"In answer to another demand made in the same letter, the undersigned
must state that the guarantee of the Canadian Government of this
payment of interest ought to secure the moneys required at the rate of
four per cent, and that they will not advise and press with their
colleagues a higher rate of interest as the basis of the arrangement.

"London, 20 December, 1862.
"L. V. SICOTTE,
"W. P. ROWLAND.

"ED. WATKIN, Esq., London."



So much, and so far, for the Pacific affair. But in the Intercolonial
discussion there was an undercurrent. The only points left for
discussion with the Duke and Mr. Gladstone were the question of survey,
which was easily settled, and the question of a sinking fund for the
loan to be made on the credit of Great Britain. At first Mr. Gladstone
insisted on such a short term of repayment, and therefore so heavy a
put-by, that his terms took away the pecuniary value of the guarantee
itself: that is to say, that what the Colonies would have annually to
pay, would have amounted to more than the annual sum for which they
could have borrowed the money themselves. I suggested a longer term,
and also, that the interest on the annual put-by, to accumulate, should
be altered so as to alleviate the burden. In answer to a letter written
with the assistance of Messrs. Howe and Tilley, I received the
following from the Duke:--