spatches, and especially that of the 15th of March, 1839, have pointed out very clearly many objects of great public utility, which he was unable to advance, in consequence of the restrictions under which the legislative powers confided to him and to the Special Council were exercised. To these your attention will of course be given. Much as the suspension of constitutional government in Lower Canada is to be regretted, it will not be without a very considerable compensation, if, during the interval, arrangements should be maturely and wisely made for securing to the people at large the benefit of those social institutions from which, in former times, the thoughts of the local legislature were diverted, by the controversies which then agitated the provincial society.

The establishment of Municipal Institutions for the management of all local affairs, will be among the most important of the subjects to which your attention will be called. On this subject I would refer you to the report of the Earl of Durham, and the Appendix marked C., by which it is accompanied. Althought the commissioners whom his Lordship appointed to investigate the question were unable, from the shortness of the time, to submit to him any conclusive recommendations respecting it, the informa. tion which they collected will prove of much advantage to you. On the importance of such institutions I need not enlarge. Your acquaintance with the system of municipal government in this country, will point out to you that there is no mode in which local affairs can be so properly administered, and that they form, at the same time, the most appropriate and effectual means of training the great body of the people to the higher branches of legislation.

The promotion of education among all classes of the people will also engage your earnest attention. On this subject I can add nothing to the information afforded by the reports of the Earl of Gosford, and his colleagues, and the Earl of Durham. It will afford Her Majesty's Government the most sincere satisfaction to co-operate with you in any measures which you may adopt for the furtherance of this important object.

In any view which can now be taken of the affairs of British North America, it is obvious that those of Upper Canada must occupy a very prominent place. I am persuaded that the zeal for the public good, and the superiority to considerations of a nature merely personal, by which the present Lieutenant-Governor has been distinguished during his long career of public service, will obviate the risk of any dissatisfaction being entertained by him, if you should find it necessary, for a time, to assume in person the administration of the government of Upper Canada, and during that period, to supersede him in the discharge of his functions. In the prosecution, therefore, of your endeavour to obtain as much agreement as possible in the plan to be hereafter submitted to the Imperial Parliament, you will not hesitate to repair to Toronto. When there, you would, of course, avail yourself of the experience which Sir George Arthur has acquired, and of the assistance which he will have both the ability and the disposition to afford you.

The first topic which will engage your attention in Upper Canada is the present financial state of the province. This has been most elaborately explained in the Lieutenant-Governor's recent despatches. Embarrassing as the immediate state of the question is, it is yet gratifying to learn from those communications, that the difficulties in which the provincial treasury is involved, originate in causes which do not affect the wealth or the ultimate resources of the province. Having undertaking great internal improvents, especially those of the Welland and Rideau canals, with inadequate resources, the works have been very imperfectly completed, and the returns are absorbed in a succession of repairs, which would not have been required if the canals had been originally formed with a greater command of capital. These works having also been effected by borrowed money, the loans have been raised at a higher rate of interest than would have been required if the credit of the province had not been diminished by the ab

1 These despatches are in Imperial Blue Books relating to Canada and in British Parliamentary Papers, 1839, Vol. XXXII; 1840, Vol. XXXI.

sorption of its revenues in such undertakings. Further, it appears that the provincial treasury might have been recruited with no perceptible addition to the public burdens, if it had been possible to increase, to a moderate extent, the duties of import on goods introduced for consumption. But, under the combined influence of these causes, the expenditure has at length far exceeded the receipt; and some measures for reinstating the provincial treasury in a secure condition have become indispensable.

Her Majesty's Government willingly acknowledge the great advantage which will arise from extending to Upper Canada such aid as the revenue of Great Britain could afford, consistently with a due regard to the interest of this kingdom, and of the other members of the empire at large. This is, however, a subject for distinct consideration. For the present I shall confine my attention to the remedial measures adopted by the local legislature in their last session.

Of these, the first was the raising a loan by Government debentures, which was sanctioned by a Bill, entitled “An Act to afford further facilities to negotiate debentures for the completion of certain works."

This Bill was reserved for the signification of Her Majesty's pleasure, and has been confirmed by the Queen in Council.

