Colonial Despatches

Mr Elliot

Mr Fortescue
I annex a separate Minute.

Mr Fortescue
The amount concerned in this letter is trifling. It is merely an excess of £152 beyond the sum of £1,800 which Parliament has granted for the expenses of the Assay Office.

But I must draw your attention to the three last paragraphs of the letter.

You are aware that at the end of his letter of the 27th of February, Mr Peel said that although Parliament is expected to grant for the Royal Engineers in British Columbia this year a sumof of £7,200, we were to instruct the Governor that he would not be at liberty to draw more than £300 of that amount for the purposes for which it is voted by Parliament; the rest would be wanted to settle the Treasury claim for specie sent out last year to the value of £6,900.

In the last paragraph of our answer of the 22nd of March we indicated, in the mildest and most considerate manner, what appeared the obvious objection to this proposal. In fact we hoped that the mere statementof of it in plain language would suffice to show that it had been made in haste and without seeing it's true nature.

But our remark has been put aside without notice. In the same letter we also offered to the Treasury the suggestion that some definite course should be adopted about the arrears, on purpose to avoid the dilemma in which Mr Peel has very correctly pointed out that the Colonial Government will otherwise be placed. Without taking any notice of this proposition either, Mr Peel has printed the Colonial Estimates with no provisionfor for Columbia except for the current services of the year, has left our letter entirely unanswered, and now persists in his former announcement about forbidding the Governor's drafts, as if not a word of objection to that course had ever been submitted to the consideration of the Treasury.

Now I do not wish to exaggerate, and I must therefore ask leave here to make a short digression. Wherever there is a Treasury Chest, it answers the purpose of a sort of Banking Establishment for Imperial transactions; and in that case the simplestmode mode of adjusting accounts is that a Governor shall pay into the Chest any money which is owed to Great Britain by the Colony, and shall draw out of it any money granted to the Colony by Great Britain. But it so happens that in Bish Columbia there is no Treasury Chest; the Governor has no direct means of paying a debt to the British Treasury except by remittance to England, which may at times be difficult or expensive. If then the amount at issue be small, and if it be perfectly clear that the Governor can punctually pay fromlocal local funds the services for which Parliament has provided, there would be no harm in his discharging a debt to the Treasury by curtailing to that extent his Drafts against the money voted by Parliament. The Treasury, if I may so put it by way of illustration, owes the Royal Engineers and others a certain sum in B. Columbia, the Governor owes the Treasury a certain sum in England, if he can pay their debt in the Colony, he may discharge in that way his own debt to them in England.

But then I submit that thisis is only applicable to amounts which the Colonial Treasury is quite sure to be able to furnish. In case of the smallest risk that the Soldier's pay voted by Parliament was falling into arrear, it would be the bounden duty of the Governor to draw bills for the required amount, and the bounden duty of the Treasury to pay the Bills. If on the contrary, as Mr Peel continues to threaten, they were to refuse the Bills in order to use the funds for satisfying other claims which Parliament has never heard of, I must with great deference submit that the Treasury would beguilty guilty of a misappropriation of the public money, and of a signal infraction of the principles laid down by recent Committees of the House of Commons on Public Monies and the Public Accounts.

No one can impute to a great Department the intentional commission of such an irregularity. But habits of distrust, a contempt for the information and opinions of others, and above all a passion for contradiction, may betray into errors which would never be fallen into under less self willed modes of proceeding.

I am exceedingly anxious notto to do injustice to the Treasury, and I have used every endeavour therefore to enter into their mind. They do not propose, it will be observed, to charge all the Governor's former over-drafts against this year's vote, but only the value of the specie sent to him last year, together with the present petty excess in the cost of the Assay Office. It has struck me as possible therefore that they may treat the coin as something sui generis, and may have in their mind some such reasoning as follows: Parliament voted a certain sum, the Governor at his own requesthas has received part in specie, he is only entitled therefore to draw the balance of the vote in bills, and any drafts beyond that balance are justly liable to refusal. Now this reasoning might have been valid if the Treasury had thought proper to refuse his overdrafts for the past year. The measure would have been harsh and impolite, but it would not have been inconsistent with the votes of Parliament. But that year being closed, I contend that any excess of money which the Governor obtained becomes at once a debt and cannot affect the votes forfuture future services. If the Treasury took the view which I have above described, they ought to have expressed the British Columbia Estimate somewhat as follows:
For the Royal Engineers £7,200
Deduct for money already supplied
to the Governor in specie 6,900
Sum to be voted by Parliament £ 300

