The Corporation That Ruled Half a Continent

Trapper wearing a coat made from a traditional Hudson's Bay Point Blanket.

On May 2, 1670 King Charles II of England granted a Royal Charter to The Governor and Company of Adventurers of England trading into Hudson’s Bay.  Not only was it one of the first corporations, it was soon one of the richest and most powerful in the world.  Within decades it would control a fur trading empire including the vast Hudson’s Bay drainage and including far flung outpost as far away as the Pacific and extending deep into what would become U.S territory trading exclusively with hundreds of indigenous tribes.  It owned outright fully 15% of all North American land excluding Spanish possessions and virtually controlled almost all of what is modern Canada excluding the Maritimes, Quebec, the southern portions of Ontario.  And this dominance extended well into the 19th Century.

All of that wealth and power would likely have remained in French hands had it not been for the extremely bad judgment of a colonial official.  

Pierre-Esprit Radisson and Médard des Groseilliers a/k/a Médard de Chouart, Sieur des Groseilliers Two traders working from established French fur trading posts near the Great Lakes got wind of Cree stories of fabulous new fur county north of and beyond Lake Superior including rumors of a frozen sea to the north.  Believing that access to the sea from the north would via a new trading post on Hudson Bay would save the cost of overland transportation to the St. Lawrence route to the Atlantic, they asked for permission to establish one.  Not only were they turned down, they were absolutely forbidden from trading north for fear that lucrative monopolies on the St. Lawrence would be disrupted.  The two pressed ahead anyway believing that arriving in Montreal laden with valuable furs would open eyes.  And indeed they returned from a1659-60 expedition to the upper regions with just such a fabulous hall.

Instead of being hailed as heroes, however, the pair was arrested for trading without a license and their furs confiscated—to be sold a tidy profit on no investment by the very official who commandeered them.  Infuriated, upon release the pair made it to the main port of French rivals in North America—Boston.  The flinty-eyed merchants of Boston may have detested the Papist swine and feared French power, but they knew an opportunity when they saw one.  Boston investors helped the Frenchmen outfit a ship to sail into Hudson’s Bay, which the English had shaky claims upon based on the final voyage of Henry Hudson back in 1610-11.  The 1663 voyage, however, failed when the Frenchmen’s ship became locked in sea-ice in the bay.

Still, the long term prospects for the venture looked encouraging enough that one Boston backer sent the two to London to seek new financing.  The hapless pair arrived in England in 1665, at the height of the Great Plague when business of all sorts was at a virtual standstill.  They languished for years in fruitless search of a benefactor.  Finally they encountered Prince Rupert of The Rhine, a cousin and favorite of Charles II.  He agreed to be a sponsor and investor and introduced the pair to the King, who likewise was intrigued and invested for his private purse.  That attracted still more capital, secured by the valuable Royal Charter.

That outfitted two ships, The Nonsuch was commanded by Captain Zachariah Gillam, who was accompanied by Groseilliers, and The Eaglet was commanded by Captain William Stannard and accompanied by Radisson which sailed in June 1668.  While The Eaglet was forced to turn back after running into heavy seas off Ireland and sustaining heavy damage, The Nonsuch completed the dangerous sail to the southern rim of Hudson’s Bay.  A trading post, Charles Fort (later Rupert House), was established at the mouth of the river named for the expedition patron, Prince Rupert, on James Bay.  By next summer the ship set sail with a full load of furs traded from the natives.  In London the cargo was sold for £1,233, an enormous sum and more than enough to pay for the expedition and turn a tidy profit.

On the basis of those kinds of results, Charles II issued his Royal Charter which granted the company a monopoly on all trade from Rupert’s Land--the region drained by all rivers and streams flowing into Hudson Bay.  A Royal Governor was appointed and English merchant adventurers became factors and agent’s overseeing a growing number of fort/trading posts-- Rupert House, Moose Factory (1673, south) and Fort Albany, Ontario (1679, west) on James Bay and three  posts were established on the western shore of Hudson Bay proper, Fort Severn (1689), York Factory (1684) and Fort Churchill (1717).  York Factory became the most important and eventually headquarters for the Company.

