CHAPTER V.
Progress of the changes in the Navigation Laws—Reciprocity Treaties—Austria, July 1838—Zollverein States, August 1841—Russia, 1843—Various anomalies, &c., then in existence—Curious effects of Registry Laws, as regarded individuals or corporate bodies—Ship Equador—Decision of the Queen’s Bench, December 1846—Further details: owner to reside in the United Kingdom—Naturalisation of goods brought to Europe—Waste of capital caused thereby; and obstructions to trade—Story of the cochineal—But the Navigation Laws not always to blame—Special views of the Canadians—Montreal, its shipping and trade—Navigation of the St. Lawrence—Free-trade with the United States desired by the farmers of Canada—Negotiations proposed—Canadians urge the abolition of Protection—Views of Western Canada—Canadians, really, only for partial Free-trade—Improvements of their internal navigation—Welland Canal—Cost of freight the real question—Loss to Canada by New York line—General summary of results as to Canada—West Indians for Free-trade as well as Canadians—Divergent views of capitalists at home—Liverpool and Manchester opposed.
Progress of the changes in the Navigation Laws.
Reciprocity Treaties.
Austria, July 1838.
The first instance of privileges being granted to ships of certain countries to import goods from ports in other countries was in the case of Austrian ships. The 4th clause of the treaty of 1838 between Austria and England provided, that all Austrian vessels from ports of the Danube, as far as Galatz inclusive, should, with their cargoes, be admitted into the ports of the United Kingdom and into all possessions of Her Britannic Majesty, exactly in the same manner as if the said vessels had come direct from ports strictly Austrian, with all the privileges and immunities granted under the Treaty of Navigation and Commerce. In August 1840, an Act was passed to give effect to this treaty, the 3rd clause of which, running as follows, was very important:—“And whereas, by the application of steam power[55] to inland navigation, and the facility thereby afforded of ascending rivers in suitable vessels with imported goods, new prospects of commercial adventure are opened up to many States situate wholly or chiefly in the interior of Europe, and whose most convenient ports are not within their own dominions; and, consequently, the trade of this country with such States might be greatly extended if the ships of such States were permitted to use, for the purposes of such trade, some ports of other States, in like manner as if such ports were within their own dominions; and, accordingly, treaties of commerce and navigation beneficial to the shipping and trade of this country might be made with such States if Her Majesty were enabled to carry such treaties into effect. Be it therefore enacted, notwithstanding the Navigation Act, that it shall be lawful for Her Majesty from time to time to declare, by the Order in Council, to be published as aforesaid, that any port or ports to be named in such order, being the most convenient port or ports for shipping the produce of any State, to be also named in such order, shall, although not situated within the dominions of such State, be port or ports for the use of such State in the trade of such ships with all ports of the British dominions, &c., in as full and ample a manner as if such port or ports were within the dominions of such State, &c.; and so long as such order shall be declared to be in force, it shall be lawful to import, &c., any goods in the ships of such State, which, by the laws in force at the time of such importation, might then be imported in such ships from a port of the country to which they belonged, and so to import such goods upon the like terms as the same could there be imported from the national ports of such ships.” Subsequently to this Act, several Conventions of Navigation, to some of which I have already briefly referred, were carried out, whereby the privileges just described were granted to various other nations.
Zollverein States, August 1841.
Russia, 1843.
The first was with Prussia, on behalf of the Zollverein States,[56] whereby the mouths of the Meuse, Elbe, Weser, and Ems, and those of all the navigable rivers between the Elbe and the Meuse were made free; thus offering means of communication between the sea and the territory of any of the Zollverein States thus opened as ports for ships of the Zollverein, so far as relates to trade with the United Kingdom or the British possessions. A little later, in 1843, a similar treaty was made with Russia, by which Russian vessels, arriving from the mouth of the Vistula or Niemen, or any other river, the outlet of any navigable stream, having its source in Russia and passing through the Czar’s dominions, were admitted, as if coming from Russian or Finnish ports. With Oldenburg there was also a treaty relating to the Elbe, Ems, Weser, and Meuse, and also with Mecklenburg-Schwerin. Lastly, like arrangements were made with Hanover, giving very nearly the same privileges as those to Mecklenburg-Schwerin. At a later period, orders were given to allow the same indulgence to ships of Oldenburg, the Hanse Towns, and Holland, as had been given to Hanover; so that, at this time, England had relaxed her Navigation Laws to the extent of calling ports, places not geographically belonging to Austria, Russia, Oldenburg, Mecklenburg, the Zollverein, Hanover, or the Hanse Towns; a concession of vast importance, especially as regarded the import of corn.
