Shortly thereafter, in 1846, the Oregon Treaty was signed by the British and the U.S. to settle the question of the U.S. Oregon Territory borders. It awarded all of Vancouver Island to Britain, despite a portion of the island lying south of the 49th parallel. In 1849, the Colony of Vancouver Island was established. Following the brief governorship of Richard Blanshard, James Douglas, Chief Factor of the Hudson's Bay post, assumed the role in 1851.
The first British settlement on the island was a Hudson's Bay Company post, Fort Camosack, founded in 1843, and later renamed Fort Victoria. Fort Victoria became an important base during the Fraser Canyon Gold Rush in 1858, and the burgeoning town was incorporated as Victoria in 1862. Victoria became the capital of the colony of Vancouver Island, then retained that status when the island was amalgamated with the mainland in 1866. A British naval base, including a large shipyard and a naval hospital, was established at Esquimalt, in 1865 and eventually taken over by the Canadian military.
The economic situation of the colony declined following the Cariboo Gold Rush of 1861-1862, and pressure grew for amalgamation of the colony with the mainland colony of British Columbia (which had been established in 1858). The colony's third and last governor, Sir Arthur Kennedy oversaw the union of the two colonies in 1866
