Canadian ocean mail service--Want of sympathy of British
government therewith.
The progress of the Cunard line had a consequence which was neither
anticipated nor welcomed by the British government. The plan of the
government to concentrate its transatlantic communications on Halifax
had been given a thorough trial and had proven a failure, and as the
expressed wish of the Canadians to have their correspondence with the
mother country exchanged at either Boston or New York coincided with the
interests of the owners of the steamers, the principal port of call on
this side of the Atlantic shifted through a series of arrangements from
Halifax to New York.
In 1852, the contract between the British government and the Cunards
provided for a direct service of weekly frequency between Liverpool and
New York, with a subordinate service by slower steamers to Halifax and
Boston. The subsidy had also undergone successive augmentations until,
in 1852, it reached the immense sum of L173,340 a year.[296] But
although the service was now to all appearances Anglo-American in
character the British government assumed to regard it as Anglo-colonial,
as imperial, because it provided the means for exchanging the mails
between Great Britain and Canada.
In 1855, the British government set on foot one of those large colonial
schemes which ought to have excited mistrust both as to its
practicability and its expediency. It proposed to establish a low and
uniform rate between Great Britain and all her dependencies excepting
India, Cape of Good Hope, Mauritius and Van Diemen's Land. The postage
was to be reduced from one shilling to sixpence per half ounce
letter.[297]
Coupled with the reduction in rate was a proposal that arrangements
should be made by which the maintenance of the services, which had
hitherto fallen entirely upon the mother country, should be shared by
the colonies having the benefit of them.
[Illustration: WILLIAM WHITE, C.M.G
(_Deputy Postmaster General_ 1888-1897)]
Canada's participation in the scheme was invited, and the arrangement
made by the British government with the Australian colonies was
submitted to the Canadian government.[298] Under this arrangement the
British government was to make the contract for the service, and the
colonies should pay half the expense involved.
The proposal found no favour in Canada. The Cunard service, the expense
of which Canada was expected to share, was far from being an unmixed
advantage to the British North American provinces. It was indeed a most
serious obstacle to the realization of plans, which Canada conceived
essential to its expansion on the lines marked out by nature.
For many years the thought of Upper Canadians had turned to the
advantages which were to be derived from the utilizing of the great
water system extending through lake and river, from the head waters of
the lake Superior to the ocean, and measures had been carried forward to
overcome the obstacles caused by the falls and rapids on the course of
the passage.
By 1849, the canal system was completed, which permitted the free
passage of inland vessels from the upper lakes to Montreal, and it was
anticipated that the greater part of the movement of immigration and
freight to and from Upper Canada and the western states, would be upon
Canadian waterways. Merchandise could be carried from lake Erie to
Quebec at less cost than from Buffalo by the Erie Canal to New York. But
in spite of these facts, trade on the Erie Canal increased largely and
steadily, while the trade on the Canadian water routes increased but
slowly.
The principal reason for the apparent disregard of the economic law that
trade will follow the superior route was found in the fact that for a
large proportion of the traffic the destination was Europe, and that the
charges to the out-ports of New York and Quebec were only a part of the
total charge to which the traffic were subject. If, for any reason, the
conveyance across the Atlantic from New York to Europe was so much
cheaper than the conveyance from Quebec, that the total charge from lake
Erie to Europe was lower by way of New York than by way of Quebec, then
it is obvious that the trade would not be attracted to the route which
seemed to be naturally the superior one.
This was the case at that time. Owing to the large subsidies given by
the British government to the steamers sailing to and from New York,
vessels running to and from Quebec could not compete with those from the
rival port. The assistance to the Cunard line, therefore, which the
British government desired Canada to give in part, was a positive
detriment to the development of the transport business of upper and
lower Canada.
