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Las diagrammes suivsnts liiufttrsnt la mAthods. 1 2 3 1 2 8 . 4 8 6 -ffi *"'**'SiiL- ^^ / V ": r- y MEMORANDTJM ON iax# THE COMMERCIAL PLATIONS, ^, ^PAST AND PRESENT, OF ill BfflflSB HORTH AMffllCAN Wmm wrrti THE UNITED STATES OF AMERICA. x»<-^'ii! *V"*1 m^^ V* ^""^ ' X': .& MEMORANDUM ON THE Commtrcial liclations, past and present^ of the British North American Provinces with the United Stats of America. PA ¥*^.> ■,■ i The undersigned, Joint PlenipoteutiarietJ of Her Britannic Majesty, with full powers for the negotiation and conclu- sion of a Treaty with the United States relative to Fisheries, Oorninerce and Navigation, deem it fitting that, at the out- set of the negotiations with which they have been charged, they should submit for the consideration of the Secretary of Stsite some suggestions in regard to the commercial relations between the United State:^ and the Canadian Dominion, which may not be unworthy of attention. All the figures used in this memorandum are taken from the oflUcial documents of the United States Government, except when otherwise stated. Wlien the British North American Provinces or Canada are spoken of, all the Provinces now composing the Do- minion, and also the Island of Newfoundland, are included therein. An impartial examination of the commercial relations that have existed between the United States and the British North American Provinces for the last fifty years, cannot fail to establish, we venture to think, beyond all doubt, that the traffic between them has been exceedingly valu- able to both countries, but that the United States have, i 2 from first to last, reaped greatly the largest advantage from it. . In the twelve years from 1821 to 1832 (both years inclu- sive) the United States official records show that tlie ex- ports of the United States to the British North American Provinces were of the aggregate value: In home products, of- - $30,907,417 In foreign products, of- 403,909 Total United States exports-- $31,401,326 And that -the entire imports of the United States in the same period from the Provinces were but - 7,684,559 Leaving a balance of trade in favor of the United States of no less than $23,716,767 In the thirteen years following the above period, (1833 to 1845,) the same state of things is found, with a steady increase of the aggregate traffic. The exports of the Re- public to the British North American Provinces were: Of domestic products - $54,082,537 Of foreign products - 4,640,332 Total United States exports (1833 to 1845)- $58,722,869 And the imports of the Republic from the Provinces were but 23,356,275 Leaving a balance in favor of the United States of-—-- - $35,366,594 TRANSPORTATION IN BOND. In 1846 we enter upon a period when the United States Government, after very many years of earnest effi)rt, suc- ceeded in obtaining from Great Britain a relaxation of the old restrictiv e navigation laws in regard to the British Colonies. With it came the international drawback system for the encouragement of overland transportation to and from the Atlantic Ocean without payment of duties. Although this 8 niejiHiire only extended to tlie transport of merchandise, it is instructive to observe the immediate and remarkable efloft it had on the direct transactions between the Repub- lic and the Colonies. The iiggreijate imports and exports between the countries immediately rose from 88,074,291, in the year 1845, to tlie following figures: 1846. Aggregate import and export trade... $9,344,150 1847. " " " --- 10,329,470 1848. *' " — 12,029,122 1849. " " .__ 10,931,147 1850. " " -.- 15,193,497 1851. '' " -- 18,708,045 1852. " " ... 16,619.315 1853. " " ... 20,691,360 Total - $113,846,106 Thus, while from 1821 to 1832 the aggregate annual traffic betw^een the countries averaged $3,257,153, and from 1833 to 1845, $6,313,780 per annum— under the intlu- enco of a more liberal policj- the traffic rose, from 1846 to 1853, to no less an average than $14,230,763 per annum. And the balance of trade still preponderated enormously to the advantau^e of the United States. In these eijjht years the Republic exported to the Provinces — Of home products-- $55,072,260 Of foreign products -.