No. 84, Financial
28 August 1860
My Lord Duke
It being my intention to quit this place to day on a visit to British Columbia, which may occupy four or five weeks, I am desirous before Manuscript image before my departure of addressing Your Grace upon a subject of the deepest importance to that Colony.
2. I had the honor of informing Your Grace in my Despatches Nos 70 and 76 of the 3rd and 16th instant, of the reported great discoveries of Gold in the Shilmilcomeen, and on the Southern frontier of British Columbia near Colvile; of the rush of people to that part of the Country, and of the urgency which Manuscript image which existed for pushing on with vigour the work of the road from Hope to the New Diggings.
3. Prodigious efforts have hitherto been made by the people of Oregon to throw supplies, by means of the Columbia River, into the Southern frontier of the British Possessions, and since these new discoveries so close to their own Territory, those efforts have been redoubled, and unless we adopt instant and Manuscript image and effective measures, the revenues of the Colony will suffer to an extent which we can hardly now foresee.
4. Your Grace is aware of our struggles to reduce the cost of transport by opening roads through the Mountains from Douglas, Yale and Hope, and I was in hopes of being able to effect those great and important works through the immediate revenues of the Manuscript image the Colony, and without foreign aid. It would have been no small satisfaction to have done so, in view of the magnitude of the undertaking, and I confidently believe my hopes would have been realized, but for the events abovementioned, and which render the immediate completion of these roads a matter of the most urgent necessity.
5. The whole expense of Manuscript image of the Trail from Douglas to Cayoosh, including 25 miles of Wagon road, which is now finished; the most expensive part of the road from Yale; and a portion of the Hope Trail to Shilmilcomeen, have been defrayed out of the current revenue. The remainder of the Yale road to Spuzzum, and of the Trail to Shilmilcomeen will be paid, as arranged with the Contractors, in British Columbia Bonds, bearing interest Manuscript image interest at 6 per cent per annum.
6. In order to complete the communications there remains: .off On the Douglas route,
From the 28 Mile House to Cayoosh, a distance of about 34 Miles of land carriage. .off On the Yale route,
From Spuzzum to Boston Bar, an exceedingly difficult portion of about 15 miles, and from thence to Yale a Manuscript image a distance of about 40 miles. .off end
7. The portion of the road from Spuzzum to Boston Bar has just been contracted for by Colonel Moody for Nine Thousand Pounds, and it will probably take an additional sum of Five Thousand pounds to open the remaining portion to Lytton.
8. Thus in addition to the works for which we have provided the means of Manuscript image of payment in the Colony, we would require as follows: For Road from Yale to Lytton.......14,000
For Road from Douglas to Cayoosh[…]16,000
9. Being unwilling to make a further issue of Bonds, lest their depreciation should greatly increase the cost of the roads in progress, I directed the Treasurer to advertise for a Loan to the extent of Twenty Five Thousand pounds; but it resulted Manuscript image resulted in only one offer, and that for the sum of Two Thousand pounds at 12 per cent per annum interest.
10. This circumstance taken in connection with the high rate of interest, (one and a half to five per cent per mensem) to be obtained for money loaned for short periods, shews that there is but a scanty supply of capital for the every Manuscript image every day demands of commerce. There is no currency except coin; there is no money which can be spared to be locked up in an advance to the Government, except at a rate of interest which we could not afford to pay.
11. Our only resource then is to turn to the Mother Country to endeavour to effect a Loan to the extent of Fifty Thousand pounds, and in this I trust Your Grace Manuscript image Grace will afford us your valuable aid. It would naturally be a subject of gratification if this, the youngest of Her Majesty's Colonies, could arrange a Loan at rates approaching those paid by other British Colonies of the same Continent, and as far as the security is concerned, I venture to submit that the revenue of British Columbia can give as undoubted security for a small Loan as the Canadas can offer for a large one.
The Manuscript image The revenue of the year was calculated to exceed the expenditure, and it has surpassed the estimate, while the expenditure has been successfully kept hitherto within the prescribed limits, excepting of course the heavy charge on Military account, which it is my anxious endeavour that the Colony should be placed in a position both to defray and to utilize as soon as possible. But it is sufficiently evident Manuscript image evident to Your Grace that neither can the expense of the Military Establishments be defrayed by the Colony, nor can Soldiers be moved from one point to another, until roads and communications be opened so as to make the Country practicable for the Merchant and the Baggage Train.
