Hamilton to Merivale (Permanent Under-Secretary)

With reference to Mr Elliot's letter of the 18th
Ultimo, enclosing a despatch from the Governor of British
Columbia requesting that a Supply of Silver and Copper Coins
be paid for in Gold dust, may be forwarded to the Colony, I
am directed by the Lords Commissoners of Her Majesty's Treasury
to acquaint you, for the information of the Duke of Newcastle,
that My Lords would not object to direct a supply of British
Silver and Copper Money being forwarded to British Columbia, if
the requisition of Captain Gossett [Gosset] were not founded on views
which their Lordships consider inconsistent with the permanent
establishment of a sound Currency.

My Lords observe from the despatch of the Governor that the
inhabitants of the Colony have adopted the denomination of the
Money of the United States, viz: Dollars and Cents; and Captain
Gossett appears to consider that the coins of the United Kingdom
may be accommodated to this practice by the adoption of a
decimal system founded on the florin as the 10th part of a
pound. The sole practical reason which he advances for this
opinion is that the florin commonly passes in the Pacific as the
Equivalent for half a dollar of the United States; and he hence
concludes that the 10th part of a pound sterling and half a
dollar of United States Currency are equivalent. It is no
doubt true that in communities which have no established currencies
supported by a well defined coinage and in which coins of
different denominations and value are used as a common circulation,
a rough and conventional relative valuation is often resorted to
which may smooth over immediate difficulties, but it is no less
certain that such expedients if inconsistent with the principles
which regulate the intrinsic relative value of currency must, if
adopted as the basis of a permanent settlement, in the end lead
to confusion and difficulty.

The standard of value both in this Country and the United
States is gold, and any attempt to bring the coins of the two
Countries into concurrent circulation must be founded on a
comparative valuation derived from the contents of precious metal
contained in the coins which form the basis of the currency in each
country. The contents or pure gold in the Eagle of 10 dollar piece
being 232 2/16 grains, and those in the sovereign being 113.001 grains,
it follows that the value of the Eagle, expressed in the denomination
of British Money, is £2.1.0 and an inappreciable fraction. The
florin, being a token coin, can only obtain permanent circulation
as representing a fractional part of its superior denomination,
the pound sterling, that is, as representing 2/s or 1/10 of a pound
sterling, and, as such, it is undervalued

*

to the extent of 2 1/2 per
cent when it is adopted as the representative of half a dollar or 1/20
of a Gold Eagle. It is obvious that a scheme of currency founded on
this error could obtain no permanence.

It was, at one time, as the Duke of Newcastle is aware, the
anxious desire of this Board to procure the assimilation of the
various local currencies of the British North American Colonies
by the general adoption of the denomination of the British Money of
Account, supported by British Coins representing them. It would
be instructive to the Treasurer of British Columbia if he were
informed, by a reference to the correspondence which passed
between the Home Government and those Colonies, especially
Canada, of the reasons which led Her Majesty's Government to
abandon that project, and to acquiesce in arrangements for the
settlement of the currencies of the several Colonies on different
bases, varying with the apparent requirements of local convenience.
He will learn that in the case of Canada after the adoption of a
pound currency which assimilated in its integration with the
currency of the United States, the pound local currency being made
equivalent to 5 United States Gold dollars, great difficulty was found
in working the concurrent circulation of British Shillings and other
smaller token coins, because they represented no exact proportion
of the pound currency, and the fractional differences of value
(which Capt Gossett disregards in the florin) led to an
arbitrary and varying adjustment, which exposed the purchaser to loss
and inconvenience. He will learn also that all these

**

difficulties
were at last removed by the adoption of a decimal system assimilating
with that of the United States, but supported by a special token
coinage which gives the advantage, which Capt Gossett does not overrate, of maintaining a circulation of coins bearing the Queen's
Effigy, the emblem of her authority.

My Lords incline to the opinion that the wisest course to be
adopted in the case of the currency of British Columbia will be to
assimilate it to that of Canada, with which colony it will doubtless
be brought eventually into close intercourse. Whatever may be
considered, in the abstract, the best system of currency for British
North America, experience has proved that no general theories will
have any weight with the several Communities of which it is composed,
and that the currency of each colony must be adapted to the demands
of local convenience.

It would be in vain to hope that, whatever may be the future
development of British Columbia, the measures which may now be adopted
with respect to its currency will have the slightest influence on
the arrangements of the older Colonies, and My Lords are of opinion
that instead of attempting to frame schemes founded on individual
preferences and imperfect information, the local Government should
endeavour to ascertain the fixed desires of the Community on the
subject and inform themselves of the best means of giving effect
to them, without derogation of sound principle and farseeing policy.

If, notwithstanding Capt Gossett's
object, the Duke of Newcastle should think
it desirable to send out
a supply of British Silver to British Columbia, My Lords will give directions to the
Master of the Mint for the purpose. But in that case it will
be necessary to decide on the description of Coins to be sent
with reference to the immediate requirements of the Colony,
and also to consider whether a supply of copper coin should not
also be forwarded. The doubt on the subject arises from the
fact, mentioned by the Governor of British Columbia, that the
currency of dollars and cents is generally adopted by the
Community, and as British token money cannot permanently
circulate as representing the denomination of dollars and
cents, the transmission of such coins might only procure
immediate convenience at considerable cost.

It may be better on this account to pause until the basis of
the future currency of the Colony is settled, when coins
adapted to it may be supplied.

As regard the suggestion that the cost of any coin that may be
transmitted should be paid for by the transmission of gold dust,
My Lords must decline the proposal as inadmissible, because the Royal
Mint does not deal in gold bullion, its function in respect to
the Coinage of Gold being confined to receiving that Metal in a
condition fit for coinage and returning the same quantity in a
coined state.

Their Lordships have the less regret in declining this proposal,
because they can hardly think that the receipt of gold dust of the
value of £6000 at the Royal Mint would create any appreciable effect
on forwarding what appears to be the main object of the Local
Government in suggesting this mode of payment.