Some of them tried their best to confiscate the property; and once or twice, by weakness and vacillation in London, they almost gained the day.

Governor Dallas and I also carefully considered the telegraph question; the route, the cost, and the best agencies to complete its very early construction.

The two agreements, which, as matter of history, I here copy, were intended to bring about the complete connection of the Hudson's Bay territories direct with England and with the United States.

"Memorandum of Agreement between Mr. Edward W. Watkin and Mr. O. S.

Wood (subject to the approval of the Montreal Telegraph Company and the United States Telegraph Companies, affected by this Agreement, and also by the Governor and Committee of the Hudson's Bay Company) for completing telegraphic communication between the Atlantic and Pacific.

"1. The Montreal Telegraph Company to construct a new line of telegraph between Father Point and Halifax, _via_ Dalhousie and Mirimichi, to be completed on or before the 1st October, 1865; and also a line from the telegraph at Arnprior to the Hudson's Bay post at the Sault St. Marie, to be completed on or before the 1st October, 1865, with all necessary instruments, stations, staff, and appliances for a first- cla.s.s through and local telegraph line.

"2. The Hudson's Bay Company (directly or through parties to be appointed by them, as they may elect) to construct a telegraph line from Fort Langley to Jasper House, thence to Fort Garry, and on to the United States boundary, near Pembina, to be completed on or before the 15th October, 1865; and also a telegraph from Fort Garry to the Hudson's Bay post at Fort William, at the head of Lake Superior; and also to make arrangements with other parties to erect a telegraph from Fort William to the Sault St. Marie, with all necessary instruments, stations, staff, and appliances for a first-cla.s.s through and local telegraph line: provided always that the construction of the telegraph between Fort Garry and Sault St. Marie is dependent upon arrangements with the Canadian Government, and that it is understood that, failing or pending these arrangements, the route to be adopted shall be _via_ Detroit, St. Paul, and Pembina to Fort Garry.

"3. The telegraph from Fort Langley to Halifax to be worked for all through business as one through system, and the through rates to be divided _pro rata_ the mileage, except that for the lines west of the Sault St. Marie (to be erected by the Hudson's Bay Company as above) an additional mileage proportion of thirty-three per cent. over the actual distance shall be allowed, until those lines pay ten per cent per annum on the outlay, after paying all operating and other expenses, including repairs and renewals, and this allowance shall be a condition with the United States lines between Canada and the Hudson's Bay boundary.

"4. Arrangements to be made by the Montreal Telegraph Company, with parties in the United States, for the construction of a telegraph from St. Paul to the connecting point near Pembina.

"5. The Sault St. Marie and Sarnia to be respectively the boundaries of the Montreal Telegraph Company and of the Hudson's Bay Company and their representatives, for the purposes of this Agreement.

"6. This Agreement to be for twenty-five years.

"(Signed) EDWD. W. WATKIN.

"(Signed) O. S. WOOD.

"Montreal, _August_ 10_th_, 1863."

"Agreement between Mr. Edward W. Watkin and Mr. O. S. Wood, for the construction of the telegraph between Fort Garry and Jasper House, and, if hereafter agreed, between Fort Langley and Jasper House, and Fort Garry and the United States boundary near Pembina (subject to the approval of the Governor and Committee of the Hudson's Bay Company in England).

"1. Mr. Wood to construct a telegraph, and all needful works and stations, from Fort Garry to Jasper House, at the cost of the Hudson's Bay Company, and to put the same in full operating order, and also instruct, and where necessary provide, the staff for the operation and repair of the line.

"2. Mr. Wood to proceed with Governor Dallas to St. Paul, with as little delay as possible, and on to Fort Garry, if necessary; and to make all arrangements required for transporting the telegraph wire, insulators, fittings, instruments, and other materials to Fort Garry; for distributing all materials from Fort Garry; for cutting, preparing, and distributing the poles; and generally for commencing and for completing the work (including a system of posts at proper distances apart) in an efficient manner, and at the earliest period.

