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Great Plains Quarterly Great Plains Studies, Center for

Summer 1983

Transportation And Transformation The Hudson's Bay Company, 1857-1885

A. A. den Otter Memorial University of Newfoundland

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Part of the Other International and Area Studies Commons den Otter, A. A., "Transportation And Transformation The Hudson's Bay Company, 1857-1885" (1983). Great Plains Quarterly. 1720. https://digitalcommons.unl.edu/greatplainsquarterly/1720

This Article is brought to you for free and open access by the Great Plains Studies, Center for at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Great Plains Quarterly by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. TRANSPORTATION AND TRANSFORMATION THE HUDSON'S BAY COMPANY, 1857 .. 1885

A. A. DEN OTTER

Lansportation was a prime consideration in efficiency of its transportation system enabled the business policies of the Hudson's Bay Com­ the company to defeat all challengers, includ­ pany from its inception. Although the company ing the Montreal traders, who were absorbed in legally enjoyed the position of monopoly by 1821. Starving the competition by slashing virtue of the Royal Charter of 1670, which prices, trading liquor, and deploying its best granted to the Hudson's Bay Company the servants to critical areas were other tactics the Canadian territory called Rupert's Land, this company employed to preserve its fur empire. 1 privilege had to be defended from commercial The principal means by which the Hudson's intruders. From the earliest days the company Bay Company defended its trade monopoly, developed its own transportation network in nevertheless, was to maintain an efficient trans­ order to maintain a competitive edge over its portation system into Rupert's Land. opponents. During its first century, when By the 1850s the company's policy of con­ business ventured hardly beyond the shores of trolling access to its fur preserve faced an the Hudson Bay, the company perfected its entirely new and potentially fatal challenge. transatlantic shipping. Later, when competitors Settlement, with technology based on an ex­ from Montreal moved into the western interior, panding agricultural-industrial economy, was the Hudson's Bay Company countered by open­ rapidly approaching the undeveloped plains. ing several inland rivers, developing a unique The economic activities of this encroaching wooden craft, the Y orkboat, and constructing civilization foretold death for the fur trade. rollered passage ways around several rapids. The Several fur empires in other parts of North America had already yielded to the relentless advance of settlement; company officials knew that theirs would also eventually succumb. As A. A. den Otter is associate professor of history early as 1849 Peter Skene Ogden, the chief at the Memorial University of Newfoundland. factor in Oregon, wrote George Simpson, the He has published several articles on western Canadian energy and transportation issues, as resident governor of the Hudson's Bay Com­ well as Civilizing the West: The Galts and the pany, "You are I presume fully aware that the Development of Western Canada (1982). fur trade and civilization can never blend

171 172 GREAT PLAINS QUARTERLY, SUMMER 1983 together and experience teaches us that the enough support to construct an efficient, pro­ former invariably gives way to the latter.,,2 fitable system of transportation. Of all the Understanding that the fall of the fertile projects, only the North West Transportation, portion of Rupert's Land to agricultural settle­ Navigation, and Railway Company was put into ment was inevitable, the Hudson's Bay Com­ operation. In summer 1858 the firm inaugu­ pany developed a strategy to retain its hold rated an agonizingly slow mail and transport over the fur trade wherever possible and to link between Canada and the prairies. But the dominate the commercial potential of the new next year, when the Hudson's Bay Company economic order.3 Accessibility was the key to withdrew its cooperation, the attempt col­ the survival plan; realizing that transportation lapsed.7 The eastern approach to the company's was the vanguard of the new civilization, the empire was safe for the time being. company once again decided to control this On the southern flank, however, the situa­ technology within its domain and to develop tion was radically different. In the United it to the company's own advantage. States, entrepreneurs had backed the new The most obvious legal threat to the com­ steampower technology with enough capital pany's charter came from the province of to fuel a transportation revolution. Throughout Canada. This British colony could claim histor­ the 1850s innovative promoters utilized steam­ ical, imperial, and juridical ties with Rupert's boats and railways to open the interior of the Land. During the 1850s, however, the provin­ continent. Early in the decade, after American cial government did not press claims to the railways reached the Mississippi River, mer­ territories. The editor of the Toronto Globe, chants in Saint Paul, Minnesota, began to com­ George Brown, tried to rally his readers to the bine river and rail to transport their merchan­ cause of western annexation-for years his dise. In this way they doubled the length of the strident editorials praised the Northwest as a shipping season and, by using carts north of panacea for the stagnating economy of Upper the city, penetrated deep into the territory Canada-but his proposal remained a minor monopolized by the Hudson's Bay Company. issue even in his own Clear Grit party and was By 1854 they were at the gates of the rich dismissed as unimportant by the Montreal Athabasca district.8 press.4 In 1857 a legislative committee, estab­ The company responded by improving the lished to investigate the worrisome emigration river route from York Factory on the Hudson of young Canadians to the United States, com­ Bay, but by 1857 the northern route was too pletely ignored the prairies as a haven for pro­ slow and the required labor too expensive to spective farmers and urged instead that they be compete with the Saint Paul approach. More­ retained in Canada by means of a vigorous over, it could not manage the rapidly increasing industrialization policy. 5 That same year traffic load. Consequently, in 1858, Governor Canada's position at the British parliamentary George Simpson authorized a trial shipment of inquiry into the Hudson's Bay Company license soap and sugar via Saint Paul. The experiment was timid and noncommittal. Canada simply was successful and saved the company consider­ could not afford to buyout the company's able time and money.9 charter and trading rights nor could it finance The company's move spurred the Saint Paul the administration of such a vast domain.6 merchants to greater efforts. In 1859 the newly Overshadowing these political considerations formed Saint Paul chamber of commerce of­ was a formidable geographical barrier. Eight fered one thousand dollars to the first captain hundred miles of uninhabitable swamps, forests, to steam a vessel down the Red River of the and hills separated Canada from the fertile North to Fort Garry. Captain Anson Northup prairies. Although several Canadian enthusiasts took up the challenge: he carted a dismantled proposed grandiose schemes to bridge the stern-wheeler from the Mississippi to the Canadian Shield, none were able to gather Red River, reassembled it inside a new hull, TRANSPORTATION AND TRANSFORMATION 173

