MODERN NEWFOUNDLAND
In 1869[41] took place a General Election, in which great Imperial
interests were involved. Governor Musgrave, in 1866, had advised
Federal union with the Canadian provinces--then about to federate
among themselves--and the election three years later was fought upon
this issue. The result was a complete rout for the Federal party; a
rout so complete that the question has hardly since reappeared within
the field of practical politics. The causes of this defeat were, in
the first place, economic considerations; secondly, Irish national
feeling and hostility to the union; and thirdly, a certain distrust
and dread of Canada. Judge Prowse, whose intimate knowledge of
Newfoundland entitles his opinion to special respect, thinks that even
in recent years there lingered some rankling memory of the days when
French Canadian raids terrified the colonists in the seventeenth and
eighteenth centuries.[42] However this may be, it is certain that the
outlying portions of the Empire hardly as yet felt the same community
with and loyalty to one another as they did with regard to the home
country. The relation of Newfoundland to the Dominion of Canada
resembles in many ways that of New Zealand to the new Australian
Federal system, and in each group of colonies there is a noticeable
drift towards centralization. Judge Prowse, who was a strong believer
in North American union both from an Imperial and from a Colonial
point of view, has fully indicated the difficulties. The Canadian
protectionist tariff, the greater attractions of the United States
market (inasmuch as the Dominion is a fish producer rather than a fish
consumer), the opposition which wide political changes unavoidably
excite--all these obstacles were formidable for the moment. It is
uncertain even now whether they will be strong enough to prevent,
indefinitely, the realization of the Confederate scheme. It is
possible that such a union would be followed by some disadvantages to
Newfoundland; but, on the other hand, the gain would be very great.
The politics of the colony would be braced by the ampler atmosphere of
the Dominion, and the tendency towards parochialism finally arrested.
The geographical difficulty ceased to exist when the United States
taught us how vast are the areas over which successful political
unions are possible. No one can fairly ask that Newfoundland should
take the step in the teeth of her own material interests; but,
assuming that union with Canada can be reconciled with those
interests, the Imperial issue holds the field. Its importance can
hardly be overstated. So soon as the several communities, which
together form the Empire, realize not merely their ties with the
Mother Country, but also their own organic interconnection, from that
moment the whole Imperial idea receives an immense accession of
strength.[43] But it is now elementary that Newfoundland, and
Newfoundland alone, can take this decision. She is the mistress of her
own destinies.
It is unfortunate that the Blaine-Bond incident in 1890 should have
excited ill-feeling against Canada in the older colony. In September
of that year a treaty of trade regulating the purchase of bait, etc.,
the shipping of crews, and transhipment of cargo (called, from the
delegates employed on each side,[44] the Blaine-Bond Treaty) was
informally negotiated between Newfoundland and the United States, and
a draft of a convention was prepared. In the following December this
draft was modified, but in January 1891, Mr Blaine submitted a
counter-proposal, which the United States were disposed to accept,
though they were not really anxious to effect the arrangement. The
treaty had been submitted to the Colonial Office, and approved by it;
but the ratification of the Imperial Government was refused at the
last moment. Probably the refusal would have caused less irritation in
the colony if it had sprung from Imperial considerations; as a fact,
it was procured by Canadian remonstrances against Newfoundland's
separate action in a matter concerning Canada also, and it was felt in
Newfoundland that the island had been sacrificed to the exigencies of
Canadian party politics. It may be added here that in 1902, another
separate agreement--the Hay-Bond Treaty--similar to the preceding, was
entered into, but was rejected by the United States Senate.
Accordingly the Newfoundland Government secured in 1905 the passing of
the Foreign Fishing Vessels Act which deprived the American fishermen
(more particularly those of Gloucester, Mass.) of the special
privileges hitherto conceded, leaving them the right under the
Convention of 1818. Disputes arose. The question was discussed at the
Imperial Conference in 1907. After temporary alleviation of the
difficulties by a _modus vivendi_, the British and American
Governments came to the conclusion that the best remedy lay in a
submission to the Hague Court of Arbitration: in 1909 the terms of
reference were agreed to, and on September 1910 the award was
given.[45] Newfoundland was thereby placed in a very favourable
position for dealing with the discrimination exercised against fish
exported to America by Newfoundlanders. The points decided were: (1)
The right to make regulations as to the exercise of the liberty to
take fish, under the Treaty of 1818, is inherent to the sovereignty of
Great Britain; (2) The United States has the right to employ
non-Americans in the fisheries, but they are not entitled to benefit
or immunity from the said Treaty; (3) While American fishing vessels
may be required to report at colonial ports when convenient, such
vessels should not be subject to the purely commercial formalities of
report, entry, and clearance at a Custom House, nor to light, harbour,
or other dues not imposed upon Newfoundland fishermen; (4) American
fishing vessels entering certain colonial bays, for shelter, repairs,
wood and water, should not be subject to dues or other demands for
doing so, but they might be required to report to any reasonably
convenient Custom House or official; (5) In the case of bays,
mentioned in the Treaty of 1818, three marine miles are to be measured
from a straight line drawn across the body of water at the place where
it ceases to bear the configuration and characteristics of a bay. At
all other places the three marine miles are to be measured following
the sinuosities of the coast.
