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Montreal, March 20^th, 1762.

Sir, I have already Acknowledged the Receipt of a Copy of the Earl of Egremont's Letter to you of the 12^th Dec^r, and I take this opportunity to return you my Answers thereto, Assuring you, that I have lost no Time in collecting the best Information of Every thing Contained in that Letter that I could possibly procure.

I feel the highest Satisfaction, that I am able to inform you, That during my Command in this Government, I have made it my Constant Care and Attention, that the Canadians should be treated agreeable to His Majesty's kind & humane Intentions. No Invasion on their Propertys, or Insult on their Persons have gone unpunished, All Reproaches on their Subjection by the Fate of Arms, Revilings on their Customs or Country, and all Reflexions on their Religion have been discountenanced and forbid.

No Distinction has been made betwixt the Briton & Canadian but equaly regarded as Subjects of the same Prince. The Soldiers live peaceably with the Inhabitants, & they reciprocaly acquire an affection for each other. I have notwithstanding, made known His Majesty's Pleasure on these Particulars to the Several Commanders of Corps, that every Individual may be acquainted therewith, which will, no Doubt, Add the greatest Weight to the Orders & Directions which have been already given. And you may be Assured that Troops who have ever shewn the most Ardent desires, to Advance the Interest of their Sovereign, and paid the most exact Obedience to his Commands, will vye with each other in Brotherly Love and Affection to the Canadians, over whom, His Majesty has extended his Royal Favor, & Protection. The Indians have been treated, on the Same principles of Humanity, They have had immediate Justice for all their Wrongs, and no Tricks or Artifices have hitherto been attempted, to defraud Them in their Trade.

I send herewith a Return, (N^o 1) of the present State of the Troops & Artillery in this Government, As to the Fortifications, except Fort W^m Augustus, which may at present be in a good state of Defence, the rest having only been calculated to repel sudden Invasions of Indians, are of Course, of small consideration. The City of Montreal is surrounded by a high Wall ramparted and flanked; the Parapet about Three feet thick a natural Defence from the River S^t Lawrence on one side, on the other, a Ditch mostly faced. Upon a Height within the City, is a small square work of wood, compleated since the Capitulation, provided with a few pieces of Artillery, & capable of containing Seventy or Eighty Men. The Fort of Chamblé, is an Antient Stone Castle, flanked with Tours, in which are Port-Holes, for small pieces of Ordnance, no Ditch or Outwork.

You will also receive herewith, a General Return, (N^o 2), of the State of this Government, for the year 1761, Comprehending the Number of its Inhabitants, Cattle &ca. The State of Population, Quantity of Acres Cultivated and Quantity of Grain sown, for the particulars of all which, I referr you to the Return.

The Soil produces all sorts of Summer grain, in some parts of its Government, the Wheat is sown in Autumn. Every kind of pulse & other vegetables; to which I may add, some Fruits, viz^t Apples Pears Plumbs Melons, &ca. Cyder is made here, but as yet in Small quantitys, In general, every Fruit tree, hardy enough to withstand the severity of the Winter, will produce in the summer, which affords sufficient Heat, to bring most kinds of Fruit to Maturity.

The Profits, which the French King drew from the Government of Montreal, unconnected with the other two Governments, of Trois Rivieres & Quebec, proceeded from the sale of certain Trading Posts in the Indian Country, From the Money paid for permits, to trade at others, which were called Free Posts, from the King's own Trade, at those called the King's Posts. And from the Droit de Quint, & Droit d'Échange. In Return (N^o 3) you will find these several posts particularly ascertained, with the annual Profits which might have accrued from the two first. It is impossible to ascertain, what were the Profits & Losses upon the French King's own Trade; No Doubt, that Trade well managed, would have produced considerable gains; but from the Number of Commissaries & Factors employed, who have made very large Fortunes for themselves; and the immense profusion of Presents, made to the Indians; I must conclude, His Majesty gained very little from the Commerce.

The Lands have all been granted, on Feudal Tenures, from thence; The King's Droit de Quint, & Droit d'Échange. The first is a Fifth, of all Monies that shall be received, on the sale of Seigneuries or Lordships. The Latter, a Fifth of the value of all Lordships exchanged, & a Twelfth of the value of all Copyhold Estates, that shall be exchanged. The Right of Exchange however, did not belong to the French King, either in the City or Island of Montreal; It having been granted to the priests of the Seminary of S^t Sulpice, who are Temporal Lords of that Island. And enjoy the privilege of the Exchange, as well the City as the rest of the Island. The French King generally remitted a Third of his Dues on these sales & Exchanges, whose Revenues from hence, might amount, Communibus Annis, to about Three Thousand Livres. I have Supported His Majesty's Right to these fines of Alienation remitting the Third, according to old Custom. This Year by an Accident, They have amounted to Nine Thousand Livres.