Various anomalies, &c., then in existence.
In fact, the Navigation Laws, as they stood in 1847, were full of anomalies, and were altogether unsuited for the state of things at which nations had now arrived. The 7th clause of the Act 7 & 8 Vict., cap. 88, directed, that “no goods shall be exported from the United Kingdom to any British possession in Asia, Africa, or America, nor to the islands of Guernsey, Jersey, Alderney, or Sark, except in British ships.” Goods, the produce of colonies in Asia, Africa, and America, could, however, be brought in vessels of any flag to the Channel Islands, but, from these, they must be brought in a British ship; and there was also the further anomaly, as we have shown, of United States vessels being allowed to clear out with produce and manufactures of the United Kingdom to the East Indies.
Curious effects of the Registry Laws
as regarded individuals or corporate bodies.
Power was then, also, granted to the Queen in Council to allow any foreign nation to trade with British colonies; and this privilege was granted to a considerable number. To some it was accorded without restriction; to others, such as France and Spain, who were rivals, restricted powers were given; while the privilege, granted to the United States of trading with British colonies, was afterwards accorded to Columbia, Rio de la Plata (including the States since formed), Mexico, Hayti, Chili, France to a limited extent, and the Spanish Colonies; and, further, all countries within what were called the limits of the East India Company’s Charter, that is, all foreign countries west of Cape Horn, and east of the Cape of Good Hope, had liberty to trade with the British possessions within the same limits. (Order in Council, 16 July, 1827.) French ships under this order were, however, only allowed to import into British colonies such goods, the produce of France, as were enumerated in the table annexed to the order (Orders, 1 June, 1826; 16 Dec., 1826), this order not including wine, the staple of France, a distinction deliberately adopted and confirmed. But, besides these perplexing anomalies, and others to which I shall presently call attention, the execution of the Navigation Law, as it was in 1847, was full of difficulties arising from the Registry Law, and the naturalisation of goods brought to Europe, &c. With respect to the Registry Law, there was a clause (the 13th) of the Navigation Act which stated “that no ship shall be admitted to be a British ship unless duly registered;” and that this might be properly done, the owner had to declare “that no foreigner has any right, share, or interest in the ship.” The following remarkable case will show how completely the spirit of this old law was neutralised in the case of Joint-Stock Companies.
Ship Equador.
Decision of Queen’s Bench, December 1846.
