APPENDIX E.*

(FROM SIR MACKENZIE BOWELL, PRIME MINISTER OF CANADA, TO THE EARL OF ABERDEEN, GOVERNOR-GENERAL OF CANADA.)

OTTAWA, 16th April, 1895.
MY DEAR LORD ABERDEEN,

  Referring to our conversation of yesterday afternoon, I enclose herewith a memorandum showing the financial aspect of our negotiations with the Newfoundland delegates, from which Your Excellency will learn the difficulties that lie in the way of our acceding to the full request of the representatives of that colony. If these figures and explanations are not sufficiently clear and elaborate, kindly let me know, and I will furnish any other that Your Excellency may required.

  Canada is very desirous of effecting a union with the ancient colony of Newfoundland, believing it would be in Imperial as well as Canadian interests; but, considering the financial obligations of Newfoundland and our relations to the other Provinces of the Dominion, it is necessary, in order to accomplish this end, that the Imperial Government should extend the most generous assistance possible.

Believe me, etc.         
(Signed) MACKENZIE BOWELL.


Memorandum.

CANADA AND NEWFOUNDLAND AS TO DEBT.

   Newfoundland has a debt of .................... $11,247,534
   In addition to which she is under
     obligation to the Newfoundland
     Railway Company for an annual
     subsidy of $45,000 for 22 years,
     which, capitalized at 4 per cent.,
     amounts to ...........................................      650,300
   Amount required to complete the
     Railway across the Island and
     the Brigus branch, both of which
     are under contract ...............................    3,932,000
       Total indebtedness and obligations ..... $15,829,834

   The highest indebtedness Canada
     has assumed for any Province,
     and is willing to assume for
     Newfoundland, is $50 per head
     of her population, which, on the
     estimate of 207,000, amounts to .......... $10,350,000
   Leaving a balance and liability of ...........   $5,479,834

  Canada cannot assume more than the above amount of $10,350,000, as this is the highest indebtedness assumed for any Province. To exceed this amount would open up at once the question of terms to each member of the Confederation. Newfoundland, however, represents that it is impossible to provide for this excess of $5,479,834 and carry on its local services at the same time, with the resources that would be at her disposal under Confederation.

AS TO YEARLY REVENUE.

  After the Dominion has assumed the general services which would fall to her under Confederation, the Island has to provide for its local services, for which it now expends about $700,000. After economising as far as possible, she considers a revenue of $650,000 annually the minimum upon which she could manage her affairs. Canada proposes to allow Newfoundland:--

   For legislation ............................................   $50,000
   For her present population (207,000),
     at 80¢ per head ........................................   165,600
   For Crown Lands ........................................   150,000
   Other allowances .......................................   100,000
$465,600 

  The following will show how the debt and yearly allowances to Newfoundland compare with those given to the other smaller Provinces of the Dominion:--

Province.
Population.
   Dominion   
   subsidy.
($)   
Debt Assumed
per head.
($)
Nova Scotia
450,396
 432,814 
29.75
New Brunswick
321,263
 483,596 
30.30
Manitoba
190,000
 437,601 
32.43
Prince Edward Island      
109,078
 183,084 
50.00
Newfoundland
207,000
 465,000 
50.00

  To grant the larger allowance asked by Newfoundland would be impossible, as it would be so much larger and out of all proportion to the subsidy granted to the other Provinces that it would either be rejected by the Canadian Parliament or open up for discussion the question of allowance, and lead to an increase to the other Provinces of Confederation which the revenue of the Dominion would not justify.

THE POSITION OF CANADA

  Newfoundland under her present tariff, on imports of about $7,000,000 of dutiable goods, collects about $1,600,000 or revenue.

  Canada, it is estimated, would receive under Confederation about $800,000 in revenue--the loss being due to the diversion of trade from foreign countries to Canada. Canada's yearly account under Confederation would then stand:--

   Payment to Newfoundland of a yearly subsidy of ........  $465,000
   Interest on $10,350,000 of debt ...................................   392,000

  Cost of general services assumed by Canada for Newfoundland :--

   Salary of Lieutenant-Governor;
   Customs;
   Excise;
   Savings Bank;
   Public Works (of Dominion character);
   Crown Lands;
   Administration of Justice;
   Post Offices;
   Militia;
   Steamship services;
   Marine and Lighthouses;
   Fisheries;
   Penitentiaries;
   Weights and Measures and Gas Inspections;
   Experimental Agriculture and Statistics;
   Quarantine;
   Immigration;
   Insurance Inspection;
   Geological Survey.
     Total .......................................................................       600,000
$1,457,000 
   Less anticipated receipts from Customs
     and Excise .............................................................       800,000
   Leaving a financial loss of ......................................     $657,000

  If provision could be made for the indebtedness of Newfoundland over and above what the Dominion assumes, Newfoundland could possibly accommodate herself to the situation. She would, however, have to economise; to throw some of the burdens which the Government now carries upon the shoulders of the community, and to raise by some form of taxation a portion of what would be necessary.

  To-day the Newfoundland Government practically assumes the whole burden of the poor relief, educating the people, building the roads and bridges, and performs other services which, in the Provinces of Canada, are dealt with almost exclusively by the Municipalities, and in no case by the Federal Government.

  The Newfoundland Estimates for the year 1894 show the requirements for these services to be:--

   Poor Relief ..................................................................   $209,611
   Education ...................................................................      157,851
   Roads and Bridges ......................................................     129,300
     Total .........................................................................   $496,762


  * Extract from Appendix to Journal of House of Assembly of Newfoundland, 1894-95.


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