"'With regard to the first--the proposed mutual use of the waters of Lake Michigan and the St. Lawrence--we considered that the present arrangements were sufficient, and that the common interests of both countries would prevent their disturbance. We were not prepared to yield the right of interference in the imposition of tolls upon our canals. We believed, moreover, that the privilege allowed the United States of navigating the waters of the St. Lawrence was very much more than an equivalent for our use of Lake Michigan. "'Upon the second point--providing for the free transit of goods under bond between the two countries--we believed that in this respect, as in the former case, the interests of both countries would secure the maintenance of existing regulations. Connected with this point was the demand made for the abolition of the free ports existing in Canada, which we were not disposed to concede, especially in view of the extremely unsatisfactory position in which it was proposed to place the trade between the two countries. "'On both the above points, we do not desire to be understood as stating that the existing arrangements should not be extended and placed on a more permanent basis, but only that, taken apart from the more important interests involved, it did not appear to us this time necessary to deal with them exceptionally. "'With reference to the third and last point--the concessions of the right of fishing in provincial waters--we considered the equivalent proposed for so very valuable a right to be utterly inadequate. The admission of a few unimportant articles free, with the establishment of a scale of high duties as proposed, would not, in our opinion, have justified us in yielding this point. "'While we regret this unfavourable termination of the negociations, we are not without hope that, at no distant day, they may be resumed with a better prospect of a satisfactory result. "'We have the honour to be, "'Your Excellency's most obedient Servants, "'A. T. GALT, Minister of Finance, Canada. "'W. P. HOWLAND, Postmaster General, Canada. "'W. A. HENRY, Attorney General, Nova Scotia, "'A. J. SMITH, Attorney General, New Brunswick. "'To His Excellency, SIR FREDERICK BRUCE, K.C.B., &c., &c., &c.'" "'MEMORANDUM A.