An application was made to the Collector at Liverpool for the registry of a ship called the Equador, belonging to the Pacific Steam Navigation Company. In the first instance, the Company required registry as a Joint-Stock Company, and three members, who had been duly elected and appointed trustees, attended at the Custom-House, Liverpool, to subscribe the requisite declaration of registry, in conformity with the provisions of the 13th and 36th sections of the Act 8 & 9 Vict., cap. 89 (the Registry Act). By the 13th section, the trustees of a Joint-Stock Company, in common with all other owners of British ships (excepting those owned by corporate bodies), were required to declare “that no foreigner, directly or indirectly, hath any share or part interest in the said ship or vessel.” The trustees in question stated that they could not make that declaration, because, in point of fact, foreigners did hold shares in that ship, and also in the other vessels belonging to the said Company; and they requested the Collector and Controller at Liverpool to expunge from the declaration the words above recited; but those officers, having no legal authority to comply with this request, refused to make this alteration. The Company then addressed the Board of Customs, requesting that they would direct their officers at Liverpool to expunge from the declaration the words above recited; but the Board, acting under advice, refused compliance with the request. The Company’s secretary then demanded registry on behalf of the Company as a “corporate body,” and claimed to make the declaration, contained in the 13th section of the Act aforesaid, which applies to corporate bodies. That declaration does not, like the other declaration, exclude foreign interest; and if, in the first instance, the Company had claimed registry as a corporate body, the probability is, that it would have been granted as a matter of course, without raising the question of foreign interest. But the Collector and Controller at Liverpool, with a full knowledge that foreigners were proprietors of the vessel, and adverting to the 13th and other sections of the Registry Act, refused registry; and the Commissioners of Customs, acting upon their solicitor’s opinion, supported the Liverpool officers in their refusal to grant the registry. The Company then moved for a mandamus in the Court of Queen’s Bench; and, after the usual proceedings in such cases, it was decided by the Court that as the Company applied for registration in its corporate capacity, the Court could not take notice of its constituent members, whether they were actually foreigners or not; or, in other words, that an English Incorporated Company was a British subject for the purposes of the Registry Act.
Further details: owner to reside in the United Kingdom.
The result of this remarkable decision was that foreigners, when incorporated, could own a ship, but not individually. In an extreme case, a ship might, ultimately, become the sole property of foreigners exclusively, and yet be entitled to be registered as a British ship, as a corporate body remains permanently. So that the law created the curious anomaly that a foreigner could not have a share in a British vessel, but might be the owner of all the shares of a corporate body which owned, for instance, the Great Eastern. Another difficulty arose with reference to the residence in or out of England of the owner of a ship. The Free-trade party contended that if a foreigner were disposed to come here and build a ship, there was no disadvantage either to British shipbuilders or British shipowners, or British sailors, especially as he could hold all the shares of a ship. On the other hand, it was contended that this was an extreme case, not likely often to occur, and the principle, if acted upon, of allowing individual ownership, might give considerable power to foreigners to the prejudice of British subjects; in fact, that the violation of this principle went to the very basis of the Navigation Law, which it would destroy. To such a point was real British ownership carried out, that, as the Act required owners of British ships to reside in the United Kingdom, the owner of a British registered ship, if he resided at Paris,[57] would lose his privileges as such.
Other difficulties arose from the indefinite character of the law: thus, gin could be brought into England, but brandy could not, in any foreign ships. American vessels could not bring corn from Holland; while, on the other hand, American corn landed in Holland could not be brought to England in a Bremen ship; and these difficulties were, in the case of corn, considerably increased by the difficulty of pronouncing upon the actual origin of the corn, as none but the most experienced dealers in grain could decide such a question, and, even with them, it must often have been mere guess work. A case occurred in which timber from Memel was sent to British North America, and, afterwards, brought to England at the low differential duty then existing. The law, at that time, permitted the produce of British possessions abroad to be imported, without its being described as the produce of those possessions; a tolerated evasion, it is clear, of the Navigation Law. But in the case of a ship arriving from Hayti, bringing a cargo of Haytian produce, the master described his ship as a Swedish ship, there being, in point of fact, no Haytian ships. In this case, the goods were liable to forfeiture; but they were allowed to be warehoused for exportation, and the vessel was permitted to depart. A Swedish ship was clearly inadmissible under the 16th Section of the Navigation Act.
Naturalisation of goods brought to Europe.
Perhaps one of the greatest absurdities attending the practical working of the Navigation Law was that which related to the “naturalisation” of goods, the produce of Asia, Africa, and America, which, when once landed in Europe, were, by this Act, not admissible into the ports of Great Britain, even in British ships, for home consumption.
Two remarkable cases came under my own experience, so curiously illustrative of the laxity and stringency of the law respectively, as to deserve especial notice. In the first case, thirty-five casks of annatto, the produce of Cayenne, a French colony, were in course of transit in a French ship to Bordeaux. This valuable dye could have been brought direct from Cayenne in a British ship for home consumption to England; but, if once brought from the French colony in a French ship, and landed in Europe, it was clearly inadmissible under the clause, “that goods, the produce of Asia, Africa, and America, shall not be imported from Europe into the United Kingdom to be used therein.”