The second financial measure of the year was the enactment of a Bill, authorizing the issue of treasury notes to the amount of £250,000 sterling, for £1 each. This Bill has also been reserved for the signification of Her Majesty's pleasure. I regret to state that Her Majesty cannot be advised to confirm it. The issue of such an amount of small inconvertible paper money, as a resource for sustaining the public credit, is not to be justified even by the present exigency of public affairs. The effect of the measure on the currency and monetary transactions of Upper Canada, and on the value of private property throughout the province, must be such as to counterbalance any advantage which could be obtained from this temporary relief. If the credit of the country can be made available to sustain for a time the transactions of the local treasury in a less hazardous and objectionable form, you will accede to any plan of that nature. It is only as a temporary expedient that any such resource will be requisite; and it is of great importance to the future welfare of the province, that the scheme devised to meet the pressure of the passing day should not be such as to preclude the early return to a more salutary course of financial operations.

A third measure of the same general character has been adopted by the local legislature, to provide for the indemnity of the sufferers by hostile incursions from the United States. The Bill for this purpose, entitled "An Act to ascertain and provide for the payment of all just claims arising from the late rebellion and invasions of this province," has also been reserved for the signification of Her Majesty's pleasure. I fear that Her Majesty's assent to this Bill, in its present form, cannot be given. The objection is not to the measure itself, in the propriety of which Her Majesty's Government entirely concur; but we think it impossible to advise the Queen to assent to an Act, which, if so sanctioned, would, by the terms of the preamble, convey a pledge from Her Majesty that the charge of this indemnity should be ultimately borne by the British treasury. The principle involved in this declaration is of too much importance to be thus incidentally recognised, even supposing it to be right that it should be admitted at all. Neither could Her Majesty properly affirm, in so solemn a manner, her acquiescence in this claim on the revenue of this country, unless it had been previously sanctioned by Parliament,-a sanction which has not been, and which could not hitherto have been, obtained. If a similar Bill should be passed, with the omission of the preamble, you will readily concur in the enactment of it.'

The Legislature of Upper Canada have also passed a Bill, which has in like manner been reserved, for settling a civil list on Her Majesty in exchange for the Crown revenues of the province. It is with sincere

1 The Legislature of Canada passed an Act in its first Session dealing with Rebellion losses as far as the old Province of Upper Canada was concerned. For Lower Canada, see No. CLXV.

regret that I am compelled to announce that this is also a measure from which, in its present form, the assent of the Crown must be withheld. The effect of it is to exclude from the protection of the grant the clergy, who at present derive their maintenance from the Crown revenue, and of whom the great majority have resorted to Upper Canada on the assurance that their stipends would be thus secured to them. Now as this charge has been lawfully fixed upon the Crown revenue, and as the Crown has no other resource from which it could be paid, it is impossible to accept the proposed civil list on such terms. Anxious as Her Majesty's Government are to defer to the representatives of the people of Upper Canada in all matters connected with the internal government of that province, they cannot consent to a measure which would practically involve a violation of the pledged faith of the Crown. We cannot decline the obligation of maintaining the rights of the clergy in question; and I can only express my hope that the local legislature may concur with the Ministers of the Crown as to the propriety of re-enacting this Bill, with the addition of the charge necessary for the maintenance of those rights. The burthen will cease with the lives of the present incumbents, and is now in the course of a progressive diminution.

The last of the reserved Bills of the late Session has reference to the long controverted subject of the clergy reserves. To this Bill the Royal assent could not have lawfully been given, until it had been laid for 30 days before either House of Parliament. It was not until the 15th August that I received from the Lieutenant-Governor the document necessary to enable me to fulfil the requisition of the Constitutional Act of 1791. It was, therefore, impossible that the Bill should be finally enacted by the Queen in Council until after the commencement of the Parliamentary Session of 1840. But had this difficulty not arisen, there were other motives which would have effectually prevented the acceptance of this measure by Her Majesty. Parliament delegated to the local legislature the right of appropriating the clergy reserves, and the effect of the Bill is to retransfer this duty from the local legislature to Parliament, with a particular restriction. I am advised by the law officers of the Crown that this is an unconstitutional proceeding. It is certainly unusual and inconvenient. Her Majesty cannot assume that Parliament will accept this delegated office, and if it should not be so accepted the confirmation of the Bill would be productive of serious prejudice, and of no substantial advantage. It would postpone indefinitely the settlement of a question which it much concerns the welfare of the provinces to bring to a close; besides I cannot admit that there exist in this country greater facilities than in Upper Canada for the adjustment of this controversy; on the contrary, the provincial legislature will bring to the decision of it an extent of accurate information as to the wants and general opinions of society in that country, in which Parliament is unavoidably deficient. For all these reasons Her Majesty will decline to give her assent to this Bill.1