Immediately after we became Masters of this Country, all Monoplys were abolished, and all Incumbrances upon Trade were removed. The Traders chose their posts, without the obligation of purchasing them, and I can by no means think, The French Management, in giving exclusive grants of trade, at particular posts, for the sake of the sale thereof; or the sale of permits to trade at the free posts, worthy our Imitations. The Indians of course paid dearer for their goods, & the Trade in General, must have been injured by Monoplys. The Traders were alone at the posts they had purchased, where no person in Authority had the Inspection of their Conduct; & committed many abuses, for which the Indians could get no Redress; And it has happened, that the Indians had murdered the Traders & plundered their Effects; by which the French have been drawn into wars at a very great Distance, and at a great Expense. The French also found a very great Inconvenience in this kind of Traffick, from the Loss of men to the Colony.

Nothing was more Common, than for the Servants, whom the Merchants hired to work their Boats, & assist in their Trade, thro' a long Habit of Indian Manners & Customs, at length to adopt their way of Life, to intermarry with them, & turn Savages. Several Edicts have been published to prevent this but notwithstanding, there are now some Hundreds amongst the distant Indians, who I do not suppose will ever return to their Country. Tho' the Trading Posts were by this means multiplied, and from thence appears to have increased the Trade, in reality, unless in a few Instances, these Monopolizers brought no Addition of Commerce into Canada, as they for the most part traded with Indians, who would otherwise have carried their Furrs to the great Marts of Michillimakinac and Detroit, so that in Effect, they were only Forestallers of the Market. Besides the Inconveniences which I have mentioned, to have attended the sale of Posts & Permits, I conceive this matter to be so liable to abuse, thro' Receivers, Jobbs, & Perquisites, that it would bring but little into His Majesty's Coffers. And that the surest & easiest way to encrease His Majesty's Revenue from the Pelletry will be the laying such Dutys only on its Importation, as shall be thought Advisable.

To remedy the Inconveniencies & abuses, which both the English & French have suffered, thro' the management of the Indian Trade; I know no better method, than to assign a certain Number of Posts in the distant Country, to which only, the Traders should be allowed to traffick, and to abolish all the little posts.

And I am of opinion the Five Posts hereafter mentioned, will enable His Majesty's subjects to trade with almost every Nation of Indians, that has yet been discovered, and that have been accustomed to Trade with the French, viz^t Kanamistigoua on Lake Huron, Michillimakinac Baye des Puants in Lake Michigan. The Detroit, and Houilliatanon on the Ouabache.

A small Detachment of Troops with proper Officers should be in each of these Posts, And the officers Authorized, either solely by themselves, or assisted by such other persons as may be found in the posts, to exercise a Judicial power — The Vast distance some of the above Posts are from the Inhabited Country, would alone make this circumstance highly necessary, and the advantages that would arise from it, are very apparent The Insolence of the Indians will be checked, by the Presence of the Troops. The Tricks & Artifices of the Traders to defraud the Indians will meet with Instant Punishment which cannot fail to make the Indians conceive, the highest Opinion of Our Integrity & His Majesty's good Inclination towards them, and by these means, all Disputes and Quarrells with the Savages will be prevented. I can devise no better plan for Carrying on the Trade in the distant Countrys, than the above; or by which, any Regulation concerning the Trade that shall be made, can ever be observed, and Supported.

Paper (N^o 4) contains the particular Dutys upon the Merchandize imported into Canada, and upon the exports of the Pelletry, Also a Computation of all the Revenues the French King enjoyed, Communibus Annis, from the whole Province of Canada comprehending at an average, Exports & Imports, Sale of Posts, & all Emoluments whatever, which were received in Canada on the King's Account, I referr you likewise to the same paper for the annual expence of Canada to the French, in Time of Peace. You will observe amongst the Exports that the Beaver, which was the exclusive Trade of the India Company, paid no Duty. Nor am I able to send you any good acco^ts, whether the French King drew any Profits from the Beaver, or other Pelletry, on its arrival in the Ports of France; or what advantages The Crown of France reaped from the Exclusive Trade of Beaver, granted to the India Company. There are no persons here who can give me any clear Information in those particulars.

