These suggestions indicate a conviction that the zone of the North American continent between latitudes 49° and 55°, embracing the Red River and the Saskatchewan districts, east of the Rocky Mountains, and the area on their western slope, since organized as British Columbia, was, in the judgment of the committee, suitable for permanent settlement. As to the territory north of the parallel of 55°, an opinion was intimated, that the organization of the Hudson's Bay Company was best adapted to the condition of the country and its inhabitants.
Within a year after the publication of this report, a great change passed over the North Pacific coast. The gold discovery on Frazer's River occurred; the Pacific populations flamed with excitement; British Columbia was promptly organized as a colony of England; and, amid the acclamations of Parliament and people, Sir Edward Bulwer Lytton proclaimed, in the name of the government, the policy of continuous colonies from Lake Superior to the Pacific, and a highway across British America, as the most direct route from London to Pekin or Jeddo.
The eastern boundary of British Columbia was fixed upon the Rocky Mountains. The question recurred, with great force, What shall be the destiny of the fertile plains of the Saskatchewan and the Red River of the North? Canada pushed forward an exploration of the route from Fort William, on Lake Superior, to Fort Garry, on the Red River, and, under the direction of S.J. Dawson, Esq., civil engineer, and Professor J.Y. Hinde, gave to the world an impartial and impressive summary of the great natural resources of the basin of Lake Winnipeg. The merchants of New York were prompt to perceive the advantages of connecting the Erie Canal and the Great Lakes—with the navigable channels of Northwest America, now become prominent and familiar designations of commercial geography. A report to the New York Chamber of Commerce very distinctly corrected the erroneous impression, that the valleys of the Mississippi and St. Lawrence rivers exhausted the northern and central areas which are available for agriculture. "There is in the heart of North America," said the report, "a distinct subdivision, of which Lake Winnipeg may be regarded as the centre. This subdivision, like the valley of the Mississippi, is distinguished for the fertility of its soil, and for the extent and gentle slope of its great plains, watered by rivers of great length, and admirably adapted for steam-navigation. It has a climate not exceeding in severity that of many portions of Canada and the Eastern States. It will, in all respects, compare favorably with some of the most densely peopled portions of the continent of Europe. In other words, it is admirably fitted to become the seat of a numerous, hardy, and prosperous community. It has an area equal to eight or ten first-class American States. Its great river, the Saskatchewan, carries a navigable water-line to the very base of the Rocky Mountains. It is not at all improbable that the valley of this river may yet offer the best route for a railroad to the Pacific. The navigable waters of this great subdivision interlock with those of the Mississippi. The Red River of the North, in connection with Lake Winnipeg, into which it falls, forms a navigable water-line, extending directly north and south nearly eight hundred miles. The Red River is one of the best adapted to the use of steam in the world, and waters one of the finest prairie regions on the continent. Between the highest point at which it is navigable, and St. Paul, on the Mississippi, a railroad is in process of construction; and when this road is completed, another grand division of the continent, comprising half a million square miles, will be open to settlement."
The sanguine temper of these remarks illustrates the rapid progress of public sentiment since the date of the Parliamentary inquiry, only eighteen months before. Of the same tenor, though fuller in details, were the publications on the subject in Canada and even in England. The year 1859 opened with greatly augmented interest in the district of Central British America. The manifestation of this interest varied with localities and circumstances.
In Canada, no opportunity was omitted, either in Parliament or by the press, to demonstrate the importance to the Atlantic and Lake Provinces of extending settlements into the prairies of Assinniboin and Saskatchewan,—thereby affording advantages to Provincial commerce and manufactures like those which the communities of the Mississippi valley have conferred upon the older American States. Nevertheless, the Canadian government declined to institute proceedings before the English Court of Chancery or Queen's Bench, to determine the validity of the charter of the Hudson's Bay Company,—assigning, as reasons for not acceding to such a suggestion by the law-officers of the crown, that the proposed litigation might be greatly protracted, while the public interests involved were urgent,—and that the duty of a prompt and definite adjustment of the condition and relations of the Red River and Saskatchewan districts was manifestly incumbent upon the Imperial authority.
