With this exordium, the legislature proceeded to its duties. The opening session was almost wholly devoted to the consideration of ways and means. It would appear on the whole to have been no small problem to make ends meet in the young colony. In 1855, for example, the total public expenditures reached the sum of £4,107 2s. 3d., of which £1,388 5s. 5d. were spent on roads and bridges; £683 18s. 1d. on surveys; £1,362 17s. 5d. on the church, chaplain and parsonage at Victoria; £100 on the administration of justice; £81 8s. 9d. on militia; £30 9s. 2d. on jail expenses; and £7 15s. 10d. on government premises. To meet this, an income of £334 17s. was derived from land sales, and the sum of £340 from the sale of licenses to deal in liquor, these being the sole local sources of revenue. The sum of £130 was voted to meet the expenses of the first House. This modest appropriation, it is of interest to note in the records, permitted the payment of £10 to the clerk of the House; £5 to the sergeant-at-arms; £20 for lighting, heating and furnishing; £50 for the copying of documents; £5 for stationery; while the remaining £40 were prudently withheld for current salaries.

Apart from this incursion into finance, little of an original nature was attempted by the assembly. Of its acts of ratification, the most important was that by which the rules of the Supreme Court, as previously in force for the administration of justice in civil cases, were continued without alteration. This done, the House lapsed into inactivity. In reality there was nothing for it to do. It introduced no new element into the government of the colony. It was not even representative of anything but the all pervading interests of the company. Douglas, the governor, was the company's factor-in-chief. Work, Finlayson and Tod, who made up the council, were respectively chief factor, chief trader and ancient pensioner of the company. The seven members of the House were no less of the monopoly. Helmcken, the Speaker, was the company's staff doctor; Pemberton was its surveyor-general; and Mackay was its clerk. Muir and Kennedy were retired servants. Yates was its beneficiary; and Skinner was an agent of the Puget Sound Company. Cameron, the chief-justice, was the brother-in-law of Douglas ; Anderson, the collector of duties, was a retired chief-trader. For the real history of the island, therefore, during the period of representative institutions as before, it is from the archives of the Hudson's Bay Company that enquiry must be made. The acts of Douglas as governor and his official despatches to the colonial office are well known; of Douglas as chief factor and the communications which he held with the London directorate—the hidden springs to which the outside show responded—we have but occasional glimpses or such stray particles of fact as may be gleaned by inference or from alien sources.

Thus, without incident or variation, the government of Vancouver Island continued until 1859, when the end came of the second five years' term of the Hudson's Bay Company's rule. In truth, the administration of the colony, as apart from the company, had proved a matter of small difficulty. There was but one constable. As no means were provided for paying a recorder or other administrator of justice, the governor himself had acted in that capacity. In the place of sheriffs and a militia. a body of mounted police termed "voltigeurs" was organized from among the settlers and servants of the company. On only two occasions was a display of force found necessary. In December 1852, a shepherd at Christmas Hill was killed by two natives, one of whom fled to Cowichan and the other to Nanaimo. To allay the settlers' alarm, Douglas with a contingent borrowed from H.M.S. Thetis, then lying at Esquimalt, proceeded to the Saanich village, where after a characteristic parley the murderer was handed over. The expedition then passed to Nanaimo and secured the second culprit. At both places the natives were sternly admonished. On the return to Victoria the criminals were tried and executed. Some time later a white man was shot by an Indian at Cowichan, but the offender was again delivered up, after a demonstration as before, and was hanged in the presence of his people. Thus was the Indian taught to respect the white man's law.

The disruption of this curious fabric was in the . end as sudden as it was complete. No other agency, it may be safely said, than that which brought the result to pass, could have achieved it with the same unexpectedness and finality. That agency was the discovery of placer gold. The incident belongs to more than local history, the opening of the gold fields of British Columbia being among the most notable of those dazzling events which have fluttered from time to time the financial capitals of the world and opened new paths for the adventurous to sudden and marvellous wealth.

