to waive Foreign Fishing-vessels Act, 1906, and points out that this and other restrictive legislation had compelled United States' fishermen to use purse-seines or abandon their rights; second, it acknowledges cordial disposition evinced by offer not to apply section 3 and first part of section 1 of Act of 1905; third, United States' fishermen will gladly pay light dues if not hindered in their right to fish, and are not unwilling to comply with regulation to report at custom-houses when possible, but it is remarked that it is sometimes physically impossible to break through ice for that purpose; fourth, as regards purse-seines and Sunday fishing, very grave difficulties present themselves, since if both these are taken away there might be, as things stand. no opportunity for profitable fishing under United States' Treaty rights. United States' Government are convinced that purse-seines are no more injurious to common fishery than gill nets; are not, in fact, so destructive, and do not tend to change migratory course of herring as gill nets do through death of large percentage of catch and consequent pollution of water. The small amount of purse-seining could not of course materially affect common fishery this season; besides, many United States' fishermen have already sailed with purse-seines as usual, and the others are already provided with them. This use of purse-seines was not free choice of United States' fishermen, they have been driven to it by local regulations, and continued use of it at this late date, this year seems vital. United States' Government will, however, renounce Sunday fishing for this season if His Majesty's Government will consent to use of purse-seines, and they cannot too strongly urge acceptance of this solution. (End of substance of Memorandum.)

His Majesty's Government propose to consent to use of purse-seines, subject of course to due regard being paid to other modes of fishery, and earnestly trust that your Ministers will see their way to agree to this course, and to pass regulation temporarily removing prohibition of use of purse-seines. If your Ministers fall in with this proposal, His Majesty's Government will be happy to endeavour to arrange with United States' Government that practice of engaging Newfoundland fishermen just outside 3-mile limit, which to some extent prevailed last year, should not be resorted to this year. Telegraph reply as soon as possible.

No. 27.

The Earl of Elgin to Governor Sir W. MacGregor.

(Telegraphic.) Downing Street, September 19, 1906. REFERRING to your telegram of the 15th September, I am sending full reply by mail. I would like, in the meantime, to observe, first, that Lord Salisbury's speech referred to drew clear distinction between internal affairs of Colony and matters of international interest, and insisted strongly on right of Imperial Government to intervene in matters coming within latter category; secondly, I have never admitted, and cannot admit, that "Foreign Fishing-Vessels Act, 1906," comes within foriner category; thirdly, like my predecessor, I have never approved policy embodied in Act of 1905, nor have I ever given any indication that I should be prepared to advise His Majesty in Council to bring into operation amended Act of 1906.

No. 28.

Governor Sir W. MacGregor to the Earl of Elgin.-(Received September 20.)

My Lord,

Government House, St. John's, Newfoundland,
September 7, 1906.

I HAVE the honour to transmit herewith copy of a Minute of Committee of Council which has reference to your Lordship's two telegrams of the 3rd instant. This Minute has been prepared after earnest consideration by my Ministers, and embraces their unanimous opinions on the points dealt with by them.

2. Clause 3 of the Minute defines the policy of this Government as embracing the following points :-

(a.) To prevent the sale of bait fishes to American vessels by the fishermen of this Colony.

(b.) To prevent the fishermen of this Colony from assisting the crews of American vessels in catching bait fishes.

(c) To enforce the revenue and customs laws so as to prevent smuggling by American fishing-vessels.

(d) To secure compliance by American fishing-vessels with the Fishery Regulations of this Colony.

The Minute states in paragraph 7 "that there is nothing in the policy of this Government that is new or novel, or that should occasion difficulty or embarrassment."

3. As regards the points comprised under (a) and (b), your Lordship's predecessor, in his telegram of the 25th October last, instructed me as follows: "Your responsible Advisers have the power, if desired, to prevent the inhabitants of Newfoundland from assisting in the exercise of their (Americans) fishery rights. Secondly, it is in strictness within the power of your responsible Advisers to refuse permission to purchase fish to all United States' vessels on any part of the coast of Newfoundland, whether for bait purposes or for export in bulk." From this it may be inferred that His Majesty's Government accept the proposition that this part of the policy of the Colonial Government is within its competency, apart from the question of the wisdom or otherwise of such a policy.

