No. 23

With reference to my despatch No. 4 of the 30th December, I transmit
to you a copy of a further letter from the Crown Agents respecting the
liabilities of your Government on account of the British Columbia and
Vancouvers Island Loans both as regards interest and Sinking fund. You
will observe that on the 12th March the contributions to the Sinking
fund were in arrear to the extent of £6175 whilst a further sum of £4125
was required for interest and Sinking fund on the 1st April.

The Crown Agents have now reported to me the arrival of Bills
amounting to £3500, which the Bank of England have been requested to
discount, for the purpose of providing funds to pay interest on British
Columbia Debentures due on the 1st of April. I am glad to find that
provision is being made for meeting the claims of the Debenture-holders,
but I must point out to you that your Bills were not received in time
for the payment of the interest on the day on which it was due.

I must also impress upon you, most urgently, the necessity for
taking immediate steps to enable your government to keep faith with the
creditors of the Colony in respect to the investments of the Sinking
fund, for paying which either at once or by instalments you have not
thought it necessary to make any proposal.

The amount which will be required before October to cover arrears,
sinking fund and interest now amount to about £15,550.

It is my intention under these circumstances to apply the
remittances hereafter received from you as follows:

1. To the payment of the interest falling due in July viz. £3000
on account of British Columbia and £1200 on account of Vancouvers Island
Loans.

2. To the extent of £8000 to the Sinking fund.

Until these charges have been met I cannot consent to the
appropriation of any moneys towards the payment of the dividends which
will become due in October 1869, and I shall expect remittances after
that time sufficient at least to pay the interest, and, as rapidly as
the revenues of the Colony will admit of, the full amount of the Sinking
fund which fund should certainly be placed in its proper position before
the dividends of April 1870 are paid.

As the consequences of this decision may be that it will become
impossible to pay the interest due on the 1st October, I do not doubt
that the Government of British Columbia will provide against a
contingency so de[s]tructive to their credit.