Having won the 1889 general election on a platform of railway construction and industrial development, the main thrust of the Whiteway government's efforts from 1889 to 1897 was extending the railway line to the west coast. In 1890 the government signed a contract with Robert G. Reid of Montreal and G.H. Middleton of Toronto to finish railway construction to Halls Bay in Notre Dame Bay. The Canadian contractors agreed to do it for $15,600 per mile, payable in government debentures. Middleton left the partnership two years later with Reid continuing the contract. In 1893 Whiteway signed a new contract with Reid whereby the railway line would be pushed on from the Exploits River to Port aux Basques. A second contract signed in what was an election year gave Reid the right to operate the Placentia branch line and the trans-island railway he was completing for a period of ten years in return for a land grant of 5,000 acres per mile operated. Hiller notes that Reid refused a longer operating period because Reid feared that "operating losses would become too onerous when they could no longer be offset by the profits of construction" (Hiller, "The Railway and Local Politics"). What must be remembered about railway building in the 1890s was that it placed a considerable strain upon the colony's finances, and probably exacerbated the other economic and fiscal problems that characterized this period.
The colony's continuing fisheries disputes over the nature of
French and American fishing rights in Newfoundland also dominated
Whiteway's attention. By the late 1880s the issue of who had the
right to carry on a lobster fishery on the Treaty Shore was now the
main concern. Imperial officials had found the Thorburn government unwilling to restrict the activities of Newfoundland and other
British (mainly Nova Scotians) subjects operating lobster factories
on the west coast. Since the establishment in 1873 of their first
factory, by 1888 British subjects had a total of 26 factories as
compared to the single French factory. Although sympathetic to
French protests of encroachments by Newfoundlanders in the lobster
factory, the British government found itself with no statutory
authority to enforce the provisions of the Treaties granting French
fishing rights on the west coast, such authority having lapsed by
mid-century through the non-renewal of imperial legislation on the
subject.
With the election of the Whiteway government in 1889, the
Colonial Office had cautiously hoped that Whiteway would be more
accommodating than Thorburn in settling the Treaty Shore problem
and asked him to London to discuss possible proposals for settlement. While Whiteway delayed his visit in early 1890 for local
political reasons, the British government reached a modus vivendi
with the French over the lobster issue before Whiteway's scheduled
arrival in March to England. Whiteway had been initially consulted
about discussions for a modus, but had not been involved in the
final temporary agreement. Knowledge of Whiteway's involvement in
the initial discussions did not become known until later in the
year. Under the terms of the modus vivendi, which means "arrangement between disputants pending settlement of dispute"--the French
agreed to respect the status quo concerning the establishments of
lobster factories as of July 1, 1889. According to Frederick
Thompson's definite study of the French Shore question, "no new
concessions would be issued to French fishermen for factories on
sites occupied by British subjects, and any competition which might
arise between French and British fishermen would be settled on the
spot by the summary joint action of naval officers..." (F.F.
Thompson, The French Shore Problem in Newfoundland, Toronto, 1961,
104). While the British government considered the modus provisional only for 1890, it had hoped that, once it was accepted by
all parties concerned, it could continue indefinitely and avoid the
need for a permanent settlement which would not satisfy all
concerned. It had also hoped Whiteway's pending arrival in London
could be used to convince him to accept the modus, especially since
he wanted imperial financial assistance to help complete the
construction of the railway to the west coast.
The modus vivendi set off an immediate political storm in
Newfoundland following its public announcement and, to forestall
opposition attacks on him of being "unpatriotic"--the former
Thorburn opposition had now re-styled itself the Newfoundland
Patriotic Association to capitalize on public discontent with the
modus--Whiteway, before he left for England, had to criticize
publicly the modus, much to the consternation of the British
government. Claiming that he was not consulted on the modus and
arguing that the British government had conceded to the French
their right to take lobsters and hence interfere with Newfoundland's territorial rights, Whiteway sent a strong protest to the
Colonial Office. This protest was partly in order to head off
growing public opposition to the modus being organized in St.
