The political troubles that continued from 1817 until 1836 in Lower Canada eventually made the working of legislative institutions impracticable. The contest gradually became one between the governor-general representing the crown and the assembly controlled almost entirely by a French Canadian majority, with respect to the disposition of the public revenues and expenditures. Imperial statutes, passed as far back as 1774-1775, provided for the levying of duties, to be applied solely by the crown, primarily "towards defraying the expenses of the administration of justice and the support of the civil government of the province", and any sums that remained in the hands of the government were "for the future disposition of parliament." Then there were "the casual or territorial revenues," such as money arising from the Jesuits' estates, royal seigniorial dues, timber and land, all of which were also exclusively under the control of the government. The assembly had been given jurisdiction only over the amount of duties payable into the treasury under the authority of laws passed by the legislature itself. In case the royal revenues were not sufficient to meet the annual expenditure of the government, the deficiency was met until the war of 1812-15 by drawing on the military exchequer. As the expenses of the provincial administration increased the royal revenues became inadequate, while the provincial revenues gradually showed a considerable surplus over the expenditure voted by the legislature. In 1813 the cost of the war made it impossible for the government to use the military funds, and it resorted to the provincial moneys for the expenses of justice and civil government. In this way, by 1817, the government had incurred a debt of a hundred and twenty thousand pounds to the province without the direct authority of the legislature. The assembly of Lower Canada was not disposed to raise troublesome issues during the war, or in any way to embarrass the action of Sir George Prevost, who, whatever may have been his incompetency as a military chief, succeeded by his conciliatory and persuasive methods in winning the good opinions of the French Canadian majority and making himself an exceptionally popular civil governor. After closing the accounts of the war, the government felt it expedient to stop such irregular proceedings, to obtain from the legislature a general appropriation act, covering the amount of expenditures in the past, and to prevent the necessity of such a questionable application of provincial funds in the future. This may be considered the beginning of the financial controversies that were so constant, as years passed by, between the governors and the assemblies, and never ended until the rebellion broke out. The assembly, desirous of obtaining power in the management of public affairs, learned that it could best embarrass the government and force them to consider and adjust public grievances, as set forth by the majority in the house, by means of the appropriation bills required for the public service. The assembly not only determined to exercise sole control over its own funds but eventually demanded the disposal of the duties imposed and regulated by imperial statutes. The conflict was remarkable for the hot and uncompromising temper constantly exhibited by the majority on the discussion of the generally moderate and fair propositions submitted by the government for settling vexed questions. The assembly found a powerful argument in favour of their persistent contention for a complete control of the public revenues and expenditures in the defalcation of Mr. Caldwell, the receiver-general, who had been allowed for years to use the public funds in his business speculations, and whose property was entirely inadequate to cover the deficiency in his accounts.

The legislative council was always ready to resist what it often asserted to be unconstitutional acts on the part of the house and direct infringements of "the rights of the crown" sometimes a mere convenient phrase used in an emergency to justify resistance to the assembly. It often happened, however, that the upper chamber had law on its side, when the house became perfectly unreasonable and uncompromising in its attitude of hostility to the government. The council, on several occasions, rejected a supply bill because it contained provisions asserting the assembly's right to control the crown revenues and to vote the estimates, item by item, from the governor's salary down to that of the humblest official. Every part of the official and legislative machinery became clogged by the obstinacy of governor, councils, and assembly. To such an extent, indeed, did the assembly's assumption of power carry it in 1836, that the majority actually asserted its own right to amend the constitution of the council as defined in the imperial statute of 1791. Its indiscreet acts eventually alienated the sympathy and support of such English members as Mr. Neilson, a journalist and politician of repute, Mr. Andrew Stuart, a lawyer of ability, and others who believed in the necessity of constitutional reforms, but could not follow Mr. Papineau and his party in their reckless career of attack on the government, which they thought would probably in the end imperil British connection.