No"", -"'sf. qt('~ ~"- .;.., Prince ." Albert Carlton House

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RAIL AND RIVER ROUTES ON THE NORTHERN GREAT PLAINS 1857-1885

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christened the vessel the Anson Northup, and this law, the company worked out a secret on 10 June 1859, reached Fort Garry.10 The partnership with the Saint Paul firm of R. C. settlement bells and cannons that welcomed the and J. C. Burbank. The Minnesota company Anson Northup signalled a serious breach in the agreed to carry Hudson's Bay Company goods transportation monopoly of the Hudson's Bay overland with carts from Saint Paul to George­ Company. town on the Red River, and with two steamers The company responded to the threat by (the Anson Northup, refurbished and renamed buying Northup's steamer. Possession of his the Pioneer, and the International) to Fort vessel, however, did not mean complete control Garry. The Burbanks retained the right to carry over the Red River, because American law free-trade goods, but at substantially higher prohibited foreign companies from owning prices.l1 Governor Simpson reported on what property in the United States. To circumvent appeared to be a satisfactory arrangement: 174 GREAT PLAINS QUARTERLY, SUMMER 1983

FIG. 1. The Anson Northup, first steamer on the Red River, from an engraving in The Win­ nipeg Country, 1859. Manitoba Archives.

Our overland transport is likely to work the companies broke their pact.13 A subse­ quite a revolution in the business & be at­ quent contract with another American firm tended with economy & other advantages­ also failed and so the company undertook its By getting in abundant supplies, with dis­ own freighting operations under the name of its patch & at a reduced rate we are able to agent, Norman W. Kittson. Low waters allowed drive the free traders & Americans out of the only intermittent use of the steamers, but even field, & to turn our position to account, by when the boats were supplemented with Red effecting large sales at remunerative rates. With proper energy in our arrangements, I River carts, the company realized significant feel satisfied we can hold the command of savings. By the end of the decade, the Minne­ the trade against all the world. 12 sota route was an important addition to the Hudson Bay ports and the company had re­ Despite the obvious advantages of the Min­ tained control over a vital access to its em­ nesota route, the arrangements with the Bur­ pire.14 banks were not satisfactory. The American Soon after the company's officers had partners were primarily interested in general neutralized the encroachment of Saint Paul trade and therefore actively promoted the business interests, they became involved in an settlement of the plains. This fundamental attempt by several British financiers to open conflict of interests led to numerous squabbles communications with the Northwest and to and disagreements; thus, when the Sioux up­ develop its fertile soil. Edward Watkin, the risings blocked the Minnesota route in 1863, president of Canada's ailing Grand Trunk TRANSPORTATION AND TRANSFORMATION 17S

Railway, initiated the move. An idealistic July 1863 he was in Canada negotiating a deal visionary, Watkin proposed to save his company whereby the Montreal Telegraph Company from collapse by incorporating the existing would undertake the construction of a tele­ lines of the Grand Trunk into a transcontinen­ graph line from Halifax to Sault Ste. Marie if the tal railway through British North America. To Hudson's Bay Company would complete a line facilitate the plan, he also suggested the unifica­ from Fort Langley to Pembina by way of Fort tion of British North America, the annexation Garry. Watkin proposed that either the Canadian of the Northwest, and the settlement of the prai­ government subsidize the Fort Garry and Sault ries.1S As the first step Watkin organized the At­ Ste. Marie section or his company would utilize lantic and Pacific Postal and Telegraph Company existing American telegraph lines south of the to build a telegraph line across the continent. He Great Lakes. Confident of success, Watkin au­ petitioned the colonial office for a subsidy and thorized D. S. Wood of the Montreal Telegraph the Hudson's Bay Company for a vaguely defined Company to construct the line from Fort Garry but broad right-of-way. The government em­ to Jasper House under a Hudson's Bay Company phatically refused his request but the company contract. Although all these proposals awaited tentatively agreed to a very narrow thoroughfare. the approval of the governing committee, Watkin To Watkin's surprise, company officials hinted placed a provisional order for copper wire.19 that he should buy up all the company's shares Watkin's enthusiasm temporarily overwhelmed and thus control its policies directly.16 the committee, and although angry about his Watkin leaped at the opportunity and by the unauthorized actions, it approved his order for summer of 1863 had worked out an arrange­ nearly two hundred tons of copper wire to be ment to buy the Hudson's Bay Company. To delivered to several points in the Northwest.20 finance the purchase, he turned to the Interna­ The committee's move was especially precipi­ tional Financial Society, an association formed tous, because the Canadian government had just by London bankers to make investments across refused to make any financial commitments for the globe.17 One of the society'S first purchases western communications. More ominously, was a majority of the shares of the Hudson's Canada was once again challenging the validity Bay Company. Thus, on 15 June 1863, this influ­ of the company's charter; soon the telegraph ential society named a new board of governors project was lost in the prolonged and complex for the old, closed company and for the first debate about the future of Rupert's Land. time put its stock on the open market. Although The negotiations that led to the termina­ the deal was primarily a lucrative refinancing tion of the Hudson's Bay Company's charter operation, a society brochure spoke in glowing consumed more than a decade. All parties in­ terms of the settlement potential of the North­ volved agreed that Canada should control at west while scarcely mentioning the enormous least the fertile portion of Rupert's Land, but they could not concur on the terms of the cost of establishing communications or civil transfer. Company officials wanted as large an government in the territories.18 The brochure indemnity for the charter as they could get, marked the dramatic change in a fundamental while Canadian politicians refused to payout policy of the Hudson's Bay Company: instead of large sums of money for the territories or blocking the approach of settlement, the com­ assume the enormous cost of administering and pany, under its new management, intended to settling the region without a substantial imperial establish modern communications in its territo­ subsidy. The British negotiators, hamstrung by ries and to control the development of resources. the chaotic politics of the period, knew that Colonizing the southwestern portion of Parliament would not approve expenditures for Rupert's Land was a venture beset by complex the economic benefit of a colony nor would it political considerations and costly long-term defend the rights of an anachronistic fur mo­ investments, and Watkin was moving too quick­ nopoly. The result was a war of words, couched ly for the cautious London bankers. Already in in diplomacy and fought with memoranda. 176 GREAT PLAINS QUARTERLY, SUMMER 1983

