I have had the honour of receiving Mr Peels letter dated the
2nd Instant, in which it is stated that your Lordship would be glad
of some further explanation as to the distinction between the lands
which the Hudson's Bay Company possessed before the "Boundary Treaty"
and others, and also as to the meaning of the expression "lands which
the Fur Trade of the Hudson's Bay Company propose to take."

In compliance with Your Lordship's wishes I hasten to afford you
the required explanation.

During the period that elapsed between the original connection of
the Hudson's Bay Company with the Country west of the Rocky Mountains
and the division of the Territory by the Boundary Treaty of June 1846,
while in fact the sovereignty was in abeyance, the Company reclaimed
from the Wilderness and occupied portions of land wherever their trading
Establishments were planted. These lands they claim as theirs without
purchase and the possessory rights thus acquired in that portion of the
Territory which is situated to the south of the 49th parallel of
North Latitude have been guaranteed to them by the Boundary Treaty.
Among the lands occupied by the Company North of the 49th parallel is
that situated at Fort Victoria in Vancouver's Island where they formed
an Establishment in the year 1843 and this is the land alluded to in the
4th Paragraph of my letter of the 14th December. Its exact extent
has not yet been ascertained by the Company's Surveyor, but whatever
that may be the Company consider they have a right to hold that land
without paying for it, while for any additional quantity that may be
required to be taken by the "Fur Trade" (which is merely a subordinate
branch of the Hudson's Bay Company) the same price will be paid as is
paid by other purchasers of land.

With regard to the levying of Import Duties, of the legality of
which Your Lordship still entertains doubts I need only say that it
rests entirely with Your Lordship to instruct the Governor of the Island
as to the extent and mode in which he is to exercise the powers
conferred upon him.