Rogers to Merivale (Permanent Under-Secretary)

I have to acknowledge your Letter of the 23rd instant,
enclosing for my Report a Letter from the Deputy Governor of the
Hudson's Bay Company respecting the amount claimable by them
from Her Majesty's Government on the resumption of VanCouvers
Island.

2. On that resumption 
the Company were entitled to claim from
the Government repayment
"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."

3. A statement of the amount claimable under these words was
framed by the Hudson's Bay Company at the desire of the
Secretary of State—and being referred to this Board was
reported upon by us on the 19th of April. In our Report we
suggested the question whether the Government intended to take
over the whole of the Company's Establishment including
Farms, Mills, a Coal Mine, Goods, Stock, and a trading Vessel or
to leave them in possession of their trading Establishments and
merely repay them the sums expended by them as Owners of the
Island under the grant from the Crown. In the former case the
claim 
amounted to £225,699.9.11. In the latter it seemed
reducible to about £34,000.

4. This suggestion led to a reference to the Law Officers of
the Crown who were of opinion that the Government was only bound
to compensate the Company for
"the sums laid out by them upon the Island as owners thereof and
for the value of their Establishments property and effects being
thereon and connected with such ownership which" they added
"are substantially the classes of 
establishment and property"
described by Mr Merivale as "got together in consequence of their
territorial possession of the soil, and to facilitate the settlement
and Government of the Island."

5. This decision was communicated to the Company in Lord Carnarvon's Letter of the 28th ultimo in which he stated that
the right to compensation only extended to sums laid out and
property got together by the Company as Owners of the Island and
not to expenditure 
and property consequent on or related to
their commercial operations as a Company carrying on Trade with
the Indians.

6. The Deputy Governor of the Company now states in reply that
the account was made out in accordance with what were supposed
to be the intentions of the Secretary of State but that
"there is no wish on the part of the Company to call upon the
Government to assume any responsibility which does not fall
within the terms of the grant" and that they will 
"raise no objection
to the principle laid down by Lord Carnarvon".

7. I presume therefore the next step will be to request the
Company to send in a fresh statement of their claim framed on
the principle now laid down by the Secretary of State and
accepted by the Company.