Berens to Newcastle
Hudson's Bay House
London
15 October 1859
I have the honor to acknowledge the receipt of Mr Fortescue's letter of the 10th August in answer to my letter to your Grace of the 16th July, but I cannot avoid observing that the grounds upon which in my letter I have sought to maintain the position for which this Company contends are in no manner dealt with by Mr Fortescue's answer.  
I beg respectfully to submit to your Grace that the simple question to be discussed is, what are the rights
of
of this Company under the provisions of the Grant for the repurchase of the Island by Her Majesty and that that question ought not to be affected by any correspondence that has recently passed on the subject, altho' undoubtedly in order to meet the views expressed by Her Majesty's Government this Company was disposed to waive the strict fulfilment of the obligations attaching to the Government in the event of the repurchase of the Island.  
Your Grace cannot fail to observe that it would be most unjust to expect that this Company would be bound by the opinion of the Law Officers of the Crown upon a Case submitted to them without their privity
and
and they considered that they were meeting the difficulty in a fair and liberal spirit in proposing to leave the whole question to the decision of Sir John Coleridge. If that course is not adopted will it be agreeable to Her Majesty's Government that the whole matter should be submitted to the decision of the Judicial Committee of the Privy Council.  
I beg again to suggest the expediency of an early settlement of this Question as in the meantime no Conveyances can be made of any Land included in the Grant to this Company for the reasons stated in my letter to Your Grace
of
of the 16th July last.  
I have etc.
H.H. Berens
Govr
Minutes by CO staff
Mr Merivale
 
ABd
17 Oct
Duke of Newcastle
I am sorry to say I can only read this letter in one way. The Company, having originally acquiesced in the principles of settlement proposed by this department, have a suspicion now (under different advice, I presume) that they were too liberal, and want to back out of it & throw the whole question afloat once more. It is now no easy matter to suggest any course of action. To accept the proposal of a general reference seems unadvisable for many obvious reasons. The grant of the island enables the Crown to "repurchase, on payment of compensation." But not a word is said as to who is to assess the Compensation or how any difference of opinion between the parties is to be adjusted. Perhaps we may ask the Law Advisers for counsel: but this delay is unfortunately very injurious, by preventing the settlement of the Vanc. I. pending questions as to Government, payment of officials, &c. I am not sure that a private interview with Mr Berens might not clear the way, by pointing out the great expediency of their surrendering the grant at once with full reservation of their right to payment however it may ultimately be ascertained.  
HM
10 20
I have no doubt the Company regrets its acquiescence in the principle of settlement at one time agreed upon and is resolved to back out of it.  
I do not think that a private interview with Mr Berens would much facilitate an early decision, though I shall be very glad to go into the matter with him.  
Upon the whole I am rather inclined to accept the proposal of reference to the Judicial Comee of the Privy Council—especially if the Company would consent that the questions involved in 10076 should be subject to the same Reference. The Public can desire nothing but an equitable adjustment of these claims and would of course acquiesce in the decision of such a Tribunal.  
There may however be some formal objection which does not occur to me. I shall be obliged to Mr Merivale if he will consider this. If he differs, he will no doubt state his objections, but if he concurs I will ask him to be good enough to give the necessary directions before he leaves Town for answering these letters and putting the matters in train. I hope Sir F. Rogers will soon be back and able to attend to the legal part of the question during Mr Merivale's absence.  
N
25
Duke of Newcastle
I should not think there would be any formal objection to bringing these questions either jointly or separately before the Judl Committee. The mode would be for the H.B.Co. to petition the Crown & the Colonl Secy to advise acceding to the prayer of the petition: which would doubtless be followed by a reference from the Crown to the Judl Committee.  
But I own I do not see how the Brit. Columbia question can be referred to the Judl Committee. I see no legal question at all. Whatever property, such as stock, &c, the Company possess they will of course be paid for. Ownership of the soil they clearly have none. They do not themselves claim it, as a legal proposition. What they seem to say is, you cannot fairly make us out landlords in your American treaty, and deny our character as landlords in Brit. Columbia. How this is to be met, seems rather a question for the Secy of State or for the cabinet.  
