No. 70, Financial
20th August 1865
In accordance with the instructions contained in your Despatch No 27 dated 1st August 1864, I have now the honor to transmit statements of the Receipt and Expenditure of the Crown fund of this Colony for the years 1859, 1860, 1861, 1862, 1863 and 1864, and likewise Estimates of probable Receipt and ExpenditureofManuscript image of that fund for the year 1865.
I delayed making this statement while a probability existed of the terms offered by the Duke of Newcastle being accepted, and further delay was caused by the difficulty of obtaining leave for Mr Ker (now Auditor in British Columbia) to complete the Audit.
The estimated "Crown Revenue of Vancouver Island for the year 1865" is very much less than that which is derivable from thatsourceManuscript image source under proper management, which cannot be adopted till the property coming to the Crown is formally conveyed by the Hudson's Bay Company, or in other words till the "Crown Lands question" is settled.
In the Estimate of Revenue the sum of $26,550.70 described as the balance due by the Colony on the 1st January 1865 corresponds to the sum of $34,066 (as reduced by audit) treated of in myDespatchManuscript image Despatch No 57 dated 18th July 1865 and which the Legislative Assembly refused to vote.
With a view to obviate any misapprehension with regard to the first item of Expenditure for 1864, namely, "salary of Sir James Douglas KCB, late Governor, $13,611.27" I enclose the copy of a letter from the Colonial Treasurer dated 29th December 1864 from which it will appear that this sum is for "arrears of salary" undrawn attheManuscript image the time it became due.
I have the honor to be,
Your most obedient Servant
A.E. Kennedy
Minutes by CO staff
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Sir F. Rogers
This is the first statement we have ever recd of the Crown Revenue & the expenses put upon that fund during any of the year's comprised in Sir J. Douglas' period of Govt at V.C.I. The amounts confirm the impression, always entertained by myself, that the Crown funds were made to bear several charges for which provision ought properly to have been made by the Legislature. For instance Sir J. Douglas' Salary—though appearing, as I remember in some of the Estimates laid before the Assembly—has practically been paid out of the Crown Revenue. It will be seen that the Crown fund has been in excess of the expse and that the Estimate of this year, will, if realized, leave a large balance in hand. The prospects, moreover, of still further increments from the sale of Crown Lands, & the discovery of gold, are by no means inconsiderable—the result of which will give the Govt a good vantage ground if ever the Assembly should enter the negotiation about a Civil List. But from the way this Assembly is going on I indulge the hope that we may be spared much further trouble with them on this head and that a junction with B. Columbia by becoming an act of necessity, may solve that difficulty.
Strictly speaking I think that these accounts of a Crown fund should be communicated to the Treasury. But that Dept—combined with the Commrs of Audit—will pick holes in the past expenditure which it wd be perfectly useless for us to make any remonstrance about to the Colony. The fact is that in Sir J. Douglas' time he paid all the expenses of the public service of V.C. Island out of the Crown Estate there and the funds of B.C., and V.C. Isl. in great measure escaped taxation.
ABd 12 Octr
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Mr Ebden
1.What led to the demand for accounts?
2.Under what authority are the follg items levied
Harbour Dues 1859-1860
Postage 1859
Fees, Supreme Court 1863
Am I right in supposing that what has apparently happened is this. The Crown Fund and General Reve have been expended indiscriminately. Now the two are separated. An account is made of all that has been recd wh ought to have been paid into the Cr. Fund, and of all that has been paid out which ought to haveManuscript image been paid out of the Crown Fund and that the difference is assumed to have been advanced for matters wh ought to have been paid for out of the Genl Revenue.
If so I do not wonder at the Assembly's repudiating the charge.
It seems to me the total claim (thus calculated) is for
29.034 Balance to Sir J Douglas
42,645 Say 8000£
But against this is possibly to be set as Mr Blackwood [said] a considerable part of the follg sums
Harbour Dues 1262
Postage 245
Net fees of Sup. Court—several thousand pounds.

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Per contra it is impossible to say how much of the Salaries are really payable from the Cr. Fund.
The Assembly's vote for Salaries unless I am mistaken was contingent upon the Land Fund being handed over? Was it treated as if it was absolute? In whole or in part?