4. My Ministers understand from the Memorandum† conveyed to me in your despatch of the 15th February last, that His Majesty's Government is in sympathy with them as regards the policy indicated under (c) and (d), and they have expressed grateful recognition of the force and clearness with which their rights and aims have been put forward in that Memorandum.

My Ministers do not fail to recognize the fact that His Majesty's Government may have difficulty in getting the United States' Government to admit the reasonableness of the contentions advanced in the Memorandum in support of the policy embraced under (c) and (d); and they are keenly conscious of the responsibility that devolves on them as servants of the Crown to abstain from any action that would produce other than friendly and amicable relations between His Majesty's Government and the Government of the United States.

5. Section 12 of the Minute states that the real questions at issue are

(1.) The right of the inhabitants of the United States to purchase bait fishes within the territorial jurisdiction of this Colony;

(2.) The right of American masters to engage the people of this Colony to procure such supplies for them.

This statement of "the real questions at issue" should be understood to mean that these two questions, which I understand to be admittedly within the competency of the Government of the Colony, are those that my Ministers regard as of urgent and prime importance at the present time. My Ministers do not, in making this statement, ignore the fact that the most serious points in the whole controversy are those that are connected with the question of the validity of the local Fishery Laws and Regulations, and of the customs laws as applied to American fishing-vessels.

6. The course that my Ministers urge on your Lordship for disposing of the two questions specified in paragraph 12 of the Minute is that the Foreign Fishing-vessels Act of 1906 may be brought into operation. It might at first sight appear as if this would be the reverse of a remedy for existing difficulties, but it can be shown that the proposal deserves careful consideration, on the following grounds:

(a.) The proclamation of that Act would remove, as pointed out in the Minute, the objections that have been advanced by the Americans to the Act of 1905.

(b.) It would enable this Government to give practical effect to their policy, as expressed in what they regard, in paragraph 12 of the Minute, as "the real questions at issue."

(c.) It does not appear that giving effect to that part of the policy and wishes of this Government would seriously complicate the negotiations now pending between His Majesty's Government and the Government of the United States.

(d.) It would not improbably gravely complicate matters were the Act of 1906 made valid, and were, for example, sections 5 and 13 put into active operation as against

* The telegram referred to continued thus: "but His Majesty's Government would strongly deprecate any such action, and must decline to be responsible for any consequences in the way of retaliation by the United States which may result therefrom."

† No. 3.

American fishing-vessels, in the light of the views held by this Government, and of the ground taken in the Memorandum referred to above.

But I am in a position to give to your Lordship the most positive assurance that, were the Act of 1906 brought into force, its special provisions would not be exercised by this Government against any American fishing-vessel without first obtaining your Lordship's sanction to such a proceeding.

My Ministers do not forget the grave and serious responsibility that would devolve on them were they to proceed to enforce on American vessels at the present time such provisions as those contained it sections 5 and 13 of the Act of 1906, or, for example, the Fishery Regulations that prohibit the use of purse seines in the herring fishery, or that forbidding fishing on Sunday.

My Ministers feel quite certain that under such circumstances they could maintain perfect peace between the fishermen of the two nations during the coming season, while at the same time preventing our own fishermen (under the Act of 1906) from fishing for and from selling fish to the Americans.

I have no hesitation in saying that your Lordship may implicitly rely on the assurance given that the action that would be taken under the Act of 1906 would be limited by this Government to what is stated above-simply to restrain the actions of our own fishermen, and that by proceeding only against them.

7. Such a course as that suggested by my Ministers would practically mean that proceedings would not, without your sanction, be taken against American masters on the rights now forming the subject of negotiations, such as the payment of light dues, entering at the Customs, fishing on Sunday, the composition of American crews, and using purse seines.

