Despatch to London.
Minutes (10), Enclosures (untranscribed) (1), Other documents (1).
No. 14, Financial
1st March 1866
Sir,
1. Continuing the subject of my Despatch No 10 of the 13th February 1866, I have the honor to enclose for your information
newspaper reports of debates in the Legislative Assembly whose
proceedings have not as yet been formally communicated to me.
2. The
2. The results of these deliberations appear to be that a majority
of the Assembly have agreed to the abolition of the Real Estate Tax
and Salaries Tax, to the reduction of Trades and Liquor Licence
Duties, and of the import duty upon milch cows, to the imposition of
import duties upon lumber and hay, and to the contraction of two
loans of $100,000 (£20,681), and £50,000 ($242,500) respectively.
3. Leaving out of the calculation the reduction of liquor licence
dutiesand and of the import duty on milch cows (which I am not able to
estimate but which would probably be an unimportant amount), the
following statement shows the financial position of the Colony as
apparently contemplated by the Assembly.
Estimated Revenue for 1866 . . . . . . . . . . . . . . . . . $206,376
Deduct: Real Estate Tax (abolition proposed) . . .$50,000
Salary Tax (abolition proposed). . . . . . 2,500
Trades Licence Duties (proposed reduction) 2,385
54,885
_______
$151,491
Add: Lumber Duty (to be imposed) . . say . . $5000
Hay Duty (to be imposed). . . . say . . 3000
8,000
_______
Total Revenue for 1866 . . . . . . . . . . . . . . . . . . . $159,491
_______
4. To meet this deficit of $116,365 (£23,992) the Assembly appear to
propose, first, a loan of $100,000 (£20,618) bearing interest at 12
per cent per annum, and, second, a loan of £50,000 ($242,500) bearing
interest at 6 per cent per annum and to be paid off by a sinking fund
of 4 per cent per annum, and that the first loan should be paid off
out of the proceeds of the second.
5. The Colony has already raised a loan of £4000 ($194,000)in in
respect of which 10 per cent per annum of £4000 ($19,400) are payable
for interest and sinking fund. This loan was by statute received and
made a charge upon the general Revenue of the Colony. The
proceedings of the Assembly now appear to have been that having
first resolved to lessen that general Revenue by abolishing and
reducing the Real Estate Tax and other Taxes to the amount of nearly
$55,000 out of an estimated Revenue of $206,376 (thereby reducing it
to$151,491) $151,491), the
next resolve to raise additional loans upon (I presume) that
diminished security.
6. It is worthy of remark that, irrespective of interest upon the
proposed $100,000 loan, the interest and sinking fund of the existing
£40,000 loan and the proposed £50,000 loan will amount to £9000
($43,650) per annum—an amount equal to more than one fifth of the
estimated Revenue and to more than one fourthof of the Revenue as
proposed by the Assembly to be reduced.
7. It cannot be supposed that the measures above detailed will meet
the approval of the Legislative Council, and I think you will agree
with me in the opinion that the credit of the Colony which must be
injuriously affected by such proposals, would in the event of their
adoption be utterly destroyed.
8. The ground upon which the Real Estate Tax is sought to be
abolished seems to be that itis is intended to introduce (at some time
or other) a Bill, which, if passed, would make real property
throughout the Colony the subject of municipal taxation only, and
relieve it from taxation for general colonial purposes. Only one
town in the Colony, (Victoria), has yet been incorporated, and in
that instance the experiment of municipal government has signally
failed, and there is but one other place in the Colony, (Nanaimo),
deservingthe the name of a town and that containing more than 800
inhabitants who are almost exclusively coal miners and labouring
people. Assuming the real property in those two places to be taxed,
as proposed, for municipal purposes it would seem that all other real
property throughout the Colony could be wholly relieved from taxation.
9. I may here state as a curious coincidence of facts that on the
day when the Resolution to abolish the Real Estate Tax was passed,seven
seven of the Members of the Assembly who form part of the majority by
whom it was carried were collectively in arrear of Real Estate Tax by
$892 (£184) which was due on the
8th November 1865 and for the recovery of which, if not soon
paid, resort must be had to the process provided by Law.