The value of annatto is apt to fluctuate suddenly from very low to enormously high prices, just as the fashion for the colour varies. Annatto on this occasion rose to a high price; and a London agent, knowing that thirty-five casks of it were on their way to Europe, set his wits to work to bring this French colonial produce into a port in England, in spite of the Navigation Laws. The agent was thoroughly acquainted with every branch of the law, and asked himself what constituted a landing in Europe? Having satisfied himself on this point, he arranged with an eminent house at Bordeaux to purchase the annatto for arrival, land the cotton, which constituted the chief part of the cargo, and charter a small vessel, and send on the annatto to London in this British ship. This was done; and, when the vessel was on the point of arrival, he sought the Commissioners of Customs, and frankly avowed his proceedings. Mr. Dean, one of the chief officers, admitted that, many years previously, especially during the war in 1810, similar transhipments had been allowed, under the authority of the officers of the Crown,—a mere transhipment, and certain formalities performed at the French Customs, not being “a landing in Europe,”—and the thirty-five casks of annatto were admitted at a profit to the partners of nearly 3000l.[58]
Waste of capital caused thereby,
In the second case, the rigour of the law led to the greatest absurdity. About the year 1839, the price of coffee was very high in the London market, while large quantities of the finest Java and Dutch colonial coffee were warehoused in store in Amsterdam. This produce was clearly inadmissible under the clause already quoted, having been, beyond all dispute, “landed in Europe.” In what way could this coffee be brought into the London market in the teeth of the existing stringent Navigation Laws? The same agent, who represented one of the oldest Dutch houses, contracted to deliver a cargo of Dutch coffee at a given price at a distant period. He then chartered a British ship, which he sent to Amsterdam, took in a cargo of coffee, and the ship thus laden with Dutch colonial produce was sent to the Cape of Good Hope. At that colony the coffee was landed, or, at all events, was supposed to be landed, fresh papers were made out, and the coffee consigned to London as “naturalised” produce, and, coming direct from a British colony in a British ship, was, of course, admissible for home consumption. To despatch many thousand tons of coffee and other produce half across the globe from Europe, for no other purpose than to be brought back again, in order to comply with the rigorous provisions of the old Navigation Laws, which, in point of fact, were nullified as regards goods, while the shipowners alone reaped the advantage of this useless and protracted voyage, was surely a climax of absurdity! Nevertheless, it is within my own personal experience that a large amount of business was transacted in this way, all the expenses incurred being, in an economical point of view, a total waste of capital.
and obstructions to trade.
Story of the cochineal.
Again, on the part of the old law, the want of adaptability to the changing conditions of different markets was often a serious difficulty. Thus, it often happened that the state of these markets in different parts of the world presented favourable mercantile prospects; but no suitable vessel could be found to carry the goods to the market where they were required. For instance, hostilities being about to break out between France and the United States in 1834, the price of French brandy rose enormously in America, while, at the same time, the large quantities of that article then in England rendered it unsaleable in the London market. At the time there was not an American vessel to be chartered in the Thames, and the American Navigation Laws precluded the brandy from being carried in a British vessel. On the other hand, palm-oil, at times, could not be brought from the United States, there being no British vessel available for charter on the spot. In such cases, the merchants complained in their letters in doleful terms, “I have lost my commission, and some British vessel the freight.” Instances of such occurrences were multiplied from all parts of the world. Much was said at the time about the difficulty of bringing cochineal from the Canary Islands, where the cactus, on which it feeds, had recently been cultivated for this purpose. Though it might be absurd to raise such complaints, as the smallest possible inconvenience resulted from the state of the law as it affected this particular article, the principle applied to the whole colonial system; and, as Spain refused to allow British ships to carry British goods to the Canaries, it was urged that our colonial system ought to be altered, so as to induce Spain to modify hers. Cochineal produced in the Canaries, and landed at Cadiz in Europe, like other articles, had to be sent elsewhere out of Europe to be naturalised, in order to come in for home consumption.
