The Story of Newfoundland Part 7

Such temporary measures as the nature of the crisis admitted were taken locally. The Legislature pa.s.sed two Bills guaranteeing a portion of the note issue of both the Union Bank and the Commercial Bank; while a loan of 400,000 dollars was procured from the Bank of Montreal, and additional loans from the Bank of Nova Scotia and the Royal Bank of Canada: thus "the financial sceptre pa.s.sed to Canada."[49] At the same time the manager and directors of the Commercial Bank were arrested on a charge of having presented a fraudulent balance sheet. Reuter's correspondent at St. John's noted that in this time of trouble the idea of union with Canada gained ground rapidly. How hopeless the position seemed to calm observers on the spot may be gathered from the following vivid extracts from a letter by _The Times_ correspondent at St. John's:[50]

"Twelve large firms controlled the whole export trade of the colony--fish oils and fish products, valued at about 7,000,000 dollars. Of these twelve only two remain ... and these are sorely stricken. These firms occupied the whole waterside premises of St.

John's, gave employment to hundreds of storekeepers, coopers, stevedores, and others, beside some thousands of unskilled labourers occupied in the handling of the fish. All these men are now without a day's work, or any means of obtaining it. The isolation of the colony, away out in the Atlantic with no neighbour, is its greatest curse.

People unemployed cannot emigrate, but must swell an army of industrials depending on the Government for relief. The city is a veritable aggregation of unemployed; it is a city to let. Every business, factory, wharf, store, or shop employing labour has either suspended business or has curtailed the number of its employees to the lowest possible limit. It is not unreasonable to estimate the number unemployed here to-day at 6,000, every one of whom must be without work until spring opens."

It is not surprising to find that in this difficulty the minds of the colonists turned towards the Imperial Exchequer. But the distinction is vital between an Imperial grant in relief of a visitation of nature and a grant in relief of financial disasters which may be the result of improvidence or extravagance. The Imperial Exchequer is drawn from complex sources, and cannot be diverted to irregular purposes without injustice to large numbers of poor people. These facts were not unnaturally overlooked in Newfoundland, for in trouble the sense of proportion is apt to disappear. Thus on March 2nd, 1895, Sir W.

Whiteway, the Newfoundland Premier, in a letter to _The Times_, said:

"We have approached Her Majesty's Government, and solicited a mere guarantee of interest to the amount of a few thousand pounds per annum for a limited period, in order to enable the colony to float its loans and tide it over the present temporary difficulties. Up to date the people of this old, loyal colony have received no response. They have been struggling against difficulties in the past, and if they still have to trust to their own inherent pluck, and to the resources of the country, they must only pa.s.sively submit, although they may the more bitterly feel the heartless treatment of the Imperial Government towards them."

The touch of bitterness in Sir William Whiteway's letter was, perhaps, unreasonable. Mr Goodridge was Premier at the time of the crash, and his Government at once appealed for help to England, on the ground that if it were not forthcoming the colony would be unable to meet its obligations. A proposal was added that a Royal Commission should be appointed to inquire into the whole political and commercial position of the colony. Mr Goodridge was unable to keep his place, and his Government was followed by that of Mr Greene. The new Government at once inquired whether, if the Newfoundland Legislature acquiesced in the appointment of a Commission, financial help would be immediately forthcoming. They desired information also as to the scope of the Commission and the terms on which a.s.sistance would be given. To this the answer was inevitable, that all these points must depend upon the findings of the Commission. In fact, the Colonial Government wished for an unconditional loan and an a.s.surrance that the Const.i.tution of the island would not be interfered with. Mr Greene, in turn, proved unable to hold his ground, and was succeeded by Sir William Whiteway.

The latter subst.i.tuted for the earlier proposals a request that the Newfoundland bonds should be guaranteed by the Imperial Government; the suggested Commission being ignored. This was the request referred to in Sir William's letter. Now it is very clear that although the amount involved was relatively small, a very important principle was raised. Responsible government has its privileges and its obligations, the latter of which flow logically from the former. The Imperial Government charges itself with responsibility for the finances of a Crown colony because it directs the policy and determines the establishment on which the finances so largely depend. It is not reasonable to ask that the British taxpayer should a.s.sume responsibility for liabilities incurred by a colony with responsible government. The _toga virilis_ has responsibilities. The case might, perhaps, be different if there were no danger that the concession of help might be drawn into a precedent. But it must never be forgotten that the aggregate public debts of the self-governing colonies at about that time exceeded 300,000,000.

The crisis of 1895 has been dealt with at some little length, because it would be impossible otherwise to understand the occasion of the great Reid Contract, which will form the subject of the next chapter.

