Murdoch and Walcott to Elliot (Assistant Under-Secretary) 11603, CO 305/18, p. 226; received 30 December

Emigration Office

28 December 1861

We have to acknowledge your letter of 21st instant, enclosing one from the Hudsons Bay Co in which it is proposed to refer to arbitration the questions respecting Land in VanCouvers Island in dispute between the Company and Her Majesty's Government. The Company nominate Mr Maynard and Mr Dallas to act on their behalf, and you convey to us the Duke of Newcastle's directions to act on behalf ofthe the Crown.

2. In obedience to these directions we have had interviews with Messrs Maynard and Dallas on the 24th and 27th inst and we proceed to state the result. But before doing so it will be desirable, in order to explain and justify the conclusion at which we have arrived, to recapitulate the facts of the case.

3. In 1843 the Hudsons Bay Co established a station at the Southern point of Van Couvers Island and called it Fort Victoria. At that time the North Western Boundary between the territory of Gt Britain and the United States had not been accurately ascertained—but in June 1846 a Treaty was concluded between Gt Britain and the United States by which VanCouvers Island was assigned to Gt Britain.

4. On 7th Septr 1846 Sir J Pelly, the Governor of the Hudsons Bay Co addressed a letter to Earl Grey inquiring the intentions of Her Majesty's Government as to the acquisition of lands or formation of Settlements within the Territory assigned by the above Treaty to Gt Britain. He stated that The Hudsons Bay Co having formed an establishment on the Southern point of VanCouvers 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 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 on the latter point he subsequently required to be furnished with an opinion from the law Officers of the Crown. The Law Officers opinion having been submitted to him, Sir Benj[ami]n Hawes was directed, on 2nd Febry 1847, to inform the Co that Lord Grey was "ready to receive and consider the draft of such a Grant as the Co would desire to receive of lands belonging to the British Crown in the Oregon territory."

5. 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 and eventually on 13th Jan[ua]ry 1849 a grant was passed conveying to the Company Van Couvers 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 Co as a Trading Company.

6. In 1851-2 the question as to the Lands held by the Co in Van Couvers Island was again brought into discussion. In a correspondence which took place in those years between the CyCompany and the Colonial Office, Lord Greys 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 Co) without purchase and for any addition thereto they will have to pay 20s/- per Acre as all other Settlers do." Lord Grey having desired a further explanation of this distinction the Company in a letter dated 4th 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 1846, while in fact the Sovereignty was in abeyance, the Co reclaimed from the Wilderness and occupied portions of land wherever their trading Establishments were planted. These lands they claimed as theirs without purchase and the possessory rights thus acquired in that portion of 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 December. Its exact extent has not been yet ascertained by the Company Surveyors—but whatever that may be the Co 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 by other purchasers of land.

7. Lord Greys conclusion on this explanation was conveyed to the Co by his Under Secretary [marginal note: Mr Peel 14 Feby 1852] 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 Co to land actually occupied by them previous 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 Co 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.

8. The information which Lord Grey thus announced he had called for was furnished by GovrGovernor 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 Co 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 three or four 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 24th Novr 1852 as 3084 Acres. No answer was returned nor apparently any action taken by Government with reference to the land in question, in consequence of either Governor Douglas' despatch or the letter from the Governor of the Company.

Of

9. Of the 3 Farms alluded to by Governor Douglas that at Victoria comprized 1212 Acres—the other two were of 1144 and 724 Acres respectively. A Fort having been built at Victoria Settlers collected round it, and the land which had originally been under tillage was sold for building lots. A Town gradually grew up to which the Gold discoveries of 1858 gave an unexpected impulse, and a large proportion of the land has now been disposed of, some of it, latterly, at very high prices. Our discussions with Messrs Maynard and Dallas had reference principrincipally=pallyprincipally to this land—the outlying Farms being comparatively of little public importance. The point which we had to determine was how far the claim which the Company derive from Lord Grey's implied promises—from the length of their possession—and from the legal effect of the Grant of 1849 could be reconciled with the public interests involved not only in the revenue to be derived from the sale of this land—but in the mode and extent of the Sale.

10. After earnest consideration and a full discussion with Messrs Maynard and Dallas it appeared to us that all that was necessary or could be justly demanded on public grounds would be obtained if what remained unsold of this Victoria lot could be recovered from the Co and placed at the disposal of the Crown. We, therefore, informed Messrs Maynard & Dallas that we should be prepared to recommend to the Duke of Newcastle that the Companys claim to the two outlying farms—and to the proceeds of the land they had sold in Victoria and to the land about their Fort, should be recognized, on condition of their surrendering to the Crown the whole of the land still unsold lying south and West of James Bay, together with a water frontage close to their Fort which had been previously marked out for a Harbor Masters Office. This proposal, as might naturally be expected, met at first with strong opposition from them. They urged that the land came clearly within the principle laid down by Earl Grey in the letter (already quoted) of 13th Febry 1852 viz. that it was land "actually occupied and made use of." They pointed out that it was not necessarily nor even naturally the site of a Town but had become so in consequence of their settling there, and they argued that if in 1852 the Co had paid for this land at the then price vizt £1 an Acre their right could not have been disputed, and that they did not make that payment only because the letter of 13th Febr[uar]y 1852 was understood by the Co as admitting their right without payment. It was impossible to deny the force of these arguments which as between individuals would, we think, have been irresistible. But it appeared to us that the Crown acting on behalf of the public was entitled and bound to insist more strictly on its rights than would be done in the case of private individuals. We therefore declined to recommend a compromize which Messs Maynard and Dallas proposed viz that the unsold land should be divided between the Crown and the Co even although the direction of the Sales were given to the Crown—but we consented to recommend some slight modifications of our proposal, so as to allow the Co to retain a homestead which they have established in the unsold portion of the land (but not to exceed 50 acres) and to set at rest titles to land between high and low water mark which has been sold to individuals.

11. Messrs Maynard & Dallas left us with the intention of submitting the above terms to the Governor and Directors of the Co and we have since received from Mr Dallas the enclosed document embodying them. We have the honor to submit this document to the consideration of the Duke of Newcastle. Whether the Co will be willing to accept the proposed terms we are unable to foretell. Both Mr Maynard and Mr Dallas described them as very severe, but we have reason to hope that they will recommend them to the acceptance of the Co. If the Co should be willing to accept them we have no hesitation in recommending that H.M. Government should close with the arrangement. We do not think that the public are likely to obtain, or have a right to demand, any greater sacrifice on the part of the Co and if more is sought it would be necessary to have recourse to litigation before the Judicial Committee of the Privy Council—which must necessarily be slow, expensive, and of doubtful issue—and which by keeping the public mind in suspense would certainly retard the progress of the Colony.

We have etc. T.W.C. Murdoch S. Walcott