The Vanc. I. question is more of a nature to be so referred. But I am afraid it would not be easy to obtain a satisfactory result. For it is really a question of account. The reference might perhaps be so managed as to get from the Jud. Committee some general declaration of the principle on which compensation should be assessed: but the Judl Committee is hardly a body fit for this. A common Law court would certainly submit such a question to an arbitrator.  
On the whole my impression is that, if you wish for further assistance [towards?] the decision of the first question (ownership in Brit. Columbia) the only available is that of the Law Advisers, putting it to them as a question of fairness, not of law, though I hardly see why they should be specially good advisers for this.  
That the second question, Vanc. I. Compensation, would be best solved by reference to a good arbitrator such as Sir J. Coleridge, with power if he thinks proper to raise [&nd?] state questions for the opinion of the Judl Committee: and power also to direct such local inquiries as may be necessary.  
But all this will be very long indeed. If we cannot arrive at a conclusion by a more compendious process of private settlement with Mr Ellice, I believe it will be essential to get the Company to relinquish their hold on Vanc. I. For things there are evidently getting into confusion. No one knows who is master, and the complication is much increased by the Governor being as it were the servant of both. I think a sum within the admitted amount might be fairly placed on the estimates next year as part payment.  
HM
O 26
I forgot to add that Sir F. Rogers is fully competent to manage this question, and better acquainted with some of its details than I am.  
[HM]
1;10380 Vancouvers Island &
1
10076British Columbia
Sir F. Rogers
Will you be good enough to look at these Papers.  
I consider a reference to the Law Officers useless as the question is not one of strict law, and Mr Merivale shews why the arbitration of the Judicial Comee of P. Council would not be applicable to the case in B. Columbia.  
An early settlement of both questions in dispute with the H.B.C. is most desirable for the interests of the Colonies, and I do not like, unless absolutely necessary, to adopt the summary mode suggested by Mr Merivale. It might possibly conduce to an arrangement if you could talk over the matter privately in the first instance with Mr Berens.  
N
29 10/59
Mr Murdoch
If you are not too busy, I should be much obliged by your drafting a letter to the HB Co. formed on your minute—or rather perhaps 2 letters—one for Vanc. I. one for British Columbia (the latter I daresay, being simply a legal matter, Sir F Rogers would not mind taking in hand notwithstanding his culpable bias toward that Company).  
As to the Duke's suggestion about the Treasury, I hardly know what to say. It is clear that at some stage or other we must go to them for approval, but I am not sure that this is the proper stage. However I will consider that afterwards.  
HM
D 15
Other documents included in the file
    *
  • Draft, Merivale to Berens, 30 December 1859, proposing a compromise for the sake of an early settlement of the compensation question (fair copy of the draft as noted below).  
  • Minutes by CO staff
    See draft dated 30 Decr/59.  
    [ABd]
    Sir F. Rogers
    I should be very much obliged to you if you wd look at this before I send it to Mr Merivale.  
    TWCM
    16/12
    Fair Draft sent to Mr Merivale.  
    TWCM
    17/12
Vide Memo sent to the Coll Office 5 Decr 1859.  
TWCM
Sir F. Rogers
By the Grant of VanCs Island (13 Jany 1849) it is provided that the Crown shall have power at the expiration of the H.B.Co.'s licence of exclusive trade with the Indians (13 May 1859) "to repurchase & take of & from the said Govr & Co the said Vancs Island & premises hereby granted, in considn of payment being made by us, our Heirs & Succ[ess]ors to the said Govr & Co of the sum or Sums of money theretofore laid out and expended by them in and upon the said Island & premises, and of the value of their establishments, property & effects then being thereon".  
