Sir:- Under your authority, as conveyed by Mr. Lowe's letter of May 2^nd, and confirmed by yours of May 16^th, June 2^nd and June 5^th, I have completed arrangements at Hamburg and Copenhagen for reducing the cost of the passage to Quebec for certain classes of emigrants, from fifty thalers (Prussian) to thirty-eight thalers, at Hamburg, and from sixty-six rix-dollars to fifty-two rix-dollars, at Copenhagen. (A portion of the Hon. Mr. McDougall's letter states the terms under which he has obtained these concessions from the Steamship companies, which terms are confidential in their nature, and therefore omitted from this published report.)

I have already apprised you per my unofficial letter of the 16^th inst., that the Montreal Steamship Company have agreed to the terms under which I have been enabled to effect; this important reduction for German and Danish emigrants proceeding to Canada.

I propose to use the same form of certificate for Denmark, Sweden and Norway. They will, however, only be issued at Copenhagen, Gothenburg, and Christiania, and the names of these places respectively will appear instead of "Hamburg" as in the copy sent you. I have had them lithographed, made up in books of 100 each, with counterparts, or "stumps", which the local agent who countersigns and issues them will fill up, sign, and retain as evidence of and a check upon the number of emigrants, assisted, and the amount of assistance granted by him.

I am satisfied that the issue of these certificates cannot safely be entrusted to persons who are in the passenger traffic. I shall, therefore, where I cannot be present myself, place them in the hands of deputies on whom I can rely. In Mr. Klotz's case, as he already represents you in Hamburg, and so far as I know, is not personally interested in the traffic, I have felt no hesitation in placing the issue of these certificates in his hands, but I shall nevertheless feel it my duty to supervise his proceedings.

The principal danger to be guarded against is the issue of these certificates in favour of persons pretending to be emigrating to Canada when in fact they are going to the Western States. The brokers and ship agents cannot be trusted to fix or attest the destinations of the emigrants, nor is there any security, in my opinion, in the formal or even written declaration of the emigrants themselves. As to written contracts, agreeing to remain in Canada or to repay the advance if they remove within a specified time, I am told they are found of no value in Australia, where the circumstances are more favourable for securing the performance of such contracts. Besides, the law in Germany especially interdicts the making of such contracts. In Scandinavia the police authorities would interfere under pretense of protecting the emigrant against imposition, and could throw such obstacles in the way of your agents that no business could be done. Practically, therefore, we are compelled to rely on the discretion and judgement of the agent who examines the emigrants before he issues the certificate in his favour; and 2^nd, on the efficiency of the arrangements in Canada for retaining and employing him.

A further security will probably be found in limiting the assistance to families and to single women. A man encumbered with a family will be disposed to settle down at the first opportunity. If a poor man (as the majority will be) the cost of moving is a great restraint upon him, while we may trust to the influence of the family tie to prevent his children, even when approaching the age of independence, from lending a very ready ear to the emissaries, domestic and foreign, of the Western Land and Railway Companies. Female domestic servants are so much in demand in all parts of Canada, and the wages offered them so much more than they have been accustomed to, that we may easily secure them if proper means are adopted on their arrival in Quebec.

Although I was not instructed to adopt a system so restricted as this, I have thought it better, subject to your approval, to begin with families and servant girls, and to await the result of the experiment with these before offering assistance to other classes.

I have already apprised you of the proposition made by Mr. Blichfeldt, the president of a combination of sailing ship freighters at Christiania, to reduce the fare of emigrants by sailing vessels from $14 to $7, if I would contribute one-half of the reduction on behalf of your Department. As an experiment, and bearing in mind your instructions of 7^th February last respecting sailing vessels, I assented to his proposal as regards families and single women to be forwarded in the JOSEPHINE, then advertised to sail for Quebec on the 18^th June. The assistance in this case would amount to $3.50 per adult instead of $4.86. I stipulated that these families and single women should be examined and approved by Mr. Sharpe or Mr. Crowe, as to their intention to settle in Canada, and their claims in other respects to assistance. The JOSEPHINE sailed on the 18^th, as advertised with a number of emigrants, 489 of whom were booked to Quebec only, and profess to be desirous of settling in Canada.

I would again remind you of the importance of retaining these Norwegians in Canada, for they may be regarded as pioneers, whose reports of their reception and settlement will do much to determine the future movements of their countrymen who contemplate emigration. The JOSEPHINE may be expected to reach Quebec early in August, and it would be well if preparations could be made to place those of her passengers booked for Canada, in some suitable neighbourhood as speedily as possible. An agent of the Ontario Government informs me that two townships have been set apart for Norwegian colonists somewhere in the Algoma District. I have very grave doubts of the expediency of sending these people into the woods north of Georgian Bay at so late a period of the year. A mistake of this kind at Gaspé, more than twenty years ago, has given to all Canada an evil reputation in Norway, which I find it very difficult to displace.