It so happens that the last ten years of the nineteenth century have been more momentous than any equal period in the history of the colony.

FOOTNOTES:

[41] The census of this year showed that the population had increased to 146,536.

[42] _Op. cit._, p. 495.

[43] This question of union was frequently raised--notably in 1906, and during the Great War in 1916 and 1917 (see end of chap. ix.).

[44] Sir Robert Bond, the ex-Premier of Newfoundland; Mr J.G. Blaine, the American Secretary of State.

[45] House of Commons Papers, Miscellaneous, No. 3, 1910, Cd. 5396.

[46] See chap. ix.

[47] December 14th, 1894.

[48] See General Dashwood's letter to _The Times_, December 18th, 1894.

[49] Rogers, p. 189.

[50] January 17th, 1895.

CHAPTER IX

THE REID CONTRACT--GENERAL PROGRESS AND RECENT HISTORY

The next few years may be dismissed briefly, for they were years of unrelieved melancholy, from the point of view of the public financial policy and the political development of the colony. Nor did the disease admit of a readily applicable remedy. The experience of each decade had shown more and more clearly that the colony had nothing in reserve--no variety of pursuits to support the general balance of prosperity by alternations of success. Potentially its resources were almost incalculably great, but their development was impossible without capital or credit. The colony had neither. Under these circ.u.mstances took place the General Election of October, 1897. The a.s.sets of the colony were not before the electorate, and there was no reason to suppose that financial proposals of an extraordinary kind were in contemplation. The result of the election placed Sir James Winter in power. In six months the famous "Reid Contract" had been entered into--a contract which must be described at some length in these pages, partly because it throws a vivid light upon the const.i.tutional relations between the Mother Country and a self-governing colony, partly because it appears to be incomparably the most important event in the recent history of Newfoundland.

On February 22nd, 1898, Mr Chamberlain received a telegram from the Governor, Sir Herbert Murray, advising him that a novel resolution had been submitted to the Houses of Legislature by his responsible advisers. A fuller telegram six days later, and a letter intervening, explained the proposals in detail. To put the matter as shortly as possible, the Government advised the sale to a well-known Canadian contractor, Mr R.G. Reid, of certain valuable colonial a.s.sets. In the first place, Mr Reid was to purchase all lines of railway from the Government for 1,000,000 dollars; this amount was the price of the ultimate reversion, the contractor undertaking to operate the lines for fifty years on agreed terms, and to re-ballast them. If he failed in this operation his reversionary rights became forfeit. For carrying the Government mails he was to receive an annual subsidy of 42,000 dollars. Minute covenants by the contractor were inserted in the draft contract, "in consideration whereof," it continued, "the Government hereby covenant and agree to and with the contractor, to grant to him in fee simple ... 5,000 acres of land for each one mile of main line or branch railway throughout the entire length of the lines to be operated: the expression 'in fee simple' to include with the land all mines, ores, precious metals, minerals, stones, and mineral oils of every kind." Besides these general concessions a particular grant of mineral land was made. The areas of land near Grand Lake, in which coal had been discovered, were transferred to Mr Reid, on condition that he should so work the coal mines as to produce not less than 50,000 tons of coal per annum.

The contract then pa.s.sed on to deal with the service of mail steamers.

Under this head eight steamers for various services were to be provided by the contractor, and by him manned and equipped. In consideration therefor the Government undertook to pay subsidies upon an agreed scale. The docks were next disposed of. Under this head the Government agreed to sell to the contractor the St. John's Dry Dock for 325,000 dollars. The next available a.s.set was the telegraph service. Here the agreement provided that the contractor should a.s.sume responsibility for all telegraph lines until 1904, in return for an annual subsidy of 10,000 dollars, and after 1904, until the period of fifty years was completed, should maintain them free of any charge to the colony by way of subsidy or otherwise.

By a later section of the draft contract it was provided that the contractor should not a.s.sign or sublet the contract, or any part or portion thereof, to any person or corporation whomsoever without the consent of the Government. The language of this prohibition is curiously general, and is indeed sufficient in its terms to prohibit a.s.signments _mortis causa_, as well as those _inter vivos_. Such a result can hardly have been contemplated.

By the last section it was recorded that "the Government undertake to enact all such legislation as may be necessary to give full effect to the contract and the several clauses and provisions thereof, according to the spirit and intent thereof, and also such as may be necessary to facilitate and enforce the collection and payment of fares and rates, the preservation of order and discipline in the trains and stations, and generally to give to the contractor all such powers, rights, and privileges as are usually conferred upon or granted to railways and railway companies for the purposes of their business."

