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1 2 3

REPORT

HON. ISRAEL T. HATCH

UPON THB

Operation of the Revenue Laws

AND

THE EECIPROCITY TREATY

UPON THH

If ORTHEKlf FKONTIEB.

COMMDNICATED TO CONGRESS, REFERRED TO THE COMMITTEE OF WAYS
AND MEANS, AND ORDERED TO BE PRINTED.

JtrnsTE istii, iSGO.

WASUINGTON.
1860.

*'^%»a.

PiECIPROCITY TREATY.

Report of Hon. Israel T. Hatch,

JUNE l«tU, 1800,

Communicated to Congress, referred to the Committee of
Ways and Means, and ordered to de Printed.

To Hon. Howell Cobb, Secretary/ of the Treasury:

In discharging the special duty assigned to me, of examining the operations
of the leveniie laws and the Reciprocity Treaty on our northern fi-ontier with
Canada, I beg leave to report that I have visited the principal points of
intercoursft between the two countries for the purpose of acijuiring practical
information, and have also had interviews and correspondence with leading
individuals whose interests are afi'ected by the treaty, and who are engaged
in the various pursuits of trade, agriculture and manufactures. The personal
obgervation I have thus been enabled to give the workings of the treaty at
the places whore its effects are perhaps most perceptible, and the information
derived thus from the every-day experience of those who do business under
it, I have believed would furnish most important data for forming a practical
judgment of its operation.

The Treaty of Reciprocity produced a revolution in the operation of the
revenue laws, as well as in the re\ enue itself. The principle of recipiocity in
the commercial intercourse of the United States with Canada, has met the
approbation of all political parties iii this country at all times. The territory
of the provinces is indented with our own along a line extending across the
continent from ocean to ocean. The wages of labor (the gieat modern test
of cne phase of national equality) are nearly equal in both countries. The
cost in the production of wheat and other cereals differs but little on both
sides of the boundary line. Shown thus to be apparently commercially alike
in these leading considerations, and minor parallels confirming the similitude,

Si'

it 1*8 not Hiiiguliir that at variouH periods of our national cxifitcnce, tho itlea of
recipPKMty in trade between the two countries has received the favorable
reyrard of oininent men.

" The jroverntnent of the United States," said Mr, Clay, in his letter of
the 1 1th October, 1826, to Mr, Vaughan, "luw always been anxious that tho
triule between them and tho British colonies should bo placei on a liberal and
equitable basis. There has not been a moment since tho ado])tioii of tho
present constitution, when thoy have not been willing to apply to it j)rineiplefi
of fair reciprocity and equal competition." Three years after tho date of this
letter, during tho ])re«idency of General Jackson, Mr. Van Buren'a letter of
instructions to Mr. McLean, who was then our Minister at tho Court of Su
James, announced tho principles on which this government re-opened i>egoti-
ations relative to tho trade with tho British colonies in North Amevica. Ho
said: ''Tho policy of tho United States in rehition to their commercial
intercourse with other nations is founded on principles of perfect equaKty and
reciprocity. By tho adoption of these principles they have endeavored to
relievo themselves from tho discussions, discontents and embarrassments
inseparable from the iiriposition of burdensome discriminations. These prin-
ciples were avowed while they were yet struggling for their independence,
are recorded in thoir first trcfity, and have been adhered to with tho most
scrupulous fidelity."

The freedonj of commerciiU intercourse has never beon more ably advocated
than by Thomas Jefferson. In the report made by him in 1793, when he
wm Secretary of the Treasriry, as if ho would rescue the term " reciprocity"
from the opprobrium it must sometimes encounter, ho made uso of tho fol-
lowing memorable words: "Should any nation, contrary to our wishes,
suppose it may better find its advantages by continuing its system of prohibi-
tions, duties and regulations, it behooves us to protect our citizens, their com-
merce and navigation, by counter prohibitions, duties and regulations, also.
Free commerce and navigation are not to be given in exchange for restrictions
and vexations, nor are they likely to produce relaxation of them."

Familiar a.s the public mind must have been made with the principles which
finally produced this treaty, by these and similar almost authoritative expres-
sions of opinion ; brought home at intervals as these ideas must have been to
tho legislation and di[)lomacy of the country, it is not surprising th t this
practical but limited experiment in substantial free trade was attempted.
The leading idea of tho treaty itself was to permit tho introduction of the
products of one country into tho other fiee of duty, and consequent
reciprocal benefits were expected to follow for both. The various colonies
included in its provisions wore left to regulate their own tariffs, and each
colonial power can annul its honorary obligations without reference to its
Bister provinces or the engagements of the empire. No statesmanship could.

howovor, foretell tho workinsjs of tho tronty, or had >i lij^lit to antici|)at<f
leijisldtioii adverao to it* Hpirit. Correct in principle as tho treaty itself was,
tho perversion of its spirit ami the ilisrojjard of its snhstanco on tho part of
Canada have ))roduceil results it is the province of this Report to exhibit.

The ctfeeLs of the Reeiproeify Treaty were first and iniino- riiii<..i siai.Mr«.
dintoly visible in the great change produced in our collection vinniivoint mwin
of revenue upon the northern frontier, and cannot fail to attract attention.
In 18.54, tho last year nnati'octed by tho treaty, although the enumeration
was then incomplete, the revenue on articles rendered free by tho treaty, dur-
ing Hubsequent years, and imported from Canaila alone, amounted to moro
than $1,243,403. (See Aj)pendix No. 1.) Assuming this as a basis of cal-
culation in the ordinary mode of comi)Uting an increase of revenue, and that
tho revenue would have continued to increase in tho same ratio as during the
previous Hvo years (Appendix No. 2), wo should, for the five a ears now past
and ended June 30th, 1859, have collected a revenue of <J7,1 00,0.59, or
ijtl,433,331 annually on imporbitions from this province alone; and we should
at the present time have a yet larger revenue from this source, if the treaty
were abrogated to-day, for tho geographical and political reasons which made
the Canailians seek our marktit for the sfile of th(!ir products, remain unim-
paired in every particular.

The revenue derived by Canada from tho same class of merchandise was,
during the year 1854, as stated by Mr. Bouchette, then the Canadian Com-
jnissioner of Customs, only $190,671, or less than one-sixth of $1,243,403,
the amount levied that year on Canadian productions by tho United States.

During the same year (1854) the revenue derived by the i,oss of rpvnnuo
United States on the chief importations from all the provin- *° "'" ^'- '^"''*''-
cos included in tho treaty, was $1,524,457 (see Appendix No. 1); computing
the increase of revenue during the five succeeding years, upon the basis of
tho increase during the five years next before the treaty, tho revenue derived
from this source would have been $9,257,580, or $1,851,517 annuallj'.

Several items of these importations are not included in thi.s calculation, and
we are now near the close of an additionjd year, when the revenues from this
source for the six years elapsed since the treaty would have been $1 1,109,103.

The influence of tho treaty on the revenue of the United Exponso of coi-
States is also clearly shown by comparing the receipts at tho tho "revenue coi-
ports of entry on the northern fi-ontier, on all importations ''^'^''''''
from Canada, with the expense of collecting them, the necessary expenditure
being for the last four years $189,730 (see Appendix No. 3), more tlian the
sum collected — a result contrary to the anticipations of some who advocated
tho adoption of the treaty, and whose views are well expressed in the very
able report of the Hon. D. L. Seymour, who argued that "the laws of trade
forbid the conclusion that a foreign commerce which shall afford to such a

poopio (18 tlio population of thotto coloiiius thoir priiu-ipal swpplicH of iiweHsii*
rioB and Itixnrius, will bo oithcr roduccd in aujoiiiit or shorn of its revenues.''*

Tlio larj^o amount of our iinportatioim from t'auada sinco tlio treaty, would
form no accurato tost of the income wo mifj;ht liavo obtained from that soiuvo.
In 1850 the articles received from Canada by the United States and rendered
free by the treaty, aim^'mted in value to %1 7,810,084, besiden many important
but uuenumerated itcniH. At the uverafro duty of 20 per cent, tlie reveniie
wouM have trained more than $;],r>G'2,\'.i8 on the imp(trtationw of tli.it year;
or RH Canada received from us during the same year i7,899,.')r)4, the value
of the corresponding articles, there waj for that year a balance of trade in
favor of Canada amounting to $!),91 1,130, the duties on which would hnvo
been $1,))8'J,220. During the four years elapsed since the treaty came into
ed'ect, and ended Slst December, 1858, wo have received from Canada $28,-
771,090 in value of the articles enumerated in the treaty more than hhe has
received from us. At the same rate of duty, the re\enuo on them would
have been $5,754,338, or $11,722,089 if computed on $58,013,449 (see
Table D), the value of commodities received by us since the treaty, and simi-
larly tree.

The collection and safe keeping of the large income which would have
accrueil to our revenue under the former system cf duties would have iti-
posed no additional expense upon our government, as an organization suitable
for the purpose already exists in the custom-houses necessarily maintained
on our nortliern frontier to prevent free trade in these commodities on which
duties are now levied, (and chiefly collected at the Atlantic ports of entry,) and
to protect the public againr.t the total loss of the revenue which must arise if
foreign merchandise could be thrown into the interior, free of duty, through
the northern frontier.

inrreiiKc of tii« The marked diango in the amount of free goods importe<i
KomiHiniporieii f''om Canada into the United States since the treaty, is shown
lom lauuiia. ^^ ^^^ following tablo, exhibiting also in contrast the im])or-

tiitions from the same province, and subject to duty, from June 30th, 1850,
to July 1st, 1859.

IMPORTATIONS TO THE UNITED STATES FROiM CANADA.

FRKK OK UUTY.

fi36,4r)4

HUHJKOT TO UUTV.

$.3.(14 !M)1 6

1,529,(185 3.42(),7H()

1850

1851

1H,')2 761,.57I ;{,H28,;i!)8

lM•^ ],17S),682 4.0!)8,4;i4

1854 380,041 (i,;{41,4!l8

18.55 6,87ti.4!t() .5,.m5,8]8

185(i 1(>,847,822 (MO.lJTo

18.57 17,000,737 (!!H,()!)7

18.58 11,267.618 3i;j.!i.53

1859 l.'{,703.748 .504.91i9

Total, $70,783,854

$28,800,344

Tho abovo atiitistics hHow tlmt whilo for tho fivo vfars tioxt prcctMliii;^ the
treaty, ilufy wiis paiil o'l nearly tlvo times tlio amoiitit of iiiipDitJitioim from
Cnuailaiu wcro admitlod freo of duty, tho exact proportioim hv\n<r ^i,4H'i,i'.V,i
of frco poods agaiiiiit )i!2 1,344, 132 of tho other chiHH siiieo iiw treaty and
boyiuiiing with our fiHcal your 1850, until July iHt, 1850, a period of f(uir
yoarw, siujilar importations to tho amount of |l50,41 0,025 have eontrihuted
nothing at all to our rovenuo, whilo wo have charged duliis only on
ij!2, 150,30 1, or about one-thirtieth part of tho amount atlmitted free of duty.

On closer examinaticm it will bo seen that a largo iironor-
tioii of tho dutv-pavmir articles imported from Canada con- pmiiii.iiiiiiHdfimi-

, ,. . "^ , 1 . , T .r, IKlllll.llllilUMiriPC.

.sistd of commodities not produced in tho country. In 1858
tho dutiable im])urtations <"roin Canada, as shown by tho abovo table, were
only $313,053; of which iron, hardware and sidt, articles not ja-oduced in
Canada for exportation in any ai)preciable quantities, alone furnished $103,-
;'j05; of the remaindor a considerable portion was also of foreign origin.
A.8 tho same reasoning applies also to other years, I present the following
tubular statement for tho same term of four years mding June 30th, 1850.

TABLE A.

is&o.

$()4n.,'J7.')

lofni niTiount of duty-paying

uriiclcs iiiiporlcd into tlie

V. 1'-. tVoiM (Jnniula

Ir»n, Imrdwaro and salt SO,!,!)!).')

Am't of Canadian and oth(!r
lootU cliiirgcd witli duties
111 tlie U. S. $130,370

1867.

f.0 1,007
531,(111

1C0,08G

1868.

i<»:{,.')!).5

ISfiU.

."jfl 1.969
;i !!),.'">.'").'■>

119,.358 1S4,4U

This statement demonstrates that during these years wo have not collected
aniually duties on much more than $100,000 in vjiluo of merchandise ac-
tudHy produced in Canada, yielding at an average of 20 per cent, about
$25*000 towards defraying the yearly expenses of collection, and of guarding
a frontier of inland coast six thousand miles in extent.

I present a statement showing in contrast the value of freo and duty-pay-
ing irticles exported from this country to Canada before January 1st, 1850,
from December 30th, 1840. . .

TABLE B.

Value of goodii, etc.. from tho V. 3.
free of duty in Canada. cUielljr
free before the treaty.

Vahip of poods, etc.. from the U. S.
paying duty in Ciinada.

1850 ,..$.5,803,732 $ 7!tl,128

1851 (i,981,735 1,384,030

1852 7,013,003 810,090

18.53 10,0.50,582 1,125,.505

18.54 1.3,449,341 2.08.3,7.56

18.55 11,449.472 9,379,204

1850 12,770,923 9,9.33,586

18.57 „ 9,900,4,30 10,2,58,220

18f3 8,473,007 7,101,958

8
Tlio oonlriwl iMitwcdn ijl.'l 1 ■'J.O.').!, llm toliil ainouiit of duty

fdnfrnut lii'lwi'(>n . , , . i i- /i i ■ .< ► , i x.,, ,>,..

iiiitioA w\u'i\ DM paying ^ixxIh niipoitiHi troiii ( iiiiH<la iii IN.'iH, kikI VH,47o.-

tliin* In I'Himiiii, 007, tlii^ valiio uf (UIF oxpoi'tM to C'atiada, paying duty to

■inl on Cjinailliin i , . ■ .t v

iinMiuriiMn* In iiio iMut Country III tlio coiroHpondiiig yoar, cannot cMcapo no-
nie. Miiii'rt. (ici., l»ut n inoro just coniparison will oxoludo foniigu mer-

(:ban(liiH> caniod through loth countries.

A glaring and important contraHt Htiil romains. in 18/58, when wo col-
loctud duties on aliout ♦ 100,000 in valuo of Canadian proiiuctioiiH, tlio pro-
ductH (>1 Aniciicaii lahor on which duties woro paid in ('anada amounted to
$l,r)'24,r)U;i. Tho stalis'Jca of ISGr) infer in part to goods iinptntcd l)ofor«
thu treaty, iind aro consequuntly omitted in the following Htatemcnl, and a
reduction should bo inadu from tho morclmndiso assumed to hu C'linadiitn ;
hut neither country has thought thi distinction worthy of a place in its stJi-
tistics, and tlio caso (loes not reipiiro tlio miniito ejahoration propcr'y observed
when the evide ice on both sides is nicely balanced in the scale of justico.

