 
                  
                  
                     Mr Elliot
                     Send copy to the Acting Governor for his information.
                     Tell him that in consequence of the objections of the
                     Treasury the Ordinance cannot be confirmed, but that as
                     H.M.G. hope that before the time arrives for the Leg
re
                     to pass a new Tariff, the Imperial Parl
t will have
                     passed an Act for the Union of the two Colonies, under
                     the Authority of which there will be only one set of
                     Commercial Laws, HM 
Govt will not proceed to actual
                     disallowance of the Ord
ce under present cons
n.
                     Par: 2 of this Letter requires attention.
                     
 
                  
                  
                   
                  
                  
                     This is a question whether we should send a circular to various
                     Colonies telling them (what is true) that to levy ad valorem duties
                     calculated on the cost of production in the country of production is
                     in effect to levy a differential duty in favour of countries where
                     production is cheap—wh is a thing not to be done.
                     
                  
                  
                     This the Treasury wish us to announce generally.  Vide 6015 
B.C.
                     
                     But contra (vide 5517 
Gambia) the Custom H. Authorities declare
                     that this mode of levying a

d valorem duties is the established mode
                     of levying them—& probably on the whole the best that can be
                     adopted.  Hence the 
Gambia Ord
ce wh adopts this method is not
                     to be objected to.
                     
                     I think in acknowledging the Treas
y letter on the 
Gambia
                     Ord
e we 
shd add, that under the circumstances 
Ld C. does not
                     propose to send out the Circular suggested by the concluding parag of
                     the Trea
y letter of 
20 June (6015 
B. Cola).
                     
 
                  
                  
                     The Ordinance N
o 3 of 
1865 was received here on the 
29th June 1865.  By the 12
th clause of the Order in Council of the 
11
                        June 1863 H.M. may by Order in Council
                     
or through a Secretary of State disallow any Law in 
British Columbia at any time within 2 years after such Law has been received
                     by the 
Secy of State.
                     
                     If this ordinance is to be disallowed, it must therefore be
                     disallowed before the 29th of this month.
                     
                  
                  
                     The question is whether under the circumstances it should be
                     disallowed or left alone.  The state of the case is shortly this.
                     
                     1;6174 B. Columbia
                     
                     The Ordinance N
o 3 was passed 
15th Feby 1865 & was sent
                     here under covering Despatch 
18 March/65.  The ordinance was
                     submitted to the Board of Trade & the Treasury.
                     
                     
1;6015 B. Columbia
                     
                     The Treasury objected to it on the ground that in effect it
                     imposed differential duties
                     
                     A regulation under which ad valorem duties are calculated according
                     to the value of the article at the place of shipment, instead of at
                     the place of entry, establishes a system of differential duties
                     inasmuch as the result must be to

 subject articles identical in all
                     respects & of the same price to the consumer, to different rates of
                     duty according as they may have been shipped from different countries.
                     
                     
                     
1;4650 B. Columbia Letter 3d March
                     
                     In answer to their objection it was pointed out by the officer
                     administering the governm
t of 
B. Columbia that there was a
                     precedent for such legislation in Canada.
                     
                     
1;Vide 5517 Gambia & Sir F. Rogers minute on 6015 B. Columbia
                     
                     It appears also that the English Custom House Authorities declare
                     that this mode of levying ad valorem duties is the established &
                     proper mode of levying them, and a 
Gambia Ordinance which adopted
                     this mode was not objected to.
                     
                     Under these circumstances it was determined not to send out a
                     Circular against this mode of levying duties, as suggested by the
                     Treasury.
                     
                     1;4650 B. Columbia
                     
                     But before this was known, & decided upon a despatch of the
                     
16th July had been sent out to 
British Columbia in which it was
                     stated that the Canadian precedent was not thought sufficient to
                     justify

 an exceptional practice in the case of 
British Columbia, &
                     that the law would be disallowed unless amendments were made to meet
                     the views of HM's Governm
t before the expiration of 2 years from
                     the 
29th June 1865.
                     
                     
1;5072 B. Columbia
                     
                     The Governor of 
British Columbia now writes word (Despatch of 
18
                        March 1867)
                     
                     that a bill is before the Council repealing the clause objected to;
                     but that had it not been made a Governm
t question of the
                     withdrawal of the provision which in the opinion of the Lords of the
                     Treasury imposed differential duties, he should be outvoted by a
                     large majority.
                     
                     
                     This objection is now removed by the Union of 
Vancouvers Island
                     & 
B. Columbia in 
1866.

  Under the circumstances the question is
                     whether to adhere to the despatch of 
July/66 & disallow the
                     Ordinance, or to leave it alone.
                     
                     I confess I incline to the latter course.  When that despatch
                     was sent off,
                     
the real facts were not known, viz that this was a usual &
                     proper course adopted for levying ad valorem duties.  Again, though
                     the amending Ordinance has not yet been received & indeed may not
                     have passed, it is probable that it has passed by this time; and
                     according to 
Govr Seymours last Despatch of the 
18th March the 
                     Ordinance has worked well.  The union of 
Vancouver's Island & 
B. Columbia has removed the objection that it was framed in a hostile
                     spirit to 
V. Island, and, in truth, that objection has not been put
                     forward by this Department.
                     
                     I have framed & send on 2 draft Despatches—one, on the
                     assumption that His Grace will not think it necessary under the
                     circumstances to advise a disallowance; the other on the assumption
                     that His Grace will think it necessary to enforce the views of the
                     Treasury, & to adhere to the tenor of the July Despatch.
                     
                  
                  
                  
                  
                  
                     It will be for the Duke to
decide
 decide between the two
                     alternative drafts.  I own that my leaning is in favor
                     of the one marked A, which disallows the law, chiefly
                     for the two following reasons—1
st whatever may be
                     the general practise on the subject, the 
B. Columbia
                     law was evidently a manoeuver against 
Vancouver and
                     therefore one that deserved a mark of disapproval.  2
nd the
                     Governor and his supporters will probably have made it one of their
                     arguments for the new Act that the previous one was sure to be
                     disallowed by HM's Government.
                     
 
               
                
                  
                  
                     I do not see how consistently with the decision of
                     
July/66 any other course than disallowance can be
                     adopted.  In that despatch after the arguments of the
                     Colony had been considered and the Union of the 2 Colonies decided
                     upon, 2 Secretaries of State in fact have written that the Act
                     
would be disallowed unless certain
                     things were done.  Those things have not been done &
                     it seems to me that I must either disallow in accordance with
                     that despatch or condemn the decision

 of my 2 predecessors—although
                     I think their policy may be questioned.  Yet
                     that policy having been adopted I can not find sufficient
                     grounds for now condemning & reversing it and therefore
                     disallow.  The disallowance 
shd be deferred to the
                     last moment if there is a possibility of and the mail
                     being received before the 
29th.