The question of establishing a steamship line from a St. Lawrence port
had engaged the attention of the legislature of the United Provinces as
early as 1851. In that year a resolution was offered to the house of
assembly, setting forth the advantages of the Canadian route, and the
fact that these advantages were offset by the aid given by the British
government to the Cunard and Collins lines (the latter was owned by an
American company), and asking that the British government be approached
with a request that they grant assistance to a Canadian line similar to
that given to the lines running in and out of New York.[299]
A committee of the assembly took the subject into consideration, and in
the following year a contract was made with a British firm,[300] which
was shortly afterwards converted into the Canadian Steam Navigation
Company, for a service from Liverpool to Quebec and Montreal during the
season of open navigation in the St. Lawrence, and to Portland, Maine,
during the five months when the river route was not practicable. The
trips were to be fortnightly to the Canadian ports and monthly to
Portland; and the steamers to be employed were to be of at least 1200
tons burthen.
Twenty-four thousand pounds a year were to be paid to the company by way
of subsidy--L19,000 by the government of Canada, L4000 by the Atlantic
and St. Lawrence railway (later a section of the Grand Trunk railway)
and L1000 by the city of Portland.
Trips were made during the winter of 1853, and throughout the summer of
1854, but there was so general a disregard of the terms of the contract,
that it was terminated, and a contract was made with Hugh Allan in
September 1855.[301] The new contractor entered upon his engagement with
laudable energy; and at the end of the first season the postmaster
general of Canada was able to make a comparison between the Canadian
service and that to the port of New York.[302]
On the westbound voyages the Canadian steamers were practically a day
slower than the Cunard steamers--the Allan steamers taking twelve days,
twenty and a half hours, to eleven days and twenty-two hours occupied by
vessels of the Cunard line. The Canadian steamers were also slower than
the Collins line on these trips by four hours. But on the voyage to
Great Britain, the Canadian line made the speediest trips of the three.
These steamers took but eleven days two hours, while the Cunard steamers
were eleven hours and the Collins thirty hours longer in reaching
Liverpool.
It was with the successful inauguration of the Canadian service that the
friction with the British government began. There developed immediately
a clash of interests.
The first note of dissatisfaction came from Great Britain. The
postmaster general communicated to the colonial secretary[303] the
information that the earnings of the packet service were much reduced by
the fact that the Canadian post office was sending its correspondence by
the first steamer that sailed whether it was British or American, and
not confining its despatches to the steamers of the Cunard line.
To the British post office, the Canadian line was an American line, and
in spite of all protests and remonstrances, it insisted on treating the
Allan line steamers as foreign. Ordinarily there would be no practical
consequence of this wilful misunderstanding, but as letters conveyed by
the Cunard line were charged eightpence the half ounce, while those
carried by the American lines were made to pay fourteen pence, the
hostility to the Canadian enterprise was marked.
The postmaster general did not stop at this point, and leave the public
on both sides of the Atlantic to consult their own interests as to
whether they would send their letters by the Canadian or British
subsidized lines. Taking up the case of interests adversely affected by
the discriminatory rates, he pointed out that, as many unpaid letters
were sent by the American lines, recipients of these letters had to pay
sixpence more than if the letters were sent by the Cunard line.
That the remedy lay in the hands of the postmaster general, of reducing
the rates on letters carried by the Canadian (or American line as he
persisted in calling the Allan line) was not to the point. He called
upon the colonial secretary, if the secretary concurred in his views, to
remonstrate with the Canadian government as to the course it has chosen
without reference to the home government. These views do not seem to
have been communicated to Canada. But shortly afterwards the British
government submitted for the consideration of the Canadian government,
the Australian scheme for a postal service to practically all the
self-governing colonies of this period.
The postmaster general of Canada had doubts as to the applicability of
the Australian arrangement to the Canadian service.[304] He presumed the
proposition was limited to the Cunard line, and would not be extended to
the equally British line running directly from Canadian ports to
Liverpool. Special interests, similar to those which had induced the
British government to subsidize the Cunard line, had led the Canadian
government to extend assistance to the Allan line, and it seemed
scarcely expedient for the Canadian government to lend aid to the
British government in the maintenance of the Cunard line in the absence
of any evidence of intention on the part of the British government to
reciprocate with regard to the Canadian line.
It was further observed by the postmaster general of Canada that even if
the Canadian government should concede the equity of the British
proposition it would be impossible to determine satisfactorily the
proportion of the cost which should be borne by the North American
provinces, since much the larger part of the mails carried by the Cunard
line was exchanged between Great Britain and the United States.