I have thus adverted to the principal topics which will engage your attention as Governor-General of British North America, in reference to the two Canadas, omitting many minor questions which will form the subject of future correspondence, and passing by for the present all that relates to the affairs of New Brunswick, Nova Scotia, and Prince Edward Island. I reserve these for consideration hereafter.

Finally, I am commanded to direct that in all the provinces of British North America you will inculcate upon the minds of The Queen's subjects 3 Her Majesty's fixed determination to maintain the connexion now subsisting between them and the United Kingdom, and to exercise the high

1 In 1853 the British Parliament recognized that the Parliament of Canada had the right to settle the question of the Clergy Reserves, provided that respect was given to all vested interests. In 1854, the Canadian Parliament passed a measure (18 Victoria, c. 2), under the guidance of Attorney-General John A. Macdonald, by which the existing claims of the clergy were made a first charge on the funds, the balance being divided among the municipalities according to population. (See Legislative Assembly Journals, Canada, 1854-5, pp. 193 ff.)

sorption of its revenues in such undertakings. Further, it appears that the provincial treasury might have been recruited with no perceptible addition to the public burdens, if it had been possible to increase, to a moderate extent, the duties of import on goods introduced for consumption. But, under the combined influence of these causes, the expenditure has at length far exceeded the receipt; and some measures for reinstating the provincial treasury in a secure condition have become indispensable.

Her Majesty's Government willingly acknowledge the great advantage which will arise from extending to Upper Canada such aid as the revenue of Great Britain could afford, consistently with a due regard to the interest of this kingdom, and of the other members of the empire at large. This is, however, a subject for distinct consideration. For the present I shall confine my attention to the remedial measures adopted by the local legislature in their last session.

Of these, the first was the raising a loan by Government debentures, which was sanctioned by a Bill, entitled “An Act to afford further facilities to negotiate debentures for the completion of certain works."

This Bill was reserved for the signification of Her Majesty's pleasure, and has been confirmed by the Queen in Council.

The second financial measure of the year was the enactment of a Bill, authorizing the issue of treasury notes to the amount of £250,000 sterling, for £1 each. This Bill has also been reserved for the signification of Her Majesty's pleasure. I regret to state that Her Majesty cannot be advised to confirm it. The issue of such an amount of small inconvertible paper money, as a resource for sustaining the public credit, is not to be justified even by the present exigency of public affairs. The effect of the measure on the currency and monetary transactions of Upper Canada, and on the value of private property throughout the province, must be such as to counterbalance any advantage which could be obtained from this temporary relief. If the credit of the country can be made available to sustain for a time the transactions of the local treasury in a less hazardous and objectionable form, you will accede to any plan of that nature. It is only as a temporary expedient that any such resource will be requisite; and it is of great importance to the future welfare of the province, that the scheme devised to meet the pressure of the passing day should not be such as to preclude the early return to a more salutary course of financial operations.

A third measure of the same general character has been adopted by the local legislature, to provide for the indemnity of the sufferers by hostile incursions from the United States. The Bill for this purpose, entitled "An Act to ascertain and provide for the payment of all just claims arising from the late rebellion and invasions of this province," has also been reserved for the signification of Her Majesty's pleasure. I fear that Her Majesty's assent to this Bill, in its present form, cannot be given. The objection is not to the measure itself, in the propriety of which Her Majesty's Government entirely concur; but we think it impossible to advise the Queen to assent to an Act, which, if so sanctioned, would, by the terms of the preamble, convey a pledge from Her Majesty that the charge of this indemnity should be ultimately borne by the British treasury. The principle involved in this declaration is of too much importance to be thus incidentally recognised, even supposing it to be right that it should be admitted at all. Neither could Her Majesty properly affirm, in so solemn a manner, her acquiescence in this claim on the revenue of this country, unless it had been previously sanctioned by Parliament,-a sanction which has not been, and which could not hitherto have been, obtained. If a similar Bill should be passed, with the omission of the preamble, you will readily concur in the enactment of it.1

