Murdoch and Rogers to Merivale (Permanent Under-Secretary)

We have to acknowledge your letter of the 11th ultimo,
enclosing accounts furnished by the Hudsons Bay Company of sums
expended by them in and upon VanCouvers Island, and desiring us
to examine these Accounts and furnish a report for Lord Stanley's information. These accounts are furnished with a view
to the resumption of Vancouvers 
Island by H.M. Government under
the stipulation inserted for that purpose in the Deed of Grant
to the Company of 13th of January 1849. Our Report has been
somewhat delayed by the necessity of personal communication with
a Member of the Hudson's Bay Company.

2. The stipulation in the Deed of grant above referred to was
to the effect that the Crown should on resumption of the Island
make payment to the Governor and Company

of the sum or sums of
Money theretofore laid 
out and expended by them in and upon the
said Island and premises and of the value of their
establishments property and effects then being thereupon.

Taking these words in their most extensive sense the Hudsons Bay
Company have furnished accounts of the whole of their
expenditure upon the Island, and of the estimated value of all
their trading and other Establishments there.
If it is intended by H.M. Government to remove the Company
altogether from the Island
and to take 
over the whole of their Establishments of every kind
for the Crown the sums so claimed amounting probably to upwards
of £200,000 will, subject to verification, be due to them. But
we can hardly suppose that this will be considered necessary
if the Company desire to retain their trading
Establishments, or in that case the amount to be reimbursed to them will be
comparatively trifling. We proceed to explain the several items
of the Account.

3. (1) Balance due to the Company £8505.6.11.
This amount is due to the Company on a Debtor and Creditor
account called "Trust Account" which appears to have been kept
by the Company against the Island from the time of the Grant.
The Company debits itself with revenues from Land Sales, Coal
Royalties, Licenses &c, and takes credit for payments chiefly
of an administrative character—Salaries, roads, militia,
Customs, gaols &c. Some charges may require 
explanation, such
as payments to Indians for extinction of Claims, but on the
whole the account seems to be of a legitimate character, and
would probably only require to be substantiated by vouchers and
original documents to be admitted.

4. (2) Cost of sending out Colonists £25,550.
From previous accounts it appears that a large portion of this
sum is the moiety of the estimated cost of sending out between
700 and 800 persons, the other moiety being borne by the Puget
Sound Company and the Fort Rupert Coal Mine. The charge
includes not only conveyance but a twelve months wages, besides
provisions, which the state of the Colony rendered it necessary
to issue to the people. This charge, if supported by evidence
of the actual outlay of the money and of the allotments of one
half of the people to Vancouvers Island, would not appear
objectionable so far as regards the expense of passage money.
But if the Government is to be debited with a years wages &
provisions 
for the people it ought to be credited if possible
with the value of their labor during that time. As no doubt
they were employed by the Hudsons Bay Company the simplest
plan would be to set their labor against their wages and
provisions and strike off the charge for the latter.

5. (3) Cost of searching for Coal &c—£12,469.5.7.
For this charge which probably comprizes large amounts for wages
it would perhaps be difficult to produce many 
vouchers, but the
Company ought to produce accounts giving every detail and
extracted from their books, or bonâ fide documents furnished to
them from the Colony. The admission of this charge, however,
and of the four which follow must depend on the decision of the
question, to which we have alluded, whether it is intended to
remove the Company altogether from the Island and take over all
their Establishments—Trading and administrative—or to allow
them to remain in the Island relieving them only of their public
Establishments.

(4) Valuation of Farms &c £12,384.—

(5) Do of Mills 3,000.—

(6) Do of Buildings, Fort &c 12,575.—

(7) Inventory at Nanaimo Coal Mine

31st Octr 1855 38,326.9.3

£66,285.9.3

6. Upon these items making a total of £66285.9.3 no confident
opinion can be formed in this Country. If these Establishments
are to be taken over by the Crown, it will, as it appears to us,
be indispensable to employ some person on behalf of the Crown
to proceed to Vancouvers Island and verify the valuation 
put
upon them by the Company. It will be seen that the Inventory at
Nanaimo Coal Mine is dated 2 1/2 years since, and can,
therefore, be nothing more than a very rough approximation to
the present value of the plant, Coal in hand &c. The expense
of employing a special valuer would be inconsiderable compared
with the large sums to which his valuation would refer.

7. Besides the above charges amounting in all to £112,810.1.9.
a note at the close of the account alludes to inventories of
goods, 
stock, and Trading Vessels, valued at £112,889.8.2. and
proceeds to say,

Should these inventories not be assumed by H.M. Government a
serious loss may be sustained by the Hudsons Bay Company in the
event of their Trade being suddenly terminated. An equitable
compensation in such case will have to be agreed upon.

Here again the main question is the continuance of the Companys
trading operations or their assumption by the Crown. If the latter
course should be decided on, this claim, which it will be
observed is very indefinite, must like the preceding be
investigated on the spot.

8. In the account No 2 it is stated that the balances of
Settlers on Sales of Land amount to £3,620.7.5. bearing interest
at 5 per Cent. This amount will of course be payable to the
Crown instead of the Company.

9. The result to which we come is that if the Company is removed from VanCouvers Island claims
will arise on their part
under the Deed of Grant, for expenditure and property, which in
these accounts are represented by the sum of £225,699.9.11. and
that of these claims upwards of seven ninths would require to be
investigated on the spot. But that if the Company is allowed
and is willing to remain and continue its operations, the amount
to be repaid by the Crown will not exceed £34,000, the items of
which can probably be investigated and settled in this Country.
We would submit, therefore, that before any further steps are
taken in the matter H.M. Government should decide 
on the course
to be adopted on the above point and if they decide to allow the
Company to remain, should ascertain whether the Company are
willing to do so. If the Company continue it will only be
necessary to obtain vouchers for the first two items in their
accounts, vizt, for the balance due on the Trust account and for the cost of sending out Settlers, and the
account between them and H.M. Government may we should hope be
brought at once to a close.