Julyan to Elliot (Assistant Under-Secretary)
Offices of the Crown Agents for the Colonies
Spring Gardens, London, S.W.
11th August 1865
I have the honor to acknowledge the receipt of your letter of the 18th ultimo, forwarding copy of a despatch received by Mr Secretary Cardwell from the Governor of British Columbia, and informing the Crown Agents for the Colonies that Mr Cardwell will be glad to receive any information or remarks which they may have to offer on the subject.
2. In reply I beg to state that the Bills for £30,000, reported by the Governor as having been drawn by him prior to the receipt of the CrownAgents'Manuscript image Agents' letter to the Colonial Secretary dated 16th February last, were accepted at this Office on the 18th May, and became due on the 20th ultimo. It was hoped that funds to meet the payments would have been obtained before the Bills matured, by the sale of some of the Debentures, but this expectation was not realized. The Crown Agents, were, however, enabled to make arrangements with the holders for deferring the payment for a further period of two months, the bills to bear interest in the meantime at the rate of 6 per cent per annum.
3. These terms are favorabletoManuscript image to the Colony, and the time thus gained may enable the Crown Agents to dispose of sufficient debentures to take up the bills without making so great a sacrifice as a forced sale would at that time have involved. In fact, since this arrangement was entered into, debentures representing £8300 have been sold at 95, which is fully 4 per cent higher than any previous offer that had been made.
4. The unsold portion of the loan has been again offered by advertisement to the public at that price, being it is believed the most likely way of obtaining the money by the timeitManuscript image it is wanted.
5. There is I believe but one other point in Governor Seymour's despatch which calls for any particular notice.
6. It is stated in the fifth paragraph that "had we been permitted to make our own arrangements locally with the Bank of British Columbia the whole of the Loan would, I understand, have been disposed of here, on terms not unfavorable to the Colony."
7. This opinion is so entirely opposed to all precedent, and totheManuscript image the principles which govern financial operations of this kind, that the Crown Agents cannot refrain from sup[p]ressing a belief that, unless the expression "not unfavorable to the Colony" is to be interpreted as meaning a price far below that which they would feel justified in accepting for the Debentures here, there must be some misapprehension in the matter.
8. The ruling rates of interest in the Colony are, I am informed on undoubted authority, from 12 to 18 per cent—and it is believed that the Government are now paying the Bank of British Columbia 12 per cent for money borrowed. The prevailing rates here duringtheManuscript image the same period have been as low as 3 per cent.
9. If the Government find it necessary to pay this high rate for short periods, on what principle can it be expected they are to float debentures, having 30 years to run, on terms which will compare favorably with our negotiations here, which have, so far, placed the money at the disposal of the Government at 6 1/16 per cent? Whilst the exchanges have at the same time been in favor of the drawers.
10. Again it appears that the very Bank which was expectedtoManuscript image to realize the more favorable terms in the Colony, are still the unwilling holders of a considerable portion of the loan taken by them in 1862, and they expressed a hope some few months ago, when the 1864 Loan was first advertized, that the Crown Agents would, if they had a superfluity of applications, enable the Bank to find customers for their unsold balance. Surely if the debentures could be dealt with favorably in the Colony this Bank would not fail to send them there, and to do for itself what Governor Seymour has been led to expect it could do for the Government.
11. To remove all doubtinManuscript image in the matter however the Crown Agents Addressed a letter—copy of which is enclosed—to the Directors of the Bank here, and their reply—copy of which is also enclosed—leaves no room to doubt that some misapprehension exists in the Colony on the subject.
12. It would be satisfactory to the Crown Agents—who spare no exertion in endeavouring to effect satisfactory sales—and it might tend to place the money at the disposal of the Colony with less delay—if the Governor were on all occasions to name theminimumManuscript image minimum price at which he would be satisfied for debentures to be disposed of in this Country.
I have the honor to be,
Your most obedient Servant,
Penrose G. Julyan
Minutes by CO staff
Manuscript image
Sir F. Rogers
In February last the Crown Agents represented to the Govr the inexpediency of attempting to sell, at that time, the Debentures in their hands issued under the Loan Ordinance—they informed him of the Measures they had taken for meeting the bills then drawn upon them & impressed upon him how desirable it was that no further bills should be drawn till some portion of the Debentures had been disposed of (see enclosure in 6405).
But before this letter reached him the Governor had drawn bills against the loan for a further sum of £30,000 which the Agents were authorized to accept if it was clear that they would be able to raise upon the securities in their hands sufficient to meet them. The Agents in their presentManuscript image letter explain the arrangement they have made with the Bank of B.C. for deferring the payment of these bills for two months, & thus give time for disposing of sufficient debentures to meet them. It has now to be decided what instructions should be given to the Govr as to drawing any further bills, see Minutes on 6405. I annex Mr Cardwell's Desp: to which Govr Seymour refers in 6405.
VJ 11 Augt
FR 14/8
Mr Cardwell
It looks to me very much as if the Governor had been somewhat unjust to the Crown Agents in this matter. The Colonial Govt are anxious to get hold of cash on the spot and perhaps have not beenManuscript image sorry to oblige a powerful local Bank by letting them gain the extravagant terms obtainable in new Countries for a loan, but it is obvious that there was not the least substantial foundation for implying that it would have been better for the Colony to get the money on the spot than in this Country.
I should acknowledge the Governor's despatch. I should say that having called upon the Crown Agents for a report Mr Cardwell has received one of which a copy is enclosed.
I should say that it is quite obvious that better terms must be procurable in the money market of England than in a new Country where Capital is scarce and interest very high, and that Mr Cardwell does not think that it would be justifiableManuscript image to expose the Colony to the much higher charges which it must bear if it's public loans are raised on the spot. (I think it very material to insert this sentence in order to discharge our duty of making a stand against money jobbing, to which a disposition has appeared on former occasions in this Colony.)
I should say that Governor Seymour must, however, be aware that even in this Country interest has of late been high and that the raising of Colonial loans has become more difficult, and I should state that Mr Cardwell does not think it proper that he should draw any further Bills upon the Crown Agents until after they shall have been able to raise and put to the credit of theManuscript image Colony the funds by which those Bills are to be met.
TFE 2 Sepr
EC 3
Documents enclosed with the main document (not transcribed)
Manuscript image
Julyan to Henry Ransom, Manager, Bank of British Columbia, 3 August 1865, concerning the possibility of disposing of the debentures in the colony.
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Ransom to Julyan, 9 August 1865, concurring in the belief that the debentures were better disposed of in England.
Other documents included in the file
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Draft reply, Cardwell to Seymour, No. 65, 9 September 1865.
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Elliot to Crown Agents, 12 September 1865, forwarding copy of despatch as noted above for information.
Minutes by CO staff
Manuscript image
Mr Elliot
I suppose copy of the despatch to the Govr should go to the Agents for their information.
EBP 9/9/65
Certainly. [3 words illegible.]
TFE 9/9