Shepherd to Labouchere

I have the honor to acknowledge the receipt of Mr Merivale's
letter of the 22nd Instant, on the subject of the occupation of the
Island of San Juan in the Canal de Arro.

It is satisfactory to the Directors of the Hudson's Bay Company to
learn that the proceedings of Governor Douglas have met with your
approbation.

I beg leave to assure you that you do the Directors of the Hudsons
Bay Company justice, by acquitting them of any intentional suppression
of information from the Secretary of State for the Colonies; but I take
this opportunity of observing, in explanation of the course pursued by
the Company in transmitting all the information they had on the subject
to the Foreign Office, that the Queen's Advocate having, by direction of
the Secretary of State for Foreign Affairs, communicated with the
Company on the subject of the occupation of the Islands in the Canal de Arro, arising out of the encroachments by subjects of the United States
of America, and it appearing to the Directors to be an international
question, they presumed that they were acting correctly in thus
addressing that Department.

The Directors will in future adopt the course indicated by you, and
will communicate all the information which they may have to convey
respecting the affairs of Vancouver's Island Colony and its
dependencies, to the Secretary of State for the Colonies.