of Canada; but it must not be forgotten that, in return for that co-operation, they had consented to a certain financial operation which added considerably to the price this country would have to pay for the Treaty. This country was, in fact, about to undertake the hazardous guarantee of a large sum the Dominion was to borrow. He regretted that the noble Earl (the Earl of Kimberley) had not consented to wait and submit this important measure to a fuller House, when it could have been more carefully gone into; but it was certainly consolatory to think that, however badly the interests of England might have been looked after by the Government in the proceedings of which this Bill was the crown, that they had been attended with no diminution of the good feeling which existed, and he hoped would always exist, between Canada and this country.

Before the end of the year, another item was added to the catalogue of disappointments which had followed our negotiations with the United States. In order to explain this, it is necessary to revert to the Treaty of Washington of the 15th June, 1846, commonly called Lord Ashburton's Treaty, although in fact the particular question was not included in those settled by his Lordship. The Treaty of Ghent had made the parallel of 49° N. the boundary-line between the two countries as far as the Pacific. Opposite the sea termination of this line lay Vancouver's Island, recognized as a British possession. At the date of this Treaty, the portion of North-western America adjacent to the line was altogether uninhabited by settled colonists; but as far as British dominion extended, it was held under a terminable lease by the Hudson's Bay Company, and used only by hunters and fishermen under its control, in common with numerous tribes of Indians. The Treaty provided that the line of the 49th parallel, "should be continued to the middle of the channel which separates the continent from Vancouver's Island, and thence southerly through the middle of the said channel and of Fuca Straits to the Pacific Ocean."

The negotiators would seem to have been either ignorant or neglectful of the fact that in the very middle of the channel thus defined lay the Island of San Juan, somewhat larger than the Isle of Wight, together with several smaller islets. The question, of course, immediately arose, to whom this island should belong. The English contended that the Rosario Straits between San Juan and the continent, must have been intended. The Americans maintained that the strait called De Arro or De Haro, between San Juan and Vancouver, was really meant. It was obvious to any impartial observer, that neither party could be strictly in the right, the actual state of facts not corresponding with that assumed by the negotiators; that the description, if construed by legal rules,' would be held "void for uncertainty," and that the only peaceful course open was that of compromise. But, as usual in such controversies, each party contended for the letter of its own interpretation, and much argument was spent over a question really unsusceptible of it.

The matter, however, might have remained for future generations to settle, had it not been for two circumstances. One of these was the attempt of General Harney, a United States' officer, to carry the point by a coup de main, through the occupation of San Juan in 1851 by an armed force. The Americans afterwards withdrew this unjustifiable step, and a joint occupation was agreed on. Subsequently to this came the colonization of Vancouvers' Island, which, with its magnificent harbour and its natural productions, bid fair to become a valuable British possession; and that of British Columbia on the mainland opposite, together with the gold discoveries within its limits. It now became of material importance to settle the pending dispute, for it was apprehended, on the part of Great Britain, that the possession of San Juan by the Americans would seriously menace the capital of Vancouvers' Island, and interfere with our maritime traffic within the channel; and the Americans were of course equally anxious to secure such an advantage.

Accordingly, by the 34th article of the Treaty of 1871, it was determined that "the respective claims of the two Governments should be submitted to the arbitration and award of the Emperor of Germany, who should decide thereupon, finally and without appeal, which of these claims is most in accordance with the true interpretation of the Treaty of June 15, 1846." It has been made a subject of accusation in this country, against the managers from time to time of our foreign policy, that no opening was left for the compromise of any portion of our original claim. Admiral Prevost, when on a boundary commission in 1856, is said to have offered the American Government a line running between the island of San Juan and that of Oreas, by way of satisfying both parties. But as no official papers on this subject have been as yet made public, we content ourselves with stating the substance of the Emperor's award, made in December this year, which was unreservedly in favour of the American claim.

CHAPTER V.