But the Navigation Laws not always to blame.
Perhaps, practically, these anomalies did not, to any large extent, occasion impediments to business beyond retarding its extension, because every merchant was so well acquainted with the provisions of the Navigation Laws (which were as much studied for their evasion as otherwise), that less inconvenience resulted[59] than might have been expected. The law, however, assumed so many complex forms with time, new discoveries, treaty obligations, and perpetual minor alterations, that, irrespectively of the advantages or disadvantages of a total change, arguments could be raised for a complete abrogation of every existing Act, if it were only to commence anew and remodel the law, so as to avoid the habitual and vexatious discussions and disputes with the Customs to which the system gave rise.
Special views of the Canadians.
As regarded the operation of the Navigation Laws with reference to Canada, it was far more complicated than even that between the mother-country, her colonies in the West Indies, and the United States. While some of the shipowners of England had, as we have seen, gone so far as even to demand protection against the shipping of English colonists, the Canadians were busily occupied with efforts in an entirely opposite direction. They were not inclined, by a system of protection, to force their trade in any particular channel: for, so far as regarded the carrying-trade of the North-Western American States, the Canadians obviously could only secure its passage through their territory by holding out superior advantages in the way of cheapness of transit. For this purpose they had already done everything that great enterprise and expenditure could accomplish. They succeeded as far as possible; and, at length, possessed a line of communication at once more rapid and more cheap from the interior to the sea than any existing in the United States. The whole question then was confined to the comparative advantages of shipment from Quebec or Montreal, or from New York. If those ports could be nearly equalised in respect to freights to England, Canada would succeed in her object; if the disparity continued as it did then, all her efforts would have been unavailing.
Montreal, its shipping and trade.
It was, generally, represented that the high rate of freight between Montreal and the United Kingdom was owing to the limited number of ships employed in the import trade of Canada. In the spring and latter end of the summer, ships, composing what was called the spring and fall fleet, arrived; and, so long as they were in port wanting freight, the rate was comparatively moderate; but in the interval, being the middle of summer, when most of the western produce arrived for shipment, an inferior class of ships only were at hand, which delivered their cargoes in bad condition, and, at the same time, charged exorbitant rates, according to the quantity of produce for shipment. The rate of freight is said to have fluctuated in Montreal in one and the same season between 3s. 6d. and 7s. 6d. per barrel; and it is stated that the higher rate, from 6s. to 7s. 6d. per barrel, had been paid in Montreal, while freights were offered in foreign ships at New York as low as 1s. and 1s. 6d. per barrel; indeed, at this time, an offer of 1s. 6d. per barrel extra would have brought any number of ships round from the American sea-ports, but the Navigation Laws interposed. It was clearly seen that such fluctuations in the rates of freight, together with the employment of inferior vessels, could not have occurred were the Canadian merchants able to select in the American ports such ships as were seeking freight to Europe.
During the temporary suspension of the Navigation Laws in 1847, twenty-two ships arrived from Bremen at the port of Montreal laden with emigrants intended for the United States, that route being chosen as easier and cheaper. These ships on their return took cargoes for the United Kingdom; and it was evident that, if the same facilities were continued, the great German emigration to the United States would to some extent pass through Canada. This was but one instance of many which might be reasonably expected, if foreign vessels could resort to the Canadian ports. These ships were well fitted for the carriage of wheat and flour; and the competition produced by their presence would not only tend to reduce the freight from Canada to an equality with those from the States, but the good condition of the cargoes delivered would be assured; the shippers would, in this way, be saved from the use of inferior vessels, the damage caused by which was thought not to be over-estimated at an average of five per cent. on such shipments.
Navigation of the St. Lawrence.
