No. 58, Financial
15 December 1862
In my Despatch of the 4th Instant, marked "Separate," I informed Your Grace that I had reserved the subject of Roads, and the financial question involved therein, for a subsequent Despatch. I willnowManuscript image now advert to that subject and explain the precise position in which I am placed with respect to these most indispensable public works in British Columbia.
2. The scheme determined upon in the early part of this year to carry out these works has been already at different times fully laid before Your Grace, but for the sake of now presenting the subject as a whole, I will enter into a brief recapitulation.
3. The lines of Road fromLyttonManuscript image Lytton to Alexandria, and from Lillooet to Alexandria were undertaken by two of the largest commercial Firms in the Colony. A portion of the line from Yale to Lytton, about 50 miles, was undertaken by the Government, the remaining portion constituting the most difficult section between Yale and Boston Bar was assigned by Contract to Mr Joseph Trutch a gentleman of high Engineering ability.
4. The works on the two lines aforesaid, and onMrManuscript image Mr Trutch's Section were to be carried on at the cost of the Contractors, aided by loans from the Government, the Contractors being re-imbursed exclusively by Tolls, but such Loans forming a first charge therein. This arrangement was imperatively necessary as none of the Contractors with their own resources could raise sufficient capital to carry out such extensive works. Without such an arrangement, I could not, for want of means, have undertaken what I shall hereafterpointManuscript image point out the very existence of the Colony depends upon. By the arrangement, I enlisted the co-operation of private enterprise, and brought to bear upon the development of the reserves of the Colony a much larger Capital than I could ever hope to command so long as the wonderful auriferous wealth of Carribou remained inaccessible but to a few.
5. The portions of this stupendous work undertaken at the cost of the Government, havebeenManuscript image been completed. Mr Trutch's section will not be finished until the Spring, for the removal of one of the mountain shoulders, involving about 100,000 cubic feet of blasting in the solid rock, and upon which only a limited number of men can be simultaneously employed, cannot be earlier effected.
6. Upon the line from Lytton towards Alexandria I regret to say that the Contractors have most signally failed, not, I believe from dishonest motives,butManuscript image but really from want of means, for they had constructed 45 miles of Road in a most creditable manner, and incurred an outlay of 100,000 Dollars. I did everything within my power, consistently with the interest of the public service to relieve the pressure upon their finances, but they had commenced a gigantic undertaking with inadequate means, and were compelled to relinquish it, throwing the road upon the hands of the Government when only halfManuscript image completed.
7. From Lillooet towards Alexandria 128 miles of Road have been completed, and an outlay incurred of 190,000 Dollars. I fear, however, that, as in the case of the line from Lytton, the Contractors have here also miscalculated the cost, for I have just now received from them an urgent application for a further loan. These gentlemen have hitherto so faithfully and energetically fulfilled their obligations that I deeply regret it is not in my powertoManuscript image to assist them further at present. They are deserving of every consideration, and as the road itself offers the most perfect security for the Loan sought and made, I earnestly trust that it may be in my power before the Spring season commences to meet their wishes, otherwise I much fear that they will break down, and we shall then be in the unfortunate position of having two incomplete lines of road thrown upon our hands.
InManuscript image
8. In such a case we should be saddled with the liabilities on both lines to the extent of the excess of valuation of the work over the advances made. This may be seen by the following statement.
Lytton-Alexandria Road
.off Valuation of work done, as estimated by
Chief Commissioner of Lands and Works ........ $100,000 .off Loan to Contractors from Treasury
repayable from Tolls .............. $26,500 .off Loan effected by Contractors with
Bank of British Columbia, due
1st March 1863, guaranteed
by Colonial Government ............ $37,500
$ 64,000 .off Balance in favor of Contractor .............. $ 36,000

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Lillooet-Alexandria Road
.off Valuation of work done as estimated by
Chief Commissioner of Lands and Works ........ $190,000 .off Loan to Contractors from Treasury
repayable from Tolls .............. $49,000 .off Loan effected by Contractors with
Bank of British Columbia, due
at different periods between 1st
March & 31st December 1863
guaranteed by Colonial Government .. $75,000
$124,000 .off Balance in favor of Contractors ............. $ 66,000
The rapid completion of both these lines of road is of an importance to the Country that I can scarcely use language too strong to express, and how to accomplish this object I amutterlyManuscript image utterly at a loss without the aid of a further public Loan of Fifty thousand Pounds (£50,000).
9. The gross Revenue of the Colony for 1863 may be fairly estimated at £110,000, but that Revenue will be required to meet outstanding liabilities and will not be disposable for the works in question which must be vigorously prosecuted so soon as the weather opens in Spring. A Loan of £50,000, would meet our wants, and effected at 6 per cent, would involve an annualchargeManuscript image charge of £3000, an insignificant sum when contrasted with the signal benefits derived from such works, producing moreover an immediate increase in Revenue, and effecting an enormous saving in the cost of inland Transport.
