Temple
June 17th 1858
Sir
We were favored with your Letter of the 31st May ultimo
Land Bd 3854 [VJ]. 
in which you stated that you were directed by Lord Stanley to send us copies of two letters addressed by the Directors of the Hudson's Bay Company accompanied by Accounts shewing the Amount to be reimbursed to the Company by Her Majestys Government on the transfer of Vancouver's Island to the Crown, so far as could be at present ascertained; together with Copy of a letter addressed by direction of Mr Secretary Labouchere to the
Governor
Governor and Company, informing them of the intention of Her Majesty's Government to require this transfer; and of a Report with which Lord Stanley had been furnished by the Land and Emigration Commissioners on the subject of these accounts.  
That the Company were in possession of exclusive trade with the Indians of the North West parts of North America (which might be regarded as embracing Vancouver's Island) under the Crown Grant of 30th May 1838, of which a Copy was also annexed.  
That they were in possession of the land of Vancouver's Island under the grant of 13th January 1849 of which a copy was also annexed and [....]  
That In repurchasing the Island of the Company under the
provisions
provisions contained in the last Clause of that Grant the Crown would become bound to repay them the sums theretofore laid out and expended by them on the Island, and "the value of their establishments, property and effects then being thereon."  
You were also pleased to say that, it would be observed from the Report of the Land and Emigration Commissioners that those "Establishments and property", were of two Kinds: a portion having been erected and got together in consequence of and in relation to, their Commerical operations as a Company carrying on trade with the Indians under their license; a portion erected and got together in consequence of their territorial possession of the Soil, and to facilitate the settlement and government of the Island.  
You were also pleased to add
that
that you were directed to request that we would report for the guidance of Lord Stanley, our Opinion, whether the Obligation on Her Majesty's Government to compensate the Company, "if the Crown repurchase the Island, extends to both these classes of Establishments and property" or to "the latter only?["]  
In Obedience to his Lordships Command, we have perused the documents submitted to us and have the honor to Report  
That we are of Opinion that according to the proper and fair construction of the Royal grant of 13th of January 1849 the obligation on Her Majesty's Government to Compensate the Company if the Crown repurchase Vancouver's Island, extends only to sums laid out by them upon the Island and premises as owners
thereof
thereof, and to the value of their Establishments property and effects being thereon and connected with such ownership, which are substantially the Classes of Establishment and property mentioned last in Mr Merivales letter.  
We are Sir
Your Most Obedt Hble Servts
FitzRoy Kelly
H.M. Cairns
Herman Merivale Esqre.
&c &c &c
Minutes by CO staff
Mr Merivale
 
ABd
22 June
Lord Carnarvon
You have paid much attention to this subject. It seems to me that it will now be proper to answer the HB Co's letter 1987, by carefully pointing out the distinction, & stating what is the portion of the claim to which HM's Govt are ready (subject of course to investigation of items which might be conducted by the Treasury or by the Ld & Emn Commissioners) to accede.  
HM
June 22
Mr Merivale
The Emigr. Commissrs state that the alternative payments to the H.B.C. are £225,000 and £34,000: according as it is decided whether or no the Company shall be removed from the Island.  
I conclude of course that from what has already passed on the subject that the Company will be allowed to remain on the island in possession of their private property but that all exclusive privileges will be cancelled.  
In this case the £34,000 is about the sum wh they will claim for Compensation. I do not know the calculations by wh the Commissrs arrived at this sum. Probably they limited it strictly to expenses of a purely administrative kind. If so there can be no objection, but if they admitted many of the "cross-divisions" wh it seems the H.B.C. have introduced into the accounts to me & wh I pointed out in my previous minute may we not be led into allowing a charge wh, though far less than that wh was at first presented, may yet be unnecessarily high?  
Do you see any objection to guarding ourselves on this and such like points in Our letter to the H.B.C. independantly of requiring a verification of the several charges?  
Even if we subsequently consent to allow a charge for compensation somewhat larger than in strictness it ought to be—and with the very complicated relationship between the Govt and the H.B.C. it is possible that it will be politic not to press for our extreme rights—no harm will be done by showing the H.B.C. that we are conscious of the strong points in our own case? It gives us at all events better ground for negotiation.  
C
June 23
 
Public Offices document:
Kelly and Cairns to Merivale (Permanent Under-Secretary), 17 June 1858, National Archives of the UK, 6012, 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=V585LW01.scx. Accessed 21 September 2017. 

Last modified: 13:16:47, 4/11/2015