The Hudson’s Bay Company

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The company’s new board of directors soon realized that the tide of immigration was not yet as strong as they had been led to believe. As its new stockholders grew increasingly indignant over the failure of the land to move, the directors became more and more anxious to sell to either Canada or England—but not at just any price. And so the three-way dickering went on: Who should pay, and how much?

The situation grew intolerable. The American Midwest was filling with settlers, and Canadians feared a northward thrust by their acquisitive neighbors unless defensive measures were taken by someone stronger than the company. At the same time demands were increasing for a cross-country railroad, which, of course, could not be built through privately held land. Abruptly, in 1869, the British government solved matters by imposing terms that the company’s board of directors did not like but that they accepted rather than face a long legal battle. Under this settlement, called the Deed of Surrender, the company retained its trading rights but sold nineteen twentieths of Rupert’s Land, the socalled Fertile Belt, to Great Britain for £300,000. H.B.C. kept one twentieth—part of the Fertile Belt in the west—to sell for settlement. Britain then allowed Canada, which had become a confederated dominion in 1867, to annex the entire area.

As its land commissioner to sell off the reserved one twentieth of its former holdings (some seven million acres), the directors chose lean, hard, bushy-browed Donald A. Smith, a one-time fur trader in Labrador and former manager of the company’s Montreal district. He had scant success at first. Immigrants preferred the better-advertised fields of the American West. To help turn the tide northward (and to reap profits for himself, an activity that always commanded his exuberant attention), Smith became one of the prime movers of the Canadian Pacific Railroad. Meanwhile he acquired enough stock in the Hudson’s Bay Company so that in 1889, when he was sixty-nine, he was able to have himself elected governor in London. He was the first field man ever to attain that exalted rank.

At the turn of the century, when the arable lands of the United States were finally filled, the long-awaited rush into south-central Canada began. Millions of acres of company land sold at such fine prices that in 1906–07 stock dividends approached 50 per cent for the first time since 1688. The success was so great, indeed, that for a time it blinded Smith to another source of income inherent in the headlong growth of the Canadian West—the turning of one-time trading posts into retail stores. The company’s sagging forts and the town lots it was offering for sale were almost completely surrounded by aggressive merchants who were making good profits. Finally the board jarred itself awake, and in 1910 it started a series of studies designed to transform primitive systems of bartering into the sophisticated routines of modern retailing.

The company’s first two block-sized department stores, both several stories high, were built in 1913 in Vancouver and Calgary. A few months later, in January, 1914, Donald Smith, honored now as Lord Mount Royal and Strathcona, . died at the age of ninety-four. In the long span of his governorship his company once again had managed, as so often before, to catch up with its competitors.

The First World War interrupted the building program—but at no loss to the Hudson’s Bay Company, which used its international trading organization to purchase and transport mountains of supplies for France and Russia. When the conflict ended, land sales boomed again. This time the company matched the population growth with a swift expansion of its retail and mail-order facilities. In 1931 supervision of the chain of stores was shifted from London to a subdirectorate with headquarters in Winnipeg.

Surprisingly, the changes did not bring about as dismal a drop in fur-trade revenues as Smith himself had once predicted. Using light planes for swift communication and tractors and snowmobiles for pulling trains of sleds, the company today has pushed its trading posts to the edges of the Arctic Ocean and has developed a flourishing commerce with the Eskimos. Radisson and Groseilliers would have approved. After all, in the three hundred years since they launched the company, that has been the one unswerving goal—finding and pleasing the customers, whether in wigwams, igloos, or modern apartment houses.