HC Deb 28 March 1867 vol 186 cc736-64

Paper relating to Canada Railway Loan [presented 26th March] referred.

Matter considered in Committee.

(In the Committee.)

MR. ADDERLEY

said, that in moving the Resolution of which he had given Notice, not one word would fall from him approving in the abstract of guarantees of colonial loans. He had always thought, and whenever the subject was under consideration, as it had been too often, he had expressed his decided opinion that they were a feature of the worst possible relations between this country and the colonies, bad enough for this country, but still worse for the interests of the colonies. He sincerely hoped that this colonial guarantee would be the last proposed to Parliament, or if proposed, the last that Parliament would be disposed to grant. This particular guarantee was an exceptional case, which, under the circumstances, it was absolutely necessary for the Government to propose. It was expedient, most expedient and advantageous both to this country and to the colonies, and on the other hand it might be granted by Parliament without the slightest risk. He had stated, in moving the Confederation Bill, that Parliament would come to the consideration of this proposal perfectly unfettered and unpledged. He now asked them to consider it freely, and if he did not make out that it was absolutely necessary as well as most expedient the Committee would be perfectly free to reject it. He thought he should best show the Committee the necessity of the proposal by giving a history of the subject. So far back as 1838, this country had to send troops to Canada in the depth of winter to resist the invasion of the sympathizers, as they were called, who had no doubt the intention and were equipped with the means for the conquest of that country. We had to embark troops at Halifax and send them across the country to Quebec, in the depth of winter, with the greatest difficulty and hazard, and at enormous cost. It was then forced on the attention of everybody that merely in a military point of view, to say nothing of commercial interests, it was necessary that railway communication should be opened between Halifax and Quebec. They had had, as the Committee knew, even more recent proof of this necessity only a short time ago. This was so evident that we proceeded at once to survey the country of New Brunswick lying between Nova Scotia and Canada. Major Robinson was sent out, and made a complete survey of various lines of railway that might be constructed between Halifax and Quebec. That able surveyor, who spent three years upon it, presented an elaborate Report to the House, and any Gentleman who was not acquainted with it had the opportunity of consulting it in the Library. He trusted that no one who had not availed himself of that opportunity would oppose the Bill. The survey ended in a preference announced by Major Robinson, on grounds principally military, for what was called the Eastern line, which was the longest. At that time Lord Grey was Colonial Secretary, and he did not hesitate, in the interests of this country, to offer to the colony a guarantee for the railway on two grounds—first, that it was essential to Imperial interests, and therefore that England ought to share the expense; and secondly, that the colony, even if called on, could not without the assistance of the guarantee and credit of this country, raise the requisite sum without a most unnecessary drag on its revenues. The offer then made by Lord Grey was first made on the part of the Imperial Government. He believed the intention of Lord Grey was that this country should not only guarantee the line but undertake the work itself. We had now different views of our relations to the colonies; and the colonies had taken a much more spirited view of their own responsibilities. The proposal since made was that whatever sum of money the British North-American Provinces should raise for that purpose the Imperial Government would gua- rantee the interest on the loan. He would not weary the Committee by referring in detail to the correspondence with every Colonial Minister—Sir John Pakington, Mr. Labouchere, and the Duke of Newcastle. It was sufficient to say that in 1862 the Duke of Newcastle, while rejecting a proposal of the colonies, made a proposal which was very much that which he now recommended. It was that the Imperial Treasury should guarantee the interest at the rate of 4 per cent on the loan to be raised by the Government of the North-American Provinces for the construction of a railway. Nothing had passed since then except the very material circumstance of the late Government having considered the Proposal on the subject made by the delegates of the provinces assembled in Quebec, and drawn up a Treasury memorandum, which funned the basis of the measure to be brought in. In 1864 the late Secretary for the Colonies expressed some regret at the delay which had taken place in proceeding with the scheme, for though New Brunswick and Nova Scotia both passed Acts on the basis of the memorandum, Canada had not; but, ultimately, their delegates adopted the proposal of the Imperial Government. An agreement was then drawn up between the Duke of Newcastle, the then Colonial Secretary, and the colonial delegates, which was to subsist for five years, and which expired next December, and it was upon that agreement that the present Bill was based, although several alterations in favour of this country had been introduced into the present Bill. The scheme had now become part of the proposed Confederation of the North-American Provinces. The two schemes of the Confederation and of the construction of the railway were bound up together. It was now clear that the one could not stand without the other, and every argument that had been cordially accepted by the House of Commons in favour of the union between the provinces applied with equal force to the guarantee of a loan for the construction of the line. It was impossible that the question of the construction of the line could be separated from that of the guarantee, inasmuch as the colony could scarcely raise £3,000,000, the amount required for the construction of the line, at less than 6 per cent on their own security, whereas with the guarantee of this country they could borrow that sum at 4 per cent. At present colonial stock was at par at 6 per cent, and to throw £3,000,000 of fresh stock on the market would be productive of great embarrassment. The construction of this line was the key to the success of the Confederation, and was essential to it in a commercial and a defensive point of view. Without this line for six months in the year, the inland portion of the Confederation would be entirely cut off from communication with the sea; and this country could not use it for the passage of troops, while the long line of frontier would be in an absolutely defenceless condition. The only way of making the new Confederation independent of the United States was to construct this important railway, which would enable Canada to develop itself, and rely entirely upon her own resources. Whatever risk the Imperial Government might run in guaranteeing this loan, it would run a still greater risk in refusing its assent to the only proposal that would enable the colony to maintain itself. If this guarantee were refused, the North-American States would remain in their old condition, in which they could hardly fail to invite aggression which they would be unable to repel. On the other hand, the guarantee might be given without running the slightest risk. The proposal now offered in the Bill was far more favourable to this country than that contained in the agreement which was assented to by the late Government, who had to deal with the question under much less favourable circumstances than at present existed. The late Government had to deal with three separate colonies, and to apportion the charges among three distinct revenues, whereas the present Government had to deal with one Confederated body politic, and with one revenue. It was possible, under the old conditions, that one of the colonies might have become exhausted before the scheme was completed, whereas now the scheme formed part and parcel of the united policy and enterprize of Confederation. The colonists were more deeply interested in it than they could have been under distinct Governments. Canada no longer looked to Portland for her outlet. Another alteration in the engagement favourable to this country was that instead of—as proposed by the late Government—the sinking fund being based on decennial periods, so that during the first ten years there was no provision made towards it, it was to begin from the very moment the line was commenced, and was to be calculated at the rate of 1 per cent upon the whole sum guaranteed, so that the entire loan would be repaid by annual and easy instalments, in about forty years, thus greatly reducing any possible risk incurred by this country. In one point, however, the present proposal was not so favourable as the former agreement. The late Government were enabled to stipulate that Parliament should not be called upon to legislate until the line of railway was actually fixed, whereas under existing circumstances it was necessary that Parliament should assent to the conditions required of them before they could know which of the three proposed lines was to be adopted. When the new Parliament of Canada assembled they would form a judgment as to which of the three surveyed lines it would be best to carry out, and would then refer their decision to Her Majesty for Her approval. Again, the security offered for the loan was a new revenue, instead of the three old ones; but he could show that the maximum of liability was more than covered by the minimum of security. The line involving the largest expenditure in its construction was the Eastern line running on the borders of the St. Lawrence, which was the one recommended by Major Robinson and by Mr. Light, who was for many years Chief Engineer of Works at New