I have to acknowledge Mr Under Secretary Peel's letter of the
20th Ult. transmitting to me a Despatch and its enclosures from
Rear Admiral Moresby to the Lords Commissioners of the Admiralty
having reference to the present state of Vancouver's Island.

To the allegations contained in these documents I shall, after
adverting to the different subjects alluded to in Mr Peel's
letter, make such replies as will, I trust, satisfy your
Lordship that you have little cause for uneasiness as far as
those allegations are concerned.

For facility of reference the paragraphs are numbered so as to
correspond with those of Mr Peel's letter.

2. That the colonization of Vancouver's Island has made so
little progress is, I beg to assure your Lordship, as deeply
regretted by the Directors of the Hudson's Bay Company as it can
be by Her Majesty's Government, but they cannot accuse
themselves of having omitted to use every effort in their power
for the colonization and improvement of the Island, which it is
not less their interest than their duty to promote. They have
had to encounter difficulties equally beyond their control and
that of the Government. The derangement of the ordinary course
of events occasioned by the state of things in California has
been a discouragement to persons who might otherwise have
desired to settle at Vancouvers Island, as it was evident that
there could be no confidence placed on hired labourers
fulfilling their engagement. This also operated as an
obstruction to the intentions of the Hudson's Bay Company to
establish cultivation sufficient to secure food for new settlers
on their arrival. They have been obliged to import at high
prices flour and other provisions for their own establishment,
and for the support of the large number of agricultural
labourers which they and the Puget Sound Company have sent from
this country to commence cultivation in order to test the
capability of the Island and encourage its settlement. The
result of this measure has yet to be ascertained, though they
trust it may be successful. It is the intention of both the
Puget Sound Company and the Hudson's Bay Company to settle their
retiring servants on small lots of land in all cases where they
have acted with fidelity and industry, and thus gradually form
villages of small settlers and independent labourers.

Mr Peel states "that your Lordship hopes that with a view both
to the interest of the Company itself and that of the settlers
that more efficient measures may be taken for its improvement
than appears hitherto to have been the case." I am not aware to
what measures your Lordship alludes, and I can only assure you
that the Directors of the Company would give their best
consideration to any measures which you may be pleased to
suggest.

3. On the subject of the public works to be undertaken on the
Island referred to in the third paragraph of Mr Peel's letter I
beg to observe, that in answering Mr Merivale's letter of the
3rd September, the omission to express in direct terms my
concurrence in the views therein expressed, did not arise from
any intention or wish to dispute the right of Her Majesty's
Government to exercise control over such works.

Mr Peel's remark that I stated that the Governor and Council
did approve of certain works of the above description is not
quite correct. On reference to my letter of the 10 September
I find I said "it was left almost entirely to the Governor and
his Council to select both the sites and the works to be erected
on them", but first obtaining the sanction of the Hudson's Bay
Company.
[Marginal note. "I do not see much difference."]
I may observe that it is not intended to make an
expenditure on public works beyond the Trust fund that may arise
from Sales of land &c, but if it should hereafter appear
expedient to do so your Lordship's approbation will be
previously applied for.

4. With respect to the reserves of land concerning which your
Lordship wishes for more particular information, I have to
state that by the last mail Mr Pemberton, the Colony Surveyor,
has sent home surveys of the lands which the Fur Trade of the
Hudson's Bay Company propose to take, but has omitted to
distinguish that which they possessed previous to the Boundary
Treaty from the whole quantity. The former will be made over to
them without purchase, and, for any addition thereto they will
have to pay 20/- an acre as all other Settlers do.

He has likewise sent a survey of the Puget Sound Company's allotment.
Any part of these allotments may be taken for Government
purposes at the cost price, but it would be convenient that the
wishes of Government should be intimated, that costly
improvements may not be made, nor buildings erected on such
portions.

