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Canada and the States By Sir E. W. Watkin Characters: 94397

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Re-organization of Hudson's Bay Company.

Thus, after a long and continuous period of inquiry and investigation- a grave game of chess with the Hudson's Bay Company-many anxieties and a great pecuniary risk, surmounted without the expected help of our Government, the battle was won. What now remained was to take care that the Imperial objects, for which some of us had struggled, were not sacrificed, to indifference in high places at home, or to possible conflicts between the two Provinces in Canada; and to secure an energetic management of the business of the fur trade and of land development by the executive of the Company, whose 144 posts covered the continent from Labrador to Sitka, Vancouver's Island, and San Francisco.

It seemed to me that this latter business was of vital and pressing importance. The Hudson's Bay factors, and traders were, in various grades and degrees, partners in the annual trade or "outfit," under the provisions of the "deed poll." This "deed poll" was the charter under which the hardy officials worked and saved. Their charter had been altered or varied over the long period since the date of the Royal concession, in the twenty-second year of the reign of Charles the Second. The deed poll in existence in 1863 provided that the profits of the fur trade (less interest on capital employed in the trade, which belonged to the stockholders who provided it) were to be divided into 100 parts, of which 60 parts belonged to the stockholders, and 40 to the "wintering partners." The "wintering partners" were the "chief factors" and the "chief traders." These 40 parts were again subdivided into 85 shares; and each "chief factor" was entitled to two of such shares, and each "chief trader" to one share. The clerks were paid by salary, and only a person who had served as a clerk could be promoted to a "chief tradership," and only a "chief trader" to a "chief factorship." Thus all had a direct or remote partnership interest. On retirement, an officer held his full interest for one year and half his interest for the succeeding six years.

I had much apprehension that if the unexpected sale and transfer of the share property, under terms and conditions in every sense unique, were not frankly and explicitly explained, and under authority, alarm and misconception would arise; while the news of the transfer would find its way to distant regions in a distorted fashion, and through unfriendly sources, long before the explanation and answer could arrive. My fear, owing to bad management in London, was somewhat realized, and I found that I had not rushed across the Atlantic, to perform every service in my power to the undertaking, in June, 1863, one moment too soon.

Then, having studied the "deed poll," I felt that, unless we made the factors and traders partners in the whole enterprise-fur trade, banking, telegraphs, lands, navigation of rivers-on generous terms, we could not expect to elicit either their energies or their adhesion to a new order of things.

Further, I saw no way to secure supervision and control over the Fertile belt, and all around it, except by the construction, to begin with, of a main line of telegraph from St. Paul to the Hudson's Bay territory, and thence by Fort Garry to the extreme western post on the east side of the Rocky Mountains. Such main line to be supplemented by other subsidiary lines as rapidly as possible. The "wire," to my mind, was the best "master's eye" under the circumstances. But, apart from business re-organization, it was most essential to explain everything to the Government of Canada; and to ascertain the views of political parties, and of industrial interests, as, also, of religious bodies, as to future government. In dealing with these questions, I had to assume an authority which was to have been confided to a delegation, to consist of Captain Henry Glyn, Colonel Synge, and myself.

On leaving England promptly-the main work being done-Mr. Richard Potter undertook for me all the details which, if at home, I should have managed, and he especially took up the discussions at the Colonial Office, which I had personally carried on, with the Duke, for the previous period.

Thus it was that the new Board was constituted, and the arrangements for taking over were made in England without my taking any, further, part. Sir Edmund Head was appointed Governor at the suggestion-almost the personal request-of the Duke of Newcastle: some members of the old Board were retained for the, expected, value of their experience, and amongst the new members were Mr. Richard Potter and Sir Curtis Miranda Lampson, a rival fur trader of eminence and knowledge, and an American. A seat at the Board was left vacant for me.

It may be interesting here to quote what the Duke of Newcastle said, in explaining, in the House of Lords, the recent transactions with the Hudson's Bay Company.

TIMES, July 3, 1863. [HOUSE OF LORDS.]

"The DUKE OF NEWCASTLE, in moving the second reading of the British Columbia Boundaries Bill, said that he should give some further information as to an extension of the means of communication across that great interval of country between British Columbia and Canada. After referring to the system of government which then existed both in Vancouver's Island and British Columbia, and to the revenues of both colonies for the previous few years-that of British Columbia being most remarkable, having nearly doubled itself in two years (the imports in 1861 being $1,400,000, and in 1862 $2,200,000)-the noble Duke proceeded to say, that the greatest impediment to the future prosperity of the Colony was a want of communication with the outer world. He had stated on a previous occasion that he hoped to be able to state this year to the House that arrangements had been made to complete the communications between the Colony and the east of British North America, and he thought he could now inform their Lordships that such arrangements would be carried out. He had desired a gentleman of great experience, knowledge, and energy, who was constantly travelling between Canada and this country, to inquire whether it would be possible to effect a communication across the Continent. This gentleman-Mr. Watkin-had returned with considerable information, and he had suggested to him to place himself in communication with persons in the commercial world who might be willing to undertake the carrying out of such a communication. He had put himself in communication with Mr. Baring and others, and he believed they had arrived at the conclusion that if arrangements could be made with the Hudson Bay Company the undertaking should have their best attention. In order that these important communications might be made certain, guarantees were to be given by Canada on the one hand, and British Columbia and Vancouver Island on the other. A complete Intercolonial railway system had long been looked forward to by those interested in our North American Provinces, and it would be impossible to overrate the importance to this country of an inter-oceanic railway between the Atlantic and Pacific. By such a communication, and the electric telegraph, so great a revolution would be effected in the commerce of the world as had been brought about by the discovery of the Cape of Good Hope. It was unnecessary to point out to their Lordships of what importance it would be in the case of war on the other side of the Atlantic. There was another matter on which he wished to say a few words. Some eight or nine days ago it was stated in a portion of the press that the Hudson Bay Company had sold their property. That statement was not altogether accurate, and certainly it was premature, for he had been informed within two hours before he came down to the House that the whole arrangement had only been completed that afternoon. He had not received any official communication on the subject, but some of the gentlemen concerned had been kind enough to inform him of the facts. He had stated on a former occasion that the Hudson Bay Company had wished to sell. Certain parties in the City had, in the first instance, entered into communication with them for the purpose either of purchasing or obtaining permission for a transit through the Company's possessions. After some negociation the alternative of permission for a transit was agreed upon. That conclusion having been arrived at he did not know what it was that raised the whole question of sale again, but some fortnight or three weeks ago fresh negociations were opened. Parties in the City proposed to the Hudson Bay Company to give them by way of purchase a sum of 1,500,000_l_. What had taken place was this: The Hudson Bay Company very prudently required that the money should be paid down, and that the whole sum of 1,500,000_l_. should be ready on a given day, which he believed was yesterday. Of course the intending purchasers could not carry out that transaction in the course of a week, and they, therefore, applied to the International Financial Association to assist them. The Association agreed to do so, and the money either had been paid or would be on a day arranged upon. A prospectus would be issued tomorrow morning, and the shares would be thrown upon the market, to be taken up in the ordinary way upon the formation of companies. These shares would not remain in the hands of the Association, but would pass to the Proprietors, as if they had bought their shares direct from the Hudson Bay Company. Of course the Company would only enjoy the rights which those shares carried, and no more. They would, in fact, be a continuation of the Company; but their efforts would be directed to the promotion of the settlement of the country: the development of the postal and transit communication being one of the objects to which they would apply themselves. Of course, the old Governor and his colleagues, having sold their shares, ceased to be the governing body, and a new council, consisting of most respectable persons, had been formed that afternoon. Among them were two of the Committee of the old Company, with one of whom, Mr. Colville, he had had much personal communication, and could speak in the highest terms as a man of business and good sense. There were, also, seven or eight most influential and responsible people, and the name of the Governor, Sir Edmund Head, who had been elected to-day, would be a guarantee of the intentions of the new Company, for no one would believe that he had entered into this undertaking for mere speculative purposes, or that the Company would be conducted solely with a view to screw the last penny out of this territory. While the council, as practical men of business, would be bound to promote the prosperity of their shareholders, he was sure they would be actuated by statesmanlike views. No negociation with the Colonial Office had taken place; and as this was a mere ordinary transfer, no leave on their part was necessary. But arrangements must be entered into with the Colonial Office for the settlement of the country; and at some future time it would be, no doubt, his duty to inform their Lordships what these arrangements were."

The Prospectus, as issued in London, for the new organization, at the end of June, 1863, contained this paragraph:-

"With the view of providing the means of telegraphic and postal communication between Canada and British Columbia, across the Company's territory, and thereby of connecting the Atlantic and Pacific Oceans by an exclusively British route, negociations have been pending for some time past between certain parties and Her Majesty's Government and the representatives of the Government of Canada, and preliminary arrangements for the accomplishment of these objects have been made through Her Majesty's Government (subject to the final sanction of the Colonies), based upon a 5 per cent. guarantee from the Governments of Canada, British Columbia, and Vancouver Island. In further aid of these Imperial objects, Her Majesty's Government have signified their intention to make grants of land in portions of the Crown territory traversed by the proposed telegraphic line.

