Murdoch and Wood to Merivale (Permanent Under-Secretary)

We have the honor to acknowledge the receipt of your letter of the
15th instant
*

enclosing a correspondence with Mr Richard Taylor relative to a
Mining Lease of a portion of Queen Charlotte's Island, and directing us
to prepare 
the Draft of a Lease for the consideration of Her Majesty's
Government. You at the same time direct us to consider whether in
granting any such Lease to a new Association the rights or privileges of
the Hudson's Bay Company will in any respect be interfered with.

2. We have to report for the Duke of Newcastle's information that
before proceeding with the Lease we have placed ourselves in
communication with the Hudson's Bay Company to ascertain, in obedience
to His Grace's instructions, how far the proposed grant would interfere
with their rights or privileges. We also communicated to the Governor
of the Company the letters noted in the margin

*

and have now to submit his answer for His Grace's consideration
and instructions.

3. It will be seen that Mr Colville [Colvile] objects to the
proposed Lease on several grounds. He states 1st that the Company,
and not Messrs Gray & Easterby, were the Discoverers of the supposed
vein and that the names "Mitchell's Harbour" and "Una Point," referred
to as its site, are in fact the names of the Company's Vessel and her
Commander, sent at their expense in 1851 to explore
the Island—6 months
before the voyage of Messrs Gray &c. 2dy that the inhabitants of
these Islands are savage and dangerous—that the Company's exploring
party in 1851 was driven off by them; the Natives rushing in to scramble
for the Gold after every blast—and that a force of at least 80 men
would be required as a protecting party before any works could be
carried on. 3dly that it would be impossible to carry on Gold Digging
without also trading with the Natives, that the proposed Lessees, if
they failed in getting Gold, would  
trade in furs, and thus the Company's
exclusive License of Trade would be infringed.

**

4thly that the connection of the promoters of the scheme with
America, (Messrs Easterby, Gray and Rooney being, if not Americans at
any rate settled at Sn Francisco) might possibly lead to a very
inconvenient collision of interests between the subjects of the two
Countries. And lastly Mr Colvile states that it is the intention of
the Company to establish a trading Port on Queen Charlotte's Island as
soon as they can do so with a sufficient force and thoroughly 
to explore
the Island with a view to ascertain whether the Minerals can be
profitably worked, in which case they will submit the result to Her
Majesty's Government with a proposal to work the Mines.

4. Under these circumstances we have thought it right at once to
submit for His Grace's decision the question whether the proposed Lease
should be proceeded with. We do not understand that the Land which it
is proposed to include in the Lease is claimed by the Hudson's Bay
Company
to be held under their Royal Charter, nor do we find in the
Statute 1 & 2 Geo: 4. c: 66, regulating the Trade with North American
Indians, any provision which could preclude Her Majesty from granting to
another Association either the privilege of trading with the Indians of
Queen Charlotte's Island, or of working any minerals which may be
discovered there, altho' without a special License any such Trading
would we think be illegal. It would follow that so far as the rights
and privileges of the Hudson's Bay
Company are concerned there is no
legal obstacle to the grant of the proposed Lease.

5. But if it is not travelling beyond our province we would
venture to submit whether, looking to the character of the Natives who
inhabit Queen Charlotte's Island, as proved by their seizure of the
present applicants Vessel, as well as by their conduct to the Hudson's
Bay Company's people, it would be expedient to grant a Lease in that
Island to any but persons whose position and responsibility would afford
a guarantee as to their proceedings. 
It is, we think, impossible to
read the reports of the Hudson's Bay Co's Officers, written it must
be observed without reference to the question now under consideration,
without feeling that it will be extremely difficult, if not impossible,
to carry on the search for Gold in Queen Charlotte's Island without a
collision with the Natives. And it is obvious that under such
circumstances unless the matter is managed with firmness and discretion
the consequences may be very lamentable. But independently of these
considerations 
if the Hudson's Bay Company really were as they allege,
the first discoverers of these Mines and not the Gentlemen represented
by Mr Taylor, as His Grace was led to suppose. The Duke of Newcastle
may be of opinion that the Company are entitled to an opportunity of
obtaining the advantage of their discovery, and if they are prepared to
work the Minerals their position and connexion would certainly appear to
afford better prospects of success than could be expected of a new
Association. If we might be permitted to 
express an opinion on the
subject we would submit, that with the present limited, but unfavorable,
information respecting the Natives of Queen's Charlotte's Island, it
would be hazardous to grant a Mining Lease there to private
adventurers—that it would be more advantageous if the Hudson's Bay
Company would undertake the working of the Mines—that whether they do
so or not enquiries should at once be set on foot to ascertain as far as
possible the correctness of the reports respecting the Natives,

***

their numbers and habits, 
and that if this further information should
show that they may be reasonably managed, and the Hudson's Bay Company
should not work the Mines,

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or should do so in an inefficient manner, the applications of private
Companies for Leases should be entertained.

6. With respect to the source from which further information may
be obtained respecting the Natives it appears to us probable that
application might be successfully made to some of the Religious
Societies whose Missionaries have devoted 
themselves especially to the
education of the North American Indians.