TAnLK C.

\K,a. isr>7. \s;.%.

rriidiicls (if the ir. S. imying

duty in Caniidu $7,nHl,2M G,2l);t,.'{20 ■t.,')2t..')03

rriidiH'ts (if ('itnudii inlying

duly ia U. S 13(>,370 KiO.OHt? 119,358

Vuhio of Ani«r!caii prodiicta
clmrjrcd witli duty in ('iin-
luiii, al)()V(^ the ('nnndiuii
jirodiicls clinrged witli duty
intlieU.S $7,HM,914 6,043,234 4,40r),145

During these years tho total amount of priiduct of Americjin industry taxol
ill Canada, was 15(18,294,293 more than the amount of Canadian productiois
tiixed in this country: redj)rocity and C(iuality being in this instance rep'o-
Hoiited by tho relative proportions of 45 to 1. This is tho condition of trido
purchased as I havo already shown by a loss of revenue, being in 1854, the
last year before the operation of tho treaty, more than six times the reveiuo
collected by Canada during that year on the articles made free by tho troity
and imported from tin United States.

Owing to the geographical position of Canada, by which she is pent up
behind our territory without any moans of carrying goods from the sea coast
for more than half the year, sho must receive through us the earliest supplies
for spring trade, and our territory furaishes at "all times the cheajiost and
most expeditious route for tho carriage of many commodities, especially thosa
of tropical origin, to Canada. ;',

It might have been supposed that a system of trade admitting nearly all
tho productions of Canada into tho United S .tes free of duty, wh'le an
R\erage revenue of over one million is annually levied on merchandise of

• r

sarly all
h'le an
idise of

Ainoiican orij^!n tnkoii into ('unudn (seo Appendix No. 4), would liavc bwn
at luaNt HatiHtactory to tliat |)rovin('e, and liavo exoinptod us from unfiii^ndly
eornniiticial l<-<riHlation on lior part. TliiH miin constitutoN a (|uail(u- nl' tliu
wholn ordinjiiy ii'voiiuo of Canada, and is loviod on (lio fruits of our imluHtry
at a tinio, wlmn, h> far as her nisou'.ros liavo as yot lu-ttn dovclojitid (willi tlio
trivial exceptions nbvady nainwl, nnd unworiliy of niontion in a national

'■ point of view), slio enjoys in tiio salo of hor productions frco from all duties

for tlio prot(!ction of our labor and tlie incroaso of our n-vcnuo, every advan-

;, taijo posscswsd l>y llu- Slates of this Union, reciprocating, by iho imposition

of duties such as no Statu of the Union could adopt or demand upon the
productions of the otliei-s. This is the return made to us for a polii'v full of
special concession in their favor, and the revemie raised by taxing our labor
has boon spc-nt in jmblic works expressly and avowedly inttaideil to divert
our commerce — thus dimini.HliJng the al)ility "•' our people to support our
own gov "rnment, »is is more particularly stateil in those parts of this Report
which treat of the railroads and canals of Canada.

t'ommerco and navigation are the medium of exchange for the articles of
production and consumption between various countries, and thiough their
nieans revenue is jiroduced. Hence, to estimate correctly the opeiation of
thn Heiiiprocity Treaty Jipon the revenue, '.vould re(|iiiro an exainiiuition of the
commercial cK^iru^nts which either Jm reiwe or diminish it.

A liberal policy towards American manufactures was al- niHtnrirni fact in
ways urged by Hritisji -statesmen as a reason for irrantinir ri'iViviMciccimiiKo

J r^ J fl .-1 In n'M'lllll' IllvVMUIIll

admission to Canadian i)roductions. In 1843 a celebrated tinir (.inniiioimp-

' nil Ahii'i'K'Mii nnd

dispatch was issued by Lord Stanley, now Earl of Derby, lamuiiuu com'rco.
recommending that all diseriminating duties in Canada against American
manufactures should cease. Until 1840 nuich (hictuating legislation had ex-
isted between the two countries, in accordance with an artificial system little
calculated to promote the common good. Sometimes an identity of opinion
was nearly established ; at other times, the diifercnce was so great thrit on
the l/th day of March, ISiil, the President of the United Slates issued a
proclamatior, prohibiting the trade between this country and the British col-
onies of North America. Hitherto dill'erential duti"'' had been exacted in
Oreiit Britain on the wheat of the United States am. the colonies, with an
intention of forcing our agricultinal productions through Canada by way of
tlie St. Lawrence. By an act of Congress dated August Gth, 1840, wo per-
mitted the [iroduce of Canada to bo sent through our lines of communication
to the ocean, either in bond or with a right of drawkick, on paying two
and a half per cent, at the place of exportation. The etl'ect of this law waH
largely to divert from the St. Lawrence the shipments hitherto made through
it, and send them through our sea porta, and it will thus be seen that under
the operation of this law wo were the carriers for Canada ; but since the treaty

tho Cunadiiiiis Imvo not only carried the comnioditieb rwjuired for their own
use, but iiiivu become the forwarders and carriers for us. Although 'he free
navigation of tho St. Lawrence had been for years lidd up to the great west
a« an ineatiniabie prize, the Canadian or British governino'it always j)roferrod
to enjoy jU advantages in driving a good bargain with us, rather than rely
upon its uncertain half ye ir's navigation for the outlet of their surjJus pro-
ductions. They continued to seek a free access to our markets.

In 1847, when the colonies suffered under a removal of tho exclusive privi-
leges it had formerly enjoyed in Great Britain, duties on Americtm manufac-
tures weie reduced from 12^ to *i^ per cent, and increased on liritish manu-
factures from 5 to 7^ per cent.; thus removing all difierontial duties against
tho United States. In 1849 the Provincial Legislature passed an act author-
izing tho removal of duties on all articles being tho growth and production
of ihe United States, on condition that we should pass a similar law. Sir H.
L. Bulwor, when British Minister at Washington, pressed u])on our govem-
ment the considera'ion of such a treaty as became law in 1854, urging, as a
reason, the liberal policy of Canada towards our manufactuies. The follow-
ing is an extract fiom his letter to our Secretary of State.

" I have already expressed to you at different periods, and
the*HM"ish"^fiiiiis^ especially in my note of the 22d of Maich last, the disap-
iion" ipf Va'iuIiL'iu poihtmcnt which was experienced in Canada, when, at the
**" "'' "' last session of Congress, it was known that no progress what-

ever had been made in the bill which had been bi-ought forward for three
successive years, for reciprocating the measures which passed the Canadian
Legislature in 1847, and which granted to the natural produce of this coun-
try an entry free of duty into Canada, whensoever the Federal Legislature of
the United States should pass a law similarly admitting into the United States
the niiturul produce of the Canadas. The disappointment was the greater
masmuch as the Canadian government has always adopted the most liberal
commercial policy with respect to the United States, as well in regard to the
transit through its canals as in regard to the admission of viam/factured
goods coming from this country T

The treaty itself was formally declared to be founded on a

Formal iloclara- •' •' _

tionK of ti.e basis of dosiro to " ivffulate the commerce and navigation between tho

the treaty. . ° . ^ .

respective territories and people of the United States and
Great Britain," and " moi-e especially betweeti Her Majesty's possessions in
North America and the United States, in such a manner as to render e
same reciprocally beneficial and satisfactory."

The assent of Congress was procured on this understanding, and it was
substantially a<lmitted on both sides that no commercial arrangement can be
perinaneiitlv advantageous to one party without being so to both; that the
basis of virtual if not of literal reciprocity, is tho only solid ground of

iHternatioii.il rcliitions, and that the incrcaseil prosperity of one of the family of
nations only otibrs an enlarged market for the industry, and an expanded field
for the coniinorco of o\ery other.

The treaty was conceived in the theories of free trade, and in harmony
with the projjioss and civilization of the ago. It was a stop forward in polit-
icjil science. American legislation had been characterized by an exti-aordinary
liberality to foreign neighbors, pli cing their lines of transpoi-tation upon an
equality with our own, and their merchants upon an equality with our own in
receiving foreign merchandise in bond. We conceded commercial freedom
upon h11 their products of agriculture, the forest, the mine, and they ha>e
either closed their markets against the chief productions we could sell to them
or exacted a large duty on admission into their markets.

From time to time the Canadian duties have been increased , , , „,

Anniinl chanffC*

since the ratification of the treaty, and durinc; the last five ?."■' .''"■'•,"i"<«^ a"-

•' o ties lu CauuUii t*-

years the following duties have been exacted on the declared ''iiTn.
value of various chief articles of consumption :

1855

Molasses 16

Sugar, refined 32

Do. other 27)^ ...

Boots and shoos 12)-^ ...

Ilarnesri i2}4 ...

Ccitton goods VlQ ...

Iron goods 1234 ...

Silk goods ]2i| ...

Wool goods I23I ...

185« 1857

1868

1859

11 .... 11

.... 18

.... 30

28 .... 26

.... 2ii}4

.... 40

20 .... 17>^

.... 21

.... 30

U}^, .... 20

.... 21

.... 25

17 .... 20

.... 21

.... 25

131^ .... 15

.... 15

.... 20

)H34 .... 15

.... 16

.... 20

131^ .... 15

.... 17

.... 20

14 .... 15

.... 18

.... 20

Every year a new tariff hjis been enacted, and each of them has inflicted
higher duties upon the chief productions of American labor. These duties
are so adjusted as to fall most heu ily upon the products of our citizens.

The tariff of 1859 was avowedly bused upon an isolating

. ■ T ' 1 1 1 Tiiriir intended U)

and exclusive policy. It was supported on this ground, alike exclude the msa-

... I » , ..'"..„ ufactures and com-

by ministerial oigius of the presy, by petitions in its favor, merce oi the United
and by mcnibers of the colonial Parliament After securing
our free markets for all Canadian productions, its advocates argued that it
was the interest of Canaflians to become independent of all other countries,
and to employ their own ships and their own people; thus keeping in the
country all that is now paid to the United States. They can find no justifi-
cation lor the annual increase in their rates of tariflf) in the assertion that the
present rates do not exceed our own. When the treaty was ratified our tariff
exceeded theirs, and the concession given to them was not an equality of
tariffs, but an interchange of produce of both countries, and certain privileges
in navigation, while a liberal policy towards our manufactures was promised
and had been adopted, thus placing the commerce and navigation of the two

t'Hj

Public opJDion in
Canada.

countries upon " terms reciprocally beneficial and satisfactory," although we
have made large reductions in our tariff since the treaty. Canada has deter-
mined to free lierself from the difliculties of her geographical position, and
the British government was compelled to secure our free markets to prevent
rebellion. This was secured through menaces and vomises of liberality to
" manufactured goods." Justice to our people for the privileges granted by
the treaty, demanded that future Canadian legislation should conform to the
letter and spirit of the treaty, and that Canadian enactments should be in the
direction of a more free intercouree between the two countries. If it bo true
that the Canfulian government has a right to increase its taxes upon our
industry, as it has done almost to the exclusion of our manufactures, because
no stipulation against this course was inserted in the treaty, then it haslj
right to put an embargo (for a prohibitory duty amounts to an end^argo)
upon all articles not enumerated in the treaty, and there could bo no check to
its aggressions.

I believe that the Canadian people do not feel easy under
their recent leginlation affecting this country ; and many of
their public men, and some public journals, speak of it as furnishing just
grounds to the United States for anr illing the treaty. The Canadians rely
more upon American foibearauco, under the violations of the spirit of the
treaty by colonial legislation, than upon any omission in the treaty to provide
against such wrong.

The Boards of Trade in th'3 chief cities of Canada West

Opiuinn of Cnna- • i /. i t -v ■

(liau UoarJs of complamcd of the Canadian tarift m such representations as

Trade. i . n • it • • « • • i

the toilowmg: " Your petitioners are of opinion, that so
uncalled for and unwise a scheme is calculated to affect the existing pleasant
commercial relationship between Canada and the United States, in the work-
ing of the Reci2)rocity Treaty; the great advantage of which to this province
is well known to your honorable House, inasmuch as the proposed policy of
the Inspector General practically shuts the door to the admission into Cana-
da of the leading articles of commerce hitherto purchased in the great mar-
ket of the United States, and forces Uppei' Canada to import via the St.
Lawrence, or otherwise pay an enormous increase of duty."

Deficiency of Ca- When the tiu-iff was under discussion in the Provincial
cause" o7t«xa" ion Parliament, a deficiency of $4,000,000 (greatly exceeding
on our products. i]^q rcveuue of that year) was officially announced. This
deficiency and the consequent increase of taxation on American manufactures,
arose, it is asserted by the organs of the government, from exjienditures in
carrying out their system of internal improvements. That a large amount
has been thus expended, is shown by the following quotation from the report
of the select committea appointed in 1858 by the Legislative Assembly of
Canada, to enquire into the course of trade between the different Atlantic

icy of

ports in America and Groat Britain. "Tho public debt of Canada has
incrcjisod from year to year to about fifty millions of dollars; twenty-fivo
millions of which have been created since 1853, principally in tho construc-
tion of railways, yielding no income." (See Public Accounts, 1857, p. 223.)

Countless trains of ftirs are now daily djisbing along those railroads, from
tho sea-board towards tho Rocky Mountains, competing, without rcijard to
n munevation, for the commerce of tho great valleys of the Lakes and the
Mis8issip|)i.

Tho railroads and canals of Canada were alike constructed Hniinmds and
for the express purpose of extending political and commer- TOnsiriictcd uT'v.
ciiJ power, by the diversion of the trade of tho great interior ^- «"■"'"*'''=•'•
of our country, through the valley of the St. Lawrence, and the Canadian
routes of transportation; thereby advancing the prosperity of the colony and
increasing British power. They were undertaken by the government, and
were mainly dependent upon subsidies and municipal bonds, and the object
of their managers has hitherto been to secure the largest amount of traffic to
the roads, instead of the largest dividends to tho stockholders.

This extended system of internal improvements was brought into active
life by tho ratification of tho Reciprocity Treaty, through which Canada waa
enabled to onen a crrain trade between tho great West and the Eastern States.
To control it, she plunged into extraordinary expenditures ibr an extended
railroad and carrying syst'^m. Increiised taxation was the consequence, and
additional duties were imposed upon all manutactured articles, and upon
many others not enumerated in tho free list of the treaty.

The Canadians attempt justification of these impositions oniciai avowal of
by their public necessities. Whence arose their necessities ? Canadian policy.
Did they not originate in a desire to abuse our concessions by strongthening
their hands in grasping tho carrying business of tho United States ?

