"'They, however, are also unanimous in the opinion, that, in view of the close geographical connection of the United States with the British Provinces—rendering them in many respects but one country—and of the magnitude of the commercial relations existing between them, it would be impolitic and to the detriment of the interests of the United States to decline the consideration of all propositions looking to the re- establishment of some future and satisfactory international commercial arrangement. Such a course would be in entire opposition to the spirit of the age, the liberality of our people, and the policy of rapidly developing our resources as a means of diminishing the burden of our public debt.
"'In view of such an arrangement, the question of whether either of the parties to the treaty has, or has not, conformed to the spirit of its stipulations, is of little importance. It is the future, not the past, that we are to consider; and if advantageous terms for the future are offered—terms which are calculated to promote the development of the trade and commerce of the United States, encourage good feeling and prevent difficulties with our neighbours, and at the same time protect the revenues of the country from serious and increasing frauds—it would be, in the opinion of the Commission, most impolitic to disregard them.
"'The offer on the part of the provincial authorities to re-negociate in respect to the commercial relations of the two countries, is in itself an expression of desire to make an arrangement that must be, in every respect, reciprocal; inasmuch as it is evident that no treaty can, for any length of time, continue that does not conduce to the benefit of both parties.
"'It is evident that the necessities of the United States will for many years require the imposition of high rates of taxation on many articles, and that with the production of such articles free, or assessed at low rates of duty, in the British Provinces, the enforcement of the excise laws on the borders will be a matter of no little difficulty, annoyance and expense; and under all ordinary conditions a large annual loss of the revenue must inevitably occur. The experience of all the nations of Europe has shown that to attempt to wholly prevent smuggling, under the encouragement of high rates of duty, is an utter impossibility. If, however, such an arrangement can be made with the British Provinces as will ensure a nearly or quite complete equalization of duties—excise and customs—it must be apparent that all evasions of the revenue laws by smugglers would instantly come to an end; and that the attainment of the above result would be of immense advantage to the United States in a revenue point of view.
"'Again: it is also urged that under the existing system the products of American industry subject to high rates of excise, are injuriously brought into competition with similar products of provincial industry which are subjected to little or no excise, and then admitted into the United States free of duty. That such is the fact cannot be denied; and is itself a reason why the abrogation or modification of the present Reciprocity Treaty has become imperative. But if it were possible to effect such an arrangement with the British Provinces as would allow the imposition of duties equivalent to the American excise on all articles of provincial production passing into the United States, it seems clear that the afore-mentioned objection would be entirely removed.
"'As the whole subject, however, is now before Congress for consideration, the Commission do not consider it as within their province to submit any specific recommendations; but would content themselves with merely pointing out that, under certain circumstances, conditions of great advantage to the United States, in a revenue point of view, might be secured.'
"Mr. Derby's report contains much that is sensational, and many curious admissions, but its general tenor is strongly in favour of a new treaty, regard being had to the revenue necessities of the United States; i.e., that articles admitted into the United States from Canada should pay a duty equivalent to the internal revenue tax on the same articles charged in the States. This is just as if Great Britain said that brandy from France coming into England should pay a duty equivalent to the English excise duty upon spirits, which would be quite fair.
"The next fact in the history is that delegates from Canada, New Brunswick, and Nova Scotia, are found at Washington on the 24th January, 1866, and that they remain there till the 24th February, on which day they report that after many days' discussion they have failed to do anything, and that the Reciprocity Treaty is finally at an end.
"Our Government having done nothing, the Provinces, it would appear, had, at the last moment, to send 'delegates' themselves to negociate; a mode of procedure altogether very unlike the action of 1854.
"The following papers give a resume of the discussion :—