I mentioned in my unofficial letter of the 16^th inst. a suggestion I have made to the Ontario Government to make their $6 bonus available to the emigrant in Norway. As soon as I receive an answer, I will communicate to you its purport. By the plan I have proposed, Norwegian emigrant families and single women would be able with the same assistance as in the case of the JOSEPHINE, to reach Canada at the small cost of $2 for passage money! It would be difficult to fix a time limit to the number of Norwegians who would crowd the seaports to avail themselves of such an opportunity to emigrate to the New World. Accustomed to a rigorous climate and an unproductive soil, these poor but hardy Norsemen would soon recognise, in the happier conditions of industrial life in Canada, abundant reasons to be grateful for the help we had given them, and to be contented with their lot.

When conferring with the Messrs. Allan at Liverpool in the early part of last month, they showed me letters from a person of credibility in Iceland, a dependency of Denmark, representing that the hardy population of that inhospitable country, were anxious to emigrate to America en masse. Repeated failures of their scanty crops and volcanic disturbances which recently threatened them with destruction, have,---so this person states---, predisposed the whole population to seek a home in the new world. These people are well adapted for settlement in the northern part of Canada, and I therefore requested Mr. Ennis (the gentleman in charge of this description of business) to make farther enquiries as to the practicability of securing a considerable colony of them for settlement somewhere on the line of the Pacific Railway. Mr. Ennis gave me the address of his correspondent, and I have written him for information as to the number and class of people who are presently anxious to emigrate, and the inducements and facilities which may be needed to meet their ease. I believe the whole population of Iceland does not exceed 60,000 souls. Their chief exports are cattle, sheep and fish, and the northern part of Scotland their principal market. The course of emigration, if once established, would naturally be via Scotland. If justified by the information that reaches me during the next ten days, I shall risk the expense of sending a special agent to Iceland to make enquiries and preparations for a movement in the spring of next year. A steamer runs (occasionally) from Copenhagen to Iceland via Scotland, and the month of July is the most suitable for such a visit. If you should for any reason disapprove of my proposed action in the matter, be good enough to cable me on receipt of this letter.

Although you have given me very large discretionary powers, I feel it my duty to keep you informed as fully as possible not only of what I have done, but of the measures I propose to take especially where they are likely to involve some expenditure. I explained to you in a former letter some of the difficulties to be overcome in consequence of the general, and I must say very natural, hostility to emigration among the employers of labour and the governing classes in all these northern countries. Even in Canada we do not look with complacency upon the efforts of those who by decrying the country and its institutions prevent capital and labour from flowing into it, and therefore we need not be surprised to find, among the patriotic citizens of these old countries oppressed by burdens, it is true, but reviving and rejuvenating their political and industrial life with almost new-world energy, a feeling akin to that which animates us, and an aversion as strong towards those, whether native or foreign, who are endeavouring to persuade the people that they are badly off and badly treated in the old homestead, and have only to cross the ocean and enter a political and social paradise. The result is that emigration and emigration agents are not popular, and the business for the most part has fallen into the hands of men of inferior position and no influence. Publicists and politicians are reticent, for they are between two fires---the common people wish to hear about it, while the educated and the wealthy do not. The press is not available, except on strictly business terms. That portion of Mr. Dodge's speech in Parliament in which he gave his reasons for leaving the United States and emigrating to Canada, was translated and published gratis in the leading newspapers of Scandinavia. His great wealth was mentioned, and inferences unfavourable to the United States openly expressed, while those favourable to Canada were left for the reader to draw from on his own responsibility. That speech has done Canada much good and the United States much harm in Europe. It would be easy to fill the newspapers here with damaging extremes from the New York Herald, the weekly edition for Europe being compiled expressly, one would think, to prevent every kind of emigration, except of thieves and murderers, to that unhappy country. Its weekly summary is little else than a catalogue, black, bloody and disgusting, of violence and crime. I have not felt that it would not be either honourable or just to avail myself of the means so ready at hand, to frighten away emigration from the United States, in the hope that we might profit thereby. My impression is that in the minds of the ignorant and the half-informed, and as regards America and its geographical and political conditions, you may place all the emigrating classes in one or other of these categories, the dissemination of these stories would reflect no credit on us. Even in England, it is surprising how many people are still unaware of the existence of boundary lines in America. In judging of our political affairs, and in estimating the social status of the people, they praise or censure us all in a lump with comprehensive impartiality. They ignore all distinctions of states, territories and countries. A thousand miles and two or three mountain ranges are nothing in America, but everything in Europe. The other day, while the "Modoes" [!] were fighting for their lives in the lava beds, Hudson Bay shares fell £2, because a few timid holders of stock feared that Captain Jack, escaping from the Yankee army on the western slope of the Rocky Mountains, might induce the Indian fur hunters of the Mackenzie, the Copper Mine and the other rivers of the north, to take to the war-path, and send home "scalps" instead of rat skins! I was gravely asked the question in Lombard Street by more than one stock exchange broker if such a turn of affairs was not extremely probable. When such notions of individual prowess, of political and social sympathy, and of physical geography in America prevail in England, what may we not expect to find among the people of the Continent who do not speak the English language or read English books?

