The Maritime Tide Turns
"The Maritimes today are the brightest spot on the business map of Canada,” declares this survey of conditions and current trends in the Atlantic Provinces
L.L. (LARRY) SNELL, baker of bread for coal miners and steel workers of Cape Breton, in a full-page advertisement in a Sydney newspaper a few weeks ago, proposed to lead the Maritime business community over the top against the industrial entrenchments of Ontario. Telling the story of a trade situation heavily weighted against the Atlantic provinces, he announced that the time had come to force realization in Ontario that the Maritimes were sellers as well as buyers.
“If Ontario expects us to buy the products of her factories, she should feed her furnaces with our fuel,” he declared.
By way of showing he practised what he preached, Snell stated he had switched a $38,000 order for materials from an Ontario producer to one in Quebec which burned Nova Scotia coal. He called upon the business men of the three provinces to do likewise.
Snell’s proclamation captured public imagination. He was hailed as a daring crusader, canonized in barber shops, train smokers and hotel lobbies. Special meetings of boards of trade were summoned and rapid-fire resolutions of support drafted. Although mobilization got no farther than that stage,
Snell enjoys the reflection that he had the Maritimes on fire for at least a week-end.
But wiser counsel of community leaders and the ironic reaction in Ontario soon levelled the dust of popular sentiment. The futility of any such organized boycott of the products of another province soon became apparent, and the resolutions adopted took the form of pious endorsation of the principle of interprovincial reciprocity.
Snell, himself, stated he hadn’t thought of the word “boycott;” that what he had in mind was something milder, a sort of “most-favored province” scheme. But there was some satisfaction, at any rate, that the “one-man uprising” was dramatic enough to compel in Ontario attention to the Maritime bid for greater trade consideration west of the Ottawa River.
Snell’s drum beating was attributed to a high-pressure expression of accumulated personal feelings about Maritime problems and difficulties. But his sortie in the direction of Ontario never got as far as the gate, and that is evidence enough that commercial warfare holds small place in the Maritime mentality. There is an unwritten policy ascendant in the Atlantic region today, expressed by the Maritime Movement, which, conceived in the travail of the early post-war years, represents the highest point of unity in thought and action yet attained by the three provinces. It spells co-operation.
Alexander P. Paterson, of Saint John, past president of
the Maritime Board of Trade, on the eve of the Snell outburst, said to the writer:
"It may be that for their past decrepitude the Maritimes themselves have been somewhat to blame, for it is only recently they have united to tell their countrymen something of their impossible physical handicaps. Formerly a conspicuous lack of such unity, induced by party politics and squabbles over purely local differences, resulted in an absence of co-operation in their infinitely more vital national concerns. Now, however, there has been a complete and welcome change. The Maritimes are working in harmony for national accord and fair play. They also are conscious for the first time of a complete change in the attitude of the rest of Canada toward them. It is now a very sympathetic one, which seems to promise better, brighter and more
equitable things for the three provinces in the near future.” For the attainment of its own estimate of what the destiny of the Atlantic provinces and their place within the Dominion should be, the Maritime Movement—which is a general growth not started or headed by anyone in
particular—is working along new lines which radiate from the simple maxim that Providence helps those who help themselves. The traditional grievances have donned the higher dignity of problems. Those within the scope of the provinces they are determined to work out themselves, but they will continue to render unto Ottawa those that are really Ottawa’s. Two major achievements stand out—the Duncan Commission’s investigation, the fruit of concerted clamor, and the establishment at Toronto of the Maritime Trade Commission.
In direct contrast to the Snell strong-arm tactics, the Maritime Movement is relying on good will and mutual interest for expansion of markets; it repudiates the kind of yeast the Sydney baker prescribes. Already the trade Commission, under the direction of R. E. W. Burnaby, has made important contacts between Ontario buyers and Eastern sellers, and at the same time through its agents in the three Maritime capitals it has developed considerable trade between the provinces themselves.
“While sellers do not furnish us with records of their sales,” Mr. Burnaby explained, “there is abundant evidence to show that these efforts to develop trade have steadily brought both direct and indirect results. One hundred and forty-six trade enquiries for goods produced, or possible of production, in Maritime Canada, went through the office last year. Some were in respect of quantities too large for present plants. Scores of letters are on file recording appreciation for assistance in making connections.”