Their Minister of Finance, Mr. Gait, in a .sport recently Amount expenu-
issued by him in England, in support of a Canadian minis- control ^oar'^om-
terial scheme, admits the insufficiency of the commerce of ■""■^<=®-
Canada to support her public works; complaining that, whilst possessing
" tho most magnificent canals in the world," she is " without any trade to
support them except her own ;" and adding that tho canals of Canada hav-
ing failed to divert trade from the channels it had already formed, a system
of railroads had also been constructed for the purpose of competing with
American interests. He then proceeds to state that after deducting a sinking
fund for tho redemption of the Imperial guaranteed loan, the direct public
debt of the province amounts to £8,884,672, or $43,001,812; adding that
of this sum, debts incurred in consequence cf tho canals and other works
connected with the navigation of the St. Lawrence, and railway advances,

furnish £8,861,400, leaving only £22,272, or $107,796, as tho totiil direct
debt of Canada made for any ollior purposes.

CnnB.ia taxes our To mak.i up the doficioncy caused by these speculative
''ublic"^v!.'rk^'c<In- cxponditurcs, Canada now seeks to make our merchants
utructcdiigiiiuKtus. j^^j manufacturers who have been most damaged by tho
diversion of Western trade to Canadian cities and transportation loutes, pay
for her non-rcnumerativo carrying system. This whole modern movement
of Canadian or British policy in transportation is artificial, unnatural, and
against the laws of trade, climate and geography — in violation of the spirit
of international intercourse, as mutually recognized and sanctioned by tho
Reciprocity Treaty. It cannot last, even if Congress should refuse to protect
our commerce on the inland seas. The transit lines of freight and passengere
across this continent to the ocean may be deflected for a time by disturbing
causes, but cannot be permanently changed. They are goveined by laws as
imperative as the natural laws which govern the flow of our rivers in their
course to the ocean.

Besides establishing a system of ad valorem duties levied in such a manner
as to discriminate against the commercial and shipping interests of United
States, the duties on our matmfactures have been increased, by the tariff of
1859, to an almost prohibitory extent; and its authors must have known that
if such duties had existed or been expected at the time when the treaty was
made, it could never have obtained the assent of Congress. The letter of
Sir H. L. Bulwer, from which I have already qnoted, did not close with a
mere statement of the liberal commercial policy already pursued towards the
manufactures of the United States, but alleged upon the official authoi'ity of
the Canadian government that if the natural product of tho Canadas should
be admitted duty free, they would be "willincf to carry out still further'''' the
same policy ; adding, as a thi'cat, that if we refused to comply with the ofibrs
made to us, "The Canadian government and legislatures are likely forthwith
to take certain measures, which both in themselves and their consequences,
will effect a considerable change in the commercial intercourse between the
Canadas and the United Suites."

We accepted the offer, made the desired and fiiendly concessions, and
trusting in the assertions unequi\ocally made, tho American authors of tho
treaty did not stop to weigh with miserly precision the exact balance of profits
to be made and advantages to be given, or the loss and gain in our revenue ;
but the "considerable changes in our commercial intercourse," and also in our
revenue, have been indeed the unfortunate consequence of our hberality.

The United Stales and Canada present tho anomalous

Anomaly present- , /> , i ■ . T

ed here ii'i the col- spoctaclo of two bordcr uatious With an array of custom

lection of revenue , ,i-i i-ii • «.

by the two coun- houses extcndmg along their whole co-terunnous frontiere,
sustained at an expense to this government greatly exceeding

\
/

triev.

116

direct

Illative
iclmnts
by the
ea, pay
voment
ral, and
io spirit
1 by the

protect
ssengere
stui'bing

laws as

in their

L manner
f United
tariff of
own that
reaty was
letter of
se with a
wards the
thority of
as should
ther^^ the
the offers
forthwith
sequences,
ween the

sions, and
ors of the
of profits
revenue ;
so in our
ality.
momalous
of custom
frontiers,
exceeding

the revenue it collects, whose j)rincipal occupation is to enter and register the
free products of Canada on theii- way to our free markets, while on the oppo-
site shore, often separated Aom us only by a bridge, a ferry, or a boundary
lino, is found an eipially extended cordon of Imperial customs buildings, em-
blazoned with the Royal Arms of England, collecting largo re\'eiuies on our
taxed products, as a tribute A-om the commercial bondage beneath which the
unfriendly legislation of Provincial Parliaments has placed us, in exchange for
the conunercial freedom we have granted to the Canadas. These exactions are
derisively justified on the ground that no special provision against them was
inserted in the treaty, although its avowed object was to carry out the [jrinci-
ple of recipiocity, and " especially to regulate the commerce aiul navigation
between Her Majesty's possessions in North Amei'ica and the United State*
in such manner as to render the same reciprocally beneficial and sjitisfactory."
In comparison with the duties of 1864, the duties levied incrpaupofdutiei
by the tariff of 1859 on many of our manufactures, such Jis <"' vmious A^icri-

"' •/ Clin iniintifiirtiireii

boots and shoes, harness and saddlery, clothing, wearing ap- t^Hiuuiiiin uuiiis.
parel, etc., h.'is been increased a hundred per cent. ; and in the large chiss of
unenumerated articles, includini; leather and nearly all our other manufactures,
such as woollens, cotton, tobacco, printed handbills, checks, etc., hats, house- .
hold furniture, glass, axes, edge tools, fire-arms, agiioultural implement'', nails,
etc., other hardware, stoves and castings, upholstery, carriages, medicines, India
rubber goods, musical instruments, soap and candles, stiirch, triuiks, manufac-
tures of brass, copper, lead and tin, earthenware, paints and varnish, except
for use of ships, manufactures of marble, etc., etc., the duty has been increased
sixty-two and a half per cent., or upwards, while on the distillations of grain
the increase has been a hundred and twenty-five per cent. (See Appendix
No. 5.)

The motives actuating the enactment of the present tariff
are of less moment than its results, and although no duties fiKtmf* injurioua-
avowedly discrimmating are levied on American goods, the
influence of the Provincial tariff produces the same effect, for the manufac-
tures most readily adopted by Canada must be like our own. The climate,
price of materials, interest of money, wages of labor, and the various causes
determining the kind and prices of manufactures on both sides of the fron-
tier, are neaily identical when no legislation intervenes to arrest or alter the
laws of trade. It is as easy to transplant manufactures to Canada, as from
one Suite to another. Master manufacturers and workmen already skillful in
the special pi.rsuits of their industry, together with the tools and machinery
adapted for their purposes, can go to Canada in a few hours. Well-known
establishments originating in this way were already transplanted under the
influence of the high tariffs of 1858 and 1859, and the tendewcy of these
tariffs is towards a virtual prohibition of our manufactures, pithough Canada

will still continue to import, as wo do, from Europe and Asia, commodities re-
quiring (such skill as wo have not attained, materials not readily accessiljlo to
us, or the products of cheaper labor than wo possess. The usual policy of
Canada has also been to encourage manufactures by admitting their mnit^riaLi
raw or partially manufactured, either free or at a low duty.

Violation of trea- Viewed Hs a question of national integrity, tho conduc« of
♦y- the Cnnailian Parliament, in thus taxing the products of Amer-

ican industi-y almost to their exclusion from the province, must be pronounced
to be a violation not only of tho letter and spirit of the treaty, but of the
amity and good faith in which it was conceived, and without which all inter-
national obligations are una\ ailing.

Piirerentinidutica '^^^ retrogiado policy developed by tho Canadian tariffs
agaiuHt our Hhip- gju^jg ^jjg rat ficatiou of the treaty is not confined in its action

perK, forwaruora •'

and morchaiiu. ^q American manufactures. With duties piactically difl'eren-

tial, through a change in the valuation, she has endeavored to assess the

business of our shippers, forwarders and merchants, by diverting trade in tea,

coffee, siigar, wine, and all other articles of foreign j)roduction, but 08j)ecially

those of tropical origin, from New York, Boston, Philadelphia, and other

Atlaatic cities of the north to Montreal, choosing a long and circuitous route

OaifH Report, to the richcst and most progressive portions of her territory,

made'to favor Brft^ oudeavoring thus to draw her comnieice from all parts of the
iBii BhipperB. ^^j.]j^ jjI^jj^ ^j^g ^.j^gj_ jjjj^ ^^ jjgj. fr(,„tjer^ instead of takmg

the shortest course from the Atlantic across the United Slates. The avowed
object in changing specific duties to ad valorem was commercial hostility.
(See Note at end of this Report from Finance Minister Gait.)

Abu«eofourbon- The law9 by which the passngo of foreign productions
ded systera. through our country in bond was permitted, were an essen-

tial part of the system of reciprocal benefits intended to develop harmoni-
ously tho natural advantages of each country. They tended to reconcile our
people to tho inequalities it imposed on us. They vested in tho financial
oiBcer of the government a power hitherto exercised in tho most liberal man-
ner towards the railroads and carrying lines of Canada, in permitting alike
the exportation of Canada and re- importation to the United States of foreign
merchandise in bond, and merchandise of American origin. Upon this idea
of being the carriers for us depend the hopes of making profitable their in-
vestments in railroads and canals. Their public works wera constructed as
our carriers, not their's.

Canada now endeavors to deprive us of all the benefits of
•ntfai duties adop- this systcm of levying duties on the value of goods at the
t«d by ana place of purchase. The people of Western Canada were

accustomed to buy their wines, spirits, groceries, and East and West India
produce^ besides many other commodities, at New York, Boston or Montreal;

tlio former system lulmiftiiig American cities to coinpotition, tbe duticH hiiv-
inoj boon specific and levied on the weight, measure or nuinher of tlio articles
wherever they wore purchased. Thus no greater duty was charged on im-
ports via Boston or New Yorii to Toronto or Hamihon than via tlie St. Law-
re ice to Montreal. The j»rescnt system forces the people of (Canada to dis-
continue tlieir business connections with our mercha its and buy from tho
Montreal or Quebec importer.

Thus the productions of China, Brazil, or Cuba, if brought to Canada via
the St. Lawrence, will pay duty only on their value in the country of their
origin, but if purchased in our Atlantic cities must pay duty on that value
increased by interest and freight over the ocean, and the various other ex-
penses and cliarges of the insurer, shipper and merchant. This is not only
legislation against our carriers but against all our mercantile interests. The
"increase of duty" has been carefully estimated to be twenty-tive jier cent,
on goods imported into the United States and thence into Canada in exc&sa
of the duties levied via Montreal. The distance from Cul a to Toronto via
the St. Lawrence (a river frozen lialf the year) is about three times as great
as through the United States. Thus Canada vainly strives to coiujuer the
laws of arithmetic, of climate and geography.

This legislation occurred at a time when, without asking
for any eqiii\a]ent, we had reduced our duties on Canadian treiityViion Cana-
manufactures twt^nty per cent. Before this, desirous of ren- '"'
dering " our commercial relations reciprocally beneficial and satisfjictc )ry,'' we
had conferred upon Canada benefits shared by all classes of her people. We
gave to her farmers highly remunerative prices, and brought their lands and
producti<)n3 upon an equality with our own, and thus greatly increased th<i
value of their homesteads. Through their agriculfv.re wo aided e\ ery branch
of their industrial occupations, though wo there'j*' .'eft the most important
points of our trade in the hands of those among wv.jm hostile traditions an;
not yet wholly extinct, and whose minds are liable, on occasions of pecuniary
pressure, to be swayed by theories petty ir their nature and opposed to their
intei'ests and our own.

All the consequences of the high tariffs of Cnnada cannot
yet be thoroughly shown by the governmentJiI statisticij of ufac'ture* in" c^a-
oither country. The minute ebb and flow of commerce from
one year to another year cannot show the full effect of these exchisive laws.
Manufactures are chiefly represented as products of the United States paying
duty in Canada in the table already given, and exhibiting in this class a de-
crease from nearly eight millions in 1856, to four millions and a half in 1858.
Manufacturing establishments, however, cannot be brought into full ojieration
in six or twelve months, although the progress made by Canadians, under the
influence of those tariffs, towards supplying their own wants and excluding
2

U9 forovcr, has been so greiif, that from a locomotive down to a «hoo-j»og»
abnost ovory branch of the nianiifactures of tliis country is aheady kuccohh-
fully oonnnenccd. Montreal, undor the foreinj; process of protei'tion and
discriminating tarifl's, is now rivalinj^ Lowell and Lynn in almost every article
of their manufacture, and apjtroaching our Atlantic cities in the magnitud«
of her commerce.

For similar reasons, the effect of the tariff of 1859 on our exportationn
of foreign merchandise to Caniuia cannot be shown -.i the form of statistics.
Less than a fiscnl year, under the regulations of either country, has elapsed
since it received the recpisite legal assent. To carry an order for tea to China,
and allow time for the return voyage to Canada via the St. Lawrence, re-
quires nearly a year. Importations, also, are frequently large, in anticipation
of increjised duties. Abundant crops, expansion of currency, an accidentally
excited demand for breadstutts in Europe, and other causes, might have the
same temporary efftMit, but a more comprehensive induction will phow the
folly of passive obedience and non-resistance undor such aggressive enact-
ments !us c'.o only bo overcome by counteracting legislation, including a repeal
of our bonded system and a withdrawal of the privileges hitherto lilnirally
granted under laws permitting the transit of merchandise, either of American
or foreign origin, from the United States through Canada, to be returned
asrain to this country.

The combined influence of the treaty and our bonded sys-
tem, even before the high taritls, was exceedingly injurious
to the largest poition of the North-West. Its farmei's suffer
from competition with those of Canada. Its maimfactures,
useful in the wants of Canadian life, are now excluded ; and
in the bonded system the whole trade in foreign goods on the frontier is lost
to the United States, American duties being exacted in all cases where the
original package is broken ; and the Canadian purchaser from the frontier
American merchant, would thus be compelled to pay duties twice over: first
to the American, and afterwards to the Canadian government. The ordinary
customer is thus driven, from our stores, and so far as the American market
is yet used by Canadians for purchasing; foreign goods or manufactures, the
common supply of Canmlian stores is thrown into the hands of Canadian
merchants who procure their supplies in Montreal. If, upon exporting foreign
goods to Canada in leas quantities than the original package, the duties were
returned to the owner, the goods, until the recent increase in the Canadian
tariff, would still have been bought in the Atlantic ports, but they would
have been sold to Americans, who would re-sell to the Canadian retailer or
consumer, as they had done in former years; and our merchants on the
frontier would not be debarred, as now, from a fair profit, by the discrimina-
tion of our own laws against them.

S;/e<iiil ami iiiju-
ri(»us «tf('('ts (»f the
treaty iiml ware-
liousinj; sjHtpm on
the iiieroantllo iii-
torests of our
nortUern frontierii.