In this state of the popular mind in Northern Europe I have felt that I would best serve the interests of Canada by avoiding as much as possible disputes and controversies with the agents and representatives of the great Republic. I observe that the Globe attacks me because I did not engage in a platform fight with Mr. Sheppard, the able representative in London of the Northern Pacific Railway Company, at a Cow Cross tea meeting! A brief report of what took place has appeared in the Mail, and I have no doubt that you and the majority of those who shall read the article will approve of my abstention on that occasion.

As regards expenditure, you will observe that I have made the certificates of indebtedness to the Allan's for assisted passage payable in Canada, if you and they prefer that arrangement. I thought it would be some check on the business to make it unnecessary that any money should pass through the hands of emigrants or agents on this side of the Atlantic in respect to assistance. The commission, however, to the emigrant brokers and agents here, must be paid them promptly. They divide it among a number of persons who cannot or will not wait, and if it is to do any good as a stimulus, it must be administered with certainty and at the precise time when the increased activity is demanded. I have tried to make it dependant upon the fact of the emigrant reaching and remaining in Canada for two months at least; but they all with one voice object to this delay. I have promised to reconsider this condition, and if possible modify it.

I have asked Mr. Dixon to place £300 or £100 at my credit with the London correspondent of a Bank here, in order that I may pass certain bills here instead of leaving the parties to draw upon him. He suggests this arrangement himself, as it will relieve him of much trouble, and as he knows little or nothing of the transactions to which the drafts refer, his supervision is of no real value. All these matters will compel me to prolong my residence here till the close of the season, and to neglect my private business in London, which I had arranged to take up about this time, but I feel the success or failure of one of the most important movements of modern times---the exodus of the vigorous descendants of the "Vikings" and "Danes", who conquered England and Scotland in the ancient time, from their original home to a new and "greater Britain" in the West may depend largely upon the arrangements I am endeavouring to complete. I will, therefore, to comply with your wishes, and for my own credit, keep my hand at the helm until we reach some kind of harbour.

I have the honour to be. Sir,

Your very obedient servant,

William McDougall.

Minister of Agriculture, &c.,

Ottawa.

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In the Hon. Mr. McDougall's letter of July 27^th 1873, he reported the following statement, containing a synopsis of his arrangements. He says,---The result of my negotiations and arrangements at the several ports named, is as follows :

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Westminster Palace Hotel,

London, October 2^nd, 1873

Sir:- Having decided to suspend the granting of assisted passages, and also the payment of commissions on emigrants to Canada from the Scandinavian Kingdoms and Germany (except in the case of servant girls, or single women), after the 20^th September, I closed up my accounts and business as far as possible, and returned to London on the 24^th ult. I notified the agents of the Steamship Lines, and also their representatives at Liverpool as I was obliged to leave a few blank certificates with my deputies at Copenhagen and Hamburg to meet the case of "families" who had not yet come forward. I am unable to send you a statement by this mail of the total amount expended in assisted passages. I do not think, however, it will exceed £50.

The accounts for commission to agents for unassisted and assisted emigrants have not all come in, but in a few days I expect to close them. The advertising and printing accounts are nearly all paid, and I hope to close them for the season in about ten days. I may state in round numbers that the whole expenditure on the Continent under my direction (except my own personal disbursements and salary, will not exceed £800. Considering that I have advertised Canada in almost every newspaper of importance in Germany, Denmark, Sweden, Norway, and in some parts of Austria and Poland, and printed and distributed pamphlets and circulars by the thousand in the language of those countries, besides employing a Professor of a University to deliver a series of lectures in Denmark, you will, admit that I have not been idle or extravagant.

My own personal expenses have been considerable greater than that of an ordinary traveller, although I have denied myself many luxuries, not to say comforts, because I was determined to give no one occasion to say that I abused your confidence for my own gratification. I have written more letters, articles for newpapers, and on the whole worked harder during the time I spent on the Continent than I ever did in any public Department in Canada.

I have the honour to be. Sir,

Your very obedient servant,

Wm. McDougall.

Minister of Agriculture, &c.,

Ottawa.