New Commercial Treaty with France-Strikes-Agricultural Strike-Builders', Police, Gas Strike-Severe Measures in connexion with the latter-The Public Revenue and Money Market-Rise of prices-Elections after the SessionBelfast Riots-Speeches of Members of Parliament, Mr. Lowe, Mr. GoschenChanges in the Ministry-Mr. Childers appointed Chancellor of the DuchySir Roundell Palmer becomes Lord Chancellor-The Athanasian Creed-Dean Stanley's Speech-Speech of Mr. Gladstone at Liverpool-Colonial AffairsMurder of Lord Mayo-Appointment of Lord Napier-The Diamond Fields of South Africa-First responsible Ministry at the Cape.

IN the month of February, with the approbation of the great mass of the French nation, the French Government gave England notice

of the termination of the Commercial Treaty of 1860; a step for which previous discussions had paved the way. "We long hoped," wrote M. de Remusat in his despatch to the Duc de Broglie, the French Ambassador at this Court, " to avoid this denunciation: we feared that it might be looked upon as the commencement of a commercial revolution; that it might cause too sudden a disturbance in interests based on the faith of former Conventions; lastly, that it might become to prejudiced minds a token of a coolness between two countries moved only by a desire for constant agreement and mutual understanding. But the declarations of the Government of the Queen entirely reassure us. We read in the despatch which is communicated to us, that if it regards the denunciation of the Treaty as a step towards its definitive extinction, it nevertheless does not look upon it as a bar to future negotiations. We also read that, whatever the result of the discussion may be, England will strive to prevent any alteration in the cordiality of the relations between the two countries; and, finally, although she has no intention of entering upon a war of tariffs, she, like ourselves, would attach much value to the recovery of her fiscal freedom.

"These are our sentiments. For us, in effect, fiscal freedom would be very precious, even necessary, at a time when we should require all our resources to meet extraordinary burdens. It is this consideration, above all, that would make us desirous to be freed from the restrictions which a series of Commercial Conventions has imposed, as regards us, on the right of taxation which every nation possesses over itself. It is in order to extricate ourselves from this kind of helplessness that we are led to place a limit, as soon as we have the power of doing so, to the engagements which are the result for us of numerous Treaties of Commerce. The one which binds us to Great Britain is the first which has arrived at a term when it can be regularly annulled. We can no longer even reckon with any certainty on the possibility of modifications which would be necessary We are, therefore, obliged to prepare for its cessation by denouncing it now. Confident in our intentions, resolved to use only with great moderation the freedom which will be restored to us, either by negotiations of new Conventions, or rather by our own legislation on our commercial régime, we have taken this step under the pressure of a public interest which cannot be misunderstood. Will you, therefore, M. l'Ambassadeur, make known to the Principal Secretary of State of her Britannic Majesty, that in our opinion the operation of the Treaty of January 23, 1860, will expire in one year from the day on which you announce to him our intentions. You will inform us immediately of the fact, in order that it may be communicated in the proper manner to the trading and industrial communities."

to us.

By this act France became free to take any financial course she pleased. She might be as Protectionist as she liked, without fear of reprisals on the part of England. The great mass of the French nation have always been bigoted Protectionists, deeply imbued with

commercial prejudices against England. Their fixed idea of a Commercial Treaty is that of a compact in which one party gains something at the expense of the other; of international trade, that one side loses what the other gains. The Treaty with England was, in their eyes, a bargain by which England gained much which France lost. M. Thiers himself, thoroughly imbued with the Protectionist fallacies, held the same opinions. He and they looked forward to undoing all the evil which they believed had been inflicted by the Treaty by a course of Protectionist legislation. The French Government at once set about doing so. The Minister of Finance, M. Pouyer-Quertier, one of the largest cotton manufacturers in France, a zealous adherent of the same doctrines, looked forward to be amply recouped for his leader's duties on raw materials, by the exclusion of English manufactured cottons from the French markets.

