Colonial Despatches

With reference to the correspondence which has passed on the subject of the claims of the Hudsons Bay Co, as administrator of the Government of VanCouvers Island, I have the honor to submit the following report for the consideration of the Duke of Newcastle.

2. The claim of the Hudson's Bay Co, as far as it had been rendered up to 1860, amounted to £40.289.19.2.In In that year a sum of £25000 was paid on account. It was expected that when the complete accounts were sent in the balance against the Crown would not be increased beyond the sum then left owing vizt £15.000.

3. The complete accounts were sent in in March 1861, and the balance made out against the Government instead of £15.000 was £53.569. In a report dated 25 May last I explained the manner in which this balance was made up and the objections to which I thought many of the items obnoxious. The items which appeared to me peculiarly open to objection were— A new Charge for various services between 1857
and 1859 amounting to . . . . . . . £15123.19.‹3 +
Interest on balances amounting to 3276. 6. 5
making a total of . . . . . . . . . £18400. 5.‹8 I also pointed out that sums amounting in all to upwards of £35.000 were charged under the head of "Supplies," "expenses," "Cash" or equally indefinite terms.

4. The whole of the papers were referred by the Treasury to Mr Andoe of the Audit Office, and after a careful and minute inspection of the Company's Books Mr Andoe on 14th of December last reported the result of his investigation to the Treasury. The conclusion to which he came was that charges amounting in all to £26157.3.10 might properly be struck off the Company's account, thereby reducing the balance due to them to £27.412.10.4. The Company on being put in possession of Mr Andoe's report withdrew a claim of £4000 on account of the services of the "Otter" but adhered to their other charges. Their claim, therefore, against the Government is according to their own statement £49.469.14.2.

5. Having been put by the Treasury in communication with Mr Andoe it appeared to me, after going through the accounts with him, that it would be desirable, before attempting to report to the Duke of Newcastle, that I should enter into personal communication with the Governor and some of the Directors of the Company. I accordingly requested an interview with the Governor and he called at this Office some days ago accompanied by Mr Maynard the Solicitor of the Company, and Mr Colvile. After some discussion I stated to them my willingness to recommend to the Duke of Newcastle a payment of £25.000 in satisfaction of their claim. To this, however, they refused to listen and demanded as their minimum £40.000. As that sum appeared to me more than the Crown could with justice be required to pay I declined to recommend it.

6. The offer of £25.000 is so small as compared with the balance claimed, that I feel bound to explain how I arrived at it. It will be seen from Mr Andoes report that the charge for sending out settlers was in the first accounts stated as

Passage for 350 at £23 each £ 8 050.—
Maintenance for one year at £50 each 17 500.—
£25.550.—

But in a later statement this charge was altered to Pass[ag]e for 557 1/2 at £23 each £12.717. 5
Maintenance for one year at about £23 each 12.832.15
25.550.—

The explanation of the Company is that the whole number of Settlers sent out was 700—that of these the Puget Sound Co was expected to take half—that they did not do so—and all they did not take were therefore, charged as Settlers to the Crown—that on enquiry it was found that the charge for subsistence had been calculated too high, and therefore though the actual expenditure slightly exceeded the sum of £25.550 (the exact amount is said to have been £25642.14.7) they decided to adhere to the sum which had been inserted in their first account. This appeared to me an unsatisfactory explanation—and I considered that the Government were entitled, if they chose, to take the number of Settlers and the cost of maintenance at the lowest amounts stated by the Company—i.e. the number of Settlers at 350 and the cost of their maintenance at about £23 a head. This would reduce the claim of £25.550 to £16.100 being a reduction of £9.450 which added to £15.723.19.3 the new claim inserted by Mr Dallas which I considered inadmissible—and £3279.6.5 for interest which I thought questionable—would make a reduction of £27853.5.8 and bring the claim down to £25.716.8.6. I was confirmed in my view by discovering that Mr Andoe had arrived independently at the same conclusion.

7. I admit, however, that £25.000 was a low estimate of the amount due, and had the Governor been willing to accept £30.000 or £32.000 I should have been prepared to recommend that sum to the Duke of Newcastle's favorable consideration. Mr Andoes report as I have stated admits a claim to £27.412.10.4 and that report having been communicated to the Company they naturally claim the benefit of it. But one item which Mr Andoe disallows—that for commission on Land Sales effected but not realized—amounting to £2405.13.10 must, I think, be admitted—and further consideration leads me to the conclusion that a charge for interest, though perhaps not to the full extent claimed, would not be unreasonable. A payment, therefore, of about £32,000 would not in my opinion be excessive.

8. From later communications I have had with one of the Directors I understand that the Company would be prepared to accept £35.000 in full of all their demands, and it is for Her Majesty's Government to consider whether it is worth while, with a view to an early settlement, to accede to that arrangement. In considering this question it is on the one hand to be borne in mind that the Government are accepting accounts which the Company themselves have no means of verifying—but which they receive on the credit of their Officers in the Colony—that a portion of those accounts are estimates, and that those estimates have in one instance (that of the maintenance of Settlers) been admitted to be entirely inaccurate. This appears a strong ground for concession on the part of the Company. But on the other hand it must be remembered that without the consent of the Company VanCouver's Island could be recovered from them only by legal proceedings—that such proceedings might be protracted for years to the injury of the Colony—that they would be very expensive, and the result doubtful at last. Under these circumstances, although I do not acknowledge the Company's title to so large a sum as £35.000, I think it would be good policy and economy to pay that sum if the matter cannot be settled for less, rather than have recourse to legal proceedings for the settlement of the points in dispute.