Brunswick. They had reports from these gentlemen and also a report from a gentleman who had been engaged in making a special survey by the Canadian Government. The calculation of Major Robinson gave £7,700 per mile as the greatest average cost of constructing either of those lines. The estimate of Mr. Light was rather higher, amounting to £8,300 per mile; but then Mr. Light acknowledged that Major Robinson's estimate would be perfectly sufficient to provide for the opening of the line, and stated that he had fixed upon a higher sum because he had taken into consideration some solid works which, after all, a railway might safely do without at its first starting. Some judgment might be formed from the cost of existing railways. The cost of the railway from Shediac to St. John's, in the construction of which the greatest engineering difficulties had to be overcome, averaged, £8,300 per mile. It was true that the Grand Trunk Railway, in its Eastern branch running to Quebec, cost £8,800 per mile; but that line was made under great disadvantages, not only from the disturbed state of the money-market at the time when means were raised for it, but also from other contemporary circumstances. Some hon. Members might, perhaps, think that the proposed railway was in itself an unpromising speculation. Hon. Members might possibly believe that it would be unprofitable, because it would be blocked in winter. Certain portions of the Grand Trunk Railway were much more liable to such accidents than any of the lines proposed, and yet that railway had scarcely ever been stopped in winter, the longest stoppage not exceeding three days. It was not, however, a guarantee of profits that he asked, but only of interest on a fixed loan to be paid off in forty years. He asked for the guarantee of interest, independently of the success of the railroad, and irrespective of any dividend upon shares, The security was wholly independent of the profit or success of the undertaking—independent even of the completion of the railway, though the Bill would take ample means to secure that object. Although the highest average sum expended upon any railway in Canada was £8,800, he would go still higher, and take the cost of the proposed line at £9,000 per mile. The length of the longest of the proposed lines was 470 miles, which, at £9,000 per mile, would give a sum exceeding £4,000,000. That would throw upon Canada the raising of an extra £1,000,000 beyond the £3,000,000 guaranteed, and they would have to raise it on their own credit, which they could not do at a less interest than 6 per cent. The maximum and greatly outside calculation of charge on Canadian revenue which he was offering was therefore a payment at the rate of 4 per cent on the £3,000,000 guaranteed, which would amount to £120,000 a year; a sinking fund at 1 per cent, which would amount to £30,000, and the interest at the rate of 6 per cent on the extra £1,000,000, which would be £60,000, making in all an annual payment for forty years of £210,000. He would ask the House next to consider the security—the consolidated revenue of Canada—upon which it was proposed to charge the interest of the sum guaranteed and of the sinking fund, and any sum this country might have to pay, and any extra suns Canada might have to raise. The only charges upon the revenue of Canada which would have precedence over these charges were those specified in the Confederation Bill—first, the cost of col- lecting the revenue; second, the interest of Canada's present debt, about £12,000.000; and third, the future salary of the Governor General, £10,000 a year. There was a difficulty in determining what the revenue would hereafter amount to, inasmuch as the intercolonial duties between one province and the other would cease under the Confederation scheme—a deprivation of revenue, however, which was attended with the certain advantage of conducing greatly to the development of the Confederated commerce and industry. The future Canadian revenue would, he believed, be fully able to bear this charge of £210,000, only £21,000 more than the separate Governments as surplus last year were able to devote in the payment of debt. But the revenue of the United Government was not a fixed sum, but was made to correspond with the requirements of their Government year by year. The revenue of Canada was likely to rise to its requirements. The debt of Canada was £12,000,000. But how was this debt created? The public debt of the country, unlike the debts of other countries, which had been, as a rule, incurred to meet the charges of war and of unproductive expenditure, had been incurred in the promotion of public and remunerative works. It had, too, been met by the establishment of a sinking fund, and under the operation of that fund the debt was gradually decreasing every year. Canada upon all occasions had been able and ready to meet her engagements, and he would ask the Committee to consider the important fact that when in 1842 this country guaranteed the loan of £1,500,000 for public works, the revenue of Canada was only £300,000 a year. The revenue now amounted to £2,500,000. With the former revenue of £300,000, however, Canada paid off the loan nine years before it because due. As it was, the taxation per head of the population was annually decreasing, and at this moment it was not more then 15s. per head—no very alarming amount compared with that of almost every other country. A short statement which he would give the Committee would show the progress and the state of the country. Between 1851 and 1864 the tonnage of vessels entering the North American ports had increased from 1,250,000 to 2,500,000, the exports from 4,000,000 dollars to 40,000,000 dollars, and the imports, exclusive of bullion, from 9,000,000 dollars to 21,000,000 dollars. During the same period the number of letters had increased from 3,500,000 to 7,000,000, and the number of post offices in the country from 843 to 2,197. The population, also, had nearly doubled in the same period. The increase of growth in a young colony like this went on not at an arithmetical, but a geometrical rate. The Confederation would take away the languor of dependence upon England which had hitherto paralysed the divided Governments. Having clearly shown that his exaggerated estimate of liabilities which he had set down at £210,000 a year, including the principal and sinking fund and any possible extra charge, would be more than counter-balanced by a yearly increasing revenue, and amply supported by growing wealth, he would proceed to state the provisions of the Bill. In the first place, it would enable the Treasury to guarantee interest at 4 per cent on £3,000,000, to be strictly appropriated to the construction of a line adopted by the Canadian Parliament and approved by Her Majesty. But the guarantee would not be given by the Treasury unless the Canadian Parliament had, within two years, passed Acts—first, for the construction of the line; secondly, for its constant use at all times for the conveyance of troops of Her Majesty; thirdly, for the prevention of any charges on the Consolidated Fund and security of the whole of the charge in respect of the loan on Canadian revenue; and lastly—he wished particularly to call attention to this—for the postponing, in order of security, of any other charge for any public works undertaken by the Canadian Government. Whatever public works might be from this time undertaken by the colony, to be charged on their revenue, such charge must come after the charge for the guarantee of £3,000,000, after the charge for the sinking fund, and after any extra sum which might be necessary to be raised by the Canadian Government for the completion of the railroad. A more complete and sure guarantee for the speedy and faithful completion of the railway could not, in his opinion, be framed. All the local as well as the central governing bodies of Canada, would unite in urging on the rapid completion of the scheme, in order that the revenue of the country might be at their command for the furtherance of other works. Objectors to the scheme had magnified the possibility of unfortunate contingencies in the future fate of Canada. They had said that the new scheme of Confederation was an experi- ment, and that it was impossible to tell whether Canada would be independent in the course of a few years, or be annexed to the United States. But such gratuitous considerations as these should not, in his opinion, weigh with the Committee. If Canada were ever annexed to the United States, which this Confederation would render most improbable, our separations would take place either amicably or hostilely. If amicably, Canada's liabilities would be taken by her new connections with Canada's assets. If it were attempted to wrest Canada from the mother country by the sword, England must trust to success in war for the power to make terms at its conclusion. Upon this point he wished to offer one remark. If England desired that Canada should remain with her—and he, for his part, hoped that the two would long be connected—the way to bind their interests was by taking a liberal view of any common enterprize. If Canada were one of the United States at the present time, they would not have to apply to the Central Government for a guarantee—Congress would furnish the required means as for a national undertaking. The right hon. Member for Calne (Mr. Lowe) appeared to doubt that statement; but there could be no doubt that this railway would be of far more value to the United States, if Canada were joined to them, than the Great Pacific Railway, for the opening of the far West, and they knew what Congress was doing for that. How unwise, then, would it be for England to disappoint the expectations which successive Home Governments had raised among Canadians with respect to this guarantee. He would make no further observations with respect to the risks and contingencies conjured up by objectors to the measure; they were all infinitesimal in character, and to the last degree improbable, if not wholly chimerical.