But they said nothing of the kind, nor do I suppose that the Duke of Newcastle would have ever consented to their thus placing the pay of the Troops for next year in even a semblance of jeopardy. They have asked simplyfor for £7,200 to pay the Soldiers in the year now current, and to £7,200 the Soldiers are accordingly entitled.

Without consuming further time in proving that the course proposed by the Treasury is wrong, it may be allowable now to pass to the more important question what course will be right. For this purpose it will perhaps be thought appropriate to inquire 1st what are the Governor's resources, 2ndly what are his liabilities to this Country, 3rdly (as I must add, although the Treasury have dismissed in silence our Official statement ofthat that question) from which portion of the liabilities, if any, Parliament may reasonably be asked to relieve the Colony, 4thly what instructions should be given as to repayment. In order to dispense with a search through numerous detached papers, I will endeavour to bring together in this minute, for the use of yourself and the Duke of Newcastle, the facts which supply the elements of these different questions.

1. The Governor reckons his Revenue for 1862 at £90,000. To show that this is no under Estimate, I offer thesubjoined subjoined Table: Revenue of
1859 Actual £47,125 Blue Book
1860 Do £53,326 Parly: Pap: p. 57
1861 Estimated but Parly Pap: p. 64 with
confirmed by the omission of balances &
receipts of the borrowings. The 3 Quarters
first 3 quarters 63,368 are supplied in 2070.
1862 Estimated 90,000 Parl: Paper p. 64

The Governor has reckoned on 50 per cent more than received in any previous year.

As to Expenditure he provides for all charges of a fixed nature, and devotes whatever is to spare, to "Roads, Streets and Bridges." The amount this year is £31,750 [marginal note: Parl: Paper p: 64]. If he realizes the large increase of revenue on which he hascalculated, calculated, £31,750 represents the portion which is disposable for general purposes.

2. Such being his resources and calculations, the following are the demands which have since arisen:
Colonial Moiety of total Expenses of the Royal
Engineers imposed in the Colony by recent
instructions dated the 27th of February 1862 11,000
Value of specie supplied from England 6,900
Excess in the cost of Assay Office 152
Overdrafts of former years for the Royal
Engineers [Col: Off: to Treasury 22 March 1862] 22,026
£40,078
Deduct available Monies £31,750
The specie itself 6,000
38,650
Deficiency £1,428

The Colony will be insolvent.

But 3rdly the Duke ofNewcastle Newcastle pointed out to the Treasury that there was a material distinction in the past overdrafts for Royal Engineers. One portion, amounting to £10,704, was for roads, bridges and surveys, and evidently ought never to have been charged except to the Colony. The other portion, amounting to £11,322, was for the pay, sustenance and movement of the Engineers, and for this sum the Duke suggested that application might be made to Parliament. His Grace pointed out that in order to enable the Colony to succeed in defraying the intended liberal Share of it's futureMilitary Military expences, it was only prudent to avoid burthening it with past claims which might defeat the whole plan. To this the Treasury have not favored us with an answer.

4thly The course which I should venture to suggest would be, that the Colony should be required to pay the following items this year:
Moiety of cost of Royal Engineers 11,000
Value of the Specie 6,900
Remaining cost of Assay Office 152
£18,052 This would leave the Governor anavailable available sum of £13,698 out of the amount on which he has hitherto calculated, of £31,750.

Next year I would propose that he should pay:
Moiety of cost of Royal Engineers £11,000
Past over Drafts for the Royal Engineers 10,704
£21,704 It is more than probable that by that time there will be other debts to this Country for him to adjust.

I cannot but think that if we obtain the foregoing repayments from the Governor we shall have done as much as canbe be expected, and that it would be good policy, and not unfair, to submit to Parliament hereafter a vote for the other excess of £11,322 which the Royal Engineers have cost in past years.

