportioti as I havi- become sensible of the importance of the matter lo which they have reference. Anlieipating a stormy and iinKitisfactory session, scarcely any thir'g could give me greater satisfaction, when I meet the Legislature, than the power to qlTer from Her Majesty's Government the great lioon lo Upper Canada which I have here ventured lo solicit on her behalf. By granting it, many of my dilTiculties would be materially overcome, and whilst llius affording to llic community so great an earnest of Ihe desire of Her Majesty's Govci nment, to promote as well their pre- sent, as their future welfare, 1 should look forward with confidence to the speedy restoration of public tranquillity and security. I have, C;'-., (Signed) GEO. ARTHUR. The Rieht Honourable The Lord Glenelg, Su:. &c. &c. Enclosure No. I. Despatch No. 01. 2«:h November, 1838. Copy. Sin: Rtctiver GtneraPi Offirt, Toronto, 31st July, 1H38. I have the honor lo enclose lo you a letter, dated the Uth June, from Messrs. Baring, Brotliers, &. Co., just received by me, for the pirliculur informa- tion of His Excellency iliu Lietenant (lovernori and lieg leave lo state that dieir comiuuiiiration, dattid ihu 2llth October last, was transmitted by mc lo the Govern- ment hero en its receipt. 1 have the honor, Sic., (Signed) JOHN H. DUNN, Receiver General. The Honomblo John MacAvlat, Private Secretttry, JfC., 6fc., Si'C. Copy. Sir: Lmdon, Uth June, 1S38. Wo have been duly favored with your esteemed letters of 7, 20 March, 3 April, and I ulti- mo, the tormer advising your dral'ts, together XH>,()1)0, Nos. 19!) a 2u4, on account of the Government, which we enter accordingly. By the two la.-t you inform us of a fresii issue of Debentures to the amount of JC5,000 and £10,000, the Nos. &,c. of which arc duly noted. In referring you lo what wc had the honor of com- municating to you in our Ictlcr ol' 'JOtli October last, (of which we enclose copy, as you do not seem lo have acknowledged receipt) with regard lo Ihe sale of Bonds with you which do not pass through our hands, but have die dividend warrants made payable nt our counting house, we must again repeat our objections to tliat course, which we believe to l)c as prejudicial lo the interests and credit of the Colonial (JovcrnmenI, as it is contrary lo our system and European usage. On our part wo object to having our names inserted on Stock, the issue of which has not bad our previous knowledge and consent. AVe have every confidence in Ihe resources and good government of tlio Province of Upper Canada, but wc do not wish our names to be connected widi loans of which neither the amount nor the periods of negotiation are previously communicated to us. On the other hand the credit of Ihe Government is injured by parcels of Bonds finding their way to Ibis market (where they m\ist all ultimately come) through dilferent channels and being ofl'ercd by dillercn' pailics whilst Ihe public is not officially informed whether any and what limit is lo be put to this irregular system of borrowing. The interest of the Province is likewise injured, because the sale of these casual parcels inter- feres with Iho realiKntloii of wliat wc bold for Ihe Govt., depresses the price and discourages buyers. We are convinced that by adopting a moro regular svslem for these operations, the finances of Ihe Provinces would lie materially benefited ; but should you. Sir, and Iho Govt, continue lo think dilfcrently, wc must most res- pectfully repeat that we Ix-g the name of our house may not lie inserted in Ihe clividend warrants of any Bonds that are not sold to us or through us. We have, &c. (Signed) BARING, BROTHERS, & Co The Hon. J. H. DtJNN, H. Af. Rec'r General, Toronto, Upper Canada. Despatch and Documents, Copy. Triplieaia. Original pr. " St. JamM." London, 20ili Odobtr, 1837. Smt Tho preceding ii a copy of Iho letter we had tho honour to address you on tho 14th inst., which vm confirm, and would now beg further to remark in ru!ipect of tho unsigned dividend warrants therein men- lionod, that as tho Bonds hava not pasHcd through our hands and tvo have received no particulars from you bv whicli wo could determine the genuineness of