No. 162
13th December 1867
My Lord Duke,
I ventured to telegraph to Your Grace recently a statement that the Colony was in very considerable financial embarrassment, and IenquiredManuscript image enquired whether there was any possibility of our being assisted by a temporary loan from the Mother Country. If not, I had to state that I am afraid I should have to make some considerable reductions in the staff of Public Officers.
2. I must now furnish some justification for the steps I took. I enclose a statement of our financial position as prepared by theAuditorManuscript image Auditor. It will be seen that we shall on the 31st December next require $223,000 dollars more than we shall possess to meet existing liabilities. This is entirely independent of $22,000 recently funded at 12 per cent interest. Of the $223,000 dollars, $110,000 are an overdrawn account at the Bank of British Columbia and upon this amount the Directors give us notice that they willchargeManuscript image charge interest at the rate of 18 per cent per annum after the 31st December 1867. $30,000 dollars will be required to redeem Debentures falling due on the 31st Decr.
3. We shall be incapable from existing sources to pay off this overdrawn account or to redeem these debentures. The exact amount of Revenue that is likely to come in up to the end of the year will beaboutManuscript image about $42,000. The first charge on this is for interest and floating debt. This amount to $39,200 which seems likely to leave less than $3,000 to carry on the machinery of Government to the end of the year, and to pay past Liabilities which altogether and irrespective of the Bank debt and debentures falling due, amount to the sum of $85,000 so that assuming we can arrangewithManuscript image with the Bank for a delay in the payment of the overdraft and arrange with the Debenture holders to renew the Debentures there is a sum of $85,000 for past and accruing liability that we are unable to meet.
4. Nor is the prospect for next year much more encouraging. With the Public establishments reduced as low as they can be we shall only beableManuscript image able to pay our bare way without I am afraid being able to clear off past liabilities. The heavy rate of interest is crushing the Colony for nearly all Public works are at a stand still. Hospitals and other valuable institutions cannot be aided, and as they cannot be entirely supported by the small number of people in each locality they are declining rapidly and verging upon abandonment.Manuscript image Roads cannot be constructed and are barely kept in repair. Education must be entirely neglected for 1868. It is questionable whether we shall be able to contract for the conveyance of Mails to Cariboo, and if we do not, the most serious dissatisfaction amongst the miners will ensue. I believe that this state of things can only be remedied, either by the Imperial Government lending theColonyManuscript image Colony fifty thousand pounds (£50,000), or guaranteeing a Loan for that amount. With the enormous attractions of California close to us I fear that we cannot greatly increase the taxation without driving out the remaining portion of the population.
6. But Your Grace will naturally enquire, how it is the finances of the Colony have been allowed to reach the condition Idescribe?Manuscript image describe? There are many causes and I am not aware that I have to blame myself for one of them.
7. When the Gold in Fraser's River was first discovered there was a great rush to the Colony from California and Australia. Between Hope and Yale where not more than half a dozen Chinamen are now the sole workers, between 12,000 and 13,000 men wereworkingManuscript image working profitably. Sir James Douglas earnestly begged Lord Lytton to make arrangements for the Government of a Colony which would soon contain a population of 100,000 men. A party of Royal Engineers was sent out and maintained at an enormous expense to the Colony while nearly all the roads were made by contract labour hired at from ten to fifteenshillingsManuscript image shillings a day. Loans were raised in England to pay for these works and so exuberant was Sir James Douglas's confidence in the financial future, that two competing road roads were made to one gold mine. The one costing one hundred and fifty one thousand pounds (£151,000). The other one hundred and one thousand pounds (£101,000). The consequence was that on my assumption of theGovernmentManuscript image Government I found a heavy London debt in existence. A Loan Ordinance to raise a further £100,000 just passed and a floating local debt of £53,000, in addition to that incurred in England, composed chiefly of Road Bonds and an overdrawn account at the Bank of British Columbia. That Bank shared in the general confidence, extended its operationsallManuscript image all over the Country and was always ready to come to the assistance of the Government. Shortly afterwards came an Indian insurrection which cost the Colony £17,000 or £18,000 in its suppression. Then the Imperial Treasury made us pay £10,700 for the, to us, useless huts the Engineers had erected on the Banks of the Fraser. In 1866 a considerable expense was incurred in opening aRoadManuscript image Road to the Big Bend of the Columbia, where it was alleged rich mines had been discovered, and large sums were spent in 1865 in opening the communications in Cariboo. Yet had not Union, as I shall presently show, taken place the Mainland would this year be able to pay its way. Vancouver Island went recklessly to work and £35,000 were spent on adredgingManuscript image dredging machine which I believe has never raised five tons of sand from the bottom of Victoria Harbour and things went faster still when there seemed a probability of the annexation of the Island to British Columbia and the shifting of the payment of the Debts that might be incurred on other shoulders. £10,000 were voted for the erection of a Government HousewhichManuscript image which had always been refused in the more prosperous times of the Colony, and Steamers were induced to visit Victoria at a large promise of payment which the Victoria politicians well knew that if ever fulfilled at all—must be so at the expense of the Mainland.
