Shepherd to Labouchere

The Governor and Committee of the Hudson's Bay Company have lately
had under their consideration the Financial Position of Vancouver's
Island, particularly with reference to the prospective means for
defraying the current expenses of the Government of that Colony.

You are aware that hitherto these expenses have been provided for,
principally by the sale of sections of land at the rate of 1 per acre;
by the amount received for Royalty on Coal, the produce of the Hudson's
Bay Company's Coal Mine; and the amount received in the Colony for
Licences and Fines.

The first source of revenue, vizt, that arising from the Sale
of land, will, it is to be feared, prove much less productive for some
years to come than during the preceding period. The Hudson's Bay
Company, and the Puget's Sound Agricultural Company, have completed to
the full extent their purchases, and notwithstanding the modification
permitting the payment of the purchase money by instalments, which has
been lately introduced with your sanction, the Governor and Committee do
not anticipate that such an impulse will be given to future sales as
will make up for the loss of income caused by the cessation of purchases
by those Companies. Under such circumstances the Governor and Committee
are of opinion that the time has arrived when it has become necessary to
send instructions to Governor Douglas to take into consideration the
best mode of providing additional means for defraying the expense of
administering the affairs of the Colony; and, considering that the
purposes for which the funds are required are those which are essential
for the happiness and protection of the Colonists, the Governor and
Committee trust that Governor Douglas will receive the support of the
Legislative Assembly should it be found necessary to impose duties on
trade, or other taxes for the accomplishment of this object.

The Hudson's Bay, and the Puget's Sound Agricultural Companies and
their Servants, have expended a very large capital in the Island, in the
hope that in the course of time some adequate return will be
forthcoming, and although the uncertain prospect of such return within a
reasonable period has now compelled them to inculcate on their Agents
the necessity of adopting more caution in the expenditure of money on
works not calculated to be immediately remunerative, yet they will be
ready cheerfully to contribute their proportion of any tax or duty which
may be imposed for defraying the necessary expense of administering the
affairs of the Colony.