"The system of making the pay of officers (of the upper grade) dependent on the success of the business, has worked well, and might be advantageously continued, in a modified form, to be hereafter noticed.

"The duties of the officers of the proposed reduced staff would be adapted to the existing distribution of the territory into departments and districts, which are as follows:--

"There are four main divisions--the Northern, Southern, Western, and Montreal Departments, roughly bounded as follows:--the 'Western'

embraces all the country west of the Rocky Mountains; the 'Northern' is composed of the country east of the mountains, as far as Lake Winnipeg and Lac la Pluie, and from the American frontier to the Arctic Sea; the 'Southern' embraces the southern and eastern sh.o.r.es of Hudson's Bay; and the 'Montreal' extends from Lake Superior down the Gulf of St.

Lawrence to Labrador. These departments are divided into districts, and in each district are several posts. The limits of districts are fixed by local peculiarities; but commonly embrace some large river, on which the various stations are planted--such, for example, as the McKenzie and the Saskatchewan. There are twenty-three districts on the east side of the mountains; to the west such subdivision of the business is now scarcely practicable, and is being abandoned. To proceed to the duties of the officers.

"The Governor-in-Chief would fulfil his present large functions, and be the medium of communication between the Company and their officers in the country.

"Under the present system the Governor is supposed to maintain a personal supervision of the whole service. This is practically impossible, the country being too large to enable him to travel over more than a limited section of it in each season. To relieve him of that heavy duty, and at the same time to maintain a real and close personal inspection, one of the four councillors might be stationed in each department, of which, in the absence of the Governor, he would be the chief officer, and held responsible for all local details, and the various posts in which he should periodically inspect and report upon.

Once, or oftener, in each year, a meeting of the Governor and the four councillors should be held, at any time or place most convenient--say, Fort Garry, Montreal, or elsewhere. Aided by such a council, the Governor would be accurately informed as to details in every part of the country, and able to deal satisfactorily with all local questions.

"The duty of the Lieutenant-Governor would be to relieve the Governor- in-Chief of some share of his labours, and to act in his absence as President of Council.

"The chief traders would, as a general rule, be placed at the head of districts, and the clerks in charge of posts.

"The very efficient cla.s.s of officers known as 'postmasters' would remain as at present. They are usually men who have risen from the ranks from merit; and, being good interpreters, and Indian traders, are commonly placed in charge of small posts. Their scale of pay is rather less than that of clerks, and they are rarely advanced to any higher rank; indeed, their ambition is satisfied when they are made postmasters.

"Reverting to the mode of paying officers, and making their incomes to some extent dependent on the success of the business, it might answer to give them an interest as stockholders. Instead of paying a chief trader 300_l_. per annum, he might have 250_l_., and a sum of 1,000_l_. of stock placed to his credit, of which he would receive the dividends only, the stock itself reverting to the Company when his connection with them terminated.

"A councillor might have 700_l_. pay and the dividends on 2,000_l_. stock. It would also be a great encouragement to the officers, and secure prolonged service, to give them an annual increase of stock--say, 200_l_. to be added for every year's service. Thus, if a man did not get as early promotion as he expected, he would still benefit by length of service.

"The principle of retired interests might be maintained, by allowing the officers to receive the dividends on the stock they held at retirement for--say, seven or ten years, before it reverted to the Company.

"To carry out these arrangements, it would be necessary to set aside in trust about 150,000_l_. stock. But the Company would lose nothing by it, as they would save in salaries what they gave in dividends.

"At the outset only 35,000_l_. of the stock would be called for, with an increase of 5,400_l_. per annum. Even allowing for a considerable retired list, it is doubtful if the whole 150,000_l_.

would ever be appropriated; and of course the dividends on whatever portion was not appropriated would revert to the Company.

"In the revision of the deed poll, it would be essential to retain the clauses which secure to the Company the right to place officers on the retired list, and to dismiss them for misconduct.

"The mode of keeping the accounts, both in London and in the country, is one of much importance, requiring early consideration. At present there are no accounts, properly speaking, kept at the posts; and very great delay occurs in ascertaining the results of the business from London. It is essential to introduce some system of a.n.a.lysed post accounts, which should keep the Governor and his Council fully informed of the state of the business at every post, and by which they might judge of the management of the officers in charge. There is now no practical check on extravagance or dishonesty, except that arising from the upright principles of the officers in the service. The adoption of a system of local audit appears the best remedy for many of the existing evils.