Such, in barest outline, was the proposal of which Mr Chamberlain was informed by Governor Murray. It certainly involved a sacrifice incalculably grave of the colony's prospects, but those who brought it forward no doubt reflected on the truism that he who has expectations, but neither a.s.sets nor credit, must reinforce the latter by drawing in some degree upon the former. In fact, it seems to have been doubtful whether, at the time, the colony could by any device meet its obligations as they became due. The force of these observations must be frankly conceded; but it may still be doubted whether a less desperate remedy was not within the grasp of resourceful statesmanship. In his first telegram, sent on March 2nd, 1898, Mr Chamberlain called attention to the more apparent objections:

"The future of the colony will be placed entirely in the hands of the contractor by the railway contract, which appears highly improvident.

As there seems to be no penalty provided for failure to operate the railways, the contract is essentially the sale of a million and a quarter acres for a million dollars."

From the legal point of view the contract was a very singular one. The Government of Newfoundland, in fact, a.s.sumed to bind its successors by a partial abdication of sovereign power. Yet the same capacity which enabled the then Government to bind itself would equally and evidently inhere in its successors to revoke the obligation. Those who are struck by the conscientious obligation which the then Government could no doubt bequeath, may ask themselves how long a democratically governed country would tolerate corruption or inept.i.tude in the public service on the ground that the monopolist worker of them had inherited a franchise from an ancestor who had known how to exploit the public necessities. The virtual expropriation of the Irish landlords, which was in progress in the United Kingdom, may have been right or it may have been wrong; it is at least a far more startling interference with vested interest than would be the resumption by a State of control over heedlessly aliened public services.

Whatever be the force of these observations, the disadvantages of the Newfoundland Government's specific proposals were patent enough. Nor were they unperceived in the colony, and in particular by the enemies of the Ministry. The islanders stopped fishing and took to pet.i.tions.

These were numerous and lengthy, and it is only proposed to consider here the pet.i.tion which was sent by dissentient members of the House of a.s.sembly, containing a formidable indictment of the proposed agreement. The objections brought forward may be briefly summarized:

1. The electors were never consulted.

2. The Bill was an absolute conveyance in fee simple of all the railways, the docks, telegraph lines, mineral, timber, and agricultural lands of the colony, and virtually disposed of all the a.s.sets, representing a funded debt of 17,000,000 dollars, for 280,000.

3. While the Bill conveyed large and valuable mineral, agricultural, and timber areas, amounting, with former concessions, to four million acres, it made no provision for the development of these lands.

4. The conveyance embraced the whole Government telegraph system of the colony.

5. It included a monopoly for the next thirty years of the coastal carrying trade.

6. It included the sale of the dry dock, and the granting, without consideration, of valuable waterside property belonging to the Munic.i.p.al Council of St. John's.

On March 23rd Mr Chamberlain answered the representation of Governor Murray, and the profuse pet.i.tions which the latter had forwarded. Both from the general const.i.tutional significance of the reply, and its particular importance in the history of Newfoundland, it is convenient to reproduce the letter in full:

Mr Chamberlain to Governor Sir H.H. Murray.

Downing Street,

March 23rd, 1898.

SIR,--In my telegram of the 2nd instant I informed you that if your Ministers, after fully considering the objections urged to the proposed contract with Mr R.G. Reid for the sale and operation of the Government railways and other purposes, still pressed for your signature to that instrument, you would not be const.i.tutionally justified in refusing to follow their advice, as the responsibility for the measure rested entirely with them.

2. Whatever views I may hold as to the propriety of the contract, it is essentially a question of local finance, and as Her Majesty's Government have no responsibility for the finance of self-governing colonies, it would be improper for them to interfere in such a case unless Imperial interests were directly involved. On these const.i.tutional grounds I was unable to advise you to withhold your a.s.sent to the Bill confirming the contract.

3. I have now received your despatches as noted in the margin, giving full information as to the terms of the contract, and the grounds upon which your Government have supported it, as well as the reasons for which it was opposed by the Leader and some members of the Opposition.

4. I do not propose to enter upon a discussion of the details of the contract, or of the various arguments for and against it, but I cannot refrain from expressing my views as to the serious consequences which may result from this extraordinary measure.

5. Under this contract, and the earlier one of 1893, for the construction of the railway, practically all the Crown lands of any value become, with full rights to all minerals, the freehold property of a single individual: the whole of the railways are transferred to him, the telegraphs, the postal service, and the local sea communications, as well as the property in the dock at St. John's. Such an abdication by a Government of some of its most important functions is without parallel.