Ellice to Newcastle
Hudson's Bay House
London
11 May 1860
I have the honor to acknowledge the receipt of Mr Fortescue's letter of the 5th instant transmitting the Copy of a despatch which your Grace proposes to address to Governor Douglas.  
I beg to suggest that the Governor should be expressly cautioned against acting upon Your Grace's instructions in regard to the land in Vancouver's Island until he receives the requisite authority from this Company, which is to be sent out to him as soon as the payment of the £25,000 shall have been made.  
I
I think it right also to advert to that part of the proposed despatch which refers to the sums to be paid to this Company on the reconveyance of the Island of Vancouver. The claim originally sent in, as stated in the despatch, embraced the whole of the expenditure of the Company, and amounted to £225,699; but I would submit that the despatch is not quite correct when it goes on to state that, on being informed that it was not the desire of Her Majesty's Government to take over any of the establishments or property connected with their commercial transactions this Company furnished an amended account.  
I think it right to observe
that
that the first communication received by this Company after the account alluded to was sent in, was under date the 28th July 1858, from Lord Carnarvon the then Under-Secretary for the Colonies, in which he stated that Her Majesty's Government are of opinion, and are legally advised, that according to the proper and fair construction of the Royal Grant of the 13th January 1849, the obligation of Her Majesty's Government to compensate the Company, in the event of a repurchase, extends only to sums laid out by the Company upon the Island and premises as Owners thereof, and the value of the establishments, property, and effects of the Company being thereon, and
connected
connected with such Ownership; and he went on to state that Her Majesty's Government 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.  
This Company were advised that they had a right to call for payment of the full amount of the claims they had sent in, but not wishing to create discussion, or to occasion inconvenience to the Government,
so
so long as it could be avoided without an undue sacrifice of the interests of their constituents, the Directors were induced to furnish an amended claim, assuming the Company to retain that part of their property which the Government declined to take off their hands. Upon reference to the subsequent correspondence, Your Grace will find that when the discussion arose about the expenses incurred in searching for Coal, which it was proposed to refer to Sir John Coleridge, this Company were anxious that the whole question should be submitted to him, but this was refused on the part of the Government.  
I
I am anxious there should be no misunderstanding on this part of the question, as it will necessarily be brought into discussion when this Company's rights in Vancouver's Island come to be considered before the Judicial Committee of the Privy Council; and it is desirable therefore that its real position should be fully understood.  
I have etc.
Edward Ellice
Depy Govr
Minutes by CO staff
Mr Fortescue
So far as regards the payment of the £25,000, it is only necessary for us to suspend the despatch to the Governor until the Treasury make the payment which I trust cannot be delayed beyond a very short time.  
The
The remainder of the Company's letter is somewhat obscure. Their apparent object is to prevent their being prejudiced by having furnished an amended account. But they made no such proviso at the time, and the present communication does look a little like a repentance of what they had previously done.  
The proposed despatch may also require some slight modifications in order to make it clear that the Governor is to wait not merely for payment of the £25,000, but for receipt of the authority which the Company has thereupon sent him.  
TFE
14 May
Duke of Newcastle
I hope the £25,000 may be paid very soon, & that the authority from the H.B.Co. for the sale of land may be sent out to the Govr, with the despatch wh. is now in draft. The rest of the letter is written, I have no doubt, with a view to the question of title to the "Fur Trade Reserves" referred to the Judicial Committee. The Co. remind us that we maintained, under legal advice, that the obligation of the Govt to repurchase extended only to their property got together by them as owners of the Island, & not to that connected with their commercial operations, under which latter head they hold these Reserves to come. The gist of the letter is to be found in the words, "assuming the Co. to retain that part of their property wh. the Govt declined to take off their hands", which imply, I suppose, that if the Govt insist on taking one portion of their commercial property, they must take all, and the second reduced account must be taken to be withdrawn. But, however that may be, I see no objection to substitute for the words they object to in the draft, the words—(after "informed")—"that H.M.'s Govt declined &c".  
CF
14
Since this was received a further correspondence with the Treasury has taken place respecting the payment of the £25,000—which will entail some further (I hope not long) delay.  
It will be right (when the money is paid) to revise the draft despatch.  
N
16
Mr Blackwood
This letter must therefore be brought forward again, when the Treasury & Commrs have reported on the Co's accounts.  
TFE
17 May
 
Public Offices document:
Ellice to Newcastle, 11 May 1860, National Archives of the UK, 4873, CO 305/15. 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=V605MI09.scx. Accessed 21 November 2017. 

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