Hamilton to Merivale (Permanent Under-Secretary)
Treasury Chambers
5 July 1859
Sir,
I am directed by the Lords Commissioners of Her Majesty's Treasury to acquaint you, for the information of the Duke of Newcastle, that My Lords have had under their consideration the communications from the Governor of British Columbia and Vancouver's Island transmitted in your letters of the 14th and 17th Ultimo, relating to the Establishment of a Mint or Refinery and Assay.
I am to observe with reference to the first of the abovementioned letters that the observations, contained in the letter of this Board of the 27th of May, had reference toManuscript imageto a proposal from the Secretary of State for the Establishment of a Mint in British Columbia without previous communication with the local authorities, and the question of establishing a Refinery and Assay was regarded as a subordinate one to the larger scheme.
My Lords now learn by the despatches of Governor Douglas of the 8th and 11th of April that, at that time, his views were confined to the Establishment of a Government Assay Office, as a measure of more immediate importance than the institution of a Mint. It is hardly necessary to observe that this proposition, being put forward as a substantive measure, involves considerations differing essentially in character from that first submitted to this Board.
It is not essential for the purposes of aManuscript imagea Mint that a Refinery should be attached to it, though probably in the case of a Mint being established in a new Colony such an association of distinct operations would be desirable; but, on the other hand, My Lords are aware of no instance of a Refinery and Assay having been carried on by Government, except in connection with or substitution for a Mint. The reason for such a connection is obvious, namely, that of ascertaining a process carried on under the control of public authorities the quality of the Metal, to which the stamp of coinage is to be affixed. It is of the nature of a guarantee for the purity of the Coinage, which it might not be safe to dispense with in the case of an infant community. But the establishment of a Government Refinery and Assay department, unconnected with a Mint, appearsManuscript imageappears at first sight to involve an encroachment on the proper limits of private enterprize, which grave necessity could alone warrant: and My Lords are not satisfied by the tenor of Governor Douglas' observations that he has sufficiently mastered all the bearings of the question to justify the adoption of his recommendation without further enquiry. They observe that in both despatches one of the principal advantages, which he anticipates from the measure is that of "keeping the gold circulating in the Country." My Lords would infer that this expression must have been intended in some qualified sense not explained, as another object on which the project is recommended is that of facilitating the levying of an Export duty on gold, and they conceive that it must be evident to every one that this metal canManuscript imagecan only be a source of wealth to the country as a merchantable product; but when a proposition of this nature is put forward, as a ground for an important proceeding, their Lordships feel it right to remark on its apparent inconsistency.
A more practical objection to the proposal arises from the opinion expressed by Governor Douglas that "having an Assay Office the Miner would only have to take his gold there, have it assayed, and receive value for it."
Through banking?
It would appear from this passage that the Governor contemplates that the proposed establishment should undertake the operation of buying and selling gold. It is probable that a trade of this nature is conducted by private Assayers, and mutual advantage to the buyer and seller no doubt arises from it; but the practice appears to My Lords to mark the proper functionsManuscript imagefunctions of a private undertaking as distinquished from those of a Government Establishment: and the suggestion tends to confirm them in their impression that a Refinery and Assay could only be properly conducted by a Government Establishment, in connection with a Mint for coinage.
My Lords are not surprised that in a thinly populated Country, in which a source of Mineral wealth has been suddenly developed, there should at first be some difficulty in organizing private enterprize for the purpose of turning it to full account, but they are persuaded that it would be a great error to attempt to supersede such enterprize by the hasty assumption of trading functions by the Government. It is only the circumstances that gold constitutes a material for coinage which leads the State to authenticate its value in any case; andManuscript imageand apart from that consideration, there is no reason for its interference in the assaying of Gold, more than in the smelting of copper ore, or other Mineral products. My Lords are satisfied that the opportunity afforded for the profitable employment of capital will soon attract adventurers to the Colony, and, although it may be difficult to induce Assayers to transfer their Establishments from California to Vancouver's Island, the want will be supplied from other sources.
Banking Establishments whose business it will be to deal in bullion,
This is a more probable mode of relief.
will afford to the Miners an opportunity for the disposal of their treasure. The Bank of British North America has proposed to establish a branch in the Colony, and a new Banking Company of London Capitalists has recently obtained a Charter for a like purpose. TheManuscript imageThe fair rivalry of respectable concerns of this nature will afford a better guarantee to the Miner than the questionable measure of a Government Establishment, fettered as it must be by Government Regulations. For these reasons My Lords do not think it advisable that any proceedings on the subject should be taken in this Country, on the responsibility of Her Majesty's Government. If further local experience should show the necessity for such an Establishment,
Which an Assay Office or a Mint?
their Lordships would not object to the experiment being tried at the expense of the Colony: and they think that, with the foregoing expression of their views, the matter may be left to the discretion of the local authorities. It does not seem to their Lordships that the interference of the Home Government would be required except in the case of a Coinage.
