No. 39

I beg to acknowledge the receipt on the 28 of Ultimo of the Duke of
Newcastle's Despatch No 15, dated the 19th of May last, mentioning
the receipt of my letter No 7, of the 28th February, and conveying
His Grace's approval of the Form used in transmitting my official
correspondence.

I have also to acknowledge the receipt of His Grace's Despatch No
16 of the 8th of June last; transmitting a Despatch from the Lords
Commissioners of the Admiralty stating that their Lordships do not think
it expedient to adopt the suggestion in my Despatch No 6 relative to the
erection of Store houses, for naval purposes, in the harbour of
Esquimalt.

Deeply interested as I feel in the progress of every measure having
a vital influence in the progressive improvement of this Colony; you
will perhaps excuse me for remarking that I exceedingly regret this
decision of their Lordships, and for the reason that it destroys almost
the only existing prospect of being countenanced in our exertions to
promote the colonization of Vancouver's Island, with the patronage of
Her Majesty's Government. Deprived by its remote position from
commercial intercourse with the mother country or any other British
possession, and cut off from the advantages of foreign trade by the
heavy import duties levied on all the productions of this Colony in the
neighbouring Ports of the United States; the inhabitants of
Vancouver's
Island, are really placed in the worst conceivable position as regards
their general prosperity, and it is very evident that the natural
resources of the Colony, must in such circumstances, remain undeveloped,
and the country continue an uninhabited waste. The Colony has been
heretofore mainly supported by the large sums of money expended in house
building and other works by the Hudson's Bay and Puget Sound Companies,
and by the servants of these Companies. That resource must necessarily
soon fail, and then follows the perplexing question as to what the
labouring people in this Colony will find to do. They will then be
destitute of employment and having no property nor means of acquiring
land, on which to employ their labour, and there being no foreign outlet
for the expansion of general enterprise, they will be unable to earn a
livelihood, and the probable consequence will be a general desire for
emigration to the American settlements; where grants of 
land are freely
proffered to all parties, who become settlers and improvers of the soil.

I was in hopes that the proposed Store-houses for the use of the
Navy at Esquimalt, would have been considered of advantage to the public
service, and that the money expended in those erections, would have been
a resource and attraction for the labouring people, until other
prospects opened upon the Colony; but those hopes being for the present
at an end, I beg leave to recall to your consideration the subject of my
Despatch No 22, of the 13th of May last, in relation to the
commercial position of this Colony. In that communication I took the
liberty of suggesting to His Grace the Duke of Newcastle, the advantages
that Vancouver's Island would gain in point of trade by being included
as a party in the Reciprocity 
Treaty between the British North American
Provinces, and the United States, which was then in course of
negotiation, and I trust that the suggestion has led to the desired
result.

The provisions of that Treaty, will have a more direct influence in
advancing the interests of this Colony, than can at present be correctly
estimated. A degree of enterprise will be excited among the Colonists,
which will soon tell favourably on the prospects of the Colony, as it is
now only waiting a favourable opportunity for development. The
Fisheries, Coal, Deals, Spars and other productions of Vancouver's
Island, will then come into play, as sources of wealth and progress.

Whenever our produce is exempted from the nearly prohibitory duty
of 30 per cent, and is received into the Ports of California on a
footing of equality, with the like productions of 
American Oregon, our
foreign Trade will soon increase, bringing wealth and prosperity in its
train.

On the contrary should this Colony not be included in the Treaty of
Reciprocity it is to be feared there never will be a profitable foreign
Trade, and I do not see how in that case, the country can ever emerge,
from its present state of poverty, or rise to that degree of importance,
which it might, in other circumstances, derive from its position in the
Northern Pacific, and its great natural advantages.

With those remarks, which I trust may not be considered
inappropriate, I will leave the case of Vancouver's Island to the kind
consideration of Her Majesty's Government.