Motion made, and Question proposed, That the Commissioners of Her Majesty's Treasury be authorized to guarantee interest, at a rate not exceeding four per centum per annum, on any principal money, not exceeding £3,000,000 sterling, to be raised by Loan by the Government of Canada for the construction of a Railway connecting Quebec and Halifax."—(Mr. Adderley.)

MR. AYTOUN

said, he thought the right hon. Gentleman's remark that he had the greatest possible dislike to guarantees was a very extraordinary introduction to an argument in favour of this particular guarantee, notwithstanding he had spoken of it as one of exceptional character, calculated greatly to benefit the colony. A very weighty objection to the Motion was that guarantees were diametrically opposed to principles of political economy. It had been said that this guarantee would not entail any loss to this country; but he should not be at all surprised if England had eventually to pay every penny of it. But whether she did or not, the proposition was unsound in principle and unfair to the taxpayers. At the present time money was exceedingly dear, railways at home were in difficulties from want of money, some having to pay 6 per cent for it. It would be a great advantage to them if they could get money at low interest and a Government guarantee; yet the Government denied them relief, and made English taxpayers liable for the debts of colonial undertakings. The proposal was totally contrary to the policy by which those on the chief Opposition Benches had gained their reputation, yet he was afraid that they also had given their consent to the scheme. It had been said that the Colonial Office had given pledges that almost amounted to a convention to do this thing; but he protested against the House of Commons being bound in matters of money by any such promises. He maintained that in a commercial and military point of view it was not expedient to depart from principle and grant a guarantee in the particular instance of that railway. The trade of Canada naturally flowed through the St. Lawrence, and its products were so bulky that they could not be advantageously conveyed by railway. An experienced railway engineer had stated that the line could never possibly pay one farthing. Then, in a military point of view, it would not only not be beneficial, but would be positively injurious to accede to this proposal, because it would hold out hopes to the colonists which it would not be in our power to fulfil. That railway traversed several hundred miles of country, and a portion of it passed in a line parallel with the St. Lawrence, at a very short distance from the United States frontier. It would be easy for the Americans, if they ever had the desire to invade Canada—which he hoped they never would have—to advance a force sufficient to cut the line and render it perfectly useless. We had difficulty enough already in obtaining an adequate supply of recruits for our army. We could never send out the forces requisite to protect that railway, or to cope with the enormous masses of men that would be thrown across the American frontier, if the United States ever seriously contemplated the invasion of Canada. Moreover, troops alone would not suffice for such a purpose. He believed the late Duke of Wellington had said that if they had not the command of the Lakes they could never defend Canada. We had now on those Lakes three gunboats, each with a crew of thirty-five men and an armament of one gun. The Americans had six vessels of double the tonnage of ours. The question was, which nation could increase its armament in the shortest time? It would be in the power of the United States Government to bring from their arsenals and sea-ports vessels of war, guns, and stores, and everything requisite for the speedy construction and equipment of a fleet, and thus obtain the command of the Lakes. He would be glad to hear from the Under Secretary of the Colonies in what manner he thought it was possible, under such circumstances, to prevent our flag from being driven from the Lakes of America within one year. They were asked to construct railways to convey troops when they had no troops to send and no fortresses in which troops could be concentrated. It would be of no use sending troops unless there were fortifications. Quebec was a strongly fortified city, and had been called by the right hon. Gentleman the Member for Oxford (Mr. Cardwell) "the door of Canada;" and a proposal had also been made to fortify a strong position on the Lakes; but the defence of the country would have to be left to the colonists. Would the right hon. Gentleman tell them whether any military men of eminence were of opinion that it was possible to defend Canada, with their reasons for their opinion, and the amount of force they thought would be sufficient? The house had not been put in possession of such information; neither had they positive information in regard to the estimated cost of the proposed railway. The right hon. Gentleman had made a statement with regard to several lines; but he did not tell them that any line had been fixed upon. The House should be satisfied that no other guarantee would be required, and that no further cost should be incurred. The line was not fixed upon because the Parliament of Canada—that was to meet next year—was to fix upon the line to be adopted.