The government was in the habit of regularly submitting its accounts and estimates to the legislature, and expressed its desire eventually to grant that body the disposal of all the crown revenues, provided it would consent to vote a civil list for the king's life, or even for a fixed number of years, but the assembly was not willing to agree to any proposal which prevented it from annually taking up the expenditures for the civil government item by item, and making them matters of yearly vote. In this way every person in the public service would be subject to the caprice, or ill-feeling, of any single member of the legislature, and the whole administration of the public departments would probably be made ineffective. Under the plan suggested by the government in accordance with English constitutional forms, the assembly would have every opportunity of criticising all the public expenditures, and even reducing the gross sum in cases of extravagance. But the same contumacious spirit, which several times expelled Mr. Christie, member for Gaspé, on purely vexatious and frivolous charges, and constantly impeached judges without the least legal justification, simply to satisfy personal spite or political malice, would probably have been exhibited towards all officials had the majority in the assembly been given the right of voting each salary separately. The assembly never once showed a disposition to meet the wishes of the government even half-way. Whatever may have been the vacillation or blundering of officials in Downing Street, it must be admitted that the imperial government showed a conciliatory spirit throughout the whole financial controversy. Step by step it yielded to all the demands of the assembly on this point. In 1831, when Lord Grey was premier, the British parliament passed an act, making it lawful for the legislatures of Upper and Lower Canada to appropriate the duties raised by imperial statutes for the purpose of defraying the charges of the administration of justice and the support of civil government. The government consequently retained only the relatively small sum arising from casual and territorial dues. When Lord Aylmer, the governor-general, communicated this important concession to the legislature, he also sent a message setting forth the fact that it was the settled policy of the crown on no future occasion to nominate a judge either to the executive or the legislative council, the sole exception being the chief justice of Quebec. He also gave the consent of the government to the passage of an act declaring that judges of the supreme court should thereafter hold office "during good behaviour," on the essential condition that their salaries were made permanent by the legislature. The position of the judiciary had long been a source of great and even just complaint, and, in the time of Sir James Craig, judges were disqualified from sitting in the assembly on the demand of that body. They continued, however, to hold office "during the pleasure" of the crown, and to be called at its will to the executive and legislative councils. Under these circumstances they were, with some reason, believed to be more or less under the influence of the governor-general; and particular judges consequently fell at times under the ban of the assembly, and were attacked on the most frivolous grounds. The assembly passed a bill providing for the independence of the judiciary, but it had to be reserved because it was not in accordance with the conditions considered necessary by the crown for the protection of the bench.

The governor-general also in his message promised reforms of the judicial and legal systems, the disposal of the funds arising from the Jesuits' estates by the legislature, and, in fact, nearly all the reforms which had been demanded by the house for years. Yet when the government asked at the same time for a permanent civil list, the message was simply referred to a committee of the whole house which never reported. Until this time the efforts of the assembly to obtain complete control of the public revenues and expenditures had a justification in the fact that it is a recognised English principle that the elected house should impose the taxes and vote the supplies; but their action on this occasion, when the imperial government made most important concessions, giving them full control over the public funds, simply on condition that they should follow the English system of voting the salaries of the judiciary and civil list, showed that the majority were earned away by a purely factious spirit. During the progress of these controversies, Mr. Louis Joseph Papineau, a brilliant but an unsafe leader, had become the recognised chief of the French Canadian majority, who for years elected him speaker of the assembly. In the absence of responsible government, there was witnessed in those times the extraordinary spectacle—only now-a-days seen in the American congress—of the speaker, who should be above all political antagonisms, acting as the leader of an arrogant majority, and urging them to continue in their hostility to the government. It was Mr. Papineau who first brought the governor-general directly into the arena of political conflict by violent personal attacks; and indeed he went so far in the case of Lord Dalhousie, a fair-minded man anxious to act moderately within the limits of the constitution, that the latter felt compelled by a sense of dignity to refuse the confirmation of the great agitator as speaker in 1827. The majority in the assembly vehemently asserted their right to elect their speaker independently of the governor, whose confirmation was a mere matter of form, and not of statutory right; and the only course at last open to Lord Dalhousie was to prorogue the legislature. Mr. Papineau was re-elected speaker at the next session, when Lord Dalhousie had gone to England and Sir James Kempt was administrator.