- 22,020,254 Total United States exports (1846 to 1853)- 77,092,514 While the imports of the Republic from the rroviuces were but 36,753,592 Leaving in favor of the United States, on eight years' transactions, the vast balance of $40,338,822 But, in addition to this direct interchange of merchan- dise, with its great preponderance in favor of the Republic, a large amount of the import and export traffic between Great Britain and the Provinces now began to be carried in bond over the canals and railways of the United States :i to Atlantic or inland ports, and thence dispatched to their ultimate destinations in American ships und steamers — vastly to the gain of the Republic, and without any cor- responding advantage to the Provinces. THE RECIPROCITY TREATY. Tlie great success that thus attended this first partial experiment of reciprocal libenility in commercial inter- course between the two countries, led directly and easily to proposals for the much more decided measure of an iu- i;erchange of the natural products of the two countries free •of custom 8- duty. For a number of years the subject was keeuiy debated in all its bearings; and it is instructive to ^look back on the record of those discussions, and observe tthe long list of distinguished American statesmen who ^were warm advocates of the measure. The Reciprocity Treaty of 1854 was signed on 5th June of tthat year, by Mr. Marcy, on behalf of the United States, and iby the late Lord Elgin, as representative of Great Britain. Its happy effects were feit instantaneously; and it is only necessary to refer to the speeches and papers of the able men of all parties in both countries who promoted the measure, and to analyze the official returns of its operation while in force, to arrive irresistibly at the conclusion that its results greatly surpassed the most sanguine anticipa- tions of its originators and advocates. The Treaty may be said to have been thirteen years in •operation; for though nominally it betran late iu 1854 and ended early in 1866, the traffic was pushed with such en- •ergy during the months of its operation in these two years, as to place them on an equality ,vith the other years. To obtain a just appreciation of the value of the traffic between the Republic and the Provinces during the thir- teen years' operation of the Treaty, it is necessary to keep in mind that the Civil War in the States in the last four years of the Treaty's existence enhanced the value of com- modities, and so deranged the industrial interests of the Republic as to give the Provinces a temporary advantage in the traffic, forbidding any fair deduction from it as to the ordinary course of trade in times of peace. In one year (1866-'66) at the end of the war the exports of British North America to the United States rose, according to the United States Official Records, to $64,714,383. However profitable this casual advantage may have been to the Provinces, it can hardly be regarded as an objection to the Treaty tliat in time of war, when the American hus- bandman was debarred from tilling his fields, the necessi- ties of life were largely supplied under it without the addi- tion of onerous custome-duties and custom-house restric- tions. Assuredly, had the Treaty not then been in exist- ence, every ton of these supplies, under the pressing urgency of the case, would have found its way across the lines, probably with little reduction of profit to the pro- ducer, but gi'eat increase of cost to the consumer. The grand fact remains that, under the operation of the reciprocity treaty of 1854, the aggregate interchange of commodities between the Republic and the Provinces — to promote which the treaty was concluded — rose from an an- nual average of $14,230,763 in the previous eight years, to $33,492,754, gold currency, in the first year of its exist- ence; to $4?, 942,754, gold currency, in the second year of its existence; to $50,339,770, gold, in its third year; and to no less a sura than $84,070,955, at war prices, in its thirteenth year. And notwithstanding the anomalous character of the cir- cumatiinces arising from the existence of Civil War during so considerable a portion of the Treaty's existence, by which the imports from the Provinces were greatly increased in volume and value, and the exports to the Provinces as naturally reduced in quantity, the balance of trade, during the existence of the treaty, was largely in favor of the United Stat'^s In the thirteen years of its operation, the Provinces purchased from the Republic commodities, according to the United States returns, to the value of $346,180,264, and the Republic purchased from the Provinces $325,726,520, leaving a gross cash balance in favor of the United States 6 of ^20,454,240. But the balance Wfts in tuct much h\r;y China, I'.ra/il, Italy, Hayti, liiissia and her possi-ssicns, Venezuela, Austria, the Ari,^entine liupuhlie, Denmark and her possessions, Turkey, I'ortupil and Insr possi-ssioiis, the Sand\vi,855 Miscellaneous - --- 24,044,077 Total home productions $271,940,988 Foreign commodities bought from the mer- chants of the United States and imported into Canada - 62,379,718 Total purchases $334,320,706 From this it will be seen that not less than $151,029,573 of manufactured goods were purchased from the United States by the Provinces under the operation of the Recipro- city Treaty. 