John's and the outports by the Patriotic Association. Politically,
Whiteway's efforts to deflect public criticism from his government
soon received a setback, however, when it was revealed that
Whiteway had been part of initial talks concerning the modus.
Consequently, his response was to take a nationalistic stand on the
issue as patriotic and emotional as that being espoused by the Tory
Patriotic Association.
During the summer of 1890 the lobster problem worsened when
Sir Baldwin Walker, the British Commodore on the Newfoundland Naval
Station, closed a Newfoundland lobster factory in St. George's Bay
under the terms of the modus. Since the owner, James Baird, was a
prominent Tory merchant, he sued Walker to recover damages for
having closed the factory, since Baird knew that Walker had no
statutory authority to enforce the treaties. However, since it
appeared that Baird's prosecution of Walker would probably succeed,
and since Newfoundland itself would not pass the necessary
legislation, in 1891 the British government introduced legislation
in the House of Commons authorizing its naval officers to enforce
the treaties on the colony's west coast. This legislation became
known popularly as Knutsford Bill (after Lord Knutsford, the
Secretary of State for the Colonies), but in Newfoundland it was
derisively referred to as the "Coercion Bill."
To prevent its passage in the British Parliament, the
Newfoundland government sent an all-party delegation from the
legislature to England to argue Newfoundland's position. Eventually, Whiteway agreed to compromise on the matter: Newfoundland
would pass a temporary enforcement bill for the enforcement of the
treaties up to the end of 1893 in return for the withdrawal of the
Coercion Bill from Parliament. While Britain would over the
remainder of the decade press Newfoundland for more permanent
legislation, Newfoundland responded to such requests through a
series of temporary enforcement bills until the French Shore
problem was eventually resolved in 1904 by France and Britain to
Newfoundland's satisfaction. In short, this compromise represented, the historian F.F. Thompson has observed, "a compromise
between the Knutsford Bill of 1891 and the defiance of the colony"
(The French Shore Problem in Newfoundland, 149), or as the
historian J.K. Hiller has noted, a compromise between the "dictates
of imperial obligation and local nationalism" (Hiller, A History of
Newfoundland, 18741901, 264).
The strains of imperial obligation and local nationalism also vied for supremacy in 18901891 when Colonial Secretary Robert Bond unsuccessfully attempted to secure a reciprocal agreement between Newfoundland and the United States. Believing that Bond would have little chance of negotiating such an agreement, in early 1890 the British government gave him permission to do so. And, if he were to have success, then Britain hoped to have Canada included in any possible deal. Consequently, the British Ambassador to the United States, Julian Pauncefote, was informed to go slow with the Newfoundland-United States talks, which Bond would carry out in his presence. Pauncefote was to ascertain also if Canada could be made part of any such agreement. The American Secretary of State, James G. Blaine, replied that Canada would have to negotiate its own separate trade arrangement; therefore, Pauncefote allowed both the Newfoundland and the Canadian talks with the Americans to proceed simultaneously.
However, when Canada saw the draft terms of a proposed
Newfoundland-American convention, it protested vigorously to the
British government, which in December 1890 ordered Pauncefote to
suspend immediately the Bond-Blaine talks, until Canadian interests
that might be affected by such a convention were fully considered
by Canada. Thinking that Bond only wished to say goodbye to Blaine
before departing for Newfoundland from Washington, the Ambassador
allowed Bond to visit Blaine in his absence. Much to Pauncefote's
chagrin and embarrassment, Bond over the next day negotiated a
final commercial agreement with Blaine acceptable to both sides.
Under the so-called Bond-Blaine Convention of 1890, American
vessels would be permitted to buy bait on the same terms in
Newfoundland as local fishermen and to trade at all Newfoundland
ports. In return, the United States would admit duty-free all
Newfoundland fish, including lobsters, and crude mineral ores.
Satisfied with this deal, Bond immediately sought ratification from
the British government for his deal with the Americans.
