Hamilton to
Merivale (Permanent Under-Secretary)
[6790, CO 60/6, p. 180; received 6 July
]
Treasury Chambers
5 July 1859
Sir,
I am directed by the Lords Commissioners of Her Majesty's
Treasury to acquaint you, for the information of the Duke of
Newcastle, that My Lords have had under their consideration
the communications from the Governor of British Columbia and
Vancouver's Island transmitted in your letters of the 14th
and 17th Ultimo, relating to the Establishment of a Mint
or Refinery and Assay.
I am to observe with reference to the first of the
abovementioned letters that the observations, contained in the
letter of this Board of the 27th of May, had reference toto
a proposal from the Secretary of State for the Establishment
of a Mint in British Columbia without previous communication
with the local authorities, and the question of establishing a Refinery
and Assay was regarded as a subordinate one to the larger scheme.
My Lords now learn by the despatches of Governor Douglas
of the 8th and 11th of April that, at that time, his
views were confined to the Establishment of a Government Assay
Office, as a measure of more immediate importance than the
institution of a Mint. It is hardly necessary to observe that
this proposition, being put forward as a substantive measure,
involves considerations differing essentially in character from
that first submitted to this Board.
It is not essential for the purposes of aa Mint that a
Refinery should be attached to it, though probably in the case of
a Mint being established in a new Colony such an association
of distinct operations would be desirable; but, on the other
hand, My Lords are aware of no instance of a Refinery and Assay
having been carried on by Government, except in connection with
or substitution for a Mint. The reason for such a connection
is obvious, namely, that of ascertaining a process carried on under
the control of public authorities the quality of the Metal, to
which the stamp of coinage is to be affixed. It is of the nature
of a guarantee for the purity of the Coinage, which it might not
be safe to dispense with in the case of an infant community.
But the establishment of a Government Refinery and Assay
department, unconnected with a Mint, appearsappears at first sight to
involve an encroachment on the proper limits of private
enterprize, which grave necessity could alone warrant: and My
Lords are not satisfied by the tenor of Governor Douglas'
observations that he has sufficiently mastered all the bearings
of the question to justify the adoption of his recommendation
without further enquiry. They observe that in both despatches
one of the principal advantages, which he anticipates from the
measure is that of "keeping the gold circulating in the Country."
My Lords would infer that this expression must have been
intended in some qualified sense not explained, as another object
on which the project is recommended is that of facilitating the
levying of an Export duty on gold, and they conceive that it must
be evident to every one that this metal cancan only be a source of
wealth to the country as a merchantable product; but when a
proposition of this nature is put forward, as a ground for an
important proceeding, their Lordships feel it right to remark on
its apparent inconsistency.
A more practical objection to the proposal arises from the
opinion expressed by Governor Douglas that "having an Assay Office
the Miner would only have to take his gold there, have it
assayed, and receive value for it."
[*](#marg1)
It would appear from this passage that
the Governor contemplates that the proposed establishment should
undertake the operation of buying and selling gold. It is probable
that a trade of this nature is conducted by private Assayers,
[**](#marg2)
and mutual advantage to the buyer and seller no doubt
arises from it; but the practice appears to My Lords to mark the
proper functionsfunctions of a private undertaking as distinquished from
those of a Government Establishment: and the suggestion tends
to confirm them in their impression that a Refinery and Assay could
only be properly conducted by a Government Establishment, in
connection with a Mint for coinage.
My Lords are not surprised that in a thinly populated Country, in
which a source of Mineral wealth has been suddenly developed,
there should at first be some difficulty in organizing private
enterprize for the purpose of turning it to full account, but they
are persuaded that it would be a great error to attempt to
supersede such enterprize by the hasty assumption of trading
functions by the Government. It is only the circumstances that gold
constitutes a material for coinage which leads the State to
authenticate its value in any case; andand apart from that consideration,
there is no reason for its interference in the assaying of Gold,
more than in the smelting of copper ore, or other Mineral products.
My Lords are satisfied that the opportunity afforded for the
profitable employment of capital will soon attract adventurers to
the Colony, and, although it may be difficult to induce
Assayers to transfer their Establishments from California to
Vancouver's Island, the want will be supplied from other sources.
Banking Establishments whose business it will be to deal in bullion,
[***](#marg3)
will afford to the Miners an opportunity for the disposal
of their treasure. The Bank of British North America has proposed
to establish a branch in the Colony, and a new Banking Company of
London Capitalists has recently obtained a Charter for a like
purpose. TheThe fair rivalry of respectable concerns of this nature
will afford a better guarantee to the Miner than the questionable
measure of a Government Establishment, fettered as it must be by
Government Regulations. For these reasons My Lords do not think
it advisable that any proceedings on the subject should be taken
in this Country, on the responsibility of Her Majesty's Government.