To return to the period now under consideration. It saw a bold attempt
to deal with the Poor-law scandal. Relief to able-bodied persons was
discontinued in 1868. A succession of good fishing seasons, and the
development of the mining industry, lessened the difficulty of the
step. Seven years later came a still more momentous proposal. "The
period appears to have arrived," said Governor Hill, in his opening
speech to the Legislature, "when a question which has for some time
engaged public discussion, viz., the construction of a railway across
the island to St. George's Bay, should receive a practical
solution.... There is a well-founded expectation that the line of
railway would attract to our shores the mail and passenger traffic of
the Atlantic ... and thus would be secured those vast commercial
advantages which our geographical position manifestly entitles us to
command. As a preliminary to this object a proposition will be
submitted to you for a thorough survey, to ascertain the most eligible
line, and with a view to the further inquiry whether the colony does
not possess within itself the means of inducing capitalists to
undertake this great enterprise of progress."
It is easy to forget, in speaking of Newfoundland until 1875, how very
little was known of the interior. The Newfoundland with which we are
concerned consisted in fact of a few towns on the coast, with a great
and imperfectly explored interior behind them. Even down to the
beginning of the twentieth century very little was known of much of
the island. It is difficult to assign limits to the developments which
are probable when a thorough system of internal communication shall
have given free play to each latent industry.
The first proposal was that a railway should be constructed from St.
John's to St. George's Bay, but objections were made from England on
the ground that the line would end on the French shore. Then came the
proposal that it should run from St. John's to Hall's Bay, with
branches to Brigus and Harbour Grace, covering in all a distance of
about 340 miles. A joint committee of both Houses prepared a report,
which became the basis of the Bill (1880). One sentence is worth
quoting, because it states very clearly the difficulties which have
played so large a part in the history of Newfoundland:
"The question of the future of our growing population has for some
time enjoyed the earnest attention of all thoughtful men in this
country, and has been the subject of serious solicitude. The fisheries
being our main resource, and to a large extent the only dependence of
the people, those periodic partial failures which are incident to such
pursuits continue to be attended with recurring visitations of
pauperism, and there seems no remedy to be found for this condition of
things but that which may lie in varied and extensive pursuits.... Our
fisheries have no doubt increased, but not in a measure corresponding
to our measure of population; and even though they were capable of
being expanded, that object would be largely neutralized by the
decline in price which follows from a large catch, as no increase of
markets can be found to give remunerative returns for an augmented
supply."
The Act was passed, which empowered the raising of a loan of
£1,000,000 for the purpose of constructing the proposed railway. By
November, 1884, the line was completed as far as Harbour Grace; by
1888 a further instalment of some twenty-seven miles was ready between
Whitbourne and Placentia; soon afterwards it was decided to recommence
building the line northwards from St. John's to Hall's Bay, which has
been discontinued through the failure of the contractors, and to carry
out the scheme the Reid Contract was entered into.
We are now reaching a period when the leading parts are played by
persons still or recently living, and the story must therefore be
continued with the reserve proper to one who is not himself an
inhabitant of Newfoundland. Particularly is this true of the much
discussed Reid Contract, the circumstances of which are reserved, from
their great importance, for a separate chapter.[46]
It is unfortunate that the ensuing stage of this short narrative
should be marred by so much trouble, but, in fact, the last ten years
of the nineteenth century have been among the most disastrous in the
history of the island. In 1892 came the most destructive of all the
fires with which St. John's has been afflicted. The fire broke out in
a stable at five o'clock on the afternoon of Friday, July 8th, and
lasted until nine o'clock on Saturday morning. It came at the end of a
month's draught, was helped by a powerful wind, and found the town
with a depleted water supply. Arising in an eastern suburb, the flames
were carried right into the business centre of the town, and finally
reached the rich warehouses of Water Street. Eye witnesses describe
the heat as so intense that brick and stone offered little more
resistance than wood. A mile of wharfage was destroyed, and Water
Street completely gutted. "Over a vast area," wrote one who noted the
effects, "nothing is now to be seen but tottering walls and chimneys."