The Legislature of Upper Canada have also passed a Bill, which has in like manner been reserved, for settling a civil list on Her Majesty in exchange for the Crown revenues of the province. It is with sincere

1 The Legislature of Canada passed an Act in its first Session dealing with Rebellion losses as far as the old Province of Upper Canada was concerned. For Lower Canada, see No. CLXV.

regret that I am compelled to announce that this is also a measure from which, in its present form, the assent of the Crown must be withheld. The effect of it is to exclude from the protection of the grant the clergy, who at present derive their maintenance from the Crown revenue, and of whom the great majority have resorted to Upper Canada on the assurance that their stipends would be thus secured to them. Now as this charge has been lawfully fixed upon the Crown revenue, and as the Crown has no other resource from which it could be paid, it is impossible to accept the proposed civil list on such terms. Anxious as Her Majesty's Government are to defer to the representatives of the people of Upper Canada in all matters connected with the internal government of that province, they cannot consent to a measure which would practically involve a violation of the pledged faith of the Crown. We cannot decline the obligation of maintaining the rights of the clergy in question; and I can only express my hope that the local legislature may concur with the Ministers of the Crown as to the propriety of re-enacting this Bill, with the addition of the charge necessary for the maintenance of those rights. The burthen will cease with the lives of the present incumbents, and is now in the course of a progressive diminution.

The last of the reserved Bills of the late Session has reference to the long controverted subject of the clergy reserves. To this Bill the Royal assent could not have lawfully been given, until it had been laid for 30 days before either House of Parliament. It was not until the 15th August that I received from the Lieutenant-Governor the document necessary to enable me to fulfil the requisition of the Constitutional Act of 1791. It was, therefore, impossible that the Bill should be finally enacted by the Queen in Council until after the commencement of the Parliamentary Session of 1840. But had this difficulty not arisen, there were other motives which would have effectually prevented the acceptance of this measure by Her Majesty. Parliament delegated to the local legislature the right of appropriating the clergy reserves, and the effect of the Bill is to retransfer this duty from the local legislature to Parliament, with a particular restriction. I am advised by the law officers of the Crown that this is an unconstitutional proceeding. It is certainly unusual and inconvenient. Her Majesty cannot assume that Parliament will accept this delegated office, and if it F should not be so accepted the confirmation of the Bill would be productive of serious prejudice, and of no substantial advantage. It would postpone indefinitely the settlement of a question which it much concerns the welfare of the provinces to bring to a close; besides I cannot admit that there exist in this country greater facilities than in Upper Canada for the adjustment of this controversy; on the contrary, the provincial legislature will bring to the decision of it an extent of accurate information as to the wants and general opinions of society in that country, in which Parliament is unavoidably deficient. For all these reasons Her Majesty will decline to give her assent to this Bill.'

I have thus adverted to the principal topics which will engage your attention as Governor-General of British North America, in reference to the two Canadas, omitting many minor questions which will form the subject of future correspondence, and passing by for the present all that relates to the affairs of New Brunswick, Nova Scotia, and Prince Edward Island. I reserve these for consideration hereafter.

Finally, I am commanded to direct that in all the provinces of British North America you will inculcate upon the minds of The Queen's subjects Her Majesty's fixed determination to maintain the connexion now subsisting between them and the United Kingdom, and to exercise the high

In 1853 the British Parliament recognized that the Parliament of Canada had the right to settle the question of the Clergy Reserves, provided that respect was given to all vested interests. In 1854, the Canadian Parliament passed a measure (18 Victoria, c. 2), under the guidance of Attorney-General John A. Macdonald, by which the existing claims of the clergy were made a first charge on the funds, the balance being divided among the municipalities according to population. (See Legislative Assembly Journals, Canada, 1854-5, pp. 193 ff.)