An oxtcnsivo tiiwlo Imd boeii CHtiiblisliud in loJitlior, alcoliol, puro spirits,
burning fluid, boots mid shocH, ciiNtings, hardware, clotliing, iniu-hinery, cnbi-
not-waro, uj)l»ol8tery, tnusical instnimunta, drugs and mt'dioinos, mnnufaoturcn
of cotton, wool and tobacco. On most of ihoso articles the present duty in
proliibitory, antl the trade is entirely destroyed or of trifling amount.

Upon some articles, jis upon leather, the operation of the bonded system
on exporting to Caruida, forms n ditl'erential system against our own manu-
factures. We pay an ad valorem duty amounting to a cent per pound on
imported hides. This duty not beitig collected of Canadians whcjj exported
in bond, constitutes an atlvantjii;e ove ■ our own tannei-s. In following up
this subject, wo find an illustration of Mi ureful vigilance illiberally exercised
by the Canadian government in all ca. jc. Canada levies no duty on hides,
but excludes our leather from her market by a duty of twenty per cent.,
making a further discrimination of Ave per cent, additioiud against the chief
articles manufactured from it, such as shoes, etc. Thus the trade of most of
our Atlantic cities, and of all our cities and villages on the northerji frontier,
feels keenly the loss of Canadian customers, who have almost totally de8(?rted
our markets, and purchase the productions of their own tanneries. Similar
results are Jilre<idy cxperiencxd in other departments, but such manufactures
as require the construction of expensive machinery will bo the last to exhibit
m the eflects of these tarifl's; and in the years 1858 and 1859 importations

» were made in anticipation of increased duties.

Many influential members of the Provincial Parliament

. , , . , , . . , OpiiiionH III Cftn-

appreciato the advantages their country would enioy in gain- «<ia upon actual

mg the market created by 34,000,000 of our citizens for all

the protlucts of Canadian industry. Opinions favorable to actual reciprocity

"', of commerce with us are not uncommon in Canada, especially in its western

districts. They are held by the many Canadians who realize the necessities
of their geographical position, and fejir the disastrous results of their modern
legislation. Their country, already too important to be regarded either as a
province or a colony, in the old sense of the wortls, possesses a population
computed to be nearly three millions in number.

Annexation does not possess many advocates on either side
of the frontier. It was, no doubt, believed by the authoi's of f uit« expected from

' the treaty that reciprocal trade would remove the causes "^

which render any closer union desirable, and would perpetuate alike interna-
tional good will and separate nationality; presenting to the world the sublime
example of two contiguous nations abandoning suspicion of injury from each
other, and practicing in their intercoui-se the best principles professed in mod-
ern civilization. The Canadians have now most of the materid benefits of
annexation to this country, without any of its taxes; more than that, they
impose taxes through their tirifls upon our tax-paying people.

illi'

•!l i

TIjo stiitoHiimnliko idciis i)n!valt!iit at tho titno whoii the
The Ckiudlitn , , .... I !• 11

niiirkcti. HTf ipin troatv bocaiiio law, antioipatinir tlio romovai ot all unntHro»-

to hII the worM for ... . i i ■ . . • .

the iirticieH nuiiioii mty restrictions botweou twoiuiigiibonnji; statos, aru in strong
'*** contrast with tho ivalitios of to-day. Tho Hritish provincoH

aro achnittod to a special partici|>atit>n in tho bonetita arisinjy from tho Ainori-
ciu\ system by an exemption in their favor, while wo contiuue to levy duty on
the articles named in the treaty when imported from other countries; but in
Canada, all these articles, with a few nominal exceptions, aro admitted free of
duty from every country in tho world; and the j>rodHct«of tho United Htatos
onjoy no more advantngo in Canada than they would tlo if the treaty had
never been made or were now abrogated. Thus, also, for tho articles enume-
rated in the treaty and produced in Canada, the market of tho United States
is thrown open to all the world, via Canada and the provinces; for no system
of inspection can bo devised sufticiontly exact to determino in what country
these common productfl of the temjitrato zono may liavo had their origin.

Tho following is a schedule of the articles enumerated in the treaty and to
be admitted into each country free of duty, when the growth and protluce of
tho exporting country.

SCHEDULE.
„ ^ ^ , ,. Grain, flour and broadstufts of all kinds; animals of all

.''(•hertnlf of free

srticioB eiiiiincrnt- kiuds; flosh, smokcd and salted moats; cotton, wool, seeds

ed lu tlie trciitv. ... . , . , ,

and vegetables; undriotl fruits, dried fruits; nshof all kinds,
products of fish and all other creatures living in tho water; poultry, eggs,
hides, furs, skins or tails undre.sscd ; stone or marble in its crude or unwrought
state; slate, butter, cheese, tallow, lard, manure, ores of metals of all kinds;
coal, pitch, tar, turpentine, ashes; timber and lumber of all kinds, round,
hewed and sawed, unmanufactured in whole or in part, firewo(xl, plants,
shrubs and trees ; pelts, wool ; fish oil ; rice, broom com and bark ; gypsum,
ground and unground; hewn or wrought or unwrought burr or grindstones;
dyestuffs; flax, hemp and tow unmanufacturetl ; unmanufactured tobacco.
Tho following is a statement of the value of the articles enumerated above,
and imported into each country from the other since the treaty came into
operation, to January 1st, 1859, without deducting for tho items re-expoiled
to us. (For the value of each class, see Appendix No. 6.)

TABLE D.

IMPOKTS INTO TUB UNITED STATES FROM CANAD.i.

1855 $IM7G,093

1866 17,810,084

1867 12,812,308

1868 Il,514.3(i4

Total $58,613,449

IMPOKTH INTO CANADA PHOM TIIR UNITED HTATKH.

i8r>r> $ 7.72r..r.fii

IKrifl T.llOD.fiM

iHr.7 H.(i.»2,():»"

1868 ft.ritiJ.olft

TotuI $2!»,S 1 1,7(50

KXfKNH OK IMI'OKTH KIIKK UNPKIl TIIK TIlKATr IN KAVOIl (IV TANADA.

IHM $ H.7:)0,r)r»3

IHM't !),!M)|,i;jO

iKr)7

less

4.170.278

_^f».!l4!),749

Total !|B28,771,«89

Tli() fullowinjif table prosentHJi full compamtivo view of all the importa !.n<i
exports to ami from the United StatvH unci Canada, from Dccoinber 3l8t.,
1840, to January iHt, 1859:

TABLE E.

18M) 1H61 18A-i 18.''>3 18M

Tmportod into Canada $(i,5!)4,8f)0 8..'t(ir),7C5 8,477,69.3 11,782,147 lo,r).'i.'),097

Imported Into U.Statc'8 4,9r)l,159 4,071,644 0,284,621 8,93C,.'(82 8,649,002

Excess of Imports Into
Canada 1,64.'{,701 4,294,221 2,193,172 2,845,765 6,684,005

• Other Imports into

United SiatoH 982,083 845,8:J3 1,251,6;{2 1,789,073 1,769,880

EHtimated excess of
Imports into Canada
from the U. States
above Canadian Im-
ports into the United
States 661,618 3,448,;i88 941,640 1,056,692 6,114,215

Imported into Canada $20,828,676
Imported into U. States
Excess of Imports into

Canada

* Other Imports into
Unitinl States

Estimated excess of
Imports into Canada
from the U. States
above Canadian Im-
ports into the United
States

1866

I8S6

18AT

1858

0,828,676

22,704,509

20,224,650

15,63.5,566

16,737,277

17,979,753

13,206,436

11,930,094

4,091,399

4.724,756

7,018,214

3,705,471

3,265,013

2,238,900

1,556,206

1,443,044

826.386 2,485,856

6,462,009

2,262,427

* These amnuntH are named In the stntistics publinhed under the sanction of the Canadian gorera-
nient aH ri'tiirned not reported at inland purtH in Canada, and it may be inferred were chiefly sent to
the United States.

■

I't'i;

Alllit>ii;^li till' (>x|ioi-tM iiiid iinitoiti ti> aiul fioiii diireriMit

r\|.<irti. nro oountritW UPO fJCIK)>lllly COIIlH't ill(l()X«H lo llu) VIlllU' ul' tllOlf

Voitilfidl Import*
Aii<l t*\|Mirtii nrr
■Kit I'lirriTt tf «t« iif

Uir tra.i« iiii«»..ii trutlo, tliy nrofntliiiir tabic <lti«» not prcHont in h true liirlit tho

I'lhli'il HUI<'» mill ' I ."» I "

''»'""'»• ncliiiil comlltion of our tnitlo with ('an.uiii. Tlio NtatiKtii-H

ot' tiiat tradt* havu orcaft!<l many oiTon«^ouH inipivsnionH. Tho pocnhaiitios of
tho oaso, njiait from thotliNlurliiiii; intluonccf* of jtohtical and icjritdHlivo cauHoM,
urine from her j^ooj^raphical position. VVhilo, for n part of tho yoiir, nho
portHoHWjH nicann of communicaling with the rtwt of tlio world hy tho St.
Lawronco, who iw so far incltmod by tho lTnit«'<l i^tatoM, tliat a hno ilrawn from
tho northorn cxtromitios of Maino ami VViM<'onHin would paiw to tho north-
ward of (iuobci', and cut (ttf, with tho oxcoption of a few unimportant coun-
tiew, tho whole irdiabitod territory of Canada, IwHidos vast acroM of fortilo land
yot unexplored (see Report on Crown Lands, part II, 1H57). On tho north
ttho i« hemmed in by tin! desert wilderness of tho frigid zone, and on tho east,
south and west by the territory of tho United States.
Rpuciniipuisiatinn '^''" <^u'''''">t <>f trade cannot \>e at once diverted, but it has
•nM^'wiii .'.gHinl't ^*'*''" al''»^n<ly shown that tho lej,'islation of Canailn is intended
til.. rnrryiiiK int..r- j„ j|j^.^,,.j f, in tho Uuitod States tho eomniorcial advantaifes

eniH of tho Uuited "

*'"''''• naturally resultiii)^ from our relative geographical position.

The means through which it is hoped this result will bo attained are the <lif-
fcrcntial duties, heretofore explained, in favor of tho St. Lawrence, and tho
change of tho system of specific duties, under which go(MlH taken into tho
western or any other part of tho province from tho United States heretofore
bore only tho same duties as if imj)orted via the St. Lawrence. A reservation
is also made by which the Governor of Canada (see Statutes of Cana<la, cap.
17, sec. 24, 2), through a departmental order, may quietly permit goods to
be imported through any part of tho United States uniler such regulations
as ho may choose, at the same valuation as if they were imported directly
from the country of their origin — a privilege not tho less likely to bo exercised
in favor of tho Grand Trunk Railroad, a foreign institution

Groat Britain ili«- . . ,, , , ., , i i /. i

criminntea In iicr ou American SOU, agamst tno railroads and canals of tho
our citicH. rniiromis Uuitfid Statos, bccauso cortaiu importations via Portland are
anc pro ut h. alrojuly admitted into Great Britain by the British Govern-

ment at a lower duty than from any other part of the United States. (See
22d and 23d Victoria, cap. 37, sec. VIL)

c'liisHincation of A simple and compendious method of considering the
tZ'fZi '.mt!.mi ♦-'xpoits of Canada is atf'orded by chusifying them as the
course of trade. products of the mine, the sea, the forest, as animals and their
productions, agricultural produce and manufactures. The comparative amount
taken by the United States and each other country annually since the treaty
(see Appendix No. 7), proves beyond controversy the increasing value of our

•

of our

nmrktttH to Canada in n<im|mriH<in with tlioHo of Great nritaiit ami all other
<«)uiitik'«.

Tlio pi'inliK'tK of \\m inirui inuHt hmoine or. l>otli hhIch a rn|ii<lly iiicrenHin^
cImw of our uxeliaii^i'H. llitlK'*'to tliu balunou Iiuh boun imicli in niir liivor.
KxtotixiNo roi^ioiis, licit in mineral wealth, cxIhI in Canaihi West, hiil lint ^eo-
lo^ieal fiH'inatioiiN are deHtituti) of coal; and iia thu t'oreHlM aro eluari; I away an
inenlculalil)) atnoimt of fuel froiti tlio liniitleM coal field.s on tho Noiit!i xhUi of
Lnko Erie, will hu re«|uired in hur northern eliinatu. 'J'liu coal of Ohio,
nortliern V'ir^^iniii and I'onnHvIvania, Hupiilios advanta^oouNly the nieaim of
unidtinj; th. orcis of Caiuula VVckI. It will nt^ver lie politic nor will it Ncarcoly
l»e |)owtil)lo for the ji;overiinieiit of Canada aj^ain to tax thin iiidinjiciiwiMo
nect'HHiiry of lifo; and if the treaty wore ahro^ated, Canada would yot b«
(»in|iellu<l to buy it from us in incroaHin^ <(uantiticH. Itx ahundanco in our
territory and itM ahHonee in the jfeolo^iv'al formations of Canada \Ve>t, exliihit
in the ^rctalcNt decree u natural a<la|)latiou to the syHtom of reciprocal lienetit«.
On thu Atlantic coaHt thu coal from thu inincH of the maritime provincoH
«flbclB BcriouH injury to tlioKo who have invented their capital in the hound-
less mineral rcsourcew of Peiinsylvania, Maryland and Virginia.

The produ.'ts of the Canadian forcHts nro brought into vigorous competi-
tion with our own, and tho elfcct Ih keenly felt by many of our lumlier-mon,
who embarked in this busineHs fully confiding in tho belief that thu protective
Hystom accorded to other manufacturing interestw would not bo withdrawn
from this. Large investments wore iti many cases madu by our lumber-men,
many of whom havo In-en compelled to abandon thoir businesH at a ruinous
loHs.

Tho Unitc<l Statofi were for five jcnrs before the adoption of the treaty, an
they aro now, almost the only customers of animals and tlioir prothicts from
Canada. Tho year 1858 afibrds no more than a fair illustration of this fact.
Wo then imported to the value of $2,232,308, being only $220,307 less than
tho whole amount of exports in this clii.s8 from Canada to all countries. These
exports from Canada have increased nearly six fold since the treaty. The
older and more closely settled regions of this country afford to Canada &ueh
a market for the chief item in this class — animals themselves — as her geo-
graphical position, remote from all other countries except the thinly ])eoplod
provinces, forbids her to export j)rotitJibly elswhere.