"One of the first objects of the Company will be to examine the facilities and consider the best means for carrying out this most important work; and there can be little doubt that it will be successfully executed either by the Hudson's Bay Company itself, or with their aid and sanction.

"For this, as well as for the other proposed objects, Mr. Edward Watkin, who is now in Canada, will be commissioned, with other gentlemen specially qualified for the duty, to visit the Red River and southern districts, to consult the officers of the Company there, and to report as to the best and safest means of giving effect to the contemplated operations."

A letter of instructions, from the new Governor, dated London, 6th July, 1863, received by me about the 22nd July, after I had made no small advance in the real business, stated:-

"SIR,

"I am authorized by the Committee of the Hudson's Bay Company to request you to proceed on their behalf to the Red River Settlement, for the purpose of reporting to them on the state and condition of this Settlement, the condition of the adjoining territory, the prospect of settlement therein, and the possibility of commencing operations for an electric telegraph line across the southern district of Rupert's Land.

"The Committee have full confidence in your discretion and judgment, but they have deemed it right to associate with you in this inquiry Governor Dallas, of the Red River Settlement, with whom they request you to communicate at once.

"The Committee are aware that it is now so late in the season as to preclude you from doing more than procure such information as may enable them to commence fresh inquiries at the opening of next season.

"I have the honour to be, Sir,

"Your obedient Servant,

"EDMUND HEAD, Governor.

"EDWARD WATKIN, Esq."

I found soon after my arrival in Canada that Governor Dallas was coming down from Red River, and would meet me at Montreal. He was a very able man; cool, clear, cautious, but when once he had had time to calculate all the consequences, firm and decided. He had been for years on the Pacific coast; and, thanks to his prudence, the landing, in 1859, of General Harney, and a detachment of United States troops on the Island of St. Juan, between Vancouver's Island and the mainland, on the Pacific, had been controlled and checkmated, by the proposal of a joint occupation until negotiations had settled the question of right. This right was, afterwards, given away by our Government under the form of an arbitration before the Emperor of Germany. Governor Dallas' opinion of the transaction will be gathered from his letters to me of the 29th and 30th October, 1872, hereafter copied.

The Governor and I became fast friends, and our friendship, cordial on both sides, continued until his death, a very few years ago. The only fault of Governor Dallas was a want of self-assertion. Brought out by the Mathesons-hardy Scots of the North-as he was, he made a reasonable fortune in China: and coming home, intending to retire, he was persuaded to accept the Governorship of the Hudson's Bay Company on the death of Sir George Simpson. Meeting at Montreal, our first act of "business" was to voyage in the Governor's canoe from Lachine through the rapids to Montreal; a voyage, to me, as almost a novice, save for my New Brunswick canoeing, of rather startling adventure; but the eleven stalwart Indians, almost all six feet high, who manned the boat, made the trip interesting, as it was to me in the nature of a new experience. These men had been with Governor Dallas nearly 4,000 miles by river, lake, and portage; and he told me he never knew them to be late, however early the start had to be made; never unready; always cheerful and obliging; and that a cross word had never, in his hearing, been uttered by any one of them. These men made Caughna Wauga, opposite Lachine, their home, and there were their families.

After the most careful study and discussion of the questions above alluded to, and others, the discussion extending over a month, we agreed to various memoranda. The one affecting the re-organization of management was as follows:-

"The first measure necessary towards the re-organization of the Hudson's Bay service, will be the abolition, or modification of the deed poll, under which the fur trade is at present carried on. The difficulty involved in this proceeding is, an interference in the vested rights of the wintering partners (chief factors and chief traders). That might be overcome by some equitable scheme for the extinction of those rights, which would serve the double purpose of rendering practicable a reorganization of the service, and a reduction in the number of superior officers, at present too large. This reduction would give the opportunity of dispensing with such men as are inefficient, and of retaining those only likely to be useful. The Company are under no covenants in reference to the clerks.

"The arrangements of the deed poll are, in outline, as follows:-The profits of the fur trade (less the interest charge, which goes exclusively to the stockholders) are divided into one hundred parts; of those, sixty are appropriated to the stockholders, and forty to the wintering partners. These last are subdivided into eighty-five shares, of which two are held by each chief factor, and one by each chief trader.

"Clerks are paid by salary. Only a clerk can be promoted to a chief tradership (1-1/85 share), and only a trader to a chief factorship (2- 1/85 shares). The promotions are made by the Company on the nomination of the chief factors, though this rule has not always been adhered to. On retirement an officer holds his full interest for the first year, and half this interest for the succeeding six years. The deed poll authorizes the Company to put an officer on the retired list, without reasons assigned, after he has served four years, but they cannot deprive him of his retired interest except for proved misconduct; but neither of these regulations has ever been put in force. It is possible the wintering partners might raise a question whether, under the existing deed poll, the Company could make any great changes in their business, or embark in new undertakings, if likely to affect injuriously the incomes of the officers on the active list, or the interests of those on retirement.

"One mode of removing this obstacle would be to ascertain the value of a retired interest, and to give a money compensation to each officer on his entering into an agreement to consent to the abrogation of the deed poll. This would involve an outlay of money, but would also be productive of a considerable subsequent annual saving.

"The eighty-five shares belonging to the wintering partners are, at this date, held as follows:-

15 chief factors 30 shares

37 " traders 37 "

10 retired chief factors 13 "

10 " " traders 5 "

--

85 "

===

"As regards the shares held on retirement, some of the interests have nearly run out, and none of the parties have any voice in the business.

"The value of a 1-85th share has been, on the average of the last thirteen outfits, which have been wound up (1846-1858), about 408_l_. At that rate a chief factor's retired interest would amount to 3,264_l_., and a chief trader's to 1,632_l_., less discount, supposing payment to be made at once, instead of its being spread over nine or ten years. On the other hand, the invariable custom of the service has been to allow every officer one or more year's furlough on retiring, which has come to be considered almost a right; when more than one year has been granted, it has been by special favour. Adding one year's furlough, a factor's retired allowance would be 4,080_l_., and a trader's 2,040_l_. The discount being taken off, to render them equal to cash, would make a factor's allowance about 3,000_l_., and a trader's 1,500_l_.

"The cost of commutation, on the above scale, would be-

15 chief factors, at 3,000_l_ L45,000

37 " traders, at 1,500_l_ 55,500

18 shares held on retirement, about 14,000

----

L114,500

========

"Without allowing a year's furlough, the above amount would be reduced about one-sixth.

"The outlay would only be called for in the case of such officers as are already retired, and of such as under a new agreement might not be re-engaged. The retired interest of the officers who might enter into a new engagement would be provided for in the revised deed poll.

"As a set-off for the outlay on commutations would be a large reduction in the pay of officers, to be hereafter noticed, and the Company would also receive actual value for their money; and on buying out the wintering partners they would become possessed of their 4/10th share of the profits of the trade.

"Under the present organization the pay of officers in the service is about as follows:-

Governor-in-Chief L 2,000

16 chief factors 12,000

35 chief traders 14,000

Clerks, about 10,000

----

L38,000

=======

"The following would probably prove a more efficient staff:-

Governor-in-Chief L 2,000

Lieutenant-Governor 1,250

4 councillors, at 800_l_ 3,200

25 chief traders, at 300_l_ 7,500

100 clerks, at various salaries, about 10,000

----

L23,950

=======

"The saving of 14,000_l_. per annum would soon reimburse the Company's outlay in buying up the present interests of the factors and traders.

"The system of making the pay of officers (of the upper grade) dependent on the success of the business, has worked well, and might be advantageously continued, in a modified form, to be hereafter noticed.

"The duties of the officers of the proposed reduced staff would be adapted to the existing distribution of the territory into departments and districts, which are as follows:-

"There are four main divisions-the Northern, Southern, Western, and Montreal Departments, roughly bounded as follows:-the 'Western' embraces all the country west of the Rocky Mountains; the 'Northern' is composed of the country east of the mountains, as far as Lake Winnipeg and Lac la Pluie, and from the American frontier to the Arctic Sea; the 'Southern' embraces the southern and eastern shores of Hudson's Bay; and the 'Montreal' extends from Lake Superior down the Gulf of St. Lawrence to Labrador. These departments are divided into districts, and in each district are several posts. The limits of districts are fixed by local peculiarities; but commonly embrace some large river, on which the various stations are planted-such, for example, as the McKenzie and the Saskatchewan. There are twenty-three districts on the east side of the mountains; to the west such subdivision of the business is now scarcely practicable, and is being abandoned. To proceed to the duties of the officers.

"The Governor-in-Chief would fulfil his present large functions, and be the medium of communication between the Company and their officers in the country.