MR. ADDERLEY

I mentioned that there are three lines from which the selection is to be made, and that the plans are in the Library.

MR. AYTOUN

But we do not know which of them is to be the line fixed upon.

MR. ADDERLEY

I have mentioned the most expensive.

MR. AYTOUN

said, they should have an estimate of the cost for each particular line, and the basis on which the estimate was founded. He objected to the proposal of the Government because the proposed line would be useless in a commercial point of view, and worse than useless as a means of defence, and because they were not in possession of the estimated cost of the works to be constructed. He begged to move, as an Amendment, that the Resolution proposed by the right hon. Gentleman the Under Secretary be rejected.

MR. THOMAS CAVE

said, he had enjoyed considerable experience with reference to the cost of railways, and begged to second this Motion. He begged to explain that he had some local knowledge of the place through which the proposed line would pass. He had listened with attention to the right hon. Gentleman, and was quite unable, with his experience on the subject, to agree with him. The only advantage he could see in the whole thing was that it would be a colossal job. He did not mean to say it would be a job on the part of the right hon. Gentleman or on the part of the Government; but from his knowledge of the conduct of the colonists and of the local authorities, he believed it would be a job for them—not merely during the period over which it was proposed to extend the construction of the railway, but for a generation at least. He believed that most of the stations led from nowhere to nowhere—and most of the residences referred to along the line were wooden huts. The circulating medium was greatly made up of grain, meat, and poultry, and he did not envy the ticket porters. The Colonial Government originally proposed that they should not only pay for the construction of the line, but work it. The projectors must know that it would never pay its working expenses at all, and that in a few years they would pass out of existence as a railway company, whatever guarantee might be given. The right hon. Gentleman said that this proposal was part of the Confederation scheme. He did not see the connection. The right hon. Gentleman said the Canadian Government could not borrow money under 6 per cent. That should be a proof to any man's mind that the security they offered was not good. Representing taxpayers of England, he could not see the advantage of guaranteeing a loan for men who could not raise money under 6 per cent, and he very much doubted if they could raise it at that amount. The right hon. Gentleman said that it would make the Canadians independent of the United States. He could not see how this country could have such a great interest in so entirely severing the Canadians from the United States. He thought the safety of that country consisted in friendly communication with the United States. Anything that would cause dissension would only provoke the very danger they were always apprehending. What produced most humiliation on the part of Englishmen in communicating with the people of the United States was the weakness of the Canadian frontier. It would be better to have the whole onus of its defence thrown on Canada itself, and no such measure as this so likely to produce the very danger they wished to avoid. If, instead of giving the colony £3,000,000 with the view of separating it from the United States, we were to give £10,000,000 of money to join and unite them, it would be more patriotic. The Americans knew the weakness of our Canadian frontier, and in the time of our trouble they would not forget it. The right hon. Gentleman said in one part of his speech there would be no risk, and in another part he said there would be a minimum risk. He said that Canada had paid a previous debt; but that was what was always done by men wanting to borrow money. They always paid small debts with the view of incurring large debts. The right hon. Gentleman said there was a surplus of income over expenditure in the colony; but if he (Mr. Thomas Cave) knew anything of figures, the reverse was the fact. In the way that some of the balance-sheets of railways were made up it was excessively easy to show anything plainly. He was reminded of his experience in America in connection with certain railways. Speaking to a railway director after dinner, he (Mr. Thomas Cave) complained that he had induced him to invest his money in a certain part of the world on certain promises made in a certain prospectus. To this remark the hon. director replied: "Why, you don't understand it, evidently. When we have to get up a railway, we draw up a prospectus and promise to the European public as much interest as we think they would like to get. We put down the estimated population between the two points, and we make the first issue of shares, and get the money." He (Mr. Thomas Cave) begged to remark that this director did not state to him what be (Mr. Thomas Cave) afterwards heard, that the director bought the land between the two places and sold it at an enormous profit. He (Mr. Thomas Cave) did not mean to say that these gentlemen would do anything so fearfully wicked. The director farther stated that with the prospectus in his hand he applied to London financial men, and was able to get enough of money to make one-third of the line. Then he published a statement announcing that in consequence of the difficulties they had to encounter, and the morasses through which they had to pass, they required more money, and proposed to raise it on first mortgage bonds. They always got this money on first mortgage bonds. Then they made another one-third—and, added the director, "We then always leave it to the shareholders and first mortgage bondholders to finish." He (Mr. Thomas Cave) feared that that must really be the result of this proposition. He had been selected as one of four Members of the House to investigate the affairs of the Atlantic and Great Western Railway, and that railway, with all its advantages—being able to carry all it wanted—running through a coal-field, and having its own coals—cost £24,000 a mile. He did not say all that money had been spent on the line; part of the money had been spent in jobbery; but there was jobbery in all parts of the world, and there might be jobbery on the railway they were going to make. In seconding the rejection of the Resolution he must express his belief that this money was nothing more nor less than hush-money.