Wheat, tho staple crop and chief export of Canada, was
not rendered free by the treaty, on its admission mto tliat poriid t.. cnnada
country. It was made free botore tho treaty by Canadian tin-re, an.i wu» free
legislation for the benefit of Canadian millera and ship-owners. "™ "' ^'
It is exported into Canada in pursuance of tho great commercial law by
which, in our time, the demand of the Eastern States and for shipment to
various parts of tho world, is supplied from the lich soil and clieap land of

the Wust. Much of it is iimnufactured in Citnnda and returned to the United
State.", free of duty ; nor cm the ordinary course of this traffic bo bettor illus-
trated than by the well-known fact that Chiciijvo, Wilwaukee and the Western
ports arc shippers to and not receivers of grain from Canada, whoso lajge
exjiorts are freely transmitted from the eastern side of hor territory to tha
Americiin frontiers. It is stated on reliable authority in the provinc il public
journals, ihat much of their imported wheat is ground on the Wclland or
Lachinc canal. After this process it cr.nnot be identified as of American
origin. It is le.><8 expensive and troublesome to enter wheat as free under the
treaty than to keep it in bond, and to a considerable extent there is littla
more d-stinction as to the origm of the wheat after it has once been taken
into Canada, than there is in nationality of the mingled waters on which it
is carried towards the ocean.

Cannrin ..xpnHs ^^ Canada produces more wheat and flour than she can
(imiTtiui'ir^iio iiu- ^*'*^' *'"'" shipments to her are not made for purposes of con-
P"""'"- sumption, but must compel the return of the same or an

equivalent quantity io us, chiefly in a inanufactured condition, at the expenso
of the milling interests of this country, or its shipment to Europe in foreign
vessels at the expense of our American bottoms.

if: n»

' )■':

'. f I

Statkmkn
Flow
1><J1).

T .thowiiu/ the romparative value of the ImporL^ a7id Exports of Wheat and
into and from Canadafrom the year endintj January 1, 1850, to January 1,

IFORTB,

EXPORTS.

F'.our.

Wheat. Flour.

2,247 ..

.. 1,072,135 .... 2,743,185

4.507 ..

. . 687,180 .... 2,683,.301

4.9:J7 ..

.. 1,421,825 .... 2,757.510

4,870 ..

.. 3,090.441 .... 4,248,835

17,%5 ..

.. 2,098,137 .... 4,796,699

.... 1,(525,7,35 ..

.. 5,928,866 .... 5,801,920

.... 808,737 ..

.. 6.977,H43 .... 0,009,809

.... l,2(i2.4cS5 ..

.. 2,789,975 .... 4,537.642

.... 763,960 ..

.. 2,355,096 .... 3,065,810

Wheat

18.50 113,9.36

1S5L 294,47j

18.52 76,9.53

18.'>3 14,664

iHbi 138,913

18.55 1,461,624

1856 1,694,091

1857 2,375,638

1858 1,647,489

Of nearly all the articles named in the treaty, a surplus is common to both
countiies; and wo have an abundant supply and c surplus for cx})ort of every
article named in it.

Canada has no crop so cheap and profitable for various manufacturing;
and other [jurposes, as the corn bought from us; she admitted it like wheat,
free, before the treaty.

For other grains — bailey, rye, oats, etc. — we furnish for Canada the only
market worlhv of mention.

Cana<iian farinor "^''^ increase in the profits of the Canadian farmer since
piacodin ticRiy .,n ^]^q treaty, is well known on both sides of .he frontier. The

t*i|ufli 1 1 \ ^\ 1 1 ii (til r ''

farmer as (n uii.ic ]nr(re amount which would have accrued to the United States

of uiriu and jiro- ^

^"<=*»- in the form of duties has gone to his benefit in the increased

Cun-
the
)f her
fore th«

value of his products and real astato. The production of many articles has
been greatly .stiinulatod much to his advantage, and their importations have
been severely felt by our own producers along all that line of frontier through
which access is naturally sought in an eastward coui-se to our cities, manu-
facturing districts, and the gre.n, highway of the world. A strong stinudus
haa been given by the treaty to all the chief public works of Canaila, which
before had signally failed.

A general dissatisfaction with the treaty exists? on the
southern side of the boundary line, wherever its operation is fi».ti„u with tue
perceived, except in those parts of thu "West whore the Cana- ™'' ^'
dian is erroneously regarded as an additional purchaser or consumer, and
not, as ho really is, a mere grain carrier in rival'-y with our own, or in those
other parts of the United States as to which for its own purposes the Cana-
dian or British government has made preferential laws, and to which it has
given a local prosperity at the expense of the general welfare of this coimtiy.

An investigation of the Canadian exports made frco by (jeogrnpi.ioni din-
the treaty, proves that Canada has now, for many of these "'IV'Jl.^'J^va 'f.j.^j
products, no market equally profitable with t^iatof the United '"",i,',\!^''[jj,fy
States, and had no outlet for them at all worthy of mention *'<"''>•
before the treaty, except this country, where they then contributed to the
revemie. The same examination wiU disclose the fact that most of the lead-
ing articles named in it were imported into Canada free of duty before the
treaty. For more than half the year the rigor of her climate debais her
from commercial exchanges with any countiy except the United States, or
through our territory, preventing her during that period from taking advan-
tage of a rise in the market. She is placed in the position of a farmer who
lias on\y one customer. This is the political and geographical disad\antage
sought to be overcome by the Earl of Derby when he urges the abolition of
duties discriminating in favor of the manufactures of his own country against
the manufactures of the United States. It was for this cause that reciprocity
was urged so strongly by Sir H. L. Bulwer, aud to compare this argument and
these admissions with the facts of experience, I again refer to the testimony
of the select committee appointed by the Legislative Assembly of Canada in
1858, by which in reference to the repeal of large discriminating duties on
grain imported into Great Britain, it is said ( pp. 4 and 5 of their lieport ) :
" The ert'ect of this law was to depreciate the value of all articles grown or
produced in Canada twenty per cent, under the value of like articles grown or
produced in the United States, and this difference in value conliimed up to
the year 1854, a period of nearly nine years."

The opinion of her merchants as to the value of our market, is i-ecorded
in their having exported to us six times as much wheat and flour as to Great

^ij^

'i!

Thofiillacy (il'tlie
Iiiv(M')io<)l iiiarki't
nlwnvH 11x111(5 H'"
valui'.

Britain during tho four years which elapsed since the (reaty and before Janu-
ary 1st, 1859.

Contrary to tho belief commonly held at the date of tho
treaty, tho Liverpool market does not determine tho standard
of value for brem'-iiutls on this side of tho Atlantic. Euro-
pean prices are now far from being remunerative to the American producer.
They have seldom been ].n-^.tablo to us, since tho termination of the Crimean
war re-oppnod tho Rrssian granaries, throw the cheap Russian serf into
close competition with the American farmer, who can only sustain himself
by his superior intclligence^and the application of modern labor-stwing im-
plements tf agriculture. Since tho speculations consequent upon that war
have ceaseil, our exportations of grain and flour to Eurojie ha\ e been insig-
nificant.; nor are they likely to be of much importance here;ifter except from
the occasional and irregular demand caused by war or famine. All tho wheat
and flour sent by us in 1858 and '9 to England, whore flour is charged ™ith
a duty of 4^ per cent., or about 16 cents a barrel, and a corresponding duty
is levied on grain, was only $1,730,152 in value, or less than half of $3,666,-
502, the amount thrown on our market from Canada, notwithstanding the
failure of her crop. The grain-growing regions of the North-Wcstern States
have suffered more than other parts of tho Union from a depression of prices
in our Atlantic cities, thus caused by the influx of Canadian products. A
temjHirary cheapness of transportation will not compensate for reduction in
the value of the grain ; and Canada by virtually prohibiting the importation
of American manufactures, prevents so far as she is able an increaseil de-
mand and consumption for breadstuffs within the limits of our confederacy.

Natural ooinnipr- Thoro has not bceu a year since the treaty when Canada
cjai (iip.Mi(Uiic« has not thrown upon our markets a larger amount of her

of Canailaiipon tho r »

Unitcii States. productions than sho has sold to ai.y other country, and to
all other countries added together — demonstrating her commercial depen-
dence upon the neighboring States when thwarted by no artificial cause or
restriction. (Appendix No. 7.) The difference will be yet more conspicuously
and clearly shown by deducting tho products of the forest from her European
exports. These alone amounted in 1857 to more than $8,000,000, or twice
as much as was sent to us, differential duties yet existing in Great Britain in
favor of colonial timber. Struggling under these obstacles imposed by the
British and Canadian governments, we arc yet to Canada of more commer-
cial value than all other countries together, while recent legislation has re-
versed the natural law of trade that a nation should buy where it sells. Her
people sell to us and are now prevented by her taiiffs from buying of us.

Hitherto tho further injurious legislation of Canada is too recent to have
fully exhibited its eflfects, and an additional illtistration of her natural commer-
ciiJ dependence is found also in our exports to that province (Ajjpeudix

-U

and to

cause or

No. 8), showing that for each of the four years ending Dcv-omber 31, 1858,
the amount taken from or through the United States exceeds the Canadian
imports from all other countries unitedly. It has already been shown how
largo a portion of them is re-exported to us, whilst the taxes on our manu-
factui'cs and differential duties on merchandise of foreign origin passing
through the United States, will effectually check tlio other classes of their
imports into Canada.

In the profits accruing from freight between the two countries, the advan-
tage since the treaty has been in favor of British shipping, the value of
exports and imports by the vessels of each country being regarded aa the
test. In the five years ending June 30, 1854, the value of domestic expoils
to Canada in British bottoms was $12,595,816, and in American bottoms,
$16,595,816, the preponderance in our favor being about one-third, whilst in
the five yeare since the treaty, and beginning with July 1, 1854, there was
an excess against us of nearly one-half, the value being $26,330,730 in
American vessels, against $38,942,652 in vessels of British nationality. No
marked inequality exists in the imports to the United States by the shipping
of both countries, the value carried by each being $37,223,665 In American,
and $36,528,968 in foreign vessels.

In this competition of shipping, American ship ownere run a race in
fetters. The staple manufacture of Canada has long been that of ship-build-
ing for exportation. A cheap and abundant supply of labor for this purpose
is obtained at Quebec during the long winter suspension of navigation, and
the value of ships built there for sale in foreign markets exceeds by many
times that of all other manufactured exports of Canada. This branch of
industry is encouraged by admitting all the materials used in the construction,
rigging or equipment of ships, either at a nominal rate of duty or entirely
free, or subject to a return of duty to the shipbuilder when satisfactory proof
is given that they have been used for this purpose.

Canada grounded her hopes of future crreatncss upon the ,^ ,

c r o r Value of free na-

possossion of the St. Lawrence. The Western States have y'ff»'i"n "f ">« '^^•

' _ I-»wrence to the

considered it of great advantage to themselves, and it was ignited statt ■..
said, when we obtained its navigation, that the benefits arising from this
national privilege would more than countei balance any fancied injury or
wrongs on other interests. The British Minister, Sir H. L. Bulwer, after
pressing upon our attention the spirit evinced by Canada towards our manu-
factures, and promising on behalf of the Canadian government to can-y a
libe'al policy out sj'll further, presented the navigation of the St. Lawrence,
with the adjoining canals, as a consideration to be paid by that province for
the free interchange of all natural productions with us, and for the navigation
of Lake Michigan. The arrangement of the treaty was comj)rehen8ive, and
included a satisfactory settlement of the perplexities then existing in regard to

ll:n

m , ,

, ill f>

I' ■ i

i I

1 *

.U. .

the fisheries along the coast of the provinces; but for this the maritime prov-
inces also received a full eijuivalent in the opening of our ninrkot to their
fish, coal and other products.

The ilobates in Congress show the high value placed by the advocates of
the treaty on the use of the St. Lawrence. One honorablo member lamented
that by being debarred from it, the shipping of the lakes wjis compelled to
be idle ai.d unproductive for about one-third of the year, whilst the interest
on the capital thus invested was running up to $250,000 annually. Another,
expressing only the general Vxpectation of many others, said: "The free
navigation of the St. Lawrence is only necessary to show us in the fall of
every year long lines of vessels seeking the Atlantic, through Canada, laden
with westLM-n produce, and in the spring making their way back with foreign
wares, and with the avails of profiUible labor for nearly half a year."

Tile commerce of the north-western lakes is of immense national import-
ance, amounting annually to $587,197,320. (vSee Report of Committee on
Commerce to House of Representatives, 1856, No. 316, vol. 3, page 9.) More
than 1000 vessels, with an aggregate burthen exceeding four hundred thou-
sand tons, are employed in navigating these waters, which Chief Justice
Taney, in that decision of the Supreme Court of the United States, which
gives the lakes forever their international character, termed " Inland Seas."
It was believed that the advantages gained by the navigation of the St. Law-
rence would bear adequate proportions to the number and value of these
commercial fleets, but the official statements of Canadian authorities show
that since the treaty received the signature of the President of the United
States, nearly six years ago, no more than forty American vessels, with a
burthen of only twelve thousand five hundred and fifty tons, passed seaward
through the St. Lawrence, and that of these less than half, or nineteen ves-
sels, with a burthen of only five thousand four hundred and forty-six tons,
have returned from sea. So insignificant has been the foreign commerce
expected by honorable members to be developed in this direction, that during
these six years only twenty-five of these vessels have sailed for foreign coun-
tries, the other fifteen having gone to American ports.

It would seem that the promised advantages from the navigation of the
St. Lawrence were more poetical than nautical, but the navigation of Lake
Michigan, ceded to Canada by the treaty, has been so extensive that in the
year 1857 one hundred and nine British vessels cleared from Chicago alone;
thus depriving our own carriers of freight, by enabling others to take the
produce of the great grain growing regions through Canada to ports on either
side of Lake Ontario, or to Montreal and thence to eastern States, or chiefly
by British vessels to Europa. It is a noticeable fact in this connection, that
the above is a statement of the clearances from only one port upon Lake
Michigan of Canadian or British vessels for one year, and they are more

^1!^

than double the nuinbor of United States vessola that passed outwards
through tlu! St. Lawrence for the last six years since the ratification of the
treaty, and ijuintuple the number tliat ever returned inward from sea.

Well might Lord Elgin exchange congratulations with the British capital-
ists in London, as ho did in a recent speech, uj)on the advantages to bis coun-
try arising from the woi-king of the Reciprocity Treaty which ho signed at
Washington,* when the barren advantages of the free navigation of the St.
Lawrence have boon given in exchange for our free markets to all Canadian
productions, and when the consequent increase of their exports has ndded
wealth to their country, and operated in inverse ratio upon the prosperity of
our agricultural and industrial classes.