Time and circumstance were on the side incursion of free traders, its abrogation opened of the colonial office. The rapid influx of the territories to all business interests as well as settlers into Minnesota and the Dakotas threat­ settlers. Throughout the negotiations, senior ened to spill over into Canada. Indeed, several company officials had debated among them­ influential Americans were calling for the selves "the future position of the company annexation of Rupert's Land to the United with reference not only to its business as a fur States. In Ontario, meanwhile, political pressure trade company but with reference to its posi­ was mounting for the Canadian government to tion as a great commercial company supplying act quickly to reserve the Northwest for Cana­ this settlement which is likely to be formed dians. The Hudson's Bay Company realized that with a view to dealing with the land that is left it had lost administrative control over the terri­ to it, and with a view to its assisting in opening tories and would eventually lose economic up that country.,,24 By 1871 the Hudson's dominance over at least the fertile portion. The Bay Company had decided not to abandon the colonial office, using these conditions to its fur trade but to modernize its management. advantage, gradually whittled down the ex­ The company also determined to capture a treme positions of both sides and in March large share of the general trade that would be 1869 imposed a settlement. In exchange for created by the settlement of the prairies. But, ceding Rupert's Land to Canada, the com­ as Governor Northcote cautioned the com­ pany woula retain title to some land surround­ pany's shareholders, profits would dwindle ing its posts and to one-twentieth of the land in unless the company offset the shrewd business the fertile belt, receiving a compensation of practices of its competitors. The only advan­ three hundred thousand pounds. The Canadian tage the company had, according to Northcote, government quickly accepted the settlement, was its expertise in wilderness transportation. but the Hudson's Bay Company acquiesced It was time, he declared, to streamline all parts only after unsuccessfully seeking some major of the company's transportation system in . . h 21 Improvements In t e terms. order to preserve its dominant place in the com­ The company's surrender of the charter merce of the Northwest.25 meant the defeat of the colonizers among its Northcote's call for the modernization of shareholders. For the past five years, Edward the company's transportation system carried a Watkin and his supporters had tried to trans­ note of urgency. Several railways were already form a fur-trade business into a huge coloniza­ approaching its business empire. In 1871 the tion company.22 They failed because, as Sir Northern Pacific reached the Red River from its Stafford Northcote, the governor, explained, terminal at Duluth; the same year, the St. Paul private corporations no longer possessed the and Pacific arrived at the river from Saint Paul. moral authority to maintain law and govern­ The St. Paul and Pacific planned to push north­ ment in a populated region. Without properly ward as far as the international border at constituted civil administration and law courts, Pembina and asked the Hudson's Bay Company the company dared not even sell land, especial­ to complete the line to Fort Garry.26 The com­ lyon credit. Moreover, the governor pointed pany's chief commissioner, Donald Smith, out, the Hudson's Bay Company did not com­ petitioned the Canadian government for a mand the resources to finance the infrastruc­ charter to construct a railway from Pembina to ture-government, telegraphs, railways, and Fort Garry and thence to Fort William on Lake warehouses-necessary to support coloniza­ Superior. Parliament never considered the tion.23 The settlement of 1869 decided aban­ charter, probably because the administration donment of colonization. was then planning the Canadian transconti­ The loss of the charter significantly altered nental railway. 27 Financial difficulties further the position of the Hudson's Bay Company. hampered the St. Paul and Pacific's plans, and Although the charter had never prevented the in 1873 the railroad went into receivership TRANSPORTATION AND TRANSFORMATION 177 along with the Northern Pacific. Despite their had been left to winter in the country, accumu­ financial problems, the two railways provided lating interest charges and eroding profits. western businesses with fast and efficient Moreover, this fragile system of moving goods transportation between the head of navigation depended upon Indians and metis, who were of the Red River and all major eastern Ameri­ expensive to pay and feed and difficult to re­ can and Canadian cities. cruit for the backbreaking work.29 Meanwhile, steamboat transportation on To meet the challenge of improved rail and the Red River also improved. In 1871 James J. river transportation and increased competition, Hill, an ambitious partner of the Saint Paul firm the Hudson's Bay Company attempted to re­ of Hill, Griggs and Company, launched the duce operating costs by using its own fleet of Selkirk on the river. After the Hudson's Bay steamships on Lake Winnipeg and the Saskat­ Company refused to pay his high rates, Hill chewan River. In May 1872 it launched the declared that American law permitted only Chief Commissioner, but the boat was ill suited domestic ships to ply the rivers of the United for the rough waters of Lake Winnipeg and States. The British-owned Hudson's Bay Com­ was retired only three years later. The next year pany successfully thwarted Hill by transferring an unnamed boat foundered on the first rapids the ownership of the International to its it encountered on the Saskatchewan River. 30 agent, Norman Kittson, an American citizen. Undeterred by these misfortunes, the company Competition, however, served only to reduce commissioned the Colville to replace the Chief rates and profits; therefore, in 1872 the two Commissioner on Lake Winnipeg and built the rivals founded the Red River Transportation Northcote to ply the Saskatchewan. The North­ Company, which set preferential tariffs for the cote, a Mississippi River type of stern-wheeler, Hudson's Bay Company and ruled the river reached Carlton House late in 1874.31 The virtually unchallenged until 1878. The consoli­ following summer, even though the company dation of'the two competitors proved to be an still needed to deploy the traditional flotilla extremely lucrative transportation monopoly. of Y orkboats for the bulk of its trade goods In 1878, for example, the Red River Transpor­ and supplies, the steamers demonstrated their tation Company paid a dividend of 80 percent cost efficiency and the company nearly re­ to all its shareholders, including the Hudson's covered its investment.32 Bay Company.28 As the general economic depression of the The introduction of reliable train and 1870s drove down fur prices, Hudson's Bay steamship service to Fort Garry forced the Company officials were more determined than Hudson's Bay Company to undertake a compre­ ever to cut their transport expenses. The firm hensive renovation of its transport network. As built a 3Yz-mile tramway around the Grand long as the company had held imperial sway Rapids as an efficient traI)sshipping point be­ over the unsettled expanse of Rupert's Land, it tween Lake Winnipeg and the Saskatchewan could safely neglect to revamp its interior River. The company also planned to place transportation system. But with the moderni­ steamers on the Clearwater and Athabasca zation of the Red River route, the company rivers in its far northern domain and worked to could no longer afford to rely on old carrying improve several portages and overland routes.33 methods. The complex Yorkboat shuttle from In 1876 the company purchased the Lily from the fur-trading posts York Factory or Moose a Clyde shipyard and carried it in sections to Factory on the Hudson Bay, or from Fort the Northwest. The Lily, which was equipped Garry via Norway House to the outlying plains with a steel hull as a protection against rocks, and forests of the Northwest, was too slow and had a deeper draft than intended. Ironically, expensive. At best, four years were required to it often grounded on the shallow river bottom realize a return on capital invested in trade and in 1883 hit a rock near Medicine Hat goods. In 1869 and again in 1870, valuable furs and sank.34 The Northcote, although better 178 GREAT PLAINS QUARTERLY, SUMMER 1983 designed, also experienced difficulties navigat­ OpposltlOn to the Hudson's Bay Company.,,38 ing the shallow Saskatchewan. By the end of The argument was not lost on the board. In­ the decade, modern steamship technology had deed, Chief Commissioner James A. Grahame, not yet conquered the capricious northern the executive largely responsible for steamboat rivers. policy, had on occasion permitted the fleet to It was apparent that the Saskatchewan carry public goods. But, because present vessels River's channel required extensive modifica­ could not handle even all of the Hudson's Bay tions before it could serve as an efficient water­ Company's requirements, he realized that way for the company's steamboats. The task creating a general steam transport system would fell to C. J. Brydges, who in 1879 was appointed require expensive investments in new ships. the company's land commissioner as part of a That was a task few committee members general shake-up of the senior administration.35 wanted to take on, particularly at a time when Brydges lobbied the Canadian government to a prolonged economic depression had seriously remove the most troublesome boulders from eroded fur prices. The committee emphatical­ various rapids and to build warping piers and ly warned Brydges not to undertake major wingdams at several small waterfalls on the investments to expand the fleet.39 Saskatchewan. Despite his close friendship with Brydges's fears of competing steamboats such leading politicians as Prime Minister John were well founded-and a direct result of the A. Macdonald, Brydges had little success. All continuing expansion of the railroads in the he gained was the reimbursement of the twenty­ 1870s. In 1877 Donald A. Smith and James J. five thousand dollars his company had spent in Hill, with the cooperation of George Stephen, 1882 and 1883 on a haphazard boulder removal the president of the Bank of Montreal, and program. The federal government subsequently John S. Kennedy, a prominent New York spent another thirty-five thousand dollars on l:anker, had gained control of the assets of the the river. 36 Compared to the massive subsidies bankrupt St. Paul and Pacific Railroad. The to railroads, the expenditures on navigational following year they completed the road to improvements were minuscule and clearly be­ Winnipeg (formerly Fort Garry) and renamed it trayed the government's priorities. the St. Paul, Minneapolis, and Manitoba Rail­ To back his lobbying efforts, Brydges com­ road.40 The establishment of a rail link between mitted the Hudson's Bay Company to a sub­ Winnipeg and Saint Paul rendered the Red stantial expansion in its steamboat operations. River steamboat service obsolete. Thus, in 1878 If the government would agree to underwrite the Red River Transportation Company sold the river improvements, then Brydges promised the bulk of its fleet to the Winnipeg and West­ not only to open the company's ships to public ern Transportation Company, formed by a traffic but to increase the size of the fleet.37 group of Montreal, Winnipeg, and Saint Paul Brydges's pledge marked a significant change in businessmen to operate the ships on the Assini­ company policy because the boats had been boine River. Late in 1879, however, Hill, Smith, built primarily for the company's own benefit, and Stephen became the principal members to cripple the opposition. Brydges, however, of the Canadian Pacific Railway Syndicate, saw the issue from a different perspective. He founded to build Canada's transcontinental explained his view to the governor's committee. railway. When the Canadian Pacific decided to "Unless the company is prepared to make its build its mainline through the southern portion boats available for public traffic and especially of the prairies, parallel to the Assiniboine, the in regards for the Indian department, ... there Winnipeg and Western Transportation Company will undoubtedly be an opposition line of boats planned to transfer its ships to the Saskatche­ put upon the river, which will have the effect of wan River.41 Meanwhile, a second firm, called opening up the whole of the northern country the North West Navigation Company, formed for supplies for fur trading purposes in direct in 1880 by Montreal, Winnipeg, and Scottish TRANSPORTATION AND TRANSFORMATION 179