"Under the present system the Governor is supposed to maintain a personal supervision of the whole service. This is practically impossible, the country being too large to enable him to travel over more than a limited section of it in each season. To relieve him of that heavy duty, and at the same time to maintain a real and close personal inspection, one of the four councillors might be stationed in each department, of which, in the absence of the Governor, he would be the chief officer, and held responsible for all local details, and the various posts in which he should periodically inspect and report upon. Once, or oftener, in each year, a meeting of the Governor and the four councillors should be held, at any time or place most convenient-say, Fort Garry, Montreal, or elsewhere. Aided by such a council, the Governor would be accurately informed as to details in every part of the country, and able to deal satisfactorily with all local questions.

"The duty of the Lieutenant-Governor would be to relieve the Governor- in-Chief of some share of his labours, and to act in his absence as President of Council.

"The chief traders would, as a general rule, be placed at the head of districts, and the clerks in charge of posts.

"The very efficient class of officers known as 'postmasters' would remain as at present. They are usually men who have risen from the ranks from merit; and, being good interpreters, and Indian traders, are commonly placed in charge of small posts. Their scale of pay is rather less than that of clerks, and they are rarely advanced to any higher rank; indeed, their ambition is satisfied when they are made postmasters.

"Reverting to the mode of paying officers, and making their incomes to some extent dependent on the success of the business, it might answer to give them an interest as stockholders. Instead of paying a chief trader 300_l_. per annum, he might have 250_l_., and a sum of 1,000_l_. of stock placed to his credit, of which he would receive the dividends only, the stock itself reverting to the Company when his connection with them terminated.

"A councillor might have 700_l_. pay and the dividends on 2,000_l_. stock. It would also be a great encouragement to the officers, and secure prolonged service, to give them an annual increase of stock-say, 200_l_. to be added for every year's service. Thus, if a man did not get as early promotion as he expected, he would still benefit by length of service.

"The principle of retired interests might be maintained, by allowing the officers to receive the dividends on the stock they held at retirement for-say, seven or ten years, before it reverted to the Company.

"To carry out these arrangements, it would be necessary to set aside in trust about 150,000_l_. stock. But the Company would lose nothing by it, as they would save in salaries what they gave in dividends.

"At the outset only 35,000_l_. of the stock would be called for, with an increase of 5,400_l_. per annum. Even allowing for a considerable retired list, it is doubtful if the whole 150,000_l_. would ever be appropriated; and of course the dividends on whatever portion was not appropriated would revert to the Company.

"In the revision of the deed poll, it would be essential to retain the clauses which secure to the Company the right to place officers on the retired list, and to dismiss them for misconduct.

"The mode of keeping the accounts, both in London and in the country, is one of much importance, requiring early consideration. At present there are no accounts, properly speaking, kept at the posts; and very great delay occurs in ascertaining the results of the business from London. It is essential to introduce some system of analysed post accounts, which should keep the Governor and his Council fully informed of the state of the business at every post, and by which they might judge of the management of the officers in charge. There is now no practical check on extravagance or dishonesty, except that arising from the upright principles of the officers in the service. The adoption of a system of local audit appears the best remedy for many of the existing evils.

"The Company's agent at New York (Mr. Wm. McNaughton), who is a valuable officer, has not at present sufficient employment to make his position worth occupying. As there is a valuable market in New York to which it would, at certain times, be advantageous to send buffalo robes, wolves' and some other furs, which could be done without interference with the market in England, it is important to render the New York agency more efficient.

"(Signed) A. G. DALLAS.

"(Signed) EDWARD W. WATKIN.

"7th August, 1863."

This memorandum was sent home to Governor Sir Edmund Head, with other papers.

On the serious questions of the future relations of the vast territory to Canada and the Mother Country; how it could best be settled; how it should be governed; what arrangement as to boundaries, and so on-I had many and serious conferences with public men. And in answer to many questions as to my own views, I drew up the following memorandum, as a resume of the whole subject. It is now nearly twenty-four years old. I have read it again and again. I am not ashamed of it. I see nothing to retract; little to alter:-

"The present state of government in the Red River Settlement is attributable alike to the habitual attempt, encouraged, perhaps very naturally, in England and in Canada, to discredit the traditions, and question the title of the Hudson's Bay Company, and to the false economy which has stripped the Governor of a military force, with which, in the last resort, to support the decisions of the legal tribunals. No other organized Government of white men in the world, since William Penn, has endeavoured to rule any population, still less a promiscuous people composed of whites, half-breeds. Indians, and borderers, without a soldiery of some sort, and the inevitable result of the experiment has, in this case, been an unpunished case of prison- breaking, not sympathised in, it is true, by the majority of the settlers, but still tending to bring law and government into contempt, and greatly to discourage the governing body held responsible for keeping order in the territory.

"At the same time it must be conceded, that, while government by a merchant organization has eminently succeeded, up to an obvious point of time and circumstances, in the cases both of the East India and Hudson's Bay Companies, and is still applicable to the control and management of distant districts, it contains within itself the seeds of its own ultimate dissolution. In fact, the self-interest, however enlightened, which brings a dividend to stockholders, is opposed to the high impartiality and absence of individualism which should characterize a true Government. Individuals and corporations may trade and grow rich,-Government may not; they may embark in constant speculation, while it cannot; they must either insensibly measure their dealings by consequences, as affecting gain, or be suspected of doing so, while the interest of Government is not individual, but collective; its duty being, to give facility to the acquirer, security to the possessor, and justice and equal protection to all.

"Therefore, although the Government of Red River has had few faults and many excellences, and has been marked by a generous policy, in many instances it has been, and is, open to suspicion; because the commercial power which buys furs, trades with Indians and whites alike, and is, in fact, the great merchant, storekeeper, and forwarder of the country; appoints a Governor and assistants, places judges upon the bench, selects magistrates, and administers the law, even amongst its possible rivals and trade competitors. Such a state of things is unsound in principle, and ought only to be continued until a stronger and permanent Government can be organized; at the same time it can only be continued in safety, on the opening up of the country, by arming the Governor with a military force of reasonable amount.

"That the Hudson's Bay Company can govern the country efficiently, on this obvious condition of all other Governments, is clear enough; and the peaceable relations between the Indians and the whites, and between the various tribes themselves, throughout the whole of this enormous territory, as well as the general state of health and occupation of the aborigines, prove how perfect and wise has been the management of the country. But government of Indians, who can be employed and traded with, and who at last become more or less dependent upon the Company's organization, as in this case, is one thing,- government of a large and expanding colony of free white men is quite another.

"It is a question whether the government of the Indians can or ought to be changed, for a long period to come, so completely is the Indian life now associated with the operations of the Company. Of course, the settlement of a new or an extended colony, involves the extinguishment of Indian rights within the area proposed; and while the outside district not set apart, would still be roamed over by the Indians, and be valuable for the fur trade, its limits must, from time to time, be narrowed by further additions to the circle of civilization and free government. Thus, the Hudson's Bay Company, if dispossessed of the government of Red River, and the proposed new Colony, would still manage and govern where it traded, and would still preserve sobriety, order, and peace amongst the Indian tribes of its territory thus limited.

"It may happen that the Hudson's Bay Company may be compelled to govern everywhere, by the refusal of the Home or Canadian Government to encounter the responsibility and expense, which at first might be serious, and which, as regards cost, must be greater in their hands than in those of a Company using portions, of its business organization for purposes of administration. It is well to look these probabilities fairly in the face.

"Such a necessity may arise from the indisposition of certain schools of politicians at home to incur Colonial expense, and the responsibility of defending a new nation flanking the United States; it may happen, owing to the refusal of Lower Canada to widen out the borders, and thus increase the political power of Upper Canada; or it may be objected in Canada generally, that the finances of the country will not, at present, prudently authorize the maintenance of a new Canadian military force; and again, the Indian war in Minnesota, which may spread itself, may raise up fears of Indian wars in the new country to be settled.

"Should the Hudson's Bay Company be compelled, then, to continue to govern the whole territory, the first essential, as before said, is a military force. That force may consist partly of regular troops, partly of mounted irregulars or militia, and it need not, in their hands, be large. The population is suited to military pursuits, and the half- breeds mounted would make an excellent irregular cavalry. And the next essential would be a convention and treaty with the United States, as to boundary and transit through the United States and Hudson's Bay territory respectively, for purposes of travel, and commerce, and of postage, and the telegraph.

"Then the limits of colonization must be defined, and it must be maturely considered at the outset, and decided as to how far, and in what form, and how soon, the principle of self-government shall be introduced. It is assumed that a thriving and expanding colony of white men neither can nor ought to be taxed and governed without their own consent, obtained in some form or other; and that it would be both unwise and unjust to attempt a permanently autocratic government. This is a most serious question, and the Act 31st George III., under which Canada was governed until 1841, would appear to solve the difficulty. The general scheme of government of that Act might operate so soon as the new Colony had a population of (say) 50,000, and its provisions might be elaborated into a constitution, to be voted by the Colony in general assembly, so soon as the population reached (say) 300,000.

