belief that, under the present circumstances of our commercial condition, the colonists pay a heavy pecuniary fine for their fidelity to Great Britain, that nothing but the existence to an unwonted degree of political contentment among the masses has prevented the cry for annexation from spreading, like wildfire, through the Province.  This, as your Lordship will perceive, is a new feature in Canadian politics.  The plea of self-interest, the most powerful weapon, perhaps, which the friends of British connection have wielded in times past, has not only been wrested from my hands, but transferred since 1846 to those of the adversary.  I take the liberty of mentioning a fact, which seems better to illustrate the actual condition of affairs in these respects than many arguments.  I have lately spent several weeks in the district of Niagara.  Canadian Niagara is separated from the state of New York by a narrow stream, spanned by a bridge, which it takes a foot passenger about three minutes to cross.  The inhabitants are for the most part U.E. loyalists,[2] and differ little in habits or modes of thought and expression from their neighbours.  Wheat is their staple product—­the article which they exchange for foreign comforts and luxuries.  Now it is the fact that a bushel of wheat, grown on the Canadian side of the line, has fetched this year in the market, on an average, from 9_d_. to 1_s_. less than the same quantity and quality of the same article grown on the other.  Through their district council, a body elected under a system of very extended suffrage, these same inhabitants of Niagara have protested against the Montreal annexation movement.  They have done so (and many other district councils in Upper Canada have done the same) under the impression that it would be base to declare against England at a moment when England has given a signal proof of her determination to concede constitutional Government in all its plenitude to Canada.  I am confident, however, that the large majority of the persons who have thus protested, firmly believe that their annexation to the United States would add one-fourth to the value of the produce of their farms.

I need say no more than this to convince your Lordship, that while this state of things subsists (and I much fear that no measure but the establishment of reciprocal trade between Canada and the States, or the imposition of a duty on the produce of the States when imported into England, will remove it), arguments will not be wanting to those who seek to seduce Canadians from their allegiance.

Shortly afterwards he writes to Lord Grey:—­