Hamilton to Merivale (Permanent Under-Secretary)
Treasury Chambers
10 December 1859
With reference to Mr Elliot's letter of the 18th Ultimo, enclosing a despatch from the Governor of British Columbia requesting that a Supply of Silver and Copper Coins be paid for in Gold dust, may be forwarded to the Colony, I am directed by the Lords Commissoners of Her Majesty's Treasury to acquaint you, for the information of the Duke of Newcastle, that My Lords would not object to direct a supply of British Silver and Copper Money being forwarded to British Columbia, if the requisition of Captain Gossett [Gosset] were not founded on views which their Lordships consider inconsistent with the permanent establishment of a sound Currency.
My Lords observe from the despatch ofManuscript imageof the Governor that the inhabitants of the Colony have adopted the denomination of the Money of the United States, viz: Dollars and Cents; and Captain Gossett appears to consider that the coins of the United Kingdom may be accommodated to this practice by the adoption of a decimal system founded on the florin as the 10th part of a pound. The sole practical reason which he advances for this opinion is that the florin commonly passes in the Pacific as the Equivalent for half a dollar of the United States; and he hence concludes that the 10th part of a pound sterling and half a dollar of United States Currency are equivalent. It is no doubt true that in communities which have no established currencies supported by a well defined coinage and in which coins of different denominations and value are used asManuscript imageas a common circulation, a rough and conventional relative valuation is often resorted to which may smooth over immediate difficulties, but it is no less certain that such expedients if inconsistent with the principles which regulate the intrinsic relative value of currency must, if adopted as the basis of a permanent settlement, in the end lead to confusion and difficulty.
The standard of value both in this Country and the United States is gold, and any attempt to bring the coins of the two Countries into concurrent circulation must be founded on a comparative valuation derived from the contents of precious metal contained in the coins which form the basis of the currency in each country. The contents or pure gold in the Eagle of 10 dollar piece being 232 2/16 grainsManuscript imagegrains, and those in the sovereign being 113.001 grains, it follows that the value of the Eagle, expressed in the denomination of British Money, is £2.1.0 and an inappreciable fraction. The florin, being a token coin, can only obtain permanent circulation as representing a fractional part of its superior denomination, the pound sterling, that is, as representing 2/s or 1/10 of a pound sterling, and, as such, it is undervalued
This is a slip of the pen for overvalued?
to the extent of 2 1/2 per cent when it is adopted as the representative of half a dollar or 1/20 of a Gold Eagle. It is obvious that a scheme of currency founded on this error could obtain no permanence.
It was, at one time, as the Duke of Newcastle is aware, the anxious desire of this Board to procure the assimilation of the various localManuscript imagelocal currencies of the British North American Colonies by the general adoption of the denomination of the British Money of Account, supported by British Coins representing them. It would be instructive to the Treasurer of British Columbia if he were informed, by a reference to the correspondence which passed between the Home Government and those Colonies, especially Canada, of the reasons which led Her Majesty's Government to abandon that project, and to acquiesce in arrangements for the settlement of the currencies of the several Colonies on different bases, varying with the apparent requirements of local convenience. He will learn that in the case of Canada after the adoption of a poundManuscript imagepound currency which assimilated in its integration with the currency of the United States, the pound local currency being made equivalent to 5 United States Gold dollars, great difficulty was found in working the concurrent circulation of British Shillings and other smaller token coins, because they represented no exact proportion of the pound currency, and the fractional differences of value (which Capt Gossett disregards in the florin) led to an arbitrary and varying adjustment, which exposed the purchaser to loss and inconvenience. He will learn also that all these
Is this a fact?
difficulties were at last removed by the adoption of a decimal system assimilating with that of the United States, but supported by a special token coinage whichManuscript imagewhich gives the advantage, which Capt Gossett does not overrate, of maintaining a circulation of coins bearing the Queen's Effigy, the emblem of her authority.
My Lords incline to the opinion that the wisest course to be adopted in the case of the currency of British Columbia will be to assimilate it to that of Canada, with which colony it will doubtless be brought eventually into close intercourse. Whatever may be considered, in the abstract, the best system of currency for British North America, experience has proved that no general theories will have any weight with the several Communities of which it is composed, and that the currency of each colony must be adapted to the demands of local convenience.
It Manuscript image
It would be in vain to hope that, whatever may be the future development of British Columbia, the measures which may now be adopted with respect to its currency will have the slightest influence on the arrangements of the older Colonies, and My Lords are of opinion that instead of attempting to frame schemes founded on individual preferences and imperfect information, the local Government should endeavour to ascertain the fixed desires of the Community on the subject and inform themselves of the best means of giving effect to them, without derogation of sound principle and farseeing policy.
If, notwithstanding Capt Gossett's object, the Duke of Newcastle should think itManuscript imageit desirable to send out a supply of British Silver to British Columbia, My Lords will give directions to the Master of the Mint for the purpose. But in that case it will be necessary to decide on the description of Coins to be sent with reference to the immediate requirements of the Colony, and also to consider whether a supply of copper coin should not also be forwarded. The doubt on the subject arises from the fact, mentioned by the Governor of British Columbia, that the currency of dollars and cents is generally adopted by the Community, and as British token money cannot permanently circulate as representing the denomination of dollars and cents, the transmission of such coins might only procure immediate convenience at considerable cost.
It Manuscript image
It may be better on this account to pause until the basis of the future currency of the Colony is settled, when coins adapted to it may be supplied.
As regard the suggestion that the cost of any coin that may be transmitted should be paid for by the transmission of gold dust, My Lords must decline the proposal as inadmissible, because the Royal Mint does not deal in gold bullion, its function in respect to the Coinage of Gold being confined to receiving that Metal in a condition fit for coinage and returning the same quantity in a coined state.
Their Lordships have the less regret in declining this proposal, because they can hardly think that the receipt of gold dust of the value of £6000 at the Royal Mint wouldManuscript imagewould create any appreciable effect on forwarding what appears to be the main object of the Local Government in suggesting this mode of payment.
I am etc.
Geo. A. Hamilton
Minutes by CO staff
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Mr Merivale
I understand that the Treasury are desirous that this question should be settled without further reference to the Colony, and that Mr Arbuthnot will propose to you to hold a conference upon it.
HT Irving 18 Dec
Mr Strachey
Would you have the kindness to take this matter in hand, & to talk it over by appointment with Mr Laing before the passing farther—as the subject is one with which you are familiar & I am much engaged.
I have written privately to Mr Arbuthnot as to the legal question raised in his private note.
HM Dec 15
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[Supplemental to above:]
Decr 14/59
Dear Merivale
We have sent you a letter about the Currency of British Columbia. The Treasurer, Captn Gossett, has some crotchets in his head, which will mar his cleverness if they [are] not removed, and I suppose that you will communicate Manuscript imageto him our letter.
But Mr Laing is of opinion that we have sufficient information before us to enable us to regulate the Currency of the Colony without waiting for further [Uieubrations?] from that quarter, and he is strongly of opinion that we should fix it on Manuscript imagethe basis of the Canada Currency which works in harmony with that of the United States. I suppose that as far as British Columbia is concerned, we might settle the matter by order in Council & Proclamation, but what should we do with Vancouver's Island Manuscript imagewhich has an Assembly &c.
Mr Laing proposes that we (i.e. you or some one from the Colonial Office) shd have a conference with us here on the subject.
Yrs vy truly
G. Arbuthnot