FIG. 2. The Hudson's Bay Company's steamer North West, moored at Edmonton, 1896. E. Brown Collection, Provincial Archives of Alberta.

financiers, also proposed to place several steam­ The monopoly was not as profitable as the ers on the river, as well as on Lake Winnipeg.42 collaborators had envisioned. Without extensive To meet the threat of competition, Grahame work on the falls and rapids of the Saskatche­ and Brydges sold the Hudson's Bay Company wan River, which Brydges had so strenuously fleet to the two newcomers, used the revenue promoted earlier, navigation was not reliable. from the sale to buy a majority interest in both Moreover, because water levels on the river companies, and early in 1881 concluded a remained low for the next few years, the freighting agreement to their mutual advantage. Winnipeg and Western Transportation Company The collusion limited the operations of the consistently failed to deliver vital supplies to Winnipeg and Western Transportation Company the small communities along the Saskatchewan to the Saskatchewan River and those of the River. These shortfalls caused hardships among North West Navigation Company to Lake Win­ the settlers and destroyed the confidence of nipeg. Both firms agreed to grant the Hudson's retailers.44 Increasingly, western merchants Bay Company a 10 percent rebate on their turned to the Canadian Pacific Railway, which freight rates.43 Therefore, with no heavy capi­ was then being laid across the prairies. Even the tal expenditures for ship construction, Grahame Hudson's Bay Company deserted the steam­ and Brydges created a transportation monopoly boats: in 1884 and 1885 the company shipped on both Lake Winnipeg and the Saskatchewan most of its Edmonton and some of its Mac­ River, won a preferential position for the Hud­ kenzie and Athabasca outfits with the Pacific son's Bay Company, maintained general control railway via Calgary. 45 Although the overland over a fleet of five river and three lake steamers, route was more costly, it was much faster and and delegated daily management responsibilities finally enabled the company to distribute its to experienced personnel. trade goods within a single season. In a highly 180 GREAT PLAINS QUARTERLY, SUMMER 1983

FIG. 3. The Canadian Pacific Railway's Countess of Dufferin arrives by steamer in Winnipeg, 1877. Manitoba Archives.

