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The Commissioner of Crown Lands of Canada, in his report for the year 

 1856, in describing the workings of this rule, says : " It will be readily seen, 

 however, that the operation of such a system would reach a climax within a 

 limited period ; that, although it could scarcely be said to be even a check in any 

 degree upon monopoly, in the first instance, the increase in the annual rents on 

 unoccupied tracts after the first few years, became so sudden and great that a 

 crisis became inevitable. 



" This crisis arrived in the year before last (1855), the rents of unoccupied 

 berths having in many cases, reached a figure the preceeding year which, if again 

 doubled, with a certainty of being quadrupled in 1856, would have rendered the 

 ground untenable. 



" A general effort was therefore made by those interested to have the system 

 suspended or rescinded. A new feature in the controversy arose on this occasion 

 from the interference of a great body of the shipping merchants of Quebec, who 

 submitted a counter-petition opposed to the views of those of the producing 

 merchants who desired to be relieved from the accumulating ground-rents. 



" The lumber trade being one of the principal resources of the country, the 

 regulations by which it is governed must always be of great moment and worthy 

 of the greatest consideration, and therefore I trust that the importance of the 

 subject to the country at large may be deemed sufficient to warrant a pretty 

 extended reference to the consideration bestowed upon it at the period of the 

 crisis referred to, and which has resulted in establishing a degree of permanency in 

 the institutions connected with it which was previously unknown. 



" As the lumber trade is ordinarily conducted in this country, there are two 

 distinct branches of it, viz., that in which the producer is engaged, and that which 

 is carried on by the shipper. There are some firms who are engaged in both 

 branches of the trade, but, although mutually dependent, they are always distinct 

 from and sometimes antagonistic to each other. The principal feature in which 

 they conflict is that it is the interest of the producer that the prices should rule 

 high, as compared with the cost of production, while it is the interest of the 

 shipper that they should rule low in the lumber markets of the country, as com- 

 pared with the prices in England. 



" This subject was very fully treated of in the evidence taken before the 

 parliamentary committee in 1849, appointed to inquire into the causes of the 

 ruinous state of the trade which had existed for some years previous to that date 

 (see appendix P.P.P.P. of that year), which it may not be considered inopportune 

 to refer to, as perhaps the greatest crisis the trade has ever had to contend with 

 since it grew to anything like its present importance. 



; ' By the evidence obtained by the committee on that occasion, it will be seen 

 that, commencing with the year 1846, there was a supply in the Quebec market 

 wholly disproportionate to the demand, originally caused by an unwisely forced 

 production, and aggravated in the succeeding years by a diminished consumption 

 arising from the general depression in commercial affairs which occurred in 1847. 

 The important fact to be observed here, is, that in 1846, a year in which the 

 statistics of the trade proved that all the elements of prosperity existed in the 

 highest degree, the most wide-spread ruin occurred among the producers. The 

 business of 1845 was most profitable to the country and to individuals engaged in 

 the trade, while the business of 1846 was ruinous to individuals and a loss to the 

 country. The demand and the shipments in 1845 exceeded those of previous 

 years ; the demand and the shipments in 1846 were equally great, or even slightly 

 in excess of those of the previous year. The reason of the prosperous state of 

 the trade in the one year and its ruinous state in the other, is, therefore, to be 

 found in the fact that in 1845 the supply was in just proportion to the demand, 