This decision, added to the indisposition of Lower Canada to the policy of westward expansion, is understood to have convinced Sir E.B. Lytton that annexation of the Winnipeg basin to Canada was impracticable, and that the exclusive occupation by the Hudson's Bay Company could be removed only by the organization of a separate colony. The founder of British Columbia devoted the latter portion of his administration of the Colonial Office to measures for the satisfactory arrangement of conflicting interests in British America. In October, 1858, he proposed to the directors of the Hudson's Bay Company that they should be consenting parties to a reference of questions respecting the validity and extent of their charter, and respecting the geographical extent of their territory, to the Judicial Committee of the Privy Council. The Company "reasserted their right to the privileges granted to them by their charter of incorporation," and refused to be a consenting party to any proceeding which might call in question their chartered rights.
Under date of November 3, 1858, Lord Caernarvon, Secretary of State for the Colonies, by the direction of Sir E.B. Lytton, returned a dispatch, the tenor of which is a key not only to Sir Edward's line of policy, but, in all probability, to that of his successor, the Duke of Newcastle. Lord Caernarvon began by expressing the disappointment and regret with which Sir E.B. Lytton had received the communication, containing, if he understood its tenor correctly, a distinct refusal on the part of the Hudson's Bay Company to entertain any proposal with a view of adjusting the conflicting claims of Great Britain, of Canada, and of the Company, or to join with her Majesty's government in affording reasonable facilities for the settlement of the questions in which Imperial no less than Colonial interests were involved. It had been his anxious desire to come to some equitable and conciliatory agreement, by which all legitimate claims of the Company should be fairly considered with reference to the territories or the privileges they might be required to surrender. He suggested that such a procedure, while advantageous to the interests of all parties, might prove particularly for the interest of the Hudson's Bay Company. "It would afford a tribunal preeminently fitted for the dispassionate consideration of the questions at issue; it would secure a decision which would probably be rather of the nature of an arbitration than of a judgment; and it would furnish a basis of negotiation on which reciprocal concession and the claims for compensation could be most successfully discussed."
With such persuasive reiteration, Lord Caernarvon, in the name and at the instance of Sir E.B. Lytton, insisted that the wisest and most dignified course would be found in an appeal to and a decision by the Judicial Committee of the Privy Council, with the concurrence alike of Canada and the Hudson's Bay Company. In conclusion, the Company were once more assured, that, if they would meet Sir E.B. Lytton in finding the solution of a recognized difficulty, and would undertake to give all reasonable facilities for trying the validity of their disputed charter, they might be assured that they would meet with fair and liberal treatment, so far as her Majesty's government was concerned; but if, on the other hand, the Company persisted in declining these terms, and could suggest no other practicable mode of agreement, Sir E.B. Lytton held himself acquitted of further responsibility to the interests of the Company, and proposed to take the necessary steps for closing a controversy too long open, and for securing a definitive decision, due alike to the material development of British North America and to the requirements of an advancing civilization.
The communication of Lord Caernarvon stated in addition, that, in the case last supposed, the renewal of the exclusive license to trade in any part of the Indian territory—a renewal which could be justified to Parliament only as part of a general agreement adjusted on the principles of mutual concession—would become impossible.
These representations failed to influence the Company. The Deputy-Governor, Mr. H.H. Barens, responded, that, as, in 1850, the Company had assented to an inquiry before the Privy Council into the legality of certain powers claimed and exercised by them under their charter, but not questioning the validity of the charter itself, so, at this time, if the reference to the Privy Council were restricted to the question of the geographical extent of the territory claimed by the Company, in accordance with a proposition made in July, 1857, by Mr. Labouchere, then Secretary of State for the Colonies, the directors would recommend to their shareholders to concur in the course suggested; but must decline to do so, if the inquiry involved not merely the question of the geographical boundary of the territories claimed by them, but a challenge of the validity of the charter itself, and, as a consequence, of the rights and privileges which it professed to grant, and which the Company had exercised for a period of nearly two hundred years. Mr. Barens professed that the Company had at all times been willing to entertain any proposal that might be made to them for the surrender of any of their rights or of any portion of their territory; but he regarded it as one thing to consent for a consideration to be agreed upon to the surrender of admitted rights, and quite another to volunteer a consent to an inquiry which should call those rights in question.