"A continuance of this state of matters may lead to the formation of a provisional government by the people themselves, and to annexation to the United States, as have been threatened. With the opening up of the St. Paul's route, there has been a large increase of the 'American' element in the settlement; and in the enclosed copy of the 'Nor' Wester' of the 22nd July, you will observe that the United States Government is quietly recruiting for its army in British territory. This matter, I trust, may be in the meantime brought to the notice of the proper authorities pending further information upon my return to Red River. "The trust which the Board has placed in my hands, and the confidence reposed in my ability to guide you in forming your plans for the future, impose on me no little responsibility and anxiety. I must relieve my shoulders of this weight by stating plainly my belief that the opening up of the country by waggon road and telegraph, and by the encouragement of settlement, must prove so far detrimental to the current commercial business of the Company as to render it difficult, if not impossible, to provide a fair dividend upon the portion of its capital embarked in the trade. I do not, however, the less recognize the necessity of opening up the country and its communications. It is not at all clear to my mind how you are to secure a remunerative dividend upon the extra sum to be embarked in the erection of the telegraph, formation of roads, &c., &c. In a commercial point of view, I do not consider it safe to enter upon these extended operations till secure of a sufficient subsidy from the different Governments interested. "Upon a mature consideration of the whole subject, I entirely concur in the views expressed by Mr. Johnstone in his letter, of which I have already sent only an _extract_ to Sir Edmund Head, viz., that with the government of the country the territorial right should also revert to the Crown, upon whatever terms might be arranged. Anything short of a full measure of this sort would fail to satisfy the settlers and the public at large, who seem inclined to view with distrust the present position of Her Majesty's Government in its supposed alliance with the new Board of Direction. "It is a question for consideration whether the northern region of the country beyond the limits of probable settlement should not still remain under the control of the Company, with such a monopoly of trade as would induce them to undertake the responsibility of managing the Indian tribes, and excluding the introduction of ardent spirits. I make this suggestion solely on behalf of the Indians, upon whom free intercourse with white men will, in my opinion, be ultimately destructive.