the Cfoupons, wc cannot uoniiider ourselves liable for the amount of any forged unrs wo may pay. Wo shall of course use our I>e8t discretion in paying the dividends. Still as the warrants have nu mark on them tu surve as a guide to us, it will bo inipoitsihlo fur us to discover thodo of a fictitious chnracier. We hope Ihot no loss will result in consequence of the irregulority above mentioned, but shoiiVl iie case prove otherwise we feel that it cannot proceed from any inattention on our part, ond we have therefore thought it right to prevent any misunderstanding between us to trouble you with thcso observations on Uio lulijcct. We have, &c. P. S. Since writing what precedes we have receiv- ed a letter from Messrs, Bosanquct & Co. of which the annexed is copy, and we likewise annex a copy uf our reply for your Government. You will perceive that much dilBculty will bo experienced in the disposal of tho Bonds in our Market, in consequence of tliuir not having as is usual in such cases passed through our hands, or any information furnished by you to enable us to answer enquiries from the holders of tho Bonds ns to the nuthentici'y of the signntiirpsatlnrhe'l to them. We regret the irregularity which has arisen on your side in the issuing of said Bonds, and wc ho|io you will be enabled, on receipt of this, to devise some plan regarding them, as will have the effect of removing the feeling which exists against them at this moment on tho part of our Stock dealers. It has heretofore been our custom to havo the negotiation of loans, when tho dividends on which are made payable at our Counting House, and as this is the system generally pursued in this country, we must beg respectfully to decline paying any of the dividends on any future issues on debentures unless they am passed through our hands in the usual way. The Hon. J. H. DCNM, H. M. Rec'r General, Toronto, Upper Canada. Enclosure JSo. 2. Despatch No. 91. 20th November, 1838. Copy. Sir: EscBivEu Gbhebal'b Officb, Toronto, 8th August, 1S3S. In reply to your communication of the 6th inst. I have the honour to report to you for the infor- mation of His Excellency the Lieutenant Governor, that during my absence in England lost year, His Excellency Sir Francis Head directed the gentleman performing my dut;- to dispose of to each of Uie Banks the undermentioned sums in debentures amounting together to £138,650 sterling, and to make them pay- able, together with the interest, at Messrs. Baring, Brothers, & Company of London. This was a depar- ture from the usual course whicli had been adopted by me and it appcan to be objected to hj Mettra. Boring and Company. I suppose that Messrs. Baring, who contracted with the Government through me for the ■um of X20(i,0(iO sterling at the rate of 10s. premium fur each £100 sterling, hold, or their friends hold, a largo portion of these debentures, and may desire tii dispow of then;, and as long ■• dabontures are sold here to parties and tianxmilled to England to vnrlom agents who have no interest in tho transaction but to realize the sale of tho debentures and expose them to sale, and perhaps at improi)er periods of the more* market, will hove tho natural effect of depreciating such Stock. When contracts for loans of money ore mode in the City uf London, tho purchuiier with whom tho contract is made, feels interested in keeping up and supporting the credit of such slock, but when sold in thiti Province, and fallen into promiscuous hands in London to bo realized for as much as it will bring in that Metropolis, it will and must have an injurious tendency on the credit of the Province. Messrs. Daring, Brothers & Co. are made the agents for paying dividends on the Debentures without their sanction, and whilst their house appears on the fare of thcso Debentures, I am not 8urpriim iil Home house or firm in tbc City of Lon- don, i:n I I am not nwnre or atri I aulhoriKod by any to olfer their services to the Government of tipper Canada for fiuch an nridertakiiig. It ap|)ears by Messrs. Baring Brothers Si Co.'s letter, under dnlo the 14th June hict, timt thev decline being made Agents for Debentures sold in L'pper Canada under these circumstances; and