competitive business based on luxury goods and depended on expanding commerce and grow­ fluctuating prices, speed and reliability were ing settlement, the very antithesis of the best absolute requirements for success. The river conditions for the fur trade. For the first time, steamers delivered neither, and over the years the Hudson's Bay Company lost control over they were phased out of existence, replaced the transportation of its trade goods, one of the by the more efficient railroads. most vital aspects of its operations. Although the steamboat program repre­ The construction of the Canadian Pacific sented a last-ditch effort to control access to Railway completed the transformation of the the fur domain, the company finally surrend­ Hudson's Bay Company from a privileged ered its transportation monopoly to the con­ monopoly to a diversified business struggling troller of a more modern technology. Railway to be competitive. The London committee technology was beyond the financial resources abolished the post of chief commissioner and of the Hudson's Bay Company. The company created a subcommittee of two Canadian resi­ could not afford to purchase a controlling dents to oversee the entire Canadian operations. interest in such large enterprises as the St. Paul The committee also appointed Joseph Wrigley and Pacific and the Canadian Pacific railways, to the new chief executive post of trade com­ nor could it generate the traffic to warrant missioner.46 Wrigley was keenly aware of how such massive investments. Railways, unlike drastically the Canadian Pacific had altered the steamboats, could not be used to shut competi­ business environment in western Canada, and tors out of its fur domain. In fact, railways he believed that the change should be harnessed TRANSPORTATION AND TRANSFORMATION 181 for the benefit of the Hudson's Bay Company. dramatically reduced, the Hudson's Bay Com­ "I would suggest," he wrote, "that the com­ pany could tender for all government contracts pany should endeavour to adopt its business to in the Northwest. 51 altered circumstances and make vigorous effort The ability to bid on all prairie contracts was not only to hold its own, but to advance and a mixed blessing. Since rail transportation try to increase in the north the collection of opened the hinterland to all companies, the Furs, and in the south general business.,,47 government began to parcel out its contracts Wrigley's northern policy emphasized cost to various firms; in return, the increased compe­ reductions and modern business techniques, tition lowered prices and profits. To meet the particularly necessary because by 1885 fur new situation, the two Fort Benton firms prices had fallen to all-time lows. Since demand divided their American and Canadian govern­ was not likely to grow, but competition would, ment business between themselves, excluded productivity had to be increased. The railway all opponents from their transport system, and mad~ Wrigley's task easier because he could even equalized profits. 52 I. G. Baker, who had instruct the nearer districts to order merchan­ taken the Canadian portion, approached the dise twice a year instead of two years in ad­ Hudson's Bay Company for a similar division vance as before. Careful inventory control of territory, but the latter company refused.53 reduced capital investments, prevented the Although the Hudson's Bay Company still buildup of unpopular stock, and broadened the viewed government contracts as "a delusion and selection of goods. Wrigley also instructed all snare" because they diverted too much capital posts and stores to adopt modern accounting and time from the regular trade, it nevertheless procedures and instituted a formal inspectorate determined to eliminate the American firm to ensure efficient operations.48 from its traditional domain. 54 The company The Hudson's Bay Company's southern enjoyed the significant advantages of size, policy was more complex and aggressive. For British connections, and all-Canadian transport, example, even as the Canadian Pacific Railway and eventually squeezed I. G. Baker out of the advanced across the plains, the company ex­ government supply business. panded its bids on government supply contracts The Hudson's Bay Company also clashed to include the southwestern corner of the with the I. G. Baker firm in the retail trade. In Canadian prairies. Traditionally, two Fort Ben­ addition to its large department store in Winni­ ton firms, I. G. Baker and Company and T. C. peg, the company operated smaller concerns at Power and Brother, had dominated the region. Portage la Prairie and other Manitoba centers. The Hudson's Bay Company had tolerated the As the Canadian Pacific Railway moved west­ invasion of its commercial territory because its ward, so did the company. In 1884, for exam­ supply lines could not equal the more efficient ple, the company built a warehouse and retail Missouri River system.49 By 1879 the situation store on several town lots purchased in Calgary. began to change. The Hudson's Bay Company's It also constructed a small outlet at Battle River fleet on the Saskatchewan River could tender Crossing north of Calgary specifically to com­ for Indian department contracts recently swol­ pete with I. G. Baker. In fact, the company len by the privation among prairie Indians. The intended to drive the American firm south of company changed its policy and from 1880 on the Canadian Pacific mainline. That objective annually captured most of the government's was not lost on the Fort Benton merchants. business along the Saskatchewan. The south­ I. G. Baker and Company offered to sell its western area was left to the Fort Benton mer­ Calgary store at a 40 percent discount on its chants because the company's overland system stock and promised not to open another estab­ still could not match their transport economy. 50 lishment in Calgary or points north. The The arrival of the Canadian Pacific changed Hudson's Bay Company accepted the offer with even that approach. With freight expenses only minor amendments. 55 The Calgary deal 182 GREAT PLAINS QUARTERLY, SUMMER 1983 became the prelude to the eventual takeover of spend an additional twelve thousand dollars all of I. G. Baker's Canadian operations. to convert the Fort Garry mill. Although the One of the reasons the Hudson's Bay Com­ committee was initially reluctant, it finally pany was able to beat the American competi­ agreed that flour milling was potentially a big tion was the special arrangement made with the money-maker and approved the modernization Canadian Pacific Railway. The company had of the two mills. 