"'The trade between the United States and the British Provinces should, it is believed, under ordinary circumstances, be free in reference to their natural productions; but as internal taxes exceptionally exist in the United States, it is now proposed that the articles embraced in the free list of the Reciprocity Treaty should continue to be exchanged, subject only to such duties as may be equivalent to that internal taxation. It is suggested that both parties may add certain articles to those now in the said list. With reference to the fisheries and the navigation of the internal waters of the continent, the British Provinces are willing that the existing regulations should continue in effect; but Canada is ready to enter into engagements with the view of improving the means of access to the ocean, provided the assurance be given that the trade of the Western States will not be diverted from its natural channel by legislation; and if the United States are not prepared at present to consider the general opening of their coasting trade, it would appear desirable that, as regards the internal waters of the Continent, no distinction should be made between the vessels of the two countries. "'If the foregoing points be satisfactorily arranged, Canada is willing to adjust her excise duties upon spirits, beer and tobacco upon the best revenue standard which may be mutually adopted after full consideration of the subject; and if it be desired to treat any other articles in the same way the disposition of the Canadian Government is to give every facility in their power to prevent illicit trade. "'With regard to the transit trade, it is suggested that the same regulations should exist on both sides and be defined by law. Canada is also prepared to make her patent laws similar to those of the United States. "'WASHINGTON, D.C., "'_Feb. 2_, 1866.'" "'MEMORANDUM B.