FR 12/10
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Sir F. Rogers
In 1864 Governor Kennedy wrote home that the public accounts had never been audited in England and enquired whether this practice had the Sanction of the Secretary of State.
He was told (1st August 1864) that the General Revenue accounts did not require to be audited in England but that the Crown Revenue accounts ought to have been so audited, and he was instructed, failing the absorption of the Crown Revenue into the General Revenue by the House of Assemblys acceptance of the proposed civil list, to send home from year to year, as to the Crown Revenue, estimates of Revenue and Expenditure for approval andManuscript image accounts for audit, and under any circumstances to send home a statement of past receipts & expenditure.
He has now sent home a Statement of receipts & expenditure from 1859 to 1864, together with a brief estimate of the Revenue and Expenditure for the current year.
The first recorded authority under which Harbour dues were raised wd appear to be a local Act passed in December 1860 fixing the dues and constituting the receipts from them a separate fund by the name of the "Harbour Fund."
Question 1. On what authority are Harbour Dues wh to 1860 counted as Crown Revenues. Ansr. No authority appears. When an Act was passed on the subject, the Dues ceased to be treated as Crown Revenue.
This Act was repealed in 1862 and in its place are now in force "The Victoria Harbour Dues Act 1862" and "the Ports of Entry Act 1863." Not one of these three Acts however has anything to do with the Harbour Revenue of 1860 or previous years except perhaps to imply that it was not necessarily Crown Revenue.
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No indication appears of the authority under which postage has been levied, except that in the Blue Book 1863 the postage amounting to £465 is stated to have been levied under the "Governors instructions."
Your question answers as to passage. Why postage is continued as Crown Reve in 1859 but not afterwards does not appear.
Blue Book 63 and bound Vol. 1857
Fees in the Inferior or Summary Court of Civil Justice are payable under an order of the Supreme Court dated the 6th of April 1857.
Fees in the Supreme Court are payable under an order of the Court dated the 3rd of April 1860 and subsequent orders.
(N.B. The fees under the Bankruptcy Act 1862 are appropriated to the purposes of the Bankruptcy Court.)
9249/63 [and] 10019/63
Governor Douglas sent home accounts of Revenue & Expenditure from 1 Jany 1862 to 30 June 1863 which go to justify your conjecture as to the indiscriminate appropriation of the Crown and General Revenues.
Printed enc. 8114/64
I do not know what has guided Captain Kennedy in the determination ofManuscript image what is Crown Revenue and I believe that there has been no rule for its appropriation except that (30th April 1864) the Governor was instructed to pay out of it his own Salary (£3000) and the Colonial Secretarys (£600) and (?) Surveyor General's quite recently.
All that can safely be said appears to me to be that a statement has been furnished of items of Revenue which are assumed to have been Crown Revenue, together with a Statement of items of expenditure which are assumed to have been defrayed (justifiably or not) from that Revenue, leaving a balance on 31 Decr 1864 of $26550.70
i.e. there ought to have been, and was virtually, that balance, but the money had been expended under note of indemnity of 30 June 64.
which has been actually expended under the promise of indemnity in the 2nd clause of the Resolution of Assembly of 30th June 1864.
9074/65, see estimates (sup) enc. No 8 and
Governor's message No 11—enc. 9
9813/64, see also Govrs message enc. 10 in 9074
The Governor inserted in the Supplementary estimates 1865 $34,066.20 instead of $26550.70Manuscript image to which he now reports that the claim has been reduced by audit.
Report from Committee enc. 10 in 9074
The difference however though great has nothing to do with the Assembly's repudiation of the claim which proceeded upon the argument that, by laying down on the 1st August 1864 that the audit of the Crown Revenue should be placed on a proper footing prospectively, Mr Cardwell endorsed all previous expenditure of Crown Revenue. The Assembly therefore repudiated the claim their vote of indemnity notwithstanding.
Mr Cardwells instructions of 1 August 1864 were however quite remote from the question now at issue.
