Julyan to Rogers (Permanent Under-Secretary)
Office of The Agents-General for Crown Colonies
6, Adelphi Terrace
London, W.C.
20 December 1862
I have the honor to report for the information of the Duke of Newcastle that in compliance with the instructions contained in your letter of the 13th November last British Columbia Government 6 p Cent Debentures to the extent of £50,000 prepared according to a form of which a copy is enclosed, have been signed by the Agents General for Crown Colonies and were delivered by them to the Bank of British Columbia on the 12th instant.
The Agents General feel that they would be wanting in their duty to the Colony if they were to omit to point out what they believe would be found a much more economicalmodeManuscript image mode of raising money upon such securities in future.
In this instance the Debentures were disposed of, so far as can be gathered from the papers before me, at par, and paid for by the purchasers in drafts on London at 30 and 60 days sight—i.e. Drafts for £50,000, were handed over to the Government in Victoria, in exchange for Debentures for a like sum handed over to the Bank in London—The Government paying 12 p Cent for the use of such Drafts, from the date of their issue to the date on which the Debentures were delivered over to the Bank in London.
It does not appear what was, in any instance, realized in cash for these drafts, but it is to be presumed that the Government sold them on the spot to raise the money which they wanted, and which the Bank was evidently not in apositionManuscript image position to give them. Whatever the amount might have been however there can be no doubt that Bills drawn by the Governor on the Agents General would have commanded higher rates in the Colony than Bank Bills, and as it is no less evident that a 6 p Cent Loan can always be negotiated on better terms in London than in a Colony where money is worth at least 12 p Cent; the best mode of conducting the operations would have been for the Governor to have directed the Agents General to sell the Debentures by public tender here, and in order to place himself immediately in funds to meet pressing emergencies he might have drawn against the proceeds of such sale instead of leaving it to an intermediate agency to do so. In this manner some 4 or 5 p Cent more would probably have been realized on the sale of theManuscript image Debentures, a half or three quarters per cent more on the sale of the Bills, and the payment of the 12 p Cent interest would have been altogether avoided. Reckoning the period for which such interest will be paid at 3 months, the saving altogether would probably have been something over £4,000 on the transaction.
The Bank attempted to re-sell the Debentures yesterday by public competition, and received tenders for about £14,000 altogether. The minimum fixed was 103 1/2 from which price up to 105 1/2 £6000 was allotted. The Balance remains unsold. This result is not by any means surprising seeing that the British Columbia Bank is a new institution quite unknown to the general public. Had these Debentures been offered for sale by the Agents General I think it highly probable that the wholewouldManuscript image would have been taken up readily at much higher prices, indeed so convinced were the Directors themselves on this point that their Chairman made overtures to the Agents General with a view of getting them to undertake the negotiation, and manifested a disposition to grant a liberal consideration for their doing so.
As however the Debentures had already been sold in the Colony by the Governor, the Agents General could not possibly re-sell them here on private account. The circumstance is only mentioned as showing that the opinion herein expressed in respect of the superior advantages afforded to the Colonies by placing their loans on the marketthroughManuscript image through the Crown Agency, is fully recognized by the public also.
I have the honor to be,
Your most obedient Servant
Penrose G. Julyan
Minutes by CO staff
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Sir F. Rogers
Send a copy of this letter to the Governor? The observations of the Agent accord with the views expressed in the Duke's Desp: of 12 Nov.
VJ 23 Dec
Duke of Newcastle
Send to Govr and request him to furnish a statement of the bills viewed from the Bank their amounts & dates—of the sums realized by the sale of these bills & the parties to whom they have respectively sold of the dates of the difft sales and the market rate of exchange upon London at the respective dates, of the amounts which will be payable by way of interest on these bills up to the 12 Dec, upon wh day the debres were issued.
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As far as I can hear or make out, bills upon London at 30 days sight [anon?] must have borne a premium in B. Columbia. Therefore payment by the Bank of 50,000£ in bills was more than equivalent to delivery of £50,000 in cash. Therefore the Bank mt properly charge interest on those bills from the date of issue.
I mention this because it throws light on an arrangement wh was to me unaccountable, viz that the Compy shd charge interest from the date of issuing the bills, not being called upon to advance a farthing of cash till presentation of these bills in London 3 or 4 months later.
FR 30/12
N 31
Other documents included in the file
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Draft reply, Newcastle to Douglas, No. 3, 5 January 1863, forwarding a copy of Julyan's letter and asking for a response.