MR. GLADSTONE

My hon. Friends who have just addressed the House have both spoken with great ability. My hon. Friend who spoke last, especially, has made good use, and very naturally, of the authority which belongs to his American experience for the purpose of discrediting a proposal which does not, I think, fall exactly within the category which he has described. Of course, upon the question of the natural obstacles in the way of the commercial success of this railway, it would be unpardonable presumption on me to enter into a contest with my hon. Friend. I am not competent to pronounce an opinion on that part of the case. But I may, I think, without detracting from his authority, say, in reply to a charge that this undertaking is tainted by a spirit of jobbery, that it is not a device and contrivance of certain gentlemen meeting together on their own private responsibility, and trusting to their own wits for the purpose of taking in the public. It is a scheme that has had the sanction of a series of free Governments for a long period of years, who, representing a population of our own birth and race, have adopted it as calculated to be beneficial in its results. The amount of authority which may be brought in support of the plan is of such a character, that I do not think we should simply observe the rules of prudence, in the attitude we assume, in the face of the colonies, or that we should be justified, if we set down at zero the whole of the assurances already given, and all the practical steps taken by the responsible authorities of the colonies. Some confidence and trust we must have in the mechanism of free Governments. The devising of this plan has been the work of a long series of years, and now it comes before us with, at any rate, the recommendation which can be drawn from a sanction of that kind. At the same time, the question we have to consider to-night is one entirely different from that of the goodness or badness of this railway as a commercial speculation. Should my hon. Friend be accurate in his estimation of the paying qualities of the railway when he says it will never, or at any rate will not for a long time, discharge its own working expenses, still I hold that it would not be wise in us to enter too minutely into an investigation of that matter. The guarantee which we are asked to give does not relate in any way to the productiveness of this undertaking. It is a guarantee to be given for the Colonial Government, and the safety of that is to be estimated by the credit, revenue, and good faith of that Government. Therefore I ant not over-scrupulous with respect to the paying qualities of this railway, and I do not wish to see the debate turn on such a consideration; for then, if the augury of my hon. Friend proved true, we should give an excuse to our fellow-subjects to turn round on us and plead their disappointment and ask for the remission of this debt, which I do not believe they will do. This is a proposal with respect to which the late Government are just as responsible as the present; and therefore I am desirous of taking an early opportunity of stating the view which the late Government took, and which I hope the House will take of this proposal. I am glad that the right hon. Gentleman first distinctly stated that neither we nor anybody are entitled to hold a free Parliament engaged or trammelled in any degree by the promises of two Administrations to apply to Parliament for a guarantee in respect of this proposal, which undoubtedly is brought forward in immediate connection with the great scheme already sanctioned by Parliament for the union of the British North-American Colonies. It was always made clear to the colonial authorities that it was not within our power or inclination to fetter the judgment of the House of Commons with respect to the liability to be fixed on the British Exchequer, and therefore I trust that hon. Gentlemen will look at this question with the feeling that they are about to exercise a free, and therefore a responsible judgment. It was always understood that this, which is called a guarantee on a loan to be raised for the construction of a railway, was, in point of fact, a financial transaction in respect to which we have no cognizance of railway companies, or anybody connected with them, but we deal simply with the exchequer of the State about to be created in British North America. I cannot but agree with those who are anxious to draw attention very fully to the serious nature of this proceeding. We may say with truth that we fairly expect that all the engagements about to be contracted with the province of Canada will be rigidly and exactly fulfilled; but it does not follow that the gift which the House is solicited to confer is a nominal or an empty gift. When we pledge the credit of England, we are laying an additional burden on the financial resources of this country. It matters not whether in a particular instance there will or will not be a call for the actual payment of the money. The principle is clear that a guarantee is a real obligation and burden undertaken by us. The real test of that circumstance is this. If, on the same day when in the City of London a large guarantee by the British Government was announced, it likewise happened that the Government had to go into the market and borrow £5,000,000 or £10,000,000 on their own account, they would not be able to raise the money on the same terms as they might have done before the guarantee was known. Therefore, let us not attempt to conceal from ourselves that the guarantee is a real burden. Many things have been said in this discussion in relation to the principles applicable to the military expense of the colony, in which I cannot but agree. The natural interpretation to be given to an expression which fell from the hon. Member for the Fife Burghs (Mr. Aytoun) is that it is to be inferred from this measure that the intention of the Government is to undertake increased responsibility and charge in reference to the military defence of the British North-American Colonies. A sentence, too, fell from my right hon. Friend (Mr. Adderley) from which, if criticized minutely, it might be inferred that, whereas Canada is without the means of defence, the construction of this railway is intended to enable this country to make greater efforts and undergo greater sacrifices in the ordinary and usual defence of that country. It appears to me beyond doubt that the construction of this railway will considerably increase the means of military defence or military aid to Canada if a case of necessity should arise. But while I say this, I must add that so far from considering this guarantee as an expression of the will and readiness of any Government of this country, or of Parliament, to undertake additional responsibility with respect to the ordinary work of the defence of the Province of Canada, I place on it exactly an opposite construction; and but for that opposite construction I should find it impossible to justify the proposal now made. I look on this guarantee as a measure auxiliary to the great work of Confederation. It is collateral to that great work the purpose of which is the development of the resources of the colonies, the increase of their wealth and strength, and along with that the gradual and, I trust, the speedy development of their self-reliance. I do not conceal from myself that we have been for a long time, to a great extent, in a false position with respect to the condition of colonial defence, and nowhere has it been so seriously exhibited as on the Canadian frontier. If Canada is to be defended, the main element and power in the defence must always be the energy of a free people fighting for their own liberties. That is the centre around which alone the elements of defence can be gathered, and the real responsibility for the defence must lie with the people themselves. But we have had a colonial system, which attempts have been of late made to modify, the characteristic of which was to throw the whole responsibility for defence not only on the Exchequer, but on the mind and thought of this country, and to place on our military department the charge and expense of the military service for the colonies, just as much as if those colonies were a portion of the there is hardly three kingdoms, and just as if they were not inhabited by an intelligent and free population. The escape from a false position of that kind is no easy matter. You cannot do it by a simple arbitrary modification of your military system. You must look to giving a higher civil and political position to these communities themselves. Much has been done in that way. We have for a full quarter of a century acknowledged absolutely the right of self-government in the colonies. But while we have made great advance in that sense, we have made very little advance with regard to many of the legitimate cousequences of that position. It is impossible to conceive anything more complete than our