The position taken by the Canadian government gave rise to great
irritation in Great Britain. Fortunately the expression of this feeling
was not communicated to the Canadian government until some years later,
when the question, though by no means settled, had passed out of the
irritation and friction phase.
It is fortunate, also, that the intermediaries between the two
governments were men of good sense, with an appreciative understanding
of the view of the colonial government. The Duke of Argyle, postmaster
general, in the Palmerston government of 1855-1858, declared that the
measures taken by the Canadian government afforded no relief whatever to
the British government. They had, indeed, withdrawn from the British
government part of the postage it was entitled to expect when it
embarked on the Cunard contract. If on the expiration of the contract
existing, which had still five or six years to run, the Canadian
government should undertake to perform half of the effective service, it
might fairly claim exemption from all share in the other half of the
service, and furthermore might claim a right to apply the amount
received by way of sea postage, towards defraying the cost of the
Canadian packets.
But, Argyle affirmed, the British government could hardly admit the
propriety of a demand made upon it for assistance to a line of steamers,
which was established by the colony--a line which had no other effect
than to diminish the postal revenue upon which the British government
relied to meet the outlay occasioned by the contract with the Cunard
company.
Labouchere, the colonial secretary, to whom the duke's views were
communicated, declined to submit them in their existing shape to the
colonial government. If the British government had been in no way
parties to the agreement made by the Canadian government with Allan, the
Canadian government were equally unconsulted when the British government
entered into the contract with the Cunard company; and Labouchere
pointed out that the British government were without the means of
enforcing its views on the Canadian government.
If the postmaster general or the treasury, which coincided in his views,
were of a different opinion, Labouchere desired to know what steps they
proposed to take in the highly probable case that the province declined
the responsibility it was sought to impose upon it. On the whole, the
colonial secretary thought the preferable course would be to allow the
present arrangements to subsist until the Cunard contract had expired,
and then enter upon negotiations with the Canadian government for
sharing with it upon equitable terms in the general expense of the
transatlantic service.
The correspondence between the departments of government in London--the
tenor of which has been described--was submitted, confidentially, to the
governor general of Canada for his opinion on the 17th of July, 1856.
Sir Edmund Walker Head replied, confidentially, to Labouchere, and set
out Canada's position with gratifying clearness. A Canadian, he
observed, looked at the circumstances from a point of view rather
different from that in which they had presented themselves to the
postmaster general at St. Martins-le-Grand. The Canadian asked: "Why are
we Canadians obliged to pay a subsidy at all for a line of steamers
running into the St. Lawrence to a British port, by a route which we
hold to be the most advantageous route? The merits of the route itself
might make our bounty unnecessary, were it not that Her Majesty's
government gives a large bounty to a line running into foreign ports."
"It might be admitted," continued the governor general, "that Canada was
benefited by the rapid transmission of mails through the United States;
but she was no party to an arrangement as one that could never be
revoked. Canada, then, thought that she could arrange for the conveyance
of her own mails to and fro by way of Quebec in summer and Portland in
winter, more rapidly and advantageously than by Boston and New York. Why
should Her Majesty's government discourage this new enterprise on behalf
of Her Majesty's subjects and by a large subsidy drive the business to
the United States ports?
"Canadians entertained the hope," the governor general further observed,
"that no course would be pursued by the British government adverse to
the principles of free trade, by the continuance of a large bounty to
the Boston and New York lines. Leave the natural resources of the
Canadian route to find their own level, and in the meantime do not use
all the influence of the British post office so as to bear as hardly as
possible on the first effort of the colony to open the St. Lawrence to a
regular line of British steamers."
Head disclaimed the idea of giving these arguments as his own, but
stated that, they expressed the opinion of many Canadians, among whom
were some of the members of his council. In December, Labouchere
informed the governor general that his view had prevailed, and that it
was decided to leave the matter as it stood, until the Cunard contract
expired, when it was hoped that an arrangement might be made more in
conformity with what was regarded as an equitable consideration for the
finances of the United Kingdom.
