On the 28th of March, 1888, the New Brunswick Lieutenant Governor and Legislative Assembly enacted “An Act to Incorporate ‘The Channel Subway Company,'” a corporation comprised by James Holly, Thomas R. Jones, Hurd Peters, Alfred A. Stockton, and Charles D. Jones. This legislation authorized the Saint John company

“to excavate, build, construct and complete a subway or tunnel, or subways or tunnels, under the waters of the Harbour of the City of Saint John in the Province of New Brunswick, from any point or points on the Eastern side of the Harbour, in the City of Saint John, to any point or points on the Western side of said Harbour in said City, called Carleton, of such form and dimensions, and of such materials as the Company may deem suitable for their purpose, and may lay down and conduct a single or double line of passageway for horses, waggons, vehicles, street cars and foot passengers.”

According to the Act, funds for this questionable endeavour were to be raised through the sale of 7,500 shares worth $100 each. Instead, on January 30, 1889, John Sparrow David Thompson (John A. MacDonald’s Minister of Justice at the time) made a case to the Governor General in Council in Ottawa that “public harbours” like the one in Saint John, under section 108 of the British North America Act,

“are vested in the Crown for the use of Canada. The Supreme Court of Canada has decided in Holman vs. Green, S.C.R., vol. 6, p. 707, that the land covered with water in the public harbours of Canada, belong to the Crown for the use of Canada, and not to the Crown for the use of the province in which such land lies. It therefore follows that the Act in question almost exclusively relates to the public property of Canada, and authorizes an interference with that property. This Act may also be considered as infringing on the power of the Parliament of Canada, exclusively to make laws in respect to navigation . . . [I therefore recommend] that this Act be disallowed unless the Lieutenant-Governor of the province is able to assure your Excellency, before the time for disallowance expires, that the Act will be, or has been repealed.”

Later in the same year, Thompson referred to the Channel Subway Company Act during a debate in the House of Commons as the subject of ongoing “communications . . . between the two Governments.”