Jacob Goldstein
Jacob Goldstein spent more than a decade as co-host of the Planet Money podcast. He's also the author of the book Money: The True Story of a Made-Up Thing, which the New…
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Before there was Canada, there was the Hudson’s Bay Company.
HBC had its own laws and its own currency, and at one point controlled trade routes from the Arctic to Hawaii. It started cities like Winnipeg, Edmonton, and Victoria. It also fought an actual war with a rival business over pemmican, a traditional indigenous snack made of dried buffalo meat, fat and berries.
Business History’s resident Canadian Robert Smith tells Jacob Goldstein how two French traders built an empire out of beaver fur, and how the company they created later signed one of the biggest real estate deals in history.
Connect with us:
Jacob.
00:00
Speaker 2
Robert Smith.
00:01
Speaker 1
We get letters. Emails.
00:03
Speaker 2
Businesshistoryatpushkin.fm. Email us.
00:05
Speaker 1
I wish they were letters. And when these come from Canadian listeners, they almost always say the same thing. Please, please do a story on the Hudson's Bay Company.
00:15
Speaker 2
Robert Smith, on behalf of our American listeners, what is the Hudson's Bay Company?
00:18
Speaker 1
Now, I am a Canadian, so I know this. This is the business that started in fur trading and ended up as the largest department store in Canada. As a Canadian, I shopped there when I was a kid. It's a big deal. It's like Sears or JCPenney's. But as I did this story, I realized that the Hudson's Bay Company is Canada's origin story. Americans, you have your 1776 Declaration, George Washington, whatever, very dramatic. Canada has the Hudson's Bay Company. It is a company that became an empire that became a nation. I'm Robert Smith.
00:53
Speaker 2
I'm Jacob Goldstein, and this is Business History, a show about the history of business in Canada.
00:59
Speaker 1
We use business empire as a metaphor. Ooh, they have a business empire. But the Hudson's Bay Company had a real empire. It had monopoly over this vast region. At one point, the company controlled trade routes from the Arctic to Hawaii. Yes. From the Atlantic Ocean to the territory that would become Oregon, Washington, Idaho.
01:19
Speaker 2
Give me one more.
01:20
Speaker 1
It started cities. Winnipeg, Edmonton, Victoria. It's the capital of British Columbia. It had its own currency, its own laws. It was a company that waged a war, a seven-year shooting war with a business competitor. And it lasted amazingly until just last year, 2025. There were still Hudson Bay department stores all over Canada. And then they went out of business. They had a big 80% off sale and they disappeared. But there wouldn't be Canada without it.
02:00
Speaker 2
Before we get into the show, a quick request for our listeners. Please tell a friend about the show and or follow us on social media. We're at businesshistorypod on Instagram and on TikTok. And thanks to the listeners who wrote in suggesting an episode on the Hudson's Bay Company. Aaron Wilson, Patrick Bowman, Jamil Koja, and Ross, no last name, all wrote to us at businesshistoryatbushkin.fm. And you can write to us, too. Thank you.
02:27
Speaker 1
On with the show. The place... the entire continent of North America, and the date is the mid-1600s. At this point, European settlement has barely touched the vast continent. There are English colonies from Virginia up to New England, the French control what will become known as Quebec, and north of that, there are British colonies in Newfoundland. It's kind of a French sandwich with British bread. Croque-mouchure. Of course, the interior of North America... was the land of hundreds of indigenous tribes at this point, First Nations, we call them in Canada, and they had long trading routes and complicated economies of their own. But the Europeans were interested in another inhabitant of the continent, and that is the beaver. It's beautiful fur. And I guess there's something distinctive about the beaver fur. Everyone always talked about beaver hats, and I pictured these furry hats, but that's not the way it works. There's a soft under fur of a beaver and it has little barbs on each hair, which means you can mat it and make felt. And it's waterproof. It's warm, lasts forever. And in the 1600s, people loved a felt hat made of beaver fur. It was the highest of fashions. And it's a little weird when you think about what North America will become, what it will eventually produce, the riches. It was the beaver that drove the economics for hundreds of years. This is the fashion.
03:59
Speaker 2
You're going to talk about Astor? You say the beaver in America. I think of John Jacob Astor, who became the richest man in America, on the beaver business.
04:08
Speaker 1
We are going to focus on Canada, but John Jacob Astor will arrive at an inopportune time. The early beaver trappers in North America in the mid-1600s were French, and they would travel up the St. Lawrence River And they traded with indigenous tribes there. And it wasn't totally organized. It was just what you could carry in a few canoes in terms of Western items. And then you would bring back the furs. But two Frenchmen had a bigger idea. They had a plan. Their names were Medard de Grosier and Pierre-Esprit Radisson. Radisson?
04:45
Speaker 2
Pierre-Esprit Radisson. Radisson.
04:49
Speaker 1
It's like also an English thing, yeah.
04:52
Speaker 2
Radisson.
04:53
Speaker 1
Radisson. They had spent decades living in the wilds of New France, as it was called, and Grosier could speak native languages, even fought alongside the Huron people against the Iroquois. Radisson had come to New France as a teenager, and he had this remarkable story. We could do a whole episode right on him. He was kidnapped and adopted into a Mohawk family. He fought alongside them, and then he betrayed him, then he was captured. It was a whole thing. So both of these guys knew about as much about North America as any European did at the time. And they loved the wilderness. They loved the freedom of the new world. Radisson would tell people about his life in the forests and rivers.
05:33
Speaker 2
Here, I got a quote for you. We were Caesars, being nobody to contradict us. Meaning they were the emperors. They could do whatever they wanted. Nobody was the boss of them.