"The grand basis of all successful settlement-the land-presents fewer difficulties than might have been imagined, because the admirable model of the land system of the United States is before us, and no better can be devised to enable a country to grow up side by side with the Republic. Reliable surveys and plans, cheap and unclogged titles to the land in fee, a limited upset price of not exceeding $1-25/100 an acre; division of the land saleable into regular sections; the issue of land warrants and regulations as to location, which will prevent, as far as may be, monopolies of land in the hands of speculators-are all essential conditions, and whatever power governs, they must be equally observed.

"Again,-reserves of land, on a liberal scale, must be made to support schools and churches, and to assist roads and other public works conducted by the Government.

"But let it be hoped that this necessity of continued government by the Hudson's Bay Company may be avoided by the wise and far-sighted action of the Home Government and of Canada. No beneficial decision can be arrived at without the concurrence of both powers, for each have rights and ideas in some respects differing, and Canada especially has the deepest concern in the future organization of the North-west. In selecting a governing power for such a country, the strength and influence of that power are the grand essentials. Even with equal enlightenment, these essentials could not be overlooked. A weak Government would invite attack, deter investment, and check general confidence.

"Apart from the government by the Hudson's Bay Company, there appear to be these alternatives:-

"1. Government by Canada annexing to her territory a tract of country extending to the limits of British Columbia, under some reasonable arrangement with the Hudson's Bay Company, fairly protective of their rights, and which arrangement ought not to be difficult to draw out, when once the principle of the settlement of the country, and the land system, and extent of land reserves, are agreed upon.

"2. Government by the Crown, as a separate Crown Colony, totally independent of Canada.

"3. Government by the Crown as a separate Crown Colony, with federation, more or less extensive, with Canada, and the establishment of a customs union between the new and old communities.

"It must always be observed that a decision as to the fate of this territory must be immediately made. It cannot wait political necessities elsewhere, or be postponed to suit individual wishes. The fertile country between Lake Winnipeg and the Rocky Mountains will be now settled, since that is now a fixed policy, and its plan of government must be in advance of, and not lag behind, that settlement. The electric wire, the letter post, and the steamboat, which two years more will see at work, will totally change the face of things; and as Minnesota has now 250,000 inhabitants, where, in 1850 there was hardly a white man, so this vast district may, when once it can be communicated with from without, with reasonable facility, be flooded with emigrants, not forgetting a very probable rush of English, Irish, and Scotch farmers, and settlers from the United States, who here will find a refuge from conscription and civil war.

"The discoveries of gold, and the disturbed state of the border Indians in Minnesota, are both unanswerable reasons of necessity for the immediate establishment of a permanent form of Government, and fixed laws and arrangements for the settlement and development of the country.

"1. The government of the North-west, as an 'annexe' to Canada, possesses advantages of contiguity and similarity of ideas on the part of Canadians and the probable settlers. Canada, it will be said, has a good and responsible Government, and why not now extend its machinery to the 1,300 miles between the height of land and the Rocky Mountains?

"But will Canada accept the expense and responsibility, and, more especially, is it just now politically possible? Were Canada politically and practically one united country, the answer would be perhaps not difficult. But Canada, for the present, is really two countries, or two halves of one country, united under the same form of government, each half jealous of the mutual balance, and neither half disposed to aggrandize the power or exaggerate the size of the other.

"Would Lower Canada, then, submit to see Upper Canada become, at one bound, so immensely her superior? And would Upper Canadian statesmen, however personally anxious to absorb the North-west, risk the consequences of such a discussion as would arise? Would it be possible, in fact, to found a Government based upon the platform of accepting the responsibility of settling, defending, and governing the North-west? If not, then, however desirable, the next best alternative must be chosen.

"Assuming that at some period, near or distant, the British North American Provinces, between the Atlantic and the Pacific, unite in a federal or legislative union, and thus become too great and too strong for attack, that next best alternative would point to such arrangements, as respects the North-west, as would lead on to and promote this union, and not stand in its way. Thus, disputes about race and customs should, if possible, be avoided by anticipation, and the constitution and power of the new Colony should foreshadow its connection with the countries to the east and to the west. Future isolation should be forbidden, while present independence should be accorded.

"2. The above assumption tends to throw doubt upon the desirability of establishing a Crown Colony, separate in all respects from Canada, and able to shut out or let in Canadian produce and manufactures at its pleasure. This is a danger to be foreseen and avoided.

"The new Colony, placed between Canada and the Pacific, must be essentially British, in the sense of its forming one secure link in a chain of British nations, or, in the interests of Canada, it had better never be organized. The power and prestige of the Crown is essential to this end, and a separate Colony, even, would have many advantages per se. It would also save Canada the cost of a new Government at a time when financial pressure and political majorities would be in the way. A Crown Colony could not be looked upon with jealousy in Canada, while government by the Hudson's Bay Company would be so regarded.

"3. But a Crown Colony with such a federation as would not alter the political balance of Upper and Lower Canada, and with a system of free trade with Canada, would appear to solve the whole difficulty; and if so, the scope of the federative principle would be matter to be settled between Canadian statesmen and the Colonial Office. The interchange between the North-west and Canada appears to be an absolute necessity in the interest of the latter. As Government, however, would require taxation, the new Colony must, in all probability, have its Custom- house; and it should be considered whether the Custom-house of Canada would not serve, as far as the eastern frontier is concerned, for the new Colony. If so, why should not duties, on a scale to be agreed upon under constitutional powers to agree, be levied on imported foreign goods, by Canada, and the duties be divided between the two powers in agreed proportions? Were this done, at least in the beginning, expense would be saved to the new Colony, a revenue would be easily collected for it, through existing machinery, and Canada would obtain the revenue and trade. Of course the scale of duties must be moderate, so as not to excite dissatisfaction, by establishing dear prices, and it would be the interest of Canada to make them so, for the more she stimulated the growth of the new customer, the better for the trade. On the other hand, the new Colony would be insured a market and an outlet for its own productions, and would be content, therefore, to accept a reasonably high scale of duties, levied for revenue purposes only, on its articles of foreign consumption."

I discussed the question involved at length with the Honorable George Brown and with his brother Gordon, at Toronto. I felt the importance of having the views, and, if possible, the concurrence of the leader of the "Grit" party. He led me to think that he concurred with me; and I sent him a copy of this document. He kept it some time, and then re- directed it to me without remark. Afterwards, I received a verbal message to the effect that "It would not do at all." I became convinced that nothing "would do at all" with a small band of men-who, at that time, had objects of their own-in Upper Canada. Some of them-few in number, I am happy to know, and impecunious-appeared to consider the old corporation of the Hudson's Bay in the light of Blucher, when driving through the streets of London, "Mein Gott! what a plunder." Some of them tried their best to confiscate the property; and once or twice, by weakness and vacillation in London, they almost gained the day.

Governor Dallas and I also carefully considered the telegraph question; the route, the cost, and the best agencies to complete its very early construction.

The two agreements, which, as matter of history, I here copy, were intended to bring about the complete connection of the Hudson's Bay territories direct with England and with the United States.

"Memorandum of Agreement between Mr. Edward W. Watkin and Mr. O. S. Wood (subject to the approval of the Montreal Telegraph Company and the United States Telegraph Companies, affected by this Agreement, and also by the Governor and Committee of the Hudson's Bay Company) for completing telegraphic communication between the Atlantic and Pacific.

"1. The Montreal Telegraph Company to construct a new line of telegraph between Father Point and Halifax, via Dalhousie and Mirimichi, to be completed on or before the 1st October, 1865; and also a line from the telegraph at Arnprior to the Hudson's Bay post at the Sault St. Marie, to be completed on or before the 1st October, 1865, with all necessary instruments, stations, staff, and appliances for a first- class through and local telegraph line.

"2. The Hudson's Bay Company (directly or through parties to be appointed by them, as they may elect) to construct a telegraph line from Fort Langley to Jasper House, thence to Fort Garry, and on to the United States boundary, near Pembina, to be completed on or before the 15th October, 1865; and also a telegraph from Fort Garry to the Hudson's Bay post at Fort William, at the head of Lake Superior; and also to make arrangements with other parties to erect a telegraph from Fort William to the Sault St. Marie, with all necessary instruments, stations, staff, and appliances for a first-class through and local telegraph line: provided always that the construction of the telegraph between Fort Garry and Sault St. Marie is dependent upon arrangements with the Canadian Government, and that it is understood that, failing or pending these arrangements, the route to be adopted shall be via Detroit, St. Paul, and Pembina to Fort Garry.

"3. The telegraph from Fort Langley to Halifax to be worked for all through business as one through system, and the through rates to be divided pro rata the mileage, except that for the lines west of the Sault St. Marie (to be erected by the Hudson's Bay Company as above) an additional mileage proportion of thirty-three per cent. over the actual distance shall be allowed, until those lines pay ten per cent per annum on the outlay, after paying all operating and other expenses, including repairs and renew

als, and this allowance shall be a condition with the United States lines between Canada and the Hudson's Bay boundary.

"4. Arrangements to be made by the Montreal Telegraph Company, with parties in the United States, for the construction of a telegraph from St. Paul to the connecting point near Pembina.