5 7 been able to wrest extra concessions from the Flour milling was not the only avenue for railroad because of the size of its shipments and profit that the Canadian Pacific opened to the the long distances involved. In addition, Donald Hudson's Bay Company. The start of prairie Smith, the company's largest shareholder, was construction sparked a real estate boom that also a Canadian Pacific director. Smith was dramatically boosted the company's land sales. only one of the policy makers in the railway Even though the land rush eventually collapsed, corporation, however, and his railway ties sales continued, although at a slower pace. The would preclude the company from using Amer­ westward progress of the railway steadily in­ ican rail lines to reach the Canadian Northwest. creased land values and enhanced company Consequently, mutual interest suggested that profits. The governing committee decided to the company ship by steamer to Montreal, use return the bonus revenues directly to share­ the Canadian Pacific to western Canadian holders by lowering the nominal value of com­ stations, and in return receive a modest rebate. pany shares and by paying out the reduction in In June 1885 the Canadian Pacific secretly cash. In this manner, the company wrote down granted the Hudson's Bay Company a 12Yz the value of its shares from twenty to thirteen percent rebate on all freight east of Winnipeg. pounds and disbursed the seven hundred thou­ The Hudson's Bay Company had wanted to sand pounds of profit its land account had include flour exports, but the railroad refused, earned in the fifteen years after the surrender ostensibly because the rate on flour was already of its charter. 58 Land sales promised to offset low, but probably because it did not want to the loss of the fur monopoly for the Hudson's give the company a special advantage on such Bay Company after the opening of the North­ an important export item. 56 Nevertheless, the west by the Canadian Pacific. agreement once again made Montreal the gate­ The loss of the fur and transportation way to the Northwest. monopoly, therefore, had nat adversely af­ The failure to secure a freight rate conces­ fected the balance sheet of the Hudson's Bay sion on flour shipments was a disappointment Company. Rather, it was the general economic to company officials. Although milling was depression of the 1870s and 1880s that caused only an incidental part of the company's total the company's lean years. Dwindling profits business, Trade Commissioner Wrigley planned coincided with a transformation in business to test the Montreal and London markets in policies occasioned by a drastically changed the hope that flour sales would eventually re­ environment. Traditionally, the Hudson's Bay place the lost fur-trade revenues. Unfortunately, Company had operated in splendid isolation, the company's mills at Fort Garry and West countering challengers with a formal policy of Lynne were badly outdated. Wrigley lamented shrewd trading techniques on the fringes of its the fact that even the new mill at Prince Albert fur empire and an implicit strategy of managing was being built "on the old and nearly obsolete transportation within this domain. The arrival [stone1 principle" and feared that if anyone of fast and efficient means of transport made erected a modern roller mill nearby, the com­ its territory even more vulnerable to inter­ pany's plant would soon be out of business. lopers; consequently, restraint of access became Despite the company's retrenchment program, increasingly important. As long as the Hudson's Wrigley strongly recommended that the board Bay Company was able to control the ap­ install roller machinery at Prince Albert and proaches to its business realm, it could to some TRANSPORTATION AND TRANSFORMATION 183 extent manage its rate of development and curb of the West, 1856-1900 (Toronto: University free trade. By making its own transportation of Toronto Press, 1980); Montreal Gazette, systems as efficient as possible, the company 13 January 1857; Montreal Leader, 13 January could undercut opponents and prevent the rise 1857. 5. Canada, Legislative Assembly, Report of of competing systems. This had been the ration­ the Special Legislative Committee on Emigra­ ale for the company's Minnesota route, the tion,joumals, 1857, Appendix 47. involvement with the Atlantic and Pacific 6. W. L. Morton, The Critical Years: The Postal and Telegraph Company, and the con­ Union of British North America 1857-1873 struction of the Saskatchewan River steam­ (Toronto: McClelland and Stewart, 1964), boats. By 1880, with the advent of western pp. 33-36; Gerald Egerton Boyce, "Canadian Canadian railways, the company's transporta­ Interest in the North West" (M.A. thesis, Uni­ tion monopoly disintegrated. The Hudson's versity of Manitoba, 1960). Bay Company could not afford the enormous 7. Galbraith, Hudson's Bay Company, pp. investment that railroad technology required; 359-61. therefore, the company could no longer trans­ 8. Alvin C. Gluek, Jr., "The Minnesota port its own trade goods and supplies. Yet, Route," The Beaver, Outfit 286 (Spring 1956): 45. even as the Canadian Pacific ended the fur-trade 9. Simpson to Fraser, 1 March 1858, HBCA, era on the prairies and contiguous forest, the PAC, A12/9, folio 93; Simpson to Smith, railroad also ushered in a new age for the Hud­ 2 October 1858, folios 268-69. son's Bay Company. Access to the far northern 10. Theodore Barris, Fire Canoe: Prairie fur forest was cheapened and the company Steamboat Days Revisited (Toronto: McClel­ became more competitive on the world market. land and Stewart, 1977), pp. 25-30. In the south the railway opened new oppor­ 11. Simpson to Fraser, 29 June 1860, HBCA, tunities in land sales, retailing, government PAC, A12/10, folio 539; Alvin C. Gluek, Jr., supply contracts, and flour milling. Backed by Minnesota and the Manifest Destiny of the a centuries-old business, newly appointed man­ Canadian Northwest (Toronto: McClelland and Stewart, 1964), pp. 144-45. agers readily adjusted the company to the new 12. Simpson to Dallas, 23 July 1859, HBCA, order. PAC, D4/84A, folio 266. The statistics in the company's records are too spotty to make an NOTES accurate assessment of amounts of cargo and numbers of persons carried on either the 1. John A. Alwin, "Mode, Pattern, and Minnesota or York routes. In 1860, however, Pulse: Hudson's Bay Company Transport, the Pioneer made three trips downriver carrying 1670-1821" (Ph.D. diss., University of Mani­ an average of 50 tons of goods and completed toba, 1978); John S. Galbraith, The Hudson's four trips up the river with an average load of Bay Company as an Imperial Factor (Berkeley: 130 bales of furs. Simpson to Dallas, 22 June University of California Press, 1957), p. 10. 1860, HBCA, PAC, A12/10, folio 530. 2. Ogden to Simpson, 10 March 1849, 13. See, for example, Fraser to Simpson, 18 Hudson's Bay Company Archives, Public July 1860, HBCA, PAC, A6/35, folio 257. Archives of Canada (hereafter cited as HBCA, 14. Gluek, "Minnesota Route," p. 50; see PAC), D5/24. also Gluek, Minnesota and Manifest Destiny. 3. Ross to Simpson, 21 August 1848, 15. Edward William Watkin, Canada and the HBCA, PAC, D5/22; Transcript of Verbatim States: Recollections, 1851-1886 (London: Reports of Proceedings at General Court, 24 Ward, Lock, & Co., 1887). March 1869, HBCA, PAC, A2/11; Dallas to 16. Confidential Proof Prospective, Atlantic Watkin, 12 July 1863, Watkin Papers, Public and Pacific Postal and Telegraph Company Archives of Canada (hereafter cited as PAC). Limited, Watkin Papers, PAC; Correspondence 4. Doug Owram, Promise of Eden: The with His Grace the Duke of Newcastle and the Canadian Expansionist Movement and the Idea Hudson's Bay Company, in Reference to the 184 GREAT PLAINS QUARTERLY, SUMMER 1983

