Hamilton to Carnarvon (Parliamentary Under-Secretary) 5331, CO 60/6, p. 148; received 28 May

Treasury Chambers

27 May 1859 My Lord,

With reference to your letter of the 14th Instant, I am directed by the Lords Commissoners of Her Majesty's Treasury to acquaint you, for the information of Secretary Sir E. Bulwer Lytton, that My Lords think it desirable, before any Measures are taken with a view to the Establishment of a Government Assay and Mint in British Columbia, that the opinions of the local * Authorities on the subject, and the sufficiency of the local Revenues to bear the cost, should be ascertained. My Lords are not prepared to sanction any preliminary expense out of Imperial funds for an object of uncertain advantage, and the firstfirst principles of which have yet to be considered.

As Sir E.B. Lytton is aware, the only instance of the institution of a Colonial Mint is afforded in the case of New South Wales, and their Lordships think that the circumstances which gave rise to the demand from that Colony and other Colonies in Australia for the Establishment of local Mints, and the proceedings consequent thereon, may be referred to with advantage, in order to ascertain how far the precedent justified the hope entertained by Sir E.B. Lytton of the success of a similar experiment in British Columbia.

The discoveries of gold fields in New South Wales afford an example of a new source of mineral wealth having been suddenly opened amidst communitiescommunities already far advanced in wealth and commerce, and possessing the advantages of a sound currency and established Banking institutions owing to the scattered condition of a great portion of the people in agricultural pursuits, and the adaptation of the Banking System to their wants, the greater part of the payments arising in trade were discharged by means of checks or the transfer of book audits, and there was perhaps no community in which so small an amount of circulating medium was employed in proportion to its trade and population.

This State of things was at once changed by the gold discoveries, which drew together a large portion of the population and effected a complete revolutionrevolution in their habits and pursuits.

A great immigration followed, and an active retail trade sprang up which could only be carried on by means of a larger circulation of coins or notes.

At that time, the metallic circulation of ** Australia consisted solely of British Money. Public and Mercantile Accounts were kept as they are still in the denominations of that Money; and the necessary supplies of specie were obtained, as they were required, by Moderate exports from this Country, chiefly through the Agency of the Banks.

The Country, therefore, in which an extraordinary demand had suddenly arisen for a large additional quantity of coin was farfar removed from its sources of supply, and the phenomenon was exhibited of a course of exchange which encouraged large shipments of Gold Sovereigns from England to Australia at the same time when gold bullion was imported thence in great quantity. The effect practically was that the gold dust was sent from Australia to the British Mint for coinage, causing great loss of time and the cost of a double voyage. During the interval which ensued, between the discoveries of gold and the receipt of the Coin transmitted hence, the Colonies were driven to great shifts for the maintenance of a temporary circulating Medium. The Banks were empowered either by tacit agreement or regulation to issue promissory Notes against bullion held by them: and this practicepractice was reduced to system in South Australia by the Establishment of a Government Refinery and Assay, for stamping small ingots of Standard Gold which were used as substitutes for Coin, and latterly assumed its form and character.

The inconveniences arising from the transitory condition of the circulation led to applications from New South Wales, Victoria, and South Australia for the establishment of local Mints in those Colonies, and after much consideration Her Majesty's Government consented to a compliance with those applications subject to regulations detailed in the Treasury Minute of 22nd March 1853, and on condition that the Colonies should bear the whole expense of the necessary Machinery and Establishments, New South Wales having obtainedobtained a start over the other Colonies by a remittence to this Country of a sum to meet the preliminary Outlay, the Experiment was Commenced by setting up a Mint at Sydney. The result has been that the Institution has been found sufficient for the requirements of all the Australasian Colonies, and has also supplied gold coins for Ceylon and Mauritius. Victoria and South Australia have allowed the question which they had raised for the establishment of local Mints to drop, and My Lords are under the impression that the Government Refinery and Assay which had been established for a temporary purpose in the latter Colony, has been abolished.