8. I returned to the Colony at the end of 1866 and found the last fraction of the £100,000 Loan of 1864 spent, heavy Vancouver Island debtstoManuscript image to pay and hardly a prospect of meeting our liabilities at the end of this year. When it became known by telegraph in Victoria that Union was about to take place, every effort was made to fill the stores with dutiable articles while the Port was still free, which it was anticipated would have to be admitted free on the Mainland on Union being consummated. I am informedbyManuscript image by the Collector of Customs that when Union was proclaimed there was over a million dollars worth of spirits, wines and Tobacco in the stores of Victoria. Thus at the time when compensation had to be awarded to many public Servants who lost office and other extraordinary expenses took place, our principal source of revenue the custom duties brokedown.Manuscript image down. The Real Estate Tax of Vancouver Island which was never paid regularly would simply, if we endeavored to maintain it have accelerated the tide of emigration which was flowing from Victoria.
10. I certainly cannot charge myself with extravagance. I refused a vote of £10,000 for the erection of Public buildings at New Westminster. I have never appointed a higher Officer than a ConstableduringManuscript image during my term of office and many are the families I have reduced to destitution by successive reductions in the Public expenditure. My own salary is nine months in arrear.
10. But it should be stated how I propose to repay a Loan if contracted. I reply that I should at once pay off the debt to the Bank on which we are paying 12 per cent to be increased to 18 per cent. I should purchase all our 12 per cent debentureswhichManuscript image which are offered in vain at San Francisco now at 65. The saving, alone in interest, would pay nearly the whole of the Civil List. I should continue to reduce the Public Establishments as opportunity might allow. And as the supply of goods which have not paid duty in Victoria is not inexhaustable we must look forward to a considerable increase in revenue within a few months. ThentheManuscript image the 4,000 or 5,000 people of Victoria instead of depriving the Mainland of its revenue must add to it the duties of their own consumption.
11. Should no assistance be afforded us to tide over the present emergency, I fear I shall have to reduce the Civil Establishments so low as to leave me, under present instructions, without an Executive Council. The Office of TreasurerhasManuscript image has already been abolished, others must follow.
I have the honor to be,
My Lord Duke,
Your most obedient
humble Servant.
Frederick Seymour
Minutes by CO staff
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Sir F. Rogers
I have shewn this to Mr Birch who says that the information & statements of the Financial condition differs little from what he has given in his Minute now before the Duke of Buckingham.Manuscript image His Grace may probably want to have this printed at once & be added to your own & Mr Birch's minutes. The liabilities for Current Expenditure on the 31 Decr are put at $223,048.
See above 1201 with return of 1st 3 Quarters Revenue for 1867. Also 1210 Blue Book Reports.
CC 4/2
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Grounds of claim for help .off 1. Generally [ad miscrieordcam?]. .off 2. The enormous value of help—reducing interest on some 40,000£ from 12 & 18% to 4%. .off 3. Expenditures on engineers (10,700) imposed by home Govt. .off 4. Indian insurrection—a matter in wh Home Govt has generally helped. .off 5. Loss of customs duties income—on passing of Union by Imperial Govt. .off end
I am sorry to have kept this several days. Print as proposed.
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Mr Cox
The Duke of Buckingham wants a dph written to B.C. telling the Governor that the question of granting them Postal assistance is under consideration but that they can have no help from the Treasury in their finances.
Would you get the papersManuscript image together & if the matter looks straightforward draft a dph. If not, having spoken to H.G. I will do it.
FR 4/7
Documents enclosed with the main document (not transcribed)
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Seymour to Secretary of State, 28 November 1867, telegram urgently requesting financial assistance.
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Statement of amount required to meet expenditures to 13 December 1867, showing a total of $223,048, signed by Robert Ker, Auditor General, 20 November 1867.
Other documents included in the file
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Draft reply, Buckingham to Seymour, No. 48, 13 July 1868 informing Seymour that British Columbia will not receive a loan from “Parliament” and that no decisions has been made yet on supporting British Columbia in establishing “a more regular postal communication [with] England.”
Minutes by CO staff
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The Duke of Buckingham directed me to draft a dph to this effect for His consn.
FR 9/7
Other documents included in the file
*
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Rogers to G.A. Hamilton, Treasury, 31 July 1868, forwarding copy of the despatch for information.
Minutes by CO staff
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Sir F. Rogers
I think as well the Ty shd have this.
Seymour, Frederick to Grenville, Richard 13 December 1867, CO 60:29, no. 1217, 574. The Colonial Despatches of Vancouver Island and British Columbia 1846-1871, Edition 2.2, ed. James Hendrickson and the Colonial Despatches project. Victoria, B.C.: University of Victoria. https://bcgenesis.uvic.ca/B67162.html.

Last modified: 2020-12-02 13:40:34 -0800 (Wed, 02 Dec 2020) (SVN revision: 5008)