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REPORT Of the Honourable the Executive Council on the subject of the proposed advance by the Dominion… British Columbia. Legislative Assembly 1877

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 40 Vic. Graving Dock. 357
REPORT
Of the Honourable the Executive Council on the subject of the proposed advance
by the Dominion Government of $250,000 in lieu of the guarantee of five per
cent, per annum on .£100,000 for ten years, for the construction of a Graving
Dock at Esquimalt, approved by His Excellency the Lieutenant-Governor
on the 31st January, 1877.
By Command.
A. C. ELLIOTT,
Provincial Secretary.
Provincial Secretary's Office,
21st February, 1877.
26  40 Vic. Graving Dock. 359
Copy of a Report of a Committee of the Honourable the Executive Council, approved by
Mis Excellency the Lieutenant-Governor on the 81st day of January, 1877.
On a Memorandum from the Honourable the Attorney-General, reporting in
relation to the advance, by way of bonus, of £50,000, agreed to be paid by the
Dominion Government to the Province of British Columbia, in lieu of the guarantee of 5 per cent, per annum for 10 years on £100,000 sterling, for the construction of a first-class Graving; Dock at Esquimalt.
1. That, owing to the tenor of the Report of the Committee of the Plonourable
the Privy Council, of the 29th May, 1876, and subsequent correspondence, it is
advisable to recapitulate the circumstances relating to the agreement by the
Dominion Government to grant to the Provincial Government the sum of £50,000,
as a bonus, in lieu of the guarantee for 10 years on £100,000, as mentioned in the
first paragraph of this report, with a view to the matter being reconsidered by the
Dominion Government, and a decision arrived at in accordance with the views of
the Local Government.
2. That, by the 12th Article of the Terms of Union, it is provided,—
" 12. The Dominion Government shall guarantee the interest for ten years from the
" date of the completion of the works at the rate of five per centum per annum, on such
" sum, not exceeding £100,000 sterling, as may he required for the construction of a
" first-class graving dock at Esquimalt."
3. That, towards the end of 1873, the then Government finding that little hope
remained of the dock being built by private enterprise, decided to undertake the
work themselves, and passed an. Order in Council, dated 20th September, 1873
(Appendix A), empowering the President of the Executive Council to act as a
delegate to negotiate with the Government of the Dominion on certain matters,
and, amongst other things,—" That the Dominion Government pay in cash $250,000
" in lieu of the guarantee of five per cent, per annum for 10 years on £100,000
<' sterling, for the construction of a first-class graving dock at Esquimalt."
4. That, in pursuance of this authority, the President of the Executive Council
proceeded to Ottawa, and placed himself in communication with the Dominion
Government, in order to carry out the above object.
5. That the letter marked B, appended hereto, proposing that the Provincial
Government should construct the dock if the Dominion Government would pay to
the Province the sum of $250,000, in lieu of the guarantee, was addressed by the
said delegate to the Secretary of State, and his acknowledgment thereto is hereto
appended, marked C.
6. That, on the 3rd November, 1873, Mr. Tilley, then Finance Minister, wrote
to the said delegate (Appendix D) stating that "I have consulted my colleagues, and
" we are prepared to submit to Parliament a proposition to the following effect:—
"That in lieu of the interest on £100,000 for 10 years, which was secured by
" the 12th Section of the Order in Council of July 1st, 1870, we propose that
"advances should be made to you, from time to time, upon certificates of the
"progress of the work, not on the whole to exceed £50,000 sterling."
7. This Government contend that the word "advance" is used merely to provide
against a demand on the part of the Provincial Government for the £50,000 to be
paid in a lump sum; but only to be advanced from time to time on that account, on
certificates of work clone. If no .doubts existed in Mr. Langton's mind that the
intention of the Dominion Government was that the £50,000 was to be a gift, is it
unreasonable that the Government of this Province should take a like view.    The 360 Graving Dock. .   1877
judgment of any impartial tribunal would of necessity be that the intention of the
Dominion Government was clear, and, putting aside all special pleading, really
amounted to the promise of the money as a gift.
8. That it will be seen by the report of the delegate laid before the Provincial
Legislature (Appendix E) that, after the resignation of the Macdonald Ministry,
the present Premier of Canada agreed to submit a measure to Parliament in order
to carry out the proposal, or some scheme equivalent thereto (Appendix F), and it
will be observed, endorsing the proposition contained in Mr. Tilley's letter of 3rd
November.
9. That, in accordance with this promise, a Bill was submitted to Parliament
by the Dominion Government in the Session of 1873 (Appendix G), which said
Bill contained at the end of Section one the words " and to be considered as part of
"the indebtedness of the Province in calculating the subsidy payable to it."
10. That in the Act itself passed in the Session of 1874, 37 Vic, cap 17 (Appendix H), the above words are not to be found, a strong argument, it is submitted,
against the contention that the advance was to be in the nature of a loan.
11. That on the Dominion Government declining to carry out their agreement
entered into respecting the bonus, on the ground that the advances were to be
made in the nature of a loan, the delegate who carried out the negotiations addressed enquiries to members of the cabinet who were parties to the agreement, and
requesting their views on the subject.
