Childers to Rogers (Permanent Under-Secretary)
Treasury Chambers
8th November 1865
I am desired by the Lords Commissioners of Her Majesty's Treasury to state, for the information of Mr Secretary Cardwell, that Their Lordships have had under consideration your letter of the 21st Ulto enclosing a communication from the Crown Agents for the Colonies on the subject of the appointment of Trustees for the Management of the Sinking Fund of the Loan of £100,000 raised by British Columbia, under the authority of the Ordinance No 7 of 1864.
My Lords concur in Mr Cardwells proposal toappointManuscript image appoint Mr Julyan and Mr Gairdner to be Trustees for the Sinking Fund of this Loan.
With regard to the suggestion of the Crown Agents that the money to be set aside for the formation of the Sinking Fund, should be invested in the repurchase of Debentures, Their Lordships are of opinion that such a course would be the most natural, and would tend to improve the value of the securities in the Market; but that the language of sec 12 in the Act—No 7 of 1864—and the corresponding secs in the previous Acts—No 5 of 1862 and No 5 of 1863—is so doubtful as to render such a repurchase inexpedient without further reference to the Colony.
Secs 10 and 11 of the Act No 7 of 1864—provide that two andaManuscript image a quarter per cent, per annum, on the amount of Debentures outstanding, should be invested in any Government Securities (named by the Secretary of State) whether Imperial or Colonial; and the dividends on such Securities are also to be invested "so that the same may accumulate by way of compound interest."
These sections would appear to authorize the Sinking Fund to be so invested in the Debentures issued under the Act (if approved by the Secretary of State) but the following sec 12—though apparently relating to the repurchase of Debentures by additional monies voted for that purpose by the Legislature, or applied by the Governor from surplus revenues, adds that the Trustees of the Sinking FundmayManuscript image may make use "thereof" for the purpose of withdrawing from the Market, by purchase, debentures issued under the Act; and such debentures are to be cancelled.
If the word "thereof" relates, not to monies in addition to the Sinking Fund appropriated by the Legislature or issued by the Governor; but to the accumulations of the Sinking Fund itself; it would be imprudent to invest the latter in these debentures, as the cancellation of the Bonds would deprive the Fund of the accumulation of the dividends at compound interest, and this, considering also the reduction of the amount outstanding on which the percentage of 2 1/4 is to be calculated, would render the extinction of the Loan,withinManuscript image within the specified time, impossible.
My Lords cannot, therefore, authorize the investment of the Sinking Funds established by these Acts in debentures of British Columbia until the Colonial Government shall have expressed their views on the question and, if necessary, obtained Legislative amendment of the 12th section of this, and the corresponding sections of the other Acts.
But it appears to My Lords that the investment of these Sinking Funds may with propriety be made in the debentures of the more important British dependencies, which are readily negotiable on the Stock Exchange, and I amManuscript image to suggest that the Crown Agents should submit the titles of such Securities for Their Lordships approval.
I am,
Your obedient Servant
Hugh C.E. Childers
Minutes by CO staff
Manuscript image
VJ 9 Novr
Sir F. Rogers
As this touches on the construction of a local Ordinance, it may be the most correct course to pass the letter through your hands. I believe however that it does not contain anythingManuscript image which need at present tax you for your attention. The suggestions of the Treasury are purely financial and appear to me reasonable; and I think that it will only be necessary to write as they desire to the Colonial Agents and to the Acting Governor.
TFE 9 Novr
I should think so. The obsns of the Treasury are in fact suggested by the C.O. letter of 21 Oct. They take the view wh that letter puts before them.
FR 9/11
EC 10
Other documents included in the file
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Elliot to Gairdner and P.G. Julyan, Crown Agent, 16 November 1865, advising that they had been selected as trustees for the management of the sinking fund for the 1864 loan.
Minutes by CO staff
Mr Elliot
I understand that a letter of this description is usual in appointments of this kind.
EBP 17/11/65
Other documents included in the file
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Elliot to Crown Agents, 16 November 1865, concerning investment of the sinking fund.
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Draft reply, Cardwell to Officer Administering the Government, No. 91, 16 November 1865.