Colonial Despatches

I have the honour to acknowledge the receipt of Your Grace's Despatch No 147 of the 28th October 1862, with copies of a correspondence with the Lords Commissoners of the Treasury, on the subject of the Assay Departmentof of British Columbia.

2. I observe, with reference to the application of the Officers of the Assay Department, for an increase of Salary, that Your Grace has left the matter to be dealt with according to my discretion, and I have Your Grace's instructions to furnish a return of the amount of work performed at the Assay office and its current costs, and receipts, up to the latest period, with other information connected with that Department of the public service.

3. I have now the honour of transmitting a return made up in conformity with Your Grace's instructions.

4. It exhibits the whole quantity of Gold assayed at the Government Office from its first establishment in the year 1860 to the 17th March 1863, and also the receipts and costs of the Department including buildings, for the same time, from which it appears that the expenditure of the Department exceeds the receipts from every source, to the extent of Tenthousand thousand and forty pounds, nine shillings and eleven pence (£10,040.9.11).

5. These results which are so different from what was anticipated may be attributed to two causes: First—The condition of the Country.
Second—The cost of the Establishment.

6. In respect to the first, although the Country in its normal state abounds in natural resources, these are as yet undeveloped. Mining is at present its only industrialpursuit pursuit, and Gold its only available product. This it has to give in exchange for food, clothing and all the other necessaries of life consumed within the Colony. For these indispensable wants it is absolutely dependent on other countries, and is thus being continually drained of its sole export and convertible capital, the Gold.

7. The Colony of Vancouver Island has no mines of Gold, and it is not in a much betterposition position with respect to other native products than the sister Colony. The trade of the former is confined to furs, coal, and timber of various kinds, which are exported in small quantities, while the balance of trade, being against the Colony, is made up of remittances of cash and gold dust.

This operates as a further drain upon the supply of Gold, which being generally exported as received from the Mines greatly diminishes the work, and affects,to to a ruinous extent, the interests of the Assay establishments in both Colonies.

8. The following trade statistics, in which the two Colonies are treated as one and the same country, having a common interest and administration system will serve to illustrate the foregoing remarks.

9. The declared official value of Imports, at Victoria for the year ending with 31st December 1862, was in round numbers Three million six hundred and tenthousand thousand dollars ($3,610,000).

10. In the payment of these imports I assume that one 1/6 of that sum—equal to Six hundred and two thousand dollars ($602,000) has been met by cash payments, and by exports of furs, coal, and timber, including an allowance for bad debts; there would then remain a balance of Three million eight thousand dollars ($3,008,000) against the Colony to be paid in Gold dust.

11. The yield of Gold in the whole Colony of BritishColumbia Columbia for 1862 is roundly estimated at Five million dollars ($5,000,000). Assuming as above that Three million eight thousand dollars ($3,008,000) was remitted in payment of imports, and that Three hundred and eighty eight thousand dollars ($388,000) left the Colony in private hands not in payment of imports, forming in all a total export for the year of Three million three hundred and ninety six thousand dollars ($3,396,000), there would remain an excess of gold dust produced over the quantityexported exported equal to One million six hundred and four thousand dollars ($1,604,000). This, as will appear hereafter, very nearly represents the declared value of the Gold dust assayed in 1862 within the two Colonies.

12. I may here remark that besides the Government establishment at New Westminster, two private Assay offices are in full operation at Victoria. Their respective returns for the year 1862 are as follows—
GoldGold assayed at the Government
Office New Westminster ounces value in dollars
40,430 634,137
Molitor & Coy Victoria 41,900 651,275
Cording & Coy Victoria 19,300 500,000
Total 101,638 $1,585,412

It is found that over two thirds of the aggregate yield of Gold is annually sent abroad, and that less than one third of the whole is actually assayed in the two Colonies. These returns show that the public have not given a decided preference to the Government establishment, and moreover that the entire receipts on the Assaybusiness business of the two Colonies, if thrown into one sum, would not cover the annual expenditure of the Government Establishment alone.