12. These enquiries, and the replies thereto, are hereto appended and marked
respectively I, J, K, L, M, N.
13. It appears from the memorandum of the Dominion Auditor, Mr. Langton,
(Appendix 0), that the question was submitted to him, and, in the first paragraph,
he says that Mr. Tilley's letter of 28th May, and especially his telegram of 3rd June,
and Mr. Langevin's letter of June 1st, seems to leave no doubt that it was the intention of the late Government that the £50,000 was to be a gift, but he reports,
with strange inconsistency, against the money having been promised as such.
14. Mr. Tilley, a member of the Government with whom the arrangement was
made, being applied to for his explanations, states in his telegram (Appendix J),—
"Langton misunderstood arrangement;" and again, in his letter of 28th May
(Appendix K), he states that "the £50,000 agreed to be advanced to the Govern-
" ment of British Columbia towards the Graving Dock, was in lieu of the facilities
"secured for that purpose under the Terms of Union, and I cannot see how there
" could be any misunderstanding in the matter, as my letter of 3rd November,
"1873, appears sufficiently definite, and the Act just passed cites the conditions in
" the first section." And again, in answer to the question as to whether the money
promised was to be a gift, he states (Appendix M) " £50,000 sterling was not to be
" charged to debt, but given in lieu of guarantee for Graving Dock. Thought my
"letter explicit."
15. Mr. Langevin, also a member of the Government with whom the arrangements were made, states distinctly in his letter of the 1st June, 1874 (Appendix N),
in answer to enquiries: "I have no hesitation to say that the Government to which I
" I belonged promised to grant to British Columbia, as a bonus, the sum of £50,000
" sterling, in lieu of the guarantee contained |in the 12th Section of the Terms of
"Union," and points out very forcibly the reasons which led to [the promise being
given, namely :—"We were convinced that British Columbia could not build their
" Graving Dock with that guarantee, and, inasmuch as the intention of both parties
" to the Terms of Union was to secure that Graving Dock, we thought it but just to
" replace it by such a sum as would secure it to your Province, British Columbia
" and Great Britain contributing their share, or British Columbia supplementing " the balance." And he remarks in the same communication " Of course this sum
"of £50,000 sterling was not to be an advance of money, but a bonus in place of the
"guarantee. "We knew we would have to obtain the sanction of Parliament to such
" an arrangement, and we told you we would do so. I am very positive about these
"negotiations, inasmuch as I was conducting them chiefly, previous to the return
" of Mr. Tilley from England."
16. That, upon the the faith of the arrangement entered into being carried out,
representations were made to the Imperial Government, and they were induced to
promise a sum of £50,000 towards the construction of the Graving Dock.
17. That, on the 13th April, 1876, an Order in Council was passed by this
Government (Appendix P), setting forth that the sum of $50,655 50 had been expended by the Lands and Works Department of British Columbia on the Dock, and
requesting payment by the Dominion Government of that sum, under the provisions
of the Act 37 Vic, cap. 17, as an instalment of the sum of $250,000.
18. That, on the 5th May, 1876, the Secretary of State replied by telegraph
''Appendix Q), asking if this Government preferred to have advance charged against
balance of debt or to have interest deducted from ordinary subsidy.
19. That, on the 6th May, this Government sent the telegram in reply (Appendix
Ii), stating that this Government understood money to be received as a grant in
aid, similar to the like amount promised by Imperial Government.
20. That, on the 18th May, 1876, a telegram (Appendix S) was received from
the Secretary of State, stating that Canada would either guarantee interest as in
Terms of Union, or make advance under Dominion Act, 1874; in latter case, interest
to be charged against balance of debt or subsidy.
21. That, on the 29th May, 1876, the Eeport of the Privy Council (Appendix T),
referred to in the first paragraph of this Report, was passed, wherein it is stated
that it is not in the power of the Dominion Government to make a gift of the said
sum of $250,000.
22. That, on the 22nd July, 1876, this Government passed an Order in Council
(Appendix U), setting forth that the views of this Government are and have been
consistently at variance with those expressed in the said Minute of the Privy
Council of the 26th May, 187f;, and stating their willingness to submit the case at
the proper time to any competent and impartial tribunal, and advising that application should be made to the Dominion authorities for the said sum of $250,000,
subject to the adjustment hereafter of the. question now at issue.
23. To this reasonable proposition no answer was returned.
24. On the 21st October, after an interval of three months, a telegram was sent
to Mr. Scott, the Secretary of State (Appendix V), asking for a reply.
25. This, likewise, failing in its object (not even having induced an acknowledgment by the Secretary of State to the continued appeals from the Local Government
for a settlement of the question, a question of such vital interest to the Province, to the
Dominion, and to the Imperial Governments), we were obliged at last to appeal to
the Premier himself, in order that he might direct a reply to be given to our repeated solicitations (Appendix W). This, ultimately, elicited from the Secretary of
State a telegram (Appendix X), which states that the Government had no authority
to do more than advance the money in mode proposed in telegram of 18th May last.