Although the equivalent gravely ofl'ered to us by the Brit- commorco of thn
ish Minister in exchange for the valuable concessions we made, ''""''"* p'l.vs moBt of

" rovfiiiii! of Cans-

has hitherto been thus imimportant as regards the St. Law- <iiau canals.

rence itself, the other part of the consideration, the use of the canals, was
enjoyed by ns so freely before the treaty wijs in operation, that in 1854 no
less than 198 American vessels used the canals of this river, and 3,100 vessels
of the same nationality used the various canals of Canada, and paid, as now,
tlie principal part of the tolls collected thereupon by the government of that
province. To close the canals to our vessels, would not only be an act of
folly on the i)art of Canada, but would be contrary to the objects for which
they were constructed. This professed equivalent to us was itself the con-
summation of their long cherished project. The State of New York might
with more wisdom close the Erie canal against the commerce of the other
States, for that canal passes through the central portion of the State which
possesses a much larger population than Canada, creating an extensive local
tariff for its support, while the canals of Canada are lateral and depend
almost entirely upon the commerce of the United States. They were made
for the purpose of diverting American commerce, not of facilitating it. The
committee appointed by their own Legislative Assembly in 1855, unhesitat-
ingly affirm in their Report, p. 3, that "the St. Lawrence

° , t- y 1 • Cnnailiiin cnnaU

c<anals were constructed at a large public expenditure, for the imiiito'iiMit trade

... , , p , ,„ ^ , of Westcru SUiteii.

purpose of drawmg the trade ot the Western States to the
ports of Montreal and Quebec."

* Great Britain reserved the right of suspending the navigation of the St. Lawrence
and canals in Canada at hor pleasure, and whenever she should exercise this reserved
right, then the government of the United States was permitted to suspend the oper-
ation of Article 3 of treaty, which contains the enumeration of free list of nrlide.s so
far as the province of Canada is affected thereby. It will thus bo seen that Great
Britain's concessions in navigation were placed in the treaty as equivalent for admis-
sion of Canadian products into the United States.

•"^^^w^^^w^

ri|i^

'•^f

{ \

We ixro entitled under the treat)' U) use the river St. Lawrence and the
canals of Canada, as the " mcjins of communicating between the groat lakes
and the Atlantic o<-oan, subject only to the same tolls and other asst'ssinents
as now or may hereafter be exacted of Her Majesty's subjects." lint as we
are tuo chief carriers through the Welland canal of wheat, flour and corn
(almost the only freight of our vessels by this route), a discrimination against
us is made by imposing the same tolls on these articles on their passage
through this canal (a work twenty-eight miles in length, and forming the only
mojins of communication for lake vessels between the upper
inu"i"m I'l"" n Am'"- iwd lowcr lakcs), as if they passed through the canals of the
lean vexscu Galops, Point Iroquois, Rapid Plat, Favian's Point, Corn-

wall, Beauharnois and Lachine, via Montreal and Quebec to the ocean. Yet
we carry twenty-five tons on the Welland canal for every single ton we carry
on the others: their respective amounts in 1858 being 787,87V tons on the
Welland canal, and 31,968 tons on the lower canals. On the other hand, in
the same year the tonnage of Canadian vessels was only 360,894 tons on the
Welland canal, but was 725,842 tons on the others. Thus our vessels are
heavily taxed for tolls on canals which they do not use; the tolls collected on
the Welland canal from American vessels alone being in the year last men-
tioned $18,522, or, as is usuiil, more than half of the whole amount collected
on all ihe canals in the province; while we paid only $405 on the St. Law-
rence canals. (See Canadian Trade and Navigation, 1858, p. 40.)

While an effort is thus made to divert the i)roduco of the West to the St.
Lawrence by discriminating tolls, it is also attempted to secure the carriage of
iron and salt to the West by passing them free through the Welland canal,
if tbey have paid tolls on the canals of the St. Lawrence — thus affording an-
other example of the studious and systematic evasion of the spirit and letter
of the treaty ratified under the promise of reciprocity.

Nature, in the severity of climate, has placed the St. Lawrence under in-
surmountable disadvantages; and that its deficiencies as an available and
reliable inlet and outlet for the internal and external trade of Canada, are
duly felt by the Canadian and Imperial governments, is demonstrated by the
extension of the Grand Trunk llailroad (a British work) to Portland, by a
perpetual lease of an Americjin railroad to that place. Every element enter-
ing into the price of fraight, and determining the channel of European and,
yet more, of tropical trade with Canada and the North- West, is in favor of
our sea ports over Montreal and Quebec as natural ports of entry.

Whilst vigorous efforts have been made by means of Canadian canals to
divert western traffic from our lines of communication, the peninsular shape
of Canada West has caused the disclosure of the same intention in the con-
struction of five different railroads across the peninsula. Two cf them cor-
nect Lake Huron with the Lakes Erie and Ontario. Two othera extend from

the St.

the St. Clair River to Lake Ontario, one of them leading also across the
flUNpension biidt^e near the Falls of Niagara. Another is laid near tlio Wel-
land Canal from Lake Erie to Lake Ontario. They all complete at or above
Toronto the connection of the various Lakes. These roads could not have
been made for the use of this province with a pojiulation at
the largest estimate of no more than three millions — not pri.ciiuiionscifran-
more than one-tlurd of wluch occupies the country al)Ove husIhIh ikt cnnuu
Toronto — the regions through which these roads run. Nei-
ther the population nor productions of Canada are sufficient to support them.
Tliey have been made on the invitation of the Imperial government (see Re-
port of the Canadian Parliamentary Committee on Commerce, 1858, )>. 4),
and by British capitalists sustained by "imperial credit" for the purpose of
securing our western trade. They were chiefly constructed with a view to
the inconsistent distinction made by oar laws, but having no foundation in
justice, permitting foreign or American merchandise to be conveyed by land,
or partly Ijy land and partly by water, from one part of the United States to
another by Canadian lines of communication, while we prohibited their car-
riage from foreign vessels from one American port to another. Laigo quan-
tities of grain and merchandise are thus sent to and from the United States
through various Canadian ports on Lakes Erie, Huron and Ontario.

It was enacted by Congress, March 3, 1817, sec. 4, that " no 'goods' shall
be imported under penalty of forfeiture thereof from one port in the United
States to another port of the United States in a vessel belonging wholly or
in part to a subject of any foreign power;" and the evasion of this law by
these railroads enabling Canadian to compete with American vessels may be
illustrated by the case of the Welland railroad, a line only about twenty -eight
miles in length and running alongside of the Welland canal. Its owners
carried a large proportion ot the grain sent last year from Chicago to Oswego,
receiving it at one end of their line from Canadian vessels and delivering it
to vessels of the same nationality at the other, thus by the simple process of
transhipment evading and frustrating the laws by which no foreign \essel
could carry direcLly from Chicago to Oswego. In this competition of ship-
ping interests there can be no equality so long as Canadian legislation makes
the price of ship-building materials cheaper in their country than in this.

These efforts to divert our own traffic from our own ter-
ritory, although important in themselves, are insignificant in oft"a'n<rrninkUie
comparison with the ambitious schemes developed in the con- n'u.,Vi'«i I'lowoV'of
struction of the Grand Trunk Rtiilroad — a work owned by "'"" "'
a combination of British cjipitalists. In our commeivial age, Bricish capital
is the power behind the throne, and the armies and navies of Great Britain
follow and protect the enterprise of her subjects. Having enlisted in their
service the special and individual interests paramount in certain pojtious of

'^ft

r.t '

the province, tlio maniifjfers of this road in omulntion of tho nnciont iiiHuence
of tho Eiist India Company on an imperial govermnent, have Kiilijcctcd tlio
Parliament of Canada to tlioir control.

Already expending yearly $0,000,000, nominally in snhhidiziiit; Ntcamships
for tho postal service, and only receiving for it a direct .eturti of $3,000,000,
the statesmen of Great Britain obtain a remuneration for the ontlay in the
influence thus acquired over tho commerce and hence in the politics of tlw
world. They soon perceived the importance of obtainino; a route to and from
Canaila at all seasons of the year, and that liberal aid to a railroad comnui-
nicjiting to tho Western Stiitos through this province might atl'oct our domes-
tic politics, and render us yet more tributary to the wealth and power of our
chief commercial rival. They thus projected the groat work of tho age for
purposes corresponding to the magnitude of its physical proportions. Intent
on securing tho valuable prize of Western trade, $10,000,000 wore advanced
to the thoroughfare known as the Grand Trunk Railroad, virtually as a per-
petual loan. The road was relieved from the jiayment of interest on this vast
sum, and tho lien of the province — a first mortgage on tlio road and its ap-
purtenances — was rendered secondary to the other bonded debts of tho com-
pany. Thus an additional loan of $10,000,000 more was otlocted upon tho
stock exchange of London. The interest on the sum of $10,000,000 which
had thus for practical purposes ceased to bo secured by tl j road, is not paid
from tho receijtts of the road, but creates those government nocossities which
the present high tarilf is nocesiary to supply.

Already this gkand incorporation is enriched by carrying the mails for
tho United States, Great Bntain, France and various otiier countries on the
European continent. Its managers congratulate thomselvos that " the battle
ground of their competition will not be in Canada, or fought against British
capital, but against their American rivals." The road is made in the most
substantial manner, and apart from its smaller provincial lines extends nearly
a thousand miles from Portland to the St. Clair river opposite Detroit. With
both its adjuncts from Quebec and Portland to Sarnia and Detroit (the doors
to our prairies), it measures 1,116 miles in length, and tributiry to it are
various other roads. The total length of these lines is 2,093 miles, and their
ci>st, with equipments, wjis more than $100,000,000. It is the great railroad
of the world — unoqualed in extent. The Victoria Bridge, crossing the St.
Lawrence at Montreal, is unsurpassed by any monument of human enterprise,
power and skill erected during tho present century. It is two miles in length,
over a vast and rapid river. By means of this bridge, the Grand Trunk
Railroad can transport goods for a distance of 1,400 miles, from the Atlantic
to the Mississippi, with but one transhipment. The change in tariff of which
we justly complain, was caused by the capitalists interested in this road, who
supported by tho British and Canadian governments, hope, in addition to

ii
t]
\l

is
it

llti

securing (lio trade ol'tlie Wctstcrn Stiitcs, to divert from us tin; profit of huyint^,
sellinif and carrying (lie coinnKxlitios jjroiiucod or consuniod l)y the people (»f
the peninsula of Canutla. This they jiropoae to effect hy the liigh tariff and
(lifferential duties aheady mentioned and professedly ma<le in favor of direct
sbipmont to Quebe<! and Montreal. The interests of those places, however,
are suhserviont to the road, the government having reserved to itself the right
of permitting goods to bo brought through the United St.ates in such cases
ns it may choose, subject only to such a valuation as if they were imported
directly from the country of their origin. This intluenco far from being con-
fine<l to (.'anada, is felt throughout the Western States, penetrating to Mern-
I)his, and already diverting from Charleston and New Orleans tho cotton and
other products of tbe south, and seeking to transfer tho shipment of tho great
southern staple to tho terraimis at Portland, on its way to tho factories of
New England and Europe. Tho experiment is boldly pushed in a manner
indicating less the struggle for temporary trade tban for permanent ernjiire.
Flour bius been carried from Chicago to Portland, and merchandise fiom Bos-
ton to Chicago, at prices fabulously low. It is stated on credible authority,
that 11,720 barrels of flour were carried over the bridge at Montreal in five
days. This is at the rate of 855,560 barrels in tho year, being 20,104 bar-
rels more than tho whole amount transported by the Eiie canal to tide water
in 1657.

By a system of bounties and special privileges lavishly applied wherever the
ingenuity of British statesmen can suggest their profitable use, all fair rivalry
with this road has been destroyed. To facilitate this undertaking a nominal
duty only, chiefly loss by 27^^ per cent than was paid on similar materials for
our roads, was imposed on the iron used in its construction. It is exempt from
taxation throughout its entire length. Steamships, subsidized by the British
government, meet its eastern termini in winter and in summer; laws have
been passed in Great Britain discriminating in favor of this road against dif-
ferent ports in our own country — against all roads owned by our own people
on our own soil — subjecting certjiin articles sent to Great Britain via Port-
land, to the same duties oiily iw if imported directly from Canada; establish-
ing an unjust precedent for future legislation and for the power reserved by
the Canadian government. No interest is jxpected on tho $16,000,000 ad-
vanced by government. Tho patronage of Great Britain and the provinces
is in its favor. It possesses at Portland an extensive range of docks, where
its cars run alongside of tho ocean steamers. Cheap fuel is bountifully suj>-
plied at all its stations.

The hope of reciprocity in tho carrying trade is futile, when such distinc-
tions are made in favor of this gigantic competition. The British govern-
ment, pureuing that commercial policy by which its historical career has

alw.ays been characterized, has not supported this road with a view to the
3

!i:'

«V1

I I

prortt of tho stockholtlors, but with » dcHij^ii of oj'Oiiiiij^ ii direct trade with
the interior of thin continutit, and of enabling her inanufuctururN, bankern and
njcrchantH, by incanH of agcntH in tho Western Statfs, to fonvort to their own
iiM^ tho profits and coinniitwions now ina(h) in our Atlantic citioH. It in in-
tended, ultimately, to uho Montreal and Portland an way stntionti oidy, for n
Hystom of conununieation including tiio (K'oan and tho (irand Trunk liailroad
with its western conncctionH, thus uniting Liverpool, London, (llaogow, Shof-
fieKl, Manchester and Birmingham, tho commercial and manufacturing cities
of England, with our inland cities in tho valleys of tho Lakes and MiKsissippi.
Tho whole plan and ptructuro of this monoi)oly for tho aggrandisement of n
foreign power, is conceived and built upon tho basis of our bonded system,
and tho liberal exerciso of ofHcial authority under tho act of 1700, and the
warehousing act of 1864 (and cerbiinly under the most liberal construction
of the act of 1700), permitting tho transit of foreign and domestic goods, first
through our territory, then through Canada, ond afterwards to their ultimato
destination in this country. Th law of 1700 was enacted at a timo when
its framei-s could not have foreseen any such application of its authority as to
permit tho productions of American origin to be taken from ono section of
the United States through a foreign country, by foieign means, to another
taction of tho United States, duty free.

Koiiy nnii injiiK- '^''® inconsistency, not to say injustice, must bo apparent
er'nnicnt 'nol pro- ^^ *'^"** pol'cy which prohibits transportation in foreign ves-
eTit»!r*'ri»e^"'f ro'ra ^^^' ^'"'"" '^"^ American port to another, and at tlio same
foreigu aggrcssioa. time toloratcs tho siimo transit from tho same ports to the
same ports through foreign means, de\eIoped in another form, and equally
in rivalry with the enterprise, labor and capital of our own citizens. From
such inconsistent legislation, or a too liberal construction of it, a foreign gov-
ernment now derives a license for its subsidized and privileged road to become
the great carrier of our exports and imports to and from our western and
eastern States. In addition, this foreign monopoly sustains its passage
thiougb our territory under the evasion of the spirit of our laws, and enjoys
under a perpetual lease the use of property which non-resident aliens thus
situated could not hold in fee.