"5. The Sault St. Marie and Sarnia to be respectively the boundaries of the Montreal Telegraph Company and of the Hudson's Bay Company and their representatives, for the purposes of this Agreement.

"6. This Agreement to be for twenty-five years.

"(Signed) EDWD. W. WATKIN.

"(Signed) O. S. WOOD.

"Montreal, August 10_th_, 1863."

"Agreement between Mr. Edward W. Watkin and Mr. O. S. Wood, for the construction of the telegraph between Fort Garry and Jasper House, and, if hereafter agreed, between Fort Langley and Jasper House, and Fort Garry and the United States boundary near Pembina (subject to the approval of the Governor and Committee of the Hudson's Bay Company in England).

"1. Mr. Wood to construct a telegraph, and all needful works and stations, from Fort Garry to Jasper House, at the cost of the Hudson's Bay Company, and to put the same in full operating order, and also instruct, and where necessary provide, the staff for the operation and repair of the line.

"2. Mr. Wood to proceed with Governor Dallas to St. Paul, with as little delay as possible, and on to Fort Garry, if necessary; and to make all arrangements required for transporting the telegraph wire, insulators, fittings, instruments, and other materials to Fort Garry; for distributing all materials from Fort Garry; for cutting, preparing, and distributing the poles; and generally for commencing and for completing the work (including a system of posts at proper distances apart) in an efficient manner, and at the earliest period.

"3. Mr. Wood to receive the cordial aid and cooperation of the staff of the Hudson's Bay Company in carrying out this work, under the orders, instructions, and control of Governor Dallas.

"4. Mr. Wood's travelling and other necessary expenses, and the salaries and other necessary expenses of his assistants, to be paid, and, in consideration of his services, he is to receive the sum of ten thousand (10,000) dollars, as a fixed payment; one-third to be paid on the storage of the materials as above at Fort Garry, one-third upon the completion of two hundred (200) miles of the telegraph, and one-third on the completion and operation of the whole line between Fort Garry and Jasper House; and further, should the whole be completed prior to the 15th October, 1864, Mr. Wood is to receive a bonus of two thousand (2,000) dollars, so soon as the line has been one month in operation; and should the whole cost of the work not exceed thirty thousand (30,000) pounds sterling, Mr. Wood to receive a further bonus of fifteen per cent. on all savings upon that sum, payable when the line has been in operation twelve (12) months.

"5. Should the telegraph lines between Fort Langley and Jasper House, and Fort Garry and the United States boundary near Pembina be ordered to be constructed, and the Hudson's Bay Company desire it, Mr. Wood to undertake the construction, on proportionate terms.

"(Signed) EDWD. W. WATKIN.

"(Signed) O. S. WOOD.

"Montreal, August 10_th_, 1863."

"MEMORANDUM by Mr. Wood as to supply of Materials.

"MONTREAL, "August 10_th_, 1863.

"DEAR SIR,

"We shall want 40,000 insulators-they will cost from $6 to $8 per 100; 35,000 red cedar top pins will cost $3 per 100; 40 sets of telegraph instruments at $60 per set; main and local batteries, $500.

"As some of these articles ought immediately to be prepared, since their preparation takes a little time, I will at once, in accordance with our understanding of this morning, order a small quantity, and the remainder when I receive your confirmation of the whole arrangement. In the meantime I shall go to New York personally, to arrange the exact form and description of insulator, it being very desirable to have this article of the most perfect description.

"Yours faithfully,

"(Signed) O. S. WOOD.

"EDWD. W. WATKIN, Esq."

My official letter to Sir Edmund Head from Montreal, 24th July, 1863, summarized all my proceedings up to its date.

"MONTREAL,

"July 24_th_, 1863.

"SIR,

"I have the honour to acknowledge your official letter of the 6th July, requesting me to proceed to the Red River Settlement, for the purpose of reporting upon the state and condition of that Settlement, of the condition of the adjoining territory, the prospects of settlement therein, and the possibility of commencing operations for an electric telegraph line across the southern district of Rupert's Land; and associating with me in this inquiry Governor Dallas, of the Red River Settlement, with whom you request me to communicate at once.

"I observe that the Committee consider the lateness of the season will preclude me from doing more than procure such information as will enable them to commence further inquiries at the opening of the next season.

"In consequence of verbal communications received before leaving England, and suggestions unofficially received from members of the new Committee, I have deemed it my duty, though unofficially, to communicate with the Canadian Government, and with those gentlemen likely to form the Government of Canada, should any change of ministry take place on the opening of Parliament, so as, as far as possible (unauthorized as I was), to prevent antagonism to the operations of the new organization pending official communication and explanations from the Governor and Committee.

"No one can be better aware of the state and views of parties in Canada than yourself. The leader of the present Government expresses a strong opinion in favour of the settlement of a separate Crown Colony in the Hudson's Bay district, and this also is the view taken by Mr. Cartier and Mr. J. A. Macdonald, and is strongly concurred in by Mr. Cazeau, the Vicar-General, who, as you are aware, leads the Catholic party in Lower Canada. On the other hand, the feeling of Mr. Geo. Brown and the 'Grits,' as heretofore expressed, has been in favour of annexing the Hudson's Bay territory to Canada, thereby securing that preponderance which would practically settle the question of the future government of the whole country.

"The views of the Duke of Newcastle, and also, so far as I understand them, the views of yourself and your colleagues, being in favour of the establishment of a separate colony unconnected with Canada, I consider the discussions which have taken place have now put the question in its right position here; but at the same time I shall endeavour to see Mr. George Brown, and give such explanations, unofficially, as may at all events prevent his considering that he has not been consulted in this important transaction.

"I have also placed myself in communication with many of those who have advocated the settlement of the North-west, including Professor Hind, who has explored much of the district; and, at my request, Professor Hind has written a memorandum, and letter upon the gold discoveries in the Hudson's Bay territory, which I now enclose.

"I have no doubt that Governor Dallas's own letters will more than corroborate what is stated in this memorandum, and I need not suggest that the most anxious and immediate attention of yourself and the Committee be directed to these discoveries, and to their political and other necessities and consequences.

"Having possessed myself of so much information in reference to the subjects referred to Governor Dallas and myself, I think we shall be able to fulfil the wishes of the Governor and Committee, Governor Dallas being here, accompanied by Mr. Hopkins, without the necessity of my proceeding on this occasion to the Red River; though, should further discussion with the Governor lead to our joint impression that such a visit would be advantageous, I shall not hesitate to undertake the journey.

"In advance of some memorandum to be prepared for you by Governor Dallas and myself, and which I shall beg him to be good enough to draft, I would mention that I have suggested that the Governor issue a circular to the employes of the Company, stating briefly the nature of the recent changes of proprietorship in the Company, and thereby having the tendency to remove any misconceptions which might arise, and which, I regret to learn, have in some few quarters appeared amongst the factors and other officers of the Company, who, as partners in the trade, have considered themselves entitled to be consulted by the late Governor and Council on the subject of the transfer.

"Governor Dallas informs me that the outfit of 1862-3 will show very much improved results; and I have little doubt that the wise and energetic measures which he has initiated since his tenure of office will bring abundant benefits in every direction. The result in the western district, which, if I recollect rightly, exhibited a loss, and which, in the past year, with all exclusive privileges taken away, gives a profit of no less than $166,000, is a convincing proof of what may be effected by improved business organization and thorough energy and firmness. It has, however, been matter of considerable anxiety to me to learn that it is Governor Dallas's desire to return to England next year.

"As regards the future management of the fur trade, Governor Dallas is of opinion that a considerable reduction may be made in the number of the employes; and that by a judicious weeding out of those who, in all large establishments managed from a distance, either were originally, or have become, inefficient, not only will expenses be saved, but a much larger trade be carried on.

"In any considerable change of personnel, the partnership rights of the factors will have to be considered; and one of the gravest and most difficult subjects of consideration will be, how to reconcile the rights of these gentlemen in a share of profit with that reorganization which the commercial interests of the Company evidently require.

"These changes can only be made after discussion with the factors and chief officers; and in some cases it may be desirable to buy out individual interests on a more or less extended scale.

"The 40 per cent. of the net profit of the Company allowed to the factors, in addition to the salaries of considerable amount, is a heavy drain, and involves other considerations opposed to rigid discipline, which need not be further touched upon here, but which are sufficiently obvious. This re-organization can only be effected by giving to the Governor very large and exceptional powers, and without delay. If these powers are given, I am quite confident that the results will be such as abundantly to satisfy the Committee. Hitherto, as it appears to me, far too little discretion has been permitted; and the practice of sending all the accounts home to England, and dealing with them in such a manner that the Governor could not tell from time to time how the financial results of expenses and profits were progressing, has produced its inevitable consequences. In future, I feel convinced, it will be found matter of the utmost consequence to concentrate the accounts at Fort Garry, and to send copies of the vouchers, journals, and ledgers from Fort Garry to England, instead of adopting the reverse practice, and endeavouring, as hitherto, to make the accounts travel as long a distance and be made up over as remote a time as possible. With proper telegraphic and postal communication between the principal posts of the Company and Fort Garry and Montreal, there is no reason why the accounts should ever be two years in arrear in future.