It was computed that 10,000 persons were left homeless, and that the
total damage exceeded 20,000,000 dollars, of which less than 5,000,000
dollars were covered by insurance. The Savings Bank, the Hospital, the
Masonic Hall, and the Anglican Cathedral, alike perished. To complete
the misery of the sufferers, it soon became known that the food supply
remaining was only sufficient for ten days. As in 1846, the sympathy
of Canada was promptly and warmly shown. The day after the fire 4,000
dollars' worth of provisions were sent over, and military tents
sufficient to shelter 1,200 people. In England, a Mansion House fund
was immediately opened by the Lord Mayor of London, and its final
amount fell little short of £20,000. Sir Terence O'Brien, the
Governor, and Lady O'Brien, happened to be in England at the time, and
they threw themselves warmly into the cause of the colony.
In 1894, a misfortune of a different kind happened. On Monday,
December 10th, the Commercial Bank, the Union Bank, and the Savings
Bank, which had all been long established, were compelled to suspend
payment. A widespread panic followed, and all business was paralysed.
Workmen were dismissed wholesale, no money being available for the
payment of their wages. To make the crisis graver still, the Union
Bank was to have provided the interest on the Public Debt, which was
payable in London on January 1st. The population feared that the crash
would bring about riots and other dread occurrences. In aggravation of
the risk the rumour spread that Newfoundland was about to be
incorporated into the Dominion of Canada as a mere province. The
Government telegraphed to the authorities in London for an immediate
loan of £200,000, and requested that a warship should be despatched in
view of imminent disturbances. The causes which led immediately to the
failure were well stated in a Dalziel telegram to _The Times_:[47]
"The immediate cause of the financial crisis which has overwhelmed
Newfoundland was the death of Mr Hall, a partner in the firm of Messrs
Prowse, Hall & Morris, the London agents of the firms exporting fish
to European markets. On his death the firm declined to meet further
exchanges until an investigation of their affairs had been made. Their
bills were protested, and the banks made demands on the Commercial
Bank of St. John's, which was the drawer of the bills, and which,
being unable to meet the demands made upon it, fell back upon its
mercantile customers. These could not respond, and the bank had to
suspend operations. The customers were compelled to make assignments,
and nearly every business house in the colony was crippled, so
interwoven are the affairs of one establishment with those of another.
"The situation was only possible under the peculiar business customs
of the colony. The fishing industry here is pursued under a system of
advances for vessels and equipments made by the merchants to the
fishermen, who gave the catch at the end of the season in exchange.
The merchants receive large advances from the only two banks doing
business here, the Union Bank of Newfoundland and the Commercial Bank.
By backing each other's bills the banks are enabled to carry on
operations, and then at the close of the year, when the produce of the
fisheries is realized, they are able to settle their overdrafts.
"The disaster happened at a most unfortunate time. If it had been
postponed for another month the merchants would have realized on most
of the fish, and the assets would have been far more valuable. At
present, 2,000,000 dollars' worth of fishery products are stored in
St. John's awaiting the means of shipment. Until financial aid from
the outside world is obtained, it is impossible to place the fish on
the market."
At this time the financial position of the colony was thoroughly
unsound. Its population numbered roughly 200,000 persons, and its
Public Debt amounted to 14,000,000 dollars, or nearly three million
pounds sterling. The Ministry of the day resigned, after an
unsuccessful attempt to form a coalition Government, and its
successors applied for Imperial help, an application which logically
involved the surrender of the Constitution. In fact, the unassisted
credit of the colony seemed hopeless, for in a year or two the railway
reckonings had to be met. The Government had issued bonds whereof
yearly interest was to become payable on completion, amounting to
almost a third of the total revenue of the colony.[48]
Such temporary measures as the nature of the crisis admitted were
taken locally. The Legislature passed two Bills guaranteeing a
portion of the note issue of both the Union Bank and the Commercial
Bank; while a loan of 400,000 dollars was procured from the Bank of
Montreal, and additional loans from the Bank of Nova Scotia and the
Royal Bank of Canada: thus "the financial sceptre passed to
Canada."[49] At the same time the manager and directors of the
Commercial Bank were arrested on a charge of having presented a
fraudulent balance sheet. Reuter's correspondent at St. John's noted
that in this time of trouble the idea of union with Canada gained
ground rapidly. How hopeless the position seemed to calm observers on
the spot may be gathered from the following vivid extracts from a
letter by _The Times_ correspondent at St. John's:[50]
"Twelve large firms controlled the whole export trade of the
colony--fish oils and fish products, valued at about 7,000,000
dollars. Of these twelve only two remain ... and these are sorely
stricken. These firms occupied the whole waterside premises of St.
