Colonial Despatches

I have to acknowledge your letter of 11th inst, with a despatch from the Governor of Vancouvers Island on the subject of the proposed surrender of the Land Revenue of that Colony in exchange for a Civil List. Enclosed in the Governor's despatch are an Address to him from the Legislative Assembly—together with a Report from a Committee of that Body and the evidence taken by them on the subject of the disposal of Crown Lands.

2. The Committee of the Assembly summoned before them a number of witnesses connected with the Crown Land Department, and took much evidence on the manner in which the Sale of Land had been managed—on the amount disposed of—and the probable value of what remained. They also received evidence from one witness (Mr Homfray) impugning the good faith and honesty with which Mr Pemberton the Surveyor General had discharged his duties. As however, that witness, who had been employed in the Surveyor Generals Office, admitted that he was on bad terms with Mr Pemberton—as his evidence was distinctly contradicted by others who had as good means of forming a judgment as himself—and as the Committee, so far as they notice the matter in their report, acquit the Surveyor General of misconduct—it is unnecessary to refer to it further.

3. The result of the evidence taken by the Committee as to the value of the Land still at the disposal of the Crown is recapitulated in their report. The conclusion to which they come is that the Revenue to be derived from it is not likely "within any very short period" to be considerable, and that even when it is increased by the advance of settlement, it will probably not be much in excess of the expenditure necessary for surveys and roads. They report, therefore, that if the proposal of the Secretary of State be accepted, either new taxes must be levied to meet the additional charge of the Civil List, or public works of great utility must be postponed. The decision on these alternatives they leave to the Assembly.

4. In the course of their enquiry the attention of the Committee was naturally directed to the transactions between the Home Government and the Hudsons Bay Co which led to the Indenture of 3rd Febry 1862. The general effect of that Indenture was to admit the claim of the Hudsons Bay Co to two Sections of Country Land containing 723 and 1118 Acres respectively, and to 1212 Acres in Victoria all of which they claimed on the ground of possession previous to the Oregon Treaty of 1846. The greater part of the Land in Victoria had been already sold by them. The Committee calculated the value of the Land sold by or surrendered to the Company at $765,437 to which they added a conjectural sum of $500,000 for the value of certain water frontages included in the Sales of the Company.

5. The Legislative Assembly in their address to the Governor scarcely notice the question of Civil List, but adopting the above calculation of their Committee urge the Governor to procure the annulment of the Indenture of 3rd Febry 1862 and the repayment to the Colony by the Hudsons Bay Co of the amount they are assumed to have received for Land in Victoria. They also urge that the sale to Mr Lowenberg of the portion of the Government Reserve known as Lot Z should not be recognized.

6. The annulment of the Indenture of 3rd Febry 1862 is of course out of the question. That Agreement was made by competent authority and it is not alleged that any fraud was used at the time, or that any breach of the conditions had been committed since by the Hudsons Bay Company, which would justify H.M. Government in calling it in question. The circumstances which led H.M. Government to admit the claim of the Hudsons Bay Co to the Land at Victoria which they are said to have sold for so large a sum, are stated in the report from this Board of 28th Decr 1861. It may, however, be convenient that I should recapitulate them at length in this place.

7. In 1843 the Company established a Station at the Southern point of Vancouvers Island and called it Fort Victoria. In that time the North Western Boundary between the Territory of Great Britain and the United States had not been accurately ascertained, but in June 1846 a Treaty was concluded between the two Countries by which Vancouvers Island was assigned to Great Britain, and on the Continent the 49th parallel of Latitude was taken as the Boundary. The third Article of the Treaty was in the following terms— In the future appropriations of the Territory south of the 49th parallel of North Latitude, as provided in the first Article of this Treaty, the possessory rights of the Hudson's Bay Co and of all British subjects who may be already in the occupation of Land or other property lawfully acquired within the said Territory shall be respected.