"As regards the settlement of the country, and, involved in that important question, the state and prospects of the Red River, the discoveries of gold above alluded to involve very serious considerations.

"Assuming a rush of miners to different portions of the territory, the machinery of Government for the preservation of order cannot be for a moment neglected, or its construction be delayed. This involves, again, the question of the establishment of a new colony. Is that colony to be governed by the Hudson's Bay Company, who are essentially a trading and landowning corporation, or is it to be governed in the name of her Majesty, the Hudson's Bay Company, so far as the limits of the Crown Colony are concerned, becoming merely traders and landowners, and ceasing to govern as at present?

"All the difficulties at Red River-which, after all, have been much exaggerated, and can be very easily dealt with-would be disposed of at once were a Governor, appointed by the Crown, to be sent out; and it does not follow that representative institutions need at first be granted, though ultimately they would become matter of necessity. The great object of the Governor and Committee-and Governor Dallas and myself perfectly agree in the view-should be to induce the Colonial Government to found a Crown Colony under arrangement with the Hudson's Bay Company with the least possible delay.

"Such a Government would not only relieve the Hudson's Bay Company of an immense responsibility, but it would render titles to land sold by them, and claims to interest in the minerals, far more certain, marketable, and profitable than at present.

"The commercial re-organization of the Company is a matter perfectly easy in the hands of Governor Dallas, empowered to act in accordance with his own best judgment; but this question of the government of the country is, after all, the grand difficulty, and, if successfully negociated, the grand hope of success as regards the future settlement of this vast district.

"As to the suitability of an immense portion of the district west of Fort Garry for eligible settlement, Governor Dallas-who has now made journeys of 1,800 miles in the last year-has no doubt whatever; and I trust that the old traditional phantoms of inhospitable deserts will be finally dismissed from the minds of the new Governor and Committee, especially when they have before them the many letters and reports in evidence of the true state of affairs, which must be in possession of the Company in Fenchurch Street.

"As regards telegraphic communication, I have made every inquiry necessary upon the subject, and Governor Dallas agrees with my views of the importance of connecting the Hudson's Bay posts by telegraphic communication.

"Subject to further discussion, I may indicate my opinion that the route suggested by Governor Dallas through the Hudson's Bay territory, viz., from Jasper House by Edmonton, Carlton, and Fort Pitt to Fort Garry, would be the proper route for a telegraph.

"This portion, as it seems to me, should be constructed at once, and by the Hudson's Bay Company.

"Were it to be constructed in Canada, it would not cost more than 15,000_l_. sterling. It may cost less, though in some cases it may cost more, through your territory; though I am inclined to think that it may be constructed for 20,000_l_. as an outside sum, and that it is impossible that the cost of this portion of the work should exceed 30,000_l_. in any event.

"This outlay being sanctioned, the connection with the American telegraph through Minnesota would be a matter of negociation; and the extension of telegraphic communication to Fort William on the one side, and to Fort Langley on the other, would depend upon the subsidies to be obtained from Canada, and from British Columbia and Vancouver Island.

"I have the assurance of the present leader of the Canadian Government, that the offer to give a subsidy, made last year, will be officially renewed, and I shall endeavour to get this promise put into writing, and send it to you home.

"British Columbia, I assume, would do what the Colonial Office requested, but, in any case, we ought not to commit ourselves to a through communication through Canada and British Columbia without a clear understanding as to the subsidies. At the same time, if you, the Hudson's Bay Company, have command of one thousand miles of telegraph, enabling you to transmit information through your own channels with a new expedition, you will practically have command of the future discussion of this large question.

"I have obtained estimates, and made calculations of the cost of these telegraphic operations, and I have selected a very eligible gentleman, Mr. Wood, the Manager of the Montreal Telegraph Company, who, I am quite sure, will carry out the operation, with the assistance of the employes of the Hudson's Bay Company, and under the orders of Governor Dallas, with perfect success.

I should recommend that immediate steps be taken; and there is no reason, in my opinion, why all the materials should not be on the ground by the end of the coming winter, since much of it can be taken by canoe, and the remainder may be taken across the snow in the winter; and why may not the whole telegraph from Jasper House to Fort Carry be completed by September in next year?

"The present attitude of the Sioux Indians in the State of Minnesota deserves serious attention. Little Crow has waited upon Governor Dallas, and the Governor has written to General Sibley.

"I have suggested whether a visit to Washington would not be desirable, and that the opportunity of assisting the American Government to make peace with these troublesome Indians should be improved, by attempting to get a settlement of your Oregon claims.

"I have the honour to be, Sir,

"Your most obedient Servant,

"(Signed) EDWARD W. WATKIN.

"Sir EDMUND WALKER HEAD, Bart., &c. &c.,

"Governor, Hudson's Bay Company."

Finding, however, that the Governor and his Committee were not prepared to act with the energy and preciseness I had desired, I closed my, unpaid, mission by the following letter of 26th August, 1863, from my house, Norfolk Street, Park Lane.

"NORFOLK STREET, PARK LANE, "August 26, 1863.

"MY DEAR SIR,

"I have to thank you for sending me copies of the official letter from the Secretary of the 13th instant, in reply to my report and private letter of the 24th July, and of your private notes of the 13th and 18th instant, the latter noticing my letter of the 4th instant.

"I desire at once to say that the heads of arrangement which I have written down with the Montreal Telegraph Company and with Mr. Wood, for your consideration, were of course entirely subject to the sanction of the Governor and Committee of the Hudson's Bay Company. And, in accordance with what I understood to be your views, when to-day you were good enough to leave the Deputy-Governor in order to see me in the board room by appointment, I shall consider it my duty to cancel all that has passed, in such a manner as, I trust, will be perfectly satisfactory to your colleagues. There will then remain nothing beyond a responsibility for a few essential materials, as to which time was an object, amounting to not more than a few hundred pounds at the utmost, which I shall take entirely upon myself, under the circumstances of doubt and difficulty as to the opinions of the shareholders of the Hudson's Bay Company which you represented to me. And with a desire to avoid similar complaints, I do not propose to make any charge whatever for my own expenses, or, if I may be excused the word, services, in connection with the mission I have had to undertake. That mission, however, cannot go without explanation, for I am anxious to avoid all misconception now, or hereafter, and I desire, therefore, by a frank statement, at once to court contradiction, should it be merited.

"Having had much to do with the discussions which led to the transfer of the Hudson's Bay Company's property, I had expressed my willingness, inconvenient as it must be to me, to act as a member of a proposed commission of three, including Captain Glyn, R.N., and Captain Synge, R.E., whose duty would be to investigate the position of the undertaking at its head establishment,-to report upon the re- organization of its business, the development of its mineral resources, the settlement of portions of its territory as a new colony, and the opening up of the country by the telegraph and by means of transit. Captain Glyn and Captain Synge had both been consulted, and the Duke of Newcastle had been applied to to obtain leave for Captain Synge at the War Office. I had been led to believe that my services were considered of some value, and I left England on the 20th June, expecting that Captain Glyn and Captain Synge would follow me in a week, and that we should at once proceed to Red River, and send home a first, but full, report by the beginning of October. I understood also that such a report was desired, to clear away any objections to the operations of the re-organized Company which might be factiously raised. And when, after my arrival in Canada, I received the prospectus with your name as Governor of the Company at its head, I found a condition of that document to be that I was to examine and report and advise generally, in concert with other gentlemen, specially qualified for the duty, not only upon the question of telegraphic and postal communication, but also as to the other objects proposed in the scheme officially laid before the public.

"Before leaving England, I repeatedly pressed the necessity of communicating with the Governor and 'wintering partners' of the Company in America, so that they should not hear of the transfer of the property for the first time from the newspapers; and I expected to be specially authorized to give the needful information and assurances. I was no party, I beg to say, to this mention of my name in the prospectus; but my friends and business connections who may have taken shares on the faith of my name, will naturally hold me responsible accordingly. Still, anxious to witness the success of a project which, energetically managed, is so intrinsically sound, I refrained from writing to you to decline the responsibility, hoping that the original plan of delegation, though delayed, would be carried out. That plan, I must observe, involved not a mere commission of engineers to explore the route for a telegraph to Jasper House, as assumed in the Secretary's letter of the 13th inst., but far wider objects, the realization of which would, I venture to think, have given satisfaction at home, and have dissipated many misconceptions, now existing, inimical to the interests of the new proprietary.

"Your letter to me of the 6th July did not reach me till the 20th, and in the meantime the newspaper notices in England led to many official and unofficial inquiries from me, involving difficulty of answer. I found, in fact, that the staff of the Hudson's Bay Company was quite at fault, and that public men in Canada misunderstood the objects of the new organization, for want of information very simple in its nature, but which-except so far as the prospectus authorized me-I had no right to supply.