The Factor employed mainly French and eventually French/native mixed breeds to go into the wilderness to trade with remote tribes, and do some trapping on their own and to encourage the tribes to visit the Factories to trade and barter.  

This system quickly cut into profits by the French, who organized raids on Hudson Bay posts.  During King William’s War 1688-97 several posts changed hand multiple times.  And during Queen Anne’s War 1702-17 the company lost all of its outposts except Fort Albany but all were returned to the Company under the terms of the Treaty of Utrecht.  The wars disrupted Company operations and no dividends were paid to stock holders for twenty years.

With relative peace restored—further Anglo-French conflicts would be less disruptive to the fur trade, the Company was finally able to become the economic engine of the dawning Empire rivaling even the East India Company, in which the Hudson Bay Company became heavily invested. 

By the early 18th Century trade values were regularized around a standard trading unit known as the Made Beaver (MB)—a prime pelt ready for processing.  The value of other furs and hides were calculated in relation to the MB.  Trade goods such as knives, kettles, beads, needles, and the Hudson’s Bay point blankets were fixed to the MB, eliminating much of the haggling of the French trading system.  By the mid 1700’s point blankets made up 80% of the value of trading goods.  These heavy woven wool blankets had heavy stripes.  In 1774, as tensions rose with the English Colonies on the Atlantic seaboard, the Company began establishing inland trading posts, the first being Cumberland House in what is now Saskatchewan.

The American Revolution quickly became part of another Anglo/French world war.  French squadron under Jean-François de Galaup, comte de Lapérouse captured and demolished York Factory and Prince of Wales Fort, a strong, modern stone and masonry star fort at the mouth of the Churchill River.

That disruption, however cost the Company fewer headaches than the creation of a new rival, North West Company (NWC) was founded in Montreal in 1779 and the first domestic joint stock corporation in North America.  Soon the NWC was operating its own string of trading posts and once again diverting trade from the Northerly route through the Bay to access to world markets through the St. Lawrence.  Fierce competition between the companies forced up prices for furs and cut deeply into profits.  In the field, competition was often violent with traders and native allies raiding each other’s camps and sometimes fighting pitched battles.

The British Government stepped in in 1824 and forcibly folded the NWC into the Hudson Bay Company.  Redundant and competitive posts were closed or consolidated.  The company was also extended trading rights to the vast new Northwest Territories and with the creation of the Columbia Department to the Pacific Ocean in the west.

Through the 1830’s John Jacob Astor’s American Fur Company based in Astoria dominated the rich Pacific coast fur trade.  But with the establishment of Fort Vancouver on the Columbia River the company gained the upper hand.  While it sent expeditions deep into Northern California—dangerously claimed by both the Spanish and Russians, the Company did everything in its power to discourage American encroachment by both overland fur traders and land hungry immigrants. 

Under terms of an 1818 agreement, no formal boundary had yet been established between US and British territory but Oregon was supposed to be jointly administered by the two nations with trading rights to both.  At best it was a tense relationship.  As immigrants began pushing west, the Company established Ft. Boise astride one likely route and bought the American trading post at Fort Hall.  Traders at both posts did everything they could to keep immigrants from coming.  But in 1843 Marcus Whitman led the first successful immigrant train along the Oregon Trail to the Willamette Valley which was followed by a flood of immigrants and foretold the doom of the Oregon fur trade.  When the boundary was established at the 49th Parallel after much bluster and sabre rattling by the Americans, the company abandoned Oregon.

Through these years the Company was getting richer, and also more complex.  MBs might due as a trading standard in the wilderness, but for increasing operations in civilization, cash was required.  For more than thirty years the Company issued its own bank notes, denominated in Pound Sterling and printed in London.