That the Maritime zone, in a comparative sense, is the brightest spot on the business map of Canada today, is attributed largely to the momentum generated by the Maritime Movement and to the material and moral effect of the Duncan enquiry. To assert that the Atlantic provinces have escaped the depression, however, is misleading. Enthusiastic citizens will tell you so, but what they mean is that the Maritimes have maintained a level above their average standards of prosperity. What the bulk of Canada understands by depression, Nova Scotia, New Brunswick and Prince Edward Island have known almost continuously and in varying degrees of severity for decades. Excepting the effervescence created in the Island province at the inception of the fox-ranching industry a quarter of a century ago, they have never experienced any old-fashioned booms, nor has their economic mercury ever dropped much below freezing. The emphasis on coal in the Snell ultimatum to Ontario manufacturers brings up the point that the Nova Scotia industry is seeking an outlet for another 1,500.000 tons.
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The Maritime Tide Turns
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Those in close touch with the Cape Breton situation say this quantity means all the difference between distress and comfortable living and working conditions in the coal producing area. Canada’s total annual coal consumption runs to about 30,000,000 tons, and of this total about 16,000,000 tons of bituminous are brought in from the United States. Last year soft coal production of the Sydney mines was less than 7,000,000 tons. After deducting the quantity used in the steel works, the bulk of the remainder was marketed in the Maritime provinces and Quebec, a few tons finding their way as far as Brockville in Ontario. Somewhere among these figures, it is felt, those crucial 1,500,000 tons surely could be squeezed in.
The Coal Situation
NOVA SCOTIA’S persistent clamor for more protection for its coal had an answer in the recent Bennett budget which increased the duty on bituminous coal from fifty to seventy-five cents per ton and provided a freight subsidy of one-fifth of a cent per ton per mile. The latter applied to the 1,000-mile journey from Sydney to the heart of the Ontario industrial zone means about $1 per ton. While this measure of assistance eases the path for the Cape Breton product it falls short of the Maritime estimate of what is needed to create an effective competitive balance with fuel from the United States. Nova Scotia had asked for a minimum duty of $1 a ton; anything less than that, it was contended, would leave too wide a spread between the two delivery prices. On the basis prevailing before the budget announcements, American soft coal was dumped in the bins of largescale users in Ontario at $4.25 per ton, while for Nova Scotia fuel the price was $5.80— this without any profit to the producers.
The Ontario position has been that it is economically impracticable to deliver Cape Breton coal in central Ontario on a competitive level; that a tariff would serve only to increase factory production costs without giving any commensurate advantage to the Sydney mines. Exactly what the Bennett relief measures will accomplish in ironing out these diverse points of view and reconciling market prices rests with practical demonstration in the immediate future. If they fail to produce more customers in Ontario for Nova Scotia coal, they may at least conduce to the expansion of an already considerable market in the Province of Quebec.
Since tests have shown the adaptability of Nova Scotia coal for coking, there is satisfaction at the declaration of a duty of $1 a ton on the American product. Such an impost was made in 1926 on the urging of the Duncan Commission but subsequent rebate provisions wiped out the protective margin. The Sydney coking plants, however, must find their markets largely in the Maritime provinces and in eastern Quebec, as Ontario itself produces twice as much as the Cape Breton output from its own ovens.
While the general Maritime attitude on the subject of fuel is based on the argument that the tariff should work even-handedly; that Ontario, basking in the sunlight of high protection should concede equal benefit to the industries of the eastern provinces, it is a curious truth that nowhere in the Atlantic region is the force of the Ontario stand on the coal issue so deeply appreciated as in the very heart of the Cape Breton mine area.
The miners realize the freight handicap, and they will tell you also, quite frankly, that they cannot hope to supply anything like the full Ontario demand for bituminous, except in time of crisis when the American source, for a period, might be cut off. F. W. Gray, one of the senior operating executives of the Dominion Steel and Coal Company, told the writer that, contrary to popular belief, the peak of production in the Cape Breton region was reached twenty years ago and that they dare not mine more than
10,000,000 tons a year else the accessible deposits would be exhausted in less than forty years.
It is not only the transport aspect that enters into the problem; there is the equally awkward factor of production cost. The Cape Breton mines, for the most part, are submarine and the haul to the pithead is long and expensive; those in the United States are land mines and equipped with the latest types of machinery for mass production.
