upon the use of the Champlain Canal by Canadian vessels, and they respectfully submit their concurrence in the said Report, and advise that a copy thereof be transmitted to Her Majesty's Minister at Washington, with a view to the matter complained of being represented to the Government of the United States.

Certified:

W. A. HIMSWORTH, Clerk, Privy Council, Canada.

The undersigned Minister of Customs has the honour to submit for the consideration of his Excellency the Administrator of the Government in Council the following information respecting certain restrictions placed upon the use of the Champlain Canal by Canadian vessels, and to request that it be made the subject of a communication to Her Majesty's Minister at Washington.

From the result of former correspondence upon a similar subject it was ascertained that an Act of the Legislature of the State of New York secured the mutual use of the canals of Canada and the United States to the vessels of each country respectively, on equal terms, as per Article XXVII of the Treaty of Washington; but, from documents herewith submitted, it appears that there are still certain difficulties placed in the way of Canadian vessels availing themselves of the right to navigate the Champlain Canal, which the people of this Dominion feel was secured to them by said Treaty.

These documents consist, 1st, of a letter from J. W. McRae, Esq., President of the Ottawa and Rideau Forwarding Company, of the 28th May, 1875, addressed to the Minister of Marine and Fisheries, in which he complains that "lumber cannot be bonded in Canadian vessels going through the United States' canals;" 2nd, a letter from J. Parmerter, Esq., Collector of Customs, Plattsburgh, New York, dated the 28th June, 1875, confirmatory of Mr. McRae's assertion, and giving as a reason the provisions of sec. 2771 Revised Statutes of the United Statues, which reads as follows:-"Vessels which are not vessels of the United States shall be admitted to unlade only at ports of entry established by law, and no such vessel shall be admitted to make entry in any other district than in the one in which she shall be admitted to unlade." The third is the affidavit of one Orrin Judson Belden, of Fort Ann, Washington County, New York, dated the 14th August, 1875, detailing the particulars of a case in which he was refused by the Collector of the United States' Customs at Rouse's Point, during the present summer, to load a cargo of lumber which he had shipped in the barge H. F. Burrill, at the Port of Brockville, Canada, for the

Port of New York, United States, on the ground that she was a British bottom, and therefore not entitled to the privilege.

The principal question for consideration is whether the Law quoted by the Collector of Plattsburgh will properly bear the interpretation which he alleges is given to it by the Treasury Department of the United States, which is, in effect, that a British vessel cannot take a cargo in bond through a canal belonging to the United States to a port in another Customs district.

That interpretation being based upon the following words, "and no such vessel shall be admitted to make entry in any other district than in the one in which she shall be admitted to unlade,” it is submitted that the mere act of the master of the vessel reporting and giving bond at an intermediate port to secure the ultimate payment of duty upon, or properly accounting for, his cargo at his port of destination (when the said cargo must necessarily be subjected to full examination as well as entry) cannot be the description of entry to which the terms of the Act apply, but is only adopted as a means of preventing any violation of the Customs laws en route. It must be remembered that a vessel bound from a Canadian port to the Port of New York must of necessity pass through the Champlain Canal to complete her voyage, and the entry proper of such vessel and cargo should take place at the termination of such voyage; any forms essential for the security of the revenue at intervening ports cannot be properly termed entries in the sense of the law.

The principal value of the free navigation of the Champlain Canal to Canadian vessels consists in the right to carry cargoes by that route to the Port of New York; and if the Act quoted is construed as stated in Mr. Parmerter's letter, it renders the provisions of the Washington Treaty, so far as the navigation of that canal is concerned, practically useless to Canada.

With reference to the affidavit of Captain Belden, it will be observed that he claims not only to be a citizen of the United States, but that his vessel also is in fact an American bottom, as, although she virtually changed hands in Canadian waters, her certificate of American registry was never surrendered, nor was she ever registered in Canada. The point, however, of interest in the present question is that she was refused the privilege of taking cargo through the canal in bond, on the sole ground of her being a British vessel, and is here presented as corroborative of the fact that the prohibition is enforced by the United States Customs Office.

The undersigned Minister of Customs recommends that his Excellency will make this matter the subject of a despatch to Her Britannic Majesty's Minister at Washington, with a view to his

calling the attention of the United States' Government thereto, with a hope that an order may issue which will have the effect to remove the restrictions complained of.

Customs Department, Ottawa, October 18, 1875.

ISAAC BURPEE.

No. 17.-Sir E. Thornton to the Earl of Derby.-(Rec. Oct. 3.) (Extract.) Washington, September 20, 1875. WITH reference to my despatch of the 6th instant, in which I inclosed copy of a note which I had addressed to the Acting Secretary of State relative to the navigation of the United States' canals by Canadian vessels, I have the honour to state that Mr. Hunter's answer reached me on the 14th instant, and I have the honour to inclose copies of it, and of its inclosure. Mr. Hunter merely transmits, without any comment, a letter from the Secretary of the Treasury, in which the latter limits himself to stating that the question had been already considered, and that it had been decided that Canadian vessels could not transport cargo from any port in the United States through the Champlain Canal to any other port in the United States.

