Murdoch to Elliot (Assistant Under-Secretary)

I have to acknowledge to Sir Frederic Rogers letter of
12th instant, enclosing a correspondance which had
passed between Mr Dallas the Agent of the Hudson's
Bay Co & Governor Douglas, on the subject of the
course adopted by the latter towards the Company in
British Columbia—together with a letter from the Governor
of the Hudsons Bay Co enclosing the copy of a rejoinder
made by Mr Dallas to the Governors explanation.

2. First, Mr Dallas complained that with the exception of one Lot, the Governor had sold the whole
frontage and available portion of the Company's reserve at
Yale, in the clearing of which and in compensation to the Indians they had incurred "considerable expense," that
a street had been run through a recently erected warehouse
belonging to the Company, and that they had been required
to remove it. The Governor answered that though a portion
of the Town of Yale had once been occupied by the Company
it had long been abandoned as a trading post—that it was
reoccupied in 1858 in consequence of the Gold discoveries—that
very little expense could ever have been incurred by
the Company in clearing the Land or in compensation to
the Indians—that in 1858 the land was overrun by adventurers whom it would have been impossible to remove by force, and
that it was necessary, in order to reduce this confusion
to order, to layout and sell the land in Lots—but that
strict orders were given to respect all land that could be
equitably claimed by the Company, and that no injustice
had been done to them as their land was marked on the
map as a "reserve" and continues to this day to be respected.
To this Mr Dallas rejoins by admitting that Yale had
been abandoned previous to 1858, but denies that in the
correspondence respecting its reoccupation any allusion was
made to the Gold discoveries (which is not asserted).

He also admits that the expense of clearing the land &
compensating the Indians was inconsiderable, not exceeding
£75 and that it would have been impossible, and unwise
if possible, to remove the first trespassers by force. But
he complains that provisional titles have been given to
the present occupants and that whatever orders may have
been issued the available land occupied by the Company
has been sold. To the statement that no injustice had
been done to the Company he gives an "entire and unqualified
contradiction," the portion of land marked as "Reserve"
having been occupied by the Company only as an outrun
for horses and being of little value.

3. Upon this subject then the only point of difference
between the Governor and Mr Dallas is, as will be seen, the extent to which land claimed by the Company has been
sold to other persons. On that point the statements of the
two are contradictory and the present papers do not afford
the means of deciding which is right. Judging from the
extent to which Mr Dallas is forced to acknowledge his
first representation to be incorrect, I should infer that the
Governors statement on this point also is most to be relied
on. But the matter appears to me practically of little
importance. Both agree that the land had been abandoned
for some time before 1858 and was only reoccupied in the
spring of that year. The Company's title could only date
from the period of reoccupation and is in fact, therefore,
no title at all. Assuming the circumstances to be as they
appear from these papers, I do not see that the Governor
was bound to reserve any portion of the land claimed by the
Company, or consequently, that they have any ground of
complaint by reason of its sale to others. This point will
no doubt be raised in the proceedings respecting the
Company's title before the Judicial Committee.

4. Second, in regard to encroachments at old Langley
or Derby of which also Mr Dallas complained, the Governor
states that the site of that Town had for years been abandoned
by the Hudsons Bay Co and a portion, if not the whole,
was in the possession of Squatters, but that he nevertheless
reserved 9 Acres which were claimed by the Company, and that
they remain still untouched by the Government. Mr Dallas
admits that Old Langley had been abandoned by the Company,
but alleges that a Salmon Store and Wharf the property of
the Company were sold to Strangers. He further complains
that on the subsequent abandonment of the Town, an equivalent
in Town Lots in New Westminster was given to other holders,
"a boon not granted to the Company." It could scarcely
have escaped Mr Dallas that the "other holders" had paid
for their Lots at Old Langley and were, therefore, entitled
when the Seat of Government was removed to equivalent lots
in the new capital. The Hudson's Bay Co had paid nothing
for their lots and had therefore no claim to a similar
exchange. On this point the Compy have clearly no
ground of complaint against the Governor.

5. Thirdly, Mr Dallas complains of the delay in
settling "the long overdue accounts" of the Company against
the Colony, and of the illiberal spirit in which they have been
scrutinized. At the end of his letter he adds a statement
of these outstanding accounts amounting to $4467.87 or somewhat
less than £900. The Governor in answer points out that
the Colony has actually paid to the Company since its creation
no less than £60,000 and that the Company have received
upwards of £5000 as commission on monies received and paid
by them for the Government. Of the above sum of $4467 he shows
that the only old debt is $994 of which $450 is inherently
doubtful—while of the remainder $2375 or more than two thirds
are merely constructive and conjectural charges. Mr Dallas
rejoins by a statement of the Costs incurred by the Company
in consequence of the assistance which as the first establishment
of the Colony they afforded to the Government and the claim they
thereby acquired in its consideration, matters which have clearly
nothing to do with the question whether the Local Government are
chargeable with unnecessary and unreasonable delay in paying
their debts to the Company. He does not deny that as stated
by Mr Douglas $2375 out of $3473 of new charge are merely a
conjectural estimate. On this head the Governors explanation is
conclusive and is not touched by Mr Dallas' rejoinder.

6. Lastly Mr Dallas complained that the license of
Trade fee of £5 had been enforced on the individual shareholders
of the Company and that "against this grievance our Agent in Yale
has in vain appealed to your Excellency and to the Resident
Magistrate." The Governor answers that immediately the matter
was brought to his notice the Resident Magistrate was directed
to refund the money. Mr Dallas rejoins that it was only after
repeated & fruitless applications to the Magistrate at Yale
that he brought the matter to the notice of the Governor. But
he does not repeat the statement which forms the gravamen of
the charge that the Agent had appealed in vain to the Governor.

7. Upon the whole it appears to me that the completeness
of Governor Douglas' answer to Mr Dallas' first complaint
is in no degree shaken by Mr Dallas rejoinder—but is rather
confirmed by it. The admissions which Mr Dallas is compelled
to make, prove the exaggeration of his first representation,
while the tone of his letters which contrasts unfavorably with the Governor's answer appears to show the animus by which he
has been inspired. It is fortunate under these circumstances
that the management of the Hudson's Bay Co affairs has
passed from Mr Dallas' hands—a continued antagonism
between the Governor & the Manager of the Hudson's Bay Co
could not fail in so small a Society to be seriously injurious
and inconvenient.

8. I would submit that Governor Douglas should be
informed that the explanation contained in his letter of 5th
December of the matters in dispute between himself and the Agent
of the Hudsons Bay Co is satisfactory, and that the rejoinder
made by Mr Dallas on 13th Decr of which a copy has
been received from the Hudsons Bay Co, does not appear to
require any further notice from him.