Julyan to Elliot (Assistant Under-Secretary)

I have the honor to acknowledge the receipt of your letter
of the 18th ultimo, forwarding copy of a despatch received
by Mr Secretary Cardwell from the Governor of British
Columbia, and informing the Crown Agents for the Colonies that
Mr Cardwell will be glad to receive any information or
remarks which they may have to offer on the subject.

2. In reply I beg to state that the Bills for £30,000,
reported by the Governor as having been drawn by him prior
to the receipt of the Crown Agents' letter to the Colonial
Secretary dated 16th February last, were accepted at this
Office on the 18th May, and became due on the 20th
ultimo. It was hoped that funds to meet the payments would
have been obtained before the Bills matured, by the sale of
some of the Debentures, but this expectation was not realized.
The Crown Agents, were, however, enabled to make arrangements
with the holders for deferring the payment for a further
period of two months, the bills to bear interest in the
meantime at the rate of 6 per cent per annum.

3. These terms are favorable to the Colony, and the time
thus gained may enable the Crown Agents to dispose of
sufficient debentures to take up the bills without making
so great a sacrifice as a forced sale would at that time
have involved. In fact, since this arrangement was entered
into, debentures representing £8300 have been sold at 95, which is fully
4 per cent higher than any previous offer that had been made.

4. The unsold portion of the loan has been again
offered by advertisement to the public at that price, being
it is believed the most likely way of obtaining the money
by the time it is wanted.

5. There is I believe but one other point in Governor
Seymour's despatch which calls for any particular notice.

6. It is stated in the fifth paragraph that "had
we been permitted to make our own arrangements locally with the Bank
of British Columbia the whole of the Loan would, I understand, have
been disposed of here, on terms not unfavorable to the Colony."

7. This opinion is so entirely opposed to all precedent,
and to the principles which govern financial operations of this
kind, that the Crown Agents cannot refrain from sup[p]ressing
a belief that, unless the expression "not unfavorable to the
Colony" is to be interpreted as meaning a price far below
that which they would feel justified in accepting for the
Debentures here, there must be some misapprehension in the matter.

8. The ruling rates of interest in the Colony are, I
am informed on undoubted authority, from 12 to 18 per cent—and
it is believed that the Government are now paying the Bank
of British Columbia 12 per cent for money borrowed. The prevailing rates
here during the same period have been as low as 3 per cent.

9. If the Government find it necessary to pay this
high rate for short periods, on what principle can it be
expected they are to float debentures, having 30 years to
run, on terms which will compare favorably with our
negotiations here, which have, so far, placed the money
at the disposal of the Government at 6 1/16 per cent?
Whilst the exchanges have at the same time been in favor of the drawers.

10. Again it appears that the very Bank which was
expected to realize the more favorable terms in the Colony,
are still the unwilling holders of a considerable portion
of the loan taken by them in 1862, and they expressed a
hope some few months ago, when the 1864 Loan was first
advertized, that the Crown Agents would, if they had a
superfluity of applications, enable the Bank to find
customers for their unsold balance. Surely if the
debentures could be dealt with favorably in the Colony this
Bank would not fail to send them there, and to do for
itself what Governor Seymour has been led to expect it
could do for the Government.

11. To remove all doubt in the matter however the
Crown Agents Addressed a letter—copy of which is enclosed—to
the Directors of the Bank here, and their reply—copy of
which is also enclosed—leaves no room to doubt that some
misapprehension exists in the Colony on the subject.

12. It would be satisfactory to the Crown Agents—who
spare no exertion in endeavouring to effect satisfactory
sales—and it might tend to place the money at the disposal
of the Colony with less delay—if the Governor were on all
occasions to name the minimum price at which he would be
satisfied for debentures to be disposed of in this Country.