8. On the 7th Septr 1846 Sir J. Pelly, the Governor of the Hudsons Bay Co wrote to Earl Grey, at that time Colonial Secretary of State, enquiring the intentions of H.M. Government as to the acquisition of Lands or formation of Settlement within the Territory assigned by the above Treaty to Great Britain. He stated that the Hudsons Bay Co having formed an Establishment on the Southern point of Van Couvers Island which they are annually enlarging, are anxious to know whether they will be confirmed in the possession of such lands as they may find it expedient to add to those which they already possess. In answer Lord Grey desired further information as to the natural qualities of the Land in question, and as to the legal competency of the Hudsons Bay Co to hold land in the British Territory beyond the Rocky Mountains, and after receiving an answer on those points he informed the Company (Sir B. Hawes 14 Decr 1846) that he is prepared to assent on Her Majesty's behalf to your proposal that certain Lands in Vancouvers Island, or in other parts of the Oregon Territory, should be granted to the Hudsons Bay Co, but before making that grant his Lordship would require the production by the Company of an opinion from H.M. Attorney and Solicitor General, to the effect that the acceptance by the Company of such a grant would be consistent with their charter of incorporation. That opinion was obtained and submitted to Lord Grey and on the 2nd Febry 1847 Sir B. Hawes informed the Company that with reference to that opinion Lord Grey was ready to receive and consider the Draft of such a Grant as the Company would desire to receive of lands belonging to the British Crown in the Oregon Territory.

9. No such grant was ever proposed, but instead, Sir J. Pelly, in consequence apparently of personal communications between himself and Lord Grey, submitted (5 March 1847) the Draft of a grant conveying to the Company the whole of the Territory belonging to the Crown to the North and West of Ruperts Land. Such a Grant was, however, considered by Lord Grey too extensive & eventually on 13th Janry 1849, a grant was passed conveying to the Company Vancouvers Island only— to the intent that the said Governor and Company shall establish on the said Island a Settlement or Settlements of Resident Colonists &c. In this Grant no reference was made to any Land already in possession of the Company as a Trading Body.

10. In 1851-2 the question as to the Lands held by the Company in Vancouvers Island was again brought into discussion. In a correspondence which then took place between the Company and the Colonial Office, Lord Grey's attention was drawn to a distinction which the Company made between Land possessed by them previous to the Oregon Treaty of 1846 and Land which they had since acquired. "The former" they said "will be made over to them" (the Company) "without purchase and for any addition thereto they will have to pay 20s/- per acre as all others do." Lord Grey having desired a fuller explanation of this distinction the Company, in a letter dated 4 Febry 1852, gave that explanation as follows. During the period that elapsed between the original connexion of the Hudsons Bay Co with the Country West of the Rocky Mountains, and the division of the Territory by the Boundary Treaty of June 1864 while in fact the Sovereignty was in abeyance, the Company reclaimed from the wilderness and occupied portions of Land wherever their trading Establishments were planted. These Lands they claim as theirs without purchase, and the possessory rights thus acquired in that portion of the Territory which is south of the 49th parallel of North Latitude have been guaranteed to them by the Boundary Treaty. Among the Lands occupied by the Company north of the 49th parallel is that situate at Fort Victoria in Vancouvers Island, where they formed an Establishment in the year 1843, and this is the Land alluded to in the 4th paragraph of my letter of 14th of Decr. Its exact extent has not been yet ascertained by the Company's Surveyors but whatever that may be, the Company consider they have a right to hold it, while for any additional quantity that may be required to be taken by the Fur Trade (which is merely a subordinate branch of the Hudsons Bay Co) the same price will be paid as is paid by other purchasers of Land.

11. Lord Grey's conclusion on this explanation was conveyed to the Company by His Under Secretary in the following terms— His Lordship having considered this explanation directs me to state, that he is not disposed to question the right of the Company to Land actually occupied by them previously to the arrangement for constituting Vancouvers Island a Colony, but that he wishes to be furnished as soon as possible with a statement of the extent and description of the Lands so claimed by the Company, and has consequently addressed a despatch to the Governor of the Island applying for such information. I am to add that his Lordship understands the claim preferred to be strictly confined to Land actually occupied and made use of, beyond which he conceives that it ought not on any account to be extended.