8 TRANSPORTATION TRAFPIO DIDDER THE TREATY. Did nothing more, thereforf;, than the volume of traffic between the countries and tho comparative contributions of each country to it, enter into the question of the relative advantages derived from the Trerty by each, no doubt could exist as to the United States having reaped much greater profit from the Treaty of 1864 than the Provincts. But there is another very important branch of the account. The transportation traffic sent to and brought from foreign countries by the Provinces, in bond, over the railways and canals, and in the ocean ships and steamers trading from United States ports, rose under the operation of the Treaty to an importance secondary only to the traffic in domestic productions. Previous to the negotiation of the Treaty this traffic had assumed considerable dimensions; but the vast increase that occurred under its operation must have drawn very large gains into tha cotfers of the Republic, and indi- rect advantages quite as valuable as the direct ones. No official returns of the goods thus passed over the United States seeius to havo been preserved until the fiscal year 1867-'68; but from the Returns since published we can form some idea of the great profit that must have accrued to the Republic while the Treaty was in force. These Returns thus state the values of the foreign exports that passed over the United States in transitu during the past six years: 1868. Total' United States transit traffic |!21, 515,604 1869. « " 21,095,984 1870 « « ... 23,191,860 1871. " " — .-.. 25,375,037 l^n. « " 31,885,320 1873. " « 40,099,185 Total transit traffic — -4162,662,990 Of this vast traffic, $115,241,704 consisted of merchandise imported by the Provinces from other countries and car- ried over United States railways and canals into Canada; 9 and $48,556,557 of it coneisted of produce exported tibroad from the Provinces via the United States. The fact that these two ar:ount9 appear to make unitedly more than the whole aggregate of the United States iransit trade, arises from shipments made from one part of Canada to aiiotlior, and consequently appearing in the list of goods goinij^ into the Unit'jd States, a^i well as in that of goods sent out from tlie United States. Nearly tiie whole of the traffic in transitu of the Republic in these six years, was either sent from cr sent to the British Provinces. And from its volume in these recent years, vve may form some idea of its great extent under the ojieration of the treaty, when colonial facilities for transportation were po different from what they now are. The value of so vast a carrying trade is not ensy to arrive at. Dr, Young, the able chief c^ the United States Bureau of Statistics, recently stated that inward ocean freights on goods "vary from 100 per cent, on [the value of] salt and some other bulky articles, to two or three per cent, on dr?ss goods," and that the "average on merchan- dise alone is not much less than eight per cent." Now, if the ocean freigbt on ordinary merchandise is eight per cent, how greatly more must be the percentage of overland freights; and how infinitely greater must be the percentage on the value of farm jiroduce than on ordinary merchandise? If it ? further co.isidered that on the transit traffic to and from Canada, inland and ocean carriage have both to be paid for, and that a large proportion of the commodities are heav}' and bulky, it will at once be seen what a fertil- izing stream is poured by the merchants of the Dominion over the railways, canals, steamships, commission agents, and port cities of the Republic, even from the limited share of their traffic now sent via the United States, under a policy of severe restriction. SPECIAL PRIVILEGES UNDER THE TREATY. Nor was it merely from the vast interchange of commod- ities and the great carrying trade in bond that the United 10 States reaper! thoir golden annual harvest from the Treaty of 1854. It must not be forgotten that, by virtue of that Treaty, tha Canadian canals and the navigation of the St. Lawrence were thrown open to the ships and commerce of the United States, on [»recisely the same footing as to those of the Canaoian people, who had spent vast sums in their construction. How largely the Republic profited by this concession, the enormous amount of American merchan- dise passed through the Canadian canals in American bot- toms, at tolls so low as to do little more tlrui defray the cost of attendance and maintenance, the public records of both countries amply establish. The sole return made to the Provinces for this concession was the permission to navigate Lake Michigan, and the promise of the United States Government to urge upon the State Authorities of the Republic to extend to the Provinces the same free use of the American canals as they had extended to the Repub'ic. This promise never bore any fruit. THE ST. LAWRENCE COAST FISHERIES FREE UNDER THE TREATY. But the crowning concession enjoyed by the United States, under the conditions of the Reciprocity Treaty of 1854, was the free use of the priceless coast fisheries of British North America. For this concession the able statesmen who represented the thirteen States in the peace settlement at the close