Articles

Beads to Billions: The Story of the H. B. C.

Big men and big deeds mark the stormy history of the Bay Company which has thrived on conflict. It has survived wars, exposes, cut-throat competition, booms and busts

RAY GARDNER September 1 1949
Articles

Beads to Billions: The Story of the H. B. C.

Big men and big deeds mark the stormy history of the Bay Company which has thrived on conflict. It has survived wars, exposes, cut-throat competition, booms and busts

RAY GARDNER September 1 1949

Beads to Billions: The Story of the H. B. C.

Big men and big deeds mark the stormy history of the Bay Company which has thrived on conflict. It has survived wars, exposes, cut-throat competition, booms and busts

RAY GARDNER

Part II

AROUND Hudson’s Bay House, Winnipeg, the air-conditioned Canadian headquarters of the world’s oldest company, they call Philip Chester the modern Sir George Simpson. In turn, Chester calls Simpson Canada’s first merchandising genius. You can easily see that this makes Chester a merchandising whiz in his own right.

Played on a cash register, this comparison of Chester, the Hudson’s Bay Company’s present managing director for Canada, and Sir George, the ancient firm’s Canadian governor of a century ago, rings true enough. When Simpson was boss, dividends were fat and the English proprietors were happy. Now, with Chester running things on the Canadian scene, the company purrs along as smoothly as the escalators he has had installed in the Bay’s six large western Canadian department stores.

Simpson and Chester each took over after the Governor and Company of Adventurers of England trading into Hudson Bay, as the firm is properly known, had fallen on hard times.

In 1826, when he was 34, George Simpson became governor of the company’s Canadian territories, an empire extending over two fifths of the present Dominion of Canada. The company had just beaten and gobbled up the North West Company of Montreal in the most bitter commercial war in Canada’s history. Victory had been hard come by; the H.B.C. was shaky.

When Simpson died with his boots on 34 years later he had become the most remarkable figure in the whole remarkable history of the Bay. Under him, the company hit the peak of its fur trading greatness, as today, under Chester, it is seeing its best years as a modem merchandising giant.

While Simpson put the Adventurers back on their feet after the ruinous North West affair, Chester rescued them from the great depression of the 30’s. The company’s career had always heen an erratic one of booms and busts, but it plunged to perhaps its lowest depths during those years.

The Adventurers Stayed Home

OVER two centuries the Hudson’s Bay Company survived the assaults of French imperialism, British parliamentary enquiries and the reckless, cut-throat Nor’westers, but it almost stayed down for the count when the depression landed its haymaker. The company was reportedly on the verge of selling out to a large eastern department store chain when Chester stepped in and convinced everyone that the world’s oldest company still had a future.

Chester was right. Last July 15 his boss, Sir Patrick Ashley Cooper, who is 30th in a line of governors stretching back to Prince Rupert, was able to tell the Annual General Court, assembled in Beaver Hall, Garlick Hill, London: “As your company enters its 280th year the financial position is sound, and at no time in our long history has it been stronger.”

Throughout its history the H.B.C. had been handicapped by absentee ownership and management. The original 18 proprietors were called adventurers trading into Hudson Bay, but not a one of them ever set foot on its shores. Sir Patrick became the first governor to set foot on the shores of the Bay in 1931, more than two and a half centuries after the company’s incorporation.

With Simpson as Canadian governor the company raked in the chips simply because he was given or seized sufficient authority to run the business aggressively on the spot. His boldness in roaming over and ruling the vast Hudson’s Bay domain—in his time, nearly one half of the continent—won him acclaim as The Little Emperor.

Today, as in Simpson’s time, top direction of the company’s affairs in Canada still comes from the Governor and his London committee, but the 53-year-old, Derbyshire-born Chester has greater powers than any company man in Canada ever had. (The exception is Lord Strathcona who was Governor from 1899 to 1914 and who was the only one to make his headquarters in Canada. But Strathcona, who is regarded as a sort of villain by present Bay executives, neglected the company to pursue his own fortune in politics and the Canadian Pacific Railway.)