10. To illustrate this last and most important point, I will adduce to Your Grace but one fact. Up to the end of last summer the lowest charge for carrying goods from Douglas by way of Lillooet to Alexandria was 61 cents perpoundManuscript image pound, or £1366 per Ton! Now in anticipation of the completion of the road, one of the most substantial Carriers in the Colony has lately tendered for the transport of all Government stores required in 1863 over the same line, at the rate of 21 Cents per pound: that is at a reduction of no less than 40 cents per pound or 896 dollars per ton, as compared with the rate charged in 1862, being in short a saving to the public to that extent upon all goods carried from Douglas to Alexandria, merelyfromManuscript image from the effect of forming Roads.
11. To pursue this illustration one step further. By the Returns of Roads Tolls it appears that Four thousand two hundred tons of goods have passed Yale and Douglas this season for the upper Country, assuming at a very low estimate that 1000 tons were forwarded to Quesnel and Alexandria, and that a like quantity only will be taken up in 1863, the aggregate saving to the public by the reduction in the cost of transport at therateManuscript image rate before stated, would amount to no less a sum than 896,000 Dollars! These are facts which speak more forcibly than any language I can employ on behalf of the measure I now propose, and I need not point out to Your Grace that until such prodigious charges on trade and industry are removed any attempt to increase the Public Revenue by the imposition of further Taxes must prove disastrous to the Colony.
12. I trust I have saidsufficientManuscript image sufficient to convince Your Grace of the propriety of my being permitted to extend the British Columbia Loan to £100,000. That is the sum upon which I calculated when I started the great public works which I have here described. Tolls are levied on the new Roads which will yield an increase not only to pay the interest of the Loan, but also to provide for the repayment of the Capital. The means and resources of the Colony are amply sufficient to warrant theoutlayManuscript image outlay, and to give the fullest security for its repayment. I do not ask for an Imperial guarantee. I do not ask that the Imperial Government should assume any liability or responsibilty in the matter, for I feel the most perfect confidence that it can be arranged on the sole credit of the Colony. I therefore hope that Her Majesty's Government will not withhold their sanction to my proposition, to enable me to carry out a measure which is not only now so immediately fraught with advantages, andessentialManuscript image essential to the progress and prosperity of British Columbia, but which assumes a wider importance when viewed as the means of prosecuting works which will presently become an indispensable link in the chain of overland communication with Canada, and give a tenfold value to these distant possessions of the British Crown.
I have the honor to be
My Lord Duke
Your Graces most obedient
and humble Servant
James Douglas
Minutes by CO staff
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VJ 14 Feby
Mr Jadis
Will you state the amount of the loans already made or authorized?
TFE 14 Feby
Mr Elliot
One Loan of £50,000 has been made and authorized. In 1861 the Govr issued a Proclamation for a loan of £100,000 to be raised partly in this Country & partly in the Colony—but all proceedings under this Proclamation were stopped & by a Despatch dated 13 May 1862 (with you I believe) the Governor was instructed to pass a fresh law authorizing a loan of £50,000, which was sanctioned by the Secretary of State & the Treasury & the money raised.
VJ 16 Feby
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Mr Fortescue
Having raised £50,000, Governor Douglas asks leave to extend his loan to £100,000 for the important object of increasing the means of communication in the Colony. The question is, may this be recommended to the Treasury?
TFE 16 Feby
Duke of Newcastle
To me the Governor's appeal seems irresistable, and the object upon wh. the money is to be spent—Road-making—one for which a young Colony may fairly borrow. There is probably no country in the world where Roadmaking is so vital, & likely to be so reproductive, as B. Columbia. The wisdom & economy of the Govr's past proceedings is another question, and I should think that he had made a grand mistakeManuscript image in attempting to construct two great lines of Road into the interior, instead of concentrating his efforts upon one, wh. wd. probably in that case have been carried far up the country by this time.
CF 18
I entirely agree. Moreover an early permission to raise the loan is almost as important as the loan itself. Will Mr Fortescue endeavour to get Mr Peel to attend to this as soon as the letter goes to the Treasury.
If we get the necessary sanction I am inclined to direct that one of the lines be suspended till the other is completed to the Rocky Mountains.
N 19
Other documents included in the file
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Draft, Elliot to G.A. Hamilton, Treasury, 27 February 1863, fowarding copy of the despatch and recommending that the further loan be authorized.
Douglas, James to Pelham-Clinton, Henry Pelham Fiennes 15 December 1862, CO 60:13, no. 1623, 581. 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.

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