Sidney Smith, the postmaster general of Canada, was of the opinion that the Canadian line would be found the preferable one during all seasons, particularly for those parts of the United States bordering on the Great Lakes, as they were brought into direct connection with the ocean at Quebec by means of the Grand Trunk railway.
As an additional attraction to use the Canadian line, Smith offered to reduce the charge for sea postage, that is, the portion of the total postage between Great Britain and North America, which was allocated to the ocean conveyance, from eightpence to fourpence a letter. This would enable the public on both sides of the Atlantic to send their letters for eightpence instead of twelvepence.
On consideration of this proposition by the governments of Great Britain and the United States, it was found open to the objection that the postage of letters carried by the Cunard line must remain at one shilling, owing to the sea postage claimed by the British government on letters carried by that line. Until arrangements could be made between the British government and that of the United States by which the charge on letters passing between the two countries by the Cunard line could be reduced from one shilling to eightpence, it was deemed inadmissible to accept the Canadian proposition.
That seemed a reasonable decision, and it would have been supposed that until the Canadian proposition could be accepted the amount of sea postage paid for the Cunard service would be applied to the Canadian service.
The British post office took no such view. It maintained that the Canadian post office was entitled to no more than the rate which it offered to accept, viz., fourpence, and as this rate added to the land postage in Great Britain and the United States, would only call for an eightpenny postage, it proposed that the difference between the eightpence and the shilling, which the public were actually charged, should be divided equally between the post offices of Great Britain, the United States and Canada.
Smith protested that his proposition was part of the scheme to reduce the postage from a shilling to eightpence sea postage, and that until the reduction of the postage between Canada and Great Britain to eightpence was affected, the Canadian government were entitled to eightpence sea postage as much as the British government were for the letters carried by the Cunards.
Alexander Tulloch Galt, inspector general of Canada, who was in London at the time, laid the whole case before the colonial secretary, pointing out that the attitude of Great Britain, in attempting to make the United States a party to the scheme to force Canada to take one-half the amount for sea postage that was claimed by and conceded to the United States and Great Britain in respect to their subsidized lines, was the more objectionable, as there was no reason for believing that the United States had attached any such stipulation to their consent to use the Canadian line.
Galt's remonstrance had the effect of inducing the British government to withdraw from its untenable position in this instance. In the course of his communication Galt mentioned the disappointment with which it was learned in Canada that the Cunard contract, which would not have expired until January, 1862, had been renewed in June 1858.
This action on the part of the British government, Galt insisted, did not seem consistent with the assurance given by the colonial secretary to the governor general in December 1856, when he wrote that the lords of the treasury had apprised him "that the existing arrangements with respect to the Canadian mail service will continue until the expiration of the Cunard contract, when they hope arrangements may be affected more in conformity with what they would regard as an equitable consideration for the finances of this country."
The Canadian legislature on the first opportunity, voted an address to the queen, expostulating strongly against the course of proceedings so injurious to the interests of Canada.