"3. Mr. Wood to receive the cordial aid and cooperation of the staff of the Hudson's Bay Company in carrying out this work, under the orders, instructions, and control of Governor Dallas.

"4. Mr. Wood's travelling and other necessary expenses, and the salaries and other necessary expenses of his a.s.sistants, to be paid, and, in consideration of his services, he is to receive the sum of ten thousand (10,000) dollars, as a fixed payment; one-third to be paid on the storage of the materials as above at Fort Garry, one-third upon the completion of two hundred (200) miles of the telegraph, and one-third on the completion and operation of the whole line between Fort Garry and Jasper House; and further, should the whole be completed prior to the 15th October, 1864, Mr. Wood is to receive a bonus of two thousand (2,000) dollars, so soon as the line has been one month in operation; and should the whole cost of the work not exceed thirty thousand (30,000) pounds sterling, Mr. Wood to receive a further bonus of fifteen per cent. on all savings upon that sum, payable when the line has been in operation twelve (12) months.

"5. Should the telegraph lines between Fort Langley and Jasper House, and Fort Garry and the United States boundary near Pembina be ordered to be constructed, and the Hudson's Bay Company desire it, Mr. Wood to undertake the construction, on proportionate terms.

"(Signed) EDWD. W. WATKIN.

"(Signed) O. S. WOOD.

"Montreal, _August_ 10_th_, 1863."

"MEMORANDUM _by Mr. Wood as to supply of Materials_.

"MONTREAL, "_August_ 10_th_, 1863.

"DEAR SIR,

"We shall want 40,000 insulators--they will cost from $6 to $8 per 100; 35,000 red cedar top pins will cost $3 per 100; 40 sets of telegraph instruments at $60 per set; main and local batteries, $500.

"As some of these articles ought immediately to be prepared, since their preparation takes a little time, I will at once, in accordance with our understanding of this morning, order a small quant.i.ty, and the remainder when I receive your confirmation of the whole arrangement. In the meantime I shall go to New York personally, to arrange the exact form and description of insulator, it being very desirable to have this article of the most perfect description.

"Yours faithfully, "(Signed) O. S. WOOD.

"EDWD. W. WATKIN, Esq."

My official letter to Sir Edmund Head from Montreal, 24th July, 1863, summarized all my proceedings up to its date.

"MONTREAL, "_July_ 24_th_, 1863.

"SIR,

"I have the honour to acknowledge your official letter of the 6th July, requesting me to proceed to the Red River Settlement, for the purpose of reporting upon the state and condition of that Settlement, of the condition of the adjoining territory, the prospects of settlement therein, and the possibility of commencing operations for an electric telegraph line across the southern district of Rupert's Land; and a.s.sociating with me in this inquiry Governor Dallas, of the Red River Settlement, with whom you request me to communicate at once.

"I observe that the Committee consider the lateness of the season will preclude me from doing more than procure such information as will enable them to commence further inquiries at the opening of the next season.

"In consequence of verbal communications received before leaving England, and suggestions unofficially received from members of the new Committee, I have deemed it my duty, though unofficially, to communicate with the Canadian Government, and with those gentlemen likely to form the Government of Canada, should any change of ministry take place on the opening of Parliament, so as, as far as possible (unauthorized as I was), to prevent antagonism to the operations of the new organization pending official communication and explanations from the Governor and Committee.

"No one can be better aware of the state and views of parties in Canada than yourself. The leader of the present Government expresses a strong opinion in favour of the settlement of a separate Crown Colony in the Hudson's Bay district, and this also is the view taken by Mr. Cartier and Mr. J. A. Macdonald, and is strongly concurred in by Mr. Cazeau, the Vicar-General, who, as you are aware, leads the Catholic party in Lower Canada. On the other hand, the feeling of Mr. Geo. Brown and the 'Grits,' as heretofore expressed, has been in favour of annexing the Hudson's Bay territory to Canada, thereby securing that preponderance which would practically settle the question of the future government of the whole country.

"The views of the Duke of Newcastle, and also, so far as I understand them, the views of yourself and your colleagues, being in favour of the establishment of a separate colony unconnected with Canada, I consider the discussions which have taken place have now put the question in its right position here; but at the same time I shall endeavour to see Mr.

