No. 46
12 September 1859
With reference to the intimation conveyed to me, in your Despatch No 1 of the 12th July, of the intention of Her Majesty's Government to repurchase Vancouvers Island, I would be very thankful to your Grace for definite instructions in this matter, for I am placed inManuscript imagein a situation of extreme embarrassment, owing to the refusal of the agent of the Hudsons Bay Co, to make further advances to meet the cost of the Civil Establishment, in consequence, as he states, of advices from home to that effect, while so far as I am aware the Charter of Grant has not yet been determined.
2. The present sources of Revenue are as follows
Licences for the Sale of Liquors
Sale of Public Lands
Harbour dues
3. The Revenue arising from the Licences of 1859 has been voted byManuscript imageby the Legislature to making streets and roads, and the proceeds of the Harbour dues, but little more than pay the Harbour Expenses.
4. I have therefore nothing to depend upon at present to meet the Civil Expenditure of the Colony, except the funds arising from the sale of Public Lands, and as the House of Assembly have no control over that source of Revenue, they have in consequence steadily declined to impose Taxes on the Inhabitants of the Colony.
5. This I considered a matter of little moment so long as the population was small andManuscript imageand the poverty of all classes extreme, as under such circumstances, no sufficient Revenue could be raised in the Colony.
6. But with the increase of population and wealth, circumstances have greatly improved since last year, and I am of opinion that a considerable Revenue may now be raised in the Colony.
7. I have therefore brought in a measure to enlarge the Representation by the addition of 6 new Members, making in all 13 members for the House of Assembly, and when that BillManuscript imageBill passes the House, it will be dissolved, and a new election called.
8. I propose to lay before the New House a scheme of direct taxation, levied on property, trades, professions, and other sources, which it is calculated will produce a Revenue that will enable the Colony to defray all the Civil expenditure in a fit and becoming manner.
9. I have proposed a system of direct taxation in preference to levying a duty on Customs, in consequence of the former being more in harmony with the wishes ofManuscript imageof the Colonists, and consistent with our former policy of making Victoria a free Port.
10. Until these measures are matured there is no Revenue to meet current expenses, except the proceeds of Land Sales, and as they may prove insufficient to defray the unavoidable expenditure of the Colony, I beg that Your Grace will instruct me as to how that expenditure is to be provided for under existingManuscript imageexisting circumstances.
I have etc.
Minutes by CO staff
Manuscript image
Mr Elliot
It has reached this Office, either in written communications made to us, or through conversations with officials of the Hudson's Bay Company, that the expenditure of Van Couver Island has, since the resumption by the Crown of its direct Governmental Authority over the Island, been chiefly defrayed out of means belonging to the Company. This has been contrived by Govr Douglas, probably through his influence with the Officers of the Company; and I have little doubt that a large bill will be presented some day for payment to H.M. Govt on this account. But the H.B.C. have given orders to the Agents to assist the Governor no more. This was to be expected, & is only fair. The result however is that the Governor is aground for funds, and enquires how he is to carry on the public service until he is enabled to execute his project of enlarging the present House of Assembly—which consists at present of 7 persons—and of afterwards recommending to the deliberation of such enlarged House the imposition of direct taxes.
