On December 22, the British Parliament received the news of rebellion in Lower Canada. The distress occasioned by the financial panic of this year in the United States had spread to Canada. It found vent in agitation against English rule on the part of the French Canadians. On the occasion of the announcement of Queen Victoria's accession to the throne, when Te Deums were sung in the churches, the French Canadians signified their disapproval by walking out of church. Louis Joseph Papineau, Speaker of the Lower House, led the opposition to the government proposals regarding the application of the revenues of the province. The home government kept up a narrow "British party" devoted to the so-called interests of the mother country. The majority in the Legislative Council constantly thwarted the resolutions of the vast majority of the popular Assembly. In Upper Canada, a British and official class practically held within its control the government of the province. This class became known as the "family compact." The public offices and lands were parcelled out among themselves and their followers.
The immediate points in dispute in 1837 were, that the government retained in its service certain officials contrary to the wishes of the Representative Assembly, and insisted on paying their salaries out of colonial funds. The Representative Assembly declined to furnish the supplies, complained of arbitrary infringement of the Constitution, and demanded that the Legislative Council, instead of being nominees of the Crown, should be made elective.
When intelligence reached England that the Assembly obstinately refused supplies for the payment of public officials, and of the arrears, which up to that time amounted to nearly one hundred and fifty thousand pounds sterling, Lord John Russell carried in the English House of Commons a series of resolutions rejecting the demand for an elective legislative council and other changes in the Constitution, and empowering the executive government to defray the expenses of the public service out of the territorial and casual revenues.
On November 6, the so-called "Fils de la Liberté" rose in Montreal under the leadership of Papineau. In Upper Canada, a similar rising was headed by William Lyon Mackenzie, a journalist. On December 4, an attempt was made to surprise Montreal. With the help of the militia the insurgents were defeated, on December 4, at St. Eustace. The leaders of the insurrection at Toronto fled to the United States and persuaded Van Rensselaer with other citizens of Buffalo to join them. On December 12, they seized Navy Island in Niagara River, established a provisional government, and issued paper money. Loyalists of Canada attempted in vain to capture the place. On December 29, they attacked the steamer "Carolina" and sent her over the Falls, resulting in the loss of several lives. This incident caused great excitement, both in England and this country. President Van Buren issued a proclamation of neutrality forbidding all interference in Canada, and sent General Wool with a military force to compel obedience to the proclamation. In Upper Canada, Major Head--afterward Sir Francis Head--undertook to suppress the rebellion by throwing the Canadians on their honor. Trusting to the good will of the people, he sent all the regular soldiers out of the province to the assistance of Governor Gosford in Lower Canada. The plan worked well. The Canadians, proud of the confidence reposed in them, enrolled themselves in the militia to the number of ten or twelve thousand, and when Mackenzie and the rebels assembled to show fight, they were routed at the first encounter, and the rebellion in Upper Canada was at once suppressed. But Major Head's policy was not approved by the British Government, and Head had to make way for Lord Durham, the newly appointed Governor of Canada.