No. 17

I have had the honor to receive Your despatch No. 89 of
the 11th November 1865, forwarding Copies of Letters from
 the Board of Trade and the Lords Commissioners of Her Majesty's
Treasury on the subject of the Customs Ordinance passed by the
Legislature of this Colony during the Session of 1865. You
inform me you cannot recommend the Ordinance to Her Majesty
for confirmation as it is contrary to precedent and unadvisable
in principle.

2. The work of the present Session is so far advanced that
it is my intention to prorogue the Legislative Council in a few
days. To attempt to alter the Customs Law without due and
sufficient notice would, I am informed by the Collector of Customs
be a serious disaster to commercial interests and would bring
Bankruptcy on the few merchants now resident in this Colony, as
all their arrangements have been made for the summer supplies
under the existing Tariff. I therefore propose to leave the
Ordinance in force until I have received instructions on the
several points I wish to bring before you and if Her Majesty's
Government are still of opinion that the principle of the
enactment is undesirable I shall then have sufficient time to
give due Notice of the alterations to be made.

3. The Lords Commissoners of the Treasury state that the
valuation of Articles subject to ad valorem duties, being reckoned
according to their value at the place of shipment, is so far as
their Lordships are aware without precedent in the Customs Laws
of British Possessions. To tell the inhabitants of this Colony,
where the Canadians form so considerable an element in our settled
population, that Her Majesty's Government cannot allow the
Ordinance to continue in force on this ground would be at once
met by a reference to the Customs Law of Canada from which the
principle of the present Ordinance was taken [marginal note:
Consolidated Statute, Canada, 22 Vic. Cap: 17, Sec. 24].

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4. The circumstances of the Colony have altered materially
since the discovery of the outlying Mines of the Kootenay District.
Previous to that time little or no trade came by way of our
Southern Boundary and New Westminster was the only declared Port
of Entry in the Colony. Now however there are three Ports of
Entry on our extensive Southern frontier—Osoyoos, in the
Similkomeen Valley, Fort Shepherd on the Columbia, and St
 Joseph's Prairie in the Kootenay District—in each instance 
consisting of a log hut, inhabited by a Revenue Officer and
Constable, with only an Indian Village within 80 or 100 miles.

5. Under the existing system goods entering the Colony by
these routes are charged duties on the value of the articles at
the Towns of Walla-walla and Colville, situated in Washington 
 Territory, the starting points whence supplies from the interior 
of the neighbouring States are forwarded for the British Columbian
Market. To carry out the suggestion conveyed in the Treasury
Letter and reckon the ad valorem duties at such Ports of Entry
would be difficult, if not impracticable, in the present early
stage of the Colony, while to take the average prices at New Westminster as the value to be charged on the frontier would give
the American Trader an undue advantage

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over the Merchants resident in this and the neighbouring Colony.

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6. It is not unnatural for the people of this Colony to
look to the Laws of Canada as a guide to their own Legislation
when the position of the two Colonies is so similar and their
future relations in all probability so intimate. I would therefore
beg leave to suggest that the principle of the Ordinance should be
allowed to continue but be so far amended as to give power to the
Executive, as in the Canadian Act, to provide that "goods bonâ
fide exported to this Province from any Country but passing in
transitu through another Country, shall be valued for duty as
if they were imported directly from such first mentioned Country."
This alteration would, I believe meet the objections raised last
spring to the enactment in Victoria, but I must add that any Change
 in the system now in force of collecting Customs Duties will be met
by the unanimous opposition of the unofficial Members of the
Legislative Council, and it would require distinct instructions
from me to prevent the Official Members from opposing an alteration
in a Law which has been found to work with advantage to the Colony.

7. Since writing the above I have received a Report from the
Attorney General copy of which I beg to forward.