12. I believe that the ordinary course in effecting Colonial Loans is to place the matter in the hands of Manuscript image of an Agent in London, who undertakes to pay the interests, redeem such portions of the principal as become payable &c on the terms of a fixed commission. The terms as to the interest, commission etc., must be settled, I presume, through or with, such Agent, to whom the Colonial Government find themselves to make from time to time, such remittances as may seem proper Manuscript image proper.
13. The assistance which I venture to solicit of Your Grace, is the selection of an Agent through whom the details of the transaction may be managed; and to whose integrity and ability may be entrusted the negociation of the terms to which such a Loan would have to submit; whether such a Loan, from its amount Manuscript image amount, is best fitted for being raised by subscription or by public advertisement, or by private tender, e.g. to Insurance Offices, or other Bodies having large amounts of available capital seeking investment.
14. I should hope that such an Agent might be found, and as I should expect to have to follow his Manuscript image his advice and experience in such a matter, I presume that there would be nothing rash in undertaking to acquiesce in such terms as he may be able to obtain, the necessary details for carrying out those terms, and for pledging the resources of this Colony for their fulfilment, being Manuscript image being contained in a Proclamation having the force of Law.
I have etc.
James Douglas
Minutes by CO staff
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Sir F. Rogers
It would be the making of B. Columbia to have a sum of money to spend in the construction of roads, or even paths capable of conveying provisions & merchandize into the inaccessible interior of the Country in return for the gold, the produce of the Miners labor. But money cannot be obtained on the spot. The Governor hence appeals to the S. of State to help him to effect a loan here. He wants £50,000, and does not ask for an Imperial guarantee, which has been already refused by The Duke of Newcastle. The Revenue of the Colony is £50,000 a year and increasing. The expenditure, about which the Governor keeps us a good deal in the dark, corresponds. Such being the case and the Colony with no other security to offer than tracts of wild land, at present almost valueless, I had misgivings as to the possibility of the Colony getting the money it wants on any terms in London; but happening to meet an eminent Banker and acquaintance of my own, I endeavored to ascertain from him whether it was at all likely that the loan cd be effected. I explained to him fully the state of the case, and having succeeded in enlisting his interests on behalf of the Colony he very obligingly offered, if I would Manuscript image furnish him with the necessary materials, to give me his opinion on the matter. I, therefore, availed myself of the opportunity, conceiving that this gentleman's opinion might guide us in our future proceeding, should the Duke of Newcastle think it desirable for the interest of the Colony to comply with the Governor's application. Of course Mr Bosauquet's letter which I annex would not prevent our obtaining the advice of the Treasury, whom it wd be necessary and proper to consult on the subject. That gentleman's Letter is chiefly to be regarded as the mercantile view of the case, and valuable accordingly. I have only to add that I think that, if a Loan should be obtained for the Colony, it would be prudent to require that the distribution of the money should be settled by the Governor in concert Manuscript image with some of the principal officials of B. Columbia. In making that suggestion I by no means wish to depreciate the honor and integrity of Governor Douglas. I offer it on the contrary to prevent the possibility of those virtues having a whisper raised against them, which, in a Colony where he is perfectly despotic in power, might, in money matters, not improbably be the result if he were left alone in the distribution.
ABd 24 October/60
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73 Lombard Street
23rd Octr 1860
My dear Sir
I return you Governor Douglas' Despatch of the 28th August, together with the Blue Book and other documents forwarded to me for perusal, and I have read them with very great interest.
With regard to the question of raising money in this country for the Colony of British Columbia, I think there ought to be no difficulty in raising the sum named in the Despatch on bonds of the Colony bearing 6 Pr Ct Interest payable in London. The peculiar political circumstances attending that locality alone could throw doubt on such a conclusion. With the guarantee of the British Government such a loan might Manuscript image of course be effected with ease at 4 or 4 1/2 Pr Ct. But I observe that the Duke of Newcastle in his Despatch of the 25th of February last holds out no prospect of such a guarantee being obtained. It is therefore proposed to pledge "the resources of the Colony by Proclamation bearing the force of law" as security for the amount.
