No. 23

In connection with the Appropriation Ordinances passed by the
Legislature of British Columbia, No. 18 of 1864 and No. 9 of 1865, upon
which I have in another despatch of this day's date signified to you Her
Majesty's decision, I have the honor to forward to you herewith a copy
of a letter which has been received from the Board of Treasury.

This letter enters fully into the financial condition of the Colony
for the years 1864 and 1865 and adverts generally to the financial
policy pursued by the local Government.

In the observations of their Lordships I must express my entire
concurrence, and I by that of the future proceedings of your Government
in its financial arrangements may be regulated in accordance with the
views which their Lordships define.

I observe from the Returns which accompanied your despatch No. 11
of the 12th of February last that the debt due by the Government of the
 Colony to the Bank of British Columbia was on the 1st of January last
£33675 whereas in January 1865 it was £27209. I call your attention to
this fact as it is evident that the expenditure of the Colony has been
continued throughout 1865 at a rate out of all proportion with the
resources at its disposal. It is apparent also that notwithstanding the
experience of previous years the error has been again committed by the
Colonial Authorities of over-estimating the Revenue of 1865.

I have therefore to instruct you that the expenditure of this year
must be reduced to such amount as may be covered by a Revenue calculated
on the actual average receipts of the last two years, and that any
further large expenditure on new Roads and Works of that nature must be
postponed until the resources of the Colony will admit of their being
undertaken with less pressure on its finances.