I am, however, to observe that theManuscript imagethe despatch of Governor Douglas enclosing a correspondence with the House of Assembly at Vancouver's Island, respecting the Establishment of a Mint in that Island which accompanies your letter of the 17th Ultimo, opens a further view of the question. The recommendation that the money to be coined in the proposed Mint, "shall be a decimal currency of the same value as that of the United States of America" may be considered as an answer to the enquiry contained in the letter of this Board of the 27th of May, regarding the character of the coinage to be adopted in case of the establishment of a Mint. My Lords have no objection to offer to the proposal and are willing that the question of the Establishment of a Mint, in one or both of the Colonies in question, should be treated as one to be determined by the local authorities from a consideration of their ownManuscript imageown interests. For the reason they have already given they are inclined to doubt whether the benefits to be obtained from such an Establishment would compensate for the expense, and they are strongly of the opinion that, at any rate, one Mint would be sufficient for both Colonies. They suggest that the Governor should in case of the adoption of a proposal for the Establishment of one Mint only, ascertain the views of both Colonies regarding the best position of the Establishment for their Mutual benefit, and report fully and in detail the arrangements which he would propose for the purpose.
The conditions which My Lords would think necessary to require are that (either in the case of one or two Mints) the Colonies should undertake the whole expense of setting them up, and remit asManuscript imageas a preliminary measure a sufficient sum for the purchase of the necessary Machinery etc. in this Country, according to the size of the Mint which they may propose; that they should guarantee the payment of any salaries which Her Majesty's Government may find it necessary to offer to persons in this Country for the purpose of securing an efficient Establishment; and that the Establishment should be placed under the Control of the Master of Her Majesty's Mint, and the Coins to be issued be regulated by Her Majesty in Council in all respects conformably with the regulations adopted, in the case of the Branch Mint at Sydney.
It is unnecessary that My Lords should enter into more particulars in this stage of the matter, regarding the arrangements to be adopted, as the published correspondence relating to Manuscript imagethe Establishment and working of the branch Mint at Sydney, which have no doubt been communicated to the Governor, will give him all the information necessary for his guidance.
I am etc.
Geo. A. Hamilton
Minutes by CO staff
Manuscript image
Mr Merivale
See previous T-y Letter 5831 and Capn Gossett's Letter 6955 received by the last Mail on the subject of the Establishment of a Mint and Assay Office in B. Columbia.
The doctrines of political economy which dictate this Letter seem to me perfectly sound, nor perhaps would it be wise, on the whole, to interfere with them in this case. The hope, and indeed the probability is that the Banks mentioned by the T-y may afford the assistance and relief of which the Colony stands in need. The longer that assistance is withheld the longer will the difficulties of the Colony last—possibly throwing on the English tax-payer charges which it is scarcely fair he should incur for this gold producing region.
ABd 13 July
Mr Gairdner
Can you tell me what was the course adopted as to arranging the gold, in N.S.W. and in Victoria?
HM Jy 14
Manuscript image
Mr Merivale
1. In the Colony of Victoria the Assay of Gold is confined wholly to the "Trade". The Government does not by proclamation or otherwise control or exercise any interference in the case.
2d In the case of N.S. Wales: It will be remembered that that was the first Australian Colony in which Gold was discovered; and application was made to the Home Government for the establishment of a Mint. That was accordingly done very much on the conditions laid down in this Letter from the Treasury with reference to B. Columbia & Vancouver's Island. Annexed is the Treasury Minute which recapitulates the correspondence, & the Order in Council under which the Mint was established, and on the same conditions Mints might be established in other Colonies.
22 March/53 Parlty Papers to 19 Augt/53. Parlty Papers Feby 1854 P. 60.
You will perceive in the Minute (last par. page 3) that the Treasury considered it essential that Government establishments Manuscript imageshould be instituted in connection with the Mints for melting, refining, & assaying the rough gold previous to its delivery at the Mint for Coinage: but those operations might be carried on in a contiguous but separate building as it might possibly be found expedient hereafter to discontinue the Govt assay of Bar Gold and to leave the operation to private enterprise. In the mean time the arrangements for the Govt refinery might be left to the local Govt; but in the Order in Council it is the duty of one of the Officers of the Royal Mint to be responsible for "the integrity of the operations of the refinery & smelting House". How far the public in Sydney resort to the Govt Establishment, or how far the assaying of Gold is carried on by private enterprise when unconnected with the coining, I cannot perceive; £12.244 is collected in 1857 by the Depy Master of the Mint but probably for operations connected with coining.
