No. 14

I have to acknowledge the receipt of your despatch No. 58 of the
15th of December last, requesting permission to extend the Loan for the
construction of Roads in British Columbia to £100,000.

The grounds alleged by you appear to Her Majesty's Government
sufficient to justify the proposed measure, and I shall therefore be
prepared to advise Her Majesty to confirm a Law similar to the British
Columbia Loan Act of 1862—for raising a further sum of £50,000 by loan
upon the security of the general revenue of the Colony.

In giving their sanction to this measure it must be clearly
understood that Her Majesty's Government do not undertake any
responsibility in respect of it, and that no Imperial guarantee is given
for either the interest or principal of the loan.

My despatch No. 150 of the 12th November will have placed you in
possession of the views of Her Majesty's Government on the subject of
the sale of Debentures issued under the act of 1862, and you will no
doubt adopt in the present instance the course which I then pointed out
by entrusting the Agents' General with the disposal of the securities.

I am desirous of receiving from you a statement showing the
application of the loan of 1862—and the arrangements with the
Contractors for the roads under which the guarantee of the local
Government was given for the sum advanced by the Bank of British
Columbia.

With respect to the two lines of Road now in the course of
construction, one from Lytton to Alexandria, and the other from Lilloet
to Alexandria, it appears to me that, looking to the great difficulties
to be surmounted, and to the fact stated by you that the Contractors for
the Lytton road had "signally failed" in fulfilling their
engagement, the more prudent course would be to suspend the construction
of one of the lines till the other was completed so as to afford access
to the diggings and settlements in the the interior.

You will furnish me with a report upon this subject, but unless
objections of difficulties exist with which I am not acquainted I should
wish you to act upon my suggestion by suspending the works on one of the
lines of Road.