The Oxford professor, Goldwin Smith, who later emigrated to Canada, advised Seward that Canada "seems likely (unless our statesmen adopt a different policy) to fall into your hands of itself, perhaps before you want it."8 The London Times echoed Smith's assessment, reporting that Britain would not object if Canadians wished to join the United States, but if a union was promulgated by force, Her Majesty's government would protest.9 This was a common view of British scholars and politicians, who had little faith in Canada's future and even less regard for her aspirations for dominion.
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Between Russian America and Washington Territory lay the British colony of British Columbia. Until 1858 the area had been an underdeveloped and sparsely populated region, serving primarily as an outpost for the Hudson's Bay Company. In that year, however, the discovery of gold brought an influx of American miners. This rapid growth led to the formation of the Crown Colony of British Columbia. Its boundaries extended from the summit of the Rocky Mountains on the east to the Pacific Ocean and the Gulf of Georgia on the west, and from the Finlay branch of the Peace River and the Nass River on the north to the 49th parallel on the south. Vancouver Island remained a separate colony until 1866.
British Columbia's rapid growth and prosperity, however, quickly subsided. By 1865 the colony was in a state of decay, a "poor, struggling, bankrupt colony on the edge of things."' As the gold deposits were depleted, the populace began to drift away, leaving less than 10,000 inhabitants in 1866, three-quarters of whom were of British or Canadian origin. Moreover, since the Hudson's Bay Company owned the territory from the head of the Great Lakes to the Rocky Mountains, the colony remained isolated from the rest of Canada East and West. Consequently, the British Columbians, especially those on Vancouver Island, maintained closer economic and social relations with the western American territories and states than with either Canada or Great Britain.
The belief among many colonists that the Home Office had abandoned them further contributed to their sense of isolation and frustration. During the Civil War, British Columbia alone of the British North American colonies was left undefended. Rear Admiral Joseph Denman informed the Admiralty that the colony did not warrant protection: "I would consider it would be greatly for the interest of England to divest herself of these possessions by any means consistent with honor and with justice to the English settlers." Denman's comments were symptomatic of a general spirit of Little Englandism emerging in Great Britain during the 1860s, a spirit that caused great concern among the colonists in British Columbia.
In such an unstable situation, growing support among the colonists for annexation to the United States represented a logical development. Many were painfully aware of the prosperity and lower taxes prevalent in the neighboring American states. Agitation for annexation began in 1866 and remained a prominent issue for several years. Vancouver Island emerged as the center of support for the movement, particularly the port town of Victoria.
Seward learned of the support in British Columbia for annexation from several sources. In January 1866, he received an extensive report from E. H. Derby, a congressional investigator. Citing the rising discontent among the colonists in British Columbia, Derby suggested that Great Britain cede its Pacific territory to the United States as payment of the Alabama claims:
If Great Britain desires to propitiate this country after all that has occurred, would it not be her true policy to cede to us a portion of her remote territories, valuable to us, but of little value to her? Were she to cede us Vancouver's Island and British Columbia ... might she not easily bring our claims to a peaceful solution...
Seward responded favorably to Derby's suggestion. After sending the report to the Senate for consideration, he began negotiations with Great Britain on the subject.
Discussions concerning the Alabama claims had begun immediately after the Civil War. The main issues were Great Britain's recognition of the Confederacy and her building of Confederate privateers. By 1866 the negotiations had reached an impasse. Seward wanted Britain's policies judged before a neutral arbitration court. Lord Russell refused, arguing that his country's actions were beyond the jurisdiction of any foreign court.
In June 1866, Russell's government fell. As the Conservatives assumed power, conditions appeared favorable for reopening the negotiations. In a lengthy dispatch to the new government, Seward listed the American claims against Great Britain for her part in building the privateers. Lord Stanley, the new Secretary of State for Foreign Affairs, finally replied in November, professing his willingness to accept arbitration of the American claims, apart from those involving the right of the British government to recognize a state of belligerency. Seward countered in January 1867, stressing that the individual claims represented only a small part of the much greater losses caused by British actions which had prolonged the war. He implied that he was holding Great Britain responsible for indirect damages that could produce enormous claims. Apparently following the plan outlined earlier in Derby's report, Seward hoped to raise the claims high enough to convince British officials to agree to a quid pro quo settlement, ceding British Columbia in exchange for the claims.
For several months prior to this last dispatch, Seward had been receiving additional evidence from British Columbia indicating substantial support in the colony for annexation. Allen Francis, the American consul in Victoria, reported in September 1866 that "the people of Vancouver Island, and of British Columbia, are almost unanimous in their desire for annexation to the United States." He included an article excerpted from the Victoria Evening Telegraph of September 5, 1866, which characterized British Columbia's relations with the United States as being closer "than our relations with any of the colonies." Two weeks later a public meeting in Victoria voted to request Great Britain to permit annexation to the United States.