Tennent to Merivale (Permanent Under-Secretary)

I am directed by the Lords of the Committee of Privy Council for
Trade to acknowledge the receipt of your letter of the 9th
Instant

transmitting for their information, by direction of Secretary Sir E.B. Lytton, a copy of a correspondence between the Colonial and Foreign
Departments with reference to the questions submitted in my letter to you
of the 18th September
last

on the subject of the disadvantageous position of British Ships in the
trade of British Columbia.

In commenting on the views of this Board conveyed in the above
letter My Lords observe that Sir E. Lytton states that he is not prepared
to recommend the surrender of the Coasting Trade of British Columbia as a
basis for renewed negotiations with the United States for a relaxation of
their prohibitory system, such a measure demanding, as he conceives,
"careful consideration not only in its relation to the interests of
British Commerce but especially as to its effects upon the future
progress and welfare of the Colony." But they observe that in a
subsequent part of Mr Elliot's letter to Mr
Hammond,

Sir E. Lytton objects to the policy of excluding Americans from the trade
between Vancouver's Island and British Columbia by rendering that trade a
Coasting Trade on the ground that "such a policy would be a return to the
old system of encouraging the British Shipowner by throwing difficulties
in the way of the Americans and would injure the Colonists by depriving
them of the advantages in the purchase of their commodities which they
would derive from the employment of American Shipping."

My Lords would only observe on this apparently conflicting
opinion

*

that considering that not only are United States Ships already in
practical possession of this trade but that British Ships are, for the
reasons pointed out in my letter of the 18th September, unable to
enter upon it under equal conditions. My Lords are at a loss to perceive
in what respects either British or Colonial interests could suffer by a
measure which would obtain for British Shipping access to a valuable
trade from which it is now excluded in return for the legal admission of
United States' Ships to a trade of which by license they already absorb
the principal share.

Sir E.B. Lytton appears to have misapprehended the views of this
Board with regard to the measures of retaliation to which I adverted in
my letter of the 18th September. My Lords in that letter did not
recommend, as is implied in Mr Elliot's letter to Mr Hammond,
that in the event of the Government of the United States refusing to
relax their present system, United States' Ships should be excluded from
the trade between Frazer's River and British Columbia; but they expressed
the opinion that it would be desirable that the Government of the United
States should be made aware of the provisions of British Law, which
render such an exclusion possible under certain contingencies. The
probability to which Sir E. Lytton adverts of the future union of the two
Provinces on grounds of general policy, appears to them to afford
additional reasons for the course which they indicated—as such a measure
would ipso facto occasion the exclusion of United States' Ships
from this trade and consequently afford to Her Majesty's Government a
legitimate argument in urging on the Government of the United States the
wisdom of securing themselves now against the possibility of such a
future result.

In conclusion I am to request that you will state to Sir E.B. Lytton
that the answer of the United States' Government in 1852 to a
representation from Her Majesty's Minister at Washington on the subject
of a proposed partial relaxation of their laws in regard to the Coasting
Trade, which is referred to in Mr Hammond's letter to Mr Merivale

does not appear to My Lords to afford adequate grounds for abstaining
from a renewal of similar proposals. Supposing that the article of the
Federal Constitution referred to upon that occasion is inconsistent with
the partial measure of reciprocity suggested in my letter of the 18th
September, it is competent for Congress, under Article V of the
Constitution, to make any modification of that article which is agreed
upon by two thirds of both Houses.

If the Government of the United States were to find Congress
indisposed to resort to this measure, it seems not improbable that the
discussion of the question might lead to a general relaxation of the
Coasting Trade Laws of the Union as a safer and more convenient
alternative.