No. 50, Financial
12th July 1866
Referring to and in continuation of my Financial Despatch No 45 dated 26th June 1866, I have the honor to transmit further communications which have passed between the Legislative Assembly and myself on the same subject.
These documents explain themselves and do not require any lengthened comment.
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In reference to the last communication from the Speaker dated 6th July I have to state that the Bill authorizing a loan of $90,000 (£10,556) has passed the Legislature and has received my assent.
This Bill (which will be formally submitted in the usual course) authorizes the Government to raise funds by way of loan bearing interest at twelve per cent per annum, to pay off the debt by overdraft to the Bank of British North America and to leave a small balance in aidofManuscript image of the ordinary Revenue at my disposal to carry on the Government. It is an attempt to make good by a loan the failure of the Assembly to provide ways and means to meet the current expenditure of the Government for the years 1865 and 1866.
It is a remarkable fact that although the Bill directs that the loan shall be repaid by the end of the year 1868, it does not indicate the means by which such repayment shall be effected,norManuscript image nor am I aware of any suggestion being made in the Assembly for that purpose, and, having regard to this important omission, I trust the urgent necessity of restoring the credit of the Government by the resumption of payments at the Treasury will be my justification for assenting to the Bill.
Although it is expected that the loan can be effected in the Colony, I have grave doubts whether it will be practicable in view of the impaired state ofpublicManuscript image public credit consequent, as will be collected from the Despatches I have from time to time addressed to you, to a great extent upon the reckless proceedings of the Legislative Assembly.
The expedient of borrowing money at twelve per cent interest for the purpose of paying current liabilities (among which is the interest on the £40,000 six per cent loan) cannot in itself be regarded as otherwise than ruinous, and, except under the very peculiar and difficult circumstancesManuscript imagestances in which I found myself placed, a resort to it would not have met my concurrence.
I may state for your information that the Legislative Assembly is now engaged in reconsidering the Estimates for the current year, and its votes and Resolutions relating thereto, of which I enclosed a copy in my Despatch No 9 dated 8th February 1866. I regret to find that the Assembly perseveres in the assertion of a right to initiatemoneyManuscript image money votes independently of the Executive Government, the obvious effects of which must be financial discredit, embarrassment, and confusion.
I have the honor to be,
Your most obedient Servant
A.E. Kennedy
Minutes by CO staff
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Sir Adderley
Nothing can be worse than this Assembly's measure of borrowing money at 12 per cent to meet public services for which it neglects to provide ways and means. From beginning to end the Assembly of Vancouver Island has shown it's total unfitness for it's duties. But happily it's existence is rapidly drawing to an end.
I should be disposed to acknowledge the despatch—to express extreme regret that the Assembly had neglected to provide ways and means for the expenditure of the Colony, and had preferred adopting a Bill for defraying the indispensable public services by means of a loan to be raised at the ruinous annual interest of 12 per cent. I should say that it is to be hoped that after the Union of the two Colonies of Vancouver and B. Columbia, the United Govt may devise some more legitimate & fitting manner of providing for the public wants.
TFE 30 Augt
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I think Mr Elliots answer the right one.
CBA 30/8
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Yes—without committing to [sic] me to the bill when it reaches this Country & comes before me for allowance.
C 1 Sep
Documents enclosed with the main document (not transcribed)
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Kennedy to Speaker of the Legislative Assembly, 2 July 1866, discussing the unfavourable financial condition of the colony with reference to previous correspondence and enclosing a letter from the chief justice on the subject.
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Joseph Needham, Chief Justice, to Colonial Secretary, 15 June 1866, advising that "officers of my Court have been refused payment at the Treasury of their salaries for the month ending 31st May last," and commenting that future occurrences would result in the closing of the courts of justice.
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Kennedy to Legislative Assembly, unnamed newspaper clipping, 6 July 1866, pointing out certain facts in relation to the finances of the colony, appending a despatch from Cardwell relating to the cost of mail conveyance and an outstanding bill on account of lighthouse supplies.
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J.S. Helmcken to Kennedy, 6 July 1866, advising that the legislative assembly had passed a bill "authorizing the raising of a loan of ninety thousand dollars, the security therefor being the 'General Revenue' of the Colony."
Other documents included in the file
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Draft reply, Carnarvon to Kennedy, No. 10, 12 September 1866.