After 1831, Mr. Papineau steadily evoked the opposition of the more conservative and thoughtful British Liberals who were not disposed to be carried into a questionable position, inimical to British connection and the peace of the country, Dr. Wolfred Nelson, and Dr. O'Callaghan, a journalist, were soon the only supporters of ability left him among the British and Irish, the great majority of whom rallied to the support of the government when a perilous crisis arrived in the affairs of the province. The British party dwindled away in every appeal to the people, and no French Canadian representative who presumed to differ from Mr. Papineau was ever again returned to the assembly. Mr. Papineau became not only a political despot but an "irreconcilable," whose vanity led him to believe that he would soon become supreme in French Canada, and the founder of La Nation Canadienne in the valley of the St. Lawrence. The ninety-two resolutions passed in 1834 may be considered the climax of the demands of his party, which for years had resisted immigration as certain to strengthen the British population, had opposed the establishment of registry offices as inconsistent with the French institutions of the province, and had thrown every possible opposition in the way of the progress of the Eastern Townships, which were attracting year by year an industrious and energetic British population from the British Isles and New England.

In these resolutions of 1834 there is not a single paragraph or even phrase which can be tortured into showing that the French Canadian agitator and his friends were in favour of responsible government. The key-note of the whole document is an elective legislative council, which would inevitably increase the power of the French Canadians and place the British in a hopeless minority. Mr. Roebuck, the paid agent of the assembly in England, is said to have suggested the idea of this elective body, and assuredly his writings and speeches were always calculated to do infinite harm, by helping to inflame discontent in Canada, and misrepresenting in England the true condition of affairs in the province. The resolutions are noteworthy for their verbosity and entire absence of moderate and wise suggestion. They were obviously written under the inspiration of Mr. Papineau with the object of irritating the British government, and preventing the settlement of political difficulties. They even eulogised the institutions of the neighbouring states which "commanded the affection of the people in a larger measure than those of any other country," and should be regarded "as models of government for Canada." They even went so far as "to remind parliament of the consequences of its efforts to overrule the wishes of the American colonies," in case they should make any "modification" in the constitution of the province "independently of the wishes of its people." Colonel Gugy, Mr. Andrew Stuart, Mr. Neilson and other prominent Englishmen opposed the passage of these resolutions, as calculated to do infinite harm, but they were carried by a very large French Canadian majority at the dictation of Mr. Papineau. Whatever may have been its effect for the moment, this wordy effusion has long since been assigned to the limbo where are buried other examples of the demagogism of those trying times.

In 1835 the imperial government decided to send three commissioners to examine into the various questions which had been so long matters of agitation in Lower Canada. Lord Aberdeen, then Colonial Secretary of State, emphatically stated that it was the intention of the government "to review and enquire into every alleged grievance and examine every cause of complaint, and apply a remedy to every abuse that may still be found to prevail."

The choice of the government as chief commissioner and governor-general was Lord Gosford, an amiable, inexperienced and weak man, who failed either to conciliate the French Canadian majority to whom he was even humble for a while, or to obtain the confidence of the British party to whose counsels and warnings he did not pay sufficient heed at the outset of the crisis which culminated during his administration. The majority in the assembly were determined not to abate one iota of their pretensions, which now included the control of the casual and territorial revenues; and no provision whatever was made for four years for the payment of the public service. The commissioners reported strongly against the establishment of an elected council, and in favour of a modified system of responsible government, not dependent on the vote of the house. They recommended also the surrender of the casual and territorial revenues on condition of proper provision for the payment of the civil service, and the administration of justice.

