Colonial Despatches

In my despatch No. 104 of the 27th of February last, I informed you that the entire pay of the Royal Engineers in British Columbia being estimated at £22,000, one moiety would henceforward be required to be defrayed from the Colonial Revenue and the other moiety be contributed by this Country, the sum of £3,800 being borne on the Army Estimates and the balance of £7,200 being provided by a Parliamentary Grant for British Columbia. In the same despatch I noticed the heavy over drafts made by you, to which serious attention had been called by the Lords Commissioners of the Treasury.

There can be no doubt that to appropriate British money to the use of the Colony without leave, by drawing unauthorized Bills on the Treasury which place their Lordships in the dilemma of either dishonoring the Governor's drafts or else allowing him to obtain funds which were not intended for him, is a very grave irregularity. I trust that you will be sufficiently warned against it by the admonition which you have received; and without dwelling further on that point, I shall now proceed to explain to you the measures which have occurred to me for the settlement of the financial affairs of British Columbia. They have been devised with the utmost consideration of the convenience of the Colony, nor am I yet in a position to state that they have met with the consent of the Lords Commissioners of the Treasury, but until you may hear to the contrary, your best course will be to follow to the utmost of your power the mode of settlement which I shall point out.

The topics to which I have directed my attention are these. 1st What are your resources 2ndly What are your liabilities to this country 3rdly From which portion of those liabilities Parliament can with any propriety be asked to relieve you, and 4thly what should be the method and order of repayment.

You have reckoned your Revenue for 1862 at £90,000, and that this is no under estimate may be inferred from the subjoined table:
Revenue of 1859 actual £47,125
—Do—- " 1860 —do— 53,326
—Do—- " 1861 Estimated 63,368
—Do—- " 1862 —do— 90,000 This reckons on an increase of 50 per cent upon the receipts of any previous year, and I much fear that the severe winter, and consequent interruption of traffic, which you have since reported, must tend to produce a temporary disappointment in your expectations. With regard to expenditure I observe that after providing for all charges of a fixed nature, your practice it so devote whatever is to spare to "Roads, Streets and Bridges." The The amount this year is £31,750. If you should realize the large increase of revenue on which you have calculated, this sum of £31,750 represents the portion of Revenue which is disposable for general purposes.

2ndly. Such being your estimated resources the following are the demands which have since arisen:
Colonial moiety of total expenses of the Royal
Engineers imposed on 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 1859 and 1860 for the Royal Engineers—-22,026
£40,078
Deduct
Available Revenue £31,750
The Specie itself 6,900—————————————-38,650
Deficiency—————————————————————-£ 1,428 Even if the whole expenditure on the indispensable object of Roads were stopped, the Colony would be in a deficiency. And much outlay on that account must have been incurred before the present instructions can arrive.

But 3rdly, there is a question to which I have above adverted, how far Parliament may be asked to relieve you from some of these arrears and to assume the charge of part of your former over drafts. The "Regimental Pay" of the engineers amounting to £3810 per annum is provided for in Army Estimates, and may be left out of the present account. Exclusive of that pay, the sums drawn for by you on account of the Royal Engineers in 1859 and 1860 are reported by you to have been as follows:

1859. £39,320

1860. 20,706 £60,026

The sums voted by Parliament for the same period in the Colonial Estimates for the Engineers amount to £38,000; the excess is £22,026.

One portion of these Bills, amounting to £10,704, is for Roads, Bridges and Surveys, and evidently ought never to have been charged except to the Colony. The other portion, amounting to £11,322, is for the pay, sustenance and movement of the Engineers, and for this sum I have suggested to the Lords Commissioners of the Treasury that application may be made to Parliament. In order to enable the Colony to succeed in defraying the intended liberal share of its future military expenses, I hope that their Lordships may assent to proposing to Parliament to grant it this relief.

4thly. On a review of all these circumstances, the following is the course which has occurred to me as the best to be adopted This year the Colony should pay the following items:
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 you an available sum of £13,698 out of the amount on which you have hitherto calculated of £31,750.
Next year you should pay
Moiety of cost of Royal Engineers——————————£11,000
Past overdrafts for Royal Engineers
as above selected—————————————————— 10,704
£21,704 By that time there will also be other debts to this Country, in respect of the year 1861, for you to adjust.

I am well aware that the proposed repayments will seriously impair your current means for the important object of the construction of roads, which is in itself so material to the prosperity of the Colony. I have however conveyed to the Lords Commissioners of the Treasury my strong recommendation that you should be authorized to make a fresh law providing for the creation of a loan for this purpose, limited to the extent of £50,000. Such a law could not however be followed by any practical success in this country, unless it set forth with proper distinctness that the debt was to have a priority over all other demands upon the Revenue and unless it provided for the redemption of the principal sum by means of a sinking fund. It would also require to contain some express declaration that the Agents General for Crown Colonies should profess authority to borrow the money.

In the meanwhile I shall be glad if you will to the best of your power regulate your proceedings by the scheme which I have sketched for discharging the liabilities of the Colony and placing its finances on a satisfactory and independent footing.