26. The Dock being of quite as much importance to Imperial and Dominion,
as to Provincial interests, the construction thereof it is submitted ought not,
in simple justice, to be left a charge upon the unaided resources of the Province.
The Imperial Government recognizing the importance of the work to Imperial
interests have promised £50,000 upon the completion of the work; but this sum 862 Graving Dock. 1877
will not be available during construction. The present Dominion Government,
notwithstanding the positive assurance of some of their predecessors in office to the
contrary, stand on the assumption that the agreement entered into, in lieu of the
12th section of the Terms of Union, was intended as a loan simply. Having
full confidence in the good faith of the Dominion Government carrying
out the promise to advance £50,000 in aid of the Dock on the terms originally
agreed upon, the Provincial Government entered upon an undertaking, the importance of which cannot be over estimated to the Dominion as well as to the Province,
but which must, nevertheless, if left to the Province alone to build, prove a burthen
difficult to be sustained. Already the large sum of $98,000 has been expended,
and in addition thereto liabilities to a considerable amount have been incurred.
27. As a question of simple equity, and apart from the construction which the
Dominion Government allege it is possible to place upon the wording of the agreement, it is submitted that the Dominion, in common with the Imperial and Provincial
Governments, ought to contribute their quota towards this work, which is of
acknowledged national importance.
28. While still contending that the views expressed by this Government are
correct as to the construction to be placed upon the promise of the Dominion
Government to advance the said sum in lieu of the said guarantee, yet we are
willing to abide by the proposition contained in said Order in Council of the 22nd
July, 1876.
The Committee concur fn the foregoing report and submit the same for Your
Excellency's approval, and recommend that a copy of this Minute be transmitted to
the Honourable the Secretary of State for Canada.
Certified,
(Signed)       Wm. Smithe,
Minister of Finance and Clerk Executive Council.
APPENDICES.
A.
Copy of a Report of a Committee of the Honourable the Executive Council, approved by
His Excellency the Lieutenant-Governor on the 20lh day of September, 1873.
On a memorandum, dated 17th September, 1873, from the Hon. the Minister of
Finance, reporting on a recommendation from the Hon. the Chief Commissioner of Lands
and Works, in which he states that many Public Works, which he enumerates, are
required in this Province, and recommends that one million of dollars be provided for
their construction.
•). ;|e * =fe '       * ' * * * * * *
That the Dominion Government pay in cash $250,000 in lieu of the guarantee of 5
per cent, per annum interest for ten years on £100,000 sterling for the construction of a
first-class Graving Dock at Esquimalt.
5|; # * * * * * * * * *
The Minister of Finance therefore recommends that the Hon. the President of the
Executive Council be empowered to negotiate with the Governments of the Dominion
*       *       *      and that he be authorized to proceed at once to Ottawa       *       *
to that end, and that he report the result of his mission       * * * *
The Committee advise that the recommendation be approved.
(Certified)       W. J. Armstrong,
Clerk, Executive Council. 40 Vic. Graving Dock. 363
B.
Ihe Honourable Mr. De Cosmos to the Secretary of State for Canada.
Ottawa, 25th October, 1873.
Sir,—I have the honour to submit for the consideration of the Dominion Government the following statement and proposition, respecting the construction of the proposed
Graving Dock at Esquimalt.
When the Terms of Union between the Dominion of Canada and British Columbia
were framed, the early construction of a first-class Graving Dock at Esquimalt was
deemed to be essential in order to advance the maritime interests of the western portion
of the Dominion, and, also, to aid in making the harbour of Esquimalt the permanent
Naval head-quarters of Her Majesty's Fleet in the North Pacific.
In order to attain that end, the guarantee in Section 12 of the Terms of Union was
offered by the Dominion and accepted by British Columbia,—both of the contracting
parties believing that it would induce private enterprise to undertake the construction
of the Dock.
Accordingly, the Provincial Government called for tenders in Canada, England, and
the United States; but none were received, except from one party, who sent in three
alternative tenders. The one deemed to be most favourable, asked for a guarantee of
seven per centum per annum on £130,000 sterling for twenty-five years. This the
Provincial Government refused to accept, owing to the Dominion guarantee being too
low ; and as matters now stand, there is no hope whatever of private enterprise building
the Dock.
Peeling the importance of its early construction, the Provincial Government have
decided to construct it as a Provincial public work, if the Dominion and Imperial
Governments will render such reasonable assistance as will warrant the undertaking.
It proposes, therefore, to construct the Dock, if the Dominion Government will pay
to the Province the sum of two hundred and fifty thousand dollars ($250,000), in lieu of
the guarantee in Section 12 of the Terms of Union, or such sum as may be realized by
capitalizing the Dominion guarantee, and such other sum as will make the total grant
$250,000. Provided, further, that the Dominion Government will use its influence to
induce the Imperial Government to grant $250,000 in aid of its construction, as a loan
to the Province for twenty-one years, at a rate of interest not exceeding four per centum
per annum, without sinking fund, secured either upon the Dock, the Dominion subsidy,
or upon the Consolidated Revenue of the Province, or upon all three; and in addition,
that it will urge upon the Imperial Government the importance of encouraging the
Provincial Government to undertake the construction of the Dock, by granting to the
Province a sum not exceeding £2,000 a year for twenty-one years, to be repaid from
time to time by docking Her Majesty's ships.
