No. 35
29th December 1857
1. Since I had the honor of addressing you on the 15th of July last, concerning the Gold fields in the interior of the continent north of the 49th parallel of latitude, which for the sake of brevity, I will hereafter speak of as the "Couteau Mines," (so named after the Tribe of Indians who inhabit thecountry)Manuscript image country), I have received further intelligence from my correspondents in that quarter.
2. It appears from their reports that the auriferous character of the country is becoming daily more developed through the exertions of the native Indian Tribes who having tasted the sweets of gold finding, are devoting much of their time and attention to that pursuit.
3. They are however at present almost destitute of tools for moving the soil, and of washing implements for separating the gold from the earthy matrix and have therefore to pick it out with Knives or to use their fingers for that purpose; a circumstance which in some measure accountsforManuscript image for the small product of gold up to the present time, the export being only about 300 ounces since the 6th of last October.
4th The same circumstance will also serve to reconcile the opinion now generally entertained of the richness of the gold deposits by the few experienced Miners, who have seen the "Couteau" country with the present paucity of production.
5. The reputed wealth of the "Couteau Mines" is causing much excitement among the population of the United States Territories of Washington and Oregon, and I have no doubt that a great number of people from those Territories will be attracted thither with the return of the fine weather in spring.
6. In Manuscript image
6. In that case difficulties between the natives and whites will be of frequent occurrence and unless some measures of prevention are taken the country will soon become the scene of lawless mis-rule.
7. In my letter of the 15th of July, I took the liberty of suggesting the appointment of an Officer invested with authority to protect the natives from violence and generally as far as possible to maintain the peace of the country.
8. Presuming that you will approve of that suggestion I have as a preparatory step, towards the proposed measures for the preservation of peace and order this day, issued a proclamation declaring the rights of the crown in respect to gold found in itsnaturalManuscript image natural place of deposit within the limits of Fraser's River and Thompson's River Districts, within which are situated the "Couteau Mines," and forbidding all persons to dig or disturb the soil in search of Gold until authorized on that behalf by Her Majesty's Colonial Government.
9. I herewith forward a copy of that proclamation, and also of the regulations since published setting forth the terms on which Licenses will be issued to legalize the search for gold on payment of a fee of ten shillings a month payable in advance. [Marginal note: Enclosures 1 & 2]
10. When Mining becomes a remunerative employment and there is proof of the extent and productiveness of the gold deposits I would propose that the License fee begraduallyManuscript image gradually increased, in such a manner however as not to be higher than the persons engaged in mining can readily pay.
11. As it is particularly desirable to place a legal check on the movements of American citizens and to prevent them from entering the British Territory either for Mining or other purposes, I propose having the Proclamation and the License regulations now issued, published in the Oregon and Washington Territory weekly Journals, so that the laws regulating and legalizing the search for gold may be generally known, and that American citizens may not have the excuse of ignorance to plead in extenuation of breaches of the law.
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12. My authority for issuing that Proclamation, seeing that it refers to certain Districts of Continental America, which are not strictly speaking within the Jurisdiction of this Government may perhaps be called in question, but I trust that the motives which have influenced me on this occasion, and the fact of my being invested with the authority, over the premises, of the Hudson's Bay Company; and the only authority commissioned by Her Majesty within reach, will plead my excuse. Moreover should Her Majesty's Government not deem it advisable to enforce the rights of the Crown as set forth in the Proclamation, it may be allowed to fall to the ground, andtoManuscript image to become a mere dead letter.
13. If you think it expedient that I should visit the "Couteau Mines," in course of the coming spring or summer, for the purpose of enquiring into the state of the country, and authorize me to do so, if I can for a time conveniently leave this Colony, I freely place my services at the disposal of Her Majesty's Government.
I have the honor to be Sir
Your most obedient humble Servant
James Douglas

The Right Honble Henry Labouchere Esqre
Her Majesty's principal Secretary of State
For the Colonial Department.
Minutes by CO staff
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Mr Merivale
The Govr has shaped his proceedings according to the instructions concerning licenses &c which Sir J. Pakington gave him in /52, when gold was discovered in Queen Charlotte's Isld. See annexed P.P. 788 Page 12. I think myself that the Hudson's Bay Co, who are at present the beneficiares under the license, shd be requested to provide the necessary funds for the appointment of the proposed Officer, & that steps shd be taken forthwith for that purpose.
ABd 2/3
Other documents included in the file
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Draft warrant appointing Douglas to be "Lieutenant Governor of HM's Territories and Possessions in North America which are bounded on the North by the 54h Degree of North Latitude, on the East by the Rocky Mountains and on the South by the 49h Degree of North Latitude."
Minutes by CO staff
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This warrant I think will do: But it will require to be carefully explained to the Governor, and to the HB Co. also: & I think considering the peculiarity of the case, it may be as well to have the Law Advisers' concurrence?
I think so.
