Childers to Rogers (Permanent Under-Secretary)
Treasury Chambers
19th April 1866
The Lords Commissoners of Her Majesty's Treasury have had under Their consideration your letter of the 15th November last, enclosing with other papers, the Report of the Auditor General of British Columbia on the accounts of that Colony for the year 1864.
Their Lordships have also had before Them the Colonial Office letter of the 20th Ulto forwarding certain enclosures which should have accompanied your letter of 30th September last transmitting for the approval of this Board an Ordinance No 9 of 1865 to apply the sum of £225,946.12.8 to the GeneralServiceManuscript image Service of the Colony for that year.
My Lords desire me to state, for the information of Mr Secretary Cardwell, that They will not further defer Their Assent either to the Ordinance No 18 of 1864 or to the Ordinance No 9 of 1865, but They think it necessary to add that They give this assent more because of the inconvenience of witholding Their sanction from an expenditure already incurred, than because They are satisfied that the expenditure has been prudently undertaken.
My Lords observe, from the Report of the Auditor General, that though the Revenue Ordinances, Nos 9 and 18 of 1864, appropriated £195,716 to the Service of that year, the actual expenditure was £160,350.
The Revenue of that year, actually received, was however, onlyManuscript image £104,865, against an "Estimated" revenue of £120,000, leaving a deficiency of £55,485 to be met, according to the statement of the Auditor General, out of the Loan of £100,000 authorized to be raised under Ordinance No 7 of 1864.
This Loan was not raised till April 1865 and then produced less than £94,000 and, in consequence of the late period at which it was raised, the expenditures of the years 1864 & 1865, which was mainly regulated by that Loan, has become in some degree mixed up.
Their Lordships apprehend that it may be ultimately found that some portion of the deficiency of 1864 may have been met by Balances on the Loan of 1865, but They have no sufficient information before Them to enable Them to come to any clear understanding onthatManuscript image that point.
Accepting therefore the statement of the Auditor General, that the whole of the deficiency of that year had to be met from the Loan raised in 1865, it seems to My Lords that if, of the liabilities of the Colony at the close of 1864 as set forth in the statement which accompanied the Report of the Auditor General, those are taken which it was necessary to meet in 1865, and some of which are directly provided for in the Estimates of that year, an approximate notion may be formed of the probable financial condition of the Colony at the close of 1865, supposing that the actual expenditure within the Colony of the different Departments for that year is actually incurred. These liabilities appear to be as follow, Vizt
Redemption of Bonds £6,400
Bills on Agents in anticipation of Loans raised in 1865 26,300
Debt due to Bank of British Columbia 27,210
Manuscript image Brought forward £59,910
Interest due to Bank 559
Drawback Refunds 550
Balance due to Agents on 31st December 1864 2,350
Approximate Expenditure of 1864, not brought to accounts until 1865 22,000
Total £85,369
But to these Liabilities must be added 22,000, the amount falling due within the year 1865, as Interest and Sinking Fund on the Loans of 1862, 1863 & 1865, making a total Liability of £107,369, to be met in 1865, irrespective of the actual Departmental expenditure within the Colony.
My Lords turn now to the Estimates of Revenue and Expenditure transmitted for the year 1865, and They find that the Revenue was estimated to produce £153,615.
FromManuscript image
From the fallacious nature of the Estimate for 1864, My Lords would have been disinclined to admit the prudence of an Estimate which calculated on a rise from £104,865—the actual receipts of 1864—to £153,615 in 1865.
They observe, however, in the Return of Receipts and Disbursements of the Colony which accompanied the Colonial Office letter of 11th January last that the Return of the Regular Revenue from Taxes and Duties for the 2nd Quarter of the year was £39,511. It is possible, therefore, that, although the Return for the previous Quarter appeared to be so unfavorable, the Expectations as regards the Revenue may in that year have been fulfilled, and if such should be the case, My Lords readily admit that it would be the best and most satisfactory justification for the Loan Policy which has been sanctioned as regards this Colony.