of the revolutionary war, struggled long and earnestly. To secure this much valued posses- sion, ail the skill of American diplomatists, persistently employed for three-quarters of a century, was exerted in vain. Un.ier the treaty o*" 1818, the right to the sea-fish- eries of the Gulf of St. Lawrence was resigned to the United States; but not until 1854, and then only as part of the Reciprocity Treaty, and terminable with it, did they ol>tain access to the most valuable portion of the fisheries, namely, those within three miles from the coast, bays and creeks of the Provinces. What the value was to the United State- of this concession it would not become us to discuss while an arbitration to determine the compensation to be h^ 11 paid Canada for twelve years' further enjoyment of it is pending, under the provisions of the Treaty of Washing- ton. But, iis ilhistrative of tlie enormous prepon(Un*ance of advantages reaped hy the United States under the Treaty of 1854, we may perhaps be [termitted to quote one or two extracts from the reports of two commissioners, specially appointed by the United States Goverrmient to incjuire and report on the subject of Reciprocity, as to the value of this one item in the balance of the international account: " W'lltiout iiarticipalion iu tlio spa-fiphnrios near the yhoros of tlie colonies, our i!<('|> t^ua-nshei (■?•, in lliat rogion will hecoint- valueless." /. D. Andrews' Ei'port, fiii.ye 35. " Eii^lauil |iossesso9 no nuraoiy for seamen at all equal to her North Americ'an colonial traile." Ihiil. " Till; avijrage numher of French seamen engaged in tho cod fishery [of the Gulf of St. Lawri-nceJ from 1841 to LS'iO was 11,500, and the average bounty paid iinnually was ;;,HOO,000 francs, (fV.SO.OOO,) equivalent to ^RY/o^.t for eacti seainiin. France iraina up in this manner ahle and hardy peamen for her. navy, who would cost the nation much more if they were trained on ships of "war." Ibtd. "The United Stntes tonnage engaged in 1862 in the cod fishery was 122,- 803 tons, in tiie niaekercl fishery, 80 59(1 tons: aggrej^^ate 203,459 tons. The returns of fish and oil from this tonnage for 1862 considerably exceeded $14,- 00'),000." E. 11. Derby, page 42. "Sranien (United States) in fisher is in 1862, 28,048. * * * The fish- eries break in at hiast 5,000 new seamen annually. ■* * * Six hundred sail have, in a single season, fished for mackerel in the Guif of St. Lawrence and Bay of Chaleur, and taken fish to the amount of |4,500,000. * * * Nearly une fourth of our fishing lleet, with a tonnage of 40,000 to 50,000 tone, worth' .•j;5,000,000 to $7,000,000 annually, fish near the three-mile line of the Frovince.s." Ihtd., p. 44. REPEAL OF THE TREATY. Such was the Treaty of 1854, whicli the United States terminated in 1866, on the ground that the advantages from it were all on the side of the Provinces, and against the Republic. Well might the Commissioner of the United States Treasury, (Mr. Derby,) writing regretfully of the repe.d, use these words: "It quintupled our trade with the Provinces, gave an impulse to public improvement, and utilized the new canald, railways, and other avenues of commerce." And he might as truly have added: "Had the Pro\inces retaliated in the same spirit, it would have lost us the enjoyment of the shore fisheries of the maritime provinces, the use of the Canadian canals, and the naviga- 12 tion of the St Lawrence river, all of which we enjoyed without consideratiot.." Fortunately the Provinces did not act in the same spirit. They thoroughly believed in the praer cent, of their entire commcrcG. But since tlie repeal the case is totally altered. The propor- tion of the furoig_ u « 0,727,000 180d-'9 * " " 1,208,440 1309-'70. « " 8,070,702 1870-'l. '' " 8,204,837 1871-2. " " 8.410,917 1872-'3! " " 11,134,956 •This sreat reduction, we assume, arose from the expeelatiouof the lowering of the duty on lumber, which went into force the following year. 16 And the prices of lumber go up in prompt sympathy with tlie increasing demand, for the benefit of the himber operators, who are in no need of sympathy in Canada, whatever they may be in the United States, but to the in- jury of numerous branches of industry in which wood forms an important element, and to the serious embar- rassment of agricultural operations on prairie and other lands. And so it is with fish, barley, peas, wool, hides, sheep, horses, and other articles of Canadian production, which cannot easily be got elsewhere. The den)and from tlie United States is good and constant, notwithstanding the custom-house barriers, and the prices keep steadily up. I 1 :i TRAFFIC DRIVEN FROM UNITED STATES CHANNELS. But in regard to wheat, flour, provisions, and other arti- cles of which the United States have a surplus as well as Canada, the effect of tie duties upon them has been to send through Canadian channels, direct to the maritime Provinces, the W est Indi' Islands and Great