establishment of Overland Passenger and Tele­ 28. Albro Martin, James J. Hill and the graphic Communication with British Columbia, Opening of the Northwest (New York: Oxford 5 July to 8 November 1862; Newcastle to University Press, 1976), pp. 76-84; Barris, Fire Berens, 21 November 1862; Elliot to Berens, Canoe, pp. 25-40. The Hudson's Bay Company 21 November 1862. probably had about eight hundred shares 17. Karen Anderson, "The Organization of worth forty thousand dollars in the Red River Capital for the Development of the Canadian Company. See Grahame to Armit, 1 November West" (M.A. thesis, University of Regina, 1876, HBCA,PAM,A12/17, folio 304; Grahame 1974), pp. 36-74; Elaine A. Mitchell, "Edward to Armit, 20 March 1878, A12/46, folio 115. Watkin and the Buying-Out of the Hudson's 29. Report of the Governor and Committee Bay Company," Canadian Historical Review 34 of the Hudson's Bay Company, 28 June 1871, (September 1953): 219-44. 22 November 1870, HBCA, PAM; Smith to 18. Prospectus, The International Financial Smith, 1 November 1870, HBCA, PAC, A6/44, Society Limited, Watkin Papers, PAC. folio 167. 19. Memorandum of Agreement Between 30. Bruce Peel, Steamboats on the Sas­ Edward W. Watkin and O. S. Wood, 10 August katchewan (Saskatoon: Western Producer Prai­ 1863, Watkin Papers, PAC; Head to Watkin, rie Books, 1972), pp. 13-23. 18 August 1863. 31. Grahame to Armit, 15 June, 29 July, 20. Head to Watkin, 18 August 1863, and 24 August 1874, HBCA, PAM, D13/1, HBCA, PAC, A7/4, folio 6; General Court folios 6, 13, and 24; 21 September 1874, Minutes, 21 June 1864, A2/3. folio 60. 21. For an excellent account of the nego­ 32. By 1870 the company had reduced its tiations for the transfer of Rupert's Land, see need for Hudson Bay shipments to only two Arthur S. Morton, A History of the Canadian vessels per year. The bulk of its trade goods for West to 1870-71, 2d ed. (Toronto: University the northern department was sent by way of of Toronto Press, 1973) and Galbraith, Hud­ Minnesota. In 1874 the Lady Head and the Wal­ son's Bay Company. See also E. E. Rich, The rus carried both the 1873 and the 1874 furs. Fur Trade and the Northwest to 1857 (Toron­ See Smith to Smith, 1 November 1870, HBCA, to: McClelland and Stewart, 1967) and W. L. PAC, A6/44, and Report of the Governor Morton, The Critical Years. and Committee, 24 November 1974, HBCA, 22. See, for example, General Court Min­ PAM. utes, 20 November 1866, HBCA, PAC; Paper 33. Grahame to Belanger, 10 December on the Vote of the Colonization of Rupert's 1974, HBCA, PAM, D14/1, folio 275; Grahame Land. to McMurray, 7 April 1875, D14/2, folio 307; 23. Minutes of the General Court, 24 March Grahame to Clark, 15 May 1875, folio 423; 1869, HBCA, PAC, A2/4. Report of the Governor and Committee, 29 24. Report of the General Court, 5 July June and 10 November 1875; Grahame to 1870, HBCA, PAC, A2/16, folio 57. Armit, 30 October 1875, A12/16, folio 699; 25. Proceedings of the General Court of the Grahame to Armit, 22 May 1877, A1/17, Hudson's Bay Company, 28 June and 12 July folio 529; Canada, Parliament, Sessional Papers, 1871, HBCA, Public Archives of Manitoba 1882, no. 139; Ron Vastokas, "The Grand (hereafter cited as PAM). Rapids Portage," The Beaver (Autumn 1961): 26. Edmund Rice to Donnelly, 6 February 22-26; C. S. MacKinnon, "Some Logistics of 1864, Donnelly Papers, cited in John L. Harns­ Portage La Loche (Methy)," Prairie Forum 5 berger, "Jay Cooke and Minnesota: The Forma­ (Spring 1980): 51-66. tive Years of the Northern Pacific Railroad, 34. Grahame to Armit, 16 August 1876, 1868-1873" (Ph.D. diss., University of Minne­ HBCA, PAM, A12/17, folio 287; Peel, Steam­ sota, 1956). boats, pp. 47-56,123-41. 27. Leonard Bertram Irwin, Pacific Rail­ 35. Alan Wilson, '''In a Business Way': ways and Nationalism in the Canadian North­ C. J. Brydges and the Hudson's Bay Company, west, 1845-1873 (New York: Greenwood 1879-1889," in The West and the Nation: Press, 1968), p. 169. Essays in Honour of W. L. Morton, ed. by Carl TRANSPORTATION AND TRANSFORMATION 185

