No. 23

I have to acknowledge the receipt of your despatch No. 46 of the
12th of September, pointing out the financial embarrassment in which
you are place in consequence of the resumption of Vancouver Island by Her
Majesty's Government, and the refusal of the Agent of the Hudson's Bay Company to continue further advances to meet the cost of the Civil
Establishment. On this subject, I must refer you to the directions
conveyed in my despatch of the 20th October last. Whatever the
temporary difficulties in the way of such a course may be, it is
absolutely necessary that the Island should provide for its own Civil
expenditure, and expedients for delaying this consummation, if
practicable, would only aggravate the evil.

The important Constitutional and financial questions which your
despatch involves are at present occupying my careful attention, and I
hope to be able shortly to give you full and definite instructions upon
them.

In the meantime I have to express my satisfaction at the prospect
which you hold out of enlarging the House of Assembly. You have only
anticipated the recommendation of Her Majesty's Government on this
point, and I trust that you may be able to carry your design without
delay into execution.

I also approve your intention to adhere to the policy of making Victoria a free port, and I concur, therefore, in your desire to raise a revenue, if possible, by direct taxation rather than by the imposition of Customs duties.