Shepherd to Labouchere

I have the honour to acknowledge the receipt of Mr Merivale's letter of the 20th Instant, communicating the result of the consideration which Her Majesty’s Government had given to my letter of the 22nd December 1856, and adverting to the full attention paid to the Report of the Select Committee of the House of Commons which inquired last Session into the State of the British possessions under the administration of the Hudson’s Bay Company, detailing the conditions on which Her Majesty’s Government are prepared to advise Her Majesty to renew the existing License for a further term of twenty-one years, and informing me that if the Company should signify their willingness to consent to these proposals Her  Majesty's Government will proceed forthwith to submit them to the local Government of Canada for their consideration, and, in the event of their concurrence, will be prepared to take the necessary measures for carrying them into effect.

In reply I beg leave to state that after full consideration with my Colleagues in the Direction we shall be prepared to recommend to our Proprietary body,
1st To agree to the reservation, as in the present License, of any Territories which may be formed by Her Majesty’s Government into Colonies.
2nd To agree to the proposed exception of Vancouver’s Island from the License, and upon this subject we beg to refer you to the answer to the communication which you have forwarded to us, conveying the views of Her Majesty’s Government in relation thereto.
3rd We concur on your suggestion that in the event of the Government of Canada declining to be a party to the proposed reference of the Boundary question to the Judicial Committee of the Privy Council upon the footing which Her Majesty’s Government are prepared to recommend, and which this Company has already expressed their willingness to adopt, the objects recommended by the Committee of the House of Commons may be attained by another course, the detailed arrangements of which should be carried out under the supervision of three Commissioners, one to be appointed by the Crown, one by the Canadian Government, and one by the Hudson’s Bay Company.

I trust that the ready acquiescence of the Hudson’s Bay Company on the plan proposed for meeting the requirements of the Canadian Government will be accepted as an earnest of their desire to be on terms of harmony and friendship with their Countrymen in Canada.

4th In communicating this assent on the part of the Hudson’s Bay Company, it is, however, right to notice that the Territories mentioned as those that may probably be first desired by the Government of Canada, namely, the Red River & Saskatchewan Districts, are not only valuable to the Hudson’s Bay Company as stations for carrying on the Fur Trade, but that they are also of peculiar value to the Company as being the only source from which the Company’s annual stock of provisions is drawn, particularly the staple article of Pemmican, a regular supply of which is absolutely necessary to enable the Officers of the Company to transport their goods to the numerous inland and distant stations, and to feed and maintain the people, both European and Indian, stationed thereat. It  s proper therefore that I should draw your attention to the fact that the ultimate loss of these districts will most probably involve the Hudson’s Bay Company in very serious difficulties, and cause a great increase of expense in conducting their trade. The Company assumes that the Canadian Government will be responsible for the preservation of peace and maintenance of law and order in all the territories ceded to them, and that they will prevent lawless and dishonest adventurers from infringing from thence the rights of the Company over the remaining portions of their territories.
5th With respect to the 11th paragraph of your letter, in which it is proposed that “Her Majesty’s Government should be authorized at any time to grant licenses or leases, or in some other manner which may be arranged by mutual consent, to place parties engaging to prosecute mining operations or fisheries in possession of the land required in any portion of our territory for the purpose, any territorial rights of the Company notwithstanding” – assuming that the principles statted in the 9th paragraph, as applicable to cessions to Canada, apply equably to any cessions which may take place in virtue of this 11th Clause, I beg to state that we shall be prepared to recommend our Shareholders to concur in this proposal.
6th In conclusion allow me to refer to the sentiments expressed in the fifth and last paragraphs of my letter of the 18th July last, as explanatory of the continued views of myself and colleagues. We are willing to enter upon a new tenure of our engagements under the renewed License upon being assured of the Support of Her Majesty’s Government and of the cordial co-operation of the neighbouring Government of Canada in maintaining tranquillity and order among the Indian Tribes, and protecting the frontiers of the whole adjacent British Territories from foreign encroachment.

The interests of the Hudson’s Bay company, we are convinced, are closely united with the real prosperity of Canada, and we trust that the humane and beneficent objects of Her Majesty’s Government will prosper under our united exertions.