The last point calls for some remarks. It is reported in the press that American fishermen are coming here provided with purse seines. If they use those nets in these waters then this Government, to put our fishermen on equal terms with the American fishermen, will have to rescind the Regulation that at present prohibits them from using the purse seine. This is an admittedly undesirable expedient, but my Ministers feel that it would be greatly better to adopt it than to institute proceedings against Americans that might produce serious complications.

8. My Ministers believe that, if the course suggested in the two last preceding paragraphs is adopted, your Lordship will fully concur with them in thinking that the presence in these waters of an American vessel for the purpose of controlling the fishermen will become quite unnecessary. The presence of a Government vessel on such a service could hardly fail to produce an undesirable feeling in the minds of fishermen and others, and would tend to weaken the relations of trust and friendship that up to now have subsisted between the fishermen of the two nations, and which it would be a pity to disturb.

9. The contents of this despatch have been communicated to my Ministers, and they unreservedly pledge themselves to carry out loyally and in good faith all that is undertaken in it. I inclose copy of a letter I have received from my Prime Minister to that effect.

Minutes of the Committee of the Honourable the Executive Council, submitted for the approval of his Excellency the Governor.

THE Committee of Council have had under consideration two cablegrams received by his Excellency the Governor from the Right Honourable the Secretary of State for the Colonies, bearing date the 3rd instant, and regret to observe that their Minute of the 15th ultimo has been received by His Majesty's Government with much disappointment.

They had hoped that the reasonableness of the position they set up, and the argument adduced in support of the same, would have found favour with His Majesty's

Government.

2. They cannot conceive how their policy in respect to American fishermen visiting the coasts of this Colony in quest of bait fishes, outlined in the Foreign Fishing-vessels Act of last Session, can have placed His Majesty's Government in any serious difficulty,

for it involves no breach of any Treaty obligation, neither does it interfere in any way with any rights heretofore exercised by American citizens under Treaty.

3. The policy that they have adopted is intended to prevent the sale of bait fishes to American vessels by fishermen of this Colony, and to prevent them from assisting the crews of American vessels in catching such fishes, to enforce the revenue and customs laws so as to prevent smuggling, and to secure compliance with Colonial Fishery Regulations that have been framed with a view to the protection and continuance of the fisheries.

4. With regard to the prohibition of the sale of bait fishes to American vessels, and of the capture of such fish by the fishermen of this Colony when intended for sale to foreigners, the Committee would observe that the principle involved in such restrictions was approved by His Majesty's Government in 1887, when the Bait Act came into operation, and the principle has been carried into practice for many years against the subjects of France who visit the coasts of this Colony to engage in the fisheries, exception only being made in certain localities when it was made manifest to the Government that an injury would accrue to the fishermen of the Colony by a strict enforcement of the Act.

5. The revenue and customs laws were ever enforced against American vessels entering the territorial waters of the Colony to engage in its fisheries up to last year, when for the first time the captains of American vessels objected to complying with those laws, and out of deference to the wish expressed by His Majesty's Government Ministers abstained from enforcing them.

6. Up to last year, with but few exceptions, American vessels conformed to our Fishery Regulations, and, as was pointed out in the Minute of Committee of Council above referred to, the State Department at Washington by official instruments enjoined on United States' fishermen the duty of respecting those Regulations.

7. There is nothing, therefore, in the policy of this Government that is new or novel or that should occasion difficulty or embarrassment.

8. The Committee of Council notice that His Majesty's Government have decided to act on the principles indicated in Lord Kimberley's speech in the House of Lords in 1891 when discussing the course taken by Lord Salisbury's Government in the matter of a modus vivendi with France, and have already proposed to the United States' Government a modus vivendi, under which the first part of section 1 and the whole of section 3 of the Foreign Fishing-vessels Act of 1905 will be held not to apply to United States' fishing-vessels, and light dues will be waived.

9. The Committee of Council would venture to point out that the Foreign Fishingvessels Act of 1906, which was passed in order to meet the views of His Majesty's Government in respect to sections 1 and 2 of the Act of 1905, as well as to enable the Government of this Colony to restrain the fishermen of the Colony from engaging themselves to Americans to catch bait fishes, would, by being brought into force by droclamation, remove that which appears to be the principal, if not the only, objection to the 1905 Act, and obviate the necessity of the proposed modus vivendi, the main provisions of which, as set forth in the despatch under reference, deal with sections 1 and 3 of the 1905 Act.