10. With reference to the reduction of the Trades and Liquor Licence
duties, and of the import duty on milch cows, I have only to observe
that any reductions of Revenueat at this time are much to be deprecated
unless imperatively called for.
11. The proposed abolition of the salary tax is however open to
strong objection inasmuch as it was imposed last year with the object
(which it has fulfilled) of reaching a class of the community which
in the absence of indirect taxation might be considered to be wholly
untaxed. The tax was an impost of one per cent upon salaries andwages
wages above £150 per annum and I think an increase of the rate would
obviously under existing circumstances have been more reasonable than
the abolition of the tax.
12. The expediency of levying import duties upon lumber and hay is
open to much question. Four fifths of the lumber imported into the
Colony come from British Columbia, and I cannot but regard the
imposition of a duty upon lumber imported thence as an impoliticobstacle
obstacle in the way of commerce and as a probable cause of irritation
and injury to both Colonies.
13. I ought not to omit to state that I believe it to be the
intention of the majority of the Assembly to embody in an
Appropriation Act such of their finanical Resolutions (those treated
of in this Despatch among the number) as from their nature would
require to be enacted by all Branches of the Legislature before they
would beof of any legal force. This course is doubtless contemplated
on the supposition that the Legislative Council will prefer to pass
an Appropriation Act so incumbered rather than either to modify it or
to reject it altogether, inasmuch as by modifying it they would come
into collision with the Assembly and by wholly rejecting the
Appropriation Bill they would leave the Executive Government without
any legal authority to incurexpenditure expenditure.
14. It is needless for me to point out how much injury to the credit
and interests of the Colony such a position of legislative affairs
must necessarily involve. It has been only through the exercise of
great forbearance that I have been able to avert a collision between
the Executive Government and the Assembly which some of the Members
of the majority havewithout without disguise declared it to be their
intention to bring about.
15. In conclusion I have only to express my regret that with the view
of keeping Her Majesty's Government informed on a subject as yet
incomplete, I should feel it my duty to trouble you so frequently and
at such length.
I have the honor to be,
Sir,
Your most obedient Servant A.E. Kennedy
Governor
Minutes by CO staff
Mr Elliot
Add this Desph to the batch I passed on a few days ago on the
subject of V.C.I. finance.
There is but one remark which I have to make, & that is that the
members of the V.C.I. Assembly are eminently unfit for their places.
Confl ——- 13 Jan/66 ——- 3033
No 4 ——- 23 " " ——- 3025
Confl ——- 24 " " ——- 3034
No 7 ——- 30 " " ——- 3028
No 9 ——- 8 Feb " ——- 3030
No 10 ——- 13 " " ——- 3246
No 14 ——- 1 March ——- 3765
N.B.
The Despatches being rather voluminous are placed on Mr Cardwell's
table for reference there in case he should desire it.
These despatches disclose a sad state of things at Vancouver
Island—A lunatic House of Assembly, and a bankrupt Government. There
is clearly no other remedy than annihilation of the Constitution, or
mixing the Colony up with British Columbia, which I have always
thought would be a hard measure upon that place. I fear it is
impossible to save the time of Mr Cardwell by making a satisfactory
precis of this mass of papers: firstly because the Governor writes
himself in a very summary style, and 2ndly because, without the
perusal of them it is scarcelypossible possible to conceive the mischievous
absurdity to which persons invested with the senatorial dignity can go.
It appears (p. 4) of desph No 4 of the 23 Jan/66 that the excess
of expenditure over income in 1865 was, in round numbers £12,577, the
account of the Colony with the Bank of British North America being
at that date overdrawn to the extent of £14,226. And there exists a
debt of £40,000, contracted in 1862.