Their scheme was complete. The agricultural interest was to be propitiated by duties on raw materials-cotton, silk, wool, hides, &c. The manufacturers to be reconciled to these duties by heavy import duties on all manufactured goods; the mercantile and shipping interest of the French sea-ports, whose trade would be injured by the check given to commerce by protective duties, to be mollified by heavy protective duties on foreign shipping (surtaxe de pavillon), and thus all classes were to be compensated except that uncomplaining race, the general mass of consumers, who were to be told to attribute all the increased prices to the Prussians.

The opposition raised by England to the commercial measures of the French Assembly, had less for its object to protect her own immediate material interests, than to assert a principle of political economy upon which, for many years, her commercial and industrial system has been based. She refused to countenance any attempts to return, under the pretext of taxing raw materials, to the old system of Protection. If at the commencement of the negotiations relating to the new tariffs, and the new duties of import and export, the French Government had made known the amount of the import tax which it intended to lay on raw materials, and if that amount had not exceeded the amount voted in the last resort by the National Assembly, many people believed that England would at once have submitted to what she would have looked upon as a fiscal necessity, and that the commercial relations between the two countries would never have been on the point of being profoundly disturbed. But at the outset the English Government endeavoured to ascertain the exact amount of the import tax which it was intended to lay on raw materials, but found it impossible to obtain this information. The English Ambassador passed an evening with the then Minister of Finance, and in the course of a conversation, which lasted four hours, the Minister either could not or would not state what would be the amount of the import tax on raw materials. It is, therefore, easy to understand why the English Government distrusted the financial 'policy of the French, especially as M. Thiers, who all his life had been an avowed Protectionist, had not then let fall a word from which

it could be inferred that he had in the slightest degree modified his views. Some time after appeared the project of M. Pouyer-Quertier, which laid before the public the amount of the tax proposed by the Minister of Finance. Raw materials were taxed from 12 to 15 and 20 per cent.; the drawback was replaced on most of the materials newly taxed; in a word, all that formidable machinery was set up again with which the partisans of thoroughpaced Protection have resisted Free Trade, and that" wall of China" rebuilt which is so effective a barrier between national industry and the contact of progress. At the same time the French Government firmly persisted in maintaining the vexatious differential duties on British shipping, against which Lord Granville never ceased to protest since they were first levied under a law of the 2nd of February. Some arbitrary proceedings of the French Custom-house also gave rise to serious complaints, indicating, as they did, a disposition to strain the spirit, if not to violate the letter, of the stillexisting Treaty. Fortunately, meanwhile, for the maintenance of amicable relations, the scheme of the French Government broke down in the working.

The great mass of French manufacturers, great part of whose trade was export, protested that duties on raw materials would ruin their export trade, which would not be aided by duties on manufactured goods entering France. Drawbacks on export were proposed, but found impracticable and useless. They also found the surtaxe de pavillon, which enhanced freights on raw material, as burden they could not bear, while the ports which were to have been conciliated by the protection to French shipping were even the loudest in their protests against it. The small quantity of French shipping indeed got increased freights, but the whole trade of the ports was injured, and by a curious irony of fate German shipping, which is under "the most favoured nation" clause, profited by the penalties imposed on the flags of other nations.

The fall of M. Pouyer-Quertier paved the way for a new understanding, and allowed the Assembly to abandon the heavy taxes proposed in his scheme, and to vote taxes too moderate to be fairly regarded as a move backwards in the direction of Protection. Negotiations were opened for a new Treaty. Under the heavy pressure of the fiscal necessities of France, England conceded the point of a reduced tax on raw materials, but only on the condition that the French Government should cease to appear as the partisan of Protection, and that England should feel there would be no return to an exploded policy in which she could never consent to participate, could she agree to assist the efforts of France to repair the losses of the war. M. Thiers did not hesitate to reduce to the lowest possible proportions the figures of the new tariff, nor did he fear to authorize the negotiators of the new Treaty to give a formal assurance that he was acting entirely and solely under the pressure of fiscal necessities, and was perfectly free from any Protectionist afterthought. The following were to be the main conditions of settlement:-" The