The fly in the tariff ointment being Cape Breton’s inability to fulfill Ontario’s needs at a reasonably low figure in return for acceptance of an effective duty, and with the knowledge that the Sydney product is a bit temperamental and requires special handling, the puzzle has been studied with a view to some tangible compromise. Out of the melting pot of ideas has emerged the principle of quota. If large scale consumers of soft coal in the central Canadian industrial zone would agree to a sufficiently high tariff, it is proposed they should be allowed a rebate—say 99 Lá per cent—on production of proof that they were using a certain proportion of Maritime fuel. By this means it is calculated the 1,500,000 tons would soon be absorbed, distribution being effected by a series of dumps conveniently placed.
A Brighter Side
DESPITE the adverse conditions in the coal area, the slowing up in steel activity and a bad time with fisheries, Nova Scotia still manages to show a bright side to the ledger. In the past year, the total average volume of industrial production was maintained and there were satisfactory harvests of both grain and root crops. A substantial yield of highly graded apples fetched more than their usual price in the world markets, and for the first time in many years the province produced copper, lead and zinc, regular shipments being made of the concentrates of these three metals. The new Mersey paper plant, having operated at capacity for the best part of the year, has sufficient contracts to keep it busy for months ahead.
In the face of world-wide decline in shipping activities and a drop of 150,000 tons in grain exports, the port of Halifax handled a cargo tonnage of 1,825,000 tons, a decrease of only 25,000 tons from the 1929 banner year. The total tonnage loaded at Nova Scotia railway stations was 7,336,136 tons, the decrease of 803,205 tons from the highlevel figures of 1929 being accounted for mostly by the falling off by 687,062 tons of shipments of Cape Breton coal. Construction contracts, collections and bank debits compare favorably with any normal year.
There are few better-equipped interpreters of the Nova Scotia outlook than W. H. Dennis, publisher of the Halifax Herald.
“Conditions in Nova Scotia,” he said, “are a great deal better than they were five years ago. The present movement was only getting its stride then. Our people now are concerned only with results. They know what they want and have already obtained an encouraging share. The prevailing optimistic situation in the Maritimes didn’t just happen; it is the harvest of ten years of effort. The people of this province are not sitting by old tombs in the twilight brooding over what might have been ; they are marching on. But at the same time we intend to keep on pressing for those advantages which are rightfully ours by all the laws of justice and national considerations.”
Conditions in New Brunswick
WHAT is true of Nova Scotia is only to a small degree less apparent in New Brunswick. The virtual stagnation of the lumber industry is offset by healthy and profitable agricultural conditions, the dairying and livestock branches showing decided improvement. Since the Maritimes import about $12,000,000 worth of farm produce
yearly for their own consumption an anomaly produced by the steady exodus in the past of farm help, the New Brunswick tillers of the soil are able to demand prices in line with the produce coming in under the handicap of freight rates, and at the same time they gain through the prevailing lower cost of imported feed. The Maritime provinces being essentially ag ¡cultural, however, should be exporters rather than importers, and energetic steps are under way to increase production. New Brunswick and Nova Scotia are the only provinces engaged in colonization, selected families being brought out from Scandinavian countries in particular, and from the British Isles. At the same time, many former citizens are returning to take up deserted farm lands.
Industrially, New Brunswick is recording steady growth; and the extensive hydroelectric developments, especially the one at Grand Falls, are absorbing much labor and materials. But a shadow of gloom has been produced at Saint John through the closing of the cotton mills there. Freight loaded at New Brunswick stations last year actually showed an increase of 29,811 tons over the 1929 figures, the total being 2,371,566. Deliveries to foreign connections through New Brunswick ports, however, fell off by about 500,000 tons, largely due to the export decreases in wheat and other grains. Paper loaded reached a record of 83,430 tons as against 24,934 tons in 1929.
Freight Rate Anomalies
OF THE three provinces, Prince Edward Island seems the least affected by what transpires abroad. Poor prices for potatoes and low returns for fox pelts, combined with ranch troubles, have not been conducive to big bank balances, but Island farmers, as a rule, calculate profits and losses over a period of several years and the average keeps them going with considerable to spare. Savings bank deposits still are the highest per capita in the Dominion, while at the same time the standard of living is steadily improving.
