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'I'liP M inijitcr nf Kinaiicc liiis liml liU attention called to an enquiry in th« Iloun' (if (,'oui- 
 nionH, whi'tlKT tlic (iovcnior (ieiicrnl han apjirovod of a " lleconiniendalion of (.'ouncil, that 
 '• luoni'V TitUt'd under the Imperial (iuarantoc. for the construction of the Intercolonial Kail- 
 
 ■ way, nhould be apjilied to the payment of the general debts of the Canadian Uouiinion, and 
 •• whether Mich applioation i> not in contravention of the Canailiao Railway Loan Act, lHtl7, " 
 and he thinks it proper to eall Your Exeelleney n attontion to the oireuniKtanee In order 
 that the imputation which is impliedly made on the fiood faith of the Goveiiimeiit may be 
 promptly repelled. 
 
 1st. The Act of TnioM provided that. •' it shall be the duty of the fiovertnncnf and 
 
 ■ Parliament of Canada, to provide for the eomuiencement. within Az months after the 
 •• T'niou. of a Railway eonnectiufj the J{iver St. Lawrence with the City of llalifa.^. in Nova 
 
 ■ Scotia, and for the eonstruotion thereof without intermission, and the eomplction thereof 
 • with all practicable speed. ' 
 
 The (iouiiiment felt it to be their duly to carry out this provision of the Constitution 
 with all jiossible dili^'ence. \ ^reat portion of the route had been so far surveyed in former 
 years that it was believed it could be placed under contract in the course of last summer or 
 .'lutumn. 
 
 ■J. It wa>. however, noeessiiry. liellire doing this, to place the l,oan ; and the I'inanco 
 -Minister, in the course „? his nc^'citiations with the Imiierial (iovernmonf, in July, 181)8. 
 intimated, that he would only raise one-half the authori:jed amount until the progress «f the 
 works maile it necessary to pro\'ide the reiiiainiler. 
 
 3. In the course of nepniations with the J'inancial Agents, Messrs. Baring & (Jlyu. the 
 Kinaiu'e Minister endeavored to jmstjuine the payments on the Loan to as remote a day ai 
 possible ; but it was thought that it would militate against the success of the operation it 
 the last instalmeutt were deferred beyond April, 18fi!t, or if the privilege of paying by antici- 
 pation were not aL'eorded to the subscribers. 
 
 4. When the Loan was contracted for, a considerable number of the sub.scrihers availed 
 themselve« of this option, and a large amount of money was paid in by anticipation. 
 
 .\s interest on tin entire F,(iaii of 'I'wa nii'.linim ( Jths henring 4 pe- cent, and }th bear 
 inp 5 jier cent), began in Jidy, ISliS. and was payable by Canada from that day. it became 
 the obvious duty of the (iovernnient so to place the nnmey received, as that an undue low 
 of interest might be avoided. 
 
 i"). The Minister id' Finance accordingly re(iuested Messrs. Baring A (ilyn,the Financial 
 Agents, tci endeavor to do so at the best rates they could, '• compatible with perfect security 
 
 ■ and immeiliate convertibility ;" but these gentlemen informed (he (Joverment that in the 
 present state of the iiioucy market, and con.sistently with these eonditiotis. they could noi 
 obtain a higher rate of interest than one per cent per annum. 
 
 Had they beeti able to havi' placed the ih^posits at any rea.sonable rate, the (iovernment 
 w(uild have been relieved from the necessity of Becking other means of temj.orariiy emploving 
 th« instalments. 
 
 ti. I'riiier the eireiimsianoes mentionad the (iovernment had, however, to considBr what 
 other means, nn the like conditions ni' immediate convertiliility and perfect security, were 
 ol»Mi to them as a temponiry investment. 
 
 7. The (iovernment of Canada was, at that time, about issuing securities to provide for 
 certain engagements of the J)ominion which it was desirable to fund or otherwise meet, and 
 it was considered that no better or more perfect security than those adverted to could be 
 proviiled in which to place a portion of the nunieys, lying comparatively unproihictiye. until 
 these moneys were rei|uired to be di.-bnr.'ied to tin- contractors on the works. 
 
 8. The (iovernment had not ceased to urge the completion of the surveys with all pos- 
 sible speed, and they endeavored to jiush on the letting of the works as rapidly as possible. 
 All the sections, on which the location surveys were sufiicicntly advanced, were accordingly 
 let last winter by public tender. They are seven in ntimber, H')2 miles in length, and the 
 cost is estimated at gf). 0(10,000. On these sections o|>erations are being actively prosccut- 
 vd. and the contractors are entitled to payment as the works proceed. 
 

