Murdoch and Rogers to Merivale (Permanent Under-Secretary)
Emigration Office
19th April 1858
Sir
We have to acknowledge your letter of the 11th ultimo, enclosing accounts furnished by the Hudsons Bay Company of sums expended by them in and upon VanCouvers Island, and desiring us to examine these Accounts and furnish a report for Lord Stanley's information. These accounts are furnished with a view to the resumption of Vancouvers
Island
Island
by H.M. Government under the stipulation inserted for that purpose in the Deed of Grant to the Company of 13th of January 1849. Our Report has been somewhat delayed by the necessity of personal communication with a Member of the Hudson's Bay Company.  
2. The stipulation in the Deed of grant above referred to was to the effect that the Crown should on resumption of the Island make payment to the Governor and Company of the sum or sums of Money theretofore laid
out
out and expended by them in and upon the said Island and premises and of the value of their establishments property and effects then being thereupon. Taking these words in their most extensive sense the Hudsons Bay Company have furnished accounts of the whole of their expenditure upon the Island, and of the estimated value of all their trading and other Establishments there. If it is intended by H.M. Government to remove the Company altogether from the Island and to take
over
over the whole of their Establishments of every kind for the Crown the sums so claimed amounting probably to upwards of £200,000 will, subject to verification, be due to them. But we can hardly suppose that this will be considered necessary if the Company desire to retain their trading Establishments, or in that case the amount to be reimbursed to them will be comparatively trifling. We proceed to explain the several items of the Account.  
1.
3. (1) Balance due to the Company £8505.6.11.
This amount is due to the Company on a Debtor and Creditor account called "Trust Account" which appears to have been kept by the Company against the Island from the time of the Grant. The Company debits itself with revenues from Land Sales, Coal Royalties, Licenses &c, and takes credit for payments chiefly of an administrative character—Salaries, roads, militia, Customs, gaols &c. Some charges may require
ex=
explanation, such as payments to Indians for extinction of Claims, but on the whole the account seems to be of a legitimate character, and would probably only require to be substantiated by vouchers and original documents to be admitted.  
4. (2) Cost of sending out Colonists £25,550.
From previous accounts it appears that a large portion of this sum is the moiety of the estimated cost of sending out between 700 and 800 persons, the other moiety
being
being borne by the Puget Sound Company and the Fort Rupert Coal Mine. The charge includes not only conveyance but a twelve months wages, besides provisions, which the state of the Colony rendered it necessary to issue to the people. This charge, if supported by evidence of the actual outlay of the money and of the allotments of one half of the people to Vancouvers Island, would not appear objectionable so far as regards the expense of passage money. But if the Government is to be debited with a years wages & provisions
for
for the people it ought to be credited if possible with the value of their labor during that time. As no doubt they were employed by the Hudsons Bay Company the simplest plan would be to set their labor against their wages and provisions and strike off the charge for the latter.  
5. (3) Cost of searching for Coal &c—£12,469.5.7.
For this charge which probably comprizes large amounts for wages it would perhaps be difficult to produce many
vouchers
vouchers, but the Company ought to produce accounts giving every detail and extracted from their books, or bonâ fide documents furnished to them from the Colony. The admission of this charge, however, and of the four which follow must depend on the decision of the question, to which we have alluded, whether it is intended to remove the Company altogether from the Island and take over all their Establishments—Trading and administrative—or to allow them to remain in the Island relieving them only of their public Establishments.
4

