The reports received from the Hudsons Bay Company's parties employed on Queen Char==lottesCharlottes Island, are not so favourable as anticipated, and it has now become a question, if surface gold, as found in California, exists in large quantities on any part of the Island. On the other hand all the accounts agree in representing the great value of the auriferous quartz from which it is expected that a rich harvest of the precious metals will be obtained.

The presence of a Vessel of War, permanently sta==tionedstationed on this coast will I am convinced have the happiest effect in promoting general trade, as well as the special interests of thisColony Colony, and I am in hopes, that Her Majesty's Government will take a favourable view of that measure. In that event I will submit for your consideration that a War Steamer of small force would be the most useful and effective Vessel that could be employed on this coast, as besides the celerity and certainty of her movements she could with less risk and far more ease than a sailing vessel, visit the numerous Bays and Inlets where prohibited vessels may be concealed.

The Colony of Vancouver's Island is, from present circumstances, in a most unfor=tunateunfortunate position for Trade; at the distance of more than 4000 milesfrom from the nearest British posession and separated from the Mother Country by half the circumference of the Globe, it has no available outlet for its productions, con-sistingconsisting of Salt-fish, Deals, Lime==stoneLimestone and Spars for Masts, which with the exception of the last will do little more than defray the expensive transport to Great Britain. Added to that dis==advantagedisadvantage the Colony has to sustain a competition with the American settlements in Oregon, whose staple exports are similar to those of Vancouvers Island, and are admitted into the American Ports in California free of duty, while heavy protective duties ranging from 20 to 30 per cent, are chargedupon upon the staple exports of this country.

Enterprise therefore languishes and unless some steps are taken to mitigate as far as possible, those disadvantages, the Colony will never prosper, and the labouring classes will seek employment in the neighbouring settlements of Oregon. Much I conceive may be effected in that way by encouraging the export of spars for the supply of the Royal Navy, which this Island produces in great abundance, and of the very best quality. I herewith enclose a document containing a description of a lot of spars prepared for shipment by Mr Brotchie a British subject; who has been nearly two years a resident on this Island, andwho who after devoting his whole time and spending all his means in the prosecution of that enterprise can find no sale for his property, which is therefore in danger of being destroyed by fire and other accidents.

I beg to recommend the case of Mr Brotchie to your consideration, as I have no doubt the Lords ‸CommissionersCommissioners of the Admiralty would find it of advantage to order a contract to be made with him for any number of Spars, required for the public service, this besides rescuing a worthy and enterprising man from ruin, would give an impulse to industry and be the means of calling into exercise a branch of trade which may leadto to very important results, as concerns the future interests of the Colony.

I have nothing further of any importance relative to the Colony to communicate. Petty offenses have on several occasions been committed by the natives, which have been fairly dealt with, but we have had no serious difficulty with any of the Native Tribes, who, generally speaking, live on friendly terms with the white settlers.

Since my last commu=nicationcummunication several dwelling houses have been erected at Victoria, and the Puget Sound Company have commenced two large farms in the same district; otherwise there has been little progress made in the settlements.