In 1858 the British government decided to make Vancouver Island a crown colony, and the secretary of state for the colonies instructed Governor Douglas to call an assembly of representatives of the inhabitants to devise some form of government for it. The license of the Hudson's Bay Company, giving it the exclusive right of trade on the island, was not renewed in 1859; and the governor, acting on instructions from Downing Street, proclaimed the revocation of the license and the establishment of a new province of the British Empire. This action of the imperial authorities gave fresh courage to the opponents of the company's government in Rupert's Land and raised the hopes of the people of Canada who wished to see that vast region annexed to their own provinces.

The Canadian government was not satisfied with the report of the select committee of the British House of Commons, presented in July, 1857. It was especially disappointed that no effective steps had been suggested by the committee for settling the boundary between Canada and the territory of the Hudson's Bay Company on the north and the west and that there had been no investigation of the company's charter. It regarded the validity of the charter as a fundamental matter in the whole question at issue between the company and Canada. The position taken by the government of Canada was shown m the following clause of a joint address of the Assembly and the Legislative Council presented to Her Majesty in August, 1858: "That Canada, whose rights stand affected by that charter, to which she was not a party, and the validity of which has been questioned for more than a century and a half, has, in our humble opinion, a right to request from Your Majesty's Imperial Government, a decision of this question, with a view of putting an end to discussions of conflicting rights, prejudicial as well to Your Majesty's Imperial Government, as to Canada, and which, while unsettled, must prevent the colonization of the country."

On September 4 of the same year the Executive Council of Canada addressed a communication to Sir Edward Bulwer Lytton. the secretary of state for the colonies, drawing attention to the importance of having a direct line of communication by railway or otherwise between Canada and the valleys of the Red and Saskatchewan Rivers, and later in the year Messrs. Cartier, Ross, and Gait went to England in connection with the matter. While there they intimated that Canada would take legal steps to test the validity of the charter of the Hudson's Bay Company, and the colonial secretary appears to have advised the governor-general of Canada that he approved of such a step; but His Excellency replied on April 19, 1859, that his council did not advise such action.

The imperial government made it plain in many ways that it would favor some practicable plan whereby the territory of the Hudson's Bay Company would be annexed to Canada. Shortly before the license of the company expired in May, 1859, Sir Edward Bulwer Lytton offered to renew it for one year or two years over the district east of the Rocky Mountains, pending some "arrangement" with Canada. But the company refused on the ground that a renewal for such a short period would only increase the inconvenience which had resulted from the state of suspense in which the question had been kept for two years, and that it would paralyze the company's authority in its own territory by creating an impression that the authority would shortly terminate. When the license was finally renewed for the usual period of twenty-one years, the government suggested that the question of the Canadian boundary should be referred to the privy council; but it refused to let the validity of the company's charter be tested while the boundary proceedings were pending, and so the Canadian government declined to take any part in the matter, on the ground that it could not be expected to compensate the company for any territory until the company's right to such territory was established.

On March 9, 1859, Sir Edward Bulwer Lytton wrote to the governor of the Hudson's Bay Company, urging that the company come to some friendly arrangement with the Canadian government; but the directors do not seem to have taken any steps to carry out his suggestion. He then decided that he would have the validity of its charter tested by the judicial committee of the privy council but before this could be done, the government of which he was a member went out of office.

The new government tried at intervals during 1860 and 1861 to devise a bill, satisfactory to all parties, whereby the imperial government might acquire from time to time portions of the territory of the Hudson's Bay Company for colonization, making suitable compensation therefor. Presumably these portions were to be transferred to Canada. But the company objected to this piece-meal dismemberment. Canada objected to acquiring the territory in such a manner, and no method of making compensation to the company was devised; and so the whole scheme came to naught.

