The North West Company was a Canadian fur trading business headquartered in Montreal from 1779 to 1821. It competed with increasing success against the Hudson's Bay Company in the regions that later became Western Canada and Northwestern Ontario. With great wealth at stake, tensions between the companies increased to the point where several minor armed skirmishes broke out, and the two companies were forced by the British government to merge.
Before the Company After the French landed in Quebec in 1608, independent French-Canadian traders commonly known as spread out and built a fur trade empire in the St. Lawrence basin. The French competed with the Dutch (from 1614) and English (1664) in New York and the English in Hudson Bay (1670). Unlike the French who traveled into the northern interior and traded with First Nations in their camps and villages, the English made bases at trading posts on Hudson Bay, inviting the indigenous people to trade. After 1731, pushed trade west beyond Lake Winnipeg. After the British conquest of New France in 1763 (and the defeat of France in Europe), the management of the fur trading posts was taken over by English speakers. These so-called "pedlars" began to merge because competition cost them money and because of the high costs of outfitting canoes to the far west.
Beginnings
There are historical references to a North West Company as early as 1770, including the Montreal-based traders Benjamin Frobisher, Isaac Todd, Alexander Henry the elder and others, but the standard histories trace the company to a 16-share organization formed in 1779, which included Todd, Simon McTavish and James McGill. Seeking to break the Hudson's Bay Company monopoly over the North American fur trade, in 1780, the organization was joined by Peter Pond and Alexander Ellice, with his brothers, Robert and James, (and, later, his sons, including Edward Ellice).
In the winter of 1783–1784, the North West Company was officially created on a long-term basis, with its corporate offices on Vaudreuil Street in Montreal. It was led by businessmen Benjamin Frobisher, his brother, Joseph, and McTavish, along with investor-partners who included the Ellices, Robert Grant, Nicholas Montour, Patrick Small, William Holmes, and George McBeath.
Official founding In 1787 the North West Company merged with a rival organization, Gregory, McLeod and Co., which brought several more able partners in, including John Gregory, Alexander Mackenzie, and his cousin Roderick Mackenzie. The 1787 company consisted of 20 shares, some held by the agents at Montreal (see below), and others by wintering partners, who spent the trading season in the fur country and oversaw the trade with the aboriginal peoples there.
The wintering partners and the Montreal agents met each July at the company's depot at Grand Portage on Lake Superior, later moved to Fort William. Also under the auspices of the company, Alexander Mackenzie conducted two important expeditions of exploration. In 1789, he descended the Grand River (now called the Mackenzie River) to the Arctic Ocean, and in 1793 he went overland from Peace River to the Pacific Ocean. Further explorations were performed by David Thompson, starting in 1797, and later by Simon Fraser. These men pushed into the wilderness territories of the Rocky Mountains and Interior Plateau and all the way to the Strait of Georgia on the Pacific Coast.
Frobisher–McTavish deal The death of Benjamin Frobisher opened the door to a takeover of the North West Company by Simon McTavish, who made a deal with Frobisher's surviving brother Joseph. The firm of McTavish, Frobisher and Company, founded in November 1787, effectively controlled eleven of the company's twenty outstanding shares. At the time the company consisted of 23 partners, but "its staff of Agents, factors, clerks, guides, interpreters, more commonly known today as amounted to 2000 people." In addition to Alexander Mackenzie, this group included Americans Peter Pond and Alexander Henry the elder. Further reorganizations of the partnership occurred in 1795 and 1802, the shares being subdivided each time to provide for more and more wintering partners.
Vertical integration of the business was completed in 1792, when Simon McTavish and John Fraser formed a London house to supply trade goods and market the furs, McTavish, Fraser and Company. While the organization and capitalization of the North West Company came from Anglo-Quebecers, both Simon McTavish and Joseph Frobisher married French Canadians. Numerous French Canadians played key roles in the operations both in the building, management, and shareholding of the various trading posts scattered throughout the country, as well numbering among the involved in the actual trading with natives.
In the northwest, the Company expanded its operations up the Saskatchewan River, establishing a fort near the site of modern-day Edmonton in 1795. NWC operations extended as far north as Great Bear Lake, and westwards beyond the Rocky Mountains. For several years, they tried to sell furs directly to China, using American ships to avoid the British East India Company's monopoly, but little profit was made there. The company also expanded into the United States' Northwest Territory (roughly today's Midwest of Michigan, Illinois, Indiana, Ohio, Wisconsin, and the northeastern part of Minnesota). In 1796, to better position themselves in the increasingly global market, where politics played a major role, the North West Company briefly established an agency in New York City.
