Lord Monek, Governor-General, October 24th—The Trent affair—Threatened Outbreak of War—Death of Prince Albert, December 15th— 1861. Defeat of Cartier-Macdonald Ministry—Maedonald-Sicotte Cabinet formed—Its Policy—The Cotton Famine—Canada at the World's Fair—1862. Reconstruction of the Cabinet—Political Dead-lock—1863.

Lord Monck, the new Governor-General, soon after his appointment as Governor-General, had to face a grave international difficulty, in which Great Britain became involved with the United States.

On the 9th of November, Capt. Wilkes, of the U. S. steam-ship Jacinto, forcibly carried off from the British mail steamer Trent, Mossrs. Slidell and Mason, commissioners of the Southern Confederacy to Great Britain and France. The British Government promptly resented this violation of international comity and of the rights of neutrals, and demanded the rendition of the captured commissioners.

While awaiting an answer to the ultimatum sent to the United States, the British Government shipped to Canada several regiments of troops, the flower of the army, with immense stores of munitions of war. The navigation of the St. Lawrence having closed, a portion of the troops came overland through New Brunswick. The country sprang to arms. Volunteer military companies were organized, home guards enrolled, and large sums of money contributed to defend, if need were, the honour and dignity of the empire.

Amid these public agitations came the startling intelligence of the death of Prince Albert, the wise and noble consort of our beloved and honoured Queen, December 15th. The nation's sympathy with the widowed sovereign was profound and sincere. A prudent counsellor, a loving husband, a high-minded man, the Queen continues to mourn his loss with almost the poignancy of her first grief.

With the close of the year the war cloud which menaced the country was dissipated by the surrender of Messrs. Slidell and Mason, the captured commissioners, to the British Government.

A new Parliament met in Quebec on the 21st of March 1862 —a §enera^ Section having taken place during recess.

The conflict of parties was renewed with the utmost vigour. The defence of the provinces against the growing military power of the United States was a question of considerable difficulty. The Imperial authorities, feeling that in case of the rupture of peace Canada would become the battle-ground, had devised a comprehensive system of fortification. The cost of the extensive works at Quebec was to be defrayed by the Home Government and that of the , works at Montreal and places west of it was to be paid from the provincial treasury. The people of Canada, while willing to make any effort for national defence that they thought commensurate with their ability, shrank from largely increasing their heavy indebtedness by undertaking military works which they considered too extensive and costly for their means, and of the necessity for which they were by no means convinced. The volunteer movement was vigorously sustained, and rifle competitions contributed to the efficiency of the corps; but the feeling of the country, in opposition to the fortification scheme, found expression in an adverse vote of the House on the ministerial militia bill. The ministry forthwith resigned, and Mr. John Sandfield Macdonald was called upon to form a new cabinet. Mr. Macdonald announced as the policy of his administration the observance of the double-majority principle in all measures affecting locally either province; a readjustment of the representation of Upper and Lower Canada respectively, without, however, adopting the principle of representation by population; and an increase of revenue and protection of manufactures by a revised customs tariff.

The parliamentary rejection of the Macdonald-Cartier militia bill created an impression in Great Britain that the Canadians were unwilling to bear the burden of self-defence —an erroneous conception, which the military enthusiasm of the country during the late Trent difficulty ought to have prevented. The thorough loyalty of the people was shown by the liberal militia bill of the following session.

Two veteran Canadian politicians passed away during the summer — the gallant Sir Allan McNab, and his Reform contemporary, the Hon. William Hamilton Merritt, the projector of the Welland Canal.

The continuance of the American war wai attended with great commercial advantage to Canada. Canadian horses were in especial demand for remounts for the Union cavalry and for the artillery. The country was also denuded of its surplus live stock and farm produce, and in fact of every marketable commodity, at highly remunerative prices. The resulting financial prosperity, in which all industrial classes shared, enabled the people to discharge the indebtedness which many had incurred through rash speculation or lavish expenditure. It was observed that " the prosperous years which now followed were distinguished by an unusually small amount of litigation, while money lenders no longer reaped the abundant harvest they had hitherto enjoyed." In their prosperity Canadians did not forget the adversity of their suffering fellow-subjects in Great Britain, who were enduring extreme privation from the cotton famine, consequent on the closing of the ports of the Southern Confederacy, from which the raw staple of their industry was derived. Generous contributions for the relief of their necessities exhibited at once the patriotism and philanthropy of the donors.

Parliament met in Quebec early in February, and the situation increased representation of Upper Canada was renewed. These efforts were defeated by the solid Lower Canadian vote; but public opinion in Upper Canada was daily becoming stronger in favour of a more equitable adjustment of the representation. At length the Government was defeated on a direct vote of want of confidence. They resolved to appeal to the country. In the new Parliament it was found that the ministers had a majority of only three. They managed, however, to get through the session without defeat.

Much irritation was felt in the United States toward Great Britain, on account of the devastation caused by the Alabama and Florida, and other Confederate cruisers. These piratical vessels, as the people of the North regarded them, constructed by British ship-builders, and equipped by British merchants, had captured and destroyed hundreds of American ships, and had almost swept American commerce from the seas. The Union armies, however, by sheer force of numbers and an unlimited supply of war materiel, were steadily crushing out the Southern rebellion, notwithstanding a heroic resistance worthy of a better cause.