In April, 1862, the Canadian government sent a communication to Governor Dallas of the Hudson's Bay Company, desiring to make some arrangement for the construction of a road and a telegraph line through the company's territory so as to connect Canada with British Columbia. Mr. Dallas replied that, while the question was really one for his board of directors in London, he himself thought that the request could not be granted. Such works as were proposed and such chains of settlements as were expected, if established in the valleys of the Red and Saskatchewan Rivers, would soon drive the buffalo away from these districts and so cut off the supply of food by which the company was able to maintain its trading posts in the regions further west and north. He believed that partial concessions of the company's territory in this way would inevitably lead to its extinction, and that, if any change were made in the government of such districts, direct administration by the crown was the only method likely to give public satisfaction. His letter contains the following paragraph: "I believe I am, however, safe in stating my conviction that the company will be willing to meet the wishes of the country at large by consenting to ail equitable arrangement for the. surrender of all the rights conveyed by the charter;.-'

COLLEGIATE INSTITUTE, PORTAGE LA PRA1RIK

During the summer of 1862 Mr. Edward Watkin, a gentleman who had been prominently connected with the Grand Trunk Railway, went to England, hoping to interest capitalists there in a scheme for building a road and a telegraph line across central Canada. In the autumn of the same year the Canadian government sent Messrs. Howland and Sicotte to London to urge upon the home government the importance of opening up the Hudson's Bay Company's territory for settlement; anil they, working with Mr. Watkin. succeeded in interesting several prominent Englishmen in their plans. The unwillingness of the company to have the road built, the unwillingness of the imperial government to grant a subsidy for the work, and the unwillingness of the Canadian government to give any substantial aid, so long as the boundaries of the company's territory were undetermined and its title in doubt, were obstacles too serious to permit Mr. Watkin's scheme to be carried out.

The simplest solution of all the difficulties would have been the purchase of the rights of the company by the imperial government; but if was unwilling to take this step, and so another solution was sought. Mr. Watkin succeeded in organizing a new company, and securing the necessary capital for it, to buy all the stock, lands, rights, and other property of the Hudson's Bay Company. The sum paid the old company was £1,500,000, and for this amount it transferred all its property to the International Finance Association, which in turn transferred it to the new company whose capital was fixed at £2,000,000. The final transfer was consummated in July, 1863^ and Mr. Watkin at once proceeded to Canada to secure government aid in his plans for opening up the western prairies by building roads, constructing telegraph tines, and planting settlements. His proposals were not favorably received by the government, for it found that the new company maintained all the territorial claims of the old one, and it declined to grant the aid asked for until the validity of those claims was definitely settled. The reply of the Executive Council to Mr. Watkin's proposal concludes thus: The committee therefore recommend that correspondence be opened with the Imperial Government, with the view to the adoption of some speedy, inexpensive, and mutually satisfactory plan to determine the important question (that of territorial rights of the company and that the claims of Canada be asserted to all that portion of Central British America, which can be shown to have been in the possession of the French at the period of the cession in 1763.

In November of that year Sir Edmund Head, governor of the Hudson's Bay Company, declared that the most- satisfactory solution of the difficulty would be. the purchase of all the company's territory by the crown• but as there were many obstacles in the way of such a plan, he proposed an alternative scheme. By it the territory fit for settlement would be equally divided between the crown and the company, with the exception of certain specified tracts to be retained by the latter; the road and telegraph would be constructed by the company; the crown would purchase such premises of the company as were needed for military purposes; and it would pay the company one third of the revenue derived from gold and silver in the territory acquired.

The proposals made by Sir Edmund Head on behalf of the Hudson's Bay Company did not meet with the approval of the Duke of Newcastle, the colonial secretary, and in the spring of 1864 he made the following counter-proposals to the company:

"1. That within certain geographical limits the territorial rights of the company should he surrendered to the Crown;

"2. That the sum of 1s. per acre on every acre sold by the government should be paid to the company, and payment 1o cease when their aggregate receipts from this source shall exceed £150,000, or on the expiration of 50 years;

"3. That one-fourth of the sum received by the government as an expert duty for gold, or on leases of gold mines, or licenses for gold mining, shall be payable to the company for 50 years, or until the aggregate receipts shall amount to £100,000;

