Murdoch to Elliot (Assistant Under-Secretary) 4105, CO 60/30, p. 206; received 27 April

Emigration Office

26th April 1867 Sir,

In obedience to the instructions contained in your letter of 20th inst, we had yesterday an interview with Mr Klaucke, on the subject of his scheme for promoting settlement in British Columbia. We proceed to state the substance of that scheme, and the extent to which we consider that it might be entertained by Her Majesty's Government.

2. Mr Klaucke proposes to form a Joint Stock Company in this Country with a capital of £200,000 in 2000 Shares of £100 each, to send out Settlers to be placed on Farms in British Columbia. The expense of the passage—of preparing & fencing the land on which the Settlers are to be placed—of erecting log houses and of providing implements and provisions until the Settlers can raise a Crop, is to be defrayed by the Company, and it is calculated that for a family of 3 Adults (that is for a man and his wife and two Children under 12) this might be done for an expense exclusive of any payment for the land, of $1100 = £229.3.4. Each family is to be placed on a Farm of 200 Acres—and until the expenses defrayed by the Company have been repaid, the Company is to be entitled to receive, as rent, one moiety of the gross produce of the Farm. It is calculated that this moiety on 400 Farms, the establishment of which, exclusive of any payment for the land, would cost £97,334, would be worth £16,000 a year or more than 16 per cent. As soon as the Settler had repaid the expenses incurred on his account by the Company the rent would cease, and the Farm become his own. In the above statement I have excluded the cost of the land, which in his pamphlet Mr Klaucke has put at $1 an Acre, as at our interview he expressed an earnest hope that the Government would be willing to make a free grant of Land to the Company.

3. It will be seen from the above statement that, assuming Mr Klaucke's data, there would be quite sufficient profit to induce capitalists to enter into the scheme. But we confess that we are not ourselves sanguine of its success.

The voyage from Europe to B. Columbia could not be performed in less than 4 months—it would involve passing twice through the Tropics and as far South as 55o or 56o S. Latitude. The Emigrants must, therefore, be provided with a large outfit of clothes, which alone would involve a considerable expense. The land which they would obtain in British Columbia would not be superior to land they might acquire in Canada, New Brunswick or the United States, while in all other respects their position would be less advantageous. It appears to us more than doubtful whether the advantages which the scheme holds out of an advance of the expense of passage and settlement, would be sufficient to overcome the disinclination which persons of the class of small Farmers would naturally entertain to so long a voyage and so distant & unknown a Country. Nor can it fail to occur to the proposed Settlers that a [per] cent amounting to one half the gross produce of their farms is a very heavy price to pay for these advantages, and is likely to make it difficult for them to release themselves by paying off the principal debt. For these reasons we doubt whether Settlers will be found to accept the proposed conditions.

4. Moreover it appears to us unlikely that Mr Klaucke will be able at the present time to induce capitalists to engage in such an undertaking. For assuming his estimates of cost to be correctly framed, it is clear that his estimate of profit must be liable to great deductions. Failure of crop—difficulty of collecting the Company's share—inability to sell at the estimated price—death or desertion of Emigrants, and many other casualties which it is impossible to foresee, must all tend to falsify his calculations. It may, however, be considered that the probability of the formation of the Company is not a point on which it is necessary here to enter. Unless the Company is formed the scheme cannot go into operation—and in that case nothing will be asked of Her Majesty's Government.

5. If the question had reference to any other Colony than British Columbia we should not be disposed to recommend that it should be entertained. But it is so important, on political grounds, to increase the British population in that Colony * and at the same time so difficult, that we are reluctant to discountenance any scheme which holds out a prospect, however remote, of doing so. Upon these grounds we are disposed to recommend that the instruction to the Governor of B. Columbia which prohibits the gratuitous alienation of Crown Land might be relaxed so far as to promise Mr Klaucke that the Secretary of State would direct the Governor of B. Columbia to reserve for any Company that might be formed for the purpose of sending out Settlers to that Colony an extent of 10,000 Acres, to be allotted to Settlers in the proportion of not more than 200 Acres to each family, on condition that whatever was not settled within two years from the date of the reservation should revert to the Crown—that at least three fourths of the heads of families should be natural born British subjects—that no charge should be made to the Settlers for the land itself—and that as soon as they should have repaid the advances made by the Company for their passage and settlement, the Farms should be granted to them in fee simple. It might further be promised that as soon as one settlement of 10,000 Acres had been completed, another concession of land should be made to the Company to the same extent and on the same conditions, and so on as long as the Company were prepared to continue their operations, and the Government was satisfied with the manner in which they did so. But it would be necessary that the local Authorities should have power to visit the settlements from time to time, to ascertain that the conditions were faithfully carried out by the Company, and that the Settlers were well conducted and fairly successful. We propose the condition that at least three fourths of the heads of families should be British because Mr Klaucke contemplates the introduction of Germans, and it is not clear that Germans would fulfil the object of filling up the Country with persons who would be loyal to the British Crown. Unless this is attained there would be no advantage in the scheme.

6. We understood from Mr Klaucke that he would be satisfied with concessions to the above extent. We do not think that, limited as we propose, they could do any harm, & though, as we have said, we do not expect much sucess from the scheme, it may, we think, be worth while not to throw away the chance it affords of effecting something towards an object which H.M. Government have for many years been anxious to promote.

I have the honor to be Sir Your Obedient Humble Servant T.W.C. Murdoch