The only immediate Importance & advantage the French King derived from Canada was the preventing the Extension of the British Colonys, The Consumption of the Commodities & Manufactures of France, and the Trade of Pelletry. She had no Doubt, views to future Advantages, That this Country might in Time supply her, with Hemp, Cordage, Iron, Masts, & generaly all kinds of Naval Stores.

The people in general seem well enough disposed towards their new Masters. The only Causes of Dislike which I can discover, proceed from the fear of losing their paper Money, and the Difference of Religion, I understand Canada to be on the same Footing in Respect of this money, as all the French Colonys; and if France pays any of them, I don't see how she can avoid paying the Bills of Exchange drawn from Canada, in the same proportion as she pays the rest. It is the Canadians only who would be sufferers by an exception, as Canadian Bills, to a very large amount are in the possession of French Merchants, and the rest may be sent to France, & no body be able to distinguish which is French, or which Canadian Property. The people having enjoyed a free & undisturbed Exercise of their Religion, ever since the Capitulation of the Country; Their fears in that particular are much abated, but there still remains a Jealousy. It is to be hoped, that in time this Jealousy will wear off: and certainly in this, much will depend upon the Clergy, Perhaps Methods may be found hereafter, to Supply the Cures of this Country with Priests well affected. But whilst Canada is stocked as she now is, with Corps of Priests detached from Seminarys in France, on whom they depend, and to whom they pay obedience It is natural to conceive, That neither the Priests, or those they can influence, will ever bear that Love and Affection to a British Government, which His Majesty's Auspicious Reign would otherwise engage from the Canadians, as well as from his other Subjects.

No Persons have left this Government to go to France, except Those, who held Military and Civil Employments under the French King. Nor do I apprehend any Emigration at the Peace being perswaded that the present Inhabitants will remain under the British Dominion. I perceive none preparing to leave the Government, or that seem inclined to do it; unless it is a few Ladys whose Husbands are already in France, and they propose to leave the Country when Peace is made, if their Husbands should not rather choose to return to Canada.

As I cannot discover that the Limits betwixt Louisiana & Canada were distinctly described, so as to be Publickly known, I can only inform you, what were generally believed here, to have been the Boundaries of Canada & give you my own Opinion, which is drawn from the Trade that has been Constantly carried on, by the Canadians, under the Authority, and permission of their several Governors. From hence I judge, not only the Lakes, which are Indisputable, but the whole Course of the Mississippi from its Heads to it's Junction with the Illinois, to have been comprehended by the French, in the Government of Canada.

The People of Louisiana carry their Trade up the Missouri River, and I can't find that the Traders from that Province, ever went higher up the Mississipi, than the mouth of the Illinois River, on the Contrary, the Traders from Canada, did constantly trade above the Illinois, from their Posts on Lake Michigan, even up to the River S^t Croix, and the Falls of S^t Anthony, And it was the Trade alone of the Mississipi Indians, which made the Post of the Baye des Puants, so very advantageous. The Illinois River, tho' formerly in the District of Canada, was after some Disputes betwixt the Governors, annexed to Louisiana. A South Easterly Line, drawn from the portage, betwixt the Illinois River and the waters which run into Lake Michigan will bring you to the post of Houilliatanon upon the Ouabaches fourscore Leagues down that River; Computing from that part, where the Boats are Launched, after crossing the Portage of the Miamis. This was the last Trading Post belonging to Canada on that side, & was certainly the Boundary of Canada on that side. About sixty Leagues below this Post, is the Post of Vincennes, which was served by the Traders of Louisiana, and of Course, was the Boundary of that Province. This is the best information I can procure you concerning the Limits, and what I have described to you, are thought to be the real Boundaries betwixt the two Provinces.

As I have answered the several Particulars of Lord Egremont's Letter, after having made the best Enquiry I shall think myself happy if the Acco^t I send you, shall in any Shape contribute to Your transmitting to His Majesty the exact State of his Province of Canada. I am with great Regard & Esteem.

Sir, your most obedient most humble servant,

THO^S. GAGE.

His Excellency

S^r Jeffery Amherst.

Endorsed: Major General Gage,

20^th March, 1762,

in S^r. J. Amherst's of May 12^th, 1762.

No 38.