No. 60

I greatly regret to have to inform you that the American
Steamers have refused to carry the Mails between San Francisco
and this Colony. Ninety bags of letters and despatches were
left behind at the vessels last trip to Victoria and no doubt
the quantity has now increased considerably by fresh arrivals
from Panama and New York. The senior naval officer has consented
to send down one of Her Magesty's ships for the mail bags, but
we cannot expect that vessels of war will often be thus employed.

2. The cause of the refusal I believe to be simply this.
Mr Birch, lately administering the Government of British
Columbia was unable to come to any agreement with Governor
Kennedy in regard to the conveyance of the Mails. The House of
Assembly of Vancouver Island refused to vote a cent for the
service if the steamers ran up as far as New Westminster.
Mr Birch thereupon made an agreement with an American
Company, under which, for a subsidy of £300 a trip, a
steamship ran between San Francisco and New Westminster
calling in going and coming at Victoria. Immediately an
opposition line was started in Victoria and the steamer
"Labouchere" was chartered to do the service between San Francisco
and that Town.

3. On the loss of the "Labouchere" the Government of Vancouver
Island made a separate agreement with the Company already
subsidized by that of British Columbia. They paid £300 a trip to
the vessel running to New Westminster in order to secure her
more prolonged detention in Victoria. Thus the "Active" received
£600 for each voyage.

4. The Legislative Council, mainly, I believe, to prevent the
Steamers passing beyond Victoria, have only placed £100 in my hands
for each trip. The vessels continue to run but will not carry the
Mails.

5. It would be a very great boon to the Colony if we could
receive some assistance from the Mother Country in establishing a
line of Steamers running to Panama or even to San Francisco. I
addressed Your Lordship on the subject in my despatch No. 39 of 7th
March 1867.