Shepherd to Labouchere
Hudson's Bay House
July 14th 1856
The Governor and Committee of the Hudson's Bay Company have lately had under their consideration the Financial Position of Vancouver's Island, particularly with reference to the prospective means for defraying the current expenses of the Government of that Colony.
You are aware that hitherto these expenses have been provided for, principally by the sale of sections of land at the rate of 1 per acre; by the amount received for Royalty on Coal, the produce of the Hudson's Bay Company's Coal Mine; and the amount received in the Colony for Licences and Fines.
TheManuscript imageThe first source of revenue, vizt, that arising from the Sale of land, will, it is to be feared, prove much less productive for some years to come than during the preceding period. The Hudson's Bay Company, and the Puget's Sound Agricultural Company, have completed to the full extent their purchases, and notwithstanding the modification permitting the payment of the purchase money by instalments, which has been lately introduced with your sanction, the Governor and Committee do not anticipate that such an impulse will be given to future sales as will make up for the loss of income caused by the cessation of purchases by those Companies. Under such circumstances the Governor and Committee are of opinion that the time has arrived when it has become necessary to send instructionsManuscript imageinstructions to Governor Douglas to take into consideration the best mode of providing additional means for defraying the expense of administering the affairs of the Colony; and, considering that the purposes for which the funds are required are those which are essential for the happiness and protection of the Colonists, the Governor and Committee trust that Governor Douglas will receive the support of the Legislative Assembly should it be found necessary to impose duties on trade, or other taxes for the accomplishment of this object.
The Hudson's Bay, and the Puget's Sound Agricultural Companies and their Servants, have expended a very large capital in the Island, in the hope that in the course of time some adequate return will be forthcoming, and although the uncertain prospect of such return within a reasonable periodManuscript imageperiod has now compelled them to inculcate on their Agents the necessity of adopting more caution in the expenditure of money on works not calculated to be immediately remunerative, yet they will be ready cheerfully to contribute their proportion of any tax or duty which may be imposed for defraying the necessary expense of administering the affairs of the Colony.
I have the honour to be Sir
Your mo: obedient humble Servant
John Shepherd

The Right Honble Henry Labouchere
&c &c &c
Colonial Office
Minutes by CO staff
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ABd 15 July
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Mr Ball
It was certainly part of the understanding on which Vanc. I. was transferred to the Company, that they were to be at the expense of governing it, & this is to be implied from the terms of the grant, though I cannot find it distinctly stated. But I think that when local funds (derivable from the sale of land) fail them, they are fairly entitled to call on the inhabitants to provide for their own government. At the same time it is so obvious that this system of self-government & self-taxation cannot be maintained concurrently with the vesting of the Exclusive ownership of the land in the Company, that I should think the Secy of State mayManuscript image answer that he cannot in reason issue such instructions, unless the Company are prepared to come to an arrangement for surrendering it.
HM July 19
Mr Labouchere
I am disposed to agree with Mr Merivale. It is time to consider what position the British Govt shd take with regard to this Dependency having in view the probable extension of population on the American frontier. The circumstances connected with the Arro islands though not very important seem to show the difficulties which will probably ensue from the continuance of the present state of affairs. In another point of view it may be doubted whether this island will remain British if there is not an influx of British population & it does not appear that the practical effect of the present system is toManuscript image attract population.
JB 21 July
Mr Merivale
I should like to speak to you about this before the answer is written.
I am inclined to think that some power of Taxation if necessary to provide for the govt of the Colony shd be allowed.
HL 30
Answer that the substance of this letter will be communicated to
the Governor with a statement that I consider it reasonable under the circumstances that some moderate imposts shd be levied to help to defray the expense of govert.
HL A 5
Other documents included in the file
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Draft reply, Labouchere to Douglas, No. 17, 23 August 1856.
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Draft, Merivale to Shepherd, 25 August 1856, relaying the instructions that were being issued to Douglas on the subject.