81. As on the occasion of the great fire of 1846, assistance was speedily forthcoming from the United Kingdom and Canada. Provisions and tents for the sufferers were immediately sent from the naval and military stores at Halifax; collections for the relief of the city were started throughout Canada; and, in addition to the amount so raised, contributions of $10,000 and $20,000 were voted by the Government of Ontario and the Federal Government respectively. From England came donations of money, clothes and materials: a grant of $75,000 was made by the United Kingdom Treasury, and a Mansion House fund, opened by the Lord Mayor of London, realised $100,000.

  82. Two years later the Island, while still bravely struggling to recover from this disaster, was overwhelmed by a financial crisis. Newfoundland's banking institutions, the Commercial Bank and the Union Bank, had for a number of years enjoyed the highest reputation, but on 10th December, 1894, the Commercial Bank was compelled through reckless banking to close its doors and suspend payment. This led to a run on the Union Bank and finally on the Government Savings Bank, both of which were driven to refuse payment to depositors. As there was little specie in circulation and the notes of the Banks became valueless, business was brought to a standstill, and workmen were dismissed wholesale. Bread riots arising out of the prevailing distress took place at St. John's. Crowds first surrounded the House of Assembly demanding "food or work." On returning, they attacked a store and pillaged its contents. Sailors and marines were landed to protect public property and buildings.* "For several days," says Prowse, "we were the most distracted country in the world. A community without a currency; the notes of the banks had been the universal money of the Colony--circulating as freely as gold on Saturday, on Monday degraded to worthless paper."†

  83. This misfortune was to exercise such a far-reaching effect on the Island's political economy, and on the habits of the people, that it is worth while to refer here to the causes from which it sprang. These are stated in a telegram to "The Times" of the 14th December, 1894:--

  "The immediate cause of the financial crisis which has overwhelmed Newfoundland was the death of Mr. Hall, a partner in the firm of Messrs. Prowse, Hall & Morris, the London agents of the firms exporting fish to European markets. On his death the firm declined to meet further exchanges until an investigation of their affairs had been made. Their bills were protested, and the banks made demands on the Commercial Bank of St. John's, which was the drawer of the bills, and which, being unable to meet the demands made upon it, fell back upon its mercantile customers. These could not respond, and the bank had to suspend operations. The customers were compelled to make assignments, and nearly every business house in the colony was crippled, so interwoven are the affairs of one establishment with those of another.
  "The situation was only possible under the peculiar business customs of the colony. The fishing industry here is pursued under a system of advances for vessels and equipments made by the merchants to the fishermen, who gave the catch at the end of the season in exchange. The merchants receive large advances from the only two banks doing business here, the Union Bank of Newfoundland and the Commercial Bank. By backing each other's bills the banks are enabled to carry on operations, and then at the close of the year, when the produce of the fisheries is realised, they are able to settle their overdrafts.
  "The disaster happened at a most unfortunate time. If it had been postponed for another month, the merchants would have realised on most of the fish, and the assets would have been far more valuable. At present 2,000,000 dollars' worth of fishery products are stored in St. John's awaiting the means of shipment. Until financial aid from the outside world is obtained, it is impossible to place the fish on the market."‡

  84. The crisis assumed an even more serious aspect in that arrangements had been made with the Union Bank to provide the half-yearly interest (about $225,000) on the Public Debt ($11,000,000) which was payable in London on the 1st January. The Government of the day, of which Mr. A.F. Goodridge was Prime Minister, telegraphed to the Imperial authorities for assistance in raising an immediate loan of $1,000,000 and added a request that a warship might be despatched to the Colony as a safeguard against possible disturbances. The message concluded by expressing the view that it absolutely essential that a Royal Commission should be appointed to enquire into the whole political and commercial position of the Colony.§ Correspondence was proceeding with the Imperial Government when Mr. Goodridge resigned. His successor, Mr. D.J. Greene, at once enquired whether, if the Newfoundland Legislature acquiesced in the appointment of a Commission of Inquiry, financial assistance would be immediately forthcoming. He also asked for assurances as to the scope of the Commission and for information as to the terms on which assistance would be given. To this a reply was received that while Her Majesty's Government would be prepared, if requested to do so, to appoint a Royal Commission to enquire into the condition of the Colony and the causes which had led to it, they could not pledge themselves beforehand as to the course which they might take on receipt of the Commission's report.º In the meantime conditions in the Island were so desperate that the Imperial Government made an immediate grant for relief purposes, and despatched a special Commissioner, Sir Herbert Murray, to administer it.

  85. On the 31st January, 1895, Mr. Greene resigned and was succeeded by Sir William Whiteway. An attempt was now made to substitute for the earlier proposals a request that the Imperial Government should guarantee the interest on a new loan to be raised by the Newfoundland Government.± When this was refused, thoughts were turned towards Canada. Some eight years earlier Sir Charles Tupper, who was always a sincere and devoted advocate of Confederation, had proceeded to St. John's and discussed the question with the leaders of both parties in Newfoundland but the terms proposed were not acceptable.¦ On the 27th February, the Governor, Sir Terence O'Brien, sent a message to the Governor-General of Canada suggesting the re-opening of negotiations for the union of the two countries. This suggestion met with ready acceptance and on the 17th March, Mr. (afterwards Sir) Robert Bond, Mr. (later Sir Edward, now Lord) Morris, Mr. (afterwards Sir) George Emerson and Mr. (now Sir) William Horwood (the present Chief Justice) were appointed to represent Newfoundland. The Canadian Delegates were Sir Mackenzie Bowell, Sir Adolphe Caron, Mr. (later Sir) George Foster and Mr. John Haggart. On the 4th April the two delegations met in Conference at Ottawa. Discussions lasted until the 16th April when they were finally abandoned.

  * Annual Register, 1895.
  † Prowse, op. cit., p. 566.
  ‡ vide Birkenhead, op. cit., pp. 136-137, also Evening Telegram, St. John's, Dec., 24, 26, 28, 1894.
  § United Kingdom Parliamentary Papers, H.C. 104 of 1895, No. 1.
  º Ibid., No. 13.
  ± Ibid., Nos. 16 and 21-23; Journal of House of Assembly, Newfoundland, 1894-95, p. 126.
  ¦ Cambridge History of the British Empire, vol. vi, p. 477.