The Salaries Act of 1860 voted certain salaries
Govr Col Secy C Justice Atty Gen. Treasurer Surveyor Gen. There may have been [other?] justification for paying these Salaries out of the Crown fund however—that otherwise the officers wd have been without legal Salary except the Govr who had £3000 from B. Columbia & [the] Col. Secy who at that time was also Col. Secy of B.C. & had £700 or £800 as such.
out of the General Revenue but provided that they should not be paid out of that Revenue until the surrender of the Crown Revenue. This Act has been left unnoticed. The Salaries Act is a permanent Act, but the sum necessary to payManuscript image the salaries under it has since been voted in separate Acts from year to year on the same condition.
9249/63 [and] 10019/63
The officers concerned, with the exception of the Governor, wd appear by the accounts received from Sir Jas. Douglas to have drawn their Salaries, the condition in the Salaries Act or Acts notwithstanding.
By the accounts received from Governor Kennedy Sir Jas. Douglas wd appear to have now drawn his arrears (if they can be called so) of salary under the Acts of 1860 & since $13611 = £2835 nearly, or about 3 1/2 years salary at £800 a year—vir[tually] from autumn of 1860 to spring of 1864.
Captain Kennedy's intention is evidently to include it in the expenditure defrayable from Crown Revenue and not to add it to the $26,550.70.
RE 18/10/65
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Mr Elliot
(Vide first Mr Ebden's minute).
This question of audit of Crown Revenue is so much mixed up with the general administration of the Colony that I leave it in your hands, merely stating what occurs to me.
My impression is that in all the VCI financial questions the great object to be arrived at is to get a fresh & firm start.
It is impossible to do more than conjecture from the papers sent home why many of the different items of receipt & expenditure are classed in Crown rather than General Revenue or why they are so classed in one year rather than another.
I should anticipate no good from ripping up these accounts and I should be disposed to treat theManuscript image Local Audit as final (if possible) up to the end of 1863—unless Govr Kennedy thinks that there is any fraud or gross negligence wh requires to be investigated and could be investigated with profit.
After that period that is to say for 1864 and 1865 I wd require the Crown accounts to be strictly separated from the General Revenue and sent home for Audit as in Crown Colonies.
But, I suppose, Treasury concurrence would be necessary for this species of amnesty.
I propose it because I imagine the financial affairs of V.C.I. to have been so conducted under Gov. Douglas that by endeavouring to audit the formerManuscript image distinctly from General Revenues, we shall embark on a task wh we cannot effect, & shall have our attention carried away from what we can effect—viz prospective separation of the accounts & prospective regularity.
This waiver of audit previous to 1864 must not be considered as affecting the claims of the Crown Revenue upon the General Revenue in respect of past years: in respect to wh vide 9074/1865. The two things have evidently no connexion.
At the same time I would in fact consent to a very liberal settlement of these claims, if by such a settlement regularity was secured for the future.
Practically the next step appears to me to write to the Treasury to request that these papersManuscript image may be referred to the Audit Office, in order that the Comms may advise this department as to the steps wh shd be taken & the instructions wh should be given in order to secure a proper audit of these accounts and suggesting that the object should be to secure at once a complete audit for the future, beginning from some comparatively recent date—as the 1st Jan. 1864 leaving the previous accounts about wh much difficulty mt be expected to be treated separately as may be found practicable.
FR 30/10
Returned to me 23 June/66.
Documents enclosed with the main document (not transcribed)
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Five separate "Statements of the Crown Revenue of Vancouver Island…shewing also the Expenditure sanctioned by the Governor out of this Fund," covering the years 1859 to 1863, each signed by Robert Ker, Acting Auditor.
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"Statement of the Receipts and Expenditure of the Crown Fund of Vancouver Island as taken from the treasurer's Accounts for the year 1864," signed by Ker.
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"Abstract of the probable Crown Revenue of Vancouver Island for the year 1865," signed by Henry Wakeford, Acting Colonial Secretary.
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"Abstract of the sums required to defray the Crown Expenditure of Vancouver Island for the year 1865," signed by Wakeford.
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Alexander Watson, Treasurer, to Acting Colonial Secretary, 29 December 1864, questioning the payment of salary arrears to Douglas and enclosing copy of Auditor's Query on the subject.
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Copy of Auditor's Query as noted above, 19 December 1864, no signature.