Such approval was not forthcoming because of Canadian
objections to the deal to the British government. Since Canada had
failed to reach its own agreement with the Americans, it did not
want any reciprocity between Newfoundland and the United States
because such a commercial agreement would foster jealousies and
political discontent in the Maritime Provinces of Canada. The
result was a serious deterioration in 1891 in Newfoundland-Canada
relations. In that year Newfoundland refused bait licenses to
Canadian fishermen in the hope that this action would force Canada
to drop its objections to the Convention. Canada, in turn,
appealed to the Colonial Office that the Bait Act did not give the
Newfoundland government the right to discriminate against British
subjects, but Newfoundland ignored such protests. This Newfoundland action sparked off a tariff war between the two colonies,
Newfoundland slapping a high tariff on imported Canadian flour and
Canada placing a prohibitive tariff on Newfoundland fish. This
situation continued for over a year until the two governments
agreed to a conference in Halifax in November 1892 to discuss
fisheries problems. The outcome of such a meeting did little to
resolve their mutual difficulties, especially since Canada
strenuously objected to Bond's determined appeals to the Colonial
Office for ratification of the 1890 Convention. As for the bait
question, a recent ruling by the Imperial government that Newfoundland could not deny Canadian fishermen bait licenses effectively
denied Newfoundland the use of bait as a lever in diplomatic
relations with Canada. As J.K. Hiller has pointed out in his Ph.D.
Thesis, A History of Newfoundland, 18741901, that within the
British Empire, Newfoundland had a subordinate position in relation
to that of Canada. While both Newfoundland and Canada each were
responsible government colonies and, in theory, were equal in the
same rights and privileges, in any confrontation between the two
colonies Britain would have to choose Canada over Newfoundland
because of the former's greater stature and influence.
The political system of the late 19th century had also been described by political scientist S.J.R. Noel as "between merchants and lawyers and lawyers and merchants." Noel has observed that "party localities were as uncertain as they were fierce, and support was generally something a prime minister had to purchase, or reinforce, by the judicious use of patronage, whether political, personal, or purely commercial" (Noel, Politics in Newfoundland, p. 19). A more contemporary situation is that described to Canadians by Newfoundland police chief J.F. Morris Fawcett in 1895 as "merely a matter of `ins' and `outs'. The mercantile party is called `Tory' by its opponents, who take to themselves the name of `Liberal'. The so-called Liberal Party in the House of Assembly consists principally of lawyers." The press was critical to the success of political parties and copies of newspapers were distributed free by the post office to the outports where the only news was often that provided by the partisan press. During the 1893 general election, the Liberal Evening Telegram satirized in verse the problems the opposition leaders, St. John's merchants Moses Monroe and Baine Grieve, had in writing a manifesto and in their desperation having to call on Tory Bonavista MHA, Alfred B. Morine.
"Mun! fill up your glass and pass the wine;
'Twill brighten us up. Oh! look at the time!
We must telephone down for that cad Morine,
To write the manifesto.
I hate the beggar. 'Tis against the grain
I send for him now; but he's got the brain,
And he'll do the job, which we've have tried in vain,
Of writing the manifesto.
All right, said Monroe, I hate him, too;
He's the bossest liar that ever I knew;
But 'tis lies we want, and 'tis lies will do:
He shall write the manifesto.
Born in Nova Scotia, Morine came to Newfoundland in 1883 to work
for the St. John's Evening Mercury, which supported Premier
Whiteway. In 1886 he won a byelection for Bonavista district as a
Whiteway supporter, but by 1889 was ousted from the Whiteway party
by Robert Bond who objected to Morine's efforts to interest
Whiteway in supporting Confederation. A political strategist,
Morine was active in local politics until the 1920s and was
frequently not far from the centre of controversy (see Robert Cuff,
"Alfred Bishop Morine," Encyclopedia of Newfoundland and Labrador,
vol. 3).