14. In respect to the second cause of disappointment in the expectations of the Government Assay Office viz: the cost of the Establishment; I would observe that the Establishment is upon a scale not proportioned to the circumstances of the Colony. In my Despatch of the 11th April 1859, No 135, I mentioned thatin in my opinion an Assay Office, suitable to the requirements of both Colonies, could be established at an outlay not exceeding Six hundred pounds (£600). Subsequent events have confirmed me in this opinion, and have shewn me that it was just. The Master of the Royal Mint when organizing the establishment appears to have taken for his guide a letter from Captain Gosset, the Treasurer, forwarded in my Despatch of the 25th May 1859 No 158. In transmitting that letter whichI I did at the solicitation of Captain Gosset, I merely drew attention to one point contained therein, viz: the serious inconvenience which was experienced from the want of British coin in the country. I did not consider it necessary to dissect the arguments of Captain Gosset first, because the fallacy of many of them seemed to me immediately apparent, and secondly because I forwarded the documents not as part of an official project, but simplyas as an emanation from an individual desirous of placing his individual views before the Secretary of State.

15. From what is before stated it is patent that the Assay Department maintained by the Government at New Westminster, is not and cannot in the present circumstances of the Colony become self supporting without a great reduction in the cost of management.

16. I was in hopes ofbeing being able to provide remunerative employment for the Assay Department and of its becoming useful to the Colony by the plan of coinage proposed in by my Despatch No 67 of the 14th November 1861, but the Assay Officers have recently stated so many objections to that plan, though originally proposed by themselves, and have suggested so large an increase in the establishment preliminary to commencing operations that without some better guaranteeof of success, and of their zeal and ability to conduct the establishment than I have yet to record, I cannot recommend the outlay.

17. By reducing the Staff of Officers, and the whole cost of the Assay Department, to a parity with private Assay Offices, wherein an equal amount of work is done by a single Assayer, and one occasional Assistant, we might succeed in equalizing the amount of receipts and expenditure; otherwise I regret to state thatI I see no prospect of rendering the establishment remunerative or of maintaining it without a heavy charge to the Colony, which is certainly not met by compensating advantages.

18. It is true that many indirect benefits do result to the Colony from the existence of an Establishment in which the Miner believes he can place implicit confidence, and I should be loth to see the Government Assay at New Westminster brokenup up entirely; but I feel that I cannot with consistency recommend its continuance on the present expensive scale. I would therefore suggest, if Your Grace sees fit to retain the Assay establishment at New Westminster, that the Staff should only consist of one Chief Assayer, and one Assistant or operative Melter, which Staff I consider should be sufficient to meet all the present requirements of the Colony. When business increases beyond the compassof of such a force additions can be made.

19. With reference to the question raised in the last paragraph of the enclosure to your Despatch as to the expediency of the removing the Assay Department from New Westminster to Victoria, I would observe that most of the foregoing remarks apply with equal force to Vancouver Island. A Government Assay Office however, would undoubtedly do a larger amount of business at Victoria that at New Westminster, for thereason reason that Victoria being more built up and settled offers greater inducement to Miners as a resort than New Westminster and the great body pass through the latter place on their way to Victoria, and to San Francisco which in its turn through its agreeable winter and varied amusements carries off large numbers that would no doubt remain in Victoria or New Westminster, did they possess equal attractions, but there still remains the fact beforeshewn shewn that the whole receipts from the Gold assayed under existing circumstances in both Colonies would not suffice to cover the expense of the present Government Establishment at New Westminster alone.

20. The Legislature of Vancouver Island have upon several occasions discussed the matter of the establishment of the Assay Office, and even of a Mint at Victoria, and I believe all parties in VancouverIsland Island are alive to the benefits that would thereby accrue, and I doubt not that the Legislature would readily vote the funds necessary for the support of a Establishment on a commensurate scale, should Your Grace after what I have herein stated, decide to abolish the Establishment at New Westminster, to re-organize it on a more economical footing at Victoria. I do not however believe that a Government Establishment atVictoria Victoria, even on a reduced scale, would be self-supporting for the first year or two, but the indirect advantages resulting therefrom would probably more than compensate the balance of expenditure over receipts.