In 1869 took place a General Election, in which great Imperial interests were involved. Governor Mnsgrave, in 1866, had advised Federal union with the Canadian provinces—-then about to federate among themselves—and the election three years later was fought upon this issue. The result was a complete rout for the Federal party; a rout so complete that the question has hardly since reappeared within the field of practical politics. The causes of this defeat were, in the first place, economic considerations; secondly, Irish national feeling and hostility to the union; and thirdly, a certain distrust and dread of Canada. Judge Prowse, whose intimate knowledge of Newfoundland entitles his opinion to special respect, thinks that even in recent years there lingered some rank ling memory of the days when French Canadian •aids terrified the colonists in the seventeenth and eighteenth centuries.2 However this may be, it is certain that the outlying portions of the Empire hardly as yet felt the same community with and loyalty to one another as they did with regard to the home country. The relation of Newfoundland to the Dominion of Canada resembles in many ways that of New Zealand to the new Australian Federal system, and in each group of colonies there is a noticeable drift towards centralization. Judge Prowse, who was a strong believer in North American union both from an Imperial and from a Colonial point of view, has fully indicated the difficulties. The Canadian protectionist tariff, the greater attractions of the United States market (inasmuch as the Dominion is a fish producer lather than a fish consumer), the opposition which wide political changes unavoidably excite —all these obstacles were formidable for the moment. It is uncertain even now whether they will be strong enough to prevent, indefinitely, the realization of the Confederate scheme. It is possible that such a union would be followed by some disadvantages to Newfoundland; but, on the other hand, the gain would be very great. The politics of the colony would be braced by the ampler atmosphere of the Dominion, and the tendency towards parochialism finally arrested. The geographical difficulty ceased to exist when the United States taught us how vast are the areas over winch successful political unions are possible. No one can fairly ask that Newfoundland should take the step in the teeth of her own material interests ; but, assuming that union with Canada can be reconciled with those interests, the Imperial issue holds the field. Its importance can hardly be overstated So soon as the several communities, which together form the Empire, realize not merely their ties with the Mother Country, but also their own organic interconnection, from that moment the whole Imperial idea receives an immense accession of strength.1 But it is now elementary that Newfoundland, and Newfoundland alone, can take this decision. She is the mistress of her own destinies.

It is unfortunate that the Blaine-Bond incident in 1890 should have excited ill-feeling against Canada in the older colony. In September of that year a treaty of trade regulating the purchase of bait, etc., the shipping of crews, and transhipment of cargo (called, from the delegates employed on each side, the Blaine-Bond Treaty) was informally negotiated between Newfoundland and the United States, and a draft of a convention was prepared. In the following December this draft was modified, but in January 1891, Mr Blaine submitted a counterproposal. which the United States were disposed to accept, though they were not really anxious to effect the arrangement. The treaty had been by placed in a very favourable position for dealing with the discrimination exercised against fish exported to America by Newfoundlanders. The points decided were: (1) The right to make regulations as to the exercise of the liberty to take fish, under the Treaty of 1818, is inherent to the sovereignty of Great Britain; (2) The United States has the light to employ non-Americans in the fisheries, but they are not entitled to benefit or immunity from the said Treaty. (3) While American fishing vessels may be required to report at colonial ports when convenient, such vessels should not be subject to the purely commercial formalities of report, entry, and clearance at a Custom House, nor to light, harbour, or other dues not imposed upon Newfoundland fishermen; (4) American fishing vessels entering certain colonial bays, for shelter, repairs, wood and water, should not be subject to clues or other demands for doing so, but they might be required to report to any reasonably convenient Custom House or official. (5) In the case of bays, mentioned in the Treaty of 1818, three marine miles are to be measured from a straight line drawn across the body of water at the place where it ceases to bear the configuration and characteristics of a bay. At all other places the three marine miles are to be measured following the sinuosities of the coast.

To return to the period now under consideration It saw a bold attempt to deal with the Poordaw scandal. Relief to able-bodied persons was discontinued in 1868. A succession of good fishing seasons, and the development of the mining industry, lessened the difficulty of the step. Seven years later came a still more momentous proposal. "The period appears to have arrived," said Governor Hill, in his opening speech to the Legislature, " when a question which has for some time engaged public discussion, viz., the construction of a railway across the Hand to St. George's Bay, should receive a practical solution. . There is a well-founded expectation that the line of railway would attract to our shores the mail and passenger traffic of the Atlantic ... and thus would be secured those vast commercial advantages which our geographical position manifestly entitles us to command As a preliminary to this object a proposition will be submitted to you for a thorough survey, to ascertain the most eligible line, and with a View to the further inquiry whether the colony does not possess within itself the means of inducing capitalists to undertake this great enterprise of progress."

It is easy to forget, in speaking of Newfoundland until 1875, how very little was known of the interior. The Newfoundland with which we are concerned consisted in fact of a few towns on the coast, with a great and imperfectly explored interior behind them. Even down to the beginning of the twentieth century very little was known of much of the island It is difficult to assign limits to the developments which are probable when a thorough system of internal communication shall have given free play to each latent industry.

The first proposal was that a railway should be constructed from St. John's to St. George's Bay, but objections were made from England on the ground that the line would end on the French shore. Then came the proposal that it should run from St. John's to Hall's Bay, with branches to Brigus and Harbour Grace, covering in all a distance of about 340 miles. A joint committee of both Houses prepared a report, which became the basis of the Bill (1880). One sentence is worth quoting, because it states very clearly the difficulties which have played so large a part in the history of Newfoundland.