Such a Proclamation charging the revenues and Crown property of British Columbia, & Vancouvers Island (which I presume is included)
Certainly not.
in the usual form of mortgage, would I think form an efficient security: and as evidence of the sanction of Her Majesty's Government, and also as affording the Government a proper control over the amount Manuscript image of issue, I would suggest that it would be expedient that the seal of the Colonial Office and the signature of the Colonial Minister should be attached to the bonds.
The bonds might be made payable in 20 years from the 1st of January next, and the interest made payable at the Agents in London half yearly from that date: and to avoid unnecessary delay they might be prepared in London in anticipation of the arrival of the Proclamation from the Colony.
With a view to preserve the market value of the bonds, of which probably none will hereafter be issued, it would be expedient to set aside annually a sum equal say to 2 Pr Ct upon the amount raised, as a Sinking Fund to be applied in redemption of the bonds at any price under par. Perhaps also there should be some restriction upon the issue of local bonds in the Colony, of which I observe by the Despatch some are already in existence.
With regard to the Agency in London, I may observe, that the Banking House of which I am a Member has had experience in raising several hundred thousand pounds for Corporations in Canada, and in paying the half yearly interest upon their bonds; and should no other source of agency more advantageous to the interest Manuscript image of the Colony occur to you, we should be ready to undertake the negociation of the proposed loan under the payment of interest subject to our usual conditions viz— 1st On receiving a commission of 2 1/2 Pr Ct beyond the usual charges of brokerage &c. 2nd Retaining in hand the amount of the first years interest on the bonds. 3rd The punctual remittance to us from the Colony of the subsequent half yearly dividends three months before they become due, charging no commission on the payment. 4th Charging at the rate of 1 1/2 Pr Ct on the amount of dividend for any part of the three months during which the provision for the dividend should not be in our hands.
Manuscript image I hope that these suggestions may be of use to you towards effecting the objects you have in view, and I shall have much pleasure in calling upon you in Downing Street at any time should you wish for farther explanation.
Believe me My dear Sir
Yours very truly
J.W. Bosauquet

Minutes by CO staff
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Sir F. Rogers
Roadmaking is so vital an object in B. Columbia, that I think we may encourage this scheme.
The question of representative institutions for B. Columbia will have to be considered on the Duke's return. But if they are held to be premature, I am much Manuscript image inclined to think—with Mr Blackwood—that a Council of some kind sh. be associated with the Govr, the reasons for which wd. be increased by the fact of his having a Loan to expand on Road-making.
CF 27
Mr Fortescue
This despatch has been sent down to me amongst those reserved for the consideration of the Duke on his return. If this Colony were able to defray it's current services and had any balance of revenue to spare, it might be a legitimate question whether it should raise a loan, looking to that balance of revenue as security for the interest. But considering that as yet the Colony is unable to provide for it's current wants, and that a Government is only maintained there by means of aid from the British Exchequer,
They pay their way—except the Engineers.
I would submit that to plunge it into debt, so long as these circumstances last, would be unjustifiable. Loans are for those who at least can pay the interest. Roads are doubtless very important Manuscript image and so are many other things which the Colony might have if it were richer, but this would not warrant incurring liabilities without a well assured prospect of being able to meet them. A man who has one thousand a year would have more comforts and luxuries if he spent two, and a man of ten thousand a year might have greater enjoyments for twenty thousand, but people learn that they must confine their expenditure within their income.
TFE 21 Novr
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Draft, Elliot to G.A. Hamilton, Treasury, 27 December 1860, forwarding copy of the despatch for consideration.
Minutes by CO staff
Mr Elliot
I have added the latter part of this draft in order to anticipate questions which the Treasury would naturally ask & to which we have no means of supplying answers.
HT Irving 10/12/60
The addition seems to me necessary and right.
TFE 10/12
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Draft reply, Newcastle to Douglas, No. 68, 1 March 1861.
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Draft, Elliot to Hamilton, 7 March 1861, forwarding two despatches transmitted to Douglas on the subject of the proposed loan.
Douglas, James to Pelham-Clinton, Henry Pelham Fiennes 28 August 1860, CO 60:8, no. 9924, 151. 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.

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