Colonial Despatches

I have to acknowledge your Letter of the 23rd instant, enclosing for my Report a Letter from the Deputy Governor of the Hudson's Bay Company respecting the amount claimable by them from Her Majesty's Government on the resumption of VanCouvers Island.

2. On that resumptionthe the Company were entitled to claim from the Government repayment "of the sum or sums of money theretofore laid out and expended by them in and upon the said Island and premises and of the value of their establishments property and effects then being thereupon."

3. A statement of the amount claimable under these words was framed by the Hudson's Bay Company at the desire of the Secretary of State—and beingreferred referred to this Board was reported upon by us on the 19th of April. In our Report we suggested the question whether the Government intended to take over the whole of the Company's Establishment including Farms, Mills, a Coal Mine, Goods, Stock, and a trading Vessel or to leave them in possession of their trading Establishments and merely repay them the sums expended by them as Owners of the Island under the grant from the Crown. In the former case the claimamounted amounted to £225,699.9.11. In the latter it seemed reducible to about £34,000.

4. This suggestion led to a reference to the Law Officers of the Crown who were of opinion that the Government was only bound to compensate the Company for "the sums laid out by them upon the Island as owners thereof and for the value of their Establishments property and effects being thereon and connected with such ownership which" they added "are substantially the classes of"establishment establishment and property" described by Mr Merivale as "got together in consequence of their territorial possession of the soil, and to facilitate the settlement and Government of the Island."

5. This decision was communicated to the Company in Lord Carnarvon's Letter of the 28th ultimo in which he stated that the right to compensation only extended to sums laid out and property got together by the Company as Owners of the Island and not to expenditureand and property consequent on or related to their commercial operations as a Company carrying on Trade with the Indians.

6. The Deputy Governor of the Company now states in reply that the account was made out in accordance with what were supposed to be the intentions of the Secretary of State but that "there is no wish on the part of the Company to call upon the Government to assume any responsibility which does not fall within the terms of the grant" and that they will"raise "raise no objection to the principle laid down by Lord Carnarvon".

7. I presume therefore the next step will be to request the Company to send in a fresh statement of their claim framed on the principle now laid down by the Secretary of State and accepted by the Company.