Berens to Newcastle
Hudson's Bay House
London
16 July 1859
I have the honor to acknowledge the receipt of a letter under date the 1st instant from Mr C. Fortescue on the subject of the claims of this Company against Her Majesty's Government in respect of expenditure in Vancouver's Island and especially as to the Expenditure on the Fort Rupert Coal Mine.  
It is necessary that I should call your Grace's attention to what has already passed upon the subject of this expenditure.  
By the Terms of the Grant of the Island of Vancouver to this Company of the date of the 13th January 1849 the
Crown
Crown reserved to itself the right to repurchase from this Company the Island and other premises the subject of the Grant in consideration of payment being made to the company of the sums laid out and expended by them upon the Island and premises and of the value of their establishments, property and effects then being thereon.  
Under date the 20th January 1858 Mr Under Secretary Merivale addressed a letter to the late Chairman of this Company informing him that in pursuance of a recommendation of the Committee of the House of Commons it was the intention of Her Majesty's Government to advise the exercise of the power reserved to the Crown by the existing Grant of Vancouver's Island to repurchase and take that Island from the Hudson's Bay Company at the approaching expiration of the Company's present trading license—namely on the 30th May 1859; and requesting that the Directors of this Company would at their earliest convenience furnish Her Majesty's Government with a statement of the sums for which they might claim repayment as laid out and expended by them in and upon the said Island and premises and as the value of their establishments property and effects therein according to the terms of the Grant.  
In compliance with this request this Company on the 24th February 1858 transmitted to Mr Labouchere the then Colonial Secretary certain accounts shewing the amount which they claimed to be reimbursed to the Company on the intended resumption of Vancouver's Island
amounting
amounting in the whole to £112,810.1.9 *
*
+112,889.8.2 for Inventories of goods &c.  
[CF]
and which embraced all the disbursements made by the Company subsequently to the acquisition by them of the Island under the Grant from Her Majesty as well as the value of the property held by them prior to the Grant. This latter however probably should not have been included. Under date the 28th July Lord Carnarvon in acknowledging, by direction of the then Colonial Secretary Sir Bulwer Lytton, the receipt of this account stated that Her Majesty's Government were of opinion, and were legally advised, that according to the proper and fair construction of the Grant of 13th January 1849 the obligation of Her Majetsy's Government to compensate the Company in the event of repurchase
extended
extended only to sums expended by the Company upon the Island and premises as owners thereof and to the value of the establishments property and effects of the Company being thereon and connected with such Ownership but that they did not recognize any obligation to compensate the Company for such of their establishments and property as had been erected and got together in consequence of and in relation to their commercial operations as a Company carrying on trade with the Indians; and intimating that the Government therefore could not hold themselves responsible as regarded the inventories of the Goods, Stock, and Vessels referred to at the end of the accounts
which
which had been sent.  
In reply to this communication I had the honor of addressing a letter to Sir Bulwer Lytton under date the 9th August 1858 in which after adverting to the previous communications above referred to I stated that there was no wish on the part of this Company to call upon the Government to assume any responsibility which did not fall strictly within the terms of the Grant and stating therefore that as the Government was legally advised that it was not under any obligation to assume any of the establishments or other property connected with our trading operations, the Company would raise no objection to the principle laid down by Lord Carnarvon with respect
to
to any property of that class which might remain in the Island.  
In reply to this letter under date September 4th 1858 Mr Under Secretary Merivale requested us to furnish an amended account of the sums which we considered due to this Company on the basis laid down in the letter above referred to and accordingly on the 2nd November 1858 the account now under discussion was forwarded to Sir Bulwer Lytton shewing a claim on the part of the Company amounting to £46,524.12.6.  
One of the items in this Account was that for the loss incurred in searching for Coal at Fort Rupert, being the item to which Mr Fortescue's letter of the 1st instant has immediate reference.  
In
In now considering the question whether this Company are entitled to be indemnified by Her Majesty's Government for this portion of their outlay it becomes necessary to advert to the terms upon which the repurchase was to be made, because when the Company agreed to adopt the construction put upon the terms of the Grant by the Law Officers of the Crown they did so under the full impression that the claim they had sent in would be admitted except in respect of those items which they agreed to take out of it, namely the cost of any establishments or other property connected with their trading operations then remaining in the Island. But if the question is now to be determined
whether
whether they are entitled to the particular head of expenditure now under discussion they claim the right to refer to the construction to be put upon the provision for the repurchase of the Island and they are quite ready to submit this question to the decision of Sir John Coleridge as suggested by your Grace in Mr Fortescue's letter of the 1st instant.  
This Company contends that under the terms of the Grant the repurchase could only be made upon repayment to the Company of all sums of money which they might have laid out upon the Island and premises as well as of the value of their establishments property and effects then being thereon.  
They contend that these terms make it incumbent on the Government to
place
place them exactly in the position in which they were before they took possession of the Island under the Grant and therefore if it is now proposed to except any portion of their expenditure as having been unproductive **
**
No—that was not the ground of the objection.  
[CF]
they rely upon the terms of the Grant as entitling them to call upon the Government to take back all the possessions they have acquired since the Grant was made reimbursing them for their whole expenditure without reference to whether any portion of that expenditure may have been productive or otherwise. They were willing as far as their existing establishments for the purposes of their trade were concerned to have excluded them from the valuation and to have retained them in their own possession but
as
as there appears to be a difficulty in coming to any arrangement upon that footing they consider that they have now a right to revert back to the terms of the Grant and as I have already observed they will be satisfied to leave it to Sir John Coleridge to decide what are their rights under its provisions.  
You will therefore be so good as to consider that this Company now claims to be reimbursed all the outlay embraced in the accounts forwarded to Mr Secretary Labouchere under date the 24th February 1858 except the three sums of £12,384.-.- £3,000.-.- and £12,575.- making together £27,959.- put down as
the
the value of the property possessed by them before the date of the Grant and also except the sum of £66,285.9.3 ***
***
£112.889.8.2  
the value of Inventories of Goods &c employed in the Fur Trade which will have to be modified according to the actual circumstances when the Island is taken over.  
While upon the subject of the repurchase of this Island by Her Majesty's Government I take leave to suggest that presuming it is clearly the intention of the Government to repurchase the Island on the terms specified in the Grant it will be necessary for this Company to re-convey the Island to the Crown excepting of course such land as has been sold by them under the powers
given
given to them by the Grant and excepting also of course the land which this Company previously held and which formed a part of their property irrespective of the Grant itself for in the absence of any reconveyance and the termination of the Grant to this Company neither the Company as still possessing the legal Title or the Crown in right of their repurchase will be in a position to make any Grants of Land.  
It is however to be observed that Mr Under Secretary Merivale's letter of the 20th January 1858 is in its terms only an intimation of the intention of Her Majesty's Government to advise the exercise of the power to repurchase the
Island,
Island, and not an express notice that such power would be exercised and no subsequent notice has been received by the Company of the intention so to exercise it.  
I have etc.
H.H. Berens
Govr
Minutes by CO staff
Mr Merivale
 
