"Her Majesty's Government are of opinion that they cannot apply to Parliament to sanction any share in the proposed subsidy by this country; and though they take great interest in the project contemplated with so much public spirit by the gentlemen represented by you for carrying a telegraphic and postal communication from the confines of Canada to the Pacific, they do not concur in the opinion of the Canadian delegates that the work is of such special 'Imperial importance' as to induce them to introduce for the first time the principle of subsidizing or guaranteeing telegraphic lines on land.
"Her Majesty's Government are further of opinion that without a submarine Transatlantic telegraph the proposed line in America will be of comparatively small value to the Imperial Government, and that whenever a scheme of the former kind is renewed, it is almost certain that this country must be called upon to bear a much larger charge for it than that which it is now proposed to devolve upon the British Colonies in respect of the land-telegraph and communication.
"As Canada has offered to bear one-half of the proposed guarantee, the Duke of Newcastle is prepared to recommend, and his Grace has no doubt of ready acquiescence, that British Columbia and Vancouver Island shall pay the sum of L10,000 per annum, as their share of L20,000 (being at the rate of L4 per cent, on a capital of L500,000), to commence when the line is in working order.
"It will, however, be necessary, before any proposal is made officially to the Colonies, that the Duke of Newcastle should receive further details. It is requisite that his Grace should be informed what provision will be proposed as to the duration of this subsidy; what conditions as to the right of purchasing the line, and to what authorities that right should belong; and on what terms the whole arrangement may be revised in the event of the Hudson's Bay Company coming to any agreement for the sale of their territory.
"There will doubtless be other provisions which the Colonies will expect.
"I am, Sir, your obedient Servant,
"T. F. ELLIOT.
"E. W. WATKIN, Esq."
I close this narrative of the Pacific Transit Scheme with the despatch of the 1st May, 1863, which summarises the proposals made and generally concurred in. These long discussions were not abortive, for they led up to the great question of the buying out of the Hudson's Bay Company, without which neither successful Confederation, nor its child the Canadian Pacific Railway, would have been achieved in this generation.
"DOWNING STREET, "1_st May_, 1863.
"SIR,
"I am directed by the Duke of Newcastle to state that he has had much satisfaction in receiving your letter of the 28th ultimo, enclosing the heads of a proposal for establishing telegraphic and postal communication between Lake Superior and New Westminster, through the agency of the Atlantic and Pacific Transit and Telegraph Company. These proposals call for some observations from his Grace.