Separate 7709, CO 60/13, p. 236; no received stamp 29 May 1862

I have to communicate for the information of Her Majesty's Government that great numbers of persons, principally able-bodied men, unaccompanied by womenor or children, continue to arrive in this Colony, on their way to the Gold Fields of British Columbia. It appears from the Custom House Returns, that upwards of Four thousand men have passed New Westminster since the first day of March last; besides these, about one thousand more are reported to have made their way overland by the Southern Frontier, making altogether from that date, an addition of about five thousandmen men to the population of the Colony.

From present appearances there is every reason to believe that the influx of people will go on increasing, and that the population of British Columbia will, this season, receive large accessions, not only by the ordinary Emigration from California, but also from the "Salmon River" Mines, which, it is reported, do not fully realize the extravagant hopes of the restless andwandering wandering Miners who have resorted to that Gold Field.

2. There has been no reaction this season in British Columbia; though considering the inaccessibility of the Country, the great distance of the Gold Fields from the sea, the heavy expense of transport, and the fact that the country itself as yet remains untilled, and, relatively to the demand, may be said to have neither corn nor cattle of its own growth, a mischievous reactionmay may at any time occur from the mere want of food. Even with the advantages of good roads and every other possible facility, the capital and commercial enterprise of the Colony could hardly be expected to cope with our present circumstances and to provide sufficient quantities of food for the subsistance of eight or ten thousand people residing at a distance of five hundred miles from theCoast Coast, and without such facilities it is very evident that the attempt could not possibly succeed, and would simply be productive of loss and disaster.

I am therefore making every possible effort to push on with the roads now in progress, and perhaps never was there a more favorable opportunity for carrying on such works with economy and despatch, as labour is abundant, and the public have unlimited confidencein in the resources of the Country.

3. These roads will benefit and improve the Country to an almost incredible extent, not only by effecting an enormous saving in the cost and facilities of transport, and by giving an impulse to business and to the ordinary sources of revenue, but also by increasing its productive powers of taxation, without injury or oppression to the Country; it being, for instance, my intention immediately on the completion of the firstfifty fifty miles of the roads starting from Lytton and Lillooet, to impose an additional tax of three farthings per pound weight—i.e. seven pounds sterling per ton—on all goods carried inland from the several termini.

It is estimated that such a tax will produce an annual revenue of about Sixteen Thousand Pounds, and with the existing one farthing tax, which last year yielded nearly Six Thousand three hundred pounds,will will produce altogether about Twenty two thousand three hundred pounds. The Country will at the same time be a pecuniary gainer probably to the extent of twenty times that sum, simply through the saving in the cost of transport.

4. I am now anxiously awaiting Your Grace's further instructions concerning the loan for British Columbia, being by the instructions containedin in your Despatch No 107 of the 6th of March last, precluded from taking any additional proceedings for borrowing money under the Loan Proclamation.

This delay is unfortunate and Your Grace may conceive my intense anxiety under the existing circumstances of the Colony, and the difficulties which surround me.

5. The increasing Revenue of the Colony has hitherto enabled me to meetall all its existing liabilities, but the anticipated calls upon the Treasury on account of the Roads commenced before the arrival of Your Grace's said Despatch, have compelled me to resort to the expedient of issuing promissory notes payable on demand at the Treasury of British Columbia, the amount of which will be strictly limited to the sum required, in addition to the ordinary Revenue to complete those works.

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The Road Contractors have agreed to receive all such notes at par, and to keep them as long as possible afloat, by accepting them as cash in their business transactions at a premium of one per cent. The principal commercial houses in the Colony being concerned in the contracts for these Roads, and the Government Notes being issued to them as a loan to enable them to carry on the work; andthey they being moreover chargeable with interest on the notes when redeemed, under the arrangements explained in my Despatch, marked "Separate" of the 15th April last, they have a very strong inducement for keeping them in circulation, and preventing their immediate return to the Treasury.

This plan will enable me to struggle through with our financial difficulties until I am favoured with Your Grace's final instructionsrespecting respecting the loan.

6. I beg in conclusion to remark that Her Majesty's Government have no real cause for alarm about the resources of the Colony or the ultimate repayment of the loan, as I did not recommend the measure until I had received the most satisfactory evidence of the latent wealth of the Colony; and I should not have been so pressing and urgent in my appeals forassistance assistance had it been for a less essential object than opening the internal communications of the Country by which that wealth can alone be made available, and the Colony rendered self supporting and independent of foreign aid, so thoroughly indeed am I satisfied with the prospects of the Colony, that I should have no hesitation, were that course open to me, of embarking every farthing of my own privatefortune fortune on the security it offers.

I have the honor to be My Lord Duke, Your Grace's most obedient and humble Servant James Douglas