Britain, a vast amount of products that were formerly sold to New York and Boston houses, and shipped to these same markets through American channels. Where two countries along- side of eajh other have each a large annual surplus of the same arti«jle, and that article is in world-wide demand, heavy duties against each other can hardly be effective. The stuff will find its way to market by some route or other. CANADIANS NOW LARGE EXPORTERS OF WESTERN PRODUCTS. The change in the other side of the account is equally instructive. The imports of domestic productions t)f the United States (as distinguished from foreign productions) into Canada, in the four years previous to the abrogation of the Treaty averaged $28,131,802 annually; but on its abrogation they immediately fell to $20,548,704 in 1867; and though they have since gradually recovered, so that the imports of the last seven years have averaged $25,649,349 17 per amuim, this was duo, not to a demand for home con- Humpti(m, but to the increasing carrying trade of the Do- minion witli foreign countries. The necessity of direct intercourse with foreign markets for Canadian products, forced on Canadian merchants liy the repeal of the Treaty, led on to a considerable traffic with those markets in American domestic products; hence we find in the im- ports of Canada from the United States in the last four years, such items as the following: 1871-72. 1872-73. Meats— fresh, stilted and smoked, $1,047,272 $1,227,870 Swine-- 612,606 1,265,813 Flour and meal - - 2,604,644 2,505,581 Indian corn - - 3,778,256 4,360,854 Wheat- - - 4,450,404 6,894,247 $12,493,082 $16,254,365 Large portions of these articles were purchased for for- eign exportation, either in the raw state or after being manufactured in Canada. The general progress of this trade, though not consisting solely of American products, is pretty well indicated by the following oflScial returns: 1868. Exports of foreign goods $4,196,821 1869. " " " — 3,855,801 1870. " « " -— _-_ 6,527,622 1871. " " '■ — 9,853,033 1872. " « " .._. 12,744,125 1873. " »' " 9,405,910 Total in six years $46,583,312 The home consumption of American domestic products in the Canada market has therefore largely decreased since the repeal of the Reciprocity Treaty. BALANCE OF TRADE NOW LARGELY AGAINST THE REPUBLIC. But the most remarkable effect of the abrogation of the Reciprocity Treaty was the immediate change it produced 2 lit m 18 in the balance of tnub^ botween tbo countries. From the year 1820 up to 18CC, a term of fort^'-six years, there were only (according' to the United States lletiiniH) five years in whicli the innual transactions between the Kepublic and the Provinces did not show a large cash balance against the Provinces. But four of these five exceptions were merely the result of War prices and the overvalnation usual in Free-entries. The entire interchange of traffic, from 1820 to 1866 showed a cash balance in favor of the United States of $195,219,272. But this state of things came to a sudden end with the expiration of the Treaty; and the balances in favor of the Dominion have since been as follows: In 1866-'67 — - - $9,281,009 1867-'68 4,099,949 1868-'69 -- 7,893,082 1869-70 14,240,477 1870-71 -- - 2,921,625 1871-72 - - 8,202,352 1872-73 --- 5,236,514 Total balance against U. S. in seven years. $51,875,008 DIVERSION OF TRAFFIC FROM UNITED STATES OCEAN PORTS. There is still another feature of the changed relations between the countries well worthy of special note. The time was when the merchants of New York and Boston controlled a large pro})ortion of the import and export traffic of the British I'rovinces; but that time passed away with thelieciprocity Treaty. Customs-duties, custom-house restrictions and examinations, consnirt' certificates, and bonding entries and charges, with all i heir annoyances and delays, have acted severely against the traffic of these Ports in Canadian products, and the railways and canals leading from them, and forced the business into more northern channels. Mr. E. H. Derby, Special Commissioner of the Treasury, iu his official report to Mr. McCulloch of Ist January, 1866, 19 (pftsje 81,) niakoH this Htaleiuont: "Tlu^commorco of IJurtton aircctcd l>v the Reciprocity Treaty cxccfils $J7,0(M),()l)<) uii- mially, iiamuly: Imports froiu and cxiM»rts to the Maritime J'roviiuM'fl, :!?fj,000,00<); oiittit"! ami returiM in (li'cp-.sca ThIi- orioH, §11,000,000; imports of wool, L'raiii, and animals ar-ross the frontici- of (ri'i«^n j^oodrt and <^oodrt in trdiisitti^ heint^ |oG,G(5ti,3r»l), while that to Canada was $r)G,867,194. A continued analynis ot'tho United States oflitial Kelurns shovvrt that, while C^ainida in 1871-'2 thuH swt'lled the ex- port riales of the domestic and foreign grodu of the United States, and the carrying trade of tlieir ocean fleet and rail- ways and canals, to an equal extent witli the ahove twenty countries, the United States took that