I have, &c,
(Signed)       A. DeCosmos.
Special Agent and Delegate of British Columbia.
c.
7he Secretary of State for Canada to the Honourable Mr. DeCosmos.
Department or the Secretary op State,
Ottawa, 29th October, 1873.
Sir,—I have the honour to acknowledge the receipt of your letter, of the 25th
instant, submitting, for the consideration of the Dominion Government, a certain statement and proposition respecting the construction of a proposed Graving Dock at
Esquimalt, and to inform you that the subject will receive the consideration of the
Government.
I have. &c,
(Signed)       J. C. Aikins,
Secretary of State, 364 Graving Doek. 1877
D.
The Honourable Mr. Tilley to the Honourable Mr. DeCosmos.
Ottawa, November 3rd, 1873.
Dear Sir,—With reference to the conversation I had with you, respecting the
Dominion aid towards the Graving Dock, and your application to the Minister of Public
Works upon the subject, 1 have consulted my colleagues, and we are prepared to submit
to Parliament a proposition to the following effect:—
That in lieu of the interest on £100,000 for ten years, which was secured by the
twelfth section of the Order in Council of July 1st, 1870, we propose that advances
should be made to you from time to time upon certificates of the progress of the work,
not on the whole to exceed £50,000 sterling. I have, &c,
(Signed) S. L. Tilley.
E.
To Sis Excellency the Honourable Joseph W. Trutch,
Lieutenant- Governor of British Columbia, &c, &c.
Sir,—1 have the honour to report that, in accordance with my appointment as
Special Agent and Delegate of your Government to make arrangements with the Dominion
and Imperial Governments to secure funds in aid of the construction of a first-class
Graving Dock at Esquimalt, * * * I left Victoria on September 23rd last,
and proceeded as rapidly as possible to Ottawa, where I arrived early in October.
Immediately after my arrival there, 1 placed myself in communication with the
Dominion Government in order to carry out the objects of my mission.
I was informed that with respect to aid for constructing the Graving Dock * *
I should have to wait until the return of Mr. Tilley, Minister of Finance, then absent in
England.
Subsequently, I addressed the letter marked BB (marked B in this Order) respecting the Graving Dock * * * to Mr. Aikins, Secretary of State for Canada, and
received his acknowledgment, marked DD (C in this Order).
On his return, about the commencement of the last session of Parliament, an arrangement was made by which the Minister of Finance, on behalf of the Dominion Government, agreed to submit to Parliament a measure to give this Province £50,000 sterling
as a bonus in lieu of the guarantee in the Terms of Union of interest at 5 per cent, per
annum on £100,000 for ten years in aid of the construction of a first-class Graving Dock
at Esquimalt. The money was to be advanced from time to time on certificates of the
progress of the work. The letter of Mr. Tilley, respecting the arrangement, was mislaid
in the office of the present Minister of Public Works at Ottawa, but I have telegraphed
to him to forward a copy from the Finance Department.
After the resignation of the Macdonald Ministry, I considered it advisable to ask
their successors to confirm the arrangements made with the late Government respecting
the dock bonus    *       *    .
Without entering into minute details of the negotiations with the new Ministry, 1
have much pleasure in stating that Mr. Mackenzie, Premier of Canada, agreed to submit
a measure to Parliament to grant as a bonus £50,000 sterling to this Province in lieu of
the guarantee in Section 12 of the Terms of Union. His letter to this effect, marked B,
accompanies this report.
As a matter of record, it may be here stated that the nature of the guarantee, in
Section 12 of the Terms of Union respecting the Graving Dock, was considered during
the negotiations with Mr. Mackenzie; and that the decision was that the £50,000 sterling,
in lieu of the guarantee of interest in Section 12 of the Terms of Union, should be given
to the Province as a grant or bonus, and was not to be charged as a debt against the
Province.        ^^k^^^^^^k
I have &c,
(Signed) A. DeCosmos.
Victoria, B. 0., February 2nd, 1874. 40 Vic. Graving Dock. 365
P
The Honourable Mr. Mackenzie to the Honourable Mr. DeCosmos.
Ottawa, 14th November, 1873.
My Dear Sir,—With reference to the proposal you submitted on behalf of the
Government of British Columbia, viz., to advance £50,000 to aid in the construction of a
Graving Dock at Esquimalt, in lieu of the guarantee of interest at 5 per cent, on £100,000
for ten years provided by the Terms of Union, I have to say that any change in the
mode of aiding in the construction of this work, from that agreed to, will require the
sanction of Parliament.
I can only say, at present, that the Government will submit a measure to Parliament
to carry out your proposal, or some scheme equivalent thereto.    I am, &c,
(Signed) A. Mackenzie.