The post Chester now holds was created for him in 1946 and at the same time he was given a seat on the London committee. As managing director for Canada, Chester, who is tall, silverthatched and still as English-appearing as a cup of tea, runs the day-to-day business from Winnipeg and implements policies set in London. As a London committeeman, he has a say in making those policies. He got his start at 14 in a Derbyshire lace mill.

The title Simpson held, Canadian governor, has long since lapsed and there is a tremendous contrast between the manner in which he ran the company and Chester’s 20th-century mode of operation.

During the Little Emperor’s reign the Bay’s empire not only stretched from Labrador to the Pacific and into the Arctic wastes, but it sprawled out into Alaska, California, Siberia, and even Honolulu. The Bay rented a huge strip of Alaska from the Russian American Fur Company for 2,000 skins a year and the pair even continued to do business when their countries went to war in the Crimea.

Simpson ranged over vast distances, visiting every fur trade post from Okhotsk, in Siberia, to Yerba Buena, on San Francisco Bay. He reorganized the company from the bottom up and then worked down again to make sure it was running efficiently.

An Instrument of Policy

He was such a stickler for business that for seven years he put off going to England to be married. Even so, his relations with native women, before and after his marriage, were on such a monumental scale they have produced one of the H.B.C.’s minor legends. An illegitimate child himself, he provided for the offspring of his illicit affairs and made it a company rule for his men to do right by theirs.

One of Sir George’s most remarkable journeys saw him cover, in 1828, the 3,000 miles from York Factory on Hudson Bay to Fort Langley on the Fraser River in 65 days. His arrival at a post was announced with a tune from his personal piper, Colin Fraser. The fort’s cannon would fire an answering salute.

Philip Chester keeps no personal piper, though he has a PRO (public relations officer). He doesn’t toil by canoe from post to post. A burly bush pilot named Harry Winny flips him

about in a company plane, and instead of a gun salute he may be greeted by a be-bop number floating in over the post manager’s radio.

But one thing remains constant with the H.B.C., today as always: conflict. Today the Bay fights the giant T. Eaton Company in six western cities, where it once fought the French voyageurs who also came out of Eastern Canada.

From its inception the company was an instrument of British policy in its struggle with France for supremacy in Canada. Britain, and the Bay, won out and the company was plunged into a new war with marauding French and Scottish traders from Montreal for control over the West.

And, when the Montrealers had been given their comeuppance, the Bay was thrust into a new conflict with the hordes of settlers who spilled out into the West, which the company considered a great fur preserve staked out for its own private use.

The Bay often gets credit for winning the West. Actually, it discouraged exploration and settlement. Both posed a threat to fur-trade profits.

Even that fine old museum piece, the Red River cart, can be explained properly only as a product of the pressure the Bay imposed on the Selkirk settlers.

When the City of Winnipeg celebrated its 75th anniversary last summer, the Bay obligingly supplied, on request, a Red River cart, complete with ox and driver (a retired CPR conductor) to take part in the opening-day parade. It probably occurred to no one, least of all Bay officials, that here, in the Red River cart, was a physical reminder that the Bay did almost everything to discourage the Selkirk settlers, the true pioneers of Winnipeg.

Charles Granted an Empire

The only way the settlers could get manufactured goods was through the Hudson’s Bay Company and the company charged a very high freight rate. The rate charged from London to Hudson Bay was as great as that from London to Canton, China. The sellers put together these crude, creaking two-wheeled carts to travel to St. Paul, Minn., where they could sell their agricultural produce and buy factory goods. The Bay retaliated by imposing a stiff import duty. In spite of it, the carts kept creaking on to St. Paul and the settlers eventually won their fight.