 'J. Th(> Kngiiifcrs li;ivt» liceii pnntiiiually oiicn^rfld in Incatiiit; tlie rf^iiiaiiiinp 8t:ctii)nH. iiml 
 tliPsc will be jilaccil iiiuliT cuntract as rapidly m poNnililc. On one [Kirtinn of the routo a 
 railway had been already built, by a private company — about '10 miles in lenKtb. The prn- 
 pricty (ifacijuirin;; thi'' line, and makinj; it a pnriicpii f.ftlic Interfiilnniii], w.ih alw»ys eon 
 ternplated an a possiliilitv, and if tlio negotiations liavinj; that objrrt in view, wliioh boL'aii 
 some time ago, are eonclntled, it will inrolvc an ininu'diale Isrpe cash outlay, in ad liion to 
 the payment of the current worVs, out of the Tntereolouial l''un<l. 
 
 10. It will thus be feni that the nioft energetic steps were taken fnuu the oiitbct to ai- 
 celeratc the progress of the works, and that the (iovernment are not open to the suspicion of 
 having deferred their jiroiiecutioii for one hour, but that on the co jtrary they have cndiavored to 
 carry out, with the utmost promptitude and good faith, the ililigHtionK entailed upon them 
 by the Act of Union, with reference to the Intercolonial Hailway. 
 
 11. It may be ueked why tb Loan could not have been postponed for ^nnle months, oi- 
 a less amount issued, inaeuiuch aa it now .ippcars that the whole of the money will not bi- 
 spent for some time ? To this enquiry there are obvious and conclusive answers. The 
 Government could enter into no contracts, nor negotiate for the acjuisition of any intermediate 
 portion of the Line, until they saw that the numey was available. \ considerable sum 
 had actually been spent on surveys, etc., etc., by anticipation. The nioni'V market was lUcu 
 unusually favorable, and it might have been a most serious matter, in a pecuni.iry point of 
 riew, to the Dominion, if the Loan had been deferred until a condition of things arose, which 
 might have entailed on Canada the payment for .'{5 years of a higher rate of interest. The 
 Financial Agent? of the Oovernment considered the time unusually op[)ortui!c. Her 
 Majesty's Government were in full possesfion of all the circumstances, and g:ive their 
 unqualified consent to the operation on the terms and to the extent to which it was carried 
 out. 
 
 12. The tiovtriiment of Caiiaila had the.efore. under these circumstances, to deal with the 
 alternative, of allowing the large deposits to remain unproductive and entail a loss of about 
 $325 000 a year; or of placing tbeui temporarily, and in a way thai would be available as 
 the money was required for actual outlay. 
 
 It wa.- not uniialurallv to be siip|po.-«cd, thai if tlie Imperial Guvcroiiicnt bad su/ficient con. 
 fidence in Canada to guarantee or endorse her Honds. the same confidence also extended to 
 trusting her with the outlay of the money on the work for which it had been riiiscd ; a work 
 which was declared to be esscmtial to the consolidat'on of the I'uion of British North 
 America, and a condition of the assent thereto, of Nova ,'^cotia ami New Brunswick ; and one 
 to the couiplctioii of wliich the good faith and interest of every Province of the Dominion were 
 pledged. 
 
 If the Imperial Government had I'onveyed the intimation that Canada could not be 
 entrusted with th.e money for the pro^ecution of its own works, or bad soiii.-ht to impose 
 restrictions on its outlay, which would neces.sarily have presupposed that distrust, the Finam'c 
 Minister believe* it woulil have been the unanimous o|>iiiion of the people of t'anada, that the 
 guaranteeof Hit Majesty's tioverninent to tlii' Loan. - howevcrhighly they might have prizeil 
 the grantini: of it — and however advantageous it miuht b.ivc been ought not lo have been 
 aeci|)ted on such a condition. 
 
 Kt. The meaning of the enquiry made in the House of Commons plainly is. thut under 
 theprt'ssureof Finruieial necessity. Canada used the Intercolonial mo f indeed the cnquirv 
 
 be not meant to convey the imptitation that (^an;ida raised this Loan prematurely witli that 
 object. The Minister of Finance believes it to be his duty to repel an insinuation, v.*hieh 
 would be alike unworthy of the (iovernment, as it woubl be utterly op|M)sed to the char.ieter 
 for giHid faith and straightforward integrity, which the peo[ile of every Province of the 
 Dimiinion have justly earned, and for the maintenance of which they have ever held the 
 representatives in whom thi'V pliee confidence U> a strict observance. 
 
