I have the honor to acknowledge the receipt of 
Mr Merivale's letter,
               dated Downing Street the 
12th instant, on the subject of the
               expenses incurred by the Hudson's Bay Company in searching for Coal
               at 
Fort Rupert, and stating that unless the Directors of the Hudson's
               Bay Company can give evidence that it was intended to carry the
               proceeds of the 
Fort Rupert Mine, (had it succeeded) to the public
               account, Her Majesty's Government are not prepared to reimburse the
               Company the expenses they incurred in that undertaking.
               
               The Directors of the Hudson's 
Bay
Bay Company feel it would be difficult
               to bring evidence of an intention on their part to carry the proceeds
               of the 
Fort Rupert Mine to the public account, as in consequence of
               the search having proved a failure, the question as to proceeds never
               arose; but they would beg to remind you that the search for Coal was
               originally undertaken by the Hudson's Bay Company as one of the means
               of promoting Colonization in 
Vancouver's Island.  That object was
               attained by the addition to the British population of the Island of a
               large number of Miners and other immigrants connected with the
               working of the Coal, who were sent out from England at a very heavy
               expense.
               
               The Coal Mine at 
Nanaimo now in the hands of the Hudson's Bay Company
               has hitherto been unremunerative, 
and
and under these circumstances
               considering that the public alone have been the gainers, the
               Directors of the Hudson's Bay Company think that, although they may
               have no strictly legal right, they have nevertheless an equitable
               claim on the liberal consideration of Her Majesty's Government with
               reference to the actual loss sustained by them in the search for the
               Coal at 
Fort Rupert.
               
               Minutes by CO staff
               
                
                  
                  Lord Carnarvon
                     I think it 
wd be well to ask the Land Board to favor us with their
                     opinion on this.