If further local experience should show the necessity for such
an Establishment,
[****](#marg4) their Lordships would not object to the
experiment being tried at the expense of the Colony: and they
think that, with the foregoing expression of their views, the matter
may be left to the discretion of the local authorities. It does
not seem to their Lordships that the interference of the Home
Government would be required except in the case of a Coinage.
I am, however, to observe that thethe despatch of Governor
Douglas enclosing a correspondence with the House of Assembly
at Vancouver's Island, respecting the Establishment of a Mint in
that Island which accompanies your letter of the 17th Ultimo,
opens a further view of the question. The recommendation that
the money to be coined in the proposed Mint, "shall be a decimal
currency of the same value as that of the United States of
America" may be considered as an answer to the enquiry contained
in the letter of this Board of the 27th of May, regarding
the character of the coinage to be adopted in case of the
establishment of a Mint. My Lords have no objection to offer
to the proposal and are willing that the question of the
Establishment of a Mint, in one or both of the Colonies in
question, should be treated as one to be determined by the
local authorities from a consideration of their ownown interests.
For the reason they have already given they are inclined to
doubt whether the benefits to be obtained from such an
Establishment would compensate for the expense, and they are
strongly of the opinion that, at any rate, one Mint would be
sufficient for both Colonies. They suggest that the Governor
should in case of the adoption of a proposal for the Establishment
of one Mint only, ascertain the views of both Colonies regarding
the best position of the Establishment for their Mutual benefit,
and report fully and in detail the arrangements which he would
propose for the purpose.
The conditions which My Lords would think necessary to require
are that (either in the case of one or two Mints) the Colonies
should undertake the whole expense of setting them up, and remit
asas a preliminary measure a sufficient sum for the purchase of the
necessary Machinery etc. in this Country, according to the size
of the Mint which they may propose; that they should guarantee
the payment of any salaries which Her Majesty's Government may find
it necessary to offer to persons in this Country for the purpose
of securing an efficient Establishment; and that the Establishment
should be placed under the Control of the Master of Her Majesty's
Mint, and the Coins to be issued be regulated by Her Majesty in
Council in all respects conformably with the regulations adopted,
in the case of the Branch Mint at Sydney.
It is unnecessary that My Lords should enter into more
particulars in this stage of the matter, regarding the arrangements
to be adopted, as the published correspondence relating to the Establishment and working of the branch Mint at Sydney, which
have no doubt been communicated to the Governor, will give him
all the information necessary for his guidance.
I am etc.
Geo. A. Hamilton
Mr Merivale
See previous T-y Letter 5831 and Capn Gossett's
Letter 6955 received by the last Mail on the subject of the
Establishment of a Mint and Assay Office in B. Columbia.
The doctrines of political economy which dictate this
Letter seem to me perfectly sound, nor perhaps would it be
wise, on the whole, to interfere with them in this case.
The hope, and indeed the probability is that the Banks
mentioned by the T-y may afford the assistance and relief
of which the Colony stands in need. The longer that
assistance is withheld the longer will the difficulties of
the Colony last—possibly throwing on the English tax-payer
charges which it is scarcely fair he should incur
for this gold producing region.
ABd
13 July
Mr Gairdner
Can you tell me what was the course adopted as to
arranging the gold, in N.S.W. and in Victoria?
HM
Jy 14
GA
Mr Merivale
1. In the Colony of Victoria the Assay of Gold is confined
wholly to the "Trade". The Government does not by proclamation
or otherwise control or exercise any interference in the case.
2d In the case of N.S. Wales: It will be remembered that
that was the first Australian Colony in which Gold was discovered;
and application was made to the Home Government for the
establishment of a Mint. That was accordingly done very much
on the conditions laid down in this Letter from the Treasury
with reference to B. Columbia & Vancouver's Island. Annexed is
the Treasury Minute which recapitulates the correspondence, &
the Order in Council under which the Mint was established,
and on the same conditions Mints might be established in other
Colonies.