With regard to a duty on imports which your Lordship seems to
think can not be imposed but by the Legislative Assembly, I can
only say that I have no recollection of any understanding to
that effect. My view is that as the formation of the
Legislative Assembly is prospective, the Colony may in the
meantime be considered as not possessing such an Institution,
and that the parts of the constitution already formed may
perform the functions of the whole until a complete developement
has taken place. The duty to be levied would principally fall
upon the Hudson's Bay Company's Fur trade, as the importation of
goods for their inland Fur posts by Fraser's River, and the
supply of their posts in the Gulf of Georgia, will be more than
9/10ths of the whole.

6. I have already stated to your Lordship that the Hudson's Bay
Company neither claim nor exercise any monopoly whatever in
Vancouvers' Island. But it appears to have been represented to
your Lordship that the Company exercise a virtual monopoly with
respect to Settlers and visitors. The only visitors to the
Island hitherto, as far as I know, are Her Majestys' ships of War
which have received supplies of provisions from the Company's
stores. The prices charged for these supplies have been
complained of as too high, and in order to ascertain whether
they are so or not, I some time ago applied to the Lords
Commissioners of the Admiralty for information as to the rate of
charge, which I regret to say I have not succeeded in obtaining.
I must therefore content myself with stating that there have
been unprecedented fluctuations in the provision market on the
North West Coast of America of late, and that the Company
imported provisions for their establishments from the Sandwich
Islands at very high prices.

I am not aware that any indirect means have been resorted to for
establishing a monopoly by refusing ground for building sites in
suitable places, to Traders who might compete with the Company,
or that any facilities for trading have been denied such
persons. Such proceedings on the part of the Companys Agent
would, I beg to assure you, meet with the marked displeasure of
the Directors of the Company. The Company have afforded the
facility of importing goods in their Ships, and some of the
Settlers have availed themselves of this privilege.

7. California will I trust in time afford an advantageous
market for the productions of Vancouver's Island, and thus
exercise a favourable influence in the Settlement of the Colony.
At present however the unsteadiness of that market holds out but
little encouragement to the Agriculturist. Wheat, which some
time ago was selling in Oregon at 7/- per bushel had fallen by
late accounts to 3'/1 1/2d.

Should Mining operations succeed in Vancouvers Island, Coal will
find a sure and ready market. As yet however none but surface
coal has been discovered.

I shall now offer a few remarks on Admiral Moresby's letter and
the enclosures therein.

Adml Moresby's letter, par: 2

It is gratifying to me to find that Admiral Moresby bears
testimony to the high character of Mr Douglas. In confiding
the direction of their affairs to such a man the Company feel
assured that they have adopted the best means in their power for
preventing such abuses as those alleged in the Admirals Report
to the Lords Commissioners of the Admiralty.

Whether the opinion stated by the Admiral in a former Despatch
and here repeated "that the attempt to colonize Vancouver's
Island by a Company with exclusive rights of trade is
incompatible with the free and liberal reception of an emigrant
community" be correct or not I will not take upon me to say. I
can only repeat that it is not applicable to the case of
Vancouvers Island inasmuch as the Hudson's Bay Company neither
claim nor exercise such right in that Island.

Par 3 & 4.

The farm let to Mr Langford by the
Puget Sound Company contains 600 acres, and the Hudsons Bay
Company have placed a Bailiff on a small farm of 60 acres, who
is paid by salary.

On the terms on which the Puget Sound Company have let their
land to Mr Langford I do not think it necessary to make any
other remark than this, that they are much more favourable to
the tenant than those stated by Admiral Moresby, favourable as
the latter must be considered to be.

Par 5.

The Company have as yet received no distinct information
respecting the Sale of the two building lots mentioned in this
paragraph, but they have reason to believe that they are on land
which forms a part of the allotment for the Fur trade, neither
have they any information of a misunderstanding with the Indians
caused by Padre Lampfrit [Lempfrit] the missionary.
Mr Blanshard was reimbursed by the Company for the expence he
incurred in building his cottage.

Par 6.