(4) Valuation of Farms &c £12,384.—
(5) Do of Mills 3,000.—
(6) Do of Buildings, Fort &c 12,575.—
(7) Inventory at Nanaimo Coal Mine
31st Octr 1855 38,326.9.3
£66,285.9.3  
6. Upon these items making a total of £66285.9.3 no confident opinion can be formed in this Country. If these Establishments are to be taken over by the Crown, it will, as it appears to us, be indispensable to employ some person on behalf of the Crown to proceed to Vancouvers Island and verify the valuation
put
put upon them by the Company. It will be seen that the Inventory at Nanaimo Coal Mine is dated 2 1/2 years since, and can, therefore, be nothing more than a very rough approximation to the present value of the plant, Coal in hand &c. The expense of employing a special valuer would be inconsiderable compared with the large sums to which his valuation would refer.  
7. Besides the above charges amounting in all to £112,810.1.9. a note at the close of the account alludes to inventories of goods,
stock
stock, and Trading Vessels, valued at £112,889.8.2. and proceeds to say, Should these inventories not be assumed by H.M. Government a serious loss may be sustained by the Hudsons Bay Company in the event of their Trade being suddenly terminated. An equitable compensation in such case will have to be agreed upon. Here again the main question is the continuance of the Companys trading operations or their assumption by the Crown. If the latter course should be
de=
decided on, this claim, which it will be observed is very indefinite, must like the preceding be investigated on the spot.  
8. In the account No 2 it is stated that the balances of Settlers on Sales of Land amount to £3,620.7.5. bearing interest at 5 per Cent. This amount will of course be payable to the Crown instead of the Company.  
9. The result to which we come is that if the Company is removed from VanCouvers Island claims will arise on their part under the Deed of Grant, for expenditure
and
and property, which in these accounts are represented by the sum of £225,699.9.11. and that of these claims upwards of seven ninths would require to be investigated on the spot. But that if the Company is allowed and is willing to remain and continue its operations, the amount to be repaid by the Crown will not exceed £34,000, the items of which can probably be investigated and settled in this Country. We would submit, therefore, that before any further steps are taken in the matter H.M. Government should decide
on
on the course to be adopted on the above point and if they decide to allow the Company to remain, should ascertain whether the Company are willing to do so. If the Company continue it will only be necessary to obtain vouchers for the first two items in their accounts, vizt, for the balance due on the Trust account and for the cost of sending out Settlers, and the account between them and H.M. Government may we should hope be brought at once to a close.  
We have the honor to be Sir
Your Obedient Humble
Servants
T.W.C. Murdoch
Frederic Rogers
Herman Merivale Esq.
Colonial Office
Minutes by CO staff
Mr Merivale
I conclude that the question of account between the Govt & the Hudson's Bay Co in reference to VanCouver's Island will eventually be referred to the Treasury when this report will be found useful.  
ABd
20 Apl
Lord Carnarvon
The great importance of the distinction pointed out by the Commissioners will be seen at once.  
It seems to me that the Company cannot be forced by Government to surrender their grant of the island, unless Government is willing to purchase their trading plant as well as their land.  
But that on the other hand, if the terms proposed by the Company are thought exorbitant, the Company cannot force Government to take the island at all, and must continue their occupation.  
This being the case, it is probable some middle course may be found, not involving the enormous expense which would be incurred by absolutely buying out the Company.  
I can therefore only suggest negociation with the leading members of the Company, & probably by conversation in the first instance, but I do not expect that it will be very easy to come to terms.  
HM
Apl 28
I will see Capt. Shepherd, and discuss the matter. But first refer to Law Officers on the question of whether the trading establishments are included in what we are bound to take off the hands of the H.B.Co.  
S
4
Lord Stanley
The estimated cost in buying out the Company—£225,699.9.11—is enormous and if some middle course can be arrived at without reestablishing exclusive rights & monopolies to the Company in Vancouver's Island it will undoubtedly be very satisfactory. It will therefore probably be desirable as suggested by MrMerivale to hear what terms the H.B.C. will agree to, without compromising your ultimate decision. There are however one or two points wh I would suggest for what they may be worth.  
1. The Balance due to the H.B.C. 8505.6.11. This is part the L. & E. Commissrs say, of a Trust account: in wh the Company set off payments made by them on roads, militia, Customs, gaols, salaries &c against receipts from land sales royalties &c.  
Is it quite fair to apply the proceeds of land sales—a permanent alienation of a great source of revenue wh diminishes pro tanto the resources of the island—to the current and annual expenses of militia, salaries, customs? Roads and gaols are permanent improvements to the Colony but I almost doubt whether in fairness the proceeds of land sales ought to be applied to purposes—wh however necessary in themselves & forming a part of the general administration of the country—are of a temporary & somewhat uncertain nature.  
2. Sending out Colonists £25,550. I doubt the propriety of this charge. There is nothing in the Grant—that I can see—wh pledges directly or indirectly the Govt to allow it. The terms upon wh the Island is granted to the H.B.C. for nine years are laid down—the resources wh shall be at their disposal are stated—their profits from minerals &c are Limited to 10 per cent—and in consideration of all these advantages the Company are to establish a settlement of resident colonists. This is declared to be the object in view for wh this grant is made—the reason in fact for conferring upon the Company rights of a very exclusive kind. But if we are to pay for such an outlay we might as well have undertaken the Emigration of these settlers. In the accounts annexed they are said to be "not required by the Company." That may be so: but I can see nothing in the Grant wh obliged the Company to send out persons whom they did not require for their commercial operations. Has any other condition be[en] made with them on this subject?  
Still less do I understand the principle upon wh one years wages and provisions are claimed for these settlers. If these men were really unrequired by the H.B.C. & therefore worthless to them, one years wages & provisions are not sufficient to indemnify the Company against the loss sustained and from their point of view they ought to have claimed more—if on the other hand they were valuable to the Company either immediately or in a short time after their arrival they ought to bear the charge. If they became of value 12 or 18 months after their arrival it is fair that the Company sd incur the loss of the first year as they receive the profits of the next eight—if they became useful on their arrival a portion [of] the burden fairly rests with the Company. It seems to me—at least without further explanation—that this claim goes beyond the just limits of compensation—that we are accepting the loss and leaving them the gain of the whole transaction. We gave them the island for nine years upon certain conditions—how far have those conditions been carried out by them? We are to receive it back only on a payment of £225,000.  
3. It is to be ascertained and considered whether the establishments, buildings &c wh we are under the contemplated arrangement to take into our hands are such as will be valuable and useful to us. They may serve the purposes of the H.B.C. but be of very inconsiderable use as far as we are concerned.  
4. Searching for Coal £12,469.5.7. Granting the correctness of the claim of one years wages & provisions to the settlers sent out by the H.B.C. part of the cost here wd probably fall within the charge for that first year—for either the men were directly employed in searching for minerals, or they relieved others engaged upon different work and enabled them to search.  
5. Land sales are alluded to in these papers. To whom has land been sold? to the settlers whose passage we are to pay? to private individuals? to such a Company as the Puget Sound Company? to members of the H.B.C. itself? In the next place upon what terms have those sales been made? has there been any precaution taken to limit the quantities, the character, the localities of such purchases? We had experience a few days since of the mischief arising out of the unadvised sale of Thetis Island. Under the Grant the Company are required to furnish statements of sales of land &c to the Home Govt—Has this provision been complied with?  
These questions I think deserve to be considered before taking any definite step in this matter.  
C
May 1
This matter can only be settled by negociation with the Compy, and by ascertaining their intentions as to continuance of their trading establishments on the island.  
S
May 3
 
Public Offices document:
Murdoch and Rogers to Merivale (Permanent Under-Secretary), 19 April 1858, National Archives of the UK, 3854, CO 305/9. The Colonial Despatches of Vancouver Island and British Columbia 1846-1871. Ed. James Hendrickson and the Colonial Despatches project. Victoria: University of Victoria. http://bcgenesis.uvic.ca/getDoc.htm?id=V585LN01.scx. Accessed 24 September 2018. 

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