acknowledgment of those rights of selfgovernment. We do not expect the laws of Canada or of Australasia to be modelled according to our own ideas. We grant them a greater freedom from interference than as amongst the three kingdoms the Legislature grants to the peculiar ideas that may happen to prevail in one of those three. We have carried it to this point, that as far as regards the Administration, I believe it may be said that the only officer appointed by the Colonial Secretary is the Governor; and I believe there cannot be a doubt that if it were the well-ascertained desire of the colonies to have the appointment of their own Governor, the Imperial Parliament would at once make over to them that power. We have gone further: because if there is any one thing which we are entitled to insist upon as a limit to that self-government, it is that British merchandise should enter into these provinces upon certain terms; but instead of that, the assent of the Queen has been given to Acts imposing duties of 10, 15, 20, and 25 per cent upon products of English industry entering Canada. These, Sir, are very serious matters, and I hope that their very magnitude will secure for them attention according to their gravity and importance. How are we to rectify what requires rectification in our relations with British North America? I must say we are in the path of reason and prudence as well as equity and liberality. We have passed a measure by the unanimous assent of the House, and with a pumptitude which if it had been a matter of legislation affecting ourselves would have been precipitancy. But when one thinks it was an acknowledgment of the title of these colonies to deal practically with their own affairs—with a speed of which there is hardly an example—we have passed a measure for uniting these colonies together, and we hope—nay, I feel confident—that the result of that measure will be the development along that great extent of territory of a stronger sense of political existence, more self-reliance, and more self-relying habits. For we must not conceal it from ourselves, that if up to this time the sentiments of British North Americans with regard to self-defence has to some extent separated the burdens of freedom from the spirit of freedom the fault has been mainly ours. It was the overshadowing power and design and determination of this country which formed our colonial system by placing on us the responsibility of its defence. We have to bring about a different state of things. The best way to do it is to raise their political position to the very highest point we can possibly bring it, in order that elevated position their sense of responsibility may likewise grow. It cannot be too distinctly stated that it is in this light that we look upon the plan for uniting the Provinces of British North America. The evil which attends the old system, casting the burden of the responsibility of colonial defence wholly, or almost wholly, on this country, is not to be measured by the amount of pecuniary drain on our resources. Even if we were so to look at it it is a very serious thing. If we were to reckon and apportion the charge of our military Estimates occasioned by keeping a British force in these provinces it would startle many hon. Members. It is a very heavy charge indeed; and it is our duty in every way to get rid of it. But the evil in this particular case is by no means limited by that view. The system of vicarious defence—the system of having the burden of its frontier defence borne by another—enervates and depresses the tone of the country in which it prevails; and its withdrawal is necessary in order to bring the country to the full possession and enjoyment of freedom. Nay, more, in this instance who can doubt that the defence of the colonial frontier mainly by the force, and wholly on the responsibility of England has been recently a source of actual danger to Canada? Does any man believe that that most wicked outrage—hardly, I think, to be paralleled in the annals of piracy itself—the Fenian invasion of Canada, would ever have taken place if it had not been known that there was precisely the same power of wounding British honour through the medium of some success vainly hoped for against British troops as in case of an invasion of Great Britain herself? It is not necessary to pursue this line of remark. That illustration is a sufficient demonstration that for Canada to take on herself, as circumstances shall open themselves, the management and control of her whole frontier will be not only a means of raising her position in the world by the fulfilment of the duties of freedom, but it will be an escape from actual peril. I know of no objection that can be urged to the contemplation of a gradual, yet, I hope, speedy change of that kind, unless it be the idea that when you cease to take upon this country the ordinary burden of defence for the colonies you weaken the tie between them and the mother country. Now, when I have stated that it seems essential that British North America should largely undertake not only the charge but the responsibility of her own defence, I do not mean to say that in the event of the occurrence of danger the arm of this country would be shortened, or the disposition of this country to use its resources freely and largely in aid of that colony would be in the slightest degree impaired. On the other hand, my belief is that there would be no bounds to the efforts which this country would make for the purpose of aiding and supporting the North-American Provinces in their willing and energetic efforts to maintain their connection with this country. But that is a totally different thing from saying that this connection is to be maintained by the expenditure of large sums of money from the British Treasury, either by way of pomp and display in the colony or by way of attracting favour there by a lavish charge. No, Sir; the connection of this country with the British colonies is to be maintained on totally opposite principles. If there are those who think that the expenditure of money through the means of little standing armies kept in the colonies is to be the security for the maintenance of colonial connection, I ask why not do that with Australia? Has our connection with Australia been in the slightest degree weakened by the almost total withdrawal of British troops from the colony? The connection between this country and her colonies is not a selfish and sordid connection, and ought not to be so on one side or the other. No; it is at once a connection of interest, of honour, feeling, and duty. That feeling is never more recognised than at the present moment; and the more it is understood that there we are to look for the basis of the connection the more secure that connection is likely to be. These are the views that appear to me applicable to the present case. It is not administration, it is not interference, it is not imposing burdens on the colonies in any shape, to which we now look for maintaining our influence there and preserving the colonies as parts of the Empire. But if this be so—if our demands on them, such as they used to be, have been not reduced and diminished, but long ago abandoned, then undue demands on the other hand should not be made on the people of this country—more especially unjust and undue demands—as they do not belong to us and are mischievous, not more to us than to the people of the colonies themselves. This, Sir, is opening a very wide political discussion; but it is only by a survey of that field that the key to a measure of this kind can be obtained. It is not fair to say, how can you connect the construction of this railway with the development of these sentiments in the colonies—the creation of habits of self-reliance and the growth of the full tone of freedom? The ground on which it may be supported is this—that following the sentiments and convictions of the colonists themselves, this plan for the construction of a railway, for which we are now asked to guarantee a loan to the Colonial Government, has been associated with and incorporated in the scheme of Confederation itself. Consider it with reference to this scheme of Confederation, and if you believe the objects of that Confederation are such as are vitally important and beneficial to the relations of this country with our North-American Colonies, give the benefit of that consideration to the proposal now made. It is only on grounds of that kind that I support the proposal before the House. The general system of colonial guarantees is one which has come into just discredit within the walls of Parliament; and I would hope that only motives of the highest order will induce any Government to make proposals to the House of Commons for such guarantees. I believe the present guarantee does depend upon motives of policy belonging to a very high order, and intimately and inseparably associated with most just and most enlightened views of the true interests of the Empire.