Distinct betterment of highways and their rapid extension and the construction of up-to-date hotels and facilities for tourists throughout the Atlantic provinces has stimulated the flow of tourists, lured by unrivalled scenery and temperate summer climate. The tourist traffic has reached the plane of a major industry, the value of last year’s traffic being estimated at $20,000,000, and in Halifax, Fredericton and Charlottetown government agencies are established for its development and regulation. It is a tribute to the pastoral beauty and historical associations of the Annapolis Valley that the Eastern Steamship Company has on order two palatial ships, to ply between Boston and Yarmouth, at a total cos', of $8.000,000
Of the twenty-nine specific recommendations of the Duncan Commission, seven have, to date, been implemented. Ten have been given partial effect. While this performance by no means is satisfying to Maritime aspirations, the measure of relief given in the form of palliatives for transport ills and increased subsidies was just the tonic needed at that time—1926—to put fresh inspiration into the Maritime Movement and strengthen the co-operative tendency of the provinces. Most of the leaders in commerce and politics whom the writer interviewed, however, keenly regretted the failure of the Government to give effect to that particular Duncan recommendation calling for increased powers for the Railway Board. A widening of scope was proposed
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to enable the Board to order experimental rates which from time to time might appear necessary to foster and develop new industries. This, of course, would not apply to the Maritimes alone but to all sections of the country where infant industry, if given a chance, might be nurtured to permanence and prosperity.
The only partial implementation of the Duncan suggestion of a twenty per cent reduction in the freight rate schedule is another cause of irritation. It has also produced queer anomalies. The twenty per cent cut was made applicable to traffic originating and terminating within the Atlantic division of the Canadian National, and it was also conceded to export traffic by sea provided the goods in question went through Maritime ports. The idea, it would appear, was to encourage use of these ports by mid-Canada shippers, but it has had a distinctly different and ironic effect. It so happens that Maritime exporters frequently have to ship via Montreal because only there may ships bound for a particular destination be found at the time desired. The Maritime shipper, in consequence, is obliged to pay the higher rail rate to Montreal for the privilege of forwarding his goods through that port.
There is something wrong, they say at Halifax and Saint John, when a Maritimer, with fine natural ports at hand, must send his shipment about 800 miles inland in order to find cargo space to a European or South American destination.
Another odd situation arises from the refusal of the Government to extend the reduction to import traffic by sea. This means that goods arriving at Halifax and destined, say, to Moncton, must pay the twenty per cent higher rate from Halifax to Moncton, which would not be necessary had the same shipment originated at Halifax.
It is such incongruities as these that try the Maritime temper.
A Violated Contract
YXTHEN one begins to discuss vital issues ’ ’ affecting Maritime economic welfare, particularly transportation, it is inevitable that one will get tangled in the lines of history. For it is on the facts of history that the Maritimes base their case.
“Confederation, as we see it,” Mr. Paterson, an authority on the subject, told the writer, “is on a contract between former Crown colonies under which they made an alliance. The idea prevails that the British North America Act is the constitution of the country. That is not so. The act simply was a piece of enabling legislation which brought the contract, or agreement, into effect. This agreement was reached by the accredited representatives of Ontario and Quebec—then known as the Province of Canada—and the colonies of New Brunswick and Nova Scotia at a conference in London in December, 1866. The Confederation thus amounts to government by contract between its component parts, a contract which all experience shows has been violated by the central authority set up to administer important matters of mutual interest.”
The Maritime provinces are more concerned with the agreement than the act because it contains, in their interpretation, an obligation of the Confederation as a whole to develop trade and commerce on an East and West basis, involving full use of the Maritime ports of Halifax and Saint John. The momentous clause, number 66,
“The communication with the Northwestern territory and the improvements required for the development of the trade of the great West with the seaboard are regarded by this Conference as subjects of the highest importance to Confederation, and shall be prosecuted at the earliest possible period that the state of finances will permit.”
Use of the word “shall,” in the Maritime view, makes the clause mandatory, and to reinforce their interpretation the pre-Confederation words of Sir John A. Macdonald
at Halifax are recalled: “Halifax will soon become one of the great emporiums of the world. All the great resources of the West soon will come over the immense railways of Canada to the bosom of your harbor.” Cartier is quoted: “We are enriching the American states; we ought to be enriching such harbors as Saint John and Halifax.”
