No. 146

I have had the honor to receive Your Lordship's Despatch No 19,
of the 5th September referring to the Loan Ordinance, 1870, and
forwarding a Letter from Mr Julyan in which he offers various
observations on my proposals for the financial arrangement of
some local debt.

2. I have read Mr Julyan's remarks with care but they fail to
convince me that the plan which I proposed was not the better to
be followed in the existing circumstances of the Colony. I do
not follow him into arguments which may be adduced to shew the
abstract advantages of a large Loan over a plurality of smaller
liabilities. I only consider what is likely speedily and
practically to relieve the present difficulties of the Colony.
And I see no reason to doubt that what I proposed would have
done so more rapidly and more effectually than Mr Julyan's plan
and at least at no greater eventual cost. I enclose a
Memorandum from Mr Ker the Auditor General, and if it were not
undesirable to occupy Your Lordship's time further upon this
subject I could point out where I think Mr Julyan's judgment
upon the advantages of the two schemes is erroneous.

3. But in my former Despatch No 71, of the 17th May,
Paragraph 8, I intimated that it would not be any advantage to
the Colony to consolidate the floating debt in the event of
Union with Canada being soon accomplished, and that I did not
propose to take any action until I should have received the
report of the Delegates then on their way to Ottawa. The terms
which they have been able to agree upon with the Government of
the Dominion are so well received by the Community and are
likely from all appearances to be so favorably viewed by the
Legislature at their next Session that Union is almost certain
within the next Year. In this case the whole public debt will
be assumed by the Dominion, and the Canadian Government can make
what readjustment they think proper. It is not now desirable to
disturb the existing arrangements, and I no longer propose to
take any steps to obtain a Loan.

4. It is proper that I should remark in conclusion upon the
observations in the closing Paragraph of Mr Julyan's Report
which were likely and probably were intended to convey the
impression that the Account of this Colony was in arrear with
his Office. The last account transmitted to me, to 31st July,
shewed a Credit of Thirteen hundred and fifty seven pounds,
Fifteen shillings and seven-pence (£1357.15.7). It was not
accurate to include October Dividends in liabilities stated to
be due on the 26th August. I find that up to the 1st October
Fourteen thousand, five hundred pounds (£14,500.0.0), had been
remitted, of which only Seven thousand, five hundred pounds
(£7,500.0.0), have been accounted for in the Statements received
from the Crown Agents; and further remittances are on their way.
The actual indebtedness of the Colony has not increased; and the
balance against the Colony on Current Bank Account is very
materially reduced.