S Apr 2
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Draft, Colonial Office to Attorney General and Solicitor General, 22 April 1858, asking that they "peruse and settle" the annexed draft warrant, with explanation.
Minutes by CO staff
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It is very irregular that we cannot find any authentic information whether there are any magistrates appointed by the Crown in the licensed territory. Mr Ellice in his evidence, 5888, says there are, Mr Barr the Company's legal adviser assures me there are not. It would be important to ascertain the fact. And I think the new Lieut. Gov. should also have a Commission as such Magistrate.
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Lord Carnarvon
I cannot find the "Couteau River" on the maps, but presume it from the description to be between Fraser & Thom[p]son's rivers.
Gov. Douglas deserves in my opinion much credit for acting—as he always has done—with promptitude & intelligence in the line pointed out to him by the home Government, and making light of difficulties instead of creating them, in a position by no means clear & with very little assistance of any kind.
But I must refer to a former minute on 8657. There is no legal authority in North-Western America, except, for certain purposes, the Courts of justice in Canada. The H.B.Co. have under Act of Parlt a license for exclusive trade with the IndiansManuscript image in that territory until May 1859, but they have no other authority whatever. Govr Douglas (a servant of the Company) has no authority from the Crown beyond Vancouver's Island "and its dependencies" whatever that may mean. His proclamation I take therefore to be wholly without legal force, until adopted by the Crown (which I apprehend it should be).
It is competent for the Crown, notwithstanding the Existing license, to erect at any time any portion of the N.W. Territory into a colony, and to abolish the exclusive trade within the colony so erected.
And I am inclined to think that, without interfering with the Company's license at all, it might be practicable, and convenient,Manuscript image to issue an ordinary Lieut. Governor's commission to Gov. Douglas, over a certain portion of the N.W. Territory (say between lat. 49o & 53o or 54o N.). This would give him at least a semblance of authority, which would also be useful in the Event of possible complications with the U.S. arising out of the Mormon affair (it having been previously suggested to us as probable that Brigham Young when hard pressed may convey his Community into the British territories).
The only objection I see to this course would be that it would, no doubt, attract a certain number of adventurers, who would treat itManuscript image as an invitation to insult the Company's monopoly.
As to the plan of granting gold "licences" adopted by the Governor on our suggestion, it is one which works well for a time & occasionally, because those who have paid for their license combine with the authorities to keep out interlopers. But it becomes unpopular as soon as profits fall off, and has been abolished in Victoria for some time.
HM Mh 2
C March 5
Gov. Douglas's conduct shd be approved.
But several questns arise as to the future.
If we erect into a colony a tract now in hands of the H.B.C., by giving Gov. D. a Commission over it, do we thereby necessarily put anManuscript image end to the license for exclusive trade? Or can the two co-exist for a time?
Except in case of necessity, I shd be reluctant to deal with the license quesn (I mean the H.B.C. monopoly) except as a whole.
If the exclusive rights are not destroyed, there can be no claim for compensatn. If they are destroyed, I fear such a claim, though not for one year, will be raised.
If there is a doubt as to our posn relatively to the H.B.C. might not the law officers be consulted?
I refer this to Mr Merivale's judgment, & ask him for further informn.
S M 8
See 2459 since arrived.
My own opinion is that under the existing license the Crown might constitute, legally, a Colony inManuscript image Northwestern America, within the "licensed" territory, and yet not give the colonists the right of trading with the Indians during the continuance of such license. But I would submit that this would practically be an impossible course. Colonists could not be freely offered land at the fixed terms of purchase (which is essential to the modern way of colonization) and at the same time restricted from trading with Indians on their own soil; which would nevertheless be a necessary restriction if the license monopoly is to be maintained in its integrity. No attempt was made to maintain the monopoly in Vanc. I. after it became a colony: I mean in point of law, though practically the Company retains it to a considerable extent. See Mr Cooper's evidence 3838 & (Report).
HM Mh 22
The license so clearly contemplates that the exclusive trade should
be abolished wherever a colony is constituted, that I cannot think there would be any claim for compensation.
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I would observe in addition that the Act 1 & 2 Geo 4. c. 66. sect 10.11.12. makes provision for the appointment of Magistrates & administration of justice throughout the Northwestern Territory. So that, strictly speaking, we possess probably the machinery for keeping things in order, if the gold discovery on Fraser's River should be realized, until May 1859, without creating a colony.
HM Mh 22
C M 23
I agree that a Commission as Lieut. Gov. shd be issued to Gov. Douglas, extending over a district sufficient to cover the gold fields.
S 24
Documents enclosed with the main document (not transcribed)
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1. Proclamation by Douglas, 28 December 1857, respecting the disposition of the gold fields within the Fraser and Thompson River Districts.
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2. Regulations governing the issuance of gold licenses for the region outlined in the above proclamation, signed by Douglas, 29 December 1857, setting license fees "for the present" at ten shillings per month, payable in advance, obtainable at Victoria.