"4. That on these conditions a government be established in. the ceded territory, Great Britain undertaking the expense and risk of that government until the colony is able to support it, as in British Columbia and other colonies.'^

The directors of the company met on April 13, 1864, and decided to accept the general principles underlying the duke's proposals, although they desired some changes in the details. They urged that the payments for land and minerals should be placed at £1,000,000 instead of £250,000, or else that they should not be limited in time, and that the company should receive 5,000 acres of land for each 50,000 acres sold by the crown. On June 6 Mr. Cardwell, who had succeeded the Duke of Newcastle -as colonial secretary^ informed the company that he could not entertain the amendments it had suggested, and no further progress in the negotiations was made for six months. But in December the directors of the company met to reconsider the matter, and the result was an offer to accept £1,000,000 as payment in full for the territory mentioned, which was practically all that granted by the charter of Charles II.

In opening the Canadian parliament on Feb. 10, .1864, Lord Monek, the governor-general said, "The condition of the vast region lying on the northwest of the settled portions of the province is daily becoming a question of great interest. I have considered it advisable to open correspondence with the Imperial Government, with a view to arrive at a precise definition of the geographical boundaries of Canada in that direction. Such a definition of boundary is a desirable preliminary to further proceedings with respect to the vast tracts of land in that quarter belonging to Canada, but not yet brought under the action of our political and municipal system." The position taken by the Canadian government, thus referred to in the speech from the throne, was stated in plainer terms by Hon. William McDougall in the debate which followed. He believed that Canada was entitled to all that part of the North West Territory, which could be shown to have been in possession of the French when they ceded Canada to the British.

In these prolonged negotiations, these proposals and counter-proposals, several facts are evident: the desire of the Hudson's Bay Company to be relieved from the task of government and its willingness to sell its vast territory for adequate remuneration; the desire of the home government to effect- a friendly settlement of the questions at issue between the company and Canada, to find some method for transferring the company's territory to Canada, and to keep the question of the company's title in abeyance; and Canada's steady adherence to the position that the questions of title and boundaries should first be settled. It will also be apparent that the three parties were gradually approaching common ground for the settlement of the questions at issue between them.

Early in 1865 the Canadian government sent a delegation headed by lion. George Brown to London to make one more attempt to secure the transfer of the territory of the Hudson's Bay Company to Canada. The delegates discussed the matter with Hon. Mr. Cardwell, and his statement of their position and that of his government is as follows: ''The Canadian ministers desired that that territory should be made over to Canada, and undertook to negotiate with the Hudson's Bay Company for the termination of its rights, on condition that the indemnity, if any should be paid, would be raised by Canada by means of a loan under Imperial guarantee. With the sanction of the Cabinet, we assented to the proposal, undertaking that if the negotiations should be successful, we, on the part of the Crown, being satisfied that the amount of the indemnity was reasonable and the security sufficient, would apply to the Imperial Parliament to sanction the arrangement and guarantee the amount."

Nothing further, however, seems to have been done for several months; but in February, 1866, Sir Edmund Head informed Mr. Cardwell that certain Anglo-American capitalists were likely to submit an offer for the purchase of all the arable land of the Hudson's Bay Company with a view to colonizing it: and, when he was reminded by the colonial secretary that there was an understanding between the Canadian delegates and the home government that Canada would have the first opportunity to secure the territory if the company disposed of it, Sir Edmund replied that the company could not be expected to leave the offer to Canada open for an indefinite period to its own financial detriment. These views were communicated to the Canadian government, and it replied on June 22 that while it recognized the importance of completing the negotiations for the extinction of the territorial claims of the company, the annexation of the territory to Canada, and the establishment of a regular government therein, the matter seemed one for the government of the Dominion of Canada to settle; and as the confederation of the provinces would shortly be accomplished, it hoped that the final settlement might be deferred a little longer. It also expressed the hope that Her Majesty's government would use its influence in the meantime to prevent any such sale as that contemplated. This reply was conveyed to the company, and six months later Lord Carnarvon suggested to the company 1hat. it would not be wise to take any steps which would interfere with the negotiations with Canada.