As early as the regime of Blanshard, rumours of the finding of gold had reached Victoria from the Queen Charlotte Islands. More in alarm than gratification at the news, a brigantine had been despatched by the company to investigate. It discovered quartz but no placers. In the following year, however, expeditions from various quarters landed on the islands; and on January 14th, 1852, Douglas was able to report the definite discovery of gold on the western coast. It appeared strongly advisable to the governor at this juncture to prohibit foreigners from landing on the new gold fields. Several vessels, he pointed out to the colonial secretary, had sailed from the United States, and more were being outfitted on the California sea-board, the crews being prepared to overcome opposition by their numbers and the ease with which reinforcements of adventurers might be obtained from San Francisco. Attention was also called to the hostile attitude of the Indians. The Admiralty in reply ordered H.M.S. Thetis to assert Her Majesty's sovereignty over the islands; but it was decided not to prohibit the vessels of foreign countries from landing men and stores there. In May of the same year, Douglas accordingly thought it advisable to report more fully on the matter. Seven American ships, he informed Earl Grey, with between forty and seventy men each, had arrived in Gold Harbour, four having returned after landing fifteen men and erecting a blockhouse. "It is very certain," he added, "that success will have the effect of attracting crowds of adventurers from the American settlements to the Queen Charlotte Islands, and it will be no easy task to eject them when firmly established." The admission of foreigners to the gold fields of British Columbia was from first to last, as will be seen, the cause of much disquietude to the governor.

These and other representations bore fruit at the close of the year, when Douglas received a commission as lieutenant-governor of the Queen Charlotte Islands—"to meet the circumstances of the time." Power was by the same instrument granted him to issue licenses, on the express understanding that they did not give a title in the soil He was requested also to forward the names of persons who might act as justices of the peace. Enclosed with the despatch which bore these orders were copies of letters which had been issued instructing the Admiralty to protect British property and interests from foreign violation and calling the attention of the United States government to the actions of its citizens on the Pacific. Douglas, on their receipt, at once drew up a proclamation with regard to the taking out of licenses, the conditions which he attached to the latter being similar to those enforced in New South Wales, the most important difference lying in the fact that the fee in the Queen Charlotte Islands was placed at ten instead of twenty shillings.

In the excitement which followed these developments, a number of expeditions made haste to the islands. Five vessels were reported in Mitchell Harbour at one time; and the hills were full of prospectors. The end, however, was disappointment. One quartz vein, seven inches in width and traceable for eight feet, contained in places twenty-five per cent, of gold; but the hope of loading vessels with the treasure was soon abandoned. From a pocket on Gold Harbour, Moresby Island, between $20,000 and $25,000 were taken (or were reported to have been taken) but more was probably spent in the mining of it than was finally recovered. About the same time Indians from the Skeena River brought in nuggets to the company's fort, but the several expeditions that were sent out to locate the sources met with failure. The whole movement died almost as suddenly as it began.

The flurry with regard to the Queen Charlotte Islands serves but as introductory episode in the history proper of the gold fields of British Columbia. These, as is well known to fame, lay on the mainland, in the beds of the Fraser and Thompson Rivers, from whose golden sands millions of dollars worth of the precious metal was washed annually for many succeeding years. Exactly how, when, or where the finds were first made is uncertain, amid the mass of legend offering on the subject. Gold dust, according to one report, had been seen by the company in the possession of the natives at Kamloops as early as 1852, though no suspicion was awakened at the time as to the wealth of the neighbourhood. Gold, according to a letter of Douglas written in 1860, was first discovered on the Thompson River by an Indian a short distance below Nicommen. Quaffing from the stream, he saw a shining pebble: it proved to be gold. Finlayson mentions the discoveries of McLean, the officer in charge at Kamloops, as among the earliest incidents of the gold-mining epoch. According to Anderson, the first intimation that the company received of the existence of gold in the interior was in 1855, when some particles of the metal were found by a servant of the company who was idly washing a pannikin of gravel near Fort Colville. The result was the opening of diggings close by, which proved only moderately remunerative. Later, in a version of the story which accounts for the spread of the news, some Canadians went over from Colville to the Thompson and Fraser, found gold everywhere, were followed by others, who in turn sent the reports over Puget Sound to San Francisco. In less than a year after, twenty thousand miners were on their way to the Fraser.

