No. 9

I have the honor to forward to Your Lordship the Colonial
Estimates for 1870 accompanied by a Report, from the Auditor
General, and all the Returns which appear to be required by the
Instructions contained in Your Despatch No 86, of the 18th
August last. I have been obliged to bestow much personal
attention and pains upon the preparation of these papers. They
would have been forwarded earlier but for the unfortunate
accident which still confines me a Prisoner in my bed. They are
now I hope nearly as accurate as it is practicable to make them
in this Government; but the great distance from Victoria of some
Districts prevents Returns from them being received in time to
be included and the Statements are therefore in some respects
necessarily only approximate.

2. The Financial position of the Colony is not satisfactory to
me. The Revenue appears to have been hitherto almost regularly
overestimated for several years, while annual Votes have almost
as regularly been exceeded. The result is a balance on the
current Bank Account to the Debit of the Colony on the 31st
December, amounting to $27,348, twenty seven thousand, three
hundred and forty-eight dollars, bearing compound Interest at 12
per cent per annum; while there are Loans outstanding, for the
most part overdue, and for the liquidation of which no provision
has been made, amounting to $291,632, two hundred and ninety one
thousand, six hundred and thirty two dollars more, and of which
the greater part bears interest also at twelve per cent—making
altogether the sum of $318,980—three hundred and eighteen
thousand, nine hundred and eighty dollars, or £65,768, sixty
five thousand, seven hundred and sixty eight pounds, which will
be found in the Statement of Liabilities under the head of
Temporary Loans. I annex a detailed Statement shewing the items
of which the total is composed.

3. It is not right that this debt should remain without
provision for its repayment. So long as they receive 12 per
cent the holders of the Debentures and the Bank of British
Columbia may not press for settlement; but they might do so at
any time, and in that case the Colony is without the means of
meeting its engagements. The Colonial Securities Company hold
more than one third of the Debentures. I have reason to believe
that they would take up the whole of this debt at six per cent
interest under new arrangements, guaranteeing the issue of the
loan at not less than 85 per cent, and probably better terms may
be obtained. But even at 85 per cent, if the Loan should be
payable in thirty years, the annual provision for interest,
sinking fund, and expenses of the loan would not amount to ten
per cent and such an arrangement would be far more advantageous
to the Colony than the present state of the finances.

4. Under these circumstances I propose to introduce an
Ordinance in the Legislative Council to authorize the
consolidation of the floating debt. I believe it to be unlikely
that we could raise a loan on better terms by advertizing for
Tenders in London just now, than may be obtained by private
negociation with the Colonial Securities Company, while much
time would be consumed by so doing, and the state of affairs on
the Continent may tend to raise the price of money in a few
months. Unless therefore Your Lordship should forbid my
proceeding by Telegraph, I shall assume your permission to make
such arrangements as the Council may concur with me in regarding
as desirable.