Again: the American merchants of the West were anxious to avail themselves of the facilities afforded by the River St. Lawrence. Thus, if their vessels were permitted to come down to Montreal and Quebec, there to meet American or foreign ships to take their cargoes on freight to Europe or elsewhere, it was naturally thought that an extensive and profitable commerce through Canada would immediately follow; the lower ports, by these means, at once assuming the position, as commercial depôts, to which their geographical position on that great river outlet of Northern America seemed to entitle them.
Free-trade with the United States desired by the farmers of Canada.
Connected with this important subject of the free navigation of the St. Lawrence west of Quebec, which the Americans were desirous of procuring, a corresponding desire prevailed on the part of the Canadian farmers to avail themselves of the American home market, whenever it offered superior prices to those derived from exportation to Europe. The price of wheat and flour in the Eastern States, required for home consumption, was often much higher than the price in Canada for exportation, and when this happened, it would obviously have been greatly to the advantage of the Canadian agriculturist if he could have exported his produce to the United States. This he was prevented from doing by a protective duty of a quarter of a dollar per bushel upon wheat. Efforts had been made in the United States to abolish this duty; but the advocates of its abolition were constantly defeated by the Protection cries of the American farmers, or by a difficulty as to the “most favoured” nation-clause in treaties with Foreign Powers, the more so, as a relaxation in favour of Canada was, naturally, capable of extension to any or all nations with whom the United States had such treaties subsisting. Here is a clear instance how commercial treaties, even of a liberal character, become as much “entangling alliances” as the political conventions of “amity and friendship” have so frequently been. Indeed, the “favoured” nation-clause, however well intended and beneficial in the highest degree in certain cases, has often been a source of dispute to those States who either have accepted or enforced it, and, even more so, to those countries which have been compelled to adopt it. The interests of great nations vary so much at different periods that inflexible rules in politics or commerce must frequently operate very prejudicially, and cannot be maintained with entire consistency for the true interests of the commonwealth.
Negotiations proposed.
It was thought that if the free navigation of the St. Lawrence were offered to the American Government in return for the abolition of the protecting duty, one measure to be co-existent with the other, Congress would be inclined to abolish the protective duty; while the abolition, being a matter of reciprocal arrangement, all difficulty arising from the commercial relations of the United States with foreign countries might thus be avoided.
Canadians urge the abolition of Protection.
The more advanced section of the Free-trade party of Canada pressed this proposal on the executive government, together with the abolition of all protection conferred by the Navigation Laws, which it was asserted was, after all, purely nominal, and only to secure other advantages. They pronounced the so-called Protection to be in its effects upon Canada practically mischievous, contending that, if the trade was nearer from Canadian waters to the canals and ports of the United States, British shipowners would have to compete with foreigners in the ports of that country; that, if they could do this successfully there, they could do so in the Canadian ports; but if not, under existing circumstances, the trade of Canada could not afford to maintain a mere legal monopoly: moreover, if the supposed Protection only led to the desertion of the cities and sea-ports of Canada, without subserving the interests of British shipowners, it was hoped that useless restrictions, irreconcilable with the withdrawal of protective duties in the United States in favour of Canadian produce, would be at once removed.
Views of Western Canada.
The Canadians could not indeed fail to perceive, when the question was raised in the mother-country, that a great portion of the exportable produce of Western Canada, probably by far the greater part, was at that very moment on its way to ports in the United States; that little was expected at Montreal; that the canals constructed on the St. Lawrence were almost idle; that importing ships coming to Montreal were without their usual full freight; that the principal importations into Western Canada were effected through the United States; and that the trade of the city of Montreal was in consequence rapidly decreasing. On the other hand, they observed the greatly-increasing consumption and importation into their country of articles formerly imported wholly through that port. Hence they inferred, that the opening of Canadian sea-ports to vessels of all nations, with permission to send colonial produce to England in any vessels, as well as the opening the River St. Lawrence above Quebec to Americans, would probably restore trade to its original channel, and increase the commerce and revenues of Canada beyond precedent.
Canadians really only for partial Free-trade.