 1 L It is only necessary to advert to the Financial condition of Canada at the time, to 
 prove bow irreconcilable with the actual facts such a supposition is. 
 
 It is true that there was a certain amount iffloalini.' liability due by the Dominion, but 
 oidy to its hseal .\gents in London^ its Uankers in Canada, tind a small amount to luie of 
 the I'no jiice* of the Honiinion, 
 
 6.^:^5/7 
 
Thisliiibilily, — o liir I'roiii lii'iiijr pns.-.iiiL^ — hhs one which tlio public creditor would hate 
 loo (.'ladly .'lilowed to rom^iiii, but tlic (lovormiii'iit tliouj^ht it jirojier to mnku provision for 
 its graduiii luudiii^. p:irtly out of deposits iu the (ioveriiincnt SaviriL's IJaiiks ; partly out of 
 deposits riMjuirod I'roni Iiisuraiiec Cunipiinii's, under the Inw, and by other iMjually eertaiu 
 lueODH. IIa<l tluy bi.i'n dis]iosod to pince a loan tor tliis purpose on the market, it eouhl hn\t 
 been successl'ully aecoiiiplished without any difticuily ; for tlie only loan issued siin-e the 
 Union (CTce))t the [ntereolonial) was promptly taken up in Canada; the (i per cent Stoek 
 heiiiL' now rcailily saleable and in I'oiitinueil demand at a premium of S to It jier eeiil ; and 
 the (Jiivernment has been coinpelleil to decline re]ienti'd appllcaliims fur fiirllier is-ues. 
 
 A eertriin amount of bonded delit also fell due last autumn, for wbieli ample pro\i;,ion 
 had been made but the W'at bulk of the holders expri'sseil in aclvanee their wish either |o 
 renew it or eonverl it into the i)oiniiiioii Stoek already nu'niioned : — .-ni oftrr which the ("lov- 
 erinncnt thouj;ht it )iM|icr in thi^ ]iid>lic interest to decline. 
 
 15. It is unniH'es'^ary lo say more In [iro\c liow unfouinlcd is any imputation that, tin 
 motive of fiinnicial neet'<.'<ity had any part whatever in imlucinir the arrauLrenu'iits with 
 referenee to the t<'m|>.u'ary iiivc'tinent of tin; IntiTeolonial money, or to shew that the ( iovern- 
 mont was influenced solely by the oiie sinjile eonsidcralioii of Hudini: a temporary investment, 
 for it. on thccciMdition ofpi-rfci-t security and immediate convertibility, by wlii<-h a heavy lo.vsof 
 interest mi^dit be avoiiled. 
 
 Tn earryim; this out. the (Jovcriimi'nt tonk lumonted ami excciptionnl jirecantions in ordei- 
 that, bv no possibility whatever. mii;lit llu're be any doubt that the mom'y borrowed would 
 be as safe aiul as immediately .-ivailablc as it would have been, were i* dcposileil at call in the 
 Hank of Knjrland. 
 
 1(). Some of these precautions are iiidieatoil in ircMeral terms in the Order in Couiieil. 
 approved (d'liy His Kxcidlcncy the (lovernor (Jeneral in Auiii>l la>t. a copy nf which with 
 the aecompanyire/ report of the Minister of Finance it is presumed, was t;aiisniitted to the 
 Secretary of State llir thi' rolonic, by His Kxcellency. 
 
 The Minister uf I'itiinice i.~ are not aw.ire tli.it any exception has ever bei^n taken to the 
 arram.'ements so made. 
 
 17. It is proper brii'Hy to recapitulate the nnans immediately ami )irospectively avail- 
 able to the liovernnient of Canada for the purposes above nKMitloneil, 
 
 (I. The (iovernnn'ut have a easli bil.incc In the hamls of their B inkers of upwards of 
 ^'Z "51* tlOd. a portion of which they are now euileavorlnL' — thouji -o far unsui-eejsfully — to 
 ]ilace on special depu.-it at interest. 
 
 h. Tliey ha\e a I'liillicr special dcpo-it with their Bankei-.s at i per cent interest of 
 Id.rtOO.dOO. 
 
 e. They have in the hands (if Mes-is. IJariiiu and (ilyii. an amount estimated by thf 
 laBt advices at *2.tttM».(IO(). 
 