I therefore, on the 15th instant, addressed another note to Mr. Hunter, copy of which I have the honour to inclose. In this note I pointed out to him in the first place that, in my previous communication, I had not referred to the transport of goods by Canadian vessels from one port in the United States to another, but from a port in Canada to a port in the United States, through the canals of the latter. I then proceeded to show that the prohibition of such navigation by Her Majesty's subjects on terms of equality with citizens of the United States was an infraction of the abovementioned Article of the Treaty of Washington.

Mr. Fish returned to Washington on the 16th instant, and answered my note on the 18th instant, merely acknowledging its receipt, and stating that a copy of it had been submitted for the consideration of the Secretary of the Treasury. A copy of Mr. Fish's answer is also inclosed. Your Lordship will notice the observation he makes, that it appears from my note that the privilege is claimed under Article XXVII of the Treaty of Wash ingten.

The Earl of Derby.

EDWD. THORNTON.

No. 20.-Sir E. Thornton to the Earl of Derby.—(Rec. October 10.) MY LORD, Washington, September 27, 1875. DURING my visit to Mr. Fish at the State Department, on the 23rd instant, I referred to my note to Mr. Hunter of the 15th [1875-76. LXVII.]

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instant, relative to the navigation of the United States' canals by Canadian vessels, and expressed my hope that the Government of the United States would take a liberal view of the question, and would secure to Canadian vessels the enjoyment of all privileges in the canals which were open to United States' vessels. I could not suppose that, after the United States' Government had obtained from the State of New York the assurance that there was no law of that State which could prevent British vessels from using those canals, the Federal Government would interpose its power, either by law or regulations, to render nugatory the permission given by the State.

Mr. Fish replied that it was far from the intention of his Government to do so, and that he had already been urging upon the Secretary of the Treasury to treat the question with as much liberality as possible. But, whilst he could not speak officially on the subject until the question was decided by the Treasury Department, it seemed to him that the Revenue Laws of the United States would prevent the use of the entire navigation of the canals by Canadian vessels. The law of the United States provided that a vessel arriving in the United States with a cargo from abroad should enter and discharge her cargo at the first port of entry she met. In entering the United States through the Champlain Canal, the first port of entry would be Whitehall, at the northern extremity of the Whitehall Canal. There a vessel arriving with a foreiga cargo, whether she were American or foreign, would be obliged to discharge her cargo. If a Canadian vessel had a fancy for navigating the canals further on, she could certainly do so, and go as far as Albany; but neither she nor an American vessel could carry a cargo there direct from a foreign port, because Albany would not be the first port of entry, nor, indeed, is it a port of entry at all.

Mr. Fish added that he supposed that the idea and the object of the Canadian Government were that the Canadian boats should be enabled to bring cargo from Canada through the canals and down the Hudson to New York. This, he said, was impossible, by reason of the above-mentioned provision of the law with regard to the first port of entry, and because neither by the Treaty of Washington nor by any other Treaty had the navigation of the River Hudson been allowed to British or other foreign vessels.

The Earl of Derby.

SIR,

I have, &c.,

EDWD. THORNTON.

No. 24.-The Earl of Derby to Sir E. Thornton.

Foreign Office, October 21, 1875.

I HAVE had under my consideration, in communication with Her

Majesty's Secretary of State for the Colonies, your despatch of the 20th ultimo, together with its inclosures, on the subject of the navigation of the United States' canals by Canadian vessels; and I have to convey to you the approval of Her Majesty's Government of the note addressed by you to the Acting Secretary of State, pointing out that the interpretation placed by the United States' Government on the United States' law, which was made to prevent Canadian vessels from carrying goods in bond through the canals, was in conflict with Article XXVII of the Treaty of Washington.

Sir E. Thornton.

I am, &c.,

DERBY.

No. 25.-Sir E. Thornton to the Earl of Derby.-(Received Dec. 12.) (Extract.) Washington, November 29, 1875.

In my despatch of the 20th of September last I had the honour to forward to your Lordship copy of a note which I had addressed on the 15th of that month to Mr. Hunter, respecting the navigation of the canals in the State of New York by Canadian vessels.

I now inclose copy of a note, and of its inclosure, which I have received from Mr. Fish in answer to my note above-mentioned. Your Lordship will perceive from the contents of the inclosure, which is a letter from the Secretary to the Treasury to Mr. Fish, that the former insists that Canadian vessels coming into the canals in the State of New York must unload at the first port of entry. He seems, however, to admit that the use of the Champlain Canal could be granted to Canadian vessels destined with cargoes to the southern terminus of the Canal, or to ports or places on Lakes Erie or Ontario.

But the Secretary of the Treasury refuses to recognize the right of Canadian vessels to transport cargoes in bond from Canada to New York.

I have forwarded a copy of Mr. Fish's note, and of its inclosure, to his Excellency the Governor-General of Canada.

The Earl of Derby.

EDWD. THORNTON.

No. 27.-Sir E. Thornton to the Earl of Derby.-(Rec. March 27.) (Extract.) Washington, March 13, 1876. SOME days ago Sir Alexander T. Galt came from Canada to the United States, and paid me a visit at Washington. He took the opportunity of showing me, by the request of Mr. Mackenzie, as he said, a Memorandum giving the substance of the correspondence which has taken place relative to the navigation of the canals in the State of New York by Canadian vessels, and urged that I should renew my endeavours to induce the Government of the United