Peel to Elliot (Assistant Under-Secretary)
Treasury Chambers
8 November 1862
In reply to your letter of the 31st Ult, I am directed by The Lords Commissoners of Her Majesty's Treasury to acquaint you, for the information of the Duke of Newcastle that the British Columbia Loan Act 1862 appears to contain the necessary provisions for the raising and repayment of the Loan of £50,000 and Their Lordships will not objecttoManuscript image to its confirmation.
They do not think however that the Governor has made a prudent arrangement with the Bank of British Columbia. The Bank becomes practically the Agent for the Loan. The Colonial Government does not get the Premium which would have accrued on the public sale of its Debentures in London by the Agents General and it has to pay Interest at the rate of 12 per cent upon BillsatManuscript image at 30 or 60 days sight received in payment of its Debentures. Whereas if the case was so very urgent the Governor might have drawn against the Debentures by Bill upon the Agents General, at the same time authorizing them to dispose of the Debentures, and as such Bills would have been at least equally saleable in the Colony with those of the Chartered Banks, he would if he had pursued this course have saved the charge of so heavy a Rate of Interest as 12 per cent.TheManuscript image The arrangement therefore which the Governor has entered into cannot be considered as a profitable one for the Colony, but it is now too late to interfere with it, and My Lords therefore have no alternative but to allow it to stand.
As soon as the Act has received confirmation by Her Majesty The Agents General should be instructed to prepare the Debentures, and to put themselves in communication with the London Office of the CharteredBankManuscript image Bank of British Columbia with a view to the delivery of the Debentures according to the arrangement made by the Governor.
I am,
Your obedient Servant
F. Peel
Minutes by CO staff
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Mr Elliot
See 10907.
VJ 11 Nov
Sir F. Rogers
By the last sentence the Treasury appear to consider that the first step must be the confirmation of the Act. I therefore pass this letter through your hands. All are agreed that the Act should be confirmed.
The Colonial Agents General should then have a copy ofManuscript image as much as is necessary of the Governor's communications,
And his last despatch will be enough, I think.
TFE 11/11
and should be instructed without delay to prepare the debentures and to proceed as described in the concluding words of the Treasury letter.
I am told that this is very urgent as the Colony is paying for the money at the rate of 12 per cent until the debentures shall be issued at the rate of 6 per cent.
The Governor should be informed of what is done, and his attention should be drawn to the unfavorable nature of his bargain as explained in the Treasury letter. It seems to have thrown undue advantages into the hands of this new bank.
TFE 10 Novr
Confirm the Ordce by dph and (as the Proclamation is in form independently of such confirmation) proceed at once as proposed by Mr Elliot.
FR 11/11
Other documents included in the file
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Draft reply, Newcastle to Douglas, No. 149, 12 November 1862, informing him that the British Columbia Loan Act, 1862, has been approved.
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Draft reply, Newcastle to Douglas, No. 150, 12 November 1862, outlining the Treasury's criticism of Douglas's awarding the entire loan to the Bank of British Columbia.
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Draft, Elliot to Crown Agents, 13 November 1862, forwarding copy of governor's despatch and instructing them to prepare the necessary debentures.