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For purposes of government the administrative divisions which formerly existed in the colony were preserved, and each of the three districts of Quebec, Three Rivers and Montreal was placed in charge of a lieutenant-governor. General Murray remained in command at Quebec; Colonel Burton was appointed to Three Rivers, and General Gage to Montreal.

The population of Canada at the time of the capitulation scarcely exceeded sixty-five thousand, of whom less than fifteen thousand occupied the cities of Quebec and Montreal. Four separate classes existed, distinguished by occupation, social standing and education. The gentry, descended from the ancient seigneurs or from the military or civil officers of former governments, constituted what remained of the aristocracy of New France. The gentry of the district of Quebec were described by Murray—and the description applies equally to those of the other districts—as vain and extravagant in their pretences, though in general poor and professing an utter contempt for trade and industry. The clergy was composed both of native Canadians and of priests from France. The Canadian clergy were descended in general from the humbler classes, and, though including men of undisputed ability and integrity, lacked something of the scholarship and refinement of their European brethren. The merchants, though not numerous, formed a distinct class in the community. The wholesale trade of the colony was largely confined to the French merchants, while the French Canadians remained content with the smaller retail business. The redemption of the French paper money was the issue of absorbing interest to the merchants. Most important of all were the habitants, whom Murray described as 'a strong, healthy race, plain in their dress, virtuous in their morals, and temperate in their living.' Murray could not but reflect on the extreme ignorance of the peasantry, which was attributed to the absence of newspapers and an apparent unwillingness on the part of the clergy to popularize education.

Now that the conflict was over, the colony directed its enfeebled efforts to repairing the breaches which the ravages of warfare had created. Agriculture, which during the campaigns prior to the Conquest was all but entirely suspended, was now gradually resumed. The trade which the war had so seriously disturbed was directed into new channels. Until the destiny of the colony had been determined the activity of government was confined to maintaining peace and order in the community. The lieutenant-governors received instructions that in the administration of justice the laws and customs of the Canadians should be respected and that, wherever possible, the former French magistrates should be retained. The inhabitants were protected in the exercise of their religion, and the prejudices against the heretic conqueror were gradually removed.

The system of military government as administered by Murray and his associates was well adapted to give the Canadians a favourable impression of British government. It singularly resembled the system to which they were accustomed, in exalting the authority of the governor and making few demands on the political intelligence of the governed. It was simple and, above all, it was administered by officers in sympathy with the needs of the new subjects. Yet the colony was not without those who were dissatisfied and who secretly longed for its restoration to France.