On 20 Jany 1858 Mr Merivale by direction of the S. of S. gave notice to the Co of the intended resumption of Vancs I. & called on them (1858) to furnish a statement of the sums of which they wd claim repayment under the condition of the grant above quoted. In answer the Co on 24 Feby sent in accounts showing claims, many of them indeterminate in nature & amount, to the extent of £225.699.9.11. On a reference to this Board we pointed out (19 Apl) that the first question to be decided was whether the Co were to be altogether removed from Vancs I. or to be allowed, if willing, to retain their trading establishments—that in the former case an amount probably not less than that claimed would, subject to verification on the spot, be payable to them, but in the latter case that they would be entitled to claim no more than abt £34,000 the verification of which might probably be effected in this Country.  
Upon receipt of this Report the C.O. referred the whole of the papers to the L[aw] O[fficers] for their opinion whether the obligation on H.M. Govt to compensate the Co if the Crown repurchased the Island extended to their establishments & property got together in consequence of & in relation to their commercial operations as a Co carrying on Trade with the Indians, as well as to those erected & got together in consequence of their territorial possession of the Soil & to facilitate the settlement & government of the Island, or to the latter only. The L.O. reported that the Crown was only bound to compensate the Co for sums laid out upon the Island & premises as owners thereof & for the value of the establishments, property & effects of the Co being thereon & connected with such Ownership—but not for the establishments or property got together in consequence of their commercial operations. The substance of this opinion was communicated to the Co for their information & the principle involved in it accepted by them *
*
In acknowledging the letter of 28 July Mr Berens says (9 Augt) There is no wish on the part of the Co to call upon the Govt to assume any responsibility which does not fall strictly within the terms of the grant. And as the Govt is legally advised that it is not under any obligation to assume any of the establishments or other property connected with our trading operations, we will raise no objection to the principle laid down by Lord Carnarvon with respect to any property of that class which may remain in the Island.

 
& they were subsequently requested to furnish an amended account drawn up in accordance with the principles thus laid down (28 July 1858 & 4 Septr 1858). Accordingly on 2d Novr they sent in an account reduced to three items—vizt 1 for public works & establishments 2d for the cost of sending out Settlers & 3d for loss on searching for Coal at Fort Rupert. The whole claim amounted to £46.524.12.6.  
To the two first items no objection was taken, but the third amounting to £12.469.5.7 appeared to us to fall rather within the Commercial than the Colonizing operations of the Co and the Co were (on a suggestion from this Board, slightly modified at the Coll Office) informed that unless they cd bring evidence that it was intended to carry the proceeds of the Fort Rupert mine (if it succeeded) to the public account their claim under this head could not be admitted. In their reply (21 April) the Directors advert to the difficulty of bringing evidence of an intention which never could have had any practical operation, but expressed an opinion that under the circes the Co "altho they may have no strictly legal right" had nevertheless an equitable claim on the liberal considn of H.M. Govt. The Colonial Office answered (1 July) by proposing a reference of the claim to Sir J. Coleridge.  
This proposal brought forth Mr Berens letter of 16 July—in which after recapitulating the previous correspondence he states that when the Co agreed to accept the construction put on the grant by the L.O. they did so "under the full impression that the claim they had sent in would be admitted except in respect to those items which they agreed to take out of it"—that according to their interpretation of the Grant the Govt are bound to repay them all the money they have laid out in the Island and premises & to replace them exactly in the position in which they were before they took possession of the Island—& therefore that if it is proposed to except any portion of their property "as havg been unproductive" they rely on the grant as entitling them to call on Govt to take back all the possessions they have acquired since its date & to reimburse them their whole expenditure. They state that they are willing to leave the whole question of their rights under the grant to Sir J. Coleridge, but not the isolated question proposed by the C.O.—and they conclude with a demand for payment of the whole sum embraced in the accounts sent in on 24 Feby 1858, except the value of the property held by them before the grant, amounting to £27.959.—& the value of Inventories of Goods &c £112.889.8.2 (erroneously stated at £66.285.9.3) which will require to be corrected to the date of the retransfer. The Colonial Office declined this proposal to reopen the whole question, insisting on the L.O. interpretation of the grant—and referred the Co to their previous acceptance of the proposed principle of settlement. The Co in reply (15 Octr) point out that they cannot be bound by the L.O.'s opinion on a case to which they were no party & propose a reference of the whole case to the Judicial Comme of the P.C. To this letter no answer has been given.  