H
G.
[As Introduced.]
An Act to authorize the advance of a certain sum to the Province of British Columbia,
for the construction of a Graving Dock at Esquimalt, and for other purposes.
ER MAJESTY, by and with the advice and consent of the Senate and House of
Commons of Canada, enacts as follows:—
1. In lieu of the guarantee of interest at the rate of five per cent, per annum for ten
years from the completion of the works, on such sum not exceeding one hundred thousand pounds sterling, as may be required for the construction of a first-class Graving
Dock at Esquimalt, as provided by the terms of the Order of the Queen in Council for
the admission of British Columbia into the Union, advances may be made from time to
time by Governor in Council out of the Consolidated Revenue Fund, for the construction
of such Graving Dock, upon certificates of the progress of the work; such advances not
to exceed in the whole two hundred and fifty thousand dollars, [and to be consid
ered as part of the indebtedness of the Province in calculating the subsidy payable to it.]
2. The Governor in Council may in his discretion advance from time to time to any
Province of Canada, such sums as may be required for local improvements in the Province,
and not exceeding in the whole the amount by which the debt of the Province for which
Canada is responsible then falls short of the debt with which the Province was allowed
to enter the Union; such advances to be deemed additions to the debt of the Province,
with permission to the Province to repay them to Canada, on such notice, in such sums
and on such other conditions as the Dominion Government and that of the Province
may agree upon; any amount so repaid being deducted from the debt of the Province
in calculating the subsidy payable to it.
H.
[As Passed.]
37 Vic.  Cap,  17,  1874.
An Act to authorize the advance of a certain sum to the Province of British Columbia,
for the construction of a Graving Dock at Esquimalt, and for other purposes.
HER MAJESTY, by and with the advice and conseut of the Senate and House of
Commons of Canada, enacts as follows:—
1. In lieu of the guarantee of interest at the rate of five per cent, per annum for ten
years from the completion of the works, on such sum not exceeding one hundred thousand pounds sterling, as may be required for the construction of a first-class Graving
Dock at Esquimalt, as provided by the terms of the Order of the Queen in Council for
the admission of British Columbia into the Union, advances may be made from time to
time, by the Governor in Council out of the Consolidated Revenue Fund, for the construction of such Graving Dock, upon certificates of the progress of the work; such advances not to exceed in the whole two hundred and fifty thousand dollars. 366 Graving Dock. 1877
2. The Governor in Council may in his discretion advance from time to time to any
Province of Canada, such sums as may be required for local improvements in the Province,
and not exceeding in the whole the amount by which the debt of the Province for which
Canada is responsible then falls short of the debt with which the Province was allowed
to enter the Union; such advances to be deemed additions to the debt of the Province,
with permission to the Province to repay them to Canada, on such notice, in such sums
and on such other conditions, as the Dominion Government and that of the Province
may agree upon; any amount so repaid being deducted from the debt of the Province in
calculating the subsidy payable to it.
Russell House,
Ottawa, June 5th, 1874.
Sir,—I have been requested by the Hon. A. J. Smith, Minister of Marine and
Fisheries, to forward to you for the consideration ot the Government the enclosed papers
explanatory of negotiations between the late administration of the Dominion and myself
on behalf of the Government of British Columbia respecting the graving dock referred
to in Section 12 of the Terms of Union.
The enclosed papers are as follows, viz:—
1. Telegram dated Fredericton, N. B., May 29th, 1874, from Gov. S. L. Tilley to A.
DeCosmos.
2. Letter dated Fredericton, N. B., May 28th, 1874, from Gov. S. L. Tilley, to A.
DeCosmos.
3. Copy of telegram dated Ottawa, June 2nd, 1874, from A. DeCosmos to Gov. S. L.
Tilley.
4. Telegram dated St. Andrews, N. B., June 3rd, 1874, from Gov. S. L. Tilley to A.
DeCosmos.
5. Letter dated Quebec, June 1st, 1874, from the Hon. H. L. Langevin to A.
DeCosmos.
The above papers are forwarded to you with the understanding that they will be
returned to me; but the Government is at liberty to make and keep copies of them. One
object in communicating these papers to the Government is to afford proof that Mr.
Auditor Langton misinformed Mr. Mackenzie, when he stated that the arrangement
was that the £50,000 sterling was to be charged to the debt of British Columbia; the
other is to move the Government to communicate to me as a matter of public record its
intention to pay to British Columbia the £50,000 sterling as a bonus in aid of the construction of Esquimalt Dock, in lieu of the guarantee in Section 12 of the Terms of Union.
Hon. Mr. Scott, Secretary of State, Ottawa.
I am, &c,
(Signed) A. DeCosmos.
J.
(Copy of Telegram.)
Fredericton, N. B., May 29th, 1874.
Answer mailed yesterday, Langton misunderstood arrangement.
(Signed) S. L. Tilley,
To Hon A. DeCosmos, M. P., Ottawa. 40 Vic. Graving Dock. 367
E.