The first official mention of the discoveries was made by Douglas to the home government in a despatch dated April 16th, 1856. This had reference to the finds on the Upper Columbia. That they were not seriously regarded is shown by the fact that the subject was permitted to rest until July 1857. In the latter year, it appears, the Indians had expelled some parties of gold-seekers from this region, partly from a desire to retain the gold, and partly because they feared that the operations of the gold-diggers would prevent the salmon from ascending the river. Later in the same year, however, Douglas in a letter to Labouchere speaks of the Couteau mines, so named from the natives of the Thompson and Shushwap countries, as attracting attention, though up to October 6th, 1857, only three hundred ounces of gold had been exported through the agency of the company. Nevertheless, on the same date as his letter, Douglas issued a proclamation declaring all gold in its natural place of deposit to belong to the Crown and that persons might not "dig or disturb the soil in search of gold until authorized in that behalf by Her Majesty's colonial government." The authorization in question was to be obtained by payment of a license of 10s. a month, Douglas excusing his action in the matter by the fact that he was invested with command over the district by the Hudson's Bay Company, and that he was the only representative of the Crown within reach. The cost of these licenses was raised to 21s. before the end of the following January.

The immediate result of the policy of causing the miners to pay tribute in this manner was to bring them one and all to Victoria as the starting-point for the new diggings. Coming as they did from California by sea, Victoria was naturally the first point of call; had no license been required, however, they might have gone through direct to the Fraser. Though the effect upon a number was merely to cause a break in the journey, upon others, owing to transportation difficulties, a longer stay was necessitated. During the spring and summer months of 1858, the rush was extraordinary. Ocean steamers crowded with gold-seekers arrived almost daily. From a hamlet clustered about a Hudson's Bay trading-post, Victoria sprang suddenly into a city. No accurate record of arrivals was kept; but it has been estimated that between twenty thousand and twenty-five thousand persons passed through its portals. Every trade, nationality and condition was represented in that throng. From the Oregon coast to San Francisco, men dropped the instruments of their calling, hastily sold what could most readily be converted into cash, left homes uncared for, and boarded the first nondescript carrier whose prow turned northward. Some who avoided the passage by sea followed the coast by land, or attempted to reach the goal through the mountain passes of the interior. The gambler and the parasite followed in their wake. California's population was seriously depleted ; San Francisco was threatened with bankruptcy. In Victoria the sound of the hammer was incessant day and night. Buildings to the number of two hundred and upward arose in six weeks. The land office was besieged before daylight. There was all but a food famine. Flour rose to $30.00 a barrel; ship biscuit was not to be had; lumber brought §100 a thousand feet; town lots sold at $1,000 per foot frontage. Victoria became immediately the most important shipping centre of the coast, and its docks were crowded with merchandise. Of the promiscuous population that continued to pour in, many remained in the city. Those in search of gold pressed on to the Fraser,—in canoes, in improvised sailing boats or in steamers, daunted by no dangers and enduring the severest hardships. Many were lost in the tide-rips, and of those that reached the great river thousands were doomed to disappointment. The Fraser begins to rise in June, and does not reach its ebb until the autumn. High water covers the bars and renders placer mining impossible. Some of the more indomitable pushed on at the risk of life to Hope and Yale, the head of navigation. The great majority, however, turned their backs on British Columbia and repaired again to San Francisco. Those who remained met with their reward. When the Fraser fell, the harvest was rich. Some $543,000 in gold was shipped out in that year alone, and it is estimated that the total output was from $150,000 to $200,000 greater than .that amount.