The confederation of the Canadian provinces became an accomplished fact on July 1, 1867; and thereafter it was the Dominion of Canada, instead of the united provinces of Ontario and Quebec, with which the home government and the Hudson's Bay Company had to deal in the negotiations for the transfer of the company's territory. While the delegates of the different provinces were working out the details of the confederation scheme, they passed a resolution, fully endorsing the position taken by the Canadian government in its communication to the imperial government on the 22nd of the preceding June; and in framing the British North America Act, by which the Dominion of Canada was created, its framers anticipated the early transfer of the territory of the Hudson's Bay Company to the Dominion, for Article XI, sec. 146, provided as follows : "It shall be lawful for the Queen, by and with the advice-of Her. Majesty's Most Honorable Privy Council, etc., on addresses from the Houses of the Parliament of Canada, to admit Rupert's Land and the North-West Territory, or either of them. into the Union, on such terms and conditions in each case as are in the addresses expressed, and as the Queen thinks fit to approve, subject to the provisions of this Act."

The statesmen of the new Dominion were fully alive to the importance of securing its vast hinterland in order that it might soon become a united dominion from the Atlantic to the Pacific, and the matter came up during the first session of its first parliament. On December 4, 1867, Hon. William McDougall, minister of public works, introduced a series of resolutions on which the addresses referred to in the British North America Act were to be based. These resolutions, which discreetly kept Canada's old contention in the background, created much discussion; but after a few amendments, they were adopted in the following form:

"1. That it would promote the prosperity of the Canadian people, and conduce to the advantage of the whole Empire, if the Dominion of Canada, constituted under the provisions of the British North America Act of 1867, were extended westward to the shores of the Pacific Ocean.

"2. That colonization of the fertile lands of the Saskatchewan, the Assiniboine, and Red River districts, and the development of the mineral wealth which abounds in the regions of the North-West, and the extension of commercial intercourse through the British possessions in America from the Atlantic to the Pacific, are alike dependent upon the establishment of a stable government, for the maintenance of law and order in the North-Western Territories;

"3. That the welfare of a sparse and widely scattered population of British subjects of European origin, already inhabiting these remote and unorganized territories, would be materially enhanced by the formation therein of political institutions bearing analogy, as far as circumstances will admit, to those which exist in the several provinces of this Dominion;

"4. That the 146th section of the British North America Act of 1867 provides for the admission of Rupert's Land and the North-Western Territory, or either of them, into union with Canada, upon terms and conditions to be expressed in addresses from the Houses of Parliament of this Dominion to Her Majesty, and which shall be approved of by the Queen in Council^-"

"5. That it is accordingly expedient to address Her Majesty, that she would be graciously pleased, by and with the advice of Her Most Honorable Privy Council, to unite Rupert's Land and the North-Western Territory with the Dominion of Canada, and to grant to the Parliament of Canada authority to legislate for their future welfare and good government.

"6. That in the event of the Imperial Government agreeing to transfer to Canada the jurisdiction and control over this region, it would be expedient to provide that the legal rights of any corporation, company, or individual, within the same, will be respected; and that in case of difference of opinion as to the extent, nature, or value of these rights, the same shall be submitted to judicial decision, or be determined by mutual agreement between the Government of Canada and the parties interested. Such agreement to have no effect or validity until first sanctioned by the Parliament of Canada.

"7. That upon tlie transference of the territories in question to the Canadian Government, the claims of the Indian tribes to compensation for lands required for purposes of settlement would be considered and settled in conformity with the -equitable principles which uniformly governed the Crown in its dealings with the Aborigines.

"8. That a select committee be appointed to draft a humble Address to Her Majesty on the subject of the foregoing resolutions."