The company’s insistence on enforcing its trading monopolies set the stage for one of the great crisis of Canadian history—the rebellion of the mixed race  Métis that had its roots in the trial of  Guillaume Sayer for illegal trading.  A large group of Métis led by Louis Riel, Sr. staged a noisy, armed demonstration outside the Company court house.  Sayer was convicted, but not fined de facto ending the monopoly.  The Red River Métis would form their own company and trade across the border into the United States.  Under the leadership of Louis Riel, son of the earlier leader, there would be two rebellions, the first resulting in the establishment of Manitoba, and the final North-West Rebellion of 1885 that was crushed by the new Dominion of Canada.

Meanwhile the British North American Exploring Expedition or Palliser Expedition explored and surveyed the open prairies and wilderness of western Canada from 1857 to 1860—all here to fore the domain of the Hudson Bay Company.  The Expedition was charged with finding a possible rail route to the Pacific.  But it also issued a report that while discouraging immediate settlement showed that much of the prairie was likely prime agricultural land.  The Company had always maintained that the west was entirely unsuitable to settlement to protect its fur trade.

When the consortium of the International Financial Society became the majority stockholder in 1863, it began looking for new infusions of cash just as Canada was emerging as a quasi-independent Canadian Confederation.  In 1869 the company approved the return of Rupert’s Land to Britain which in turn gave it to Canada and loaned the new country the £300,000 required to compensate for its losses. The Deed of Surrender came into force the following year. The Northwest Territories was brought under Canadian jurisdiction under the terms of the Rupert’s Land Act 1868, by the Parliament of the United Kingdom. The Deed enabled the admission of the fifth province, Manitoba to the Confederation on 15 July 1870. 

Although fur trading remained a cornerstone of the business, the influx of settlers into the Prairie Provinces and British Columbia transformed trading posts into mercantile stores, selling directly to settlers for cash.  Over vast areas of rural Canada Hudson Bay Company operated virtually the only local stores.  The first such shop was established as early as 1857 at Fort Langley on the Frazier River.  Other stores soon followed.

In 1913 Hudson Bay entered the Department Store business with a grand new store in Calgary Alberta, quickly followed by more big stores in Edmonton, Vancouver, Victoria, Saskatoon, and Winnipeg.  After World War I the company expanded with store in Ontario and Quebec.

As retail sales became an ever bigger part of the business, the Hudson Bay Company began retreating from the fur trade and diversifying into real estate holdings and Petroleum companies.  Hudson's Bay Oil and Gas Company (HBOG) became a major Canadian oil producer in combination with other producers and consolidation and began exporting oil to US refineries by pipeline to Billings, Montana.  After a severe dip in international oil prices, the Company sold its controlling interest in HBOG and exited the energy business.

Shortly after, it ended its participation in the fur trade, which had become a public relations nightmare for the company over the annual baby seal hunts in the arctic.  It sold all of its remote Northern trading posts and fur business in 1987,

By that time the Hudson Bay Company had ceased to be a British corporation under Royal Charter.  Due to heavy taxation in Britain, the company dissolved it Royal Charter on its 300th anniversary in 1970, moved its headquarters to Winnipeg, and became a Canadian company. 

The company aggressively moved into greater and greater retail operations, buying up one after another established chains including Morgan’s allowing it to expand into Montreal, Toronto, Hamilton, and Ottawa.  It re-branded all store as The Bay.  More chains were acquired, including the Zellers discount store, Simpson’s.  Through a succession of majority owners, most notably billion are Kenneth Thompson and his family from 1970-97, the Hudson Bay Company continued to gobble up competitors large and small including Tower Department Stores, Woodward’s, and K-Mart Canada.

The company is now owned by NRDC Equity Partners, an American equity trading corporation which already controlled Lord & Taylor luxury department stores.  It transferred management of Lord & Taylor to the Hudson Bay Company.  In 2013 it also purchased another flagship luxury chain, Sax Fifth Avenue.  

Today the company operates hundreds of store in the United States and Canada and is once again diversifying.  But it still sells those trade blankets at its Hudson Bay Stores—and gets a pretty penny for them, too.