The lack of cordiality displayed by the government of the mother country
towards the ocean transport enterprise of her colony in its initial
stages yielded to no warmer feeling with the progress of the scheme. The
Allan service was performed during 1856 and 1857, as the postmaster
general stated, with meritorious punctuality.[305]
In the beginning of 1858 the Quebec-Portland service attracted the
attention of the British post office, which intimated a desire to
utilize it for the conveyance of mails between Great Britain and the
United States during the period of the year when the Allan steamers made
Portland their port of arrival and departure.[306]
Sidney Smith, the postmaster general of Canada, was of the opinion that
the Canadian line would be found the preferable one during all seasons,
particularly for those parts of the United States bordering on the Great
Lakes, as they were brought into direct connection with the ocean at
Quebec by means of the Grand Trunk railway.
As an additional attraction to use the Canadian line, Smith offered to
reduce the charge for sea postage, that is, the portion of the total
postage between Great Britain and North America, which was allocated to
the ocean conveyance, from eightpence to fourpence a letter. This would
enable the public on both sides of the Atlantic to send their letters
for eightpence instead of twelvepence.
On consideration of this proposition by the governments of Great Britain
and the United States, it was found open to the objection that the
postage of letters carried by the Cunard line must remain at one
shilling, owing to the sea postage claimed by the British government on
letters carried by that line. Until arrangements could be made between
the British government and that of the United States by which the charge
on letters passing between the two countries by the Cunard line could be
reduced from one shilling to eightpence, it was deemed inadmissible to
accept the Canadian proposition.
That seemed a reasonable decision, and it would have been supposed that
until the Canadian proposition could be accepted the amount of sea
postage paid for the Cunard service would be applied to the Canadian
service.
The British post office took no such view. It maintained that the
Canadian post office was entitled to no more than the rate which it
offered to accept, viz., fourpence, and as this rate added to the land
postage in Great Britain and the United States, would only call for an
eightpenny postage, it proposed that the difference between the
eightpence and the shilling, which the public were actually charged,
should be divided equally between the post offices of Great Britain, the
United States and Canada.
Smith protested that his proposition was part of the scheme to reduce
the postage from a shilling to eightpence sea postage, and that until
the reduction of the postage between Canada and Great Britain to
eightpence was affected, the Canadian government were entitled to
eightpence sea postage as much as the British government were for the
letters carried by the Cunards.
Alexander Tulloch Galt, inspector general of Canada, who was in London
at the time, laid the whole case before the colonial secretary, pointing
out that the attitude of Great Britain, in attempting to make the United
States a party to the scheme to force Canada to take one-half the amount
for sea postage that was claimed by and conceded to the United States
and Great Britain in respect to their subsidized lines, was the more
objectionable, as there was no reason for believing that the United
States had attached any such stipulation to their consent to use the
Canadian line.
Galt's remonstrance had the effect of inducing the British government to
withdraw from its untenable position in this instance. In the course of
his communication Galt mentioned the disappointment with which it was
learned in Canada that the Cunard contract, which would not have expired
until January, 1862, had been renewed in June 1858.
This action on the part of the British government, Galt insisted, did
not seem consistent with the assurance given by the colonial secretary
to the governor general in December 1856, when he wrote that the lords
of the treasury had apprised him "that the existing arrangements with
respect to the Canadian mail service will continue until the expiration
of the Cunard contract, when they hope arrangements may be affected more
in conformity with what they would regard as an equitable consideration
for the finances of this country."
The Canadian legislature on the first opportunity, voted an address to
the queen, expostulating strongly against the course of proceedings so
injurious to the interests of Canada.
The action of the British government in prolonging the arrangements with
the Cunards was set in a strong light by a review of several
circumstances connected with it.[307] The application of the Cunard
company, for an extension of their contract, was made in October 1857,
only nine months after the discussion with the Canadian government. It
was referred by the treasury to the admiralty and to the postmaster
general.
The treasury recommended that it be granted, while the postmaster
general deprecated an extension, for reasons not connected with the
Canadian representations. On March 2, the treasury decided that it was
premature to discuss either an extension or a renewal of the contract,
though they expressed their readiness to consider favourably, any
application that Cunard might make when the contract had advanced nearer
to its termination.