"The Company's agent at New York (Mr. Wm. McNaughton), who is a valuable officer, has not at present sufficient employment to make his position worth occupying. As there is a valuable market in New York to which it would, at certain times, be advantageous to send buffalo robes, wolves' and some other furs, which could be done without interference with the market in England, it is important to render the New York agency more efficient.

"(Signed) A. G. DALLAS.

"(Signed) EDWARD W. WATKIN.

"_7th August_, 1863."

This memorandum was sent home to Governor Sir Edmund Head, with other papers.

On the serious questions of the future relations of the vast territory to Canada and the Mother Country; how it could best be settled; how it should be governed; what arrangement as to boundaries, and so on--I had many and serious conferences with public men. And in answer to many questions as to my own views, I drew up the following memorandum, as a _resume_ of the whole subject. It is now nearly twenty-four years old. I have read it again and again. I am not ashamed of it. I see nothing to retract; little to alter:--

"The present state of government in the Red River Settlement is attributable alike to the habitual attempt, encouraged, perhaps very naturally, in England and in Canada, to discredit the traditions, and question the t.i.tle of the Hudson's Bay Company, and to the false economy which has stripped the Governor of a military force, with which, in the last resort, to support the decisions of the legal tribunals. No other organized Government of white men in the world, since William Penn, has endeavoured to rule any population, still less a promiscuous people composed of whites, half-breeds. Indians, and borderers, without a soldiery of some sort, and the inevitable result of the experiment has, in this case, been an unpunished case of prison- breaking, not sympathised in, it is true, by the majority of the settlers, but still tending to bring law and government into contempt, and greatly to discourage the governing body held responsible for keeping order in the territory.

"At the same time it must be conceded, that, while government by a merchant organization has eminently succeeded, up to an obvious point of time and circ.u.mstances, in the cases both of the East India and Hudson's Bay Companies, and is still applicable to the control and management of distant districts, it contains within itself the seeds of its own ultimate dissolution. In fact, the self-interest, however enlightened, which brings a dividend to stockholders, is opposed to the high impartiality and absence of individualism which should characterize a true Government. Individuals and corporations may trade and grow rich,--Government may not; they may embark in constant speculation, while it cannot; they must either insensibly measure their dealings by consequences, as affecting _gain_, or be suspected of doing so, while the interest of Government is not individual, but collective; its duty being, to give facility to the acquirer, security to the possessor, and justice and equal protection to all.

"Therefore, although the Government of Red River has had few faults and many excellences, and has been marked by a generous policy, in many instances it has been, and is, open to suspicion; because the commercial power which buys furs, trades with Indians and whites alike, and is, in fact, the great merchant, storekeeper, and forwarder of the country; appoints a Governor and a.s.sistants, places judges upon the bench, selects magistrates, and administers the law, even amongst its possible rivals and trade compet.i.tors. Such a state of things is unsound in principle, and ought only to be continued until a stronger and permanent Government can be organized; at the same time it can only be continued in safety, on the opening up of the country, by arming the Governor with a military force of reasonable amount.

"That the Hudson's Bay Company _can_ govern the country efficiently, on this obvious condition of all other Governments, is clear enough; and the peaceable relations between the Indians and the whites, and between the various tribes themselves, throughout the whole of this enormous territory, as well as the general state of health and occupation of the aborigines, prove how perfect and wise has been the management of the country. But government of Indians, who can be employed and traded with, and who at last become more or less dependent upon the Company's organization, as in this case, is one thing,-- government of a large and expanding colony of free white men is quite another.

"It is a question whether the government of the Indians can or ought to be changed, for a long period to come, so completely is the Indian life now a.s.sociated with the operations of the Company. Of course, the settlement of a new or an extended colony, involves the extinguishment of Indian rights within the area proposed; and while the outside district not set apart, would still be roamed over by the Indians, and be valuable for the fur trade, its limits must, from time to time, be narrowed by further additions to the circle of civilization and free government. Thus, the Hudson's Bay Company, if dispossessed of the government of Red River, and the proposed new Colony, would still manage and govern where it traded, and would still preserve sobriety, order, and peace amongst the Indian tribes of its territory thus limited.