As every schoolboy worth his pass in Canadian history well knows the story of the Hudson’s Bay Company begins with the story of two freebooting French fur traders, Pierre Espirit Radisson and Médart Chouart, Sieur des Groseilliers, more familiarly known as Radishes and Gooseberry.

But every schoolboy may not know that Radisson and Groseilliers were also a couple of shrewd speculators. One Bay historian calls them “completely equipped fortune hunters” and remarks that “a more daring pair of unscrupulous international promoters cannot be found in the history of commerce.”

Radisson and Groseilliers thought nothing of risking death by starvation or massacre by Indians, but they drew the line at being hornswoggled by the French governor of Quebec. In 1660 he fined them the modern equivalent of $280,000 when they refused to let him muscle in on one of their fur-trading ventures.

This piece of racketeering drove the pair into the arms of the English and in 1666 Charles II was giving them an audience.

A year later the first stock in the company was taken out and another year later Groseilliers established the first post, Fort Charles, on Hudson flay. This was so successful that on May 2, 1670, Charles granted the charter to The Governor and Company of Adventurers of England trading into Hudson Bay.

The charter gave the company the “whole trade of all those seas, streights, and bays, creeks and sounds . . . that lie within the entrance of Hudson’s Streights, together with all the lands, countries and territories upon the coast and confines of the seas, streights and bays, lakes, rivers and creeks and sounds aforesaid.”

The Adventurers got not only a trading monopoly, but complete ownership of the land and sovereignty over it including the powers of war and

peace.

Charles actually gave away more North American territory than he or any other white man even knew existed. It included the provinces of Quebec and Ontario north of the Laurentia n watershed and west of the Labrador boundary, the whole of Manitoba, most of Saskatchewan, the southern half of Alberta and a large slice of the Northwest Territories. In all, this tidy little subdivision added up to about; a million and a half square miles, or roughly two fifths of the present Dominion of Canada.

From the first, profits were whopping. In 1684 a 50%, dividend was declared and in 1690 the company trebled the value of its stock, from £ 10,500 to£31,500, and declared a 25% dividend. It was, in effect, a 75%, return on its original capital.

By 1685 the company had built a string of forts, five in all, on Hudson Bay, the beginnings of chain store merchandising in North America.

This set the stage for the Bay’s first conflict —with the French.

French Canada considered the forts a menace. To the south Britain had entrenched itself in its New England colonies and now the English were thrusting in from the north. The French feared encirclement.

In 1686 the French struck and the Hudson’s Bay Company headed into 10 years of intermittent war during which it saw its posts sacked and burned and its ships sunk.

“Asleep at Hudson Bay”

In a brilliant wilderness campaign in 1686 the 24-year-old Le Moyne d’Iberville captured three of the company’s posts in the name of the King of France. D’Iberville’s most spectacular success came in 1697 when he routed the English in the greatest sea fight in Arctic history. With a single vessel, his flagship Pelican, he defeated three English ships, sinking one as large as his own and capturing another. The third ran for it and escaped.

At one time the Bay was reduced to one fort, but it was never completely ousted from Hudson Bay.

Peace came in 1697 with the Treaty of Ryswick hut four years later France and Britain were at war again. It was not until 1713 that peace was again restored when the Treaty of Utrecht established for all time British rights on Hudson Bay.

The fighting cost the Bay dearly; from 1690 to 1718 the company paid no dividends. But by the middle of the 18th century, business was looking up. Annual fur shipments to England were worth £23,000 to £30,000 and overhead was averaging $19,400. A respectable profit, considering that the company was being run in Canada by 120 officers and men. The original stock of £10,500 had jumped to £103,000.

It was a juicy enough plum to attract

the eye of a wealthy Irishman, Arthur Dobbs, who launched a 20-year battle to upset the Bay’s charter and to obtain a charter for a rival company. Dobbs’ campaign culminated in 1749 in a parliamentary enquiry.