But there is this extraordinary circumstance: The text of the London agreement was made known to the Canadian public only five years ago. It was found in 1926 by a search party of the Saint John Board of Trade under Mr. Paterson, who, inspired by references in the act to some antecedent document, concluded that somewhere there was on file, or, by some mischance displaced from its proper place in the arfchives of the country, a written instrument fundamentally relative to the Confederation statute. The hunt was carried on for weeks at Ottawa, Fredericton, Halifax and London, and finally the constitutional sleuths stumbled on an old British Government blue book among dusty papers in a comer of the Legislative Building at Fredericton. It was found to be a record of documents and correspondence dealing with Confederation, and among them appeared the full text of the London agreement. The vital clause, 66, was found to be worded almost identically with a similar clause contained in the Quebec resolutions of 1864, but, while the latter had no binding significance, the agreement is held to have the force of contract.
Just why the London agreement, so important to the Maritime case, never reached the public at the time of Confederation but lay in a state of suppression, designedly or otherwise, for so many years, is a matter of speculation. Reconstruction, of events at London in 1866, however, leads Maritime historians like Mr. Paterson to believe that to avert a breakdown of the Conference the envoys from the colonies compromised with their instructions to such an extent that they were frightened to reveal their handiwork, and that Macdonald, on his return, handed the people the British North America Act as the sum total of their endeavors.
The situation that developed soon after Confederation is portrayed thus: The Grand Trunk, operating from Central Canada to Portland, was entitled to a fair return, and the interests backing it worked to that end without thought of the Maritimes; determination developed at Montreal to make that city a great port by concentrating there the trade of Ontario and the West, notwithstanding the agreement which called for its flow through Maritime ports; the Canadian Pacific appeared on the scene, also entitled to make dividends; and United States transportation companies were competing for Canadian traffic. With the agreement of union, of which the Government at any rate must have been cognizant, on one hand, and the railway policies of private corporations, coupled with the ambitions of Montreal, on the other, Canada, on the subject of transportation, became divided within itself. The result was inevitable. The Maritime provinces, sidetracked, “at the mercy of the Grand Trunk” as their leaders had feared and thought they had guarded against, began their economic retrogression. Today, Canada’s railway organization and its freight rate structure, instead of being based on the seaboard as Maritimere claim it should have been from the first, are based on Montreal; and the Atlantic provinces, in their own estimate, have become a tribute-paying hinterland of the Quebec metropolis.
To mention the Intercolonial Railway, now a part of the Canadian National system, as an implementation of the Confederation pledge, is the quickest way to stir the Maritime polemical urge. It is insisted that the Intercolonial has never been operated in line with the London agreement, nor has the freight rate structure been commensurate with the undertaking that Maritime products should have fair trading access to central Canadian markets. Moreover, one will be told that to conform with strategic requirements the route was charted 250
miles longer than ordinarily would have been necessary for purely commercial needs.
“It was never intended that the Intercolonial should operate on a strictly paying basis,” said Mr. Paterson. “It was built under agreement to overcome geographical handicaps and to permit the natural flow of interprovincial products east and west.” When the Eastern provinces came to the point of taking stock of Confederation results, they found it was too late to retrieve the ground lost in developing their resources and maintaining their position. An era of laissez-faire began, of apathy and indifference. The drain of man power, lured to the West, continued and increased. On the other hand, central Canada, like a magnet, had attracted the energy and enterprise generated by the birth of the new nation. The process of centralization of the country’s industry, prestige, financial and political power had full play.
To Offset Centralization
MARITIME opinion holds that this centralization, apart from its conflict with the original purpose of Confederation, is an infhænce working against the Atlantic provinces parallel to that of the adverse transport structure, because it has produced inequality in the application of national fiscal policy.
L. W. Simms, of Saint John, one of the leading Maritime industrialists and past president of the Canadian Manufacturers’ Association, said:
“There is a growing conviction that the principle of centralization has been carried too far in Canadian industry, commerce and finance. Clearly our transportation facilities cannot be regarded as ends in themselves; they must be instruments or servants and not the masters of the people. It is conceivable that the most arbitrary and drastic adjustment of rates might be a relatively insignificant problem if national co-ordination and integration, resulting in an equitable distribution of prosperity, is promoted thereby.
