Murdoch and Rogers to Merivale (Permanent Under-Secretary)

We have to acknowledge your letter of 7th instant, enclosing for our
Report a letter from the Admiralty, on the subject of the reservation
by the Crown of Coal and Timber for Government purposes in VanCouvers
Island and British Columbia.

2. In respect to Coal we presume that it would never be contemplated
by Government to reserve any mine to be worked at its own expense for
its own service. The only way in which a reservation could be made
would be by inserting a condition in any Lease, that the Coal
required for Government purposes should be furnished either
gratuitously or below the market price.

3. If there were a large demand for Coal and no other means of
meeting it, such a condition would have the effect of throwing on the
Revenue of the Colony (to which the Royalty of the Coal Mine would
belong) a portion of the expense of supplying the Government with
Coal, but it would not necessarily prevent the working of the Mines.
Unless the quantity to be supplied were accurately specified, it
would probably cause more injury to the Colonial Revenue than benefit
to the Government Service, inasmuch as an indefinite liability is
naturally calculated at a maximum. Nevertheless, if there were a
large private demand the profits upon it might be sufficient to
counter balance the loss on the public demand. But this is not the
case at VanCouvers Island. The Hudson's Bay Company are already in
possession of and are working, a mine at Nanaimo. They will probably
for a long time find no difficulty in supplying all the Coal that is
wanted, and as they pay no Royalty it may be doubted whether any
other persons, even with an ordinary Royalty, will be able to compete
with them. It is quite certain that no one burthened with a
Government reservation would be able to do so. The effect,
therefore, of such a reservation would be to drive away private
enterprize from the Coal Fields of these colonies and to perpetuate
the monopoly of the Hudson's Bay Company. Of course under such
circumstances the Admiralty would be at the mercy of the Hudson's Bay
Company for their Coal supplies. We cannot, therefore,
recommend that any reservation should be made of Coal.

4. In respect to Timber for ship building it is obvious to remark,
that as such Timber could only be brought to this Country round Cape
Horn—a voyage considerably longer than that from Australia and New
Zealand where there are inexhaustible supplies of the finest
Timber—it is scarcely conceivable that the Admiralty should ever
have recourse to the Forests of VanCouvers Island or British
Columbia. For the small quantity that might from time to time be
required for the repair of the Ships on the Station, it would not be
worth while to make any reservations.

5. But even if this were not the case it may be doubted whether
reservations of this description are of any practical use. Assuming
them to be made the Admiralty must still depend for the felling and
conversion of the Timber on the ordinary Lumberers of the Country.
And where the required Timber is on Land for which a Timber License
has been granted, it must, as a general rule, depend on the Licensee.
For in order to get Timber out of the Forest it is necessary to
construct roads and ways along which it may be hauled—and for the
accommodation and subsistence of the Lumberers
while thus employed temporary huts must be erected and provisions
must be laid in. If the Admiralty were to employ any other person
than the Licensee to haul their Timber, they must provide other
Laborers with other huts and Stores of provisions, and other roads
and ways. It is clear that to do so would involve an unnecessary
expenditure probably greater than the value of the Timber to be
obtained, and there would be besides a constant risk of Collision
between their Lumberers and those of the Licensee, which, removed as
they would be from the control of the usual Tribunals, might give
rise to serious consequences.

6. But if the Admiralty is to operate through a Contract with the
Licensee there is no necessity for a reservation. The Timber
required for Ship building, and especially for Masts, is more
valuable for that purpose than for any other. And the Licensee would
for his own sake reserve it for Sale to the Admiralty if he knew that
they would want it. The chance moreover of obtaining a contract with
the Admiralty would stimulate those engaged in the Lumber Trade to
explore the woods for Trees suited for the purpose—instead of
leaving the Admiralty Agents to discover the Trees for themselves.
It may perhaps be said that the Admiralty would get the Timber
cheaper if it were forbidden to all but the Admiralty Agents. This
advantage, however, if any, must be very small. Timber on the ground
in a new country has no marketable value—its price consists almost
entirely of the cost of felling it and bringing it to market, and
contracts made by means of open Tenders would protect the Admiralty
against exorbitant demands on the part of individuals. Or at worst
the Admiralty, if it thought the demands of Licensees exorbitant,
might employ its own people on the Crown Lands where Licenses had
not been granted, and on which, therefore, it would have every
advantage that the proposed reservations could have provided.

7. But while we believe that such reservations would be useless for
good, they would not be powerless for harm. Although, as we have
said, it is extremely unlikely that Timber should be brought from
VanCouvers Island or British Columbia to build Ships in this Country,
it is very probable that as the Country advances Ship Building might
become a considerable business in it. But the proposed reservations
could scarcely fail, it they had any effect at all, to retard and
embarrass this business and in so far to interfere with the progress
of the Colony.

8. Reservations of Timber fit for ship building were formerly
universal in Licenses to cut Timber in the British Colonies,
especially in Canada and New Brunswick, but they have, we believe,
been for many years discontinued as vexatious and unnecessary. We
do not think it would be desirable to revive them in VanCouvers
Island and British Columbia.