No. 39, Military 9580, CO 305/19, p. 229; received 29 September 30 July 1862

I have the honor to acknowledge receipt of your Despatch No 95, of the 30th April last, acquainting me that the project of sending a Regiment to Vancouver Island has for the present been droppedbut but desiring that a fit Site for the future erection of Barracks for any of Her Majesty's Troops who may be stationed in the Colony should be reserved; and mentioning in reference hereto, your Grace's confident expectation that I shall be able with Colonel Moody's assistance to select a fitting spot on the "large extent" of lands recovered to the Crown under the recent agreement with the Hudson's Bay Company.

2. I sincerely trustthat that it may be within my power to fulfil Your Grace's expectations in this respect, but at the present moment I must confess I have great doubts upon the subject.

From the time of the receipt of Your Grace's Despatch of the 24th January 1862, No 84 vizt—the 28th March—until now, I have in vain endeavoured to ascertain from the Hudson's Bay Company the extent and position of the land that is to be surrendered to the Crown. The agreementbefore before mentioned provides for the retention by the Company of 50 acres, without purchase, of land to the South of James' Bay—and for the surrender of the whole of the remaining portion of the unsold Lands. A reference to the Assessment Roll of 1861 shews the unsold land then possessed by the Hudson's Bay Company to the south of James' Bay to amount to exactly 50 acres. It probably is much less than that now; consequently, instead of a large extent of land being recovered to the Crownunder under that agreement, as is the impression entertained by Your Grace, I fear it will be found that by it the Crown does not take benefit of one single acre—and not only so—but from the absence of any plans or maps being attached to the agreement, and from its very skilful wording—owing no doubt to none of the parties to it—save Mr Dallas only—having any local knowledge of the lands treated of—the Hudson's Bay Company so far from making anyconcessions concessions to the Government which the agreement would lead any one to infer—have actually obtained from the Crown almost the whole of the very small portion of ground not covered by Buildings actually now and for years past in the possession of the Government; and to which the Company had no sound claim, as I think has been very clearly shewn in the correspondence which I have had the honor, upon former occasions, to address to your Grace upon the subject.

I I have the honor to be My Lord Duke Your Grace's most obedient and humble Servant James Douglas