10. The Government of this Colony has never exacted duties in respect of goods on board United States' vessels necessary for the prosecution of the fishery and support of the fishermen during the voyages to and from the fishing grounds, and neither is any such action contemplated.

11. It is respectfully submitted that the quotation from Lord Kimberley's speech in the House of Lords in 1891 justifying the modus vivendi with France is scarcely applicable to the case under discussion. Lord Knutsford, in introducing that measure, and the Earl of Kimberley, in supporting the same, set forth that it was impossible to avoid such legislation, "first and principally because it had been discovered that in fact there existed at the time no lawful mode of enforcing His Majesty's Treaty obligations in Newfoundland," the Act which gave the necessary power having been allowed to lapse.

Further, the right of British subjects to erect permanent structures on the Treaty Shore had been questioned; great excitement and bad feeling had been aroused by the removal and destruction of such properties, and it was by reason of these circumstances that the modus vivendi of 1891 was regarded by both political parties in England as absolutely necessary.

12. No such condition of things appertains in the case under discussion, the real questions at issue being

(1.) As to the right of the inhabitants of the United States to purchase bait fishes within the territorial jurisdiction of this Colony; and

(2.) As to their right to engage the people of this Colony to procure such supplies for them.

There is in this case no question of the lapse of Imperial authority to enforce Treaty obligations; no question as to territorial rights, nor any excitement or bad feeling manifested in connection with the conduct of the fishery such as was held to warrant the modus vivendi of 1891.

13. The Committee of Council is extremely anxious to assist the efforts of His Majesty's Government in obviating the difficulties and dangers which His Majesty's Government consider are to be apprehended in the course of the approaching autumn and winter fishery, and having full knowledge of local conditions, which it is impossible for His Majesty's Government to possess, they consider that such assistance can be best rendered if they are empowered to call into force the Foreign Fishing-vessels Act of last Session, which would convey to them an authority to deal with the fishermen of the Colony, as they cannot do at the present time.

If His Majesty's Government intimates its willingness to consent to the Foreign Fishing-vessels Act of 1906 being proclaimed, and decides that the Government of this Colony can be justly held liable for an arbitration which, in the opinion His Majesty's Government, may render necessary or desirable by reason of the ambiguity of the Treaty that this Colony is in no way responsible for, then the Committee of Council will consider the question of such liability, as well as that of any damages arising out of the ambiguity of the Treaty, and that may accrue from the enforcement of the Foreign Fishing-vessels Act of 1906. R. BOND, Colonial Secretary.

(Signed)

September 5, 1906.

Sir,

Inclosure 2 in No. 28.

Sir R. Bond to Governor Sir W. MacGregor.

Colonial Secretary's Office, St. John's, Newfoundland,

September 7, 1906.

REFERRING to your communication of this day's date, forwarding, for the perusal of your Ministers, a despatch on the American question which you propose to forward to the Right Honourable the Secretary of State for the Colonies,, I have the honour to intimate that I read the said despatch to Committee of Council this afternoon and its contents were unanimously concurred in.

I have, &c.

THE American Ambassador called at this Office to-day, and requested an early reply to the Memorandum communicated by his Excellency on the 12th instant respecting the proposed modus vivendi in regard to the Newfoundland Fishery question.

His Excellency was informed that His Majesty's Government were doing all that they could to expedite an early and satisfactory reply, that they were pressing the Newfoundland Government to authorize temporarily the use of purse seines, on the understanding that care would be taken not to interfere with other modes of fishing, and that they hoped that, if this were agreed to, the United States' Government would do all in their power to discourage and prevent the engagement of Newfoundland fishermen just outside the 3-mile limit.

Mr. Whitelaw Reid said that he would telegraph in this sense to his Government.

I am, &c. (Signed) EDWARD GREY.