[*](#marg5)
You will perceive in the Minute (last par. page 3)
that the Treasury considered it essential that Government
establishments should be instituted in connection with the
Mints for melting, refining, & assaying the rough gold previous
to its delivery at the Mint for Coinage: but those operations
might be carried on in a contiguous but separate building
as it might possibly be found expedient hereafter to discontinue
the GovtGovernment assay of Bar Gold and to leave the operation to
private enterprise. In the mean time the arrangements for the
GovtGovernment refinery might be left to the local GovtGovernment; but in
the Order in Council it is the duty of one of the Officers of
the Royal Mint to be responsible for "the integrity of the
operations of the refinery & smelting House". How far the public
in Sydney resort to the GovtGovernment Establishment, or how far the
assaying of Gold is carried on by private enterprise when
unconnected with the coining, I cannot perceive; £12.244 is
collected in 1857 by the Depy Master of the Mint but
probably for operations connected with coining.
3. In South Australia a different course was adopted. The
Colonists betook themselves to the Diggings, & brought back
Gold, but it was leaving the Colony & the banks were in difficulty.
[**](#marg6)
The local Legislature accordingly passed an Act "to provide for
the Assaying of uncoined Gold and to make Bank Notes under certain
conditions a Legal Tender."
[***](#marg7)
Under that Act, a GovtGovernment Assayer
was appointed: the Gold might be assayed, melted & stamped:
The Banks might buy such Gold Bullion at £3.11 per oz & issue
Notes against such Bullion. The Notes of the Banks were a Legal
tender, but they might pay them in such assayed bullion. That
process was found inconvenient, and a further Act was passed
No 14 of 1852, for continuing the GovtGovernment assay of Gold
and for stamping it into Money Tokens at £3.11 per oz. In
fact they took the function of coining into their own hands in
order to meet an emergency & it was permitted. But on the 17
Feb. 1853 the Governor reported,
[****](#marg8)
that the Government Assay Office
had done its work, was no longer required and was abolished.
Since that period any necessary assay of Gold seems to have been
left to private enterprise. Although South Australia is not at
present nor has been a gold producing Colony, still from
its proximity to the Victoria Gold Fields a good deal of the
raw material found its way into the Colony & I thought
that this illustration might be of use.
GG
16 July
Mr Fortescue
These papers require to be read together, and with the
Governor's despatches of 8th & 11th April and 25 May
to which they refer.
[*****](#marg9)
It seems necessary to decide whether we
will acquiesce in the view of the Ty or make any further
stand in defence of those of the Governor.
I suppose we may assume that we shall not give the
B. Columbians a mint, or anything more than mechanical
assistance, for which they must pay, whenever they may think
proper themselves to establish one.
The only remaining practical question is, shall we
establish a Government assay office (either at the exp: of the
Colony, only about £800 says the Governor, or
at the first cost to the Treasury, to be repaid by & bye).
The Treasury say this is an unnecessary interference with
private enterprise—that it will not keep the gold in the
country—that it is not to be desired it should—and they
corral various careless expressions of GovrGovernor Douglas's on
the economical bearings of the question.
But GovrGovernor Douglas's main argument is, We want a
revenue—an export duty on gold is the only thing we can
think of—an export duty cannot be levied if the miners carry
away all the ore privately—they will not carry it all away
privately, if they have the advantage of an assay office,
where they can have its purity tested.
To say that this want will be supplied by degrees
by the Bankers & other private enterprises is true no doubt,
but in the mean time how are we to pay an establishment?
Now the case of South Australia certainly does seem rather
in point. The Government there thought there was evil in
the immediate abstraction of all the gold brought into the
Colony by miners returning from Victoria (which for this
purpose may be considered as part of the same colony). They
set up an "assay office" on purpose to prevent it. The
measure was much doubted by political economists
here. But it was in force for a twelvemonth. And I
believe it was considered in the colony to have worked well
& obtained its object, until from other causes it became unnecessary.
The expense I believe is trifling enough, but I
suppose the mechanical appliances are not immediately
accessible in the Colony.
HM
Jy 18
Duke of Newcastle
The Govnrs desp. of 8th May was sent to the
Treasury, in connection with the assay question, but has
not been answered. They probably think they have said
enough in their letter of the 5th July. This Report
of Capt. Gossett's affords additional arguments for the
establishment of a GovtGovernment assay, wh. certainly seems a
very advisable measure, as a means of fixing the mining
population, and levying an export duty. Capt. G. is, I sh.
think, right in thinking that Queensborough is the place
for it, and not Victoria, altho' his own interest of
course lies in the former place & not the latter. I do
not find that you have yet recommended the Assay plan to
the Treasury, as that part of your minute on 5892 was not
acted upon—indeed that particular desp. did not touch the question.
CF
29 July
It is most probable that as in S. Australia so in B. Columbia
an Assay Office will before long be found unnecessary and be
discontinued, but it is for immediate purposes that it is
required and I will recommend it at once (see Minute on 5892).
It will be well to send Copy of Treasury letter to Gov. D.
N
[date cut off file]