Dobbs accused the company of abusing the Indians, ill-treating its own servants and of not extending its settlements to the limits given it by its charter. He charged that the H.B.C. had “slept on the shores of the Bay” for a generation. Meantime the French had journeyed inland and claimed the country which the company actually owned but which none of its men had ever seen.

The enquiry ended in a complete victory for the company, hut it was not won strictly on the merits of the case., The British had decided to keep a united front against the French.

Hobbled by its absentee ownership, the company was passing up great opportunities and, by default, was allowing the wide-awake and adventurous French a head start in the conflict that eventually was to break out across the prairies and in the wild Athabasca country.

By 1756 the French had forged a chain of forts stretching from Montreal to the western foothills. The Indians were not so ignorant that they would travel the great distances to Bay posts when the French were setting up shop nearby.

At last the company began to stir. In 1754 it had sent Alexander Henday into the west, not to built forts but to drum up business among the Indians.

The Bay sponsored 60 such selling trips from 1754 to 1774 without much success before it began to meet the Montrealers’ threat by establishing its first inland post. In 1774 Samuel Hearne, already distinguished as a great Arctic explorer, built Cumberland Flouse, near The Pas.

Terror on the Prairies

With the fall of Quebec in 1759 and the assurance that Canada was British for once and for all, the French and Scots of Montreal had burst into the West in a feverish scramble for the fortunes that were to be made in fur. The Hudson’s Bay Company and its royal charter was now to face its greatest challenge.

The Montrealers banded together into companies of their own. Eventually, by 1776, the North West Company, ruled by Simon (“The Marquis”) McTavish, a shrewd and dictatorial merchant who became Montreal’s wealthiest man, emerged as a power.

The Montreal traders became the explorers of the Canadian West. They crossed the Rockies to build forts on the Pacific Coast and they struck out to the Arctic Ocean.

From the ranks of the Nor’westers, not from those of the Hudson’s Bay, sprang the three most illustrious figures in the exploration of the West, Alexander Mackenzie, David Thompson and Simon Fraser.

David Thompson, who is often described as the greatest land geographer who ever lived, was originally a Bay man but quit when the company ordered him not to undertake any exploration.

By 1806, the Nor’westers had swallowed up or merged with their rival Montreal companies and stood ready for the showdown with the Hudson’s Bay Company.

It was to be a war without quarter. “The Bible and the booze only made matters worse,” writes one historian, “and hunger, breach of promise and violent restraint like fire-breathing dragons invested the wilderness wherever the companies crossed each other’s path.”

A gallant, philanthropic Scot, Thomas Douglas, fifth Earl of Selkirk, gained control of the Hudson’s Bay Company in 1811 (he was its principal stockholder) and conceived a plan to found a colony for homeless and impoverished Scottish crofters in the Red River Valley. The Hudson’s Bay Company opposed the plan—as it did all schemes to settle the West—but granted him 160,000 square miles of territory which now includes parts of Manitoba, Minnesota and North Dakota. The settlement scheme was purely Selkirk’s own hobby—not the company’s.

The Nor’westers were immediately aroused. A settlement at the forks of the Red and Assiniboine Rivers would menace their life line between East and West. They began to sabotage the scheme even before the first settlers left Scotland. Terroristic propaganda spread by them provoked desertions.

But the colony became a reality and by June 1814 the third party of settlers had reached Red River. The Nor’westers now plotted “the complete downfall of the colony ... by fair means or foul,” as one of them wrote.

In the fall of 1815, they launched a campaign of terror. Night raiders sniped at the settlers, crops were destroyed, barns and houses burned. Miles Macdonnell, the colony’s governor, surrendered to avoid bloodshed and the colonists departed for their winter quarters at Jack River, near Lake Winnipeg.

“Little Emperor” Takes Over

The cocky Nor’westers celebrated their victory—prematurely. The Company of Adventurers had been provoked at last into taking the offensive.

Three Hudson’s Bay-Selkirk forces began to converge on Red River. They included 100 Swiss mercenaries, mostly veterans of the War of 1812.

