The matter was regarded as so far concluded that on July 9 a meeting took place between the Canadian representatives and the officials of the treasury and post office, the details of the scheme were reduced to writing, and the secretary of the post office received the approval of a communication to the postmaster general of the United States informing him of the arrangement, and that thereafter the Canadian ships would be considered as British and not as United States packets.
Considering the arrangements as completed, Smith and Galt decided to return to Canada, and on the 11th they called on Palmerston for the purpose of taking their leave, when, to their utter stupefaction, they were informed that the government peremptorily refused to sanction the transfer.
The reasons put forward for this unusual action on the part of the government lacked even the merit of plausibility. It was first argued that the Lever contract contemplated the grant of £78,000 a year for a fortnightly service from Galway, in addition to all the ocean service which might be existing, while the transfer would have the effect of substituting the Galway service for one of the existing services, and thus continuing the charge of £78,000 a year with a positive diminution of public accommodation.
Smith had a conclusive reply to this argument. He pointed out that at the time the Galway contract was entered into, that is on May 21, 1859, the Canadian service was only fortnightly; and the arrangement for which the sanction of the government was sought would have given exactly the accommodation contemplated when the contract was given—a weekly service between Ireland and America.
As for the modifications in the contract, which formed part of the ground of the government's refusal to sanction it, the first was that "the arrangement transferred the contract to a party of undoubted, from one of questioned, solvency." Smith's only comment on this was to complete the sentence by adding "or in other words would ensure its performance efficiently."
The only other important modification sought by Canada in the terms of the contract was the substitution of Canadian for United States terminal ports in America. Apart from the slight to Canadian interests involved in putting forward such a reason, it must be clear that the Cunard line, in which the British government did not conceal its interest, would have been benefited and not injured by the withdrawal of a line running to United States ports. Smith concluded his protest by pointing out the distinction which the Canadian people could not fail to draw in comparing Palmerston's refusal, with that of previous governments.
The grants to the Cunard and Galway lines were stated to have been made in ignorance of the Canadian interests, and the inability of the government to remedy these and other evils was deplored. In the case under consideration the British government, Smith pointed out, deliberately opposed themselves to that which would have benefited Canada, and had determined that the competition of which they complained should be maintained. The protest was quite without avail. The Galway Company entered on the performance of its contract, but its service was marked with so much irregularity, that the postmaster general was compelled to cancel it.
FOOTNOTES:
[296] First report of select committee on packet and telegraphic contracts, May 1860 (Br. Parl. Papers, No. 328).
[297] Report of P.M.G. of United Kingdom, 1855.