3. In South Australia a different course Manuscript imagewas adopted. The Colonists betook themselves to the Diggings, & brought back Gold, but it was leaving the Colony & the banks were in difficulty.
28 Jany/52.
The local Legislature accordingly passed an Act "to provide for the Assaying of uncoined Gold and to make Bank Notes under certain conditions a Legal Tender."
Parl. Paper 28 Feby 1853 P. 336.

Under that Act, a Govt Assayer was appointed: the Gold might be assayed, melted & stamped: The Banks might buy such Gold Bullion at £3.11 per oz & issue Notes against such Bullion. The Notes of the Banks were a Legal tender, but they might pay them in such assayed bullion. That process was found inconvenient, and a further Act was passed No 14 of 1852, for continuing the Govt assay of Gold and for stamping it into Money Tokens at £3.11 per oz. In fact they took the function of Manuscript imagecoining into their own hands in order to meet an emergency & it was permitted. But on the 17 Feb. 1853 the Governor reported,
Parly Papers 16 Augt/53 P. 184.
that the Government Assay Office had done its work, was no longer required and was abolished. Since that period any necessary assay of Gold seems to have been left to private enterprise. Although South Australia is not at present nor has been a gold producing Colony, still from its proximity to the Victoria Gold Fields a good deal of the raw material found its way into the Colony & I thought that this illustration might be of use.
GG 16 July
Manuscript image
Mr Fortescue
These papers require to be read together, and with the Governor's despatches of 8th & 11th April and 25 May to which they refer.
The despatch of the 8th April is not here.
Added now.
It seems necessary to decide whether we will acquiesce in the view of the Ty or make any further stand in defence of those of the Governor.
I suppose we may assume that we shall not give the B. Columbians a mint, or anything more than mechanical assistance, for which they must pay, whenever they may think proper themselves to establish one.
The only remaining practical question is, shall we establish a Government assay office (either at the exp: of the Colony, only about £800 says the Governor, or at the first cost to the Treasury, to be repaid by & bye).
The Treasury say this is an Manuscript imageunnecessary interference with private enterprise—that it will not keep the gold in the country—that it is not to be desired it should—and they corral various careless expressions of Govr Douglas's on the economical bearings of the question.
But Govr Douglas's main argument is, We want a revenue—an export duty on gold is the only thing we can think of—an export duty cannot be levied if the miners carry away all the ore privately—they will not carry it all away privately, if they have the advantage of an assay office, where they can have its purity tested.
To say that this want will be supplied by degrees by the Bankers & other private enterprises is true no doubt, but in the mean time Manuscript imagehow are we to pay an establishment?
Now the case of South Australia certainly does seem rather in point. The Government there thought there was evil in the immediate abstraction of all the gold brought into the Colony by miners returning from Victoria (which for this purpose may be considered as part of the same colony). They set up an "assay office" on purpose to prevent it. The measure was much doubted by political economists here. But it was in force for a twelvemonth. And I believe it was considered in the colony to have worked well & obtained its object, until from other causes it became unnecessary.
The expense I believe is trifling enough, but I suppose the mechanical Manuscript imageappliances are not immediately accessible in the Colony.
HM Jy 18
Manuscript image
Duke of Newcastle
The Govnrs desp. of 8th May was sent to the Treasury, in connection with the assay question, but has not been answered. They probably think they have said enough in their letter of the 5th July. This Report of Capt. Gossett's affords additional arguments for the establishment of a Govt assay, wh. certainly seems a very advisable measure, as a means of fixing the mining population, and levying an export duty. Capt. G. is, I sh. think, right in thinking that Queensborough is the place for it, and not Victoria, altho' his own interest of course lies in the former place & not the latter. I do not find that you have yet recommended the Assay plan to the Treasury, as that part of your minute on 5892 was not acted upon—indeed that particular desp. did not touch the question.
CF 29 July
It is most probable that as in S. Australia so in B. Columbia an Assay Office will before long be found unnecessary and be discontinued, but it is for immediate purposes that it is required and I will recommend it at once (see Minute on 5892). It will be well to send Copy of Treasury letter to Gov. D.
N [date cut off file]
Hamilton, George Alexander to Merivale, Herman 5 July 1859, CO 60:6, no. 6790, 180. The Colonial Despatches of Vancouver Island and British Columbia 1846-1871, Edition 2.2, ed. James Hendrickson and the Colonial Despatches project. Victoria, B.C.: University of Victoria. https://bcgenesis.uvic.ca/B595TE21.html.

Last modified: 2020-12-02 13:40:34 -0800 (Wed, 02 Dec 2020) (SVN revision: 5008)