During the early 1890s Newfoundland also experienced serious
domestic political and financial problems that brought the colony
to the verge of financial bankruptcy and nearly led to union in
1895 with Canada. Re-elected in the 1893 general election, in
January 1894 the Whiteway government found itself the victim of a
carefully planned strategy devised by Morine. On January 6, a
number of Tories filed petitions in the Supreme Court under the
1889 Corrupt Practices Act charging 17 government members with the
illegal use of public funds during the campaign. The first case,
heard in February by former Tory politician and now Judge James
Winter, found against two government members representing the
District of Bay de Verde. Disturbed by this verdict, Premier
Whiteway feared that the other 15 defendants as well would receive
a similar fate and would be unseated from the House of Assembly.
Rather than risk defeat in the House through this means, through
the loss of his 13-seat majority he received in the recent
election, he asked Governor O'Brien for approval to have legislation enacted repealing the 1889 Corrupt Practices Act and make it
retroactive to legalize the actions against which the petitions had
been filed.
O'Brien refused to sanction Whiteway's request for this
legislation, since he believed this would have the effect of
stopping the trials and casting him in a partisan light. Ironically, by not acceding to his Premier's request, O'Brien was in fact
acting in a very partisan manner. For, under the responsible
system of government, the governor was to accept the advice of his
ministers and be above reproach for doing so. In the end, the
Colonial Office provided O'Brien with a compromise solution:
Whiteway could repeal the legislation but not be given an act of
dissolution. If he resigned for not getting his demand for a
dissolution, then O'Brien was to call upon the opposition to form
a government. Consequently, Whiteway decided not to press the
repeal issue, but instead asked O'Brien for an immediate dissolution and a general election, a request denied by O'Brien on the
grounds that it was his job to uphold the law and not evade it
which he would be doing if he granted the dissolution. In turn,
Whiteway threatened to resign if he never got the dissolution; he
threatened also not to pass supply and revenue bills and prevent
any minority government from doing so. On April 11 he tendered his
resignation, despite having a majority in the House, but it was one
which was dwindling because of the guilty verdicts being rendered
by the Supreme Court against members of his government.
At O'Brien's request, the Tory Leader of the Opposition, A.F.
Goodridge, formed a minority government and asked the governor for
a prorogation until he had a majority of members in the Assembly
through the unseating of a sufficient number of sitting Liberals.
He met the House on April 14 and announced its prorogation until
April 23. A subsequent Liberal vote of non-confidence failed to
carry in the House, despite the Liberal majority, because the
motion was not permitted on constitutional technicalities. While
Goodridge succeeded in convincing the governor to keep the House
closed passed the April 23 date for another month, his government
did not remove Whiteway and his former cabinet colleagues from
their positions as directors of the government Savings Bank.
Consequently, Whiteway supporters unsuccessfully attempted to use
their influence as bank directors to create a commercial crisis in
the colony and force the re-opening of the Assembly before they
actually lost their majority in the Assembly through being
unseated. However, by the end of July, Goodridge had finally
gotten his majority and had the Assembly convened to pass the
necessary supply and revenue legislation for the 18941895 fiscal
year. The Assembly then closed to await the results of the
byelections to fill the seats left vacant by the unseated Liberals.
Despite the appointments of Tories to road boards and the use of
the government steamer for campaigning--Judge James Winter had
conveniently returned early from his circuit for this purpose--the
government only took one seat from the Liberals, thus being placed
back in a minority position once more when the Assembly re-convened. Goodridge showed no rush to surrender the reins of power
to the Liberals, claiming the right to stay in office until
defeated in the Assembly. Having a personal dislike for the
Liberals, Governor O'Brien did not force the issue with Goodridge.
What did force the issue in December 1894 was the collapse of
the colony's two commercial banks. On the one hand, the political
problems of the past year had had the effect of seriously undermining the confidence of foreign investors and bankers in the colony's
economy. Indeed, the government's railway contractor, Robert G.
