Confidential

I have the honor to acknowledge the receipt of your Grace's
Despatch of the 29th September last marked "Confidential" and
also of copies of the correspondence between Her Majesty's
Government and Lord Lyons, touching the occupation of the Island
of San Juan by troops of the United States.

2. I shall not fail to attend to the instructions conveyed to
me in your Grace's Despatch, to the effect that it is the desire
of Her Majesty's Government that a civil Magistrate should
continue to reside on the Island of San Juan, and that he should
be directed to forbear from all acts which may lead to hostile
manifestations by the United States Officers: and that, without
instructions from your Grace or from Lord Lyons, no troops are
to be landed on the Island, unless indeed such a step should be
required for the support of the resident Magistrate or for the
protection of the lives and property of British Subjects.

3. In my Despatch No 55 of the 9th November last transmitting
copies of my correspondence with Lieut. General Scott, I
reported my proceedings with respect to the Island of San Juan
up to that date and I am glad to observe that they are in all
respects in accordance with your Grace's instructions.

4. The Federal Troops of the United States have all been
withdrawn from the Island of San Juan with the exception of
a Company of fifty men under the command of Captain Hunt, who
still remain there professedly for the protection of American
Citizens.

5. Besides these troops, there is a civil staff consisting of a
Magistrate and an Officer of the Customs.

6. On the other hand Her Majesty's Government is represented in
San Juan by a single stipendiary Magistrate without any Military
or Naval Force whatever—the "Pylades", lately stationed there,
having been recalled to this place by the naval Commander in
Chief.

7. I do not apprehend the occurrence of any national difficulty
with the Captain in command of the Federal Troops stationed on
San Juan, but the presence of such a force on the disputed
Territory without an equal force of British Troops implies a
concession on our part, and will have the worst possible moral
effect throughout the Country; and if that state of things
continues long the Island will unavoidably slip from our grasp,
as the ignorant squatter population of the adjoining American
Territory deceived by appearances and considering the question
of Title as settled in favour of their own country will occupy
the whole of the land and so form a
de facto
American occupation, the effect of which may be fatal to British
rights. And here I might mention that the Pre-emption system of
the United States holds out every inducement to American
Citizens to settle on the Island, and in this respect they have
a great advantage over British Subjects; for should the Island
eventually become American Territory, the American squatter is
confident that he will be confirmed in his occupation, whilst
the British subject has no such satisfactory assurance of his
claim being recognised, should the Island become part of Her
Majesty's Dominions.

8. Should there be no prospect of an immediate settlement of
the question of Sovereignty I have no hesitation in submitting
to Her Majesty's Government, in the event of the United States
continuing to maintain troops on San Juan that the military
occupation should be at least a joint one, and that an equal
number of British troops should be stationed there.

9. Either that course, or the withdrawal of all authorities on
both sides should be adopted, but for the reasons before
mentioned I conceive that the withdrawal of all authorities
would be by far the more desirable measure, if the question of
Title is to remain for any time in discussion. I apprehend that
now the question of Sovereignty is avowedly in dispute, no
Civil Authority can legally exercise any jurisdiction on the
Island, for the laws of neither Country can be claimed as
extending to it.

10. In conclusion I cannot refrain from expressing to your
Grace the satisfaction it has afforded me to find that the
course we have pursued has met the approbation of Her Majesty's
Government for although well assured how much the Government
would deprecate any hasty or inconsiderate action which might
imperil the amicable relations subsisting between Great Britain
and any other nation, yet in this case, under all the
circumstances of the occupation of San Juan, confident that the
offensive movement was the Act of an individual and not of a
Government, I must confess I had some doubts in my own mind as
to whether the passive and non-resistent policy we had followed
would be altogether acceptable to Her Majesty's Government
considering the large and magnificent force we fortunately had
at our disposal, and that if any collision had unhappily
occurred it would not have resulted from any aggressive deed on
our part, but simply from the responsibility forced upon us in
defence of National Honor and Integrity.