<persName ref="prs:kennedy_a"><surname>Kennedy</surname>, <forename>Arthur</forename></persName> to <persName ref="prs:cardwell"><surname>Cardwell</surname>, <forename>Edward</forename></persName> 20 August 1865, CO 305:26, no. 9813, 253.

Sir F. Rogers This is the first statement we have ever recdreceived of the Crown Revenue & the expenses put upon that fund during any of the year's comprised in Sir J. Douglas' period of GovtGovernment at V.C.I. The amounts confirm the impression, always entertained by myself, that the Crown funds were made to bear several charges for which provision ought properly to have been made by the Legislature. For instance Sir J. Douglas' Salary—though appearing, as I remember in some of the Estimates laid before the Assembly—has practically been paid out of the Crown Revenue. It will be seen that the Crown fund has been in excess of the expse and that the Estimate of this year, will, if realized, leave a large balance in hand. The prospects, moreover, of still further increments from the sale of Crown Lands, & the discovery of gold, are by no means inconsiderable—the result of which will give the GovtGovernment a good vantage ground if ever the Assembly should enter the negotiation about a Civil List. But from the way this Assembly is going on I indulge the hope that we may be spared much further trouble with them on this head and that a junction with B. Columbia by becoming an act of necessity, may solve that difficulty.

Strictly speaking I think that these accounts of a Crown fund should be communicated to the Treasury. But that Dept—combined with the Commrs of Audit—will pick holes in the past expenditure which it wdwould be perfectly useless for us to make any remonstrance about to the Colony. The fact is that in Sir J. Douglas' time he paid all the expenses of the public service of V.C. Island out of the Crown Estate there and the funds of B.C., and V.C. Isl. in great measure escaped taxation.

ABd 12 Octr

Mr Ebden 1.What led to the demand for accounts?

2.Under what authority are the follg items levied Harbour Dues 1859-1860 Postage 1859 Fees, Supreme Court 1863

Am I right in supposing that what has apparently happened is this. The Crown Fund and General Reve have been expended indiscriminately. Now the two are separated. An account is made of all that has been recdreceived whwhich ought to have been paid into the Cr. Fund, and of all that has been paid out which ought to have been paid out of the Crown Fund and that the difference is assumed to have been advanced for matters whwhich ought to have been paid for out of the GenlGeneral Revenue.

If so I do not wonder at the Assembly's repudiating the charge.

It seems to me the total claim (thus calculated) is for 29.034 Balance to Sir J Douglas 13.611 42,645 Say 8000£

But against this is possibly to be set as Mr Blackwood [said] a considerable part of the follg sums Harbour Dues 1262 2127 3,389 Postage 245 51 194 Net fees of Sup. Court—several thousand pounds.

Per contra it is impossible to say how much of the Salaries are really payable from the Cr. Fund.

The Assembly's vote for Salaries unless I am mistaken was contingent upon the Land Fund being handed over? Was it treated as if it was absolute? In whole or in part?

FR 12/10

Sir F. Rogers 1 6971/64

In 1864 Governor Kennedy wrote home that the public accounts had never been audited in England and enquired whether this practice had the Sanction of the Secretary of State.

He was told (1st August 1864) that the General Revenue accounts did not require to be audited in England but that the Crown Revenue accounts ought to have been so audited, and he was instructed, failing the absorption of the Crown Revenue into the General Revenue by the House of Assemblys acceptance of the proposed civil list, to send home from year to year, as to the Crown Revenue, estimates of Revenue and Expenditure for approval and accounts for audit, and under any circumstances to send home a statement of past receipts & expenditure. 1 9813/65

He has now sent home a Statement of receipts & expenditure from 1859 to 1864, together with a brief estimate of the Revenue and Expenditure for the current year.

The first recorded authority under which Harbour dues were raised wdwould appear to be a local Act passed in December 1860 fixing the dues and constituting the receipts from them a separate fund by the name of the "Harbour Fund." * This Act was repealed in 1862 and in its place are now in force "The Victoria Harbour Dues Act 1862" and "the Ports of Entry Act 1863." Not one of these three Acts however has anything to do with the Harbour Revenue of 1860 or previous years except perhaps to imply that it was not necessarily Crown Revenue.

No indication appears of the authority under which postage has been levied, except that in the Blue Book 1863 the postage amounting to £465 is stated to have been levied under the "Governors instructions." ** Blue Book 63 and bound Vol. 1857

Fees in the Inferior or Summary Court of Civil Justice are payable under an order of the Supreme Court dated the 6th of April 1857.

Fees in the Supreme Court are payable under an order of the Court dated the 3rd of April 1860 and subsequent orders.