On the 20th of the same month, Cunard made another application on the
same general grounds; and this time the treasury, without further light
on the subject, yielded, and directed the extension, requesting the
postmaster general to communicate his views as to any modifications
that might be introduced into the contract, without materially affecting
the basis of the existing agreement.
The postmaster general, in reply, pointed out that the rate of payment
made to Cunard was considerably higher than that for any other packet
service, also that he had before him another offer for the conveyance of
the transatlantic mails for an amount much less than was paid to Cunard.
The new offer was from Inman, agent for the Liverpool, New York and
Philadelphia line, whose vessels made their voyages at a speed not much
inferior to Cunard's, and who agreed to convey the mails for the amount
of the sea postage.
The offer had been received on the 1st of March, nineteen days before
the application of Cunard; and as the postmaster general had had
occasion to correspond with the postmaster general of the United States
respecting Inman's offer, he had not thought it necessary to communicate
this proposal to the treasury, nor did the treasury consider that their
duty required them to make any further investigation before awarding the
contract for L173,340 a year.
These facts are taken from the report of a select committee appointed by
the house of commons in 1860, to inquire into the manner in which
contracts have been made for the conveyance of mails by sea. The
committee found that, in the making of these contracts, there was an
extraordinary division of duty and consequent responsibility, between
several departments of government.
The parties by whom these contracts were actually entered into, were the
lords of the admiralty, but the authority for making them rested with
the treasury, who prescribed their terms and conditions. The treasury
before coming to the decisions which they communicated to the admiralty,
consulted with the postmaster general, the colonial secretary, and with
the admiralty themselves, in reference to the postal, colonial and
nautical questions involved.
Theoretically, the arrangements were scarcely open to criticism. It was
proper that the information necessary for a decision, respecting, in the
first place, whether a service was required at all, and, in the next
place, what the terms and conditions should be, on which the service
should be performed, should be concentrated somewhere, and there seemed
no place more fitting as a focal point than the lords of the treasury,
who were responsible for obtaining and spending the money required for
the maintenance of all the services called for by the government.
But the fault lay not in the organization. It was to be found in the
lack of co-ordination among the contributory departments. Several
instances are given of the results of the failure of the departments to
co-operate with one another. One which has a certain piquancy is the
provision for the mail service to Australia.
It will be remembered that the first jarring note in the relations
between Great Britain and Canada concerning mail services arose when
Canada declined to fall in with the proposition that the British
government should arrange for the conveyance of the mails across the
Atlantic, and that Canada should pay its share of the resulting outlay.
The colonial secretary submitted, as the model arrangement, one which
had been made between the governments of Great Britain and the
Australian colonies, under which each government should pay half the
cost of the service. The contract was to be arranged for entirely by
Great Britain, and the colonies were assured that such care should be
exercised in the arrangements that they could depend on their interests
being safeguarded.
How the government acquitted itself of the trust it assumed on the
behalf of Australia, the parliamentary report shall relate. "That
contract involved a yearly subsidy of L185,000, of which one-half was to
be paid by the Australian colonies, who had no opportunities of being
consulted in the framing of the contract; so that special circumspection
was required. The tender accepted was that of a new company without
experience, and who had no ships fit for the work.
"One of their vessels," continues the report of the committee, "the
'Oneida' which was reported against, by the professional officer of the
admiralty, and had not the horse power or tonnage required by the
contract, broke down on her first voyage. Time was not kept, and though
the colonies complained, it appears that no steps were taken to ensure
the fulfilment of the contract with suitable vessels."
"The company," added the report of 1860, "in one year lost their
capital, L400,000; the service proved a complete failure, and great risk
of an interruption in postal communication was incurred. This contract
had been entirely arranged by the then financial secretary, whose acts
in these matters do not appear to have received confirmation by any
other authority."
It is not perhaps surprising, with the Australian venture in mind, that
an explanation involving the same sort of incompetence on the part of
the departments of government should be made regarding the Cunard
contract.
The explanation of the Cunard contract was that when the decision of the
treasury granting the renewal was made, the then financial secretary,
who had only entered office with the change of ministry in the month of
March immediately preceding, was not aware of the existence of the
correspondence between the home government and that of Canada in 1856;
nor, though that correspondence was among the records of the treasury,
and the authority on which the colonial secretary had written his
despatch of December 3, 1856, was a minute of the treasury, did the
proceedings appear to have been known to any of the officers of the
department charged with this branch of the business.
