No. 114

I have the honor to acknowledge the receipt of Your despatch
No. 48 of 24th July, transmitting a Copy of a Letter from the
Lords Commissoners of Her Majesty's Treasury, with a Report from
the Commissioners of Audit respecting the British Columbia Accounts
for 1863.

2. In obedience to your instructions I have the honor to furnish
explanations prepared by the Auditor General on the items of
expenditure in excess of the Estimate for that year.

3. With reference to that portion of the letter from the
Commissioners
of Audit which notices the transfer of £368.7.6, the rent of the
Water Frontages, New Westminster, to the Municipal Council, I learn
that when these frontages were first leased no Municipal Council
existed. After its formation, the Council applied for the control of
the Wharf Road, and the rents received for frontages, offering in
return to undertake the construction of a substantial plank road by
the wharfside, a duty which must otherwise have fallen on the
Government. On these considerations Sir James Douglas acceded to
the request of the Council and authorized the payment of the rents
to that body.

4. With regard to the amount of Temporary Loan, £37,938
advanced by the Bank of British Columbia. It will be necessary to
explain the system pursued in the Colony in regard to the custody
of the Public Money. Since 1860, the Colony has never been free
from debt to the Bank. All Revenue, therefore, received at the
Treasury has been at once paid into the Bank, and all Payments are
made by Cheques on the Bank which allows overdrafts, charging
interest on the daily debtor balance at the rate of one per cent
per month. The legal rate of Interest being fixed at one and a half
per cent per month. The greater part of the payments made by
Government were due between April and July, and great inconvenience
would have been experienced if the Government had not had this
accommodation.

5. The Commissioners of Audit further draw attention to a Loan
of £9000, made by the Government of Vancouver Island. I can only
presume in explanation that British Columbia being largely in debt
to the Bank at the rate of Interest of one per cent per month, and
the Colony of Vancouver Island having at the time a surplus Revenue,
Sir James Douglas considered the arrangement advantageous to both
Colonies. The Interest charged on the Loan being at the rate of
one half per cent per month. I may add that the whole amount was
repaid to Vancouver Island by Sir James Douglas a few days before
Mr Seymour's assumption of the Government of this Colony.