Hamilton to Merivale (Permanent Under-Secretary)

I am directed by the Lords Commissioners of Her Majesty's
Treasury to acquaint you, for the information of the Duke of
Newcastle, that My Lords have had under their consideration
the communications from the Governor of British Columbia and
Vancouver's Island transmitted in your letters of the 14th
and 17th Ultimo, relating to the Establishment of a Mint
or Refinery and Assay.

I am to observe with reference to the first of the
abovementioned letters that the observations, contained in the
letter of this Board of the 27th of May, had reference to
a proposal from the Secretary of State for the Establishment
of a Mint in British Columbia without previous communication
with the local authorities, and the question of establishing a Refinery
and Assay was regarded as a subordinate one to the larger scheme.

My Lords now learn by the despatches of Governor Douglas
of the 8th and 11th of April that, at that time, his
views were confined to the Establishment of a Government Assay
Office, as a measure of more immediate importance than the
institution of a Mint. It is hardly necessary to observe that
this proposition, being put forward as a substantive measure,
involves considerations differing essentially in character from
that first submitted to this Board.

It is not essential for the purposes of a Mint that a
Refinery should be attached to it, though probably in the case of
a Mint being established in a new Colony such an association
of distinct operations would be desirable; but, on the other
hand, My Lords are aware of no instance of a Refinery and Assay
having been carried on by Government, except in connection with
or substitution for a Mint. The reason for such a connection
is obvious, namely, that of ascertaining a process carried on under
the control of public authorities the quality of the Metal, to
which the stamp of coinage is to be affixed. It is of the nature
of a guarantee for the purity of the Coinage, which it might not
be safe to dispense with in the case of an infant community.
But the establishment of a Government Refinery and Assay
department, unconnected with a Mint, appears at first sight to
involve an encroachment on the proper limits of private
enterprize, which grave necessity could alone warrant: and My
Lords are not satisfied by the tenor of Governor Douglas'
observations that he has sufficiently mastered all the bearings
of the question to justify the adoption of his recommendation
without further enquiry. They observe that in both despatches
one of the principal advantages, which he anticipates from the
measure is that of "keeping the gold circulating in the Country."
My Lords would infer that this expression must have been
intended in some qualified sense not explained, as another object
on which the project is recommended is that of facilitating the
levying of an Export duty on gold, and they conceive that it must
be evident to every one that this metal can only be a source of
wealth to the country as a merchantable product; but when a
proposition of this nature is put forward, as a ground for an
important proceeding, their Lordships feel it right to remark on
its apparent inconsistency.

A more practical objection to the proposal arises from the
opinion expressed by Governor Douglas that "having an Assay Office
the Miner would only have to take his gold there, have it
assayed, and receive value for it."
*
It would appear from this passage that
the Governor contemplates that the proposed establishment should
undertake the operation of buying and selling gold. It is probable
that a trade of this nature is conducted by private Assayers,

**

and mutual advantage to the buyer and seller no doubt
arises from it; but the practice appears to My Lords to mark the
proper functions of a private undertaking as distinquished from
those of a Government Establishment: and the suggestion tends
to confirm them in their impression that a Refinery and Assay could
only be properly conducted by a Government Establishment, in
connection with a Mint for coinage.

My Lords are not surprised that in a thinly populated Country, in
which a source of Mineral wealth has been suddenly developed,
there should at first be some difficulty in organizing private
enterprize for the purpose of turning it to full account, but they
are persuaded that it would be a great error to attempt to
supersede such enterprize by the hasty assumption of trading
functions by the Government. It is only the circumstances that gold
constitutes a material for coinage which leads the State to
authenticate its value in any case; and apart from that consideration,
there is no reason for its interference in the assaying of Gold,
more than in the smelting of copper ore, or other Mineral products.
My Lords are satisfied that the opportunity afforded for the
profitable employment of capital will soon attract adventurers to
the Colony, and, although it may be difficult to induce
Assayers to transfer their Establishments from California to
Vancouver's Island, the want will be supplied from other sources.

Banking Establishments whose business it will be to deal in bullion,
***
will afford to the Miners an opportunity for the disposal
of their treasure. The Bank of British North America has proposed
to establish a branch in the Colony, and a new Banking Company of
London Capitalists has recently obtained a Charter for a like
purpose. The fair rivalry of respectable concerns of this nature
will afford a better guarantee to the Miner than the questionable
measure of a Government Establishment, fettered as it must be by
Government Regulations. For these reasons My Lords do not think
it advisable that any proceedings on the subject should be taken
in this Country, on the responsibility of Her Majesty's Government.
If further local experience should show the necessity for such
an Establishment,
**** their Lordships would not object to the
experiment being tried at the expense of the Colony: and they
think that, with the foregoing expression of their views, the matter
may be left to the discretion of the local authorities. It does
not seem to their Lordships that the interference of the Home
Government would be required except in the case of a Coinage.

I am, however, to observe that the despatch of Governor
Douglas enclosing a correspondence with the House of Assembly
at Vancouver's Island, respecting the Establishment of a Mint in
that Island which accompanies your letter of the 17th Ultimo,
opens a further view of the question. The recommendation that
the money to be coined in the proposed Mint, "shall be a decimal
currency of the same value as that of the United States of
America" may be considered as an answer to the enquiry contained
in the letter of this Board of the 27th of May, regarding
the character of the coinage to be adopted in case of the
establishment of a Mint. My Lords have no objection to offer
to the proposal and are willing that the question of the
Establishment of a Mint, in one or both of the Colonies in
question, should be treated as one to be determined by the
local authorities from a consideration of their own interests.
For the reason they have already given they are inclined to
doubt whether the benefits to be obtained from such an
Establishment would compensate for the expense, and they are
strongly of the opinion that, at any rate, one Mint would be
sufficient for both Colonies. They suggest that the Governor
should in case of the adoption of a proposal for the Establishment
of one Mint only, ascertain the views of both Colonies regarding
the best position of the Establishment for their Mutual benefit,
and report fully and in detail the arrangements which he would
propose for the purpose.

The conditions which My Lords would think necessary to require
are that (either in the case of one or two Mints) the Colonies
should undertake the whole expense of setting them up, and remit
as a preliminary measure a sufficient sum for the purchase of the
necessary Machinery etc. in this Country, according to the size
of the Mint which they may propose; that they should guarantee
the payment of any salaries which Her Majesty's Government may find
it necessary to offer to persons in this Country for the purpose
of securing an efficient Establishment; and that the Establishment
should be placed under the Control of the Master of Her Majesty's
Mint, and the Coins to be issued be regulated by Her Majesty in
Council in all respects conformably with the regulations adopted,
in the case of the Branch Mint at Sydney.

It is unnecessary that My Lords should enter into more
particulars in this stage of the matter, regarding the arrangements
to be adopted, as the published correspondence relating to the Establishment and working of the branch Mint at Sydney, which
have no doubt been communicated to the Governor, will give him
all the information necessary for his guidance.