No. 90
15th July 1867
My Lord Duke,
I have the honor to forward a return of the probable receipts and positive obligations of this Colony for the half year ending the 31st December.YourManuscript image Your Grace will see that with every precaution we can use there will probably be a deficiency of two hundred and twenty three thousand dollars or about forty five thousand pounds (£45,000). Perhaps Your Grace will inform me if we can look for any assistance from the Mother Country under these circumstances. I had no idea when in England last year that the financial condition of the two Colonies was so bad or else I should have communicatedfullyManuscript image fully with Your Grace's Department on the subject. One great cause in the present depression is the admission duty free on the Mainland of the large supply of commodities which were imported to this place while it was still a free port.
I fear that I shall have to make some further serious reductions in the staff of public officers.
It is now for the first time that the Colony has been thrown on its own resources.HithertoManuscript image Hitherto it subsisted to a considerable extent on loans contracted in the Mother Country.
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& a very bad principle to go upon.
We have now, at a time of unusual depression along the whole Pacific Coast, to make provision for the repayment of borrowed money expended.
I have the honor to be,
My Lord Duke,
Your most obedient
humble Servant
Minutes by CO staff
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Mr Elliot
The despatch is not signed. A more unsatisfactory despatch I never read. A probable deficiency at the end of the present year of £45,000. In a MemoManuscript image I have sent on as to the Debt it will be seen that the Colony is in arrear in the sum of £4375 to the Crown Agents on account of interest & Sinking Fund of their Debt. £4125 more becoming due on the 1t Oct.
It is to be hoped that Governor Seymour is preparing some Financial scheme for extricating the Colony from its present embarrassed state—but the sooner he is made aware that he will get no pecuniary assistance from the Home Treasury—supposing I am right in inferring that is so—the better for himself & the Colony.
We may expectManuscript image Mr Birch here immediately, & perhaps it may be as well to hear what he has to say.
CC 2 Sept
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Mr Adderley
Mr Birch has arrived.
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N.B. I have given him leave of absence for three weeks to see his friends.
But I am inclined to think that the first step shd be to ascertain what can be ascertained in the office as to the mode in wh this has come about, e.g. I should like to see—what was the Revenue & Expenditure per ann for the last few years & particularly how much of that expenditure went in Roads & public works, or such unforseen matters as the Indian rebellion, and also how much was defrayed by loans & how much by Revenue.
Also, as Mr Seymour says that much is due to the decrease of the customs since or in anticipation of Union, (the Merchants pouring their goods into Victoria while it was a free port, & then pouring them duty free from Victoria into B.C. as soon as the Colonies were united). I should like to see whatManuscript image was the position of the Colony before that cause operated. My impression is that they were more or less insolvent & only went on by aid of the Bank before that time, having inter alia remitted the Gold Tax witht taking any means by new taxation or reduction of expenditure to fill up the deficit wh that (I suppose) had caused.
This only concerns the past. As to the future it is no doubt true that high taxation, distress and want of assistance from home will probably cause the American population of the Colonies to press for annexation—a pressure wh wd soon become irresistable except at a cost far greater than the worth of the fee simple of the Colony.
On the other hand if the Colonists once find that the annexation threat [is] satisfactory in extracting moneyManuscript image from us they will plunder us indefinately by it.
I think in this state of things, that, although I do not anticipate that HG will hold out expectations of pecuniary assistance to B.C. yet it wd be better to master the case as far as possible, before answering this in order to put the refusal on the firmest & least irritating grounds.
I suppose the question to be (in the long run) is B.C. to form part of the U.S. or of Canada; and if we desire to promote the latter alternative, what form of expenditure or non-expenditure is likely to facilitate or pave the way for it.
FR 16/9
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I agree we should first get all information. It seems to me impossible that we should long hold B.C. from its natural annexation. Still we should give & keep for Canada every chance, & if possible get Seymour to bridge over the present difficulties till we see what Canada may do. I think our US Minister should keep his ears open for any overtures of equivalents in exchange of this territory. Immediate reductions & new taxation are inevitable, & what will be the consequences.
CBA 17/9
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Prepare comparative analysis of the expenditure & revenue for the last 2 years & of each Colony for 2 or 3 years before union—which will show the items which have caused the difficulties & the course to be adopted can then be better considered. The customs revenue will doubtless gradually improve after the consumption of the articles imported free.
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Sir F. Rogers
In July last Governor Seymour stated that the Colony of B Columbia would be in arrear on the transactions of 1867 by probably £45,000 & he asked for pecuniary assistance from home. He has repeated that request in several subsequent despatches, & more recently he has asked by Telegraph to be allowed to draw on the Imperial Treasury to the extent of £50,000.