AdmittingManuscript image
Admitting, therefore, though with considerable doubt, the corrections of the Estimate of Revenue, the amount applicable to the charges of the year 1865 will consist of:
Revenue £153,615
Loan of April 1865 93,931
Due by HM's Government on account of Regimental Pay Acct 2,937
Advances unaccounted for 11,772
Total £262,255
On referring to the abstract of the Estimated Expenditure for the year it appears that the amount to be expended by the Departments within the Colony, as per items 1 to 12, inclusive, and item No 15, is, in round numbers, £160,000, and if to this be added the Liabilities, as stated above, it will appear that the charges for the year will be £267,369, as against resources amounting, under the most favorable circumstances, to only £262,255.
My Lords are aware thattheManuscript image the Estimates of the year were framed previous to any intimation of the actual produce of the Loan of April 1865, and They hope, from the terms of the Governors despatch of 18th May 1865, that some portion of the Estimated expenditure on Roads, &c, will, at least, have been postponed until information was received as to the produce of the Loan.
At all events that Loan is now exhausted, and the Financial affairs of the Colony will during the Current year have to be conducted without the extraneous assistance which has of late years been received, and there will be, in consequence, a better opportunity of judging what its Financial condition now is.
With the interest and Sinking Funds of the Colonial Debt, amounting already to over £20,000 a year, My Lords would hesitatebeforeManuscript image before They could sanction for the present any further extension of the Loan system, and They think that the Governor should be instructed that the expenditure of this year must not be based on the supposition that he is again at Liberty to incur a portion of it on the prospect of any new Loan, and he should be warned as strongly as possible against that hasty and sometimes ill-considered expenditure which a Loan Policy is apt to encourage, but the continuance of which, on the cessation of such Policy is seldom prevented without more than ordinary care.
My Lords prefer to deal thus generally with the expenditure of British Columbia during the two years in question, partly on account of its being at this time a matter of the past, and partlybecauseManuscript image because They expect that that of the Current year will afford better material for an opinion as to the Financial condition of the Colony. Their Lordships, however, request that They may receive as early as possible, a full statement from the Governor of the actual Receipts and Disbursements within the year 1865, together with a full account of the Liabilities of the Colony at the close of that period.
I am,
Your obedient Servant
Hugh C.E. Childers
Minutes by CO staff
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Mr Elliot
Young Colonies are very expensive Commodities to somebody. Fortunately this Colony has sources of wealth by means of which the "Mother Country" gets off without damage. But that is no reason why the Authorities of B.C. shd not be very seriously warned against incurring expenses which are not absolutely indispensable. If this Colony goes on exceeding its revenue in its infancy it will add to its liabilities as it grows older. One course I shd suggest being taken viz: to insist onManuscript image the Governor obtaining the authority of the S. State previous to inserting in the Estimate votes for services of an unusual amount. I have already observed on 2173/65 upon the false position of the S.S. when an Estimate comes home 12 months after its time containing items for large expenditure for which no permission has been obtained. I wd peremptorily forbid the Govr inserting any item (above £2 or 300 a year) in the Estimate unless the S.S. shall have sanctioned it.
The Ordinances referred to in this Letter will have now to be sanctioned—and a copy of the Letter sent out with such observations on the subject generally as Mr Cardwell may think proper to make.
ABd 20 Ap
This will be found a useful review by the Treasury of the finances of the Colony. If their grounds are correct, they have every reason for inculcating caution on the Colonial authorities, and for fearing that otherwise serious difficulties may be in prospect. I would suggest that, besides forwarding this to the Acting Governor, a Copy should be sent to Mr Seymour, with some observations (if Mr Cardwell takes that view)Manuscript image on the necessity of prudence in the financial arrangements of the Colony.
TFE 20 April
A Draft, sustaining the wholesome views of the Treasury, should be prepared: &, as suggested, Mr Seymour should be made aware of what is passing. This last shd be done in time for him to have it in his power to write, if he thinks proper, by the next mail.
EC 23
Other documents included in the file
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Elliot to Seymour, 28 April 1866, forwarding copy of Treasury letter and proposed draft despatch to the colony.
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Draft reply, Cardwell to Officer Administering the Government, No. 22, 30 April 1866.
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Draft reply, Cardwell to Officer Administering the Government, No. 23, 30 April 1866.