Reid had had problems trying to sell his railway debentures in
Britain, while the prices of outstanding government debentures of
all issues had dropped greatly. And, while this was happening
outside Newfoundland, locally the Whiteway Liberals were attempting
to encourage a run on the Commercial and Union Banks by telling
people not to accept their banknotes.
On the other hand, the commercial crisis had resulted from the
past borrowing practices of the banks' directors. There had been
bad fisheries since the late 1880s and the directors had made large
loans to themselves to maintain their businesses and thus
overextended themselves. They also drew credit upon the funds of
their depositors as well as the funds of the government Savings
Bank deposited in the commercial institutions. For instance, in
1882 the firm of E.J. Duder began business with a capital supply of
$128,000, but by 1894, it owed the Commercial Bank a total
indebtedness of $668,000. Thus, by 1894 the two banks had made a
total of $5.1 million in outstanding loans--of which $2.1 million
went to their directors--but had only $4.8 million in deposits on
hand and there was little possibility that such loans could be
repaid in the foreseeable future. This situation had been allowed
to develop with the financial affairs of the two banks because of
the falsifying by the bank directors of their annual reports to
government. Such reports did not show the real amount of loans
outstanding in relation to assets on hand.
In December 1894 financial chaos ensued when the London and
Westminster Bank refused to honour any further banknotes from the
two local banks or any form of their commercial exchange. The
occasion for this action was the death of an English commission
merchant who represented several prominent St. John's merchants.
The trustees of his estate demanded an immediate cash payment from
the St. John's merchants to settle their debts, which the Commercial Bank was unable to meet. Accordingly, on December 10--"Black
Monday"--the Commercial was forced to suspend payment, its closure
being followed by that of the Union Bank the same day. Several
large firms also closed their doors and stopped doing business and
financial panic followed, as crowds filled the streets looking for
exchange for their worthless banknotes. Since the Savings Bank had
its assets tied up in unsaleable colonial debentures and notes of
the two failed banks, its position was also precarious and the
government faced bankruptcy. When the Goodridge government failed
to secure financial assistance from the Imperial government it
resigned on December 12 in favour of a Liberal ministry led by St.
John's lawyer D.J. Greene (Whiteway having been unseated in the
election trials). Financial stability was restored in part through
the establishment of Canadian branch banks in the colony and the
legalization of Canadian currency as a medium of exchange.
Moreover, Greene passed legislation guaranteeing Union Bank notes
at 80 cents on the dollar and those of the Commercial Bank at 20
cents. The Bank of Montreal now became the colony's financial
agent, acquiring the position by loaning the government $400,000 to
enable it to meet the half-yearly interest owing on its bonds and
debentures due on January 1, 1895. The government's credit was
further strengthened in May 1895 when the Colonial Secretary,
Robert Bond, managed to raise $2.5 million from London bankers in
return for a government policy of stringent economy in government
expenditures; in the short-run, Bond got a limited loan on behalf
of the government by pledging his own personal credit. Bond's
success came only after the colony failed to obtain financial
assistance from the Imperial and Canadian governments. In
particular, negotiations over financial assistance from Canada
proceeded as part of discussions in April between the Newfoundland
and Canadian governments over possible terms of union between the
two colonies.
In March 1895 the anti-confederate Bond had led a government
delegation to Ottawa to negotiate terms of union, so desperate had
Newfoundland's financial situation become. The Colonial Office had
been willing to provide financial assistance only if Newfoundland
were to agree to a Royal Commission to investigate its financial
and constitutional situation with the implication that responsible
government could be suspended. Confederation now appeared the
lesser of two evils. Negotiations commenced on April 4 and ended
twelve days later with the Canadians offering less than what the
Newfoundlanders were prepared to accept and the British unwilling
to provide any assistance to bridge the financial differences
between the two parties. Newfoundland would not seriously
contemplate Confederation again until 1947.
Source: Melvin Baker, "History 3120 Manual: Newfoundland
History, 1815-1972", Division of Continuing Studies, Memorial University,
1994, revision of 1986 edition)