In this state of affairs the Estimates of the Revenue and Expenditure
of the Colony for 1866 had to be submitted to the Assembly. That Body
has rejected and reduced proposed Votes—amalgamated Offices and
indicated the Officers for them—increased salaries and voted
salaries for Offices not set down in theEstimates Estimates. The Governor is
deprived of his Private Secretary—the Colonial Secretary of one
Clerk out of two, and of his only messenger. The Harbour Master
loses his Boatmen and becomes Post Master. The duties of the
Assessor are transferred to the Assistant Surveyor General, whilst
the former enjoys a sinecure, a special Act providing him with a
permanent salary. The Treasurer's salary is reduced. The Salary of
the Auditor is refused and the Colonial Accounts are to be audited by
the Clerk of the Assembly gratis. The Surveyor General's salary is
disallowed, and the Assistant Surveyor General will, the Governor
supposes, have to conduct the duties of the Roads, Bridgesand and public
works, besides the onerous work of Assessor—Secretary to the Light
House Board—Assistant Surveyor's clerk and Collector of Taxes. The
Registrar General—who holds his Office under special enactment—has
had his duties transferred to the Registrar of the Supreme Court.
The salary of the Light House Commissioner and Secretary is refused.
The Chief Justice and Attorney General are deprived of their clerks.
The Sheriff is to be Governor of the Gaol without salary. The
Stipendiary Magistrate at Victoria is to be Superintendent of Police
an Office from which he had been relieved by the Governor in
consequence of irregularities—the Stipendiary Magistrate at Nanaimo
and his clerk are dispensed with, and the dutiesof of Harbour Master,
which the Magistrate used to discharge, and the collection of dues
and taxes at that place are to be performed by the Post Master there.
They have reduced the Police expenses far below what is prudent or
even safe—voted half the actual cost for the maintenance of the
prisoners and disallowed the cost of a Tower for a fog bell got from
England for the benefit of shipping in a dangerous locality, where
fog and strong currents prevail.
On the other hand it is proper to notice that they have voted money
for education—for the Hospital, and for mail communication with San
Francisco. But they do not contemplate meeting their appropriationsout
out of incoming revenue but by Loan or Bonds not payable before the
expiration of 5 or more years or by issuing Exchequer Bills bearing
interest.
An enclosure P. 55 in despatch No 4 contains a very useful analysis
of the Votes proposed in the Estimates, and the decision of the
Assembly upon them.
And in enclosure P. 9 in despatch No 9 will be seen the temperate and
judicious observations of the Governor to the Assembly on some of its
retrenching schemes.
These, amongst many more instances, will probably suffice to describe
the extraordinary mode inwhich which the Assembly are putting their
Colonial expenses to rights. They are usurping Executive as well as
Legislative functions, and make no effort whatever to revise their
systems of taxation, which the Governor has told us might easily be
put on a good footing, and be ample for all governmental purposes.
Unfortunately in Vancouver
Island the power of initiating money votes
is not reserved to the Governor—so the Assembly run wild—and he has
no organ in the Assembly to explain his views. How Governor Kennedy
manages to get on at all and keep his temper with such a Legislature
is surprising. Praise seems due to him for having escaped a
collision with theAssembly Assembly, considering the affronts and
mortifications he has had to put up with from that Body. Governor Kennedy has done all in his power to introduce economy and make
prudent alterations. In 1865 he appointed a Board of Officers to
report on the financial condition of the Colony, and found reason to
concur in the opinion they reported as to the best means of effecting
reductions and reorganizing the public establishments, but pending
the decision of H.M's Government on the question of Union he has not
attempted any reform. In the changes &c now made by the Assembly
Captn Kennedy "concurs in no single instance."
In
In his Confidential despatch of the 24 Jany the Governor epitomizes
the proceedings narrated more at large in his public despatches, and
explains that a dissolution of the present House of Assembly would
not have remedied the mischief, as an Election would not have
improved the material of the House. The franchise is £12 rental, or
a freehold of 20 acres of Land, or of the value of £50. It would
also have been imprudent to dissolve a House pledged to adopt
any form of Government conceded by Her Majesty on Union with
British Columbia.
The question necessarily arises what is to be done under present
circumstances? The answer I think is very short. It is to instruct
the Governor to use whatremains remains of the unappropriated Crown fund as
he may consider most equitable amongst the public Officers who are
deprived of or are curtailed in their salaries, but still to keep a
balance in hand—to continue to exercise the same good temper and
moderation towards the House of Assembly as he has already so
signally exhibited—and to inform him that measures are under
consideration which, it is hoped, will have the effect of relieving
his present very embarrassing position.