Now although there can be no doubt that the finances are in a most embarrassed state, that the Colony is paying heavy interest & sinking fund on Loans contracted in England, that it is largely indebted to the Colonial Bank, to the Crown Agents, to some of its public officers, & that the Salaries of the Public officers are several months in arrear it is of course necessary that the exact financial conditionManuscript image of the Colony should be enquired into before the Secretary of State & the Treasury can come to a final decision as to whether B.C. should receive Imperial Aid, or not.
In accordance with your direction Mr Hemming & I have been engaged during the last few days in such an enquiry, which owing to the manifest discrepancies occuring in the financial returns & the annual Blue Books, has been accompanied with some difficulty.
The result of our investigations will be found in the annexed tables showing the Ordinary Revenue & Expenditures under each head for the last 4 years, and the amount of aid (Table No. 3) on the one hand from temporary & permanent Loans, and of the disbursements on the other in part repayment of those Loans,Manuscript image in redemption of bonds, & in remittances to Agents to meet the interest &c accruing on permanent Loans.
From these tables, Nos 1 & 2, it would appear that
The total Ordinary Revenue during the 4 years ending in 1866 has been £433,895. 5.0
The total Ordinary Expenditure, including that on Roads during the same period has been £588,955.19.2
which shows an excess of Expenditure over Revenue of £155,060.14.2.
The temporary & permanent loans raised during 1862/3 1864 & 5 have been respectively
Temporary £135,081.3.7 (Bearing 10 & 12 p.ct)
Permanent £200,000.0.0
Total £335,081.3.7
The disbursements made for the redemption of Bonds & repayment of temporary loans has been
Total £125,141.5.9
Leaving an apparent debt at the end of 1865 of £209,939.17.10. The remittances to the Agents for interest & sinking fund during that period were £42,109.12.6.
The permanent Loans of £200,000Manuscript image were raised in 1862-3-4 under local Ordinances for the purpose of carrying two roads through a wild & thinly populated Country.
The last Loan for £100,000 raised in 1864 (which only realized £95,800) was not however entirely spent on roads. £20,000 went towards the suppression of Indian disturbances & £10,700 to the Imperial Treasury for buildings occupied by the Royal Engineers & for Surveys undertaken by them.
The Colony received therefore only £65,100 for the objects for which that Loan of £100,000 was raised.
The amount which the Crown Agents must annually provide for interest & Sinking Fund on the BC Loan of £200,000 & the Vancouver Isld Loan of £40,000 isManuscript image £24,000 (see statement prepared by me in September last No 5.) The account of the Colony with the Agents is annexed & shews a deficit of £4550. (No 4.)
One of the causes for the present depression has been the falling off in the Customs Revenue owing to large importations of Merchandize into Victoria while a free port, which, after the Union were introduced on the Mainland without the payment of any duty. This falling off would simply be of a temporary nature.
All these circumstances combined are stated to have caused a deterioration of over 95 per cent in the value of property, that is to say that Land which in 1863-4Manuscript image was worth £100 would now fetch at auction £3 or £4.
It is worthy of remark, as will be seen from the detailed tables Nos 1 & 2, that in 1866 the cost of Establishments was £38,000 out of a Revenue of less than £95,000. (Estabts & interest on Loans therefore absorb 1/2 the Revenue).
In the same year in Hong Kong notwithstanding a large increase for the Mint Staff the Estabts only cost £32,000 out of a Revenue of £160,000—and the relative rates of Salary to the principal officers in those Colonies were respectively
B Columbia Hong Kong
Governor £4000 & £1000 allowance £5000
Col Secty £800 £1500
Auditor £500 £1000
Registrar £500 £800
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In conclusion I beg to be allowed to observe that the Blue Books, the Estimates & the Financial Returns from B Columbia besides being carelessly prepared, are most irregularly transmitted to this Country—for instance the Statements of Revenue & Expenditure & the Estimates for 1867 which were drawn up or rather passed in March last have only within the last few weeks been received in this office, and they are seldom if ever accompanied by such an explanation as would make them intelligible without a rigid examination.
The Revenue of Vancouver Island the year before Union was £58,000 exclusive of Loans.
W Robinson 18 Dec 67

Documents enclosed with the main document (not transcribed)
[Enclosures with minute above:]

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Table No. 1, Statement of British Columbia Revenue for the years 1863 through 1866, showing a grand total of £433.895.5.0.