The committee observed that they had not received any satisfactory
explanation of the circumstance that a matter so recent, and of such
importance, should have been lost sight of.
But the painful story of the relations between the government of the
mother country and that of her North American colony with respect to the
ocean transport enterprise set on foot by Canada, does not end here. In
the autumn of 1858, an Irish company known as the Lever or Galway
Company, which had a contract with the Newfoundland government for a
mail service between Galway and St. Johns, proposed to the British
government to establish a service with fortnightly frequency between
Galway and America.
This scheme excited considerable interest, particularly in Ireland; and
several representations were made to the government, by deputations and
by memorials from chambers of commerce, setting forth their sense of the
advantages which it would confer on the trade of that country. The
publicity given this project brought into the field the two applicants
who had been disappointed when the Cunard contract had been extended in
1857.
Inman on October 15 protested against the granting of a subsidy to a new
line, and expressed the hope that, if it should be decided to give
assistance to a line from Galway, the proposed service should be put up
to public competition. The treasury replied to Inman, informing him that
when a new service was about to be established by the government it was
their practice to invite tenders by public advertisement, thereby
affording to all parties the opportunity of tendering therefor. Inman
heard no more from the government on the subject before the contract
with Lever was concluded.
The Canadian government, also, advanced its claims for consideration.
Galt wrote to the colonial secretary on November 11, 1858, and the
London agent of the Canadian line on January 18, 1859, submitted an
application to the treasury. He pointed out that the effects of this
subsidized line would be disastrous to the prospects of his company, and
expressed the trust of his principals "that before interfering to crush
a provincial company of such magnitude, your lordships will at least
afford the company we represent an opportunity of being heard."
This appeal was so far successful, that it obtained for the company the
honour of an interview at the treasury. They were promised that their
representations would be considered; but no further notice was taken of
their application.
On the same day on which the Canadian company's letter was dated, viz.,
January 18, the Lever company submitted an offer for the conveyance of
the mails from Galway to Portland, Boston and New York, calling at
Newfoundland for L3000 a voyage. The treasury, following the practice
laid down for their guidance, asked the postmaster general for his
opinion on the proposal.
The postmaster general reported adversely, observing that it was not
expedient to enter into any contract for the service, which would bind
the government to a heavy annual payment. He was also of the opinion
that the vast mercantile traffic between the two countries afforded
abundant opportunities to secure additional service that might be
desired on favourable terms.
Here then were three strong reasons to call for the government staying
their hands from entering into a contract with Lever: the remonstrance
of Inman, coupled with the intimation from the treasury that in the
event of their deciding to establish the service, they would put it to
public tender; the expostulation of Galt on November 11, 1858, and the
appeal of the Canadian company for an opportunity to be heard on January
18; and the unfavourable report of the selected adviser of the treasury.
Yet, in the face of all these circumstances, the treasury on February
22, authorized a contract to be made for a fortnightly service to Galway
and New York, and Galway and Boston, alternately, at the rate of L3000 a
voyage. The parliamentary committee in seeking an explanation for this
extraordinary course, examined Lord Derby, the chancellor of the
exchequer, as to the reasons which moved him to authorize this service.
Derby stated that he was influenced mainly by the consideration of the
social and commercial advantages which this service would confer on
Ireland, and of the preference due to the Lever Company on account of
its enterprize, in first establishing a line of steamers from Galway.
Derby stated, however, that when he authorized the service he had not
before him some materials, nor had he in view some considerations,
which, the committee believed, should have been held essential elements
in the determination of the question. He had no knowledge of the
correspondence which had passed between the home government and that of
Canada, and between the treasury and Inman.
Consequently then, in the words of the committee of the house of
commons, Derby's decision was given "in ignorance of the strong feeling
in Canada as to the injury done to their interests by the system of
subsidizing what they deemed rival lines; of the assurance given in
1856, on which the Canadian government relied, as a pledge that they
would have an opportunity of being heard before that system was renewed
or extended; and of the surprise and dissatisfaction already occasioned
by the renewal, without hearing them, of the Cunard contract; and in
ignorance, also, of the implied pledge given to Mr. Inman, that the new
service would be thrown open to public competition.
