Colonial Despatches
The colonial despatches of Vancouver Island and British Columbia 1846-1871
Public Offices document
Julyan, Penrose Goodchild to
Elliot, Thomas Frederick 10 October 1865, CO 60:23, no. 9854, 70.
Abstract
Julyan, Penrose Goodchild to
Elliot, Thomas Frederick 10 October 1865, CO 60:23, no. 9854, 70.
Public Offices document.
Minutes (3), Other documents (1), Marginalia (1).
Julyan to Elliot (Assistant Under-Secretary)
Offices of the Crown Agents for the Colonies
Spring Gardens, London, S.W.
10th October 1865
Spring Gardens, London, S.W.
Sir,
The first payment to the Sinking Fund of the British
Columbia Loan, authorized by Ordinance No 7 of 1864, is
now due, and it becomes necessary that the Secretary of State
should, in compliance with the provisions of Section 11 of
that Ordinance, appoint Trustees for the management of the
Fund, and name the Securities in which the money is from time
to time to be invested.
The Trustees to the Sinking Funds of the two small loans
previously placed on this marketfor
for British Columbia are
Mr Penrose G. Julyan and Mr Gordon Gairdner, and the
Securities in which the money is invested are Consols.
for British Columbia are
Mr Penrose G. Julyan and Mr Gordon Gairdner, and the
Securities in which the money is invested are Consols.
In this instance it appears to me that the most advisable
course to pursue would be for the Trustees to invest the
money in the repurchase of the Debentures themselves, in the
manner provided for in Section 12 of the Ordinance.
This could be done now under advantageous circumstances,
as they are selling at a considerable discount, whereas when
the investments for the Sinking Funds of the two first Issues
were under consideration the Debenturescommanded
commanded a premium
in the market. They can now be bought at a price which
would be equivalent to an investment at 6 1/2 per cent per
annum (viz 92) irrespective of the final saving to the
Government of the difference between the selling and the
redeeming price of the Securities.
commanded a premium
in the market. They can now be bought at a price which
would be equivalent to an investment at 6 1/2 per cent per
annum (viz 92) irrespective of the final saving to the
Government of the difference between the selling and the
redeeming price of the Securities.
The debentures so repurchased would of course be cancelled
or destroyed in the presence of the Trustees to the fund.
Qu as to this.
I would also suggest, with regard to the Sinking Funds
formed under the British Columbia Loan Ordinances of 1862 and
1863, that the Trustees should be authorized to use the money in
the samemanner
manner whenever they may find an opportunity of
purchasing the Debentures, issued under those Ordinances, below par.
manner whenever they may find an opportunity of
purchasing the Debentures, issued under those Ordinances, below par.
Out of the £100,000 of Debentures created under Ordinance
No 7 of 1864 nearly £80,000 have been disposed of, and
sufficient funds have been realized to meet all the known
liabilities of the Colony in this Country up to the present
date—including £10,900 due to the Treasury—and to leave a
small balance in hand. Sales are extremely difficult to
effect however, even at the low price of 92, and it will
probably be some time before the remaining £20,000 will find a market.
Minutes by CO staff
I confess I doubt about this.
Colonial Govt are very fond, when providing a sinking fund say
for payment of debentures, of authorizing the Trustees to invest that
fund in the repurchase of those debentures—wh seems to me perfectly
right.
But then they go on to say that the debentures shall
be cancelled. And the B. Columbia Orde goes farther & says SS 13
that after every such repurchase
the annual payment to the Sinking Fund should be reduced.
But the result of this proceeding will be that the
Sinking Fund will be wholly inadequate for its purpose.
The contributions to the Sinking Fund are
calculated on the notion that the investments in it
will bear interest up to the time when the repayment
is made—say for 25 years.
And if 1000£ of the B.
Columbia Sinking Fund is to be invested in Ceylon
debentures it will bear interest at 6 percent for that
25 years, & principal and interest will be forth coming
amounting at that period (accordg to the tables) to
4383£ and will be available for paying of[f] that amount of the debt.
And if 1000£ of the B.
Columbia Sinking Fund is to be invested in Ceylon
debentures it will bear interest at 6 percent for that
25 years, & principal and interest will be forth coming
amounting at that period (accordg to the tables) to
4383£ and will be available for paying of[f] that amount of the debt.
But if this 1000£ is invested in B. Columbia
debres the debres are to be cancelled. The
Colony therefore will save the interest instead of the
Sinking Funds being increased by it—and the total
debt, when 25 years afterwards it becomes due, will be
diminished not by 4385£ as it ought to be—but by 1000£
only.
I incline therefore to think that if any Colonial
Sinking Fund is meant really to answer its purpose, it
shd not be invested in debres of that Colony,
except on condition that the Debentures remain the
property of the Sinking Fund Trustees who shd
receive from the Govt the annual interest like any other Creditor.
I incline therefore to think that if any Colonial
Sinking Fund is meant really to answer its purpose, it
shd not be invested in debres of that Colony,
except on condition that the Debentures remain the
property of the Sinking Fund Trustees who shd
receive from the Govt the annual interest like any other Creditor.
And I think moreover that when the debres have
difft periods to run the investment in the debres
on short periods should not be allowed to exceed (proportionally) the
investments in debres issued for longer periods.
FR
12/10
Qu refer to Treasury suggesting this view.
The matter is self evident when
reduced to figures
in its simplest form.
reduced to figures
in its simplest form.
According to [Mr Elliot Table 18?] the sum to be set
apart annually and invested at 5 per cent in order to secure payment
of 100£ at the expiration of 25 years is £2,095 say £2.1 but if this
annual payment is employed in each year in paying
off the debt the total sum so employed will be 25 x £2.1 or in other
words £52.1 or £52.10 leaving £47.10 unprovided for.
If the period & assumed rate of interest are
less the deficiency of course will be less, but some
deficiency there will always be. In B. Columbia the
annual contribution is 4 per cent—the period is
20 years—so that the total payments wd be 4 X 20 = 80
per cent and the deficiency 20 per cent.
EC
13
Other documents included in the file
Elliot to G.A. Hamilton, Treasury, 21 October 1865, forwarding
copy of the Crown Agent's letter for consideration, but expressing
doubts as to the validity of the repurchase proposal.