it appears to mo that the Government cannot issue any moro until Messrs. Baring's permission Ikj obtained or some arrang.'nient can be made with sonic other house in London to act as Agents in tlkve transactions, which will reipiire a full and complete investigation into the finances of the Province before I could expect to obtain the consent of an Agent. I lament to observe that I can see no way by which money can be procunid for the public works until Messrs. Barings either consent to permit their house to be the Agents or some other Agent be appointed, which will take time; and as it is now late in the season, perhaps the Legislature will ilevise other re- sources for meeting the demands of the Province. I have, &c., • (Signed) JOHN H. DUNN, P. S, — The enclosures above referred to, with Report of the Honorable Executive Council, are returned herewith. The Honorable John Mac AuLAT, . ' . " i Civil Secrelary, - ' I •■ Enclosure, No. 4. Despatch, No. 91. 20/A November, 1838. Copy Executive Cmincil Chamber at Toronto, Tbursdiiy, Olh August, 1833. PRESENT : The. Hon. RonRRT Balowin Sullivan, Pre- siding Councillor. " William Allan. '• Aiioirs-nis Baldwin. " John Elmslky. " William llK^nv Dhapkb. '/b Hi'f Eteelleney air OunMom Aithvb, K.C.II., LieuttiuiiU-iSuvtmor ofih* Province of Upper Caeada, ami MtLJor.detterml eommamliiig Itrr Majflj/'i t'orieithtreim, ^. J^. ^. Mporl, a* to the injiirioui tendency of fiircinx n nogolialion of loan* under unfavorable circiimslanceti in the money market, and of neKoti- aling tlicso loan*, without the knowledge of Ibc aijunti by whom the inlorvit had to be paid, or of Iho negoliiilion of loans nt any depreciation In the injury of iho holder* of Debenture* furincrly isiued. The Execiilive Council fuel bound, however, lo itatn circuinstancea which appeared of paramount nnccssily, mid which will, it ia hoped, oxcurou>< extent, by ihe aioppage of the public works, uitHer. taken under act* of Parliament previously passed. Advices from England continued to be discotir. aging; and from these it appeared that there w.is no prospect of the immediate sale of Debenturci. in the London market, where American securities appeared to be peculiarly unacceptable. The house of Thomas Wilson d: Co. *u8pendpd. It was represented to the Government, that ex- tensive losses would accrue from the decay of the works undertaken, and from the breach of contracts with the undertakers of public works and delay in their accomplishment. The Provincial Parliament wa« specially sum- moned lo deviie measure* to meet the crisis which had arrived. One of the measures of relief adopted was, giving authority to the Government to issue Debentures payable in London in lieu of those payable in the Province found to be unsaleable. Tho House of Assembly adopted this measure in anticipntion of the Debenture4 being purchased bv the Bank* in thi* Province, who might uae them in raising funds in London, cither by way ofiajenr by adding their own credit lo thai of the Govern, ment, and thus obtaining advances. \ Despatch and Documonts, 'Die Aoi wat lo drawn ai not (n lonva it in Ilia pnwar of lliu (•iivorninuni lo •nil D^bcnltirei under (•iir : lliii wni in ciinrnrinity willi nil (lie ullier Acli iMillioriiinK lliu iinKnIiiiliiin ul InHtii, 'I'lio biilanueii in lliu liaiidi of Meiiri. Wilaon nnd ('uni|iiiny ii|i|iniiri)d lo !ie in Jeopardy, and llio Gov. crnnioiil i.-uiild nut liikn llio rcJtixinaibilily Mfai-nding l.ir|{i) nmouiiln of public icciiritie* tu ^gunl* in Loii. •t»n. Il'ilioy woro id tcnl, it did not nppcnr pridinlilo iliul tliuy could bo snM nl piir, nnd lliaivfuro tlio Mundiiilt llii'in iii n nii'iiim ul' iiniiiodiulo ruliuC would iKit liiivu tliu doiircd clluct of ({iving iinnicdiutnly iiv.iilablo fundii. Ily a inio lo llio liiinki in llio Provincv, tlicso lundo bucuino iniinediairly nvailulilu. It wiis iiueoiiiry In niimc sonnt liniiso in L'indon III which llio dividundi on llie Dubcniurvi ahould bo liinde nnyulilo. lliiiicr the prciiuro of thcnc circuinalancea, the Council mod roluclnnily aniRtilcd In tlio iiilo o{ Diibcnturc* in the Province, nrd, iil the time, tt did not uppt'iir tliiit tlio lliinkii