The ch.-ingcs to be produced by this grasping monopoly will bo developed
with the rapidity characteristic of modern times. They will include the
whole system of our commerce and industry. Qv&xt Britain, by saving inter-
mediate profits, will be enabled to sell her manufactuics in close competition
with our own, will obtain on easier terms the produce of tho west and tho
south, of which she is the chief foreign consumer, and will transact an increased
business in tho merchandise bought by her from other countries and sold
to us. The reward thus obtained will be ample compensation for the
large outlay on this road, and its seemingly reckless competition. This

'.]o

From

ititcriiiitioti.-il iiitorcourao onco full)' ostiihli'^hed, profitublo pticuH for iVoight
will Ikj uxac'tu)!.

Tills vast (loimnercial Htriijrglu wlioro monopoly is tho on<l to I") piinod,
must toriiiiiiato in n coIohhuI (■uiiihiiiutiuii of Arncriuin cujiital uikI nbility, or
till) field inuHt i)u ahaiidoiutd lo tliuir loyal rival.

Already in tho livu various linos of railroad from tliu onstorn to llio north-
western States, nnd vsitli a water line of transportation unsurpassed in ihii
world, throuf^h our own country, from Li'kos Superior and Mioliin-an to tlm
Atlantic, we havo sufHcienl competition to insure iiKxIerato rates; nnd tho ulti-
mato inter()st8 of producer and consumer are alike consulted, l>y Jiayiiii; a fair
and remunerative price to tho carrier, i-hould tho present ruinous competi-
tion continue, it will be followed by [)riccs of freif;ht to nnd from the west
dictated by combinations secure in their monopoly, und rc-imbursitig, by taxo»
on tho western producers, tho losses they havo sustained.

This "Treaty of Reciprcx'ity" was not on our part founded only on commor-
eial considerations, but was regarded as inaugurating a system of international
fraternity. A real and permanent frame for tho comprehcnsivo principles on
which our own institutions are based, and for tho popular instincts expressed
among less practicfil nations in vaguo sentimonfalism, wjis sought in a system
of mutual benefits intended to give each country all the advantages of annex-
ation without its entangling political difllculties.

Tho natural ndaptiition of tho United States and Canada to give and re-
ceivo reciprocal benefits, easily and without humiliation conferred by neigi.
bors on each other, is well known; but tho explicit and earnest appeals of
Canada for an honorable and mutually beneficial reciprocity, arc now n«i
longer uttered. With an increase of wealth and importance, the liberality of
her spirit and of her promises has ceased ; and deeming herself secure in our
forbearance, Canada has adopted by her recent legislation a policy intended
to exclude us from all tho geographicjil benefits of our position, while she
hopes to use all their advantages for her own gain. Each concession has been
used !i8 a vantage ground for further encroachments; she has reversed the
natural laws of trade, and prevents merchants and agriculturalists from buy-
ing in the sjmie market where thoy sell. The revenue formerly collected on
our northern frontier luis been annihilated. She has increased lior own
revenue by a tax on American industry. Tho .advantageous trade formerly
carried on with Canada by the cities and villages on our northern frontier,
has been destroyed. Our farmers and lumbermen encounter the competition
of new nnd productive territories. It having been found that our shippers,
sailore and merchants in tho Atlantic cities were transacting a mutually pro-
fitable business with Canadians, the grasping spirit of their legislation endea-
vored to secure all tlie benefits of this trafl:ic, and att.ncked our interests with
discriminating duties. Our railroads suffer from a British competitor^.

8((

mippoiloil bv piivili'ijoH oqiiivalfiit to tiixntioii dii (luiir l)iiHiiit«H with tlui
C"iiim<liaii |>n)\iiuv iiikI llio iiid-iior of our own (uiiiitiy. Our iimiiut'mtmvrh,
itmtwiil ofi!X|ii>rlin>j; to (.'uniidii, aru cliccktd l»y imports inloniltHi noon tu pro-
hibit tho oiitnitiiM! of ihoir proibictioiw into tho provini'o. Tho wool anil raw
iiKitt-rialH of (!iiiia'la arc aihnittt!<l (hity-fn-o into our tiiarkotH, but tho fabrics
niaili- from tlitiin aro uxchKltii from Caiuwhi, contrary to tho explicit iinMurance
of tlif ISritish Miuistur on lichalf of tho Canuilian ^ovornmcnt, that it would
lies williiiic to carry tho principl<w of rocipnn'ity out htill further. Hitherto
tho vaunteil advantaijfos from navit^ation tlirouixli tlio St. fiawroiici! havo been
scarctjjv worthy of any Kcrious consideration. Tlie protfered hand ofcoinmer-
<'ial fiiiMidship, accepted for a timo by C!anada, with far more ndvant.iifo to
Canadians than to ourselves is now rojoctud. In this oxclusivi) and unnatu-
ral system, Canadians yet depend upon our market for the sale of their pro-
ductions, upon the immense traflie of our States for their carrying trade, and
npoti our tiMritory for the means of transit to the ocean. Kor tiieir partici-
pation in the traflie of our States, which is the olyect of their unscrupulously
aggressive tariffs, they depend upon tho contirnied liberality of our revenue
regulations, made under laws giving great discretionary powers intended to bo
used in facilitating our commerce instead of advancing tho eonnneroo of a
foreign country.

Tho results of the Reciprocity Treaty and l/anadian legislation upon our
corauierco nnd revenue are too obvious to have escaped the sagacity of British
statesmanship. 15y the treaty we jtlacod Canada on an eipiality with one of
the States of this Union, without subjecting her to any of its burdens. Hy
her legislation in imposing extraordinary (axes upon the jjroducts of Amer-
ican industry, she is compelling us to bear her burdens created to sustain
:gigantic rivalries worthy of tho imperial ambition, for supremacy by land
jiud watt!r over our inland commerce, arid for tlio grave influence which thus
may be exeri'ised upon our politic.-il career.

Tho tenor of tho instructions under which this Report is mad(% excludes
tlie idea of any rocnmiondation upon my part pointing towards any remedy
of the great evils vMch investigation has thus shown to exist under this sys-
tem of miscalled i.ieiprocify. I cannot but believe, however, that 1 should
fail in the duty assigned to me, if I omitted to at least sugge.st tho practical
results to which the foregoiiig considerations would lead.

A treaty broken is a treaty no longer — obligations upon one part cease,
when correlative obligations have no binding foicc upon the other. That th«
substance and spirit of this treaty have been more than disregarded by thtj
other contracting power with which it was made, is too evident to admit of
dispute. It is equally evident that a systematic scheme of provincial leorisla-
tion, affirmatively aggressive upon great interests of this country, com-
menced w ith the ratification of the treaty as the beginning of its opportunity.

Mini li.'iM |)i(i;,'irsr,(:(l ill i(8 sti( li;;ll» and its <(Xl(;iil, ill its <li! ails ami it^ scopfl,
ill all iliHaNli'iiiiH ('oiiH(!(|iii!nc(>H rveiy day wliilo thai oi>|Hiiliiiiity lian cutitiiiiiod.
Without ihoti'oatVi ii'» wu'li ajj<i;rt!t*loiirt could wvor liavu hct'ii nftfiiiptLMl ; with
itH toiiiiinatioii ihcy inu.st rwiHo. Tln'ii tho jjov<'iiiiii('iif ot" this ('(niiitry cdti
rt'suinc thniiij,di ii'ufiliinalc iiicnns flic protirtidti of tliKsc t,ncat inti-rcslM which
;;ii\i<i'iiiiiciitH c\iNt, to jH'otcct. Then the Canailiaii I'arliaiiicnt lllu^«t Ix^ (inni-
pclK^d til modify ittt oxiHtini; IciriNlation in tliift ruM|)o<;t, until thoday Hliall ictuin,
when, ii» lic'fon', f h« laws of tiadc vgiilatod hy tho Ic^iMliition of ConjfvonH, «hull
;;iv() UH Koiiictliin;^ far more like reciprocity than we now poHWRH. The hoipo
t,'overiiiiient — the provincial ;;o\eriimcnt it.-telf, in the j;i'cat intoicHtH entirely
de.pondeiit upon our trule. Iiavo j;iveii liosta^fCM, which will ho far moru
hiiidiiii; upon them than this ruptured treaty, that thuir leirit^lation woiiM not
then 1)0 8liHped to make us their trihiitaries. I certainly nhoiild ti'ansc((n<l
my province in makini,' any paiticular sn^i^estion of the mc;ins of abioi^atiii!^
the treaty. It is not for me to say wli(;tlier or not tho repeal of the atseiitinj^
law of Conf^ress, re(iuircd by \t» fifth article, would havo that ed'ect, or what
more limited etfucf, if any it would liavo. Convincoil, nH I am, however, that
the dilatory measure of ^ivin;^ tho notice ro(|uii(!d hy flio treaty for its abro-
gation wouKl bo far too slow to afford practical reiiiedios of tho abuses I liavo
exhibited in tliis Report, I certainly should fail in that <hity, wiiich tho pro-
loiiyod and most careful considoration of these most important matters brinies
so strongly liomo to mo, if 1 did not nt least point out the fact, that such
])ropor alleration of the navii,'ation laws of 1WI7*, in relation to tho trans-
portation of ujoods in foreign vessels from ono port in tho United States to
another port in the United States, a« would make tho prohibitions in such
case upon foreign vessels equally applicable to the carriage of pro])erty by
other foreign means from ono of our ports to another; and that the with-
drawal of the })rescnt privileges existing under the laws of ]799f and lH54j,
in reference to the shipment, carriage and re-entry of property going to and
from tho United States and Canada, would in a inost important degreo
hasten tho riMiioval of many and perliaps all of the numerous evils I have
stated. Tho necessary conseijuences of such action must bo the alteration by
tho Canadian Parliament, now in session, of tho legishition under which wo
now suffer. Tho wrongs of to-day would thus bo immediately but perhaps
only temporarily mitigated. The proper, radical and suflicient remedy, be-
yond question, is tho speedy abrogation of the treaty itself.

ISRAEL T. HATCH.
WASiitNOTON, March 28, ISOO.

com-

* Sec. 4 Navigation Laws, March 1, 1817.

t .'^cc. 47 of Revenue Laws, passed March 2, 179!>.

t Sec. 5 of Act to extend Warehousing Sy slvm, pusscd March 28, 1854.

Xoi K. — The flscnl year of Canada (onninatoH iij'on the Slst day of Doct'inlMM-.
which iiiukfs statistifial comparisons hctwof n tlit- two countries very (litllcult As our
fiscal year eml)race8 jmrts of two years, \ have generally adojited in my calculations
fur compavisons (he Canadian fiscal year.

" By e vlfuding the ad valorem princ-ido to all importations and thereby encour.
aging and developing the direct trade between Canada and all foreign countries by
Beo, and so far benefitting the shipping interests of (ireat Uritain — an object which is
partly ittained through ihc duties being taken upon (he value in the market where
lost l)ought — the levy of specific duties for several years had comi)le(ely <livorted
the trade of Canada in teas, sugars, etc., to the American markets (our Atlantic cities),
and had destroyed a very valuable trade which formerly exis(ed from the St. Law-
rence to (lie Lower Provinces and West Indies. It w as belii ved that the comi)Ictiou
of our canal and railroad systems (via Portlond), with the improvements in the navi-
gation of (he lower St Lawrence, jusdfied the belief that the snpjdy of Canadian wants
might be once more made by .sea. and the benefits of this commerce o))tained by our
own merrhaiiis and forwarders. Under (his conviciion it was determined by the
government toai>j)ly the principle of ad valorem dudes. (Mr. Gait, Finance Minister
of Canada, Report, Mr.rch 1, 18(50, p. 36.)

" Any increase of duty which has been placed on English goods, is quite indemni-
fied at the increased cost by which our canals, railroads and steamshij's enal>le them
now to be delivered throughout the province; and if the question were one of com-
petidon with Canadian manufacturers, the English exporter is quite as well off as be-
fore, whilt! iis compared with the American, his position is greatly improved." (Page
38, same Report.)

Letter of British Minister, loarnii^g Canadian Goremment of the consequences of
increase of Didies upon American products.

(Gopr.)

Washinoton, February 2StIi, 1859.

Sin. — I have (he hono"" to acknowledge the receipt of your dispatch of the 19th
inst., enclosing a copy of a report of a CommiKee of (he Executive Council, with
reference to a supposed design on the part of the government of the United States
to terminate the Reciprocity Treaty.

A Resolution has been proposed by Mr. Kino, of the State of New York, in the
Sena(e, pointing to the terminaiion of the treaty at the peiiod con(empla(ed in the '
provisions of that instniment ; and suggesting that retaliatory duties be meanwhile
imposed upon articles produced or manufactured in the British Provinces, which are
not exempted from duty by the treaty.

This Resolution was referred to the Committee on Finance, whicii has, however,
not reported upon the sulyect

No resolution has, I believe, been moved in the House of Rei/resentativea ; but
there hiis been some exhibition of hostility to the operation of the treaty in the
course of the debate.

I am bound to state, however, that the high scale of duties now established by
the Canadian tariff has produced in some quarters a feeling of dissadstUcdon whicli
may eventually result in a serious movement against theHtii)ula(ions of the Recii)io-
city Tieaty. It is urged that while under the treaty. Canada has the advantage of

pourine hor raw productions into tho United States free of charge, tbe American
trader whose exports to Canada consist in considerable part of manufactured goods,
is mot' on tho Canadian frontier by a high tariff. The reciprocal exoneration is
alleged to be more apparent than real, and the United States are represented to be
the losing party. Your excollonoy can judge how far the impressions I allude to are
well founded, and whether they might not be removed by some modiflcjtion of the
duties affecting certain Iclnds of goods imported by Canada from the Uni ed States.

Tho governmenta of the British Provinces may be confident, that the best eflforts
of Hor Majesty's Minister at Washington will, under the instructions of the Secretary
of State for Foreign Affairs, bo always employed In support of the reciprocity sysUm.,
which ha« proved to bo so advantageous to the Interests of Her Majesty's subjects.

I have, etc.,
His Excellency NAPIER.

Sir E. W. Hbap, Bart., '

etc, cot., oto,

;i !;,

i A

APPENDIX.

No. 1.

Statemkkt eMhUimj the I'alue o»(f Ammmt ••( Ihitifs on Arlkle.
ported (lurinij the. fiscal year mdlng 'Mih June, 1854, and now
Jkviprocity Treutij.

liftle Vnliie

ARTIC/.KS. of Duty of

per cwt. Articles.