(Copy.) Government House,
Fredericton, May 28th, 1874.
Dear Sir,—In reply to your communication of the 23rd instant, 1 beg to state that
the £50,000 sterling agreed to be advanced to the Government of British Columbia,
towards the graving dock, was in lieu of the facilities secured for that purpose under the
terms of Union, I cannot see how there could be any misunderstanding in the matter, as
my letter of the 3rd November, 1873, appears sufficiently definite, and the Act just
passed cites the conditions in the first section.
I have the honor to be, dear Sir,
Yours faithfully,
The Hon. A. DeCosmos, M. P., Ottawa.
(Signed) S. L. Tilley.
L.
(Copy of Telegram.)
Ottawa, June 2nd, 1874.
Your letter of May 28th and telegram of May 29th, received, and I understand them
to mean that the £50,000 sterling, promised to be advanced in aid of the construction of
a graving dock at Esquimalt, was to be a gift to British Columbia in lieu of Section 12
of the Terms of Union.    Is that your meaning?
(Signed) A. DeCosmos.
To His Excellency Gov. S. T. Tilley, Fredericton, N. B.
M.
(Copy of Telegram.)
St. Andrews, June 3rd, 1874.
£50,000 sterling was not to he charged to debt, but given in lieu of guarantee for
graving dock.    Thought my letter explicit.
(Signed,) S. L. Tilley.
To Hon. A. DeCosmos.
TS.
(Copy.) Quebec, June 1st, 1874.
My Dear Mr. DeCosmos.—Your letter of the 29th of May, has just reached me. In
answer 1 have no hesitation to say that the Government to which I belonged promised
to grant to British Columbia, as a bonus, the sum of £50,000 sterling, in lieu of the guarantee contained in the 12th Section of the Terms of Union. We were convinced that
British Columbia could not build their Graving Dock with that guarantee, and inasmuch
as the intention of both parties to the Terms of Union was to secure that Graving Dock,
we thought it but just to replace it by such a sum as would secure it to your Province,
British Columbia and Great Britain contributing their share, or British Columbia supplementing the balance. Of course, this sum of £50,000 sterling was not to be an
advance of money, but a bonus in place of the guarantee. We knew we would have to
obtain the sanction of Parliament to such an arrangement, and we told you we would do
so I am very positive about all these negotiations, inasmuch as I was conducting them
chiefly previous to the return of Mr. Tilley from England. I hope the above will prove
satisfactory, and remain, my dear Mr. DeCosmos,
Yours very truly,
(Signed) Hector L. Langevin,
Son. A. DeCosmos, M. P., Russell House, Ottawa. 368 Graving Dock. 1877
O.
Memorandum upon the advance proposed to be made to British Columbia on
account of the Graving Dock.
I have gone carefully over the correspondence upon the subject submitted to me.
The letter of Mr. Tilley, of 28th May, and especially his telegram of 3rd June, and Mr.
Langevin's letter, of June 1st, seems to leave no doubt that it was the intention of the
late Government that the £50,000 was to be a gift jto British Columbia, but there is
nothing on record in the Department shewing this to have been the intention, and it has
surprised me a good deal, and is the first intimation I have had of such an intention.
The papers connected with the ajjplication were sent from the Secretary's Office to
Council, May, 18th, and Mr. Cote believes that they were given to Mr. Cartwright, but
I have not been able to find them. I, however, recollect the substance of them very
well. There were two distinct letters from Mr. DeCosmos of the same date (Oct. 28th,
I think). The one applied for an advance of £50,000, in place of the Government
guarantee provided for at Union, upon receiving which the Province would undertake
the work as a Provincial work. The other asked for advances, by way of loan for
public works generally.     Mr. Tilley conferred with me on this latter application, and I
drew the report upon which the O. C. of was based, which was subsequently
cancelled, and the impression upon my mind was that this was the reply to both applications. In this it seems that I am mistaken, but there is nothing in the nature of the
transaction to imply that anything in the nature of a free gift was either asked for or
promised. The application was for an advance of money instead of the promised guarantee.
That guarantee was to be 5 per cent, on £i00,000 for ten years, so that if we had had
to pay the interest under our guarantee we should have advanced at the end of the 10
years £50,000, the sum which we are asked to advance at once, instead of by instalments
during the ten years. But to guarantee the interest on a loan does not imply that that
interest is to he regarded as a free gift. In all such cases, though the guarantor may
have to pay in the first place he can recover from the party on whose behalf he gave
the guarantee. I believe that if we had given such a guarantee, and had been called
upon to pay under it we should have had a right to charge it annually against the
subsidy, or as a matter of grace in the debt account. Mr. Tilley's answer of Nov. 3rd,
to the application would seem to imply the same thing. He says:—"In lieu of the
"interest on £100,000, which was secured by the 12th Section of the O. C. of July 1st,
" 1870, we propose that advances should be made from time to time, not on the whole to
" exceed £50,000." The ordinary meaning of an advance is certainly something- that
has to be repaid. Mr. DeCosmos certainly, in his letter to the Admiralty of Dec. 6th,
uses words which would seem to imply a gift. He says that the Provincial Government will recommend the Legislature to accejJt from Canada the lump sum of $250,000
in lieu of the payments to be made by it during a series of years, but I submit that
neither the 12th Section of the O. C. of 1870, nor Mr. Mackenzie's letter of Nov. 14th, to
which he refers, bears such an interpretation.