year from (^anada, in return hut 840,961,432, of which 34,614,502 was gold and silver, $1,180,790 goods of United States production returned to the States from Canada, and $691,299 etlects of immigrants passing through Canada into the United States. But, on the other hand, while the twenty countries ahove named took, as ahove stated, hut $56,603,359 of the export traffic of the United States, their import traffic inti» the United States was no less than $108,377,613 — of which only $7,218,620 was gold. COMPARATIVE DUTIES IN THE UNITED STATES AND DOMINION. Again: of the entire purchases hy Canada from the United States in 1871-'72 of home and foreign products, (excluding the traffic in transita from the comparison,) arti- cles to the value of $20,710,532 were admitted /?'<;£! of duty , and only on $12,018,548 was any duty paid. The total amount of duty levied was $2,216,215, or an average per centage on Canaila's entire importations from the States (free and dutiable) of that year, of only 6f per cent. On the other hand, of the purchases by the United States from Canada in the same year, the articles admitted free of duty were to the value of but $9,329,881, and those subjected to duty $31,631,551. Indeed, as there were included among the free importations $4,619,502 of gold and silver coin and Ifil I P:' If I* \l 22 bullion, 91,180,790 of United States profliictions returned to the States, aiul 5^686,800 of effects of iminigr.ints passing through Canada into the States, — the free importations of merc>iandise from Canada by th(^ Jnited States were in reality but $2,842,789, against $31,631,555, on which cus- toms duties were levied to somewhere about 25 per cent, on the entire importations of the year. SAME FACTS DEMONSTRATED IN 1873. And the same state of things is found in the year ending 30th June, 1873. The declared value of the entire export trafHc of the United States with foreign countries was as follows: Of home products - 8049,132,503 Of foreign products - 28,149,511 Of foi'cign products passing in 'rans'du over tlu^ railways and canals of the States to fo'-eign countries 40,099,185 Total United States expo^ traffic 187?-'73, $706,949,259 Of this vast export traffic Great Britaiii and liev colonies received from the United States: Of home products $420,939,283 Of foreign products 18,639,171 Of foreign goods brouglit over the railways and canals of the States 33,071,529 472,049,983 Balance to the rest of the world $234,299,276 Of the above great amount of traffic taktunied from Canada to the States, and $729,985 effects of immigrants passing through Canada into the United States. The actual importation of Canadian merchandise was theretore but $35,708,392, while the twenty-two coun- tries above nam'^d, whoso share of the United States ex- port traffic of the year was but $64,901,145, including gold, or $52,593,830, excluding it, sent into the United States in the same year no less than $131,101,423, of which but $2,. 24 104,393 Wcas gold. The "balance of trade" for the years 1872-'3, therefore, was ^52,593,830 of export traffic from the United States into these twenty-two countries, and $128,997,030 of imports into the United States from them,— or $70,303,200 against the United States. And the contrast is even more marked when the United States eustoms-duties on Canadian products are compared with those on the products of other coi. 'tries whose com- merce is of infinitely less moment than that of Canada. In the year 1872-73, of the $35,708,392 of merchandise im- ported by the United States from Canada, only $4,334,285 was admitted free of dut ;•, and on the remaining amount of $31,374,107 duties were levied to somewhere about 25 per cent, on the entire importations from Canada of that year. Canada, on the other hand, on her importations from the United States tiie same year, admitted merchan- dise to the value of $22,016,690 entirely free of duty, and levied duties on only $16,555,866, to the amount of but $2,923,795, or 8| per cent, on the entire importations of merchandise for the year. How different was it with the twenty-two countries above named. Of their importations into the United States, $102,501,338 were received free of duty, and only on $29,200,085 was any duty charged. It is not for us to criticise in any way XAe manner in which the United States choose to impose tbeir duties. We merely mention these things to remind you of the disad- vantageous position Canada occupies in her transactions with the Republic, in comparison with that of other coun- tries whose transactions are not to be compared in extent or profit with those of the British Provinces. When, with , a these facts before them, Her Majesty's Advisers invite the Government of the United States to reconbider the whole commercial relations of the Republic and the Dominion, with a view to placing them on a friendly and durable basis of reciprocal advantage, the question 26 naturally presents