Despite its efforts, the North West Company was at a distinct disadvantage in competing for furs with the Hudson's Bay Company, whose charter gave it a virtual monopoly in Rupert's Land, where the best furs were trapped. The company tried to persuade the British Parliament to change arrangements, at least so the North West Company could obtain transit rights to ship goods to the west needed for trading for furs. It is said that Simon McTavish made a personal petition to Prime Minister William Pitt, but all requests were refused.
A few years later, with no relief to the Hudson's Bay Company's stranglehold, McTavish and his group decided to gamble. They organized an overland expedition from Montreal to James Bay and a second expedition by sea. In September 1803, the overland party met at Charlton Island, in what is now Nunavut Territory, the , a ship that Fraser acquired. At Charlton Island, they laid claim to the region inhabited by the Inuit, in the name of the North West Company, and were able to capitalize on the rich furs of the area. Their expansion northwestward cut into the profits of the Hudson's Bay Company. In 1800, HBC profited £38,000 in trade compared to the North West Company's £144,000 in 1800. This bold move caught the Hudson's Bay Company off guard. In succeeding years it retaliated rather than reaching a compromise, which McTavish had hoped might be negotiated.
Late 18th/early 19th century
Simon McTavish brought several members of his family into the company, but nepotism took a back seat to ability. His brother-in-law, Charles Chaboillez, oversaw the Lower Red River trading post. McTavish also hired several cousins and his nephews William McGillivray and Duncan McGillivray to learn the business. William McGillivray was groomed by his uncle to succeed him as Director of the North West Company, and by 1796 he had effectively done so, acting as Montreal agents' representative at the annual meetings at Grand Portage, and later at Fort William.
Simon McTavish was an aggressive businessman who understood that powerful forces in the business world were always ready to pounce on any weakness. As such, his ambition and forceful positions caused disagreements between him and some of the shareholders, several of whom eventually left the North West Company during the 1790s. Some of these dissidents formed their own company, known unofficially as the XY Company, allegedly because of the mark they used on their bales of furs. Their cause was greatly strengthened in 1799, when the North West Company's hero explorer, Alexander Mackenzie, quit his old partnership and soon after joined them.
There was intense competition between the rivals. When Simon McTavish died on 6 July 1804, the new head William McGillivray set out to put an end to the four years' rivalry. It had escalated to a point where the master of the North West Company post at Great Bear Lake had been shot by an XY Company employee during a quarrel. McGillivray was successful in putting together an agreement with the XY Company in 1804. It stipulated that the old North West Company partners held 75 per cent of the shares, and the former XY Company partners the remaining 25 per cent. Alexander Mackenzie was excluded from the new joint partnership.
Under William McGillivray, the Company continued to expand, and apparently to profit, during the first decade of the 19th century. Competition with the Hudson's Bay Company was intense, however, and profit margins were squeezed. The North West Company branch in New York City had allowed the Canadians to get around the British East India Company's monopoly and ship furs to the Chinese market. Cargo ships owned by the North West Company conveniently sailed under the American flag, and doing so meant continued collaboration with John Jacob Astor.
However, Astor was as aggressive as Simon McTavish had been. An intense rivalry soon developed between him and William McGillivray over the Oriental market and westerly expansion to unclaimed territory in what is now the Columbia River basin, in the present-day states of Washington and Oregon. Astor's Pacific Fur Company beat the North West Company in an effort to found a post near the mouth of the Columbia, Fort Astoria. A collapse in the sea otter population and the imminent possibility of British seizure of Astoria during the War of 1812 led to its sale to the North West Company in 1813. When HMS Racoon and its Captain Black arrived, he went through a ceremony of possession, even though the fort was already ostensibly under British control. Due to treaty complications of the Treaty of Ghent requiring the return of seized assets, putative ownership of the site was returned to the United States in 1817. Renamed as Fort George by the North West Company, continued to operate until the Hudson's Bay Company's takeover and the replacement of Fort Astoria by Fort Vancouver.
The Canadian fur trade began to change in 1806, after Napoleon Bonaparte ordered the blockade of the Baltic Sea as part of the ongoing struggle between France and Britain for world dominance. Britain was dependent for almost all of her timber on the Baltic countries and on the U.S. states of New Hampshire and Massachusetts (which at that time included the large territory of Maine). By then, however, tensions had also begun to escalate again between Britain and the United States.
In 1809 the American Government passed the Non-Intercourse Act, which effectively brought about an almost complete cessation of trade between the two countries. Britain became totally dependent on her Canadian colony for her timber needs, especially the great white pine used for ships' masts. Almost overnight, timber and wood products replaced fur as Canada's number one export. Fur remained profitable, however, as it had a high value-to-bulk ratio. In an economy short of ready money, fur was routinely used by Canadian merchants to remit value to their London creditors.
Forced merger