Such were the hopes entertained by the Canadians of a modification in the restrictive system. But even the boldest of their Free-traders shrunk for a time from the notion of an unconditional surrender of the natural advantages the navigation of the St. Lawrence conferred upon Canada. Hence they proposed to themselves to reserve their full rights, and confined their advocacy to such changes in the law relating to navigating the St. Lawrence above Quebec as would enable them to make terms with the Americans. They had then no idea of throwing open to foreigners generally the use of their great rivers without an ample equivalent: they contented themselves with asking for powers from the Imperial Legislature to enable them to negotiate from time to time on the subject, and to make the navigation of the river a matter of treaty and regulation; preserving their own sovereignty, with power to resume the exclusive use of it at the conclusion of any agreement.
Improvements of their internal navigation.
Hitherto the enterprise and energies of the colonies had been almost exclusively directed to the important objects of improving the internal navigation of the St. Lawrence from Lake Erie to Quebec, so as to place it in such a state of cheapness and efficiency as would make that route more advantageous as a port of embarkation for a sea voyage than any route through the United States.
Welland Canal.
In the case of the Welland Canal, Canadians could not fail to perceive that the passage of American vessels down and up had contributed to render it profitable. Indeed, the Welland Canal was used extensively by American vessels, as it was a short communication between the two great lakes, and, at the same time, admitted of the passage of large vessels, which, instead of entering the American Erie Canal at Buffalo, proceeded down Lake Ontario to Oswego, where goods are transferred to the canal-boats for transport to New York. In this way a large portion of the revenue from the Welland Canal was derived from the American trade, arising from the free navigation of a part of the internal waters of Canada, and thus Western Canada enjoyed the benefit of a navigation supported to a considerable extent by foreign commerce.
Cost of freight the real question.
It was observed, further, that, if products from the Western States could be transported to the sea more cheaply through Canada than through America, the Canadian route would of course be preferred, and thus the Canadian canals would engross the carrying trade of the North-Western States of America. But if, on the other hand, the advantage of the perfect inland navigation was more than counterbalanced by the rates of freight from Quebec and Montreal to Europe, the people of Western Canada, having no protection in the English markets by using the Canadian lines of communication, would send the whole of their produce by way of New York, and import such articles of foreign consumption as they required by the same route.
So long as the colony enjoyed Protection in the British market no injury to its commerce could arise, because the extent of the protection was generally sufficient to prevent the owners from divesting the Canadian produce of its British character, and it could not become available for the home market of America, unless on the payment of a heavy duty. Even with regard to American produce, the provision in the old Corn Law giving to American wheat and flour the same protection as Canadian if exported through Canada, with the payment of 3s. per quarter duty in the province, was, at most times, a sufficient inducement for many Americans to make shipments to Montreal, as well as for the Canadians to make purchases in the United States. When, however, by the repeal of the Corn Laws all protection was removed, the question became one of mere cheapness of transport; and taking an average of the preceding four years, the difference in freight was no less than 3s. per barrel of flour in favour of New York over Montreal.[60] Even when the benefits enjoyed by Canada in her internal navigation, estimated at 1s. 6d. per barrel, were deducted, there would still remain in favour of New York, 1s. 6d. on each barrel of flour—an advantage quite sufficient to turn the whole export trade into that channel.
Loss to Canada by New York line.
As the United States then admitted the transit of Canadian produce through their territory, the loss it encountered at New York arose from the necessity of complying with the Navigation Laws, which forbade its being imported into England in foreign ships (8 & 9 Vict., cap. 88, sect. 4). At the same time, it must, also, be noticed that, as freight in British ships from New York to England was no higher than the freight in American ships, this restriction, confessedly, had no appreciable influence on the question of transmission through Canada or the United States.
For some time, previously, the import trade of Western Canada, which, by means of protecting duties in favour of British ships and British goods, was forced to come by the St. Lawrence, had been changing its direction, and Montreal, which supplied the whole western country, was becoming deserted by the western merchants. The new Customs Law of that province, while it equalised duties, enabled the consumer to purchase in the cheapest market, and, thus, vastly increased the evil to former importing cities; hence, a very large proportion of the export trade also of Canada had now taken the direction of New York. There was, therefore, naturally a serious apprehension, lest the great public works of the St. Lawrence would cease to be useful and profitable, and, that the commercial connection so many years existing between Western and Eastern Canada would thus be altogether cut off.