itself, how it conies that, having pros- pered 80 well since the repeal of the Keciprocity Treaty of 1854, Canada now seeks for its restoration. The answer is as natural as the question. The population of the United States is forty millions, and that of the Dominion is but feur millions. The boundary between them is for the most part but a surveyor's line, often unknown even to those who live beside it; and it is of the utmost importaiice to Canada that common interests and mutual good will should exist between the countries. And what so conducive to this end as commftvcial intercourse, generously carried on and mutually profitable? The people of Canada are not ignorant that a market near at hand is better than a dis- tant one; and good as their present markets are, they would gladly have the old one in addition. They com- prehend the barrier that custom-house restrictions throw in the way even of the existing traffic; and they seek to have these withdrawn. They are proud of their own St. Lawrence route, and intend to improve it to the uttermost for the benefit of the great West and their own ; but would gladly use the Ocean Ports and other channels of commerce of the Republic, when freights and fares and friendly reci- procit}' draw them in that direction. And very great aa have been the advantages always accruing to the United States from reciprocity, the Canadians can find only cause of hearty rejoicing at that, so long as they themselves con- tinue to enjoy that moderate degree of prosperity with which Providence has blessed them. There is no mystery, no arriere pensce, in their desire that the commercial rela- tions of the Republic and the Dominion should be placed on the most kindly and unfettered and mutually advantage- ous basis consistent with their respective existing obliga- tions, and with that connection with Great Britain which the Dominion so happily enjoys. It was with these views, and in this spirit, that the Can- adian Administration availed itself of the opportunity presented by the twenty-second Article of the Treaty of Washington to represent to Iler Majesty's dovernmeut the 26 advantage that would accrue to both countries by the sub- stitution of a satisfactory Commercial Treaty in lieu of the money compensation to be paid (under arbitration) by the United states, for twelve years' enjoyment of the coast iisiieries of the Dominion. It was felt that if the large value placed by the Canadian people on their Fisheries were not reasonably compensated by the results of the ar- bitration, a feeling of dissatisfaction might be engendered in the Provinces, not conducive to international harmony; and that if, on the other hand, an award were made equal to the contidentanticipatit)n8of the Provinces, the good feeling restored in the United States by the Treaty of Washington might be sensibly impaired. To merge the i^atter in a general measure of mutual commercial co: ;e88ion, for the mutual advantage of both parties, and with injury or in- justice to neither, seemed the fitting conclusion to be ar. rived at by the Governments of 1\vo great nations. Her Majesty's Ministe "S were pleased to adopt the sug- gestion of the Canadian Government, and the matter having been brought under the attention of the Secretary of State, and through you. Sir, to the notice of the President of the United States, a friendly response was at once received, and the necessary measures instituted foi opening formal negotiations. In the interview which we had the honor to be favored with by you at the State Department, on the 28th March, we stated to you that lici- Majesty's Government was pre- pared to accept a renewal of the Reciprocity Treaty of 1854 as a substitute for the arbitration provision of the Washington Treaty, in reference to the Canadian Coast Fisheries. You thereupon suggested an enlargement of the scope of the Treaty, and we asked in what manner you would propose to enlarge it. You replied that you had no proposition to make, but that you suggestetl, as topics for discusslo'.v the enhwge- ment of the Canadian canals, so as to facilitate the trans- 27 but portation of tlie proilncts of the great AVostcrn States to the Atlantic seaboard; and also the addition of certain chisses of manufactures to the free list of the old Treaty. We then stated that we were prepared to enter into an agreement for the enlargement of the Canadian eanids. In regard to the addition of certain classes of manufac- tnres to the free list under the old treaty, we reminded you that the revenue of the Canadian Dominion was largely obtained from a fifteen-per-cent. ad valorcmdniy on manufactured goods, and that any articles made free in Canada under agreement with any foreign country must be made free to Groat Britain, But we added that the Government of Canada was desirous to aftbrd every facil- ity for the encouragement of extended commercial relations between the Republic and the Dominion, in the belief