Hamilton to Rogers (Permanent Under-Secretary)

With reference to Mr Elliots letter of the 27th
ult submitting a proposal of the Governor of British Columbia
for the negotiation in this country of a Loan of £50,000 for
the purpose of completing the construction of Roads to the
newly discovered Gold diggings on the Southern Frontier of
the Colony; I am directed by the Lords Commissioners of Her
Majestys Treasury, to acquaint you, for the information of the
Duke of Newcastle, that Their Lordships, having had this proposal under Their consideration, are fully prepared to appreciate
the importance of an early development of the the Resources of
the Colony, by the Construction of Roads, and They would be unwilling to throw any impediment in the way of the undertaking;
but They would remind His Grace that there are several important
considerations to be dealt with, before the proposal of a Loan
can be finally adopted.

Their Lordships would observe that They have not, up to the
present time, received any account of the Revenue and Expenditure
of British Columbia, since its first establishment as a Crown
Colony.
*
Nor have They received the accounts, that have been
called for, of the appropriation of the sums, that have been
drawn from time to time, by Bills upon the Paymaster General, for the service of the Colony;
**
which might enable Them to adjust
the advances made from the Treasury Chest account, a question
which formed the subject of the correspondence noted in the margin;
***

Until They have before Them some further information in regard
to the general Financial condition of the Colony, My Lords are
unable to form an opinion, how far They would be justified in
assenting to the present proposal of The Governor.

It will be incumbent on the Governor to shew clearly, that
the local Revenue is able to meet the Charge for the Loan, together
with all other legitimate Colonial Charges; with the exception of
The Colonial pay of the Royal Engineers, which may for the present,
under the circumstances of the newness of the settlement, be borne
by the Imperial Government. It will also be necessary, before
any steps can be taken for raising a Loan in this Country, that
some adequate provisions should be made by Local Enactment, for
the payment of the Interest, and for the Redemption of the
Principal of such Loan; as any uncertainty on these points might
cause considerable difficulty in raising the Money in the English
Money Market.

In the event of the Governor's furnishing satisfactory information
as to the Financial condition of the Colony, together with a
complete statement of the expenditure of the sums drawn from this
country, and upon the passing of an Act, or Ordinance, providing
for the raising of the money required, on the security of part,
or the whole, of the Revenue of the Colony, Their Lordships will
be prepared to entertain the proposal, and They would suggest
for the consideration of His Grace, that the negotiation of
such loan might be most conveniently effected eventually, through
the Agents General for Crown Colonies.

Their Lordships approve of the instructions which His Grace
proposes to give to Governor Douglas in regard to the Funds
already raised by him on the security of Colonial Bonds, and
in regard to the necessity of obtaining the sanction of Her
Majesty's Government for raising money on the security of
Colonial Revenue. Before concluding this communication Their
Lordships would point out, what appears to Them to be an
oversight in the statement contained in the 2nd Paragraph
of Mr Elliot's letter, in regard to the pay of the
detachment of Royal Engineers, being the "only" charge upon
the Imperial Treasury for British Columbia; and that all
other Expenses are provided for out of the revenue of the Colony.

A reference to the Estimate for this Colony, for the year
1860/1 shews, that, apart from the Salary of the Governor,
provision is made for the Salary of the Commissioner of Lands,
and for the Colonial pay of the Royal Engineers, who are, so
far as Their Lordships are aware, engaged in a civil, rather
than a Military, capacity for the service of the Colony; their
Military or Regimental pay still chargeable on the Army.