(Signed) John Langton,
June 8th. Auditor.
Copy of a Report of a Committee of the Honourable the Executive Counil, approved by
His Excellency the Lieutenant-Governor on the 13th day of April, 1876.
Upon a Memorandum from the Honourable the Chief Commissioner of Lands and
Works, in relation to the Graving Dock at Esquimalt, stating that by Section 1, of Cap.
17, 37 Vic, of the Statutes of Canada, it is provided that—"Advances may be made
"from time to time by the Governor in Council, out of the Consolidated Revenue Fund,
"for the construction of such Graving Dock, upon certificates of the progress of the
" work, such advances not to exceed in the whole two hundred and fifty thousand
"dollars." 40 Vic.
Graving Dock.
369
That the sum of fifty thousand six hundred and fifty-five dollars and fifty cents
0,655 50) has been expended by the Lands and Works Department of British
Columbia, on account of this work, of which expenditures a statement of particulars,
certified by the Chief Commissioner of Lands and Works, is appended hereto. And
recommending that application be made to the Dominion Government for the payment
of that sum, under the provisions of the Statute above mentioned, as an instalment of
the sum of two hundred and fifty thousand dollars to be paid on that account.
The Committee advise that the recommendation be approved, and that should this
report be adopted, a copy thereof, together with the accompanying certificate, be forwarded by Your Excellency to the Government of Canada, with a request that the sum
of fifty thousand six hundred and fifty five dollars and fifty cents ($50,655 50) therein
specified, be paid to this Government.
Certified,
(Signed)        T. Basil Humphreys.
Clerk of the Executive Council.
Schedule of payments made by the Provincial Government of British Columbia on
Account of Graving Dock, Esquimalt.
Bank of British Columbia (paid in London).—
Drafts for purchase of Cement and Machinery  -|
Freight   Shipping,  Disbursements,  Insurances,   &c,   included  (Cement [•
now stored at Esquimalt  J
Custom House Duties on Cement and Casks	
Port Warden's Certificates of condition ,
Storage of Cement to 28th February, 1876	
Cost of landing cement and machinery 	
Surveyor's disbursements, Work on dock site	
Cleaning machinery	
Advertising for tenders for construction	
Salary of Resident Engineer to 31st March, 1876	
Cooper and repairs to casks	
Telegraphic messages  	
Exchange on drafts for payment of newspaper accounts 	
James Watt & Co., instalments on contract for machinery	
Bank of British Columbia, interest on payments made in London	
Moving coal from shed on dock site 	
General average certificate, shipment °$ "Aboyne"	
15,084 17
7,380 45
3,243 43
25,708 05
1,745 20
100 00
879 67
390 75
77 75
24 00
605 15
1,557 93
24 50
38 95
5 76
18,900 00
252 00
19,152 00
294 00
51 79
345 79
|    50,655 50
Lands and Works Office, Victoria,
13th April, 1876.
(Signed) John J. Austin,
Accountant.
Forbes Geo. Vernon,
Chief Commissioner of Lands ds Works.
(Signed)
Q.
(Copy of Telegram.)
5th May, 1876.
The Lieutenant- Governor, British Columbia.
Government wish to know if your Ministers prefer to have advance for Graving
Dock charged against balance of debt or to have interest deducted from ordinary
subsidy.
(Signed)       R. W. Scott. 370 Graving Dock. 1877
E.
(Copy of Telegram.)
Victoria, 6th May, 1876.
To the Secretary of State for Canada.
My Ministers desire me to state in reply to your telegram, 5th instant, this Government understands money to be received from Dominion in lieu of guarantee under
Article twelve Terms of Union, for construction of Esquimalt Graving Dock, a grant in
aid of that national work, similarly with the contribution of like amount from Imperial
Government.
(Signed)       Joseph W. Trutch.
8.
(Copy of Telegram.}
Ottawa, 18th May, 1876.
To the Lieutenant- Governor of British Columbia.
Canada will grant guarantee in terms of Article twelve of Treaty of Union or make
advance under 1st Section of Dominion Act of 1874. In the latter case interest will be
chargeable against balance of debt or subsidy.
(Signed) R. W. Scott.
T.
Copy of a Report of a Committee of the Honourable the Privy Council, approved by
His Excellency the Governor-General in Council, on. the 29th May, 1876.
Upon an application from the Lieutenant-Governor of British Columbia for the payment of $50,(555 50, on account of the construction of the Graving Dock, at Esquimalt,
The Hon. the Minister of Finance, to whom said application has been referred,
reports as follows :—
1st.—That upon the receipt of the said application, the following telegram was
addressed by the Secretary of State to the Lieutenant-Governor of British Columbia :
" 5th May,  1876.
