No. 63

I have the honor to acknowledge the receipt of Your
despatch No. 3 of the 30th July, forwarding a letter from
 the Governor of the Hudson Bay Company, together with an extract
of a letter from Mr R. Finlayson representing that the Hudson
Bay Company are subjected to the payment of Customs Duties on
importations into this Colony which are not exacted with equal
strictness from other traders.

2. In reply to this Statement I have the honor to enclose
a copy of a Report from the Collector of Customs.

3. It is difficult to furnish any explanation of such a
strange misstatement of facts, as that contained in the extract
from Mr Finlayson's letter which accompanies Your despatch.

*

4. Mr Finlayson states that repeated representations have
been made to me on the subject, and even informs the Hudson Bay
Company, through their Secretary, of the reply I have given to
these representations.

5. If the first portion of Mr Finlayson's statement is
 correct, the postal service between Vancouver Island and this
Colony must be very defective. During the fourteen months I
have administered the Government of this Colony I have never
received a representation from the Employees of the Hudson Bay
Company on this subject, it is needless to add that I have never
had occasion to reply in the terms stated in Mr Finlayson's letter.

6. Mr Finlayson cannot but be aware of the very stringent
Laws lately passed by the Legislature of this Colony with a view
to suppress the sale of intoxicating liquor to the native tribes,
and of the desire of this Government to do everything in its power
to destroy a trade which is so demoralizing to all engaged in it.

7. The Ordinances noted in the Margin

**

have worked most successfully throughout the interior of this Colony and
it is only on the Coast that the sale of liquor to Indians continues to
any extent—and even there I am led to believe from the reports
received from the Customs Agent that the consumption of Spirits
is much reduced.

8. In October 1865, Mr Duncan, of the Methlakatla Mission
 informed me that two Vessels were employed in selling liquor to
 Indians on the Coast of this Colony. I immediately applied to
Admiral Denman for a Ship of War. A vessel was placed at my
disposal without hesitation, and within six weeks both vessels
had been captured. I have received no representation from any
source since that date.

9. There can be no doubt that a large quantity of liquor
is taken from Victoria in canoes up the Coasts of Vancouver Island and British Columbia. A glance at the map of the Coast
line, will show the almost impossibility of preventing this
while the laws of Vancouver Island allow with impunity the sale
and exportation, in any kind of craft, of any quantity of spirits
& alcohol.

***

10. Had the Laws of these Colonies on the questions connected
with the Native Races been assimilated, the Indian liquor trade
would long ere this have been destroyed.

11. It is somewhat remarkable that the representatives of
the Hudson Bay Company in Vancouver Island strongly opposed the
Bill brought in by the Government of that Colony, on the model of
the one now in force in British Columbia, and Mr Finlayson as
a Member of the Legislative Council, went so far as to propose
the introduction of a Bill, legalizing the sale of liquor to Indians.

12. While the Laws of Vancouver Island have encouraged this
vile traffic, and a large number of the "Merchants" have lived
on the proceeds of this lucrative trade, it has been very difficult
to carry out on the sea-coast the laws existing in British Columbia
 for the prevention of the sale of intoxicating liquor to Indians;
more especially since the receipt of Mr Secretary Cardwell's
despatch No. 50 of July 1865, informing me that the Law Officers
of the Crown were of opinion that all the Islands, adjacent to
the West Coast of North America, south of the 52nd degree of
 North Latitude, belong to the Colony of Vancouver Island. After
 this decision was received the Customs Officer stationed on the
Northern Coast, could no longer overhaul canoes and small vessels
coasting along the Vancouver Island shores, and thus a large
amount of liquor has been sold with impunity, and some has
doubtless found its way in small quantities to the Indian Tribes
 on the mainland. It is difficult to make the Indians understand
 the justice of allowing the tribes on Vancouver Island to hold
 their drunken orgies without interference, while the Indians resident
 on the mainland are punished if liquor is found in their Camps.

13. I have on several occasions in interviews with Dr Tolmie
and Captain Lewis proposed a somewhat unusual course, but one
which I considered the present anomalous state of affairs justified,
namely, that the Captain and Officers of the Hudson Bay Company's
Steamer engaged in the North West Coast Trade, should be allowed
to receive, from the Government, an authority to act in the
prevention of smuggling and the sale of intoxicating liquor to
 Indians, but the reply has invariably been that such an authority
might interfere with the Company's trade. Had the representatives
of the Company in these Colonies acceded to this suggestion, the
North West trade would have been virtually secured to the Hudson
Bay Company, and the illegal traffic referred to, destroyed.
Indians will freely give information to trading vessels as to
the sale and amount of liquor in their possession, while, during
the presence of one of Her Majesty's Ships on the Coast they are
generally invisible, having a great dread of a Man of War.

14. With the immediate Union of these Colonies in view, and
the consequent extension of the British Columbian Ordinances to
 the Island of Vancouver, I apprehend no difficulty in dealing
with this important question.

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15. If the Hudson Bay Company find their Fur trade on the
North West Coast on the decline the cause may be traced, not
to the action of the Government, but rather to the conduct of
their own servants, who have invariably opposed the Government
of Vancouver Island in passing proper and humane laws for the protection of the native tribes, and are unwilling to render
the Government of this Colony, the slightest assistance in
carrying out laws for the suppression of an illegal and demoralizing
traffic, which by their own action they have assisted to create.