Murdoch to Merivale (Permanent Under-Secretary)

I have to acknowledge Mr Elliot's letter of 22nd ultimo, enclosing
a Despatch from Governor Douglas in answer to a Memorial addressed to
Her Majesty, and a representation addressed to the Earl of Derby, by
Mr Nias, on the subject of the sale of Town Lots in Victoria Van
Couvers Island.

2. Mr Nias stated that a large number of Town Lots in Victoria had
been sold by Governor Douglas—that they had been bought to a great
extent by Land Jobbers, 50 or 60 by one person—that Lots worth from
£50 to £1000 had been sold for £5 and £10 and that as no conditions
of improvement are attached to the sale they will be held by the
owners as a speculation in an unimproved state—that capitalists who
do not improve their properties are a great injury to the bona fide
settler—and that those who have purchased the land at Victoria are
to a great extent Foreigners. Mr Nias, therefore, urged that steps
should be taken to compel purchasers of Town Lots to make substantial
improvements on them within a reasonable time.

3. To these statements Governor Douglas replies in effect that the
only Town and suburban Land in Van Couvers Island—that namely in the
neighbourhood of Victoria belongs to the Hudson's Bay Company—that
the Company have been in the habit of selling suburban Lots of 5
acres for £25 and Town Lots measuring 120 x 60 feet for £10.8.4 but
latterly for £20.16.8—that Country Lands have always been sold at £1
an Acre in Lots not less than 20 Acres—that there are many thousand
Acres of Country Land now open for purchase at £1 an Acre, and any
number of Town Lots at £20.16.8 which find no purchasers—that
consequently the allegation that jobbers have bought such Lands for
an inconsiderable sum and are holding them as a speculation is not
true—that instead of having fallen into the hands of a few jobbers
the 1142 Town Lots were purchased by 434 individuals—that their
whole extent amounts to only 193 1/3 Acres equal on an average to
about 2112 square yards to each purchaser—that the subdivision of
the Land is generally very minute as is shown by the fact that 203
Lots were sold to 209 purchasers and that for 8 of the Lots there
were 17 purchasers—but that it would not be desirable to prevent
individuals from purchasing more than one Lot a piece, as some
occupations would require a larger area than 120 x 60 feet. He adds
that of Country Lands 30,214 Acres have been sold in 110 Lots to 126
purchasers giving an average of about 239 Acres to each.

4. It may, I think, be assumed from Governor Douglas's statement
that the information which had reached Mr Nias as to what had
occurred in Van Couvers Island was incorrect—and that no Land
speculations have yet taken place there calculated to interfere with
the prosperity or settlement of the Island. The nature of the Hudsons
Bay Company's claim to the Town and suburban Land in the
neighbourhood of Victoria is explained in the letter from the Company
of 21st instant of which a Copy is enclosed. Under the
circumstances stated in that letter I apprehend that even if there
were more ground than there appears to be for Mr Nias' statements
the Home Government would not be entitled to interfere with the
disposal of the Land held by the Company, not as Trustees for the
Crown but as a Commercial Company, from a date prior to the grant of
1848.

But having pointed out the errors in Mr Nias' statements Governor Douglas considering very properly that the question raised by that
Gentleman is of paramount importance proceeds to explain his own
views respecting it. He states that he has always been favorable to
the theory of improvement duties, and was disposed to introduce them
when the rush of Emigration to Vancouvers Island first commenced.
But on reflection he considered that it would be inconsistent after
striving so long to promote immigration to impose a check on it as
soon as it began—that it was not probable that a high price of Land
could be long maintained by speculators where there was so much
unoccupied—that capitalists buying Land might be expected in their
own interests to do their best for the interests of the Colony—that
it would be difficult to define, and in the case of labouring men
inexpedient to enforce, substantial improvements—and that
a temporary dearness of labor and material might render such
improvements impracticable. As a remedy against speculative
purchasers whenever they become inconvenient he, therefore, suggests
a Tax on unimproved Land.

6. I venture to think that Governor Douglas' reasoning scarcely
meets the case. Whether Her Majesty's Government are entitled to
interfere authoritatively with the disposal of this Land by the
Hudson's Bay Company is, as I have pointed out, open to question.
But it may be assumed, for the sake of argument at least, that the
Company would be disposed to defer to such recommendations as the
experience of H.M. Government might induce them to offer, for the
management of this Land in the manner most advantageous to the
interests of the Colony. The risk then pointed out by Mr Nias and
which will certainly require to be encountered, is not that ordinary
Country Lands should be bought and held over by speculators, but that
Town Lots and Lots having special advantages from situation or
otherwise, should be so held. Lots such as these cannot under
any circumstances be of great extent, and a speculation in them would
not be affected by the quantity of Rural Land open for purchase in
the Island. Neither would it be safe to trust to the personal
interest of the Speculator. That interest would lead him to keep up
the Land until by the improvement of the neighbourhood its value had
been raised to its extreme point—but long before that it would
probably have become an obstruction and nuisance to the community.
In his objection to the difficulty of defining improvement duties,
and to the facility with which they may consequently be evaded it is
impossible not to concur. But he does not seem to have perceived
that the same objection would apply to the remedy which he proposes,
namely, a tax on unimproved Land. For if, as he justly states, it
would be difficult to define "substantial improvements" on a Town
Lot, it would be infinitely more difficult to define what amount of
improvement should exempt Land from the Tax and what proof of such
improvement should be furnished. It may safely be predicted that any
improvement duties prescribed in Vancouvers Island would follow the
same course as settlement duties in other Colonies and become
deceptive or migratory.

7. Protection against the anticipated evil must be found, as it
appears to me, first in selling Town and suburban Lots by auction
only, as I suggested in my report of 5th instant, and second by
imposing a Tax not on unimproved only, but on all Land within the
limit of the Township. I am not aware whether there is at present in
Victoria sufficient population to allow of the incorporation of the
Town, but whenever that can be done the municipal Authorities would
be the proper persons to be entrusted with the power of Local
Taxation, and if precautions were taken to restrict the franchise to
resident Householders, and it were provided that the Revenues raised
from the Town should be expended exclusively on local improvements,
there would be little reason to apprehend that speculators would find
it profitable to buy up Land to hold it for any length of time in an
unimproved state. But until a local municipality can be established
the imposition of any Tax of this kind must remain with the central
authority.

8. I have here adverted to a Tax on Town Lands only, but the same
reasoning will apply to a Tax on suburban and Country Lands should it
be found that they are bought and held in an unimproved state with a
view to speculation. The imposition, however, of a general Tax on
Land in a sparse population is a matter of questionable policy, as
the collection of it is likely to be very difficult and to cost more
than the Tax will produce.