Berger and Ramsey Cook (Toronto: McClel­ of the Hudson's Bay Company, 30 June 1885, land and Stewart, 1976), p. 185. HBCA, PAM; Wrigley to Armit, 10 November 36. Canada, Parliament, Sessional Papers, 1885, A12/27, folio 456; Memorandum on 1885, no. 138. Supplies for the Northern Department, folio 76. 37. Ibid., Brydges to Langevin, 28 Septem­ 49. Grahame to Armit, 16 November 1877, ber 1880. HBCA/PAM, A12/57, folio 720. See also Paul 38. Brydges to Armit, 8 January 1880, F. Sharp, Whoop-Up Country: The Canadian­ cited in Hartwell Bowsfield, ed., The Letters of American West, 1865-1885 (Norman: Uni­ Charles John Brydges, 1879-1882: Hudson's versity of Oklahoma Press, 1973), pp. 207-28. Bay Company Land Commissioner (Winnipeg: 50. Grahame to Armit, 22 January 1880, Hudson's Bay Record Society, 1977), p. 47. HBCA/PAM, A12/48, folio 125; Grahame to 39. Grahame to Armit, 16 November 1877, Armit, 14 May 1880, folio 327. HBCA, PAM, A12/17, folio 720; Armit to 51. Grahame to Wrigley, 2 May 1884, Grahame, 27 June 1877, A6/507, folio 538; HBCA, PAM, A12/52, folio 134; Wrigley to Brydges to Colville, 1 November 1880, cited in Armit, 6 July 1884, A12/27, folio 376. Bowsfield, Letters ofG. J. Brydges, pp. 103-5. 52. Grahame to Wrigley, 2 May 1884, 40. Martin, James J. Hill, pp. 114-98. HBCA, PAM, A12/52, folio 134. For example, 41. The fact that the Winnipeg and Western Ogilvie Mills slashed prices on its flour surplus Transportation Company decided to transfer and captured most flour contracts west of its fleet to the Saskatchewan River as early as Manitoba; James M. Francis, "Montana Busi­ the late fall of 1880 is surprising in light of the ness and Canadian Regionalism in the 1870s fact that the Canadian Pacific Railway did not and 1880s," Western Historical Quarterly 12 announce its decision to take a more southerly (July 1981): 296-97; see also James M. Francis, route than originally planned until the spring "Business, Enterprise, and the National Policy: of 1881. Perhaps the railroad's decision was The Role of T. C. Power & Brother and I. G. made earlier than has traditionally been as­ Baker & Company in the Political and Eco­ sumed. The close connections among Hill, nomic Development of the Southwestern Prai­ Smith, the steamboat companies, and the ries and Northern Montana" (M.A. thesis, Hudson's Bay Company make a leak of infor­ University of British Columbia, 1978). mation quite possible. For details of the trans­ 53. Wrigley to Armit, 3 November 1884, fer of ships, see John Macoun, Manitoba and HBCA, PAM, A12/27, folio 89. the Great Northwest (Guelph: World Publish­ 54. Grahame to Wrigley, 2 May 1884, ing Co., 1882), pp. 582-85; Peel, Steamboats, HBCA, PAM, A12/52, folio 134; 22 July 1884, pp.76-78. folio 241. 42. Barris, Fire Canoe, pp. 61-62. 55. Grahame to Armit, 28 January 1884, 43. Grahame to Armit, 11 August 1881, HBCA, PAM, A12/52, folio 55; 18 April 1884, HBCA, PAM, A12/64, folio 130; 18 November folio 126; 2 May 1884, folio 134; Wrigley to 1881, folio 407; 29 December 1881, folio 525; Armit, 6 October and 3 November 1884, 16 March 1882, A12/50, folio 95. A12/27, folios 52 and 87; 14 February 1885, 44. Canada, Parliament, Petition of the folio 188. Merchants of Prince Albert, Sessional Papers, 56. Wrigley to Armit, 3 November 1884, 1885, no. 138. HBCA, PAM, A12/27; Wrigley to Kerr, 9 June 45. Grahame to Armit, 2 August 1884, 1885, folio 354; Kerr to Wrigley, 10 June 1888, HBCA, PAM, A12/51, folio 243; Wrigley to folio 354. Armit, 20 February 1885, A12/27, folio 195. 57. Wrigley to Armit, 13 October 1884, 46. Report of the Governor and Committee HBCA, PAM, A12/27, folio 60; 12 March 1885, of the Hudson's Bay Company, 1 July 1884, folio 233; 12 September 1885, folio 396. HBCA,PAM. 58. See the semiannual Reports of the 47. Wrigley to Armit, 17 November 1884, Governor and Committee of the Hudson's HBCA, PAM, A12/27, folio 94. Bay Company, 1870 to 1885, especially 30 48. Report of the Governor and Committee June 1885, HBCA, PAM.