I believe that the operation of the free navigation system will be what you anticipate, to a great extent at least, and that it will tend materially to equalise prices on the two sides of the line.  At the same time I do think, that there are circumstances in this country which falsify, in some degree, the deductions at which one arrives from reasoning founded on the abstract principles of political economy.  One of these circumstances is the power which the farmers in the Western States, having no rents to pay, have of holding back their grain when prices do not suit them.  You must have observed what hoards they poured forth when they were tempted by the famine prices of 1847; and I cannot but think that this power of hoarding, coupled with an indifferent harvest, must account for the great disparity of price, which has obtained during the course of the present year in the New York market for bonded grain, and grain for the home consumption.  I fully expect, however, to see the price of Canadian grain, bonded at New York, rise, now that it can be exported to Liverpool in the New York liners, which will carry it for ballast.  Nevertheless, I think that Sir Robert Peel’s dictum with respect to the Repeal of the Corn Laws, on the day on which he retired last from office, when he observed that thenceforward, even when the poor suffered from the high price of bread, they would not ascribe that suffering to the fact of their bread being taxed, applies with at least equal force to the reciprocity question as affecting the Canadian farmers.  For sure am I that, so long as there is a duty on their produce when it enters the States, and none on the introduction of United States produce into England, they will ascribe to this cause alone the differences of price that may occasionally rule to their disadvantage.

The history of the two measures which Lord Elgin so ardently desired, and which in the foregoing and many similar letters he so urgently pressed, was eminently characteristic of the two Legislatures, through which they had respectively to be carried.

[Sidenote:  Repeal of Navigation Laws.]

In England, the repeal of restrictive Navigation Laws was contended for by thoughtful statesmen on grounds of public policy.  The protective and conservative instincts of the old country, fortified by the never-absent spirit of party, resisted the change.  When fairly beaten by force of argument in the House of Commons, they entrenched themselves ha the House of Lords; and it was only after a hot struggle that the Act was passed in June 1849, of which one effect was, by lowering freights, to increase the profits of the Canadian trade in wheat and timber, and thus to advance, in a very important degree, the commercial prosperity of the colony.

[Sidenote:  Reciprocity Treaty.]