ABd
20 July
This is an awkward letter to deal with. We proposed to the Company arbitration on one particular question, the onus of the Expenditure on the "Nanaimo" *
*
Ft. Rupert  
[CF]
Mine. They answer by a letter in which they appear to express their willingness to submit the general question of their position toward Government to the arbitration of Sir J. Coleridge, at least so I understand it. I cannot but think this should be declined: & the Company merely asked whether they agree to the simple & limited reference before suggested.  
HM
Jy 22
Duke of Newcastle
This letter is very different in tone from that of April 21, in wh. the Co. urge no "legal right" but only an "equitable claim on the liberal consideration of H.M.'s Govt" with respect to the Ft. Rupert Coal Mine—on the ground of the Immigrants introduced in connection with it, so distinguishing this item from that relating to the Nanaimo mine (£38,326) wh. had been included in the statement of Feby 1858, but left out in the amended account of Novber 1858.  
The peculiarity of the letter is that it for the first time calls in question the principle laid down in the C.O. letter of 28 July 1858—that no compensation is due by the Crown for establishments &c got together for commercial purposes—with which principle the acct. of Novber 1858 professes to be "in strict conformity". (See Mr Berens's letter of Novber 2.) The Co. now propose to reopen that general question of the construction to be put upon the provisions of the Grant for re-purchase, and seem to lay down a new principle, viz—that excepting the property actually possessed by them before the Grant, they are to be compensated for all subsequent expenditure, whether productive or otherwise. This is a new distinction, not before made by either party. For we do not demur to the Ft. Rupert expenditure as unproductive, but because (as we hold) the product, if there had been any, wd have been commercial profit & not public receipts. I think I would answer by referring them to Ld. Carnarvon's letter of 28 July 1858, & decline to reopen the question of the principle of compensation, wh., on the advice of the Law Officers, was laid down by H.M.'s Govt, and accepted by the Co. as the basis of their amended account, and ask whether they agree to refer to Sir J. Coleridge the simple question, whether the Ft. Rupert item ought to stand in the account.  
CF
27
The answer recommended by Mr Fortescue is the proper one, but it must be carefully worded. There is an appearance of tempers in this letter and it looks like an attempt to bully.  
N
28
Other documents included in the file
  • Draft, Fortescue to Berens, 10 August 1859, declining to "lay down or accept any new basis of negociation" and asking again whether the company wishes to have the narrower question respecting the Fort Rupert claim submitted to arbitration.  
 
Public Offices document:
Berens to Newcastle, 16 July 1859, National Archives of the UK, 7160, CO 305/13. 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=V595HB09.scx. Accessed 20 July 2018. 

Last modified: 14:39:40, 16/2/2015