No. 28, Financial

I have the honour to acknowledge the receipt of your
Despatch of the 5th January 1863 No 3, transmitting for my
information copy of a letter from one of the Agents General for Crown
Colonies in respect to the Loan of £50,000, recently contracted
by this Government.

2. In compliance with Your Grace's instructions, I forward
herewith a Return exhibiting the various details of information
required by Your Grace in respect to the manner in which the Loan
was disposed of.

3. I have perused the remarks of Mr Julyan upon the course
which was adopted with the view of immediately realizing of the
proceeds of the Loan. I do not doubt that under ordinary circumstances
the method suggested by Mr Julyan would have been found more
advantageous than that which was followed, but under the
circumstances existing I conceive the arrangement entered into
with the Bank of British Columbia was in every way advantageous. The
pressure upon me for money was urgent, I had no positive certainty
at the time the arrangement was made that the Act would be
confirmed. I could not therefore without previous intimation
have placed paper in the market that I was not satisfied would be met.
The paper of the Bank of British Columbia on the other hand I had every
reason to believe would be duly honored, and had the Loan
Act not been confirmed or had it been delayed through error in
form, the Bank would have become the creditors of the Government
at a rate of interest of one third less than money could have
been procured on the spot.

4. Mr Julyan is also mistaken in one or two of his assumptions.
Subsequent events have proved this. The negociation of the Vancouver
Island loan was not effected upon much better terms by the Agents
General, than the British Columbia Loan by the Bank of British Columbia. The minimum fixed by the
Bank was 103 1/2. At the first allotment £6000 was disposed of
at and above this price. The minimum fixed by the Agents General for
the Vancouver Island Debentures was 103 3/4: and at the first
allotment only £5900 were disposed of at and above that price. I
believe that since, the two Debentures command about equal rates.
I am inclined to think better rates would have been obtained for
the British Columbia Debentures had the Agents General abstained from
putting a notice in the Times, which I cannot but view as calculated to
create a feeling of uncertainty respecting the Loan which would
be prejudicial to it; and although so far as that Loan was
concerned in a money point of view, it might not affect this Government,
yet such a feeling with respect to the first Loan of the Colony
could not but be detrimental to the credit of the Colony and likely
to injure the negotiation of further Loans. The Drafts of the Agents
General could not have been disposed of in the Colony at any
better rates than the Drafts of the Bank of British Columbia. We
generally obtain the best rates for our Drafts from the American House
of Wells Fargo & Co the great Express Agents. A draft upon the
Agents General recently offered to them for sale on Vancouver Island
Account was questioned, and I believe objected to as they had no
knowledge of such paper. The drafts of the Bank of British Columbia
are readily taken
by them and command as high rates as the drafts upon Her Majesty's
Paymaster General. I merely mention those particulars to shew that,
however justly Mr Julyan may judge of matters from his point of
view in London, yet it is necessary to make allowance for local
circumstances before a full appreciation of the case can be arrived at.