 </. They have India Bonds in tin' hands of Messrs. Bariiej^ and (!lyn. worth about 
 $750,11(10. 
 
 c. They have )ireferenlial securities, of undoubted value, pavable in 1.2. J! and t year» 
 from .lanuary last, with iiiteic^^t. of the (irc.at Western Railway Company of Canada, 
 Bmountinjr to ?2, 750.0(10. 
 
 f. They have receipts from the I'o-t (.office Saviusrs Bank, which since their establish- 
 ment have avera'jed about 850.(100 per mon'.li and which in the course of the next year are 
 estimated (beyond the cash in hamO at gtiOO.OOO. 
 
 (J. They have depo-its by Insurance Companies of Consols, Stocks and Bonds, about 
 to be converted into cash within 2 years, id 81,500.000. 
 
 h. They have purchased Bonds in iiiitieipation of the re(|ulrements of the Intercolonial 
 .Sinking Fund to about $270,000. 
 
 )'. They have provided, — over and above the forejruin^' means, — special credits with the 
 Bankers atid Financial .Vjients of the Government for the express purpose of meeting any 
 possible call on Intereohmial account, viz., with 
 
 Me.surs. Baring and <!lyu ?1. 250. 000. 
 
 The Bank of .Montreal, «i2,500.000. 
 
IS. It will llms 1)1' Nrii. tliiit tlir >lati'lllrlil nf li:i\ilii;- ;i|i|plicil llic imiiM(\ iliiM'(| iiiiiliT 
 the Cimailii l.iKiii Ai't IMCT, in |iiiyrm'iit cif the jji'iicial (lilit> nT llic Diiniiiiiiiii in ciiiitriivcii- 
 lion (pCtliiil Alt. i- widioul 11 kIiiiiIiiw of funinliitinn. 
 
 Till' iTcdil 111' tli.' Ddiiiininn dI' (Iiiii;nlii .-tiinil-' ton well tn rrmlcr |Im> n'luuiM' in any 
 indirect m ninvnrtliy iiican^ fur lin^ paymi'iit nl' liir diOit.- necfMiiry. anil >1m' iiii/.ff 
 licr ropiilatiiin tin- noiiil faitli tun iiijriiiy tu nsiirt to llirni. Canaila has Imt to oft'ii- her own 
 Mi'eiiiitics to liii' own )n'0|ilc'. or on the lionilon money market, iim sIu' may tiiiols niosi Cor her 
 advaiitajic, tolind rtliatevcr means are niMMlcd I'or the Mi.iiiiteniiiice oCthe pulilii' eredil. or llir tlie 
 prosecution oC enter|iri.ses whicli iier |icoiile think can lie fn'iiilcntly ami ,id\ ant.iLii'ously undc'V- 
 takcn. .\nd wliile licr ohlipition to comph'tc the Intercoloiiia. Itailway will lie liiltllleil to the 
 letter. kIio cliiim- the riL'ht oi' makin;jr snch snlpsidiary arranv;enienls wliethcr in rcL'ard to 
 tin: Loan or the works thcinsilves. l^^< her own inli'rchls may rciniirc, 
 
 I'.l. Her Maje.-ly'M (loveriiment has liilherto exteinlcil a most !;eneroiis contiilence to 
 Cmiada in coniieelioii with all the untncudont iieijotiations on this widiject. niid there is no reason 
 to helicve ihiit in fiituve that eonfidenct^ will he aliridufd, This ti'eliiii; induced tin: .Miiiisti'r 
 oi' l''inane<' to recommend to His Kxcellency the propriety of makini: th" extraordinary and 
 unwonted provisions already refcri'ed lo; — provisions which iitnU'r ordinary circumstances 
 uccd uot liave liecu nuide. .•Mid it now im]iols liim lo .submit these ohservations lor \our 
 Kxcellency s consideration, in order tliat llcr .Majesty's (iovernmeiit may lia\e the moans 
 of jnstilyinj;- the conlidcnce wliicli in this matter, as in all other-, they have ;-,iivariahly 
 relioscd ill the iiooil faith of the itihaliilalits of British North America. 
 
 It is the duty of Canada to see that the amount of the Loan is faithfully expended on a 
 work in which Her .\Iaji'sty's (lovcrnment and the nominiou have confessedly a eoinmon 
 interest. Of that <hity Cinada is fully sensihie, and it will he pcrfornicd with the mo-t exact 
 inteirrity. 
 
 JOHN ROSE. 
 
 Minister of Kiiiance. 
 Ottawa. :.".tth Mhv. I8(!!I.