(irain. Flour, nml Bmulsttiffs 20 $:3,!»0(),073 ..

.Animals, free 7r),4()() ..

dutiable 20 .... 225,042 ..

Fresh, Pinokod, and Salted Meat, 20 5, 1 84 . .

Cotton, Wool, free 12r) .

Heeds, Plants, Shmbs, etc., free 18,210 .,

dutiable 20 .... .555 ..

Vegetables 20 102,800 ..

Uudried Fmita 20 .... 13,092 .,

Dried Fruits 20.... ;{| ..

Fibh of lUl kinds 20 901,671 ..

I'roduc't.s of Fish and of all otlier creatures

living in the water

Poultry 20 .... 1,016 ..

Eggs 20 .5,.500 ..

Hides and Skins 5 .... .34,729 ..

Furs, undres.sed 10 13,920 ..

Tails, undre.ssed 20 8 ..

Unwrought Stone 10 10,7.58 .

Unwrought Marble 4 4 .

Huttcr 20 .... 126,811 .

Cheese 30 .... 127 .

Tallow 10 .... 37 .

Lard 20 .... 8.37 .

Horns 5 .... 1,421 .

Manures

Ores of Metiils, free 18,790 .

dutiable 20 .... .516 .

Coal .30 254,775 .

Pitch, Tar, and Turpentine 20 75 .

Ashes 20 4,441 .

Fire and otlier Wood .30 728,688 .

All other Wood 20 .... 574.051 .

Pelts 20 .... 24.639 .

Wool.. .30 69.182 .

Fish Oil 20 .... 110,402 .

Uice

liroom Corn

Hark 20 .... 978 .

Gypsum, ground 20 353 .

free, unground 113,312 .

Grindstones 5 23.265.

Dyestuffs : 5.... 14,717.

Hemp. Flax, Tow. unmanufactured

Tobacco, unmanufactured 30 2.915 .

Rags 5 12.696.

Total $7.398,.358 .

Deduct for iJritish North American Prov-
inces 1,301,154 .

Leaving for Canada $6,097,204.

.s which were iin-
made free. I>y the

I)llti(!,<,

$781,214

4.5,128

1,036

111

20,.561

2,738

180,3,34

20.3

1,100 00

1,7.34

1,392

1,075

25,362

167

, 103

76,432

888

218,606

114,810

4,927

20,7.54

22,080

195

1.163

735

874

634

$1,524,457

231,0.54

$1,293,403 40

No. 3.

SiATKMKNT of the Eevenw. collecled nnnnnlly at the, principal Vort.t nf Khtn/ on the
Xorth-WisU'rn Lakes from 1855 to ]S5!), inelusiveh/. on Canadian aiid all other Im-
portatiouK/rcv} Canada, so far as ascertained; sho'wiruj Expenditures over lieceipU:

1K6 S: .

1«57 o£

1H..8 7.,^

1859 [2

Total $ 1,907

Kxjicnscof eoUcct-
ingfortimr joars
as per U. Htati'S
Register for 1857 $21,016

:-
g

$ 2,fi40

4,045

2,900

3.727

17,8.S4

1,735

1,349

4,491

1,797

7,499

8,050

1.074

2,084

5,152

2,907

2.293

7,924

2,109

2,377

4,193

7.803

1,514

8,317
42,131

958

8,4,')0

18,481

15,407

15,033 •

5,9;J0

54,884 49,312 43,148 32,548 52,652

26,330 4,424

ft*

1-^

»'■ i

»■?!

'■■'ii

'•*

ss?

r-i <D

§1

-♦

IS ■

-t

<«>

■s •

* t« ■

1 = '

'■2 ;

z a '

■ a ■

-a

1850

1H57 92

1858 98

1859

Total $ 190

62
5

2,685
1,576
3,095

2,847

5,070

11,822

13,8K9

32,905

6,093
4,809
2,93,3
2,714

13,801
9,880
1..5,35
2,147

Total.

89 9,103 63,752 16,609 27,429 03,014 288,508

Kxjicn.'io 1)1' collect-
ing for lour years
as per U. Stales
Register for 1857 $i;i,072 14,732 22,312

58,032 17,828 4.3,872 22,960 478,2,38

Excess of cost of collection over receipts $ 89,730

No. 4.

Statkmknt e.rhihitini; the amount of Bevenue from Didies o?i Prodwts of American
ori'jin, collected by the Canadian Government] from Dec. 31, 1855, to Jan. 1. 1860.

1S56.

Duties— Specific $

•■ 20 jjcr cent

'• 12>.<andl5 •' ...
" 5and2'„' •' ...

1858.

217,941 99 Duties— Specific

41.796 00 "

81,3,041 22

21,935 90

Total $1,095,315 00

25 and 20 pei

20 and 15 '•

15 "

5 and 2% "

Total....

cent. ,.

$302,955 00

52,9,'>5 00

392.123 00

103,557 00

11.742 00

$883,261 00

1857,

Dutit's— Spcc-ilio

" 20 per cciit

" 15 •• '• ...

" rKiiuiL".; " ....

18,09,

$20(t.M2 00 Duties on AniPriciin piodiic-

^•l.,'*,'^.'. 40 tioiia $l.lO!t.»Gl 00

C.'il'i.lflO .'{;')

IT.C.Mi 24

Toiiii f!i)4;i,!)«;t ;i8

Total .

.$1.10i),4«l 00

So tlie lot.il ;iiii(nint of duties loviod in Canadu in 1859, undor iho high
tarlrt', was ^4,4^7,840. In 1858, iho whole amount of the (hities wuh
$3,381,389, of w'liii'h more than one-fouith was levied on productions of
United States oiii>;in. Il is therefore fair to assume tliat more than !5!l,109,-
401, or one-fourth of the whole customs revenue, arose from the same source
in 1859, the duties by the tfiiWof that year being proportioiially higher upon
the dutiable articles exported from the United States to Canada than those
from any other country.

See j)ublished accounts of Canada, 1859, by Mr. Gait, Minister of Finance.

No. 5.

State.mknt of the. Canadian Tan(f of \H'>i), in cimfraat icilh Vial of 1854, //le yfor

when the Treaty was made.

1"69.

('LANS 1.

]8,'>4.

Brandy, gin, ruin, etc., 100 per cent.

Brandy, 40 cents jier fral,, 25 jier cent;
Rum, etc., 25 cents and 25 per cent.

Clash 2.

40 per cent, eifrars, sugar refined, duty Cigar."", .30 cents per 11). and 12J per
on (he latter to lie reduced on a sliding cent.; sugar relined, $2 50 jior cwt, and
scale to 15 per cent, in 18()2. 12 J jier cent.

Class 3.
.'iO per cent, rnffee roast or ungronnd, Unrefined sugar $ I 20 per cwt. and 12*
sjuees gnmiid. drieil fruits, 8nuf!', starch, percent.; niola.s.«es 4 cents jier gal. ana
patent nie<lic:ines, sugar not refined, and 12J jtercent.; coffee roast or groiuid, $12 J
molasses, 2 cents on a sliding scale to 10 ))er cwt, and 12J i)ercenl.; and spice.s,
per cent, in !S(i2. ground or nnground. 30 per cent.; fruits,

etc., snuff. 7 cents i)er lb. and 12 J percent ;
starch, 12J per cent.

Class 4.
15 jier cent, tea, green coffee, on sliding Tea 2 cents per lit. and 12J jier cent.;
scale to 5 per cent, after Jan., 18(13. coffee (green) !t2 cents jier cwt. and 12|

per cent

Cl.AHR 6.

25 per cent, manufactures of leather, viz. Manufactures of leather, l)oots and shoe.*,
t)Oots, shoes, harness and saddlery, eloth- saddlery, clothing, wc'aring ajiparel, etc.,
ing or wearing apjiarel made by hand or 12J per cent
sewing machine.

Class 6.
Goods paying 20 percent; leather and T'neniimerafed, etc., 12J jier cent, in-
alniost every manufacture. eluding leather and almost all manufac-

tures.

MM.

18S4.
Woollens; crittons; (oliacci). tlils urlicln
•icing iilfo Niilijcot wiuMi iiiiiniit'iictiinMl to
ulioiit 2 ccntH jior lb., iiiiil sniilf In 7 tcMite
ixu'lb. ; ImtH, I'lirnitiin', kIii.ss. axt-w, <'(Ip;e
tooJH, ugi'iuiiltnral iniiilciiiciilH, lianhvuru.
cttstingH, mowing inacliiiicH, cto.

HookK froo; iron, bniss iinil coiiiht, and
nio.st iirticlcs in this cIiih.s, ?J iier ccnL

tlash 7.
Book, map and printing paper, If) per Paper, 121 per cent
cent.

Cl.AHM 8.

10 per rent., sliipn' Itookn, iron, brass or
I'oppor in bar, rod, hoop or sheet, win-,
boiler i)!ates, nnijis, sheet lend, candlo
wicks, cotton, yarn, and mill Hhutts, cranks,
forged, in the rongii. and gtuierally urtlclcH
partially manulactured.

Cl,AHH 9.

Spccilic, whiski'y, IS cents per gal. Whiskey [> cents per gal., and 12J per

* cent

Cr.Asa 10.
Five, iron, zine and tin in pigs or block, Iron, brass and tin in pig or blocks, 2J
all articles nunwd in treaty (with nominal per cent
e.xccplion), liook-binders' tool.s, canvas for
sails, variou.s artii'les ifnscd for ship build-
ing, hat fcll« and bodies, etc., etc.

No. 6.

Statement nhVMnij in contrast the value of each clas.i of Imports into each vounlry
from the other, <ftlie different classes of all articles eHumvrali:d in tlie Treutii fur Jivv.
years before the Treaty and to Jan. 1, 1859.

ISfiO. 18.'-,l. 1852.

Into into Into Into Iihd lutd

„ . ... ,,, U. States. Caimdii. U. States. Cauuiln. U. Stiitos. Camida.

Produce of the Mines 41..'.87 17.033 tiiolG ]02 t4S,J7

Produce ot the Koivst $1,6.W,4.S8 4.).605 IjL'TUy.'U IH.tV.O 1 83.S 77.-) IKil'^O

ProduceoltlieSra ;)0,94;j 1^1.473 4;i,7v4 •i64W 'iOZf.'i .'tlOTg

Animals and then- 1'i(k!ucc 490,477 45,'),03rf ,'Jt;4,7S7 9lW,17U fiiHilS9 454475

Agricultural Produce 2,70U,3«:i 4:i7.IW4 1,937,293 070,327 3.277.yJ9 4-3J37

Total.-* $4,707,270 99l),f;W 3,S4;!,410 1.740,13,3 0,133,374 1,1^9,707

IS.M.

Into Into

U. .'<tate.'<. C'anailn.

Produce of the Mines 1.. $ .').S,400 12H.fiS6

I'roduce of the Koresl 2.5b».h9S «fl.«20

Produce of the Sea 7.3.421! 3.S3.4;t6

Anhnal.s and their Produce 1,107.870 ,570.5«7

Agricultural Produce 4,949,570 0(iS,113

Totals , $8,779,106 1,815,342

]H.')4.

IS;-,.

Into

U. States.

Canada.

r. Stales,

C'rinadiu

118,028

2.W.1S2

23.:l(i3

4.-.5,7;i9

2,131.723

107.-159

3010.8>0

180,830

86 472

74.S51

]4H.5;0

201,863

eS4,4!9

S4,i.591

1.4.S5.'.l2.'i

1.878.0t:4

5,29.'i.007

1. (-00,52 1

ILbOLatn

4,972,475

8,305,931 2 7!-4,004 ie,47u.iJJ3 7,72j,i61

isse.

I'-ST.

nrA.

Into

V MtutPH.

Produce of tlii> Mlncn $ H4.'J2S

I'roduec of tlif Koient 8,.'14),i;H4

Produce of till' S I'll HO.IMS

AninialK anil tbeir I'roduce 2,.'I75.;IS8

AgTlcultiiriil I'rodutc Il,h8l,8;t0

TotuU $17,810,084

Into

Caniiiln.

4S8.1IS4

.•«(•-! 1H)1

411,71(1

2,f«lfi «;is

3.800,112

Into
I', Sliiti's.

;i,:u;),otiH

U.),4I7
l,ltT4,.'ilii

7. 100,4 la

Into

Ciiniiclii.
fiOO 4tl4
4I1.W0
;tl4.'j»i

2,i:t4.;i.'i!)
o.'JTzirii

Into
l". Slai(-,H.

n.'i 41).)

3-iio;;mh

l.'.K is.->

'jail.TMl

fi,7io,;:o.'>

Into

('anadu.

324,374

212,177

l.'.7,fl74

l,4tM,H73

3,;i«f),ftl7

7.»00,&54 12,S12,S0H 8,0I^,0.;0 U,.M4.;i04 fi,6»4.6IS

!■■

No. 7.

SuMMAUT shoirhiff an anmial emesn of Kjfportations frdm Canada to the I'liUed Staten
above those to all other covntrks toij ether, from Ike. .'(1. 1851, to ,lan. 1. 1859.

Total Kiports from riinndft to the Unilod
St4itcs. (ircai Urit4iin and all other
countrifH,

K.xportH from Cnnndnto
tlie I'nilcd .Slaten.

1855 $ 28.inMf>l $20,002,230

1850 ;r2.017.0l(l 2().2IS,().''>.T

1857 27,00(i,(;2i I(."(12.(i41

1868 _2;{,472^(i01( I.i,.i7;!.138

Totiii $110,0;i4,710 $(i8,:{,)(;,722

E.\|)()rt» to the United States $(;s,:^5f..722

Ex|)ort,s to all other countries $12,277,1)80

Amount of Canadian Flxport-s to the U. S. above those to Great
Britain and all other countries .$2(;,078.8.34

No. 8.

SfMMARY shoidng an annual excens of Importations into Canada from the United
Statcnabove those from allothtr conntries toijether, from Jhc.'M, ix,'yl, to, fan. 1, 185.4.

Imports into ranad.'i from the United Statea
and all other countries.

Imports into Canada from
till! I'nitcd StatPH,

1855 $ ;{6,086,lfln $20.82S,(;7(i

1856 4.'},58.1,387 22.70t,.'J0<J

1857 39,4;i0.5!»7 20.221,(i50

1858 29,078,527 15,(i;;.5,5()5

Total.

,179,680 $79,:{93,400

Imports from the United States $79.;i9;j. 100

lm])()rts from all other countries $G8,78(;,2S0

Imports from the I'nilcd Stales above those of (ireat lit iliun..'$l 0.007,120

■ ,-|*lfi|||iliJi{,pi!!ll