When Douglas assumed the role as governor, there were less than a thousand white people in the whole territory that is now British Columbia, and most of this was settled on the Southern tip of Vancouver Island.

For a few years, the colony remained a virtual autocracy ruled by James Douglas with a small three man executive council and an appointed Legislative council which were mostly made up of men from the Hudson's Bay Company.

Douglas was against the idea of letting common people vote, and believed that what people really wanted was to be governed by the "ruling class". Under Douglas's assembly, only those people who could become a member and vote were those who had a "freehold" land lease in excess of 300 pounds. (this meant that you would have exclusive privileges to lease the land for what in those days was a lot of money - most people couldn't afford to join.)

By 1855, Britain was strongly criticising the company monopoly in Rupert's Land and on the Pacific Coast. The British colonial secretary decided that some kind of democracy had to be established on Vancouver Island. Douglas was a bit "disconcerted" when he received instructions to establish an elected legislative assembly.

In 1856, the first election for the Legislative assembly took place. However, Victoria was the only place a real democratic election did take place, and only forty people were able to vote for the seven elected representatives.

In other places, the assemblymen were nominated without anyone able to oppose their nomination. All of the elected representatives elected in Victoria had ties to the Hudson's Bay Company. Three of these men had become enemies of Governor James Douglas. Dr. John Sebastian Helmcken, the company's surgeon and Douglas's son in law, was chosen as house Speaker.

The Legislative Assembly had little power. Meetings were in a "smoky room" at Fort Victoria. The only source of money the Assembly had was through the sale of liquor licences, and it was not allowed to borrow any additional money.

"At this time the streets of Victoria were in a virgin state and during the winter, Wharf Street was almost impassable: the drays sinking up to the hubs and often had to be dug out, if fact there was a great want of passable roads everywhere, but there was no money to put them in order, the useless Legislature would not levy taxes or grant any money, there was no charter for a city, so Governor Douglas had to do the best he could and certainly did a great deal, but with a great deal grumbling too - the idea still prevailed that the HBCo ought to do everything." John Sebastian Helmcken (BCARS: ADD.MSS.505.V.12)