The Secretary of State for the Colonies, to the Governor Generalt (Copy of Copy.) ' Dowsxsc Smear, 4th Sept, 1869. Canada—No. 177. Shy—-

I have read with much satisfaction the Speech with which you closed the late session of the Parliament ot the Dominion of Canada, as well as the Resolutions of the Parliament. authorizing your Government to enter 'into negotiations with the Government of Prince Edward Island, with a view to the admission of that Colony into the Dominion.

i trust, that in settling the terms proposed, as the basis of this arrangement, the Government of the Dominion will deal liberally as well as justly with the Island, and that the Government of the Island will receive favorably such proposi- tions when made, as l believe it is in the interest of the whole of the B. N. A. Colonies, that they should be united under one G0vernment; and II. M’s. Government watch with much interest, the successive steps that are being taken towards the accomplishment of this great end.

I have, 850., (Signed) GRANVILLE. Governor General, The Right Ilonorable Sir John Young, Bt., G. C. B., G. C. M. G , &c., &c., &c.

Government House, Ottawa, Canada, December 18, 1869.

(Copy)

Sir;

I nave the honor to transmit, herewithj'or your information, and that ol'your Government, a copy of a minute of the Privy Council of Canada, relat- ing to the question of a Political Union of the Island of Prince‘ Edward with the Dominion.

JOHN YOUNG. Sir R. Hodgson, ‘ Administrator, 850., P. E. ‘1.

Copy of a Report of a Committee of the Honor- able the Privy Council, approved by His Ex~ cellency the Governor General, in Council, on the 14th December, 1869.

The Committee of Council have had under con- sideration, a memorandum, dated 11th December, 1869, from the Hon Sir George E. Cartier and Messrs. Tilley and Kenny, stating, that at the desire of their colleagues, they visited the Island of Prince Edward, in August last, and having, while there, had the opportunity of discussing, informally, with members of the Government, and other leading public men, the question of the political union of the Island with the Dominion, and having, in view of the importance of estab- lishing a basis on which such union can be eli'eet- ed, carefully considered the question under its linancial aspect, they have come to the conclu- sion that the following proposals, which they submit for the concurrence ol'the Council, should form the financial basis of such uni-on, viz :

ROYAL GAZETTE.

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Ist. The Dominion Government will assume and defray all the charges for the following ser- v1ces, Viz:

(IL) The salary of the Lieutenant Governor.

(8.) The salaries of the Judges of the Sn; preme Court and District or County Courts, when established. .

(0.) The charges in respect of the department of Customs.

(1).) The Postal Department.

(E.) The protection of the Fisheries.

(R) The provision for the Militia.

(G.) The Light Houses, Shipwrecked Crews, Quarantine and Marine Hospitals.

(11.) The Geological Survey.

(1.) The Penitentiary.

(J.) Efficient .Steam Service for the convoy- ance of Mails and Passengers, to be established and maintained between the Island and the Domi- nion, winter and summer, thus placing the Island In continuous communication with the lnterco’lo— nial Railway and the Railway system of the Do- minion; and such other charges as may be inci- dent to and connected with the services, which, by the B. N. A. Act, 1867, appertaiu to the General Government, and as are, or may be, allowed to the other Provinces.

2d. Canada to be charged with the debts and liabilities of the Island existing at the time of the union.

dd. That the Island not having incurred debts equal to those of the other Provinces now consti- tuting the Dominion, shall be entitled to receive, by half-yearly payments, in advance, from the General Government, Interest at the rate at five per cent. per annum, on the difference between the actual amount of its indebtedness and the-in- debtedness per head of the population, at which Nova Scotia and New Brunswick are now allowed in the Union, or the payment of such dill'erence, in five per cent. Government Bonds, payable in London, as the Island Government may elect, taking the population of the Island in 1861 as the basis of the calculation. -

4th. The Dominion Government to pay $25,« 000 per annum to the Island to meet the expenses of the Local Government and Legislature. '

5th. An annual payment to be made to the Island Government equal to 80 cents per head of the population, to be augmented in proportion to the increase of the population as may be shown by each Decennial Census, until the population amounts to 400,000, at which rate such Grant shall thereafter remain, it being understood, that the First Census shall be taken in the year 1871.

They submit that much discontent has for many yeas existed amongst. the inhabitants ofthe Island, arising from the fact that the Lands of the Colony had been granted by the Imperial Government in large blocks, and chiefly to persons rrsident abroad, thus leaving the Government of the Island no lands, the proceeds ol'thc sale of which could, as in the other British Colonies, be appro- priated towards~ Local improvements and the xnainteinancc of “the Government.

That this discontent has been increased from the fact, that many of the settlers in the Island can only obtain land-"on lease, instead of the pur-

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