MR. LOWE

Sir, the speech of the right hon. Gentleman (Mr. Gladstone) naturally divides itself into two portions. The first, that in which he answered most of the arguments in favour of the measure before us, and the second, that in which he himself argued very forcibly against it. I thought that one of the arguments which would be principally relied on in favour of the measure would be that several Governments had agreed to this proposal and had pledged the faith of the House and of the country to it. But the right hon. Gentleman, with an authority second to none upon the subject, has taken upon himself to relieve us from this difficulty, and has told us that the matter is fairly and fully before us, and that we are not pledged in any way to anything. I have no doubt that the right hon. Gentleman is perfectly right in what he says; because, although it may be insisted that any treaty entered into by Government with a foreign Sovereign would bind us, however much we might disapprove, this does not apply to colonies governed by the same Sovereign as ourselves. I therefore entirely agree with the statement of the right hon. Gentleman that the House is perfectly free to adopt any course of action it may think fit to take in the discharge of its duty with reference to this question. The right hon. Gentleman has also relieved me from the necessity of showing, which I think it would be easy to do, that in a commercial point oh view, the construction of this line is perfectly useless, and in a military point of view it is highly dangerous. He says that he does not put the question upon the merits of the line, but upon other considerations. The House is perfectly aware that Canada has a communication already by means of the railway from Montreal with the town of Portland, in the State of Maine, which is a port open all the year round, so that for the purposes of commerce there is already a communication between Quebec and the Atlantic ocean. For commercial purposes, therefore, it is unnecessary to make this line. I am not competent to express an opinion upon the military ques- tion involved in the construction of this railway; but it does appear to me that if we make a railway within twenty miles of the frontier of Maine, the first act of the American Government in the event of a war with this country would be to seize the line. The question with us would be, whether it would not be preferable to destroy it rather than allow it to fall into their hands. Whether they would think it worth while utterly to destroy it or to use it for the conveyance of their own troops I leave it to a military man to determine; but it appears to me that seated on horseback—as is the military phrase—on that line, the American troops would effectually interpose themselves between Halifax and Quebec, between one part and the other of the Confederation, against either or both of which they might act at their pleasure. Therefore, in constructing this railway, I believe that we are making a formidable auxiliary to America if ever she chooses to invade Canada. Then, although I am already discharged by the right hon. Gentleman from the necessity of doing so, I may take the liberty of saying that a more hopeless undertaking than this railway it would be impossible to conceive. Any person conversant with the country will tell you that it is impossible it can pay its working expenses. Engineers will tell you that, owing to the severity of the climate and the desolate regions through which it passes, it must be closed during a large portion of the year, and yet this is the line that is to be constructed especially to enable troops to be brought up from Halifax to Quebec, when the St. Lawrence is closed. The country through which it is to pass is one most difficult for the construction of works of this description, since it consists of a succession of parallel ridges and of deep valleys, which will render it impossible for the line to be constructed without a great number of cuttings and viaducts being made. I am also informed upon authority that it is quite ridiculous to suppose the line could be made for anything like the highest estimate that has been laid before us. But we are discharged from considering all this. The question we have to consider, the right hon. Gentleman says, is not what is to be done with this railway when constructed—indeed it does not matter, according to the right hon. Gentleman, whether the money is spent upon the railway at all, or whether it is misappropriated, so long as we have good security for its repayment—because the loan is intended to serve a higher purpose. But I think it does matter to what use the money is to be applied. I think it is not consistent with the dignity or the good sense of the House that we should be calling upon the people of this country to take upon themselves a financial burden in order to facilitate the construction of such a line as has been described. If I am wrong in my calculation—and I certainly do not speak from personal knowledge of the matter—let us, at all events, have an inquiry into the matter. The right hon. Gentleman has relieved us from the necessity of discussing the ruinous fallacy that "It is only giving our name," for when we give our name we are incurring a pecuniary liability, and that we have no right to do unless this country is to obtain some equivalent advantage from the engagement. Proceeding a step further, I next come to ask why is it that, all these arguments being so satisfactorily refuted by the right hon. Gentleman, we are asked to give our guarantee for this loan? The answer is because it is auxiliary to the Confederation. This does not appear to me to be a very intelligible phrase; but I will endeavour to analyze it in a moment. Another reason given is that, as the right hon. Gentleman says, and says with truth, we have got into a false position with regard to our North-American colonies in connection with military matters, and that we must get out of it. We have in some degree debauched the minds of the colonies by being over-ready with our men in defending them, and over-ready with our money in the way of military expenditure. This is all exceedingly true; but how does this prove that we ought to guarantee them £3,000,000 more. It seems to me that the argument goes exactly the contrary way. If we are to teach our colonies self-reliance, and if they are really to undertake their own defence, we should not commence by furnishing them with British credit. This is essentially a military scheme. If we are to find the guarantee to enable the scheme to be carried out, how does that inculcate the principle of self-reliance among the colonies? I am not able to state the amount of our military expenditure for the purposes of Canadian defence, but it must be something enormous—certainly more than £1,000,000, and this has to be undertaken by a poorer country in favour of a richer; for, judged by any test, the inhabitants of Canada are indisputably better off than are the taxpayers of this country. And, notwithstanding this vast annual expenditure on their behalf, we are now asked to guarantee the loan of this large sum. This, then, is the way the question stands at this moment, and there only remains one other consideration, and that is, are we justified in guaranteeing this loan because it is "auxiliary to the plan of the Confederation?" As a plain man, what I understand by this loan being auxiliary to the plan of the Confederation is this—that it is the price this country is to pay for the Confederation being entered into by our North-American colonies. That is a very serious question indeed. I, as a Member of Parliament, was quite willing to give my consent to the Act for the Confederation, because the people themselves wanted it, but there I say our responsibility should end; and I protest against our taking upon ourselves the responsibility of inducing the colonies to enter into such a confederation. I do not see why, because we are assenting to the colonies adopting any form of government they may choose, we are to take upon ourselves to find the money for them to undertake this scheme. I think that by bribing them to enter into this Confederation by guaranteeing this sum, we are taking upon ourselves a responsibility which we shall one day deeply rue. I object to this measure for exactly the reasons that induce the right hon. Gentleman to advocate it—namely, because it is "auxiliary to the Confederation," It is because by voting this money for carrying out this scheme which the right hon. Gentleman truly says has been incorporated into and made a part of the Confederation, not with the view of any pecuniary advantage to this country, but only to smooth away the objections the colonies themselves might have had to the plan of Confederation, and perhaps to draw the colonies and the mother country into a closer relationship as borrower and surety, that I object to this proposal. For my own part, I do not think that this plan of Confederation is calculated to work satisfactorily; but it is the wish of the people of the colonies that it should be carried into execution, therefore I can make no objection to it. But I do object to its being supposed that they have been induced to enter into this scheme by pecuniary considerations. But I object to the measure upon much larger grounds. This plan of inducing the colonies by persuasion and by the influence of a loan of public money, to enter into a particular form of Government is fraught with this evil, that we represent ourselves to them and to the world as taking a peculiar interest in the manner in which they choose to regulate their internal affairs and their relations with the United States. Now that we have given them self-government, let them manage their affairs their own way, and do not let us Hake ourselves responsible for the manner in which they regulate their internal or foreign relations. The management of our own affairs is quite sufficient for us without our mixing ourselves up in matters with which we have no concern, and over which we do not for a moment profess to exercise the slightest control. I think the reason given by the hon. Member for Barnstable (Mr. Thomas Cave) against entering into this arrangement is of immense cogency. We are setting up this Confederation—or, at least, we shall not be acquitted of such an intention in the eyes of America—as a rival to the United States. ["No, no!"] It is said that we are setting up the Confederation in order that they may defend themselves against aggression; but I say that we are setting them up as a rival to the United States. ["No, no!"] To my mind nothing could be more foolish or more unworthy of us as a nation than such an attempt; while, at the same time, nothing could be more fatal or more ridiculous than such an act on our part. I am not going to repeat all that I have said on previous occasions upon this subject, as to the absurdity of thinking that we can defend these colonies against any attack by the United States; but I must repeat that I object to any step being taken that can be construed into a sort of challenge or defiance to the United States, or that would lead them to suppose that we contemplate by any act, by making a railway, or by any other job, to make these colonies a match for them. You have on the one hand a country like Canada, using the word in its new sense, with 1,500 miles of frontier, and a population of 3,800,000, and do you think you can make her a match for the United States, with its population of 35,000,000, merely by the aid of a few thousand men, whom, in all probability, in the event of a war you would not be able to send to her assistance? The idea is the most ridiculous and chimerical that can possibly be. It is because this scheme does point in this direction, it is because the ominous word "defence" is mixed up with it, that I more especially object to this House being dragged into this guarantee. The position I wish to maintain with regard to the American colonies is to do our duty towards them as far as in us lies, but not to undertake impossibilities. We are in America somewhat in the position of the Plantagenets in France about the time that the French Monarchy was consolidated—namely, encumbered with large dominions which a mistaken sense of honour forbade them to get rid of, although unable to defend them. What we ought to do is to cultivate the most peaceful relations with the United States, and for that purpose we should abstain from taking any measures which could be construed by that country into a hostile attitude. We are not able to carry it out, and therefore had better not attempt it. We are at peace now with the United States, and my hope is that Canada may be preserved from invasion by that country—in the first place, by the good sense and moderation of the people of that country, and next by a similar reason that would prevent Italy invading Norway—namely, by the climate. I hope the House will consider seriously the step they are about to take, and that if they determine to enter upon this step they will put in this Bill some very stringent securities to provide that the money spent under our guarantee shall be applied to the purpose for which it is voted, and that it shall not stick to any one's fingers in its progress to this charming railway that is to be constructed. Agreeing as I do mainly in principle with my right hon. Friend, I submit that I draw the more logical inferences of the two. Our principles are common; our conclusions are exactly contrary. It is for the House to judge which conclusions are better founded. I was examined before a Committee of the House of Commons three or four years ago on the military defence of the colonies, and I made an observation, which I beg to repeat— In the time of the American Revolution the colonies separated from England because she insisted on taxing them. What I apprehend as likely to happen now is that England will separate from her colonies because they insist on taxing her.

