No. 1

I have to acknowledge your despatch No. 17 of the
14th of May last,
transmitting for the information of Her Majesty's Government, copies of
your Correspondence with the House of Assembly of Vancouvers Island up
to the 7th of May last.

From your message of the 7th respecting the erection of certain
buildings required for the public offices of the Colony, it would seem
that you informed the House of Assembly that the people of the Island
were not to defray the cost of these buildings, and that the Agent of
the Hudsons Bay Company had agreed to defray the whole of the expense.

I am at a loss to understand the ground of these proceedings. Both
you and the Agent of the Hudsons Bay Company have been fully aware that
the license to the Company was about to terminate on the 19th of May:
that on that event Her Majesty's Government had the power to repurchase
the Island "in consideration of sums expended by the Company and the
value of their establishment:" and you were directed by Mr Labouchere,
as long ago as February 1856, to send home in anticipation of that
event, the necessary accounts of what was due.
The Company were warned in January 1858, that this power of repurchase would be exercised: and there has been since a long correspondence, not yet terminated, between Her Majesty's Government and the Company as to the adjustment of accounts.

You cannot therefore have expected when incurring this expense on
the very eve of the termination of the license, that any portion of the
expense would be ultimately defrayed by Her Majesty's Government; and if
there has been any mistake on this point, I must direct you to cease at
once all farther expenditure on these buildings or other public works
except such as may be incurred with the consent of the Legislature of
Vancouvers Island.

I send you copy of the letter which I have caused to be addressed
on this subject to the Governor of the Company.