"It may happen that the Hudson's Bay Company may be compelled to govern everywhere, by the refusal of the Home or Canadian Government to encounter the responsibility and expense, which at first might be serious, and which, as regards cost, must be greater in their hands than in those of a Company using portions, of its business organization for purposes of administration. It is well to look these probabilities fairly in the face.

"Such a necessity may arise from the indisposition of certain schools of politicians at home to incur Colonial expense, and the responsibility of defending a new nation flanking the United States; it may happen, owing to the refusal of Lower Canada to widen out the borders, and thus increase the political power of Upper Canada; or it may be objected in Canada generally, that the finances of the country will not, at present, prudently authorize the maintenance of a new Canadian military force; and again, the Indian war in Minnesota, which may spread itself, may raise up fears of Indian wars in the new country to be settled.

"Should the Hudson's Bay Company be compelled, then, to continue to govern the whole territory, the first essential, as before said, is a military force. That force may consist partly of regular troops, partly of mounted irregulars or militia, and it need not, in their hands, be large. The population is suited to military pursuits, and the half- breeds mounted would make an excellent irregular cavalry. And the next essential would be a convention and treaty with the United States, as to boundary and transit through the United States and Hudson's Bay territory respectively, for purposes of travel, and commerce, and of postage, and the telegraph.

"Then the limits of colonization must be defined, and it must be maturely considered at the outset, and decided as to how far, and in what form, and how soon, the principle of self-government shall be introduced. It is a.s.sumed that a thriving and expanding colony of white men neither can nor ought to be taxed and governed without their own consent, obtained in some form or other; and that it would be both unwise and unjust to attempt a permanently autocratic government. This is a most serious question, and the Act 31st George III., under which Canada was governed until 1841, would appear to solve the difficulty.

The general scheme of government of that Act might operate so soon as the new Colony had a population of (say) 50,000, and its provisions might be elaborated into a const.i.tution, to be voted by the Colony in general a.s.sembly, so soon as the population reached (say) 300,000.

"The grand basis of all successful settlement--the land--presents fewer difficulties than might have been imagined, because the admirable model of the land system of the United States is before us, and no better can be devised to enable a country to grow up side by side with the Republic. Reliable surveys and plans, cheap and unclogged t.i.tles to the land in fee, a limited upset price of not exceeding $1-25/100 an acre; division of the land saleable into regular sections; the issue of land warrants and regulations as to location, which will prevent, as far as may be, monopolies of land in the hands of speculators--are all essential conditions, and whatever power governs, they must be equally observed.

"Again,--reserves of land, on a liberal scale, must be made to support schools and churches, and to a.s.sist roads and other public works conducted by the Government.

"But let it be hoped that this necessity of continued government by the Hudson's Bay Company may be avoided by the wise and far-sighted action of the Home Government and of Canada. No beneficial decision can be arrived at without the concurrence of both powers, for each have rights and ideas in some respects differing, and Canada especially has the deepest concern in the future organization of the North-west. In selecting a governing power for such a country, the strength and influence of that power are the grand essentials. Even with equal enlightenment, these essentials could not be overlooked. A weak Government would invite attack, deter investment, and check general confidence.

"Apart from the government by the Hudson's Bay Company, there appear to be these alternatives:--

"1. Government by Canada annexing to her territory a tract of country extending to the limits of British Columbia, under some reasonable arrangement with the Hudson's Bay Company, fairly protective of their rights, and which arrangement ought not to be difficult to draw out, when once the principle of the settlement of the country, and the land system, and extent of land reserves, are agreed upon.

"2. Government by the Crown, as a separate Crown Colony, totally independent of Canada.

"3. Government by the Crown as a separate Crown Colony, with federation, more or less extensive, with Canada, and the establishment of a customs union between the new and old communities.

"It must always be observed that a decision as to the fate of this territory must be immediately made. It cannot wait political necessities elsewhere, or be postponed to suit individual wishes. The fertile country between Lake Winnipeg and the Rocky Mountains will be now settled, since that is now a fixed policy, and its plan of government must be in advance of, and not lag behind, that settlement.

The electric wire, the letter post, and the steamboat, which two years more will see at work, will totally change the face of things; and as Minnesota has now 250,000 inhabitants, where, in 1850 there was hardly a white man, so this vast district may, when once it can be communicated with from without, with reasonable facility, be flooded with emigrants, not forgetting a very probable rush of English, Irish, and Scotch farmers, and settlers from the United States, who here will find a refuge from conscription and civil war.