In effect it has been found from Experience thatthat one Mint is sufficient for the requirements of all the Eastern Colonies excepting Hong Kong: and it may be observed, as bearing on one of the arguments used by Sir E.B. Lytton in favor of the Establishment of a Mint in British Columbia, that the Colony of Victoria in which the system of an export duty of gold was first instituted, has not found it necessary to establish a local Mint for the purpose of facilitating the Collection of a Revenue from that source.

It will be seen from this statement that the circumstances of British Columbia are entirely different from those which led to the successful Establishment of a Mint at Sydney: indeed, except in the fact of both being Gold producing Colonies, there are no points of resemblance in theirtheir condition. It does not appear that there is any want of coin in British Columbia, and if the community can readily obtain their supplies of coin from the United States, My Lords consider it doubtful whether a local Mint in the Colony could compete successfully with the Established Mints of the adjoining Country.

If this supposition be correct, the utility of the proposed Mint would be confined to that anticipated by Sir E.B. Lytton of restraining the diggers from leaving the Colony with their produce for the purpose of disposing of it in California. My Lords are not apprized of the source of the information obtained by Sir E.B. Lytton on this point, *** but from the despatch enclosed in your Letter, Their Lordships would have inferred thatthat this departure of the Miners might have been ascribed to the severity of the weather, **** which suspended their operations and may have induced them to go with their produce to a Country where they could find not only a better market but a more genial climate.

Allowing, however, that there may be an evil in the present state of things which it is desirable and possible to remove or mitigate, My Lords confess that they are not satisfied that the Establishment of a Mint would produce the effect which is desired. It is clear that in order to obtain a return for the gold it must be exported in some shape. My Lords apprehend that in the present state of communications with Columbia, California affords the only available or at least the most convenient market for thisthis purpose. The Californian dealers who buy the gold in the colony no doubt strive to obtain the highest profit that they can by their operations, but from the large amount of gold purchased and exported by them, My Lords would infer that, in the main, the percentage charged by them is not excessive. If it be, the correction will no doubt be found in private enterprize and competition. It cannot be for the interest of the dealers to drive away miners from the Colony and thus diminish production.

The Assay and Mint, for the object in view would afford no other facility to the Miner than that of enabling him to ascertain at a regulated charge, the intrinsive value of his Treasure, and of getting it converted into a form convenient forfor exchange. But a very important question here arises which is not touched upon in Your Lordship's letter. Of what form and of what standard should the proposed Coinage consist?

In the case of Australia there was no question on this point. The currency of the Colonies in that part of the world was British and the coin required was one corresponding in weight and fineness with the British Gold Sovereign. But in the North American Colonies the case, as Sir E.B. Lytton is aware, is very different. In Canada and New Brunswick the Currency has been made to conform to that of the United States and My Lords apprehend that it is based principally on the gold coins of that Country, though British Coins are a legal tender at specified rates. In the other Colonies the Currency is mixed and the money of Account is peculiar to each: but United States gold coins enter largely into the circulation of all. The efforts of Her Majesty's Government to obtain the concurrence of those Colonies in any uniform System of Currency were unavailing: and if it be proposed to establish a Mint in British Columbia for their general convenience, My Lords apprehend that there would be no less difficulty in bringing them to an agreement regarding the description of coinage that would be best adapted to their requirements.

In these circumstances it would be necessary to decide whether it would be expedient to make Coins to be issued from the proposed Mint comformableconformable to those of this Country or to those of the United States.

In either case it is doubtful whether they would find ready Currency beyond the limits of British Columbia.

The Standard of fineness moreover of the Coins of the two Countries differs: that of Great Britain being 11/12ths and that of the United States 9/10ths fine. Independently of the denomination of the Coin, therefore, it would be necessary to decide which standard would be preferable for the object in view.

In answer to the enquiry of Sir E.B. Lytton regarding the cost of establishing a Mint, My Lords have to observe that that must depend on the character and extent of the Machinery setset up. They observe that when arrangements for establishing a Mint at Sydney were under discussion, the Master of the Mint furnished two Estimates one for a small Mint to be worked by animal power, the cost of which would have been about £10000. The other for larger Machinery worked by Steam, the cost of which was estimated at £30,000. The total Cost incurred at Sydney for the Refinery and Mint buildings and Machinery was more that £40,000.

I have etc. Geo. A. Hamilton