It appears to me that this enquiry of the Governors is not so alarming as it looks. There is no Civil Establishment so to speak at V. Couver Island besides the Governor and his Secretary, the former of whom is paid by this Country as Govr of British Columbia; whilst the public Manuscript imageexpenditure of the place can only be occasioned by the necessity for roads, bridges, surveys, and works which usually devolve on municipalities or parishes. This expenditure cannot be very great—(we are entirely in the dark as to its amount, having no reports from the Governor to enlighten us thereon)—but it is doubtless increasing with the wants of an increasing community. But whatever the amount may be I am at a loss to know how the Governor can venture to appeal to H.M. Manuscript imageGovt for assistance in his dilemma. As I have before observed the expenses of the Colony, small as they are, have been incurred for local objects. The Colony possesses a Legislature, and it is that Body which must find the way of meeting the public expenses past and present. Surely the Imperial Parliament can not be applied to on the subject. To me it seems that there is but one answer to give to the Governor, viz: that as soon as H.M. Govt and the H.B.C. have come to a settlement of the account in the matter of the repurchase of the value of the Co's establishments on the Island he shall be duly & promptly apprized—that pending that settlement, if he is in want of funds to carry on the local Govt, he must, whether with an enlarged or unenlarged House of Assembly, obtain from that Body the supplies necessary for the public service—& that the Imperial Parlt cannot be applied to on behalf of Van C. Island. I should myself be disposed to express much gratification at the prospect the Governor holds out of enlarging the House of Assembly—state that he Manuscript imagehas only anticipated the recommendation of H.M. Govt on that point, and urge him to lose no time in carrying his design into execution.
As it is of great moment to have Victoria a free port—it may draw much commerce there in preference to San Francisco, where the duties on imports are excessively high—commend Govr Douglas therefore for his desire to impose direct taxes: & not customs duties.
ABd 1 Novr
This is a very serious matter.
The ordinary thing in Colonies is that whilst the proceeds of taxes are styled Colonial Revenue, and are appropriated by the Legislature, the proceeds of lands are Crown Revenue. When Colonies grow large this leads to a struggle, because the disposers of the Colonial Revenue decline to apply it unless they gain a control Manuscript imageover the other revenue also, so as to manage the whole public income. The result has generally been that after stipulating for some moderate Civil List, the Crown has surrendered the land revenue (and often the management of the lands also) to the Local Legislature.
But in VanCouver's Island I am told that we have hitherto subsisted entirely on funds supplied by the Hudson's Bay Coy, and that nothing at all has been settled about the revenues. It seems to me, if the fact be so, or indeed if the case be such as described in the foregoing minute by Mr Blackwood, that the fundamental constitutional arrangements of the place have to be settled, and this is a matter which I can only recommend to be reserved for Mr Merivale, as he has had to devote far more attention than any one else to the constitutions of our distant European settlements.
TFE 10 Novr
I suppose Govr Douglas must be told that he must trust to his Land Sales—and, if they fall short, to his Legislature—keeping down expenditure to the lowest point possible, until the new Legislature can be got together.
CF 11
Manuscript image
I would not tell the Governor to trust to his land-sales for two reasons. 1st because it appears that no arrangement has yet been made respecting them beyond an intimation that the Assembly was not to interfere with them, and 2dly because the land-sales ought not to go to defray the current ordinary expenditure of the Colony but to form a fund for the introduction of Settlers—an Immigration Fund—without which I fear few except Mining Adventurers will go there.
I would answer in the terms proposed by Mr Blackwood. He will no doubt use the money derived from sales of land for the present, but I would not Manuscript imagegive an apparent sanction to what I hope may soon be stopped.
This despatch involves other important considerations—financial and Constitutional—one of the latter of which is touched upon by Mr Elliot. As soon as Mr Merivale returns I wish this paper to be sent to him as I wish as soon as possible to confer with him & Mr Blackwood (if he should then be in Town) on the whole subject of the present condition of Vancouvers Island & British Columbia.
The answer as above may however go on.
N 22
Other documents included in the file
Manuscript image
Draft reply, Newcastle to Douglas, No. 23, 1 December 1859.
Minutes by CO staff
Mr Irving
You will bear in mind that the Governor's despatch, and the important Minutes on it, are to be handed over to Mr Merivale as soon as they return from circulation. The Duke has directed that this particular despatch need not be delayed.
TFE 26/11
I should wish to see the former despatch, in which he was told not to incur fresh expence till the H B Co matters were settled.
HM N 29
Douglas, James to Pelham-Clinton, Henry Pelham Fiennes 12 September 1859, CO 305:11, no. 10758, 160. 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/V59046.html.

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