"Several of the Hudson's Bay Company's chief factors and traders had, it appeared, addressed a memorial to the then Governor and Committee, some months ago, upon the rumoured sale of the property, and had been, as stated to me, informed that no transfer was likely to take place, or would in fact be undertaken without previous consultation; and yet these gentlemen learnt for the first time from the public papers that new arrangements had been made. It was not unnatural, therefore, considering the relations of these gentlemen with the Company, that they should feel much annoyed; nor was it, perhaps, surprising that an influential member of the body should have predicted a general resignation of the factors 'from Labrador to Sitka,' followed by a confederation amongst them, in order to carry on the fur trade in competition with the Hudson's Bay Company, they possessing, as was said, 'the skill, the will, and the capital to do it.'

"The appearance of Mr. Lampson's name as Deputy-Governor, in the absence of any prior explanation, aggravated the first feeling of distrust; for it was said that he and his connections had been, and then were, the Company's great, and often successful, rivals in the fur trade, carrying on a vigorous competition at all accessible points.

"The arrival of Governor Dallas at Montreal some days before my receipt of your letter of the 6th July, enabled these misconceptions to be dealt with; and the issue of a circular by the Governor, together with many personal explanations, and some firmness on the part of Mr. Dallas, will, I trust, very soon remove the want of confidence and dissatisfaction on the part of the staff, which at first looked threatening. These explanations, of course, took time, and rendered the Governor's presence in Canada necessary.

"Governor Dallas and myself made various opportunities of meeting members of the present and of the late Government of Canada, and of talking over the subject of the North-west, and of its organization and government; and I feel convinced that these unofficial discussions were of considerable use, and may help to prevent antagonism and territorial claims on the part of Canada, which, in my opinion, might be very embarrassing, and ought to be foreseen and avoided. Possibly the following article in the Government organ, written by order, and handed to me by the Honorable W. P. Howland, will best exhibit, without further troubling you, the friendly spirit of the Canadian Government before I left for England:-

"(From the Quebec Mercury.)

"'The recent announcements concerning the transfer of the title and territory of the Hudson's Bay Company to a new corporation have naturally awakened considerable interest in Canada. So far, however, no specific intimation of the opinions of the new Company has been given. It is understood that they will not confine themselves to a mere following in the footsteps of their predecessors, but that colonization, telegraphy, the opening up of common roads, and eventually of railroad communication, enter into the scheme which, whether as regards the interests at stake or the capital involved, may be said to be colossal in its character. It is no doubt anticipated by the new Company that the Canadian Government and people will cheerfully aid them in an enterprise which evidently concerns us so closely. Speaking in general terms, we presume that it may be conceded that such anticipations have been correctly formed. The development of Canadian territory, or of British territory immediately adjacent to it, could never be a matter of indifference to the Government or people. Though young in years, still Canada cannot forego those aspirations regarding the future which are naturally suggested by the magnificent domain which, stretches along the northern portion of the Continent. It is for Canadians to occupy and eventually to govern it, and any means which point to the furtherance of an object which may be called spontaneous in the Canadian mind must engender solicitude and evoke encouragement.

"'When Messrs. Howland and Sicotte were in England, they expressed their opinion that Canada would be willing to aid the "Atlantic and Pacific Transit Company" in their enterprise of opening up communication across the Continent through British territory. Upon their return to this country, the matter was fully discussed, and it was understood, subsequently, that the Government of that day was prepared to recommend an appropriation of $50,000 per annum, provided that the Company gave the necessary assurances of their ability to commence and carry out the work. Since that time, however, those who formed that Association appear to have enlarged the field of their operations, and have included the whole of the Hudson's Bay Company, with their territory, prestige, and appliances, within the scope of their operations. But the same general policy which suggested the recommendation of the $50,000 referred to, would also prompt similar assistance to the New Hudson's Bay Company. It can be of little moment to Canada by whose agency the western territory is developed-that which is wanted is development.

"'Judging, then, by what has gone before, and from the exigencies which the spirit of progress imposes upon all Governments, it is not improbable when the new Company has itself determined what they will do, in what shape their enterprise will be promoted, that reasonable assistance will be given them. At present, it seems hardly likely that any exact conclusion has been made by themselves in this matter. Mr. Watkin, in whom a wide and just confidence is placed, not only by the shareholders in the new enterprise, but by the British Government itself, is here, engaged, no doubt, in collecting from the various sources within his reach such information as will enable him to report fully upon the matter. That done, the Company will be able to make propositions and to solicit the kindly aid of Canada. Looking at the wide field for enterprise that will be opened up; at the speedy colonization that is likely to take place, consequent upon the recent discoveries of gold; at the prospect that Canada may be made the high road for commerce between the great East and West; that the trade of the St. Lawrence, and all the various and manifold interests connected with it, will be inspired with new and energetic vitality,-from these and many other considerations it must be evident that the policy for Canada, let her political position as to parties be what it may, is to extend a friendly and greeting hand to those who come with capital and confidence to become the pioneers of a new order of things, which cannot fail to pour riches into the lap of Canada, and to lay the foundation of a prosperity which can be at present but dimly imagined.'

"The importance of assisting the work of opening up the North-west for telegraphic and postal purposes would, I believe, be alluded to in the Governor-General's speech on the 15th. [Footnote: This was done, and the following is an extract from the speech of the Governor-General of Canada, on opening Parliament:-

"I have received a despatch from the Secretary of State for the Colonies, enclosing copies of a correspondence between Her Majesty's Government and the agent of the 'Atlantic and Pacific Transit and Telegraph Company,' in reference to a proposal made by that Company for the establishment of a telegraphic and postal communication between Lake Superior and New Westminster, in British Columbia. The importance of such an undertaking to the British North American Provinces, both in a commercial and in a military point of view, induces me to commend the subject to your consideration. Copies of the correspondence shall be laid before you, and I feel assured that should any proposal calculated to effect the establishment of such communication on terms advantageous to the province be submitted to you, it will receive encouragement at your hands."] But whatever may be the extent or the value-as to which latter point I fear my opinion does not, as I regretted to find, quite coincide with yours-of the sympathy and support of Canada, any new bias in favour of your projects, as promised in your prospectus, has been mainly aided by the belief which, entertaining it, I inculcated, that without loss of time, and with the promptness and energy of English merchants, the new Government of the Hudson's Bay Company would establish, with the aid of the provinces east and west of the Hudson's Bay territory, but without shirking its own share of duty, telegraphic and postal communication in British interests, available for commercial, and requisite for other and even more serious, purposes. That the works would be begun at once, and that the Hudson's Bay Company, so long obstructive, would now set an example of despatch, and that that which had long been hoped for and promised by others, would now be accomplished by them as the pioneer works of an early settlement of the cultivatable portions of the country.

"It is obvious that, unless materials are supplied and plans arranged before the end of September, the overland operations must wait a year's time. Therefore, apparently under a misapprehension of your wishes or policy, as our interview of yesterday showed, I looked out for the best practical man I could find fit to undertake the construction of a telegraph and system of posts, enabling postal and telegraphic service to be worked together. I found that man in Mr. O. S. Wood, an American settled in Canada, the engineer and manager of the 4,000 miles of telegraph owned by the Montreal Telegraph Company, which pays 23 per cent, upon its capital of 100,000_l._; and believing him to be exactly the man for the occasion, I agreed with him, subject to your sanction, to superintend and be responsible for the erection and operation of a telegraph and system of posts between Fort Garry and Jasper House. I do not trouble you with the document, as it is to be cancelled, so far as your Company is concerned; but I may shortly state that it proposed the completion of the works by October, 1864, and in addition to a liberal, but not excessive, payment for Mr. O. S. Wood's work, responsibility, and experience, it awarded a percentage upon all savings on the total sum of L30,000_l._, the outside estimate taken for the whole job, and a small premium for all time saved in the completion of the work. These payments were to be so made that the integrity, completeness, and success of the work would be their main condition.

"I also made a very important conditional agreement with this Montreal Telegraph Company, under which they were to extend a new and independent, or precautionary, line of telegraph from Halifax (Nova Scotia) to Mirimichi and on to Father Point, connecting with the other existing telegraphs up to Arnprior (Ottawa), and another telegraph from Arnprior to the Sault St. Marie, where you have a trading port. On the other hand, subject to the aid of Canada and British Columbia, your Company were to extend, or obtain the extension of, a telegraph from the Sault by Lake Superior to Fort Garry, and another by Jasper House to Fort Langley. All these telegraphs were to be completed by October, 1865. The Montreal Company were also to obtain the extension of the Minnesota telegraph to your boundary near Pembina, you extending your telegraph to that point. Thus, assuming the Fort Carry and Jasper House telegraph to be completed by October, 1864, and knowing that this, and the telegraph from Fort Langley to Jasper House, could be finished as easily, a complete and independent Atlantic and Pacific telegraph, stretching for more than 1,000 miles through your territory, might have been secured,-always assuming that this season of 1863 were saved, which was the great practical object before me. I obtained, as a condition, that in dividing the rates paid for messages, your telegraphs should have a bonus of 33 per cent. so long as your capital did not pay a clear 10 per cent. dividend.

