Confidential CO 398/1, p. 107

Downing Street

14 October 1858 Sir,

I have to acknowledge your Despatch of the 30th of August, of August I.e., Douglas to Lytton, No. 37, 30 August 1858, 10344, CO 60/1, p. 134 enclosing copies of the regulations issued for the management of the Gold Fields, and a Proclamation establishing Harbour Regulations, &c.

The latter I have transmitted to the Lords of the Committee of Privy Council for Trade, with a view of obtaining their Lordships' opinion; but the former relate to so important a branch of the administrative duties with which you are now charged, that I prefer very briefly calling your attention to some points which have suggested themselves to me, rather than postpone all communication on the subject till the next mail.

I am sensible of the difficulty of criticising in England the details of those regulations which, from an experience of local circumstances and requirements, you have laid down for the guidance of the Gold Commissioners and miners in British Columbia.

I feel also that rules which have been established in the Australian Colonies with good effect may be qualified by conditions in North America, which from a necessarily limited information on the subject I am unable to take into account. I am not, therefore, prepared to give you any definite instructions, or to insist upon any modifications which at first sight might seem desirable.

But whilst, therefore, on these grounds, and from a reliance on your judgment and discretion, I am desirous of giving you full freedom of action, I feel it right to place before you the impressions made upon me by a perusal of your regulations for the gold fields.

On the Instructions to the Assistant Gold Commissioners and to the Police I have no objection to offer. They appear to me in both cases to meet the objects which are to be had in view.

Taking, however, first, into consideration the rules prescribed in the case of alluvial gold, the regulations provide that licences at 21s per month shall be taken out by each miner, such licences conferring a claim to the following spaces, viz., 25 feet of the bank of the river, 25 feet of each bank of a creek or ravine, or 20 square feet of table land.

Such arrangements may be on the whole most congenial to the dispositions of the American miners whom you may have to consider; but I cannot forget that it was the system of enforcing from time to time the licence fee which created in Victoria so much dissatisfaction, and ultimately led to the Ballarat riots, and to the adoption of new rules. The Victorian system was in the main the same as that which you have apparently adopted. It exacted a licence fee of 1£ from each miner per month, and, as Sir Charles Hotham says, in a Despatch of 21st November 1855 to Sir William Molesworth, William Molesworth = Ballarat riots, Hotham to Molesworth, 21 November 1855, CO 309/35, pp. 59-80. After gold was discovered at Ballarat, Victoria?? (west of Melbourne, Australia), in 1851, Governor Hotham was concerned about the continual violations of licence laws. He visited Ballarat in August 1854 and ordered the local police to check mining licences at least twice a week, instead of monthly, as before. This increased police action agitated miners, who rioted at the Eureka stockade on 3 December 1854, resulting in major reforms of the handling of colonial lands and finances, which Hotham reported in his letter to Molesworth. Molesworth ( 13, pp. 570-72) was appointed secretary of state for the colonies July 1855 and died in October of that year. Hotham died less than two months later. [Laura, add notes.] "The great and primary cause of complaint which I found was undoubtedly the licence fee."

Every miner was required to produce at a moment's notice the licence which authorized him to dig. No excuse was admissible. Theoretically, nothing could be more just than that the man who profited by the gold should pay a proportion to the Crown for the right of extracting it, but practically nothing could be more unsound.

Even if he were rich enough to pay it, he often could not spare the time to go to the Government Office and obtain his licence. Thus a general antipathy to the licence system was engendered, and men's minds prepared for any measure which might wash away the annoyance.

It was then decided that the monthly licence fee should be abolished, and be replaced, independently of royalties, first, by a miner's annual certificate of 1£; secondly, by the payment of 10£ per annum on every acre of alluvial soil; and, thirdly, by and indirect tax in the shape of 2s6d export duty on the ounce of the gold.

Experience seems, as far as we yet know, to have justified this change in Victoria. Discontent, with its attendant dangers, has been removed, and by the present system, which appears to be acquiesced in by all parties, a larger revenue is obtained than ever was the case under the earlier arrangement. I observe, indeed, by the last Victorian returns for 1856, that the duties on the export of gold amounted to more than 376,000£.

It is, I doubt not, expedient to maintain a distinction between the search for gold in alluvial soil and its extraction by means of machinery from quartz rocks, and I conclude that the object which you have mainly had in view in your regulations on this branch of the subject has been to attract men of capital to the Colony. At the same time, I would request you to consider again with care the expediency of requiring so large a sum as 2,000£ security from any individual entering upon this particular field of speculation.

In Victoria, the royalty is not to exceed one-twentieth of the gross produce, instead of being as high as one tenth, and the payment exacted from the miner (1£ per yard) is probably less felt, and more remunerative in the long run, as it is in proportion to the work which he achieves, than would be the introduction of capital to the extent of 2,000£, which it must be further borne in mind is nugatory if subsequently invested in other objects of speculation, and burdensome to the individual giving the security if it is to lie idle.

I do not question the correctness of your decision in assigning three years as the period when such a licence must be renewed, though there might be cases where the erection of expensive machinery would require some latitude to be allowed in enforcing the rights of the Crown; but the condition that 20 men shall be simultaneously employed upon the claim is one which, under certain circumstances, might press somewhat hardly upon the miner.

The seizure as Crown property of gold of any kind which has been procured without due authority is a question the propriety of which would be governed by the particular circumstances of the case, and the means possessed by the local functionaries for enforcing the rule.

I observe with satisfaction the foundations laid in these regulations for the creation of local tribunals, the attributions of which will enable them either to dispense a ready and simple justice, or to settle disputes by an arbitration on the spot and accessible to all.

I have etc. E.B. Lytton