No. 40, Separate

1. I have the honor to transmit the Blue Book of Vancouver Island
for the year 1863 being the first that has ever been compiled for
this Colony.

2. I received this Book from the Colonial Secretary a few days
before his departure from the Colony in the middle of May, and a
pressure of business has prevented me from verifying its contents
until now.

3. It is not my intention to offer any lengthened comments upon
tables and statistics which I do not think very reliable, and, this
being the first Blue Book of Vancouver Island, there are no
comparisons to make.

4. I must, however, offer some observations with a view to correct
erroneous statements which have been placed before Her Majesty's
Government in reference to the finance and taxation of this colony.

5. It has been stated authoritatively that this Island is
"overburdened" by taxation. I will therefore recapitulate the taxes
levied.

Real Estate Tax which produced in 1863 £8854

Trade Licences 3687

Liquor Licences 4914

Harbour Dues 3563

The details and rates of these taxes will be found at pages 1 and
2 of the Blue Book.

6. The Ports of the Island are
free, and there are no import or export duties of any kind.

7. The Real Estate Tax of one per cent per annum upon the assessed
market value of all real estate is that which has been dwelt upon as
most oppressive and "burdensome".

8. I have no intention of discussing the policy of this Tax, but it
can hardly be considered "burdensome" when compared with the tax for
selling liquors (I think
too low) which realized £4914, or more than
half that paid by the whole real estate of the Colony.

9. When the amount raised by Trade Licenses, £3687 (including
various professions and callings) is compared with the value of
Imports, I think it will be apparent that the commercial interest is
not overburdened with taxes.

10. I believe the following may be taken as a nearly correct value
of the imports:

*

1861 1862 1863

$2,018,424 $2,550,242 $3,860,430

£ 416,299 £ 525,987 £ 796,213

11. There being no import duties the bulk of the population escape
taxation in any form whatever, while the merchants and traders pay a
tax of £3687 for Trades Licenses being less than one half per cent
upon their sales.

12. There has been a net increase of Revenue including loans in 1863
as compared with 1862, of £26,343, while there has been an increase
of expenditure of £22,689.

13. The state of the Roads and land communication is very defective
though an expenditure of £18,000 has been incurred in 1862 and 1863
and a large outlay voted for the current year. The law and practice
in connection with this important subject stand greatly in need of
amendment and will occupy my immediate attention.

14. The same may be said in reference to the survey, sale, leasing
and general management of Public Lands.

15. A project for dredging and deepening the Harbour of Victoria has
been entered upon, I think unadvisedly, and without sufficient data,
which will I fear result in the useless expenditure of a large sum of
money.

16. The population are orderly loyal, and prosperous. Pauperism is
unknown.

17. The condition of the Indian population is very lamentable.
Drunkenness and prostitution being the prevailing and prominent
characteristics. I refrain from further notice of this matter which
will be made the subject of a separate Despatch at an early period.

18. The capability of this Colony to support a population has been
much discussed, and very opposite views expressed. There is in my
opinion sufficient agricultural land of fine quality to support a
million of people and the climate is unexceptionable and most
salubrious.

19. Expensive and defective postal and other communication are the
great bar to progress, and reflect but little credit upon two great
nations, England and America. A "Times" newspaper costs fourpence
postage, and that for a book is entirely prohibitory.

20. It is surprising how little is known of the resources and
interior of this Island. Loose assertion and surmise have been
accepted in lieu of accurate examination or survey. To remedy this
great want I have recently despatched an exploring party under an
intelligent leader, liberally supported by private subscription in
aid of the Government expenditure. The first report from this party
is highly encouraging.

21. I can see nothing to retard the steady progress and prosperity
of this Island if the colonists are prudent and true to themselves.