It was hardly to be expected that two ships of War coming
unexpectedly at the same time could procure sufficient supplies
of provisions from the Company's stores, which are provided
solely with a view to their own requirements. The charge for
grass and mutton seems high, and will be enquired into. With
regard to the latter article it is to be borne in mind that the
traffic between Vancouver's Island and Nisqually, from which
cattle and sheep are brought, was stopped by the United States
Custom House authorities in Oregon, the natural consequence of
which would be to enhance the price at Fort Victoria. So many
of the Company's servants had deserted in consequence of the
gold digging temptation, that Mr Douglas had difficulty in carrying on the
ordinary business of the trade, and could not spare labour for
the cultivation of either gardens or fields.

Par 8.

The Statement in the 8th paragraph of
the Admirals letter is a revival, with additions, of the story
which I had occasion to notice and, as I had hoped, to set at
rest, in a former communication, but as it has been
reproduced by Admiral Moresby I shall bestow a few remarks upon
the present version of it.

It has been the uniform policy of the Hudson's Bay Company never
to suffer the blood of a white man to be shed by a savage with
impunity. This policy is well understood by the tribes who
inhabit the regions under the control of the Company, and it is
not too much to say that it has saved many a life that would
otherwise have been sacrificed. There is therefore a very
strong antecedent improbability that any officer of the Company,—were
it only for his own sake—would offer a premium for the
murder of white men. But the testimony of Mr Beardmore
[Beardsmore] is conclusive on this point, and the more so
because he is known not to be well affected towards the Company.
When examined by Admiral Moresby he says expressly that a reward
(and to Indians no small reward)
was offered for the apprehension of the murderers, and that no
reward was offered for the deserters. The charge of offering
a reward for the heads of the Seamen may now, I think, be
considered as finally disposed of.

But a similar charge in regard to the Muirs is now, for the
first time, brought foward as the hearsay evidence of one of
them. Andrew Muir, the Admiral's informant, was the ringleader
of a mutiny at Fort Rupert, and a deserter.

It is also worthy of remark that this man omitted to mention the
offer of a reward for his head when he submitted to Governor
Blanshard his complaints of the bad treatment he had received
from the Hudson's Bay Company. Nor is it probable that if such
a reward had been offered the Governor who reported to your
Lordship the rumour respecting the murder of the Seamen would
have left this to be reported by Admiral Moresby twelve months
after the transaction to which it refers is said to have taken place.

Par 10.

The Title deeds have been delayed for
want of surveys. The Surveyor first sent out having failed
to fulfil his engagements, it was found necessary to send out
another, and much time was consequently lost. Terms of Deeds
have been transmitted to the Company's agent, to be filled up as
soon as the boundaries of the allotted lands shall have been
fixed by the new Surveyor. When these Deeds, which are supposed
to be on their way to England, arrive, they will be executed
here and returned to the Colonists by the first opportunity.

Par 11.

The people hitherto sent out have been
hired Servants, a portion of whom have been married men; but in
this matter the Company must be guided by circumstances, as the
limited means of feeding the people, until cultivation to some
extent could be established, rendered it inexpedient to send out
men with large families.

Par 12.

On the subject of protection referred
to in the correspondence between Mr Blanshard and Mr Douglas
attached to the Admiral's Report, I had the honor of stating to
your Lordship in my letter of the 28th February last that I did
not consider a Military force necessary. I have seen no reason
to alter that opinion, but on the contrary am confirmed in it by
Mr Douglas's letter to Mr Blanshard of the 3rd July 1851. I
quite agree with him that the appointment of local Magistrates
is all that is necessary. When I read Mr Blanshard's letter of
the 2d July 1851 to Mr Douglas I was not a little surprised,
as Mr Douglas always discountenanced a Military force, and had
lived on the Island for years with only a few white men; but how
Mr Blanshard could have stated the substance of Mr Douglas's
conversation as implying the necessity of a military force is
quite incomprehensible. That it was a misapprehension on his
part is evident from Mr Douglas's answer.