George Brown, and give such explanations, unofficially, as may at all events prevent his considering that he has not been consulted in this important transaction.

"I have also placed myself in communication with many of those who have advocated the settlement of the North-west, including Professor Hind, who has explored much of the district; and, at my request, Professor Hind has written a memorandum, and letter upon the gold discoveries in the Hudson's Bay territory, which I now enclose.

"I have no doubt that Governor Dallas's own letters will more than corroborate what is stated in this memorandum, and I need not suggest that the most anxious and immediate attention of yourself and the Committee be directed to these discoveries, and to their political and other necessities and consequences.

"Having possessed myself of so much information in reference to the subjects referred to Governor Dallas and myself, I think we shall be able to fulfil the wishes of the Governor and Committee, Governor Dallas being here, accompanied by Mr. Hopkins, without the necessity of my proceeding on this occasion to the Red River; though, should further discussion with the Governor lead to our joint impression that such a visit would be advantageous, I shall not hesitate to undertake the journey.

"In advance of some memorandum to be prepared for you by Governor Dallas and myself, and which I shall beg him to be good enough to draft, I would mention that I have suggested that the Governor issue a circular to the employes of the Company, stating briefly the nature of the recent changes of proprietorship in the Company, and thereby having the tendency to remove any misconceptions which might arise, and which, I regret to learn, have in some few quarters appeared amongst the factors and other officers of the Company, who, as partners in the trade, have considered themselves ent.i.tled to be consulted by the late Governor and Council on the subject of the transfer.

"Governor Dallas informs me that the outfit of 1862-3 will show very much improved results; and I have little doubt that the wise and energetic measures which he has initiated since his tenure of office will bring abundant benefits in every direction. The result in the western district, which, if I recollect rightly, exhibited a loss, and which, in the past year, with all exclusive privileges taken away, gives a profit of no less than $166,000, is a convincing proof of what may be effected by improved business organization and thorough energy and firmness. It has, however, been matter of considerable anxiety to me to learn that it is Governor Dallas's desire to return to England next year.

"As regards the future management of the fur trade, Governor Dallas is of opinion that a considerable reduction may be made in the number of the employes; and that by a judicious weeding out of those who, in all large establishments managed from a distance, either were originally, or have become, inefficient, not only will expenses be saved, but a much larger trade be carried on.

"In any considerable change of personnel, the partnership rights of the factors will have to be considered; and one of the gravest and most difficult subjects of consideration will be, how to reconcile the rights of these gentlemen in a share of profit with that reorganization which the commercial interests of the Company evidently require.

"These changes can only be made after discussion with the factors and chief officers; and in some cases it may be desirable to buy out individual interests on a more or less extended scale.

"The 40 per cent. of the net profit of the Company allowed to the factors, in addition to the salaries of considerable amount, is a heavy drain, and involves other considerations opposed to rigid discipline, which need not be further touched upon here, but which are sufficiently obvious. This re-organization can only be effected by giving to the Governor very large and exceptional powers, and without delay. If these powers are given, I am quite confident that the results will be such as abundantly to satisfy the Committee. Hitherto, as it appears to me, far too little discretion has been permitted; and the practice of sending all the accounts home to England, and dealing with them in such a manner that the Governor could not tell from time to time how the financial results of expenses and profits were progressing, has produced its inevitable consequences. In future, I feel convinced, it will be found matter of the utmost consequence to concentrate the accounts at Fort Garry, and to send copies of the vouchers, journals, and ledgers from Fort Garry to England, instead of adopting the reverse practice, and endeavouring, as. .h.i.therto, to make the accounts travel as long a distance and be made up over as remote a time as possible. With proper telegraphic and postal communication between the princ.i.p.al posts of the Company and Fort Garry and Montreal, there is no reason why the accounts should ever be two years in arrear in future.

"As regards the settlement of the country, and, involved in that important question, the state and prospects of the Red River, the discoveries of gold above alluded to involve very serious considerations.