entered into the IninsnC' linn without unniidcinblu rink ; nw it'drpreciiili'in in Anierinnn Hucuritiun bud i-onlinucd In incruniic, ihey niuit bnvo been lovcro loHcm, notwitlistiindiiig lliuir l^nln by the iv.vcliiiii{;i>, Tlio Cuiinrll weru under the full iinprension that llio tninsiiciinn would hiivo been immi'diulely ox. ploincd to iMeasra. Harin<; iSc Co., und tlicir uppniviil under the circuinalnnces olilnined, which they regret extremely wiia, however, not prnniplly dono. After the return of tlio Ui^ceiver (iencnil In iho Province, upon bis rcporliiig I'uvoriibly ofthe pcrf'i'ct ntnbility oi'llio lluufie of Aloiiarii. Itiirin;;, uiid upon Ilia Hlulotnont lliiit ho was bo well aaaured of thn Debcnlurca bcini{ aaluiiblo in L'lndun, n furilier sunt (ir£0(),OUO wna tninaniiticd lo that House for sali'. It iippeiira, however, thnt to thia day they uro gnlcnble at pnr according to Inw. Thu cxpendiiuro whicii theao Dcbenlurea wcro nxpectcd triMl iia In priiveiit the iicj^ntlulinn nf now liiaiM in llm bnat pr.iciicnble niiiniiiT, should llip ni'ci'asiilei oftliii Province or the public iiitervsta require aiinli n nKsmure. It ia dun to the ilonnrnbln Meaars. Allan and Draper lo any they were iibaent wlii-n Ihe first sum of DttlxMiiiirua were aolil lo llie Dnnka, nnd tlint Iheri'riirn they ciinnnt be held liiblo to nny ccnsuru which mny bu hi'lil to allncli to the tninauction. All which is reapcclfully subiniltcd, (Signed) U. B. SULLIVAN, . i: c. Copy of Despatch from Lord Ghnelg in Jinsicer to the forrgoiiig. Copy. No. 203. DnwMMi .SriirKT, Slal Juimury, 18.19. Sin: I have rccoived, nnd have Inid hrfore my eollenjiuna, ymir I)i'sp:ilcli of tlio 'JDili Novimibor liisl. ;No. 01, i-xplniniiii; 'I"' pr''»' nl liiiniiriul alato of Uppi'r (-'aniiilii, nml iifl'(Miii(j various siiiigcsiions by which llio existing dilTKMilliua may ii. your opinion bo overcome. 'I'lio iin|iorl:inc(' of ihia Bnbjnct, nnd tho manner in which you have hroiii;lil it under our notice, have commiiiidcd our iiiosl acrinus attention. Yiiu prnpoao in the first place thai, under existing rirciimsiances, you xlioulil ho peniititrd so far to depart from my circular inslriictiona of .'list August, IS.'HI, ns lo assent to nny bill which may bo pre- scnied to xoii *■ having for its object lo allow the " Receiver General to issue, on the credit of Ihe "Government, bill;i or nolijs pnynblo in Toronto at " twelve motitha after date to the extent of J5100,. " out), lo bo used ns a circulating medium, and made " chnrgpiible on the prospective revenue of tho pio. " vince." This, however, you doacribo as a mere temporary expedient ; nnd you express your opinion, thnt the iasue of Government paper not convertible into spe- cie, is dctrimenlul lo the credit of the province : and unless there were a prospect of financial relief, founded on a sound and simple basis, no good result could be looked for from it. That <■ sound and simple basis" you subsequently explain to be the developemcnt of the resources of the country by an emigration on a large scale, " directly facilitated as a great national measure ;" with the consequent in- flux of British capital, and Ihe restoration of eenfi. dence in the security of Ihe connection between the provincu nnd (treat Britain — the annexation to Up- per Canada of a sea. port, and the increase of the import duties — and lastly, Ihe raising of ii loan in this country on Ihe gunranteo nf the Imperial reve. nues to pay ofT Ihe provincial debt. By the imme- diate adoption of such measures you consider that the difliculiies in which the province is now involved mny be eiTentually removed. With respect to your first proposition, I must observe that the restriction ■■^\ Relating to the Finances of the Province. ■T-\ •■■J. impowiil on the Lleulenint novernor of Upper Ca. nida in rrgHrd lo mnnoy bill* by my circular dei. pkleh of 3lil of Augu«t, Ifl30, wui conditionally withdrawn by my dei|iiitch to yoiiri«irof 98lh D«g. 1497. 