The Hudson's Bay Company would not consent to the transfer of its territory until the amount of compensation for it hail been settled, and as Canada had practically agreed to do this, the Duke of Buckingham and Chandos, then secretary of state for the colonies, sent a dispatch to Lord Monck, saying that the Dominion government must settle the terms of the transfer with the company before the bill authorizing the transfer would be submitted to the imperial parliament. Accordingly the Dominion parliament passed the Rupert's Land Act in .Tulv, 1868, authorizing the government to acquire the territory of the Hudson's Bay Company. The government sent Sir George E. Cartier and Hon. William McDougall to England to arrange terms with the company, and they sailed on their mission on October 3, 1868. Soon after they had presented their credentials to the Duke of Buckingham, that minister informed them rather pointedly that the company was to be treated as a proprietor holding a good title to the lands whose transfer was sought, and so eliminated Canada's old contention from the discussion. There were proposals and counter-proposals for some time; and the business was also delayed by a change of government, in which Earl Granville succeeded the Duke of Buckingham in the colonial office, and by the resignation of the Earl of Kimberley, the company's governor, who was succeeded by Sir Stafford Northcote.

The British government was most anxious to have the negotiations brought to a satisfactory termination, and Earl Granville seems to have brought some pressure to bear upon the company, just as his predecessor had done upon the representatives of Canada. He plainly reminded the company that the title to its great territory was not beyond dispute, that its boundaries were open to question, that its vast domain was almost certain to be overrun by thousands of Canadian and American settlers, that it was powerless to prevent such an invasion, and that its government of the great region in the past had not proved its ability to maintain law and order there for the future. Finally an agreement was reached, and on March 9, 1869, the arrangements for the transfer were completed. They were as follows:

"1. The Hudson's Bay Company to surrender to Her Majesty all the rights of government, property, etc'in Rupert's Land, which are specified in 31 and 32 Victoria, clause 105, se«tion 4; and also all similar rights in any other part of British North America not comprised in Rupert's Land, Canada, or British Columbia,

"2. Canada is to pay to the Company £300,000 when Rupert's Land is transferred to the Dominion of Canada.

"3. The Company may, within twelve months of the surrender, select a block of land adjoining each of its stations, within the limits specified in Article 1.

"4. The size of the blocks is not to exceed........ acres in the Red River country, nor three thousand acres beyond that territory, and the aggregate extent of the blocks is not to exceed fifty thousand acres.

"5. So far as the configuration of the country admits, the blocks are to be in the shape of parallelograms, of which the length is not more than double the breadth.

"6. The Hudson's Bay Company may, for fifty years after the surrender, claim in any township or district within the Fertile Belt, in which land is set out for settlement, grants of land not exceeding one-twentieth of the land so set out. The blocks so granted to be determined by lot, and the Hudson's Bay Company to pay a rateable share of the survey expenses, not exceeding an acre.

"7. For the purpose of the present agreement, the Fertile Belt is to be bounded as follows: On the south by the United States boundary) on the west by the Rocky Mountains; on the north by the northern branch of the Saskatchewan ; on the east by Lake Winnipeg, the Lake of the Woods, and the waters connecting them.

"8. All titles to land up to the 8th of March, 1869, conferred by the Company, are to be confirmed/

"9. The Company to be at liberty to carry on its trade without hindrance, in its corporate capacity, and no exceptional tax is to be placed on the Company 's land, trade, or servants, nor an import duty on goods introduced by them previous to the surrender.

"10. Canada is to take over the materials of the electric telegraph at cost price, such price including transport, but not including interest for money, and subject to a deduction for ascertained deterioration.

"11. The Company's claim 1o land under agreement of Messrs. Vankoughnet and Hopkins to be withdrawn.

"12. The details of this arrangement, including the rilling up of the blanks in Articles 4 and 6, to be settled by mutual agreement."

Such were the terms on which the government of the Hudson's Bay Company ceased, after it had been an empire within the empire for two hundred years; thus it surrendered its title to most of a territory out of which half a dozen European kingdoms might have been carved; and thus Canada acquired a vast addition to her dominion whose estimated area was nearly two and a half millions of square miles. The long-deferred hopes of the people of the Red River colony for stable self-government and the maintenance of law and order were on the eve of being realized.