It will not escape you that the success of this or any other plan must depend on the facilities allowed to the Governor for obtaining money. Even had he possessed an intact surplus of upwards of £31,000, he was anxious to borrow £20,000 more for roads; and in case he caused the amount to be expended with integrity youwere were prepared, I think, to believe that it would be a judicious outlay. The more that we wish him to make repayments to England out of his current Revenue, the greater is the reason to allow of his raising small loans on the spot if he can. But here again we are met by the Treasury. They have peremptorily objected to his borrowing money while he is receiving aid from home, which aid as you are aware consists of the Governor's Salary (granted to some twenty other Colonies) and of only half the total of Military expenditure on the place. Under the Duke ofNewcastle's Newcastle's direction I am preparing the draft of a letter asking the Treasury to reconsider the case. But they are very hard to persuade.

Indeed one of the harassing things in their mode of action is that they take no comprehensive view, and hence will sometimes conflict with themselves. Thus in the present instance they insist on the one hand upon the Colony's repaying the last farthing which can be charged against it, and they object on the other hand to the Governor's borrowing any assistance to his revenue whichis is wholly inadequate to these demands. So long as they are but refusing what others propose, they seem to think that they must be safe, but occasionally this lands them in inconsistencies. I do not see that they ever attempt to solve a difficulty, much less to confer a benefit. They never supply a plan of their own. It is upon us that they vindicate their originality because as soon as we have said one thing, they always say the contrary.

This however is a digression for which I ought toapologise, apologise upon their general mode of doing business. I have submitted above a practical course for consideration; should it meet with approval, I do not say that we may not so far concede to their view as to give the Governor an option of paying part of his debt by curtailing to that extent his drafts on the Treasury, but I think that this could only be done with strict instructions that his first duty is to issue punctually at the right moment the pay to the Royal Engineers, and that if any want of local fundsshould should produce the least difficulty in that respect, it would be his duty immediately to draw, as far as necessary, Bills upon the Treasury rather than keep the Troops without the pay which Parliament has been pleased to provide for them.

Duke of Newcastle
Mr Elliot's full & searching statement places this whole case before you. Between the culpable over-drafts of the Governor on the one hand, and the Treasury's mode of dealing with us, on the other, there is enough here to try all Colonial Office tempers. As to Governor Douglas, without objecting to Mr Elliot's plan for the settlement of the arrears (as put to the Try 22nd March) I think it goes to the very limits of leniency, and that the Govr's attempt to throw upon us the task of persuading Parlmt to pay for road & bridge making in the Colony, under the guise of Military expenditure, is intolerable.

I must add, that the system under wh. such overdrafts as these can take place must be very unsound. It ought, one wd. think, to be first clearly defined, in any particular case, whether the Imperial Govt intended to undertake the charge of a particular service or transaction, in which case any under estimate wd. be made good by Parlmt, or whether it was only intended that a front should be made by Parlmt towards the expenses of such service, in which case any excess of cost should, as a matter of course, fall upon the Colony.

With respect to the Treasury, the kind of answer to their present letter proposed by Mr Elliot seems the right one. I would refuse to give such instructions to the Governor as they require—that is, I would make them understand that the money to be raised for the Royal Engineers must be available and used for the Royal Engineers, if necessary. While the Govr might be instructed, as a matter of convenience & economy, in settling accounts to refrain, if possible, from drawing upon the Parliamentary vote, so that it may go to pay for the Specie, thus setting off the one debt against the other. I would also point out to the Try. in very distinct terms their entire omission to notice our letter of the 22nd March.

I concur entirely in the answer which ought to be sent to this letter. I shall plainly refuse to give any such instructions to the Govr—not because I wish to palliate his conduct but because I will not be a party to deceiving Parlt and leaving the Engineers to the risk of non-payment, nor to authorize the Govr to make his Colony bankrupt.

Draft reply, Newcastle to Douglas, No. 121, 13 May 1862.

Thomas Graham, Royal Mint, to G.A. Hamilton, Treasury, 17 March 1862, forwarding account showing amounts disbursed from mint cash account.

"The Refinery, British Columbia, in account with the Master of the Mint," statement issued by the Royal Mint, 14 March 1862.