Then, on June 19, 1816, the Nor’westers struck their most murderous blow. A party of 70 Bois Brûles (halfbreeds) in Indian war paint descended on the colony. Warned of their coming, Governor Semple and 30 volunteers set out on foot to parley with them.

The halfbreeds advanced in the form of a half-moon. A French Canadian named Boucher dashed out of their ranks, shouting and gesticulating. Semple strode toward him and placed his hand on Boucher’s gun. A shot was fired from the ranks. Instantly, the firing became general.

“In a few minutes almost all our people were either killed or wounded,” a colonist named Pritchard wrote.

Governor Semple and 21 of his men were killed, their bodies mutilated by the Bois Brûles who fell among the wounded with knives.

This was the massacre of Seven Oaks.

When he heard of the massacre, Selkirk headed for the Nor’westers’ stronghold at Fort William and captured it without a shot. By the end of the year his Swiss mercenaries had retaken Fort Douglas, at Red River, without bloodshed.

Out of the Seven Oaks and Fort William affairs emerged 30 charges against Selkirk and the Hudson’s Bay Company, ranging from riot and larceny to false imprisonment and assault, and 150 charges against the Nor’westers, of murder, robbery, arson, grand larceny and malicious shooting. The charges against the North West Company produced only one conviction, for murder, and then sentence was never carried out.

The struggle continued for another three years but in the end both sides called quits.

The English traders had been shaken by the years of strife, but the reckless Nor’westers had been bled white.

In 1821 the companies amalgamated and the Hudson’s Bay Company emerged as a powerful monopoly.

By act of parliament the continued sovereignty of the original charter was guaranteed and the company was granted a 21-year license entitling them to exclusive rights of trade in all Indian territory east of the Rockies. West of the Rockies, in the Oregon territory, they were given sole British right of trade.

This was granted rent free. The only strings attached made the company responsible for administration of civil and criminal law and for diminishing the liquor trade among the Indians.

Persecution at Red River

The company now ruled nearly half the continent. Their sway extended over most of the present Dominion of Canada, excepting only the Great Lakes-St. Lawrence basin, the Maritime Provinces and Newfoundland. And their Columbia Department extended to what are now Washington and Oregon where they held sole British rights to trade in competition with the Americans.

It was now that George Simpson, the Little Emperor, stepped forward to lead the company to its greatest era of prosperity as a strictly fur-trading company.

But Simpson had his troubles, too. In the 1850’s a new attack on the company began to take shape. In Canada there was agitation for the throwing open of the West and, in Britain, parliamentary crusaders were prepared to tilt a lance at any monopoly, especially such a large and vulnerable one as the Hudson’s Bay Company.

The company was now plunged into the last of its historic conflicts: the struggle to discourage settlement of Western Canada.

The fur traders had always opposed settlement for it meant the doom of the fur trade. The North West Company had tried to smash the Selkirk settlement for this reason. The Bay itself protected it only as a weapon against the Nor’westers. Lord Selkirk himself said, “The great impediment to a colony . . . seems to be the Hudson’s Bay Company monopoly.”

After the Nor’westers had been vanquished, the settlers at Red River were persecuted to the point where they petitioned the United States Government to annex the territory. They promised to fight on the American side in the event of war. Private traffic in furs was a capital crime. Before the company would transport his goods for him, each settler had to declare he was not trading in furs.

In 1849, at the height of the Oregon border controversy between Britain and the States, the company was asked by the British Government to found a Crown colony on Vancouver Island to forestall a possible rush of American settlers.

The company was made trustee of the natural resources and was allowed a profit of 10% on the sale of land. But the effort to colonize was halfhearted. Five years later there were fewer than 500 settlers.

Finally, in 1857 the agitation for settlement of the West resulted in the company being hauled before a British parliamentary committee for the second time.

The committee’s report made it plain that the days of the royal charter though not ended were definitely numbered.