" Government wish to know if your Ministers prefer to have advance for Graving
" Dock charged against balance of debt, or to have interest deducted from ordinary
" subsidy."
To which, upon the 6th May, 1876, the following reply was received:—
" My Ministers desire me to state, in reply to your telegram 5th instant, this
" Government understands money to be received from Dominion in lieu of guarantee
"under Article Twelve, Terms of Union, for construction of Esquimalt Graving Dock,
" a grant in aid of that national work similar with the contribution of like amount from
"Imperial Government."
That upon the 18th May, 1876, the Lieutenant-Governor was informed by telegram
as follows:—
" Canada will grant guarantee in terms of Article Twelve of Treaty of Union, or
"make advance under 1st Section of Dominion Act of 1874. In the latter case interest
" will be chargeable against balance of debt or subsidy."
2nd. The Minister of Finance, under these circumstances, advises that the Government of British Columbia be informed that, in the opinion of this Government, the 1st
Section, of Cap. 17, 37 Vic, only contemplates an advance of certain moneys, and that it
is not in the power of the Government of the Dominion to make a gift of the sum of
§250,000, as would appear from the preceding telegram to be. expected by the Government of British Columbia. He also recommends that the latter Government be further
informed that it is within their option either to obtain the guarantee for the space of 10
years, as provided in the Article of Union, or an advance of $250,000 independently of
any balance of debt as yet undrawn, interest on which, at the rate of five per centum
per annum, would he deducted annually from the subsidy paid by the Dominion to
British Columbia; or should the Government of Britsh Columbia so decide, the said
amount might be advanced under the 2nd Section of the 17th Cap. of 37 Vic. 40 Vic. Graving Dock. 371
The Committee concur in the foregoing report, and submit the same for Your
Excellency's approval. They further recommend that a copy of this Minute be transmitted to the Lieutenant-Governor of British Columbia.
Certified,
(Signed)       W. A. Himsworth,
Clerk, Privy Council.
u.
Copy of a Report of a Committee of the Honourable the Executive Council, approved by
His Honour the Lieutenant-Governor on the 22nd July, 1876.
Upon a Memorandum, from the Honourable the Attorney-General, on the Minute
of the Privy Council of Canada of the 26th May, 1876, in relation to the payment of the
sum of $250,000 by the Government of the Dominion to that of this Province, in aid of
the construction of a Graving Dock at Esquimalt; the Attorney-General states that the
views of this Government are, and have been, consistently at variance with those
expressed in the said Minute of the Privy Council upon the question, whether such payment should be an advance to be repaid by the Province with interest, or a bonus (or
absolute gift) as this Government contend was promised and assured to British Columbia
from the Dominion Exchequer, as a contribution towards this great work, which is not
Only calculated to benefit this Province but directly interests the whole Dominion, as
well as the Empire at large, as is evidenced in regard to the latter by the promised
grant of £50,000 sterling from Imperial funds.
That the Government of British Columbia undertook this work in full reliance of
receiving such bonus of $250,000 from Canada in aid of its construction.
That considerable sums of money have been already expended, and large liabilities
incurred on this account.
That it is most desirable that the work should proceed as rapidly as possible
towards completion.
That it is not expedient at this time to recapitulate the facts, or to re-state the
arguments on this question.
That this Government is willing to submit the case, at the proper time, to any
competent and impartial tribunal.
And the Attorney-General advises that application should be made to the Government of Canada for the above amount, subject to the adjustment hereafter of the question now at issue, as to whether such moneys are to be paid and received as a bonus in
aid of the Dock, or as a loan to be repaid with interest.
The Committee recommend that the report be approved, and that Your Excellency
be requested to transmit a copy hereof to the Government of the Dominion and to make
application accordingly.
(Certified) A. C. Elliolt,
Pro. President Executive Council.
V.
(Copy of lelegram.)
Victoria, 21st October, 1876.
To the Secretary of State for Canada.
g reply to its comm
1 to that proposition
(Signed)       A. C. Elliott.
Government anxiously awaiting reply to its communication of 22nd July, respecting
Graving Dock.    When may answer to that proposition be expected. 372 Graving Dock. 187T
W.
(Copy of Telegram.)
Victoria, 10th November, 1876.
To the Honourahle A. Mackenzie.
Telegraphed in October to Mr. Scott about Dock ; no reply yet. Government very
anxious to receive reply to communication of 22nd July about Dock. Please be good
enough to reply to this 'Telegram as soon as received, stating decision arrived at.
(Signed) A. C. Elliott.
To the Honourable A. C. Elliott.
2.
(Copy of Telegram.)
Ottawa, November 13th, 1876.
The Government have no authority to do more than advance the money in modes
proposed in telegram of 18th May last.
(Signed) R. W. Scott.
VICTORIA:
PRINTED BY RICHARD WOLFENDEN, GOVERNMENT PRINTER,
AT   THE   GOVERNMENT   PRINTING   OFFICE,   JAMES'   BAY.
1877

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