The invasion of this wild and lawless multitude presented a serious problem to Douglas, badly equipped as he was for maintaining order and enforcing the authority of his government. On May 8th, 1858, he gives voice again in a despatch to the fear which had so beset him at the time of the gold discoveries on the Queen Charlotte Islands—the fear of the foreigner who knew not the company. He admits the openings for trade presented by the inrush, as well as the practical impossibility of stemming so fierce a tide; yet he cannot refrain, notwithstanding the peremptory mandate of Lytton that it was no part of British policy to exclude foreigners from the gold fields, from casting about for means of regulation and profit other than those that went hand in hand with a policy of unrestriction. One plan which he ventured to suggest as asserting the interest of the Crown at the same time that it assured a revenue to the company, involved an arrangement with the United States Pacific Mail Company whereby the Hudson's Bay Company would enjoy a monopoly of the trade on the Fraser River and receive a compensation of two dollars per capita for each passenger carried to the head of navigation, the steamers to accept no passengers but those who had paid for licenses from the government of Vancouver Island. The arrangement was to continue for one year. Lord Lytton, however, promptly disapproved of the conditions as too favourable to the company, and as a matter of fact, the arrangement was never more than a project within the mind.

Shortly after the beginning of the influx Douglas made a trip in person to the mainland, ascending the Fraser to Forts Langley, Hope and Yale. At Langley a number of speculators had taken possession of the land and were staking lots for sale; unlicensed and contraband trading had also sprung up. These matters were speedily righted. At Fort Hope, the miners, prior to his arrival, had organized a form of government and had posted regulations. These were replaced by rules proclaimed in the name of the governor of Vancouver Island.

An incident is related of this trip which brings into prominence the practical wisdom of the governor. Landing at Hill's Bar, he inquired concerning the presence of a British subject, with a view to the appointment of a justice of the peace. The one man indicated to him confessed to a lack of knowledge of the law, and recommended a versatile and well-known foreigner to the governor's attention. Impressed by the man's candour, Douglas declared that if he knew the difference between right and wrong his qualifications were sufficient, and he was forthwith appointed to administer the law.

In June, Douglas in a despatch to Lord Stanley gave a detailed account of this journey. "Evidence is obtained," he wrote, "of the existence of gold over a vast extent of country situated both north and south of the Fraser River, and the conviction is gradually forcing itself on my mind that not only the Fraser River and its tributary streams, but the whole country situated to the eastward of the Gulf of Georgia, as far north as Johnstone's Straits, is one continued bed of gold, of incalculable value and extent." In view of this, he proposed that the land be thrown open for settlement, and that it be surveyed and sold at a rate not to exceed 20s. an acre. He pointed out, at the same time, that compensation would have to be made to the Hudson's Bay Company for giving up their rights of exclusive trade.

It was in reply to this communication that Douglas received intelligence of a decision on the part of the home government fraught with important consequences to himself and the country. Mention has been made before of the proceedings of that select committee of inquiry which placed so unfavourable a report regarding the Hudson's Bay Company before the British parliament of 1858. In Canada a similar investigation had been made with a like result. This and the discovery of gold on the Fraser River had convinced the government of the need of radical change, west as well as east of the Rockies. On August 2nd, 1858, accordingly, an Act was passed providing for the government of the mainland of British America, from the 49th parallel northward to the Naas and the Finlay, and from the crest of the Rocky Mountains westward to the sea, including the Queen Charlotte and adjacent islands with the exception of Vancouver Island. One month later, the license of exclusive trade granted to the Hudson's Bay Company for twenty-one years from 1838, in so far as it covered the territory above defined, was revoked, the government re-purchasing the company's rights on Vancouver Island for £57,500. Of British Columbia (for by that name it was decided that the new colony on the mainland should be known) it was proposed that Douglas should be governor, the office to be held in conjunction with his present post in Vancouver Island. The condition was added that he should sever all connection with the Hudson's Bay and Puget Sound Companies. The additional salary offered was at first £1,000. Douglas expressed appreciation of the honour and accepted the conditions. "With the consent of the Hudson's Bay Company," he wrote, "I place my humble services unhesitatingly at the disposal of Her Majesty's government, and I will take early measures for withdrawing from the company and disposing of my Puget Sound stock, trusting that the allowance as to salary from Her Majesty's government will be adequate to my support in a manner worthy of the position I am called upon to fill." The allowance, in Douglas's opinion, ought to have been £5,000, his fortune having been impaired by his almost unrequited tenure of office in Vancouver Island. The colonial secretary, however, did not feel justified in assigning a larger sum than £1,800 at the time, though it was intimated that an increase derived from local funds would not be opposed if the revenue should warrant it.