The principal questions which appear to arise on this correspondence are  
First. Can the Govt hold the Co to their acceptance of the principle of settlement admitted in Mr Berens' letter of 28 July 1858. I do not see how that could be done. The acceptance is not expressed in any way that wd be legally binding on the Co & if they now refuse to abide by it & it is attempted to enforce it the result must be the reference of the whole matter to a Court of Law. But if it is to come to this it wd be better to accept at once their proposal to refer the matter to the Judicial Comme & to get an amicable instead of a hostile proceeding. At the same time it is clear that the Co have no ground for the assertion on which they base their change of proceeding vizt that they were under the impression that the claim they sent in would be admitted, as in Mr Merivale's letter communicating the L.O. opinion he expressly says "how far the principle above adverted to may affect the other items of the account must be matter of separate consideration in each case."  
Second. If they cannot be compelled to abide by their previous decision can any compromize be effected? It is clear that if the Govt are compelled to take over the whole or any large portion of the Cos expenditure (and the terms of the grant are so indefinite that notwithstanding the L.O. opinion it is impossible not to apprehend such a result) whatever has any relation to trading establishments or Commercial enterprize will be simply wasted. The only chance of reimbursement would be that the Co should repurchase from the Crown—but as they wd have no competition they wd of course repurchase only the profitable portions at their own price. In short they wd be in a position to make a good bargain & the Crown be compelled to accept a bad one. It would be worth some sacrifice to avoid this.  
The compromize that occurred to me, as you know, is to revert to the position of 2 Novr 1858 and to divide the Fort Rupert Mine expenses. This would give the Co in round Nos £40,000—and the matter might be settled at once. If they will not compromize & we are driven to arbitration or litigation, then arises the question.  
Third, whether the Co are entitled to retain their Farms &c which they acquired before the grant of 1849. The words of the grant seem wide enough even for this, but I cannot think that in justice such a construction cd be insisted on. The grant was evidently dealing with operations to be undertaken & interests to be created under itself & therefore subsequent to its date. It takes no notice of interests actually then existing. And upon this point we cannot ignore the correspondence which passed with Lord Grey before the issue of the grant, the inference from which seems to be that the Co would have received special grants of the property they had acquired if it had not been felt that such special grants were included in the general grant which was then in preparation. The minor question was apparently forgotten in the major but it would not I think be worthy of the Govt to take advantage of such an oversight. Nor is there any ground for adopting an illiberal policy towards the Co while such a policy wd certainly damage the Govt if hereafter the matter were to come into a Court of Law. Upon the whole, therefore, I do not think the Co cd be fairly required to surrender property wh: they held before the grant of 1849.  
It does not occur to me that there are any other questions connected with the Vancs Island matter to be considered before we see Mr Berens & Mr Maynard—Except perhaps, if no compromize seems likely to be effected, to propose the surrender of the Island, pending the reference to arbitration by the Judicial Comme on some terms that will leave the rights of each party in status quo.  
There remain the questions respg Land in B. Columbia.  
The nature & extent of the Co's claims are stated in my report of 29 Augt last, which is among these papers. It is clear, I think, that if those claims were to be decided on their own merits alone the Co could put forward no legal title to any of the Land and the Govt wd be at liberty to deal with them on principles of justice & with equal reference to the claims of the public as to theirs. But the matter is complicated by the Oregon Treaty & by the interpretation put upon it by the L.O.  
By the 3[rd] article of the treaty it is stipulated that "The possessory rights of the H.B. Co and of all British subjects who may be already in the occupation of land or other property lawfully acquired within the said territory shall be respected." The L.O. say that the term "possessory rights" has a well understood meaning in Treaties & that when used as in the above stipulation it signifies that possession & absolute property shall be considered & treated as identical. The Co allege that the Land which they claim is that wh: they possessed before the Oregon Treaty—that it stands on exactly the same footing as the Land within the Territory ceded to the U.S. by that Treaty, the property in which has been conceded to the H. Bay Co on the representations of the British Govt—and they urge that the British Govt cannot maintain their rights as against the United States and refuse them as against themselves under precisely similar circumstances.  