"To this end, I advised you to confirm the order of 175 tons of charcoal wire and of the insulators, post pins, batteries, and instruments needed for the length between Fort Garry and Jasper House (the wire from England, and the other material from Canada and the United States), at a total cost, already given you in complete detail, estimated, when delivered at Fort Garry, as not to exceed 10,000_l._. This statement of cost, and a reference to my past statements, will answer the question in Mr. Fraser's letter of the 13th, as to whether I had calculated the heavy expense of carriage- 20_l._ per ton to Fort Garry. The question shows that it had not been calculated in Fenchurch Street that the poles and timber would be got in the country, and that the whole weight of material to be sent to Fort Garry was about 200 tons at the most.

"I may pause, however, in answer to another similar question, about the relative prices of American and English wire, &c., to say, that the best market for wire is England; and the best market for the less important articles is the United States, while the proper prices chargeable for the best article by the best houses are known to all practical men. I may add, as I am asked what is the weight per mile of telegraphic wire, that 'best charcoal No. 9 electric wire' is 320 lbs. to the mile of 1,760 yards.

"On leaving this subject, I may add, that if on further consideration you determine to store the material above named (cost and carriage 10,000_l._) at Fort Garry, there is yet time to get it out to St. Paul, and some, if not all, may go through to Fort Gany. There is a post three days per week to Fort Garry, and posts go through all parts of your own territory regularly, the 'Winter Express' leaving Fort Garry on Christmas Day. Though, in my humble opinion, not the best thing, still the transmission and storage of that material would be looked upon as an evidence of your intentions, and would help to keep you right in Canada and in your own territory, as also in British Columbia, and would expedite a final and favourable decision as to the proposed subsidy. So strong is my opinion, that I am ready to join any four or five gentlemen of your Committee feeling an interest in the work, in providing and paying for the material itself, if you will send it through at once.

"It will, I assume, be apparent to you how necessary it is to keep the section of telegraph in your own special district in your own hands. Your organization, also, will enable you to convey and erect material very cheaply. As to all details, I refer to the papers already sent over containing full particulars, and showing quantities, kind, cost, means of conveyance, and, more important than all, character of country and proposed route; the latter from the personal experience and knowledge of the country of Governor Dallas and Mr. Hopkins, whose reliability and capacity as advisers no one will question.

"While in Upper Canada, I received proposals for the establishment of steamers on your rivers and lakes: and no doubt these could be arranged for; but as the telegraph is to stand over for the present, I do not add to the length of this paper by any statement on this head.

"I would call attention, however, to the exploration of Dr. Hector, on behalf of the Canadian Government, of the lands adjoining Lakes Huron and Superior. Dr. Hector has surveyed a line of road all the way up to Dog Lake; and Mr. McDougal, the present Commissioner of Crown Lands, appears ready to recommend the gradual, but rapid, construction of roads throughout this territory, and onwards to that of the Hudson's Bay Company. Possibly you may consider the suggestion which I made in reference to obtaining an independent outlet to Lake Superior, in the direction of Superior City, as well worthy of consideration.

"As respects the alleged discoveries of gold, upon which some doubt is thrown in Mr. Fraser's letter of the 13th, I have merely to add that the testimony of Governor Dallas is important, and that the report of Professor Hind appeared to me to contain valuable evidence and reasoning, which can be tested by the further explorations of a geographical commission, for which purpose either Professor Hind, or Sir William Logan, or Mr. Sterry Hunt, or all these well known Canadians, are at once available. Professor Hind's suggestion as to the supply of quicksilver by the Company to miners, may or may not be valuable to a Company desiring to retain the lead of trade in portions of its own territory; but a reference to his report will show that it was not proposed to you as an immediate measure, as surmised. In any case, it is undoubted that gold exists in districts east of the primary rocks of the east flanks of the Rocky Mountains, and that persons are seeking for it in greater or less numbers. We have yet to learn how far the information has spread, and what influence it may have upon the movement of the American population. But, great or small, it is a fact affecting the settlement of the community, which enlarges the general pressure for a decision as to how large tracts of your territory, suitable beyond doubt for human habitation, are hereafter to be governed for the good of the people who may come, and so as to preserve British ascendency in your part of the Continent. Both Governor Dallas and myself have had many discussions as to this, and you have before you already both his views and mine. But the paper gives a resume of the general case as presenting itself to many thoughtful persons, known to you in Canada, and belonging to the various political parties. It was desirable to record their ideas, and I present them for what they may be worth, wishing you to understand that the proposal for federation and a joint Custom-house is the view of Mr. George Brown. On the other hand, Mr. Cartier, and even Mr. Sandfield Macdonald, desire to see a separate Crown Colony established.

"I now come to the all-important matter of the wise, economical, and efficient working of the business of the Company in America. The paper drawn up under the instructions of Governor Dallas by Mr. Hopkins, and discussed at length between us, is offered to you as an attempt to solve a difficulty which must be got rid of if more business is to be done at less cost, and if the competition around you is to be met, as it easily may be, with thorough success. The deed poll is an arrangement standing in the way of change and extension of your operations: it covers legal questions which some day may give you trouble; and it may be modified in some such manner as that suggested by your assent in the first place, and by the judicious action of Governor Dallas, who should receive your instructions soon, consequent thereon.

"The proposal to substitute a contingent and temporary interest in so much stock of the Company for the 40 per cent. of profits now given to the chief factors and traders, may assist you in placing your unissued shares, in a mode leading to a very large annual saving, to be accompanied by an evident increase of efficiency. For, able as your staff is in general, there are many useless, and even mischievous, persons under pay or profits; and the unfortunate propensities of Sir George Simpson did not lead in his latter years, I fear, to the improvement of the moral tone of your servants. There are cases of favouritism and abuse not at all creditable, such as that of the employment of Sir George's illegitimate son, and the retention of a chief trader notoriously useless and drunken, for many years after the chief factor of his district had reported his demerits to the local governor. But the service is popular, and there can be no difficulty in keeping up a staff fully able to cope with the sharp and energetic men employed by the American traders,-your permanent rivals in business.

"It is perhaps unnecessary further to explain the reasons of my not proceeding to Red River. As before stated, I had expected to do so in company with Captains Glyn and Synge, without whom I should have hesitated to undertake the more extended and responsible task at first proposed. I did not in any event expect that Governor Dallas would come to Canada prior to the receipt of your official letter of the 6th July, and for which I had been waiting from the 30th June until the 20th July; and when he arrived, and especially when I found that the purposes of my proposed journey had been in great measure previously fulfilled by him, it became a question of whether it ought not to be postponed. He had already folly advised the Governor and Committee of the 'state of the Red River Settlement,' of its 'suitability for settlement,' and of the general and highly favourable features of the tracts, over which he had travelled for 1,800 miles in various directions. The best route for a telegraph could be, and was, suggested, to you from his own observations, corroborated and added to by the personal experience of Mr. Hopkins and others, who had often traversed the districts, and had resided for years therein. The entire feasibility of constructing a telegraph across the Continent was not only confirmed by these experiences, but by the practical views of persons consulted, who had set up lines through even more difficult and wilder tracts of country.

"Therefore the objects you appeared to have before you were realized, if not directly through me, yet through the colleague you had selected for me, your own local governor, of whom I cannot express too high an opinion, having been his almost constant companion for above a month, during which every detail, so far as we could grasp it, was thoroughly discussed.

"Having given my best attention and labours to the whole subject for some years, and believing that I might be of more service to you here, since Governor Dallas could not be spared to come home, and could not prudently have left Canada until he had put all your business there in order, I exercised no unwise discretion in returning to England.

"I have now to ask your forgiveness for the length of this paper, and to express my readiness to give any further explanations in my power, while wishing you and your colleagues quite to understand that I have no desire whatever-but far the contrary-to obtrude myself upon you in the control of an enterprise which I honestly believe can be made completely successful by the exercise of even ordinary energy and skill, and which ought to be safe and certain in such experienced and able hands as yours.

"I have the honour to be, dear Sir,

"Yours faithfully,

"EDWD. W. WATKIN.

"Sir E. W. HEAD, Bart.,

"Governor of the Hudson's Bay Company."

One other object I desired to accomplish, was an exchange of boundary between the Hudson's Bay and the United States, with the view to Superior City being brought into British territory by a fair payment and exchange of land. The negociation looked very hopeful at one time, but it was not followed up in London, and it fell to the ground. There are few people who understand that it is not only desirable to do the right thing, but to do it at the right time-that is, when circumstances favour the doing.

I am entitled to say that, owing to the non-acceptance, at the time, of our proposals, much delay in realizing the great object of settling the government and colonizing the territory arose: inadequate terms for the sale and purchase of the vast landed estate of the Company had to be accepted from Canada; and the "wintering partners," not made real partners, as recommended by Governor Dallas and myself, but held at arm's length, had, at last, to be compensated for giving up the old "deed poll" with a sum of 107,055_l._, paid in 1871-ten years after the date of our report to Sir Edmund Head.

But, "all's well that ends well," and the great work is, at last, accomplished.

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