No. 12

I have the honor to forward for Your Lordship's information a
copy of correspondence which has passed between Lord Lisgar and
myself, partly by telegraph, respecting certain resolutions of
the Legislative Council proposing modifications of the present
British Columbian Tariff in lieu of the adoption of the Canadian
Schedule of Duties upon the Union of this Colony with the
Dominion.

2. By the terms of Union arranged with the Government of Canada
it is agreed that the existing Tariff and Excise Duties of
British Columbia shall continue in force until the proposed
Railway from the Pacific Coast and the system of Railways in
Canada shall be connected, unless the Legislature of British
Columbia should sooner decide to accept the Tariff and Excise
Laws of Canada. If the alternative is strictly limited to this
option, the decision of the majority will be in favor of the
Canadian Tariff, which on most Articles of general consumption
is much lower than the scale of duties now collected here. I
enclose for Your Lordship's information a Comparative Statement
of the two Schedules.

3. A large and influential section of the Community and the
Council, however, dread the effect of the Canadian Tariff and
Excise Laws upon the Agricultural and Manufacturing interests of
the Colony. The chief objection to that Tariff is the low scale
of duties levied upon Cereals. Flour being admitted at a very
low rate of duty it is alleged that the erection of Mills and
the establishment and development of an important branch of
Industry will be prevented; and that, in the absence of Mills,
Wheat will not be grown.

4. The Excise Laws of Canada will it is feared bear hardly upon
the Brewers who are at present exempt from any duty, in which
case it is said a smaller quantity of Barley will be grown and
thus both Brewers and Farmers would suffer.

5. The great difference in the rates of duty on Spirits in the
two Tariffs is one main inducement to the advocates of the
Canadian scale to press for its adoption. It is sought
therefore to effect a compromise, by which, certain alterations
being made on specified Articles, the remainder of the present
British Columbian Tariff may, at all events for the present, be
retained, and with it our own Excise Law which only applies to
Distilleries.

6. The Council accordingly propose to the Canadian Government
that the duty on Spirits shall be reduced to the Canadian rate,
viz: Eighty cents, per Gallon; the duty on Flour to seventy-five
cents per barrel; (present British Columbia rate One Dollar and
Fifty Cents) and the duty on Wheat to Ten cents per bushel,
(present British Columbia rate Thirty-five Cents per hundred
pounds). And that British Columbia shall enter the Union with
her own Tariff so amended. The rates thus proposed are in no
case lower than those which would be adopted in the Canadian
Tariff so that Canada would suffer no pecuniary loss; and if
British Columbia may at all be allowed to retain for a time a
scale of duties different from that prevailing in the Dominion,
I do not see that the changes which are desired are
objectionable in principle.

7. Supposing the Canadian Government to assent to this proposal
time will not be afforded to make the alteration in the present
Session of the Legislature of this Colony, which will be the
last before Union; and the Attorney General doubts the
competency of that body to make any such alteration after assent
to the terms of Union, having reference to the language of the
agreement there embodied. But by consent of both parties
concerned what is desired may be obtained. And it is submitted
that if the Canadian Parliament assent to the proposal and such
assent is embodied in their Address to the Queen, reciting the
Resolution of the British Columbian Legislature to which assent
is given, the arrangement may then be carried into effect by
Order of the Queen in Council declaring the Union of this
Province with the Dominion.

8. As I have stated in my Despatch to Lord Lisgar, Mr Trutch,
who has already proceeded on his way to Canada, has been
instructed to afford all necessary information to the Canadian
Government, and on his arrival in London he will be able to
acquaint Your Lordship with the result of the negotiations upon
this subject.

9. I have succeeded in separating the acceptance of the terms,
from any questions upon this matter. And in the event of the
Government of Canada declining to meet the wishes of the
Council, they are prepared to enter the Union with our own
Tariff as it stands under the Agreement in the terms of the
Address.