The only possible answer to this argument as it seems to me is, what you threw out in conversation, that Gt Britain being about to divest herself by the Treaty of the power of hereafter dealing with the Co's claims south of 49o and being unable to place them in exactly the same relation to the U.S. as they had occupied towards herself could not do otherwise than stipulate for placing them on a solid footing—and to that extent improving their position—but that it does not follow that she should equally abandon the power of dealing with the claims which remained within her own boundary. To this it may be answered that we must assume that England intended to act fairly by the U.S. as well as by the H.B.Co and would not have demanded any thing of them which when required of herself she refuses on grounds of public policy. This answer, however, does not appear to me conclusive. The Oregon Treaty was avowedly a compromize and it is not unreasonable to assume that the U.S. Govt were willing to allow Br. subjects to obtain better titles than they before possessed in the ceded territory (which would be in consonance moreover with the U.S. Laws in respect to Squatters) as one of the concessions to Gt Britain, in return for Gr. Britain's surrender of her claim to the whole right bank of the Columbia River. The Land in question was of no value at the time of the Treaty, nor was there then any reason to expect that it would for many years be required for settlement. It might therefore be fairly asserted that in granting the privileges demanded for Br. subjects no public interest was sacrificed—but rather that the only probable resource for opening the Country was protected & encouraged.  
The matter is different since the discovery of gold in Br. Columbia. The claims of the Co come there in direct opposition to public interests & the Govt is therefore bound to construe them strictly. If they were admitted the progress of the Colony might be seriously interfered with & a large portion of the Revenue to be derived from Sales of Land be diverted from the public Treasury to the Co. The Govt therefore while it is bound to do justice to the Co is not at liberty to do more and the question is what justice absolutely requires. The Co have themselves considerably reduced their claim in their last communication. In the letter of 12 Octr 1858 Mr Berens asked for a recognition of all their possessions "taking as a basis the land occupied & pastured by the Cattle of the Co before the influx of Miners" adding that the Co proposed the same title to these lands as those in Oregon. In the last letter dated 6th Octr last Mr Berens claims the benefits of the Oregon Treaty stipulation only for the Lands acquired by the Co before the date of that Treaty—accepting for the rest of their lands the principles laid down in the C.O. letter of 14 Septer vizt the grant in Towns only of Land on which buildings have been erected—the grant in Country Lands only of Lands which have been cultivated—& Licence of occupation of Pasture Lands.  
It may probably appear on investigation that the Lands acquired by the Co before the Oregon Treaty are of no very great extent—for it is stated in Mr Berens first letter that before that date their Trade was sent by the route of the Columbia—& that it was only on the Cession of the course of that River to the U. States that they opened up the route thro Br. Columbia beginning at Fort Langley "which had long previously been established." If by this is meant that the claim which they now put forward at Fort Langley existed before the Oregon Treaty it is clear that the Govt must resist it, for they claim 10 acres in the Town & 6400 acres in its immediate neighbourhood. But is is most likely that the greater portion of this was acquired later & may therefore be treated as open to arrangement.  
Under any circes it is evident that their claims cannot be decided on without a searching enquiry on the spot—which, it appears, is to be committed to Coll Moody. All that could now be done would be to settle the principles on which they were to be dealt with. It appears to me that if the Co are made to understand clearly that the argument derived from the Oregon Treaty is not held to be conclusive—and that irrespective of it they are not considered to have any legal title they may be brought to consent to some compromize which without being unfair to them will not be injurious to the public.  
When you have made up your mind in the matter we had better ask Mr Berens to call here—as it has already stood over, from accidental circes some time.  
TWCM
24/11/59
Other documents included in the file
  • Draft, Colonial Office to Berens, no date, proposing a compromise for the sake of an early settlement of the compensation question.  
 
Public Offices document:
Berens to Newcastle, 15 October 1859, National Archives of the UK, 10380, 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=V595HB14.scx. Accessed 20 July 2018. 

Last modified: 16:56:35, 24/2/2015