Private

I wish to apologise to Your Grace for the small amount of
official information respecting this colony which the mail
packet which leaves today will convey.

I have for the last fortnight been engaged on a tour of
inspection along the North West Coast & the motion of the vessel
was too great, generally, for me to write despatches.

There is nothing of very great moment to report.
This Colony separated by so vast a distance from the Mother
Country is gradually being occupied by Citizens of the United
States. No English immigration reaches us, & all the public
officers whose situations have been abolished under recent changes,
return to Europe. There is a systematic agitation going on in
this town in favour of annexation to the United States. It is
believed that money for its maintainance is provided from San
Francisco. As yet, however, nothing has reached me officially
on the subject, & should any petition on the subject be
handed to me, I will know how to answer it before I transmit the
petition to your Grace. On the mainland the question of annexation
is not mooted, & during a recent journey I made in the interior I
was received everywhere with salutes & other expressions of
loyalty to the Government I represent.

2. The finances are, I regret to say, in a deplorable condition.
The country was greatly over-staffed in the beginning & a reaction
has set in. Then, the revenue has suffered greatly from the
large importations made into Victoria while still a free port
which now pay no duties on transmission to the miners. Another
reason for the present despondency is that the Colony was, up to
the present time kept alive by loans raised in England, on
which we have now to pay heavy interest while receiving absolutely
no aid of any kind from the Mother country. The miners are doing
well & a population is settling down in Cariboo & its neighbourhood.

3. The principle difficulty we have to contend with here is the
competition with California, one of the richest countries in the
world & the miners & labourers feel but too strongly the
attractions which the large town of San Francisco, with its
boundless demand for labour offers. Were British Columbia removed
from such a dangerous competition it might do well. It has every
natural advantage, but under English management it is far from
Head Quarters & is kept in a state of commercial quarantine by
our republican neighbours. The discrimatory duties in the States
are so high that our nearest markets for timber are the Australian
Colonies & France. The latter country imports spars from hence.
We are not prosperous but there is no political
agitation & the one paper specially employed to advocate annexation
has ceased to exist.

4. Your Grace will be pleased to hear that our Indian
population is prosperous & contented. I have had gatherings of
the natives for several consecutive years on the Queen's birthday.
This year I did not issue any invitations yet upwards of 4,000
attended to congratulate me on my return to the Colony. Some of
the Chiefs from the Upper Fraser travelled nearly a thousand
miles, to New Westminster & back for the occasion.

5. On my late voyage I found considerable depression existing
at the Hudson's Bay Company's trading posts along the coast. The
whiskey smugglers from Victoria interfere much with the legitimate
 trade of the coast. Fort Rupert seemed almost abandoned. Fort
Simpson still remains a place of importance.

6. I was much gratified to find at Metlakahtlah under the
supervision of Mr Duncan the Indians have made considerable
progress in civilization. The "lodges" have become regular houses
with glass windows, neat gardens, good furniture. The native
police force seems well managed & most of the Indians can read
and write. The village asks for no assistance from the
Government yet is flourishing in every way. The natives own a
 schooner, are erecting a saw mill, are making roads of some
magnitude & possess, under the direction of Mr Duncan a shop far
superior to any that the Hudson's Bay Company has yet established.
I shall have the honor of reporting more fully to Your Grace
on the conditions of Metlakahtlah.

7. Immediately opposite Fort Simpson commences the 30 mile
strip of land accorded to Russia by the Convention of 1824 & now
sold, or about to be sold to the Government of the United States.
As British Columbia runs to the back of this narrow belt as far
as 60o North, & as many rivers rich in gold in their upper waters
have their entrance to the sea in foreign territory, I thought
it well for me to understand the system existing between the Russian
authorities & ourselves in regard to the peculiar arrangement
under which, though the whole natural attractions of the country
lie in English territory, the access to them is in the hands of
a foreign power. After examining the coast and being entirely
satisfied with the relations existing between the Russians and
ourselves I called at Sitka; the Chief town of Russian America.
I was received with every attention by the Governor Prince
Makarantoff & had all facilities given me for seeing the town. The
climate is severe, the soil arid & the Americans who have already
landed there seem disappointed in their expectations. Some of
them knew me by sight & introduced themselves & others. Nothing
could be more respectful than their manners & they talked to
me freely about their speculations. They are "pre-empting"
land under the law of the United States, but it seemed to me that
the great notion was to buy up the place in every way & then sell
to others such rights as they might have acquired. Whatever the nature
of the arrangements may be for the transfer of Russian America to the
United States, there is on the spot no feeling against the English.
The Americans seemed glad to see me & looked upon me as a friend.

There is great fear of the Indians existing among the Russians.
The natives are not allowed into the town & guns from every part
of it are pointed at the Indian village. There will doubtless
soon be a collision between the Americans & the Indians. It
will be a serious one as the natives are strong. Already
adventurers from the United States have pre-empted the Indian
 reserve. The natives have all blackened their faces in sign of
grief. I imagine that this is on account of the cession of
their country to the Americans, but the Russians say that it
is owing to two native Chiefs having been killed by our Indians
on the Stikeen River.

I shall report fully to Your Grace upon all the matters
alluded to in this letter, for which I beg your indulgence.

Mr Birch of the Colonial Office will return to his duties
in Downing Street by the next steamer.