No. 50, Financial

Referring to and in continuation of my Financial Despatch No 45
dated 26th June 1866, I have the honor to transmit further
communications which have passed between the Legislative Assembly and
myself on the same subject.

These documents explain themselves and do not require any lengthened
comment.

In reference to the last communication from the Speaker dated 6th
July I have to state that the Bill authorizing a loan of $90,000
(£10,556) has passed the Legislature and has received my assent.

This Bill (which will be formally submitted in the usual course)
authorizes the Government to raise funds by way of loan bearing
interest at twelve per cent per annum, to pay off the debt by
overdraft to the Bank of British North America and to leave a small
balance in aid of the ordinary Revenue at my disposal to carry on the
Government. It is an attempt to make good by a loan the failure of
the Assembly to provide ways and means to meet the current
expenditure of the Government for the years 1865 and 1866.

It is a remarkable fact that although the Bill directs that the loan
shall be repaid by the end of the year 1868, it does not indicate the
means by which such repayment shall be effected, nor am I aware of
any suggestion being made in the Assembly for that purpose, and,
having regard to this important omission, I trust the urgent
necessity of restoring the credit of the Government by the resumption
of payments at the Treasury will be my justification for assenting to
the Bill.

Although it is expected that the loan can be effected in the Colony, I
have grave doubts whether it will be practicable in view of the
impaired state of public credit consequent, as will be collected from
the Despatches I have from time to time addressed to you, to a great
extent upon the reckless proceedings of the Legislative Assembly.

The expedient of borrowing money at twelve per cent interest for the
purpose of paying current liabilities (among which is the interest on
the £40,000 six per cent loan) cannot in itself be regarded as
otherwise than ruinous, and, except under the very peculiar and
difficult circumstances in which I found myself placed, a resort to
it would not have met my concurrence.

I may state for your information that the Legislative Assembly is now
engaged in reconsidering the Estimates for the current year, and its
votes and Resolutions relating thereto, of which I enclosed a copy in
my Despatch No 9 dated 8th February 1866. I regret to find that
the Assembly perseveres in the assertion of a right to initiate money
votes independently of the Executive Government, the obvious effects
of which must be financial discredit, embarrassment, and confusion.