Murdoch and Rogers to Merivale (Permanent Under-Secretary)

We have to acknowledge your letter of 28th ultimo, enclosing a
Despatch from the Governor of Vancouvers Island, in which he requests
instructions for his guidance in respect to the disposal of the
Revenue arising from the sale of Crown Lands.

We gather from the papers transmitted to us that up to the
commencement of last year Governor Douglas was in the habit of drawing on the Hudsons Bay Co for such funds as were necessary to
carry on the Government of Vancouvers Island, but that when a certain
progress had been made towards the repurchase of that Island by the
Crown the Company declined to make any further advances—that
Governor Douglas having under these circumstances applied for
instructions was informed that he must provide for the expenses of
the Colony out of local resources—that the local resources at his
command consist of the proceeds of Land Sales spirit licenses and
Fines and amounted in 1858 to £11,694.1.3, exceeding the expenditure
by £3,211.15.6, but that the Revenue of 1859 was expected to be less
productive than that of 1858, and would probably be insufficient,
even with the balance in hand, to defray the expenditure. We
further learn that an Act has lately been passed to increase the
number of Members in the House of Assembly of Vancouvers Island from
7 to 13—and that Governor Douglas was about, in obedience to his
instructions, to propose to the Legislature to impose taxes to defray
the ordinary expenditure of the Colony. But anticipating that in
reply to that proposition the Legislature will demand the control
over & disposal of the Revenue arising from Sales of Land and other
sources, he requests to be furnished with instructions for his
guidance on that point.

The question thus raised being one of policy we should not venture
under ordinary circumstances to offer any opinion upon it. But as we
understand it to be the desire of the Duke of Newcastle that we
should do so, we proceed to submit such observations as occur to us.
We must premise, however, that our information as to what has
occurred of late years in other Colonies on the same subject is very
incomplete—and we cannot, therefore, illustrate our views regarding
it by the experience acquired elsewhere.

It appears then from what has been stated that it would not be
impossible, if it were desired, to defray the whole present
expenditure of Vancouvers Island from existing sources of Revenue,
without having recourse to the Legislature, and consequently that it
would be possible at present to resist any demand which the
Legislature might make for a control over the Crown Revenue, without
the risk of being exposed to financial embarrassment. This state
of things can, however, only be temporary. It makes no allowance for
the natural expansion of the Colony or for those public works and
establishments which are indispensable to its progress. Unless the
Colony is to be stunted in its growth, and its natural resources to
remain undeveloped the time must very shortly arrive at which the
Revenues now at the disposal of the Crown will be insufficient for
the public service.

Whenever that time comes it will be necessary to apply to the Local
Legislature for additional Funds to supplement the Crown Revenues and
the Legislature, as soon as it is called upon to provide any
considerable balance of the public expenditure, will acquire in fact
the power of controlling the whole. For although the most essential
expenses of Government may continue to be defrayed from the Crown
Revenue, and be, therefore, nominally removed from the control of the
Legislature, yet the Legislature by attaching conditions to the
supplies which it is required to vote, or refusing them altogether,
can practically coerce the Government in regard to the services
defrayed from the Crown Revenues. It was, we believe, in this manner
that the House of Assembly of Lower Canada, during the protracted
contest with its Government on the question of supplies, gradually
drove the Government from each successive position until the Colony
was brought to a state of rebellion. In the other North American
Colonies the Government warned by what had occurred in Lower Canada
abstained, we believe, from entering on any contest in the matter,
and in the Australian Colonies the control of the Crown Land Revenue
was surrendered before the question had been raised. We are not
aware what has occurred on the subject in other Colonies.

But if it is certain that the question will be raised, and if the
issue admits, as we believe, of little doubt, the only remaining
question is whether anything is to be gained by a temporary
resistance to the demand of the Local Legislature. Upon this point
it seems to us scarcely possible to entertain a hesitation. If the
control over these Revenues is given up to the Legislature frankly
and at once, there can be no doubt that the Legislature will in
exchange grant such a Civil List as will place on a permanent footing
those services which it is undesirable to submit to an annual vote.
If it is not given up a contest will be begun which must eventually
result in the defeat of the Government and the triumph of the
Legislature. But in that case the disposition to make liberal
provision for the Government with which they have been in dispute
will no longer be felt in the Legislature. Meanwhile the contest
will have excited an irritation on both sides which will have
extended to other questions and be felt long after the matter in
dispute has been given up—and during its existence the best
interests of the Colony will be overlooked in the heat of a party
struggle. We cannot believe that any momentary convenience arising
from the retention of the control over the Crown Revenues—if such
exists—would be worth the inconvenience which would follow from
such a contest.

Upon the whole we have no hesitation in stating our opinion that if
the Legislature of Vancouvers Island is called on to vote supplies,
and in reply demands a control over the revenues arising from Land
and other casual sources, it would be a wise policy to concede that
demand, in return for such a Civil List as the circumstances of the
Colony may render desirable.

It will of course be the duty of the Government in administering
these Lands to take care that the control over the Revenue which is
thus given to the Legislature of a small community is not made a
pretext for enabling the members of that community to acquire an
undue amount of property in Land to the injury of future immigrants.