"The question of the future of our growing population has for some time enjoyed the earnest attention of all thoughtful men in this country, and has been the subject of serious solicitude. The fisheries being our main resource, and to a large extent the only dependence of the people, those periodic partial failures which are incident to such pursuits continue to be attended with reaming visitations of pauperism, and there seems no remedy to be found for this condition of things but that which may tie in varied and extensive pursuits. . . . Our fisheries have no doubt increased, but not in a measure corresponding to our measure of population; and even though they were capable of being expanded, that object would be largely neutralized by the decline m price winch follows from a large catch, as no increase of markets can be found to give remunerative returns for an augmented supply."

The Act was passed, which empowered the raising of a loan of £1,000,000 for the purpose of constructing the proposed railway. By November, 1884, the line was completed as far as Harbour Grace; by 1888 a further instalment of some twenty-seven miles was ready between Whitbourne and Placentia ; soon afterwards it was decided to recommence building the line northwards from St. John's to Hall's Bay, which has been discontinued through the failure of the contractors, and to earn-out the scheme the Reid Contract was entered into.

We are now reaching a period when the leading parts are played by persons still or recently living, and the story must therefore be continued with the reserve proper to one who is not himself an inhabitant of Newfoundland. Particularly is this true of the much discussed Reid Contract, the circumstances of which are reserved, from their great importance, for a separate chapter.

It is unfortunate that the ensuing stage of this short narrative should be mat red by so much trouble, but, in fact, the last ten years of the nineteenth century have been among the most disastrous in the history of the island In 1892 came the most destructive of all the fires with which St. John's has been afflicted. The fire broke out in a stable at five o'clock on the afternoon of Friday, July 8th, and lasted until nine o'clock on Saturday morning. It came at the end of a month's draught, was helped by a powerful wind, and found the town with a depleted water supply. Arising in an eastern suburb, the flames were carried right into the business centre of the town, and finally reached the rich warehouses of Water Street. Eye witnesses describe the heat as so intense that brick and stone offered little more resistance than wood. A mile of wharfage was destroyed, and Water Street completely gutted  Over a vast area," wrote one who noted the effects, "nothing is now to be seen but tottering walls and chimneys." It was computed that 10,000 persons were left homeless, and that the total damage exceeded 20,000.000 dollars, of which less than 5,000,000 dollars were covered by insurance. The Savings-Bank, the Hospital, the Masonic Hall, and the Anglican Cathedral, alike perished. To complete the misery of the sufferers, it soon became known that the food supply remaining was only sufficient for ten days. As in 1846, the sympathy of Canada was promptly and warmly shown. The day after the fire 4,000 dollars' worth of provisions were sent over, and military tents sufficient to shelter 1,200 people. In England, a Mansion House fund was immediately opened by the Lord Mayor of London, and its final amount fell little short of £20,000. Sir Terence O'Brien, the Governor, and Lady O'Brien, happened to be in England at the tune, and they threw themselves warmly into the cause of the colony.

In 1894, a misfortune of a different kind happened. On Monday, December 10th, the Commercial Bank, the Union Bank, and the Savings Bank, which had all been long established, were compelled to suspend payment. A widespread panic followed, and all business was paralysed. Workmen were dismissed wholesale, no money being available, for the payment of their wages. To make the crisis graver still, the Union Bank was to have provided the interest on the Public Debt, which was payable in London on January 1st. The population feared that the crash would bring about riots and other dread occurrences. In aggravation of the risk the: rumour spread that Newfoundland was about to be incorporated into the Dominion of Canada as a mere province. The Government telegraphed to the authorities in London for an immediate loan of £200,000, and requested that a warship should be despatched in view of imminent distuibances. The causes which led immediately to the failure were well stated in a Dalziel telegram to The Times:

"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 & Moms, 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, felt 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 realized, 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 realized 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."

At this time the financial position of the colony was thoroughly unsound. Its population numbered roughly 200,000 persons, and its Public Debt amounted to 14,000,000 dollars, or nearly three million pounds sterling. The Ministry of the day resigned, after an unsuccessful attempt to form a coalition Government, and its successors applied for Imperial help, an application which logically involved the surrender of the Constitution. In fact, the unassisted credit of the colony seemed hopeless, for in a year or two the railway reckonings had to be met. The Government had issued bonds whereof yearly interest was to become payable on completion, amounting to almost a third of the total revenue of the colon).

Such temporary measures as the nature of the crisis admitted were taken locally. The Legislature passed 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 passed to Canada." At the same time the manager and directors of the Commercial Bank were arrested on a charge of having presented a fraudulent balance sheet. Renter'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 m y be gathered from the following vivid extracts from a letter by the Times correspondent at St. John's:

"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. Feople unemployed cannot emigrate, but must swell an army of industrials depending on the Government for relief. The city is a veritable aggregation of unemployed; if 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 passively submit, although they may the more bitterly feel the heartless treatment of the Imperial Government towards them."

The touch of bitterness m Sir William White-way'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 assistance 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 assurance that the Constitution 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 substituted 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 Grown 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 assume responsibility for liabilities incurred by a colony with responsible government. The toga virus 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.