"It was likewise given," the committee added, "without any consideration
of the question, whether, assuming the interests of Ireland warranted
the establishment of the service from Galway, that object might not have
been secured by an arrangement which would, at the same time, have
provided for the wants, and satisfied the just claims of Canada."
The round condemnation by a committee of the house of commons, of the
course pursued by the government, gave Smith, the postmaster general of
Canada, a handle of which he was not slow to make full use. The report
of the committee was laid before the house of commons on May 22, and on
the 30th of the same month, Smith again approached the government on the
subject, setting forth the grounds of his appeal to the British
government, and concluding by asking that the government should aid the
Canadian line by a subsidy of L50,000 a year. He pledged the Canadian
government to give a like amount for the same purpose.
The application was refused, and Smith, whose resources seemed endless,
approached the subject from another angle.[308] The contract which was
made with the Lever Company called for a fortnightly service, the
consideration being L3000 a trip, or L78,000 a year. The Lever Company
was in no position to fulfil the terms of its contract, and Smith opened
negotiations with the company to take over their contract, stipulating
to allow the company L35,000 of the L78,000 which the contract would
bring, as the consideration for the assignment.
An agreement was concluded on these terms, and the deeds were signed on
July 6, 1860. The only condition now was the consent of the British
government to the arrangement, which was required by the contract, but
which under the circumstances was regarded as purely formal. The terms
being laid before the secretary of the treasury and the postmaster
general, secured the approval of both those authorities; and on the 11th
of July, the sailing arrangements under the contract were settled
between Smith and the official in charge of the post office packet
service. Success seemed now assured, but before the day was over, the
situation had undergone an entire change, for the British government had
refused its assent to the assignment of the contract.
No reason was given for the refusal of the British government to
sanction the transfer of the Lever contract to the Canadian line. Smith
wrote to the secretary of the treasury for an explanation. He pointed
out that the negotiations were made with the assent of Lord Palmerston
and the treasury, that the arrangements had all been made on the
secretary's assurance, and that in view of the strong feeling already
existing in Canada on account of the treatment meted out to Canada in
regard to its ocean mail service, he would be wanting in respect to the
imperial authorities if he accepted the secretary's intimation
literally, and in its full significance.
The secretary in his reply, gave away the whole case of the government.
He admitted that for himself he had never concealed his opinion that the
arrangement proposed by the Canadian government would have been a
desirable one, but insisted that he had not used Palmerston's name
beyond that. He had ascertained Palmerston's views as to the importance
of meeting the wishes of Canada, sufficiently to warrant him, not in
concluding negotiations, but in advancing them to the point where a
definite proposal might be made to the government.
The ground on which the treasury based refusal of assent to the
agreement made between the Lever Company and the Canadian government,
was that the contract contemplated the grant of L78,000 a year for a
fortnightly service from Galway, in addition to the other ocean services
which were then in operation, while the transfer of the Lever contract
to the Allan's would have the effect of merely substituting one contract
for another, leaving the service just where it stood before--with an
additional charge of L78,000 a year against the government.
There was another consideration and an extraordinary one. The government
had suffered severe condemnation at the hands of the committee of the
house of commons for their disregard of the pledge given, that, before a
contract was awarded it would be put up for public competition. Their
action in awarding the contract to the Lever Company without tender was
an undeniable injury to the interests of Canada, and now this censure
was made the cover for another blow at those same interests.
The secretary of the treasury observed that the pledge formerly given
and unfortunately overlooked had acquired much notoriety and must in any
contingency afterwards arising be treated with rigour. "If the Galway
contract be considered binding," he concluded, "the government cannot be
accused of breaking this pledge as long as they simply continue to pay
the subsidy for the same services and to the same parties." But the case
became different if they sanctioned a new arrangement involving material
modifications, particularly when the arrangement transferred the
contract to a party of undoubted, from one of questioned, solvency.