It is impossible from the information we possess to say how much the
Crown Fund amounts to. It is certainly £4000 a year, ifnot not 5 or
even £6000—and the charges at present imposed on it are the
Governor's salary—£3000 [and] the Colonial Secretary—£600. A sum
to the Surveyor Genl proportioned to his services to the Crown,
necessary Payments for the administration, maintenance & increase of
the Fund.
There will, therefore, remain a very trifling balance to divide
amongst the Officers.
Mr Elliot
I think it is worth calling the attention of the Authorities to the
fact that the House of Assembly of V. Couver Island expires by efflux
of time in the course of this Summer and requesting them to consider
whether, adverting to the disorganized state of affairs there—to the
disreputable character of the Members—and to the knowledge we
generally possess that if a fresh election takes place the new House
would be composed of the same class of persons as compose it now, it
would not be advisable privately to suggest to the Governor that,
though the decision must rest entirely with him, who, being on the
spot, has the best means of judging, it seems to H.M.G. that it wd
be the wisest course for him to abstain, as long as he can do so,
from summoning a fresh Assembly.
The duration of the House of Assembly is for 3 years, from the date
of its first meeting. Act of 1859.
Under his Commission the Govr is empowered, with the aid of his Ex:
Council, to summon Assemblies in such manner as has been already
appointed, or prescribed by Lawful Authority. There is nothing that
I can see in the Laws of V.C.I. which make it compulsory on the
Governor to summon an Assembly. The necessity of obtaining money to
carry on the public Service may, as in England, make it essential to
have an annual Parliament: but if the Assembly now sitting in V.C.I.
shall have provided supplies, and as we have Crown Revenue sufficient
to pay the Governor and his Colonial Secy I can not myself see any
harm, but probably much advantage from dispensing with any more
Assemblies in this place. Supposing that the Union of the 2 Colonies
be effected this year the amalgamated Legislature will, it is to be
hoped, put matters straight.
Mr Cardwell Mr Blackwood tells me that without special instructions the Governor
would not summon a new assembly before Oct of this year at soonest.
This gives time for us to pass our Union Bill. I think, considering
the past conduct of the Assembly & the probability that next year
will start both colonies on a new course, it would be well to suggest
by a Confidential Despatch to the Governor to take no steps towards
summoning a new Parlt until the fate of our Union Bill be decided.
Documents enclosed with the main document (not transcribed)
Newspaper clippings,
British Colonist15, 16, 20, 21, 22 and 24 February 1866,
Chronicle15, 16, 20, 21, and 22 February 1866,
reporting various debates concerning the finances of the colony
and the futher proceedings of the Legislative Assembly thereon
(seven pages).
Other documents included in the file
Draft reply, Cardwell to Kennedy, Confidential, 10 May 1866.
Minutes by CO staff
Sir F. Rogers
Perhaps you will have the goodness to see that I am right in my view
of the Law. The first Governor of V.C.I. was Govr Blanshard. He
was directed by his Commission and Instructions to summon General
Assemblies of Freeholders. He was at the same time left at liberty
not to summon such Assemblies, but to carry on the Govt with the
advice of his Council only. He (wisely) availed himself of that
permission. But his Successor—Govr Douglas—was ordered to call an
Assembly together in the terms of his Commission & Instructions. He
accordingly did so. An Act—called the Franchise Act—was soon
afterwards passed. By the 15 clause the duration of the Assembly was
fixed at 3 years. As I have mentioned in my (accompanying) Memo I
can see in that Act or in any other, no provision requiring the Govr
to summon an Assembly within any stated time after a dissolution or
natural death, whereby I conclude that, except for the necessity of
obtaining supplies, there is no reason why the Governor should order
a fresh election. The supplies for /66 having been secured, as I
gather from the Governor's finance despatches, I conceive that
affairs will go on much more smoothly at V.C.I. without the Assembly
sitting than with that Body. Of course I base my recommendation on
the Assumption that an Act of Parlt will be passed this Session
uniting the two Countries.