John's, gave employment to hundreds of storekeepers, coopers,
stevedores, and others, beside some thousands of unskilled labourers
occupied in the handling of the fish. All these men are now without a
day's work, or any means of obtaining it. The isolation of the colony,
away out in the Atlantic with no neighbour, is its greatest curse.
People unemployed cannot emigrate, but must swell an army of
industrials depending on the Government for relief. The city is a
veritable aggregation of unemployed; it is a city to let. Every
business, factory, wharf, store, or shop employing labour has either
suspended business or has curtailed the number of its employees to the
lowest possible limit. It is not unreasonable to estimate the number
unemployed here to-day at 6,000, every one of whom must be without
work until spring opens."
It is not surprising to find that in this difficulty the minds of the
colonists turned towards the Imperial Exchequer. But the distinction
is vital between an Imperial grant in relief of a visitation of nature
and a grant in relief of financial disasters which may be the result
of improvidence or extravagance. The Imperial Exchequer is drawn from
complex sources, and cannot be diverted to irregular purposes without
injustice to large numbers of poor people. These facts were not
unnaturally overlooked in Newfoundland, for in trouble the sense of
proportion is apt to disappear. Thus on March 2nd, 1895, Sir W.
Whiteway, the Newfoundland Premier, in a letter to _The Times_, said:
"We have approached Her Majesty's Government, and solicited a mere
guarantee of interest to the amount of a few thousand pounds per annum
for a limited period, in order to enable the colony to float its loans
and tide it over the present temporary difficulties. Up to date the
people of this old, loyal colony have received no response. They have
been struggling against difficulties in the past, and if they still
have to trust to their own inherent pluck, and to the resources of the
country, they must only passively submit, although they may the more
bitterly feel the heartless treatment of the Imperial Government
towards them."
The touch of bitterness in Sir William Whiteway's letter was, perhaps,
unreasonable. Mr Goodridge was Premier at the time of the crash, and
his Government at once appealed for help to England, on the ground
that if it were not forthcoming the colony would be unable to meet its
obligations. A proposal was added that a Royal Commission should be
appointed to inquire into the whole political and commercial position
of the colony. Mr Goodridge was unable to keep his place, and his
Government was followed by that of Mr Greene. The new Government at
once inquired whether, if the Newfoundland Legislature acquiesced in
the appointment of a Commission, financial help would be immediately
forthcoming. They desired information also as to the scope of the
Commission and the terms on which assistance would be given. To this
the answer was inevitable, that all these points must depend upon the
findings of the Commission. In fact, the Colonial Government wished
for an unconditional loan and an assurrance that the Constitution of
the island would not be interfered with. Mr Greene, in turn, proved
unable to hold his ground, and was succeeded by Sir William Whiteway.
The latter substituted for the earlier proposals a request that the
Newfoundland bonds should be guaranteed by the Imperial Government;
the suggested Commission being ignored. This was the request referred
to in Sir William's letter. Now it is very clear that although the
amount involved was relatively small, a very important principle was
raised. Responsible government has its privileges and its obligations,
the latter of which flow logically from the former. The Imperial
Government charges itself with responsibility for the finances of a
Crown colony because it directs the policy and determines the
establishment on which the finances so largely depend. It is not
reasonable to ask that the British taxpayer should assume
responsibility for liabilities incurred by a colony with responsible
government. The _toga virilis_ has responsibilities. The case might,
perhaps, be different if there were no danger that the concession of
help might be drawn into a precedent. But it must never be forgotten
that the aggregate public debts of the self-governing colonies at
about that time exceeded £300,000,000.
The crisis of 1895 has been dealt with at some little length, because
it would be impossible otherwise to understand the occasion of the
great Reid Contract, which will form the subject of the next chapter.
It so happens that the last ten years of the nineteenth century have
been more momentous than any equal period in the history of the
colony.
* * * * *
FOOTNOTES:
[41] The census of this year showed that the population had increased
to 146,536.
[42] _Op. cit._, p. 495.
[43] This question of union was frequently raised--notably in 1906,
and during the Great War in 1916 and 1917 (see end of chap. ix.).
[44] Sir Robert Bond, the ex-Premier of Newfoundland; Mr J.G. Blaine,
the American Secretary of State.
[45] House of Commons Papers, Miscellaneous, No. 3, 1910, Cd. 5396.
[46] See chap. ix.
[47] December 14th, 1894.
[48] See General Dashwood's letter to _The Times_, December 18th,
1894.
[49] Rogers, p. 189.
[50] January 17th, 1895.