No. 26

You have been already informed that a correspondence has been for
some time in progress between Her Majesty's Government and the Hudson's
Bay Company on the subject of the resumption by the former of
Vancouver's Island and the amount which on such resumption would be
payable to the Company under the stipulations of the grant of 13th
Jany 1849.

By the terms of that Grant the Crown was entitled, at the
expiration of the Hudson's Bay Company's license of exclusive Trade to
repurchase Vancouver's Island on repayment to the Company of the sums
of money expended by them upon the Island, and of the value of their
establishments, property, and effects thereon. The license of exclusive
Trade expired on 13th May 1859, and in anticipation of its termination
Her Majesty's Government gave notice to the Company in the close of
1857 of the intention of the Crown to resume the Island, and requested
them to send in a statement of the amount of which they would be
entitled to claim repayment. The claim which they sent in in the first
instance embraced the whole of their expenditure and amounted to
£225,699—but on being informed that Her Majesty's Government declined
to take over any of the establishments or property connected with their
commercial transactions they furnished an amended account comprizing
only three items viz.

£ s d

1 The balance due on account of )

public works & Establishments ) 8505..6..11

amounting on 31st Decem: 1857 )

2 The cost of sending out Settlers 25,550..-..-

3 The expense of searching for

Coal at Fort Rupert 12,469..4..7

£46,524..11..6

The Company however have since intimated that they do not wish
this to be taken as a final restriction, on their part, of their
claims to those enumerated in this List.

To the two first items, (assuming the details to be supported by
vouchers) Her Majesty's Government did not object, but the third
appeared to them to stand on a different footing. It is unnecessary to
trouble you with a detail of the correspondence that ensued, it is
sufficient to state that Her Majesty's Government being convinced,
after full consideration, that a further and indefinite delay in the
settlement of the matter would be detrimental to public interests, and
that an examination of the matter on the spot would probably involve
considerable expense, thought it most advisable on the whole to effect
a compromise on the point with the Hudson's Bay Company. They
therefore proposed that the expense of the Fort Rupert Coal Mine should
be divided equally between the Crown and the Company, and the Company
having acceded to that proposition, a vote for £25,000 will be
proposed to Parliament during the present session in part repayment of
the amount due to the Company. The vote has been limited to the above
sum because the account of expenditure for public works &c has as I
have stated been furnished only to 31st December 1857, and until that
account is completed the exact amount to which the Company will be
entitled cannot be ascertained.

The Company have apprised me of their readiness to receive the
amount proposed to be voted, and to convey to you the necessary
authority to make grants of Land, not however including any of the Lands
belonging to, or which have been registered, as belonging to the
Company, whether in their own possession or in that of third
parties. As the title of the Company to these lands is now under
investigation this reservation is reasonable, and must be acquiesced
in. In regard to other lands in Vancouvers Island you will on receiving
the above authority from the Company take the necessary steps for
throwing them open for Settlement.

The measures for making the payment of £25,000 are so far advanced
that I have every reason to hope that you will receive the intended
authority by the present Mail or by the next one at the latest.

I shall have no objection to the adoption of the price of
4s/2d
per acre which has been recommended by the Legislature with your
concurrence. Upon other questions connected with the manner of
disposing of the Crown Land I shall address you by the next opportunity.