8<> fur na thai iniiriiction ia euneerned, you are Ihsrcfuni frna to act on your own ditcretinn in accepting or tK>etyi\na, ony kill which may b« nrO' aented lu you by Iho Lpginlmure fur ihn iiiun of pa. per money, lint boforo llvr Mnjvity'i (lovcrnment could ||ivn iheir oxpreai previoni aiuKMiiin to >\ niea* aura auch ni voii conloinplutn, Ihoy would require much mora detniled inliirmution reipecting it than itcontiiincil in your prcaont dcapiilch. I proceed to notice ilin poiiiti on which that inlunnation ia po. Oulinrly diifvciivo. You auggoit Ihnt the contrmplaled notea ahoulJ be uaed u« » " Circulaiing Medium." You do not however alnln in what auma they ore to be iiiued, in what niiinnnr iho iaiue ia to mndo, wholhor in pnytnont I'ur provincial ongagemonla and diHhurio. mcnia, or U|iihi unruritiea, or through the B.iiiki ; m>r whellitr it ia dvaigni'd tu cunatilulo ihcm n legal lender for riohia. I nuod not point out the eaaonliul difTurenco hi'twncn n loan miiJe on piihlio aocurily by Iho iiiauo ol* Hialo Ronda, nnd a crralion of paper money inconvertible into coin, but which ia to be for. e,ed into circulation with paper convertible into ailver. The (irat plan only givca to ciipitulial* a meana of tnvealmeni, lomponiry or perm.iticnt, and at thn aome limo iifTinla to the aiale the uan of the capital lent. Tliu aiirood plan incrcasoi the whole circu- lation by an isaue wliiuli cannot pna«ibly circulate nl par with n piipor bearing an intrinvic value ; nnd itiuat tlicrcfiiru, if tniide u legal lender, drive out of Ihe Provincn u rerliiin amount of the ailver now there, oithi^r in cirrululion, in the DiUik*, or in tho Military Cliey an inaue of inconvertible Gov- ernment notea, unleaa there be a surplus revenue or a state of public credit thai juatifiea the expenditure. Under theao circuinstancea it appear* to Her Ma> taaty'a Government thai th* prop«r eoura* weald le, after ascertaining the txiating dtlletl in the Revanue, to procure an enantment rtvokinn in Ihe flrat place thn law which prohiliita Ihe raising of toana in Lond'm on leas favourable terma than *i pur, bearing & per cent, intereal, and authorising Ihe negotiation of a loan in London to Ihe amount of the deficit in the revenue, and no further, on Ihe moat favourable terms which can be procured under Iho sanction and with tho naaisiance of Her Majea. ly's Uovernineiit, but secured on Ihe revenues of the Province. If auoh a measure should be adopted you would, in reporting it to me, transmit fur the information of lUr Majesty's Oovernnient a atal*. ment allowing the ox ict amount of the Revenuea and Kxpcndituru of Upper Canada with auch eipla. naliona ns might appear to you neeeasary. In roapnct to your propoaal for the direct eneour. agomcnt of einigMtinu to Upper Canada, and Ihe annexation 10 the Province of a aea-pori, I refrain III present from entering into any detailed explana* lion. The latter of those proposiliuna could of courae only bo cfTecied through Ihe intervention of Parliament ; and until the plan of Her Majeaty'a Miniaters for Ihn future government of Canada ahall have been laid before P.irliament, it would bo obvi. oiialy inconvenient to i-nlor into a diacuasion on iso- lated poriinna of it. Dut I beg to aaaure you that neither of ihnae subjocts have escaped our attentive coniiideratiun. Lastly, you propose that Her .Majesly'a Govern- ment shoiilil, on ihu security of the Briiiah Treasury, ruiae n lonii in Kngiand to pay olf Ihe whole debt of Upper ('nnnila. The amount of thia debt ia not leas than jE1,I2.'i,000, of which the greater part haa been incurred, not at Ihe siiggealion of Iho local Government, nor with thu knowledge of the Seere. tnry of i^iato, or the Lorda Cominiaaionera of Ihe Treaaury, but by tho authority of the Colonial Le- gialaiiiro fur public works and local improvement*. Ilcr Miijeaty'a Guvornmenl can diacover no ground on which lliey could pnipoao to Parlininent to throw on ihia coiMiiry ili» burthen thua incurred by Upper Canada. At uli ovnnta they would feol it inipossi. bio to hold out any proapoct of this naturo ul the present ninmont, when tlio general ofluirs of both Ihu Canndita are engaging iheir surious deliberation, and moat ahortly bo submitted fur the consideration of Parliament. I have the honor, ttc. (Signed) GLENELG, Major General Sir Gro. Artiidb, K. C. H., &e. 0(c. dec. «-n^ / rt •fl \ B o W i » i ii ijWN--