12. The statement of the extent and description of the Land thus called for was furnished by Governor Douglas in a despatch dated 25th June 1852. After describing the District first marked out by the Company for occupation which comprized 25 Square Miles the Governor stated, that the Company, he understood, proposed to retain of this Land only 3 Farms comprizing about 4000 acres, one at Victoria and the other two at the distance of 3 or 4 miles from that place. The extent of these Farms was more precisely given in the report from the Governor of the Company to Sir J. Pakington of 24 Novr 1852 as 3084 Acres. No answer was returned, nor apparently any action taken by Government with reference to Land in question, in consequence of either Governor Douglas' despatch or the letter from the Governor of the Company.

13. It was admitted that no conveyance of this Land had been made by the Crown before the grant to the Company of the whole Island by the Deed of 13th Janry 1849. The Company state that subsequently to that grant the Colonial Surveyor sent home the usual Deeds for the conveyance of the Land to the Company, but that they were advised that as the whole Island was already vested in them by the grant of Janry 1849 it would be anomalous for them to convey to themselves these special Lots. They, therefore, contented themselves with passing a Resolution and order to be entered on their records to the effect that the Lots in question were to be considered as the property of the Company.

14. It had been intended at one time to submit to the Judicial Committee of the Privy Council the question whether, under the circumstances above stated, the Company had a legal claim to this Land—or if they had not a claim in Law whether they had such a claim in equity as H.M. Government were bound in justice and good conscience to admit. But before the necessary steps were completed for that purpose, the Company proposed that the matter should be settled by arbitration, in the same manner as had been recently done with Lands held by them in British Columbia. To this the Duke of Newcastle assented, and we were directed to undertake the arbitration. The result was the Indenture of 2nd Febry 1862 which the Legislative Assembly denounces.

15. The general principle by which we were influenced in framing that Agreement was, that H.M. Government had during many years and on repeated occasions when the matter was brought to their notice acquiesced in the claim of the Company to consider the Land at Victoria their private property—that this had been especially the case in the course of the negociations with Lord Grey, and that it was only because their right was believed to be undoubted that they did not at that time put it beyond question by paying the prescribed price of £1 an Acre for the Land. The Land itself had been actually disposed of to purchasers and could not of course have been reclaimed. The only question was, therefore, whether the Company could be required to account for the money they had received for this Land as money received by them, not in their private characters, but as Trustees for the Crown. It appeared to us impossible under the circumstances to come to such a conclusion with justice. Nor if such a conclusion had been adopted could it have been carried into effect except through legal proceedings which must have been expensive and dilatory and the result doubtful. But the principal object of referring the matter to arbitration was to put an end as speedily as possible to all questions between the Crown and the Company which would impede the retransfer to the Crown. This it was supposed the Agreement would do. Unfortunately unforeseen circumstances, but especially the questions connected with the Government reserve, have defeated that expectation.

16. As respects the Address of the Assembly I would venture to submit that the Governor should be directed to inform them that H.M. Government have no power to set aside the Indenture of 2nd Febry 1862. The question of the grant of a Civil List in exchange for the Land Revenue can hardly be said to have been considered by them. Whether it is desirable in their present temper again to bring it under their consideration is a question on which I do not presume to give an opinion. But the sooner, and the more distinctly they are made to understand that the Agreement of Febry 1862 is final, the better it will be for the peace of the Colony.

17. In the enquiry before the Committee of the Assembly some evidence was taken about the sale to Mr Lowenberg of Lot Z on the Government Reserve, and the Assembly, as I have stated, in their Address to the Governor urge that no steps should be taken to confirm that sale until the question has been again brought before H.M. Government. But no evidence is adduced to affect the conclusion on the subject which I submitted in my reports of 30th March and 10th May last. It is therefore unnecessary for me to add anything on that point.