MR. WATKIN

said, that in following the right hon. Gentleman he felt very much as a quiet Roman citizen must have done on passing the chief gladiator in the street—inclined to pass over to the other side, and to have nothing to say to him for fear of the consequences. But some years ago he was requested by the late Duke of Newcastle to make inquiries, which convinced him that the hobgoblin fears expressed that night in regard to the construction of this 375 miles of railway were unfounded. Let hon. Members remember that Her Majesty's American dominions extended over an area equal to one-eighth of the habitable globe. This railway gave us communication not only with Canada, and with 10,000 miles of American railways, but with the vast tract of British territory extending across to the Pacific. The consequence of making this railway would be that two days would be saved in going from England to the Northern Continent of America, including the great corn-growing district of the west. If the House had seen, as he had seen, the Canadian Volunteers turn out in bitter weather to repel a threatened invasion without a red coat near them, they would think that the right hon. Gentleman's taunts might have been spared. The British provinces had taxed themselves £360,000 a year for the execution of their portion of those works which Lord Durham had proposed in 1838, with the object of binding together by the means of physical communication the varied sections of the Queen's American dominions. The evidence of every military man, including Sir John Michell, the present Commander-in-Chief in Canada, was that this railway was absolutely necessary for the military defence of the colonies. It was, however, to be defended not merely on that ground, but on that of its great commercial advantage. There were now in the Government offices memorials from many of the large towns in the three kingdoms concurring in the commercial necessity and advantage of the measure which the House was now asked to agree to. Therefore, originating as it did with Lord Durham, sanctioned as it was by Lord Grey's proposals of 1851, adopted by the late and the present Government, demanded for purposes of defence, as also for the more genial and generous objects of commerce and of peace, he hoped the House would support the construction of the railway by a guarantee which would not cost this country a shilling.

Motion made, and Question put, That the Commissioners of Her Majesty's Treasury be authorised to guarantee interest, at a rate not exceeding Four per centum per annum, on any principal money, not exceeding Three Million Pounds sterling, to be raised by Loan by the Government of Canada for the construction of a Railway connecting Quebec and Halifax."—(Mr. Adderley.)

The Committee divided:—Ayes 247; Noes 67: Majority 180.

House resumed.

Resolution to be reported To-morrow.