“In conjunction with this, a widespread policy of delivering goods at the same laiddown price to all the principal points in Canada would go far to meet the situation.” The Saint John Board of Trade, having estimated the gross value of Canadian industrial production in 1928 as $3,769,850,364, finds that the total Ontario contribution is slightly more than fifty-one per cent, and that of Quebec about twenty-eight per cent. Assuming that the same proportion holds good today, Central Canada enjoys the benefit of eighty per cent of Canada’s productive effort in factory and foundry. The conclusion thus is drawn that central Canada as a community is deriving benefits from the tariff to the same proportionate extent. To the argument that central Canada is paying the same percentage of revenue from industry to the federal treasury, the retort comes that it is not central Canadian money that flows into the Ottawa treasury, but tribute money from the other provinces; that the centre is a clearing-house for the payment of the major portion of the national taxation. Montreal and Toronto hold the head offices of the great chartered banks and big insurance companies, and money daily is pouring into these corporative money chests from the wings of the country.
Using its own survey as a basis, the Saint John board is developing a plan in line with Mr. Simms’ suggestion, which, it believes, might go far to offset this centralization of industry and finance and at the same time reduce the burden of the freight rate schedule. The scheme makes tariff protection a consideration in return for which the manufacturer would be obligated to equalize the delivery price of his product throughout the country by absorbing freight charges. The
principle is already in use. it is pointed out, by a number of producers, and on that ground it is deemed practicable for general application. At the same time it is recognized that certain products are perhaps more adaptable to the plan than others. How it would work out in respect of Nova Scotia steel is a point on which the Saint John board will doubtless be more explicit when the time comes for it to place the proposal before the country for consideration. Coal, being a raw product, probably doesn’t enter the picture.
An Ontario automobile manufacturer, for illustration, delivers a car to a Toronto buyer for $1,000. Now, since centralized industrial conditions plus high freight rates and small supporting population render the manufacture of cars in the Maritimes out of the question, a Halifax buyer is obliged to look to Ontario for his car, and he finds that the same model in Toronto will cost him approximately $100 more. If there were no tariff, he could obtain the car from Portland or Boston by water at a much lower figure. But he has no alternative. This situation would be rectified under the Saint John plan by the Ontario purchaser being obliged to pay $10 more for his car in order to save his Halifax brother $90.
If applied to all forms of protected industrial products, the Saint John mathematicians believe the plan would amount to a fair distribution of the benefits of the tariff over the whole country. At present, they assert, the benefits are sectional, the rest of the country being penalized in proportion to the distance buyers are located from the central manufacturing zone.
But the results of the plan would not end there, say its proponents. If the Maritime handicap in point of transport was equalized there would be little in the way, they hold, to delay a revival of industry throughout the Atlantic provinces; they would stand on more or less common ground with central Canadian competition.
With the possible exception of the coal problem, which presents points peculiarly its own, the Maritime situation today may be clarified in the light of two major influences, which, the people down by the Atlantic reiterate, conspire against the progress and prosperity of the three provinces: Transportation shortcomings, which have blocked the originally designed East and West policy, and inequality under the application of fiscal policy. Both of these are serious, fundamental issues buried in the Confederation rock, and although the psychology of the Maritimes is to look upward and forward, to demonstrate by performance that in virtue of their great resources, abundant water power, unequalled fertility of soil, temperate climate and splendid ports, they are worth considering as effective parts of the Dominion and the concentration of the forces of development, there is a definite realization that achievement of purpose depends on proper readjustment of the errors of the past. But there is every disposition to admit that the passage of time since the signing of the Confederation contract and the changed conditions make it both undesirable and impracticable to retrace the course of history and rebuild the structure.
Maritimers believe that if they took the contract to court they might win a decision, but the victory, they also know, would be equally disastrous to themselves. For the Maritimers are committed to Confederation. Their whole estate and future are bound up with it and they are loyal. Instead of regarding the contract as a legal document they propose to press it purely on moral grounds, believing in the justice and good will of their partners to grant them equity. Only a few die-hards talk of calling in the sheriff to seize the Parliament Buildings at Ottawa.