"The discoveries of gold, and the disturbed state of the border Indians in Minnesota, are both unanswerable reasons of necessity for the immediate establishment of a permanent form of Government, and fixed laws and arrangements for the settlement and development of the country.

"1. The government of the North-west, as an 'annexe' to Canada, possesses advantages of contiguity and similarity of ideas on the part of Canadians and the probable settlers. Canada, it will be said, has a good and responsible Government, and why not now extend its machinery to the 1,300 miles between the height of land and the Rocky Mountains?

"But will Canada accept the expense and responsibility, and, more especially, is it just now politically possible? Were Canada politically and practically one united country, the answer would be perhaps not difficult. But Canada, for the present, is really two countries, or two halves of one country, united under the same form of government, each half jealous of the mutual balance, and neither half disposed to aggrandize the power or exaggerate the size of the other.

"Would Lower Canada, then, submit to see Upper Canada become, at one bound, so immensely her superior? And would Upper Canadian statesmen, however personally anxious to absorb the North-west, risk the consequences of such a discussion as would arise? Would it be possible, in fact, to found a Government based upon the platform of accepting the responsibility of settling, defending, and governing the North-west? If not, then, however desirable, the next best alternative must be chosen.

"a.s.suming that at some period, near or distant, the British North American Provinces, between the Atlantic and the Pacific, unite in a federal or legislative union, and thus become too great and too strong for attack, that next best alternative would point to such arrangements, as respects the North-west, as would lead on to and promote this union, and not stand in its way. Thus, disputes about race and customs should, if possible, be avoided by antic.i.p.ation, and the const.i.tution and power of the new Colony should foreshadow its connection with the countries to the east and to the west. Future isolation should be forbidden, while present independence should be accorded.

"2. The above a.s.sumption tends to throw doubt upon the desirability of establishing a Crown Colony, separate in all respects from Canada, and able to shut out or let in Canadian produce and manufactures at its pleasure. This is a danger to be foreseen and avoided.

"The new Colony, placed between Canada and the Pacific, must be essentially British, in the sense of its forming one secure link in a chain of British nations, or, in the interests of Canada, it had better never be organized. The power and _prestige_ of the Crown is essential to this end, and a separate Colony, even, would have many advantages _per se_. It would also save Canada the cost of a new Government at a time when financial pressure and political majorities would be in the way. A Crown Colony could not be looked upon with jealousy in Canada, while government by the Hudson's Bay Company would be so regarded.

"3. But a Crown Colony with such a federation as would not alter the political balance of Upper and Lower Canada, and with a system of free trade with Canada, would appear to solve the whole difficulty; and if so, the scope of the federative principle would be matter to be settled between Canadian statesmen and the Colonial Office. The interchange between the North-west and Canada appears to be an absolute necessity in the interest of the latter. As Government, however, would require taxation, the new Colony must, in all probability, have its Custom- house; and it should be considered whether the Custom-house of Canada would not serve, as far as the eastern frontier is concerned, for the new Colony. If so, why should not duties, on a scale to be agreed upon under const.i.tutional powers to agree, be levied on imported foreign goods, by Canada, and the duties be divided between the two powers in agreed proportions? Were this done, at least in the beginning, expense would be saved to the new Colony, a revenue would be easily collected for it, through existing machinery, and Canada would obtain the revenue and trade. Of course the scale of duties must be moderate, so as not to excite dissatisfaction, by establishing dear prices, and it would be the interest of Canada to make them so, for the more she stimulated the growth of the new customer, the better for the trade. On the other hand, the new Colony would be insured a market and an outlet for its own productions, and would be content, therefore, to accept a reasonably high scale of duties, levied for revenue purposes only, on its articles of foreign consumption."

I discussed the question involved at length with the Honorable George Brown and with his brother Gordon, at Toronto. I felt the importance of having the views, and, if possible, the concurrence of the leader of the "Grit" party. He led me to think that he concurred with me; and I sent him a copy of this doc.u.ment. He kept it some time, and then re- directed it to me without remark. Afterwards, I received a verbal message to the effect that "It would not do at all." I became convinced that nothing "would do at all" with a small band of men--who, at that time, had objects of their own--in Upper Canada. Some of them--few in number, I am happy to know, and impecunious--appeared to consider the old corporation of the Hudson's Bay in the light of Blucher, when driving through the streets of London, "Mein Gott! what a plunder."