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Table No. 2, Statement of British Columbia Expenditure for the years 1863 through 1866, showing a grand total of £598.255.19.2.
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Table No. 3, Statement of Receipts on Account of Loans for the years 1862/63 through 1865.
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Table No. 4, Statement of Accounts with the Agents, showing the status of the assets and liabilities of the colony, prepared by W.C. Sargeaunt, Crown Agent, 17 December 1867.
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Table No. 5, memorandum on British Columbia finance, prepared by colonial office staff [taken in entirety below].

Minutes by CO staff
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Sir F. Rogers
I have been through the accounts of B Columbia with the Crown Agents.
The first Loan of 1862 for £50,000 was sold in the Colony, what it realized is unknown.
The second of 1863 realized £52,403.19.0. The third of 1864 for £100,000 was sold piecemeal—the Agents unwilling to put it on the market were obliged to do so because the Govt drew so heavily on them—it realized £95,800 or £4.4s discount.
The liabilities of the Colony on the 1 Oct (next Tuesday) will be £8500. The account with the Agents is in a deficit of £5,940.
The annual paymentsManuscript image which the Agents must meet for interest & sinking fund, on B.C. Loan £200,000 & VCI £40,000 are
1 Jany in each year 6250
1 Apl   "   "   " 4125
15 Apl   "   "   " 2000
1 July   "   "   " 6250
1 Oct   "   "   " 4125
15 Oct   "   "   " 2000
Total 24750
which includes payt of interest on V.C. Loan of £40000 or nearly one fourth of the Actual Revenue.
WR 28 Sept 67
[The following minutes overlap in time with those already taken:]
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Mr Holland
The Duke of Buckingham would be glad if you would look at the B. Columbia & Vancouver Loan Acts & see what power the Governor has of remitting what is due for interest & sinking Fund on the Loans raised.
The Acts are, (herewith)
B. Columbia
No 44 of 1862 £50,000
   56 of 1863 50,000
   7 of 1864 100,000
No 54 of 1862 £40,000
On the 1st April last B. Columbia wasManuscript image in arrear for interest & sinking fund to the extent of £9,000, to meet which the Agents had in hand, for all purposes, only £2843 leaving a balance of £6,157 agt the Colony. In addition to this amount there became due in July a further sum of £6250 for interest & sinking fund on the two £50,000 Loans amounting together to £12,449. And on the 15th July a sum of £2000 for interest & sinking [fund] on the Vancouver Loans of £40,000 became due = £14449.
Monies have subsequently been recd which have enabled the Agents to pay off all interest due, & a portion of what was dueManuscript image on account of the Sinking Fund, leaving only £4375 due.
On the 1st Oct. a further sum of £4125 will be due on account of the £100,000 loan.
I learn from the Agents that they have been promised further remittances.
Will you be good enough to add what you have to say & send this on.
CC 30 Aug
Documents enclosed with the main document (not transcribed)
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Statement of estimated revenues from 1 July to 31 December 1867, showing a total of $270,310.
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Statement of funds needed to meet the necessary expenditures and liabilities of the colony from 1 July to 31 December 1867, showing a total of $223,584.
Other documents included in the file
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Table listing revenues and expenditures for British Columbia and Vancouver Island for the years 1864 through 1866, prepared by colonial office staff.
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List of acts authorizing the raising of loans for British Columbia 1860-1866 and Vancouver Island 1862-1864, prepared by colonial office staff.
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Two tables indicating the status of the colonies with respect to interest and sinking funds, prepared by W.C. Sargeaunt, Crown Agent, 20 May 1867.
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Memorandum, T.F. Elliot, 31 December, indicating Buckingham's intention to print the papers of Rogers and Birch for Cabinet, and asking to know whether any further refinements were required.
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Printed copy of confidential report by Rogers and Birch on the financial status of British Columbia, with two tables appended.
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Duplicate copy of despatch No. 90, Seymour to Buckingham, currently under discussion.
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Robert Ker, Auditor General, to Colonial Secretary, 3 June 1867, indicating financial needs of Colony to end of the year, and the means of meeting the salaries of public officers, marked "enclosed in duplicate despatch No 90 of 15 July 1867."
Documents enclosed with the main document (not transcribed)
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Statement of estimated revenues from 1 July to 31 December 1867, showing a total of $270,310, enclosed in duplicate despatch No. 90.
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Statement of funds needed to meet the necessary expenditures and liabilities of the colony from 1 July to 31 December 1867, showing a total of $223,584, enclosed in duplicate despatch No. 90.