Par: 12

The Servants of the company are
engaged on contracts for five years; the wages of labourers are
17 per annum; they are lodged, fed, supplied with implements,
and conveyed out and home at the Company's expence. They almost
all remit money to their families during their contracts, and
very many of them, when they quit the Service, have considerable
balances to receive. Salmon and Pork, with Beef and Mutton
occasionally, constitute their foods. The English labourers are
chiefly from Dorsetshire. Now the wages of a Dorsetshire
labourer have not for some years averaged more than 7/6 per
week, out of which he has to find every thing for himself and
his family, when he has one. It hardly need be enquired how
much fresh meat, or animal food of any kind, can possibly be
procured with such wages, or whether the labourer is better off
in Vancouver's Island or at home. But the Company, like all
other employers of labourers, have a right to hire them at as
low wages as they may be willing to engage for. They find no
difficulty in procuring men for those wages in Orkney, from
whence they have for many years obtained them, and where the
nature of the service is perfectly known. The wages o. 17 are
for the first term of engagement, and afterwards, on a renewal
of their engagements, the men get increased wages according to
their industry and usefulness. Almost all the European servants
save money in the service besides remitting money to their families.

Admiral Moresbys informant is mistaken in saying that only
Canadians and Indians have till lately been employed by the
Company. A large proportion of their servants are from the
Western Isles of Scotland and the Orkneys. Englishmen were
engaged solely from a belief that having been more exclusively
occupied in Agricultural labour than the Islanders, they might
be very useful in a new Colony.

With respect to the quality of the Pork supplied to the
Servants, I can only say that it was the best that could be
procured, and cost a very high price.

The informant states that the price of an article is withheld,
or some punishment inflicted upon the men for asking it, that
nothing under half a dollar is allowed to be purchased by the
men, that a little thread is charged half a dollar, a button or
two the same. Now I find upon examining the mens accounts that
the charges against them are composed of a variety of articles,
small in quantity, and many charges of 3d, 4d, 5d & 6d,
in short like small shop accounts in any other part of the world.

In the Admiral's Report of the conversation he had with Mr
Beardmore, I observe he says the men were deceived by the
Hudson's Bay Company—that no man in his right senses would come
from England to suffer what these men have got to suffer, it was
worse than transportation, &c &c.

Admiral Moresby might have seen that Mr Beardmore had left the
Company's service a discontented man, and should have therefore
been on his guard against receiving his opinions and statements
as correct representations of the real state of things. Some of
the men stated to have been deceived and to have been subjected
to treatment worse than transportation—men from Kent—came home
in one of the Company's vessels in place of seamen who had
deserted, it being impossible to procure other seamen at the
time. Now those very men had been but a few months at home when
they volunteered to resume their places in the Company's service,
and they did so. They returned to Vancouver's Island by the
next ship. I may also mention that the Company have had
applications from the friends of the Englishmen who are now in
Vancouver's Island to be taken into their Service—and this in
consequence of the statements sent home from thence.

One man writes thus from Cumberland—"I had a letter from an
uncle that went out on the first of November 1850, and he wants
me to go out as soon as ever I can for the same place, and he
went by your Company, his name was Wm Aikenson, he requested me to write up to you directly. Please write back as soon as you can, and let me know how the emigrators rules or conditions are."

Another says "I have received a letter from my sons James and
Charles and Robert Fish now in your employ in Vancouvers Island,
and they give me a very satisfactory account of the place. they
never regret leaving their home but say they are very happy and
comfortable."

From the person who engaged the Dorsetshire men for the Company
the following letter was received in October last, "I write
these few lines to enquire if you want any hands this fall for
Vancouver, as I have applicants every day and I cannot give them
an answer until, Sir, I hear from you; if you want any please to
let me know as I think I can get them for you, married or
single". and in another letter he says "their friends (the
friends of the men sent out to Vancouver's Island) have brought
me their letters for me to read, and they all give it an
excellent character, plenty of every thing."

Permit me in concluding this letter to assure your Lordship that
the Directors of the Hudson's Bay Company have no more earnest
wish than to see the Settlers prosperous whether engaged in
trade, agriculture, or any other branch of industry.