(N.B. The fees under the Bankruptcy Act 1862 are appropriated to the purposes of the Bankruptcy Court.) 9249/63 [and] 10019/63

Governor Douglas sent home accounts of Revenue & Expenditure from 1 Jany 1862 to 30 June 1863 which go to justify your conjecture as to the indiscriminate appropriation of the Crown and General Revenues. Printed enc. 8114/64

I do not know what has guided Captain Kennedy in the determination of what is Crown Revenue and I believe that there has been no rule for its appropriation except that (30th April 1864) the Governor was instructed to pay out of it his own Salary (£3000) and the Colonial Secretarys (£600) and (?) Surveyor General's quite recently. 1 9813/65

All that can safely be said appears to me to be that a statement has been furnished of items of Revenue which are assumed to have been Crown Revenue, together with a Statement of items of expenditure which are assumed to have been defrayed (justifiably or not) from that Revenue, leaving a balance on 31 Decr 1864 of $26550.70 *** which has been actually expended under the promise of indemnity in the 2nd clause of the Resolution of Assembly of 30th June 1864. 9074/65, see estimates (sup) enc. No 8 and Governor's message No 11—enc. 9 9813/64, see also Govrs message enc. 10 in 9074

The Governor inserted in the Supplementary estimates 1865 $34,066.20 instead of $26550.70 to which he now reports that the claim has been reduced by audit. 1 6971/64 Report from Committee enc. 10 in 9074

The difference however though great has nothing to do with the Assembly's repudiation of the claim which proceeded upon the argument that, by laying down on the 1st August 1864 that the audit of the Crown Revenue should be placed on a proper footing prospectively, Mr Cardwell endorsed all previous expenditure of Crown Revenue. The Assembly therefore repudiated the claim their vote of indemnity notwithstanding.

Mr Cardwells instructions of 1 August 1864 were however quite remote from the question now at issue.

The Salaries Act of 1860 voted certain salaries **** out of the General Revenue but provided that they should not be paid out of that Revenue until the surrender of the Crown Revenue. This Act has been left unnoticed. The Salaries Act is a permanent Act, but the sum necessary to pay the salaries under it has since been voted in separate Acts from year to year on the same condition. 9249/63 [and] 10019/63

The officers concerned, with the exception of the Governor, wdwould appear by the accounts received from Sir Jas. Douglas to have drawn their Salaries, the condition in the Salaries Act or Acts notwithstanding. 1 9813/65

By the accounts received from Governor Kennedy Sir Jas. Douglas wdwould appear to have now drawn his arrears (if they can be called so) of salary under the Acts of 1860 & since $13611 = £2835 nearly, or about 3 1/2 years salary at £800 a year—vir[tually] from autumn of 1860 to spring of 1864.

Captain Kennedy's intention is evidently to include it in the expenditure defrayable from Crown Revenue and not to add it to the $26,550.70.

RE 18/10/65

Mr Elliot (Vide first Mr Ebden's minute).

This question of audit of Crown Revenue is so much mixed up with the general administration of the Colony that I leave it in your hands, merely stating what occurs to me.

My impression is that in all the VCI financial questions the great object to be arrived at is to get a fresh & firm start.

It is impossible to do more than conjecture from the papers sent home why many of the different items of receipt & expenditure are classed in Crown rather than General Revenue or why they are so classed in one year rather than another.

I should anticipate no good from ripping up these accounts and I should be disposed to treat the Local Audit as final (if possible) up to the end of 1863—unless GovrGovernor Kennedy thinks that there is any fraud or gross negligence whwhich requires to be investigated and could be investigated with profit.

After that period that is to say for 1864 and 1865 I wdwould require the Crown accounts to be strictly separated from the General Revenue and sent home for Audit as in Crown Colonies.

But, I suppose, Treasury concurrence would be necessary for this species of amnesty.

I propose it because I imagine the financial affairs of V.C.I. to have been so conducted under Gov. Douglas that by endeavouring to audit the former distinctly from General Revenues, we shall embark on a task whwhich we cannot effect, & shall have our attention carried away from what we can effect—viz prospective separation of the accounts & prospective regularity.

This waiver of audit previous to 1864 must not be considered as affecting the claims of the Crown Revenue upon the General Revenue in respect of past years: in respect to whwhich vide 9074/1865. The two things have evidently no connexion.

At the same time I would in fact consent to a very liberal settlement of these claims, if by such a settlement regularity was secured for the future.

Practically the next step appears to me to write to the Treasury to request that these papers may be referred to the Audit Office, in order that the Comms may advise this department as to the steps whwhich shdshould be taken & the instructions whwhich should be given in order to secure a proper audit of these accounts and suggesting that the object should be to secure at once a complete audit for the future, beginning from some comparatively recent date—as the 1st Jan. 1864 leaving the previous accounts about whwhich much difficulty mt be expected to be treated separately as may be found practicable.

FR 30/10

Returned to me 23 June/66. [ABd]