Smith next addressed Palmerston, and his letter shows clearly the
incomprehensible and provoking course pursued by that statesman. At
every step in the negotiations the treasury was consulted, and its
approval gained. The solicitor of the Galway Company was also in
frequent communication with the treasury, and he actually altered the
form of the deed of transfer upon the suggestion of the secretary.
The resolution of the Galway Company, accepting the proposal of the
Canadian government, was adopted, and on the same day the treasury was
informed of the fact. A week later--on July 5, 1860--Smith and Galt, the
Canadian minister of finance, waited on the secretary of the treasury,
who informed them that Palmerston was much gratified that the
arrangements had been made, and on the strength of these assurances
Smith executed the assignment of the contract, and provided securities
for the purchase money, of all of which Palmerston expressed his high
approval.
The matter was regarded as so far concluded that on July 9 a meeting
took place between the Canadian representatives and the officials of the
treasury and post office, the details of the scheme were reduced to
writing, and the secretary of the post office received the approval of
a communication to the postmaster general of the United States informing
him of the arrangement, and that thereafter the Canadian ships would be
considered as British and not as United States packets.
Considering the arrangements as completed, Smith and Galt decided to
return to Canada, and on the 11th they called on Palmerston for the
purpose of taking their leave, when, to their utter stupefaction, they
were informed that the government peremptorily refused to sanction the
transfer.
The reasons put forward for this unusual action on the part of the
government lacked even the merit of plausibility. It was first argued
that the Lever contract contemplated the grant of L78,000 a year for a
fortnightly service from Galway, in addition to all the ocean service
which might be existing, while the transfer would have the effect of
substituting the Galway service for one of the existing services, and
thus continuing the charge of L78,000 a year with a positive diminution
of public accommodation.
Smith had a conclusive reply to this argument. He pointed out that at
the time the Galway contract was entered into, that is on May 21, 1859,
the Canadian service was only fortnightly; and the arrangement for which
the sanction of the government was sought would have given exactly the
accommodation contemplated when the contract was given--a weekly service
between Ireland and America.
As for the modifications in the contract, which formed part of the
ground of the government's refusal to sanction it, the first was that
"the arrangement transferred the contract to a party of undoubted, from
one of questioned, solvency." Smith's only comment on this was to
complete the sentence by adding "or in other words would ensure its
performance efficiently."
The only other important modification sought by Canada in the terms of
the contract was the substitution of Canadian for United States terminal
ports in America. Apart from the slight to Canadian interests involved
in putting forward such a reason, it must be clear that the Cunard line,
in which the British government did not conceal its interest, would have
been benefited and not injured by the withdrawal of a line running to
United States ports. Smith concluded his protest by pointing out the
distinction which the Canadian people could not fail to draw in
comparing Palmerston's refusal, with that of previous governments.
The grants to the Cunard and Galway lines were stated to have been made
in ignorance of the Canadian interests, and the inability of the
government to remedy these and other evils was deplored. In the case
under consideration the British government, Smith pointed out,
deliberately opposed themselves to that which would have benefited
Canada, and had determined that the competition of which they complained
should be maintained. The protest was quite without avail. The Galway
Company entered on the performance of its contract, but its service was
marked with so much irregularity, that the postmaster general was
compelled to cancel it.
FOOTNOTES:
[296] First report of select committee on packet and telegraphic
contracts, May 1860 (_Br. Parl. Papers_, No. 328).
[297] Report of P.M.G. of United Kingdom, 1855.
[298] _Sess. Papers_, Canada, 1859, No. 26.
[299] _Journals of Assembly_, 1851, p. 85.
[300] Report of commissioner of public works, 1852-1853.
[301] Report of P.M.G. to council, December 7, 1863 (_Sess. Papers_,
1864, No. 28).
[302] Annual report of P.M.G., 1856.
[303] _Br. Parl. Pap._, 1859, XXII.
[304] _Br. Parl. Pap._, 1859, XXII.
[305] Report of P.M.G., 1857.
[306] _Sess. Papers_, Canada, 1859, No. 26
[307] First report of the select committee on packet and telegraphic
contracts May 1860 (_Br. Parl. Papers_, No. 328).
[308] _Sess. Papers_, Canada, 1861, No. 21.