The imperial government immediately recognised that they had to face a very serious crisis in the affairs of Lower Canada. On the 6th March, 1836, Lord John Russell, then home secretary in Lord Melbourne's administration, introduced a series of ten resolutions, providing for the immediate payment of the arrears of £142,160. 14s. 6d., due to the public service, out of the moneys in the hands of the receiver-general. While it was admitted that measures should be taken to secure for the legislative council a greater degree of public confidence, the government deemed it inexpedient to make that body elective. The necessity of improving the position of the executive council was also acknowledged, but the suggestion of a ministry responsible to the assembly was not approved. This disapproval was quite in accordance with the policy adopted by Englishmen since 1822, when a measure had been introduced in parliament for the reunion of the two Canadas—the precursor of the measure of 1840. This measure originally provided that two members of the executive council should sit and speak in the assembly but not vote. Those parts of the bill of 1822 which provided for a union were not pressed on account of the objections raised in both the provinces, but certain other provisions became law under the title of "The Canadian Trade Acts," relieving Upper Canada from the capricious action of Lower Canada with respect to the duties from which the former obtained the principal part of her fund for carrying on her government. This share had been originally fixed at one-fifth of the proceeds of the customs duties collected by the province of Lower Canada, but when the population of the western section increased considerably and consumed a far greater quantity of dutiable goods, its government justly demanded a larger proportion of the revenues collected in the ports of the lower St. Lawrence. The legislature of Lower Canada paid no attention to this equitable demand, and eventually even refused to renew the legislation providing for the payment of one-fifth of the duties. Under these circumstances the imperial government found it necessary to intervene, and pass the "Trade Acts," making the past legislation of Lower Canada on the subject permanent, and preventing its legislature from imposing new duties on imports without the consent of the upper province. As this was a question of grave import, the resolutions of 1836 gave authority to the legislatures of Upper and Lower Canada to provide joint legislation "for determining and adjusting all questions respecting the trade and commerce of the provinces."

As soon as the passage of these resolutions became known throughout Lower Canada, Papineau and his supporters commenced an active campaign of denunciation against England, from whom, they declared, there was no redress whatever to be expected. Wherever the revolutionists were in the majority, they shouted, "Vive la liberté!" "Vive la Nation Canadienne!" "Vive Papineau!" "Point de despotisme!": while flags and placards were displayed with similar illustrations of popular frenzy. La Nation Canadienne was now launched on the turbulent waves of a little rebellion in which the phrases of the French revolution were glibly shouted by the habitants with very little conception of their real significance. The British or Constitutional party took active steps in support of British connection, but Lord Gosford, unhappily still governor-general, did not for some time awaken to the reality of the public danger. Happily for British interests, Sir John Culhorne, afterwards Lord Seaforth, a courageous and vigilant soldier, was in the country, and was able, when orders were given him by the reluctant governor, to deal determinedly with the rebels who had taken up arms in the Richelieu district. Dr. Wolfred Nelson made a brave stand at St. Denis, and repulsed Colonel Gore's small detachment of regulars. Papineau was present for a while at the scene of conflict, but he took no part in it and lost no time in making a hurried flight to the United States—an ignominious close to a successful career of rhetorical flashes which had kindled a conflagration that he took very good care should not even scorch him. Colonel Wetherall defeated another band of rebels at St. Charles, and their commander, Mr. Thomas Storrow Brown, a well-meaning but gullible man, fled across the border. Dr. Wolfred Nelson was captured, and a number of other rebels of less importance were equally unfortunate. Some of the refugees made a public demonstration from Vermont, but precipitately fled before a small force which met them. At St. Eustache, one Girod, a plausible, mendacious Swiss or Alsatian, who had become a leader in the rebellious movement, and Dr. Chenier, a rash but courageous man, collected a considerable body of rebels, chiefly from St. Benoit, despite the remonstrances of Mr. Paquin, the curé of the village, and defended the stone church and adjacent buildings against a large force, led by Sir John Colborne himself. Dr. Chenier and many others—at least seventy, it is said on good authority—were killed, and the former has in the course of time been elevated to the dignity of a national hero and a monument raised in his honour on a public square of the French Canadian quarters of Montreal. Mad recklessness rather than true heroism signalised his action in this unhappy affair, when he led so many of his credulous compatriots to certain death, but at least he gave up his life manfully to a lost cause rather than fly like Papineau who had beguiled him to this melancholy conclusion. Even Girod showed courage and ended his own life when he found that he could not evade the law. The rebellious element at St. Benoit was cowed by the results at St. Eustache; and the Abbé Chartier, who had taken an active part in urging the people to resistance, fled to the United States whence he never returned. The greater part of the village was destroyed by fire, probably in retaliation for the losses and injuries suffered by the volunteers at the hands of the rebels in different parts of the district of Montreal.