Delegates representing the three provinces met in Quebec in September, 1862, to consider this offer, New Brunswick being represented by Messrs. Tilley, Steeves and Mitchell. The delegates from the Maritime Provinces declared their willingness to propose to their respective governments to accept the proposition of the Duke of Newcastle if Canada would bear one-half of the expense of the railway instead of one-third. The Canadian government offered to assume five-twelfths of the liability for the construction and working of the Intercolonial, and to this the delegates for New Brunswick and Nova Scotia had to agree. This imposed a very serious burthen on two provinces, which, between them, had only six hundred thousand inhabitants, and their willingness to assume it shows the interest they took in this great work.
In pursuance of an arrangement made at this Quebec meeting, delegates from the three provinces went to England to arrange the terms of the guarantee with the British government; the Hon. Mr. Tilley represented New Brunswick, and the Hon. Joseph Howe, Nova Scotia. Mr. Gladstone, who was then chancellor of the exchequer, insisted on a sinking fund being provided, which was to be a first charge on the revenues of the several provinces. This sinking fund was objected to by the colonial delegates, but the only modification in its terms which they were able to obtain was that the sinking fund was not to take precedence of any existing liability. Before leaving England, Messrs. Tilley and Howe prepared and submitted a memorandum to the Duke of Newcastle in which they expressed a hope that Mr. Gladstone might be induced to reconsider the matter of the sinking fund, and that it would not be insisted on. The Canadian delegates left England without an acceptance of the terms proposed by Mr. Gladstone, and without a formal rejection of them. Previous to the meeting of the Canadian parliament, Tilley proceeded to Quebec to urge upon the Canadian government the preparation of the necessary bills to carry out the agreement entered into for the construction of this great railway. He reported to the lieutenant-governor on his return that the government of Canada, for reasons stated, could not then undertake to pass the legislation required, which they greatly regretted, but that they had not abandoned the arrangements for the construction of the railway. The Canadian government's declaration in the course of the session that they had abandoned this important enterprise was, accordingly, a source of great surprise and regret. The governments of New Brunswick and Nova Scotia passed the necessary legislation at the next session, but the government of Canada took no further step in the matter until the confederation negotiations were commenced in 1864.