It has been unnecessary to refer to the export trade in timber from Canada, as this stood on exceptional grounds. Indeed, a general opinion prevailed that the export of timber from Quebec would probably be carried on, under any circumstances, in British ships specially employed in that branch of trade.
General summary of results as to Canada.
From these important considerations it was concluded:—
1st. That, as Canada then enjoyed but a remnant of Protection in England, she ought to be released from any restrictions for the benefit of the shipowner.
2nd. That, without the free navigation of the St. Lawrence and a repeal of the Navigation Laws so far as British North American Colonies were concerned, there was reason to apprehend that New York would become the emporium of the trade of Canada, and further, that, thus, a community of interests, commercial and political, would be created with the United States.
3rd. That, in such a case, the repeal of these laws would not materially injure the British shipowner, the question simply being whether competition for trade should take place in the harbours of the United States or in the River St. Lawrence.
Lastly, That the repeal of these laws would have a tendency to perpetuate, and not to destroy, the relations existing between Canada and the mother-country.
West Indians for Free-trade as well as Canadians.
Divergent views of capitalists at home.
For these reasons, an organisation of merchants in Montreal, and in various towns in Canada, who had leagued themselves as Free-traders and had been very active in disseminating their views, as well as in enforcing them, with all the influence they could command, on the colonial Governor, and on the English Executive and both Houses of Parliament, now demanded the total repeal of the British Navigation Laws. They did not, however, stand alone in their desire for unrestricted navigation. The West Indies, as soon as they found that the British Parliament had taken away the protection afforded to them by the differential duties, were as loud in their complaints as the Canadians, the more so, as having been deprived of all protection on their sugars by Lord John Russell’s Equalization Act of 1847, it became indispensable to get their produce conveyed to market at the cheapest possible rate of freight, so as to compete, with any chance of success, with their foreign rivals. They therefore denounced the Navigation Laws in no measured terms; and when Montreal petitioned that its corn should be admitted into the ports of Great Britain in ships of any nation their merchants thought proper to charter, the West Indians preferred the same request, in order to secure the lowest cost of transport for their sugar. While, therefore, the colonists were urging the adoption of the principle of an entire free trade with the colonies, many capitalists of England, and, especially, the shipowners, viewed with great alarm the total abandonment of what was known as our “colonial system,” and declared their apprehension that such a change would throw the carrying trade into the hands of the United States. Clinging to Protection, they said, in their memorials to Parliament, “that the only remaining thing connected with our whole important and most magnificent colonial system, which enabled us to baffle the efforts of the whole world united against us, was that part of the system under which the produce of the colonies was obliged to be brought to this country in British ships.” These alarmists declared that such a relaxation as the colonists now demanded would ruin them inevitably. Regarding every concession which had been made to the Americans during the preceding half century, having as it had for its object increased intercourse with the West Indies, as a pernicious policy, tending to injure British colonies and to encourage American trade, they alleged that the protection of the colonies had not been carried far enough; that British shipowners could not exist without Protection; that the uncertainty prevailing with respect to the Navigation Laws was productive of injury to the country, as no persons would embark capital in shipping; and, further, that, as regarded the West Indies, it was not the general wish of the colonists that the Navigation Laws should be repealed.
Views of Manchester and Liverpool.
In this controversy, the important cities of Manchester and Liverpool each took also a very different view. The great Free-traders of the former desired the unconditional repeal of the Navigation Laws, feeling convinced that their cotton and corn would then be brought to them at cheaper rates, and that they would be able to deliver to much greater advantage in distant markets the products of their manufacturers; but the shipowners of Liverpool, almost as a body (though there were a few important exceptions), were exceedingly adverse to any material change in these laws, as they regarded with great and natural jealousy the then triumphant progress of American shipping.