A Killing for Speculators

The committee recommended that, if she wished, Canada be allowed to take over lands suitable for settlement in the Red and Saskatchewan Valleys and that the company’s rule over Vancouver Island be terminated and the colony be extended to the Rockies.

In areas where there was no prospect of immediate settlement the company was still to hold sway. But this concession was no unqualified reaffirmation of its charter rights. It was made, rather, to protect the Indians against the evils of competitive trade and to conserve the fur-bearing animals.

Only one of the recommendations was acted upon at once. The company surrendered Vancouver Island and a Crown colony was established over all British Columbia in 1858.

In England speculators saw a golden chance. In the summer of 1863 the International Finance Society captured the H.B.C. This syndicate, formed for the express purpose, bought the stock of the company for £1,500,000.

Six years later, in 1869, the company’s new owners made their deal with the infant Dominion of Canada. At last the royal charter was surrendered. The company gave up its ownership of Rupert’s Land, as it called the territory granted it in 1670 by Charles II.

The company was paid £300,000 cash and given more than 7 million acres most of it in the fertile prairie provinces. In the great land booms of the early part of this century it made millions out of this gift land. Even today it has oil rights to 4)4 million acres.

Now the barriers were gone and the great flood of migrants began sweeping over the West. And as tent towns and then young cities began springing up around company forts the Bay found itself gradually evolving into a modern merchandising concern.

The evolution of the storied Fort Garry, at the junction of the Red and Assiniboine, into the huge department store that stands today on Winnipeg’s Portage Avenue typifies the modern development of the ancient company of adventurers.

Fifty-nine years before the city of Winnipeg was incorporated in 1873 the Hudson’s Bay had been operating a fort—or store—at one location or another. At the time of Winnipeg’s incorporation most everyone shopped at Fort Garry, including Lady Dufferin, wife of the Governor-General of Canada, who picked up a hat and a jacket there in 1877.

The company kept pace with the development of Winnipeg by erecting a fine new store in 1881 on Main Street. There it stopped and for 45 years it stayed in the Main Street store, tacking on additions every now and then. It was not until 1926 that

it moved into the modern Portage Avenue store.

Meanwhile Eaton’s had moved into one of the choicest locations on Portage and when the Bay built it had to settle for second choice.

In the first 10 years of this century the Bay had squandered its initial mercantile leadership. Its absentee proprietors were lulled into inaction by the lush profits from land sales. The idea of cities mushrooming from tent towns was beyond their comprehension. As for their then Governor, Lord Strathcona, he was hitting the jackpot himself in land, politics and the CPR.

Rival merchants jeered at the H.B.C.’s old-fashioned methods and the public began to resent its failure to keep up with the progress of their fine new cities.

At last, the company stirred, just as it had when the Nor’westers challenged it a century before. Great department stores were planned and built, in Vancouver and Calgary in 1913 and in Victoria in 1914. •

Today, with Chester showing the way, the company is constantly sprucing up its stores with escalators and new wings and revamping its merchandising methods with every gimmick it can lay a hand on.

This Would Rock Rupert

An extra floor has been tacked on the Edmonton store and the Vancouver building is sprouting a large addition. In Winnipeg a sales system is being tried out which will actually make it possible for a shopper to find, say, a size 15 dress without rummaging through a stack of assorted sizes. The system is simple but downright revolutionary.

The Bay dress department used to be like any other dress department: the dresses were on racks by price and not by size. Now, dresses of one size are all on the same rack, regardless of price. This switch is saving shoppers time and trouble but what the Bay likes most about it is that it’s making more sales.

Prince Rupert and his original 18 Adventurers never guessed it would all come to this when they touched their good friend Charles for that original charter. Likewise, Philip Chester has no idea of the final destiny of the world’s oldest company and, furthermore, he won’t even hazard a guess.

“We’re not a large company,” he says (though the firm grosses $100 millions a year) “but we are the oldest. It’s nice to know that.