I have the honour to acknowledge the receipt of the 
Earl
                  of Carnarvon's letter of the 
7 Instant in which he announces
               first that Her Majesty's Government must insist on the strict
               fulfilment of the condition upon which 
Governor Douglas was
               appointed to the Government of 
Vancouver's Island, and 
British
                  Columbia, namely, his entire separation from the Hudson's Bay
               Company and the abandonment of all contingent share in its profits
               or retiring annuity dependant thereon; and secondly that while
               you do not think 
Governor Douglas entitled 
to
to any separate allowance
               as Governor of 
Queen Charlotte's Island, yet, if he has incurred
               any actual expense in that capacity there would be no objection
               to having his statement of those expenses entertained with a view
               to reimbursement.
               
               In reply, I have the honour to acquaint you that no time will
               be lost in transmitting to 
M Douglas a copy of 
Lord
                  Carnarvon's letter in order that he may at once be made aware of the
               determination of Her Majesty's Government on both those questions.
               
               As regards 
M Douglas's retired interest in the Fur Trade,
               I have only to observe that although the Directors of this Company
               do not feel justified in the present state of affairs in exercising
               their right of 
pre-emption
pre-emption, they trust he may be enabled to find
               some other means of disposing of his remaining interest in the Company.