tliat nothing could tend more to their mutual advantage, not only in a pecuniary sense, but as tending to foster and strengthen those friendly feelings that ought eminently to prevail between two peoples mainly derived from the same origin, speaking the same language, and occupying the geographic position towards each other of the United States and Canada. We conveyed to you the assurance of the Canadian Government, that acting in this spirit, and in the confidence that we would be met in the same spirit by the Government of the Republic, the assent of Canada will be heartily given to any measure calculated to pro- mote the free and fair interchange of commodities, to re- duce the cost of transportation, or conduce to the joint ad- vantage of the two countries, so that it be not seriously prejudicial to existing industrial interests of the Canadian people. In the spirit of this assurance, we invited you to suggest for discussion the classes of manufactures that you would desire to have embraced in the new treaty. This you de- clined to do; but you urged that we should indicate the enlargements of the old Treaty likely to he acce[)table to both countries. Without acquiescing in the propriety of this course, we yielded to your wishes, an propose that during the continuance of the Treaty the coasting trade of Canada and of the United States shall be thrown oi)en to the vessels of botii countries on a foot- ing of (complete reciprocal equality. We propose that the Canadian canals, from Lake Erie to Montreal, b(i enlarged forthwith at the expense of Can- ada, so as to ailniit of the [)assiige of vessels 260 feet in length, witli 45 feet beam, witli a depth etpial to the capacity of till' lake harbors. Wf |iro[»ose that, during the continuance of tlie Treaty, all the Canadian canals and the Erie, Whitehall, SaultSte. Marie, and Lake St. Clair canals, in the United States, shall be thrown open to the vessels, boats, and barges of both count lies on the same terms and conditions to the citizens of both countries ; and that full power be given to tranship cargo from ships or steamers into canal-boats at any canal entrance, and also to tranship boats into ships or steamers at any canal outlet. 31 The free navigation of the St. Lawrence river having been conceded forever by Great Britain to the United States under the Washington Treaty, but the free naviga- tion of Lake Michigan having been conceded for ton years only by the United States to Great Britain under the same Treaty, we propose that both concessions be placed on the some footing, free from restrictions as to reporting at any port in tlie United States other than tlie port of destination. We propose that during the contininuice of the 1'reaty vessels of all kinds, built in the United States or Canada, may be owned and sailed by the citizens of the other, and be entitled to registry in either country, and to all the benefits thereto pertaining. We propose that a Joint Commission shall be formed, and continued during the operation of the Treaty, for deepon- ing and maintaining in thoroughly efficient condition the navigation of the rivers St. Clair and Detroit, and Lake St. Clair, on whichever side of the river the best cliannel shall be found; the expense to he defrayed jointly by the con- tracting parties, by contributions corresponding to the commerce carried on in these waters by them respectively. We propose that a Joint Commission shall be formed, at joint expense, a«d maintained during the operation of the new Treaty, for securing the erection and proper regulation of nil Liglit-houses on the great lakes common to both countries, necessary to the security of the shi[)pinir thereon. We propose that a Joint Commission shall be formed at joint expense,. and miiintained during the continuance of the Treaty, to promote the pro[»agation offish in the inland waters common to both countries, and to e?iforce tho laws enacted for the protection of the fish and fishing grounds. We propose that citizens of either country shall b(> en- titled, during the continuance of the Treaty, to take out Letters Patent for new discoveries in the other country, on the same footing as if they had been citizens of that coun- try. We propose that the best method of discountenancing and punishing illicit trade between the countries shall be ■T'W^'i 82 the subject of consideration and co-operation by the Cus- toms AirMiorities of the two countries. That in case a Treaty of Commercial Reciprocity should not have been conchided before the end of the present ses- sion of Congress, tlie right of adjudication of the chiim of Canada to compensation for the tisheries, under articles XXII to XXV of the Treaty of Washington, would 'n no degree be waived, and that in that event the fulfilment of the stipulation contained in those articles would be imme- diately proceeded with. Wasiiinuton, D. C, 27 April, 1874. (Signed) EDWARD THORNTON, GEO. BROWN. m ^ ^i^ . i ^