05:44
Speaker 1
I should say here there are a bunch of great books about the early fur economy. Adventure books about fur trappers. And I got many of the stories in this episode from the excellent book called The Company by Stephen R. Bowne. So, 1660. Radisson and Grosier traveled far into the continent along the St. Lawrence River. They get to the shores of Lake Superior. And because they spoke native languages, they were able to get a little business intelligence. There was a tribe called the Cree that had the biggest... most beautiful beaver pelts they had ever seen. And the Cree told them something remarkable. The rivers in this region, they said, all flow north. And they flow into an enormous saltwater bay. It would turn out to be Hudson's Bay. European ships had sailed into it years before, but hadn't really done anything about the discovery, at least the discovery to European sailors. And that gave the two Frenchmen an idea. Why are they paddling thousands of miles into the interior, getting furs and taking them back out again, when you could bring European ships into this northern bay? And the Cree and the other natives could bring the furs down the rivers to them. They called it the Grand Scheme.
07:00
Speaker 2
That sounds great in English. Yeah. And usually those things lose something in translation, but I love the grand scheme. I want a grand scheme.
07:09
Speaker 1
Yeah. And this is an early version really of a department store, kind of like we talked about in the Wanamaker show. They would centralize the product in one place. They would have one big supply chain and all their customers would come to them.
07:22
Speaker 2
Or like a big warehouse in a way, right? A big trading warehouse out in Staten Island. Yeah.
07:27
Speaker 1
But it's Costco and it's on Hudson's Bay. What they were dreaming about... involved the kind of scale you couldn't fit into a canoe.
07:37
Speaker 2
Sure. A ship. A ship is much bigger than a canoe.
07:41
Speaker 1
So they return back to New France along the St. Lawrence River. Their canoes are filled with beaver pelts and their grand scheme, and they expect everyone to get super excited about this. But no, the governor of New France fines them for trading without a colonial license.
07:57
Speaker 2
Bureaucrat!
07:58
Speaker 1
He threw Grosier briefly in jail. He confiscated some of their pelts. Radisson later wrote about the French governor.
08:05
Speaker 2
So here, I guess he's writing about the confiscation of the pelts, right? These super valuable pelts. Radisson writes of the governor, the bugger did grease his chops that he might the better maintain his coach and horses at Paris.
08:18
Speaker 1
Greedy. But it wasn't just greed. The French were struggling to maintain their settlements on the St. Lawrence River. And they didn't want some plan, some ocean-based plan that would cut the river out of the beaver trade.
08:33
Speaker 2
Huh.
08:34
Speaker 1
Uh-huh.
08:34
Speaker 2
So this is like an incumbent. This is like an incumbent fighting an innovation.
08:38
Speaker 1
Yeah. They didn't want the productivity gain. They wanted the jobs of the fur traders coming down the river.
08:44
Speaker 2
Yeah, yeah.
08:45
Speaker 1
So fine. The two trappers think, we are going to take the grand scheme to someone who does not treat us like dirt.
08:51
Speaker 2
To someone who's not an incumbent, who doesn't have a vested interest in the status quo.
08:55
Speaker 1
To the king of England, who already had settlements in Canada, but... did not have a big fur trade and might like this plan. Turned out to be excellent timing. 1665, England had a new king, King Charles II. England had just made it through the age of the Puritan Oliver Cromwell, who apparently hated fun. Cromwell and his fellow Puritans abolished Christmas celebrations, they closed the theaters, they cracked down on pubs and dancing and music. So King Charles II eventually returns to the throne and gets rid of all of these restrictions.
09:32
Speaker 2
It's the restoration. It's a party. It's a party in England. Non-stop party.
09:37
Speaker 1
Charles is living large. He's restoring the palaces. He has lots of hangers on. And the king needs more money. So let's just say he is open to business propositions at the time.
09:49
Speaker 2
I think the king always needs more money. The king always needs more money.
09:54
Speaker 1
Here come two French fur traders with a proposition.
09:58
Speaker 2
A grand scheme, one might say.
09:59
Speaker 1
A grand scheme. I love this description of what Radisson and Grosier looked like when they arrived in England. Here's a description from around the time of Radisson.
10:09
Speaker 2
His black hair just touched with gray hair. like mine used to be, hung in a wild profusion about his bare neck and shoulders. A huge scar wrought by the tomahawk of an Indian disfigured his left cheek, and his leather belt was sheathed a long knife. Perfect for the restoration. They're going to love this guy at court.
10:29
Speaker 1
They loved him. They were a big hit. They loved these guys. They were a huge hit in court. They, in fact, gave them a pension so that they could just hang around court and tell stories.
10:41
Speaker 2
This is why the king needs more money, because he's just paying people to hang around to tell stories. Not that there's anything wrong with getting paid to hang around to tell stories.
10:49
Speaker 1
And it's more than the story. The king likes the business plan. English ships sailing for Hudson's Bay. It could turn a profit, and it could piss off France.
10:58
Speaker 2
Dig it to the French.
10:59
Speaker 1
And it also fit this current theory that everyone had of how a country gets really rich, and that's mercantilism. We haven't talked about it yet on the show.
11:08
Speaker 2
Have we not? It was like the dominant economic theory for a long time. And the basic idea, well, the really basic idea was the way you get rich is by piling up gold and silver in your country. And the way you do that is essentially you run a trade surplus. You export more valuable things than you import. And what that meant in terms of colonies in the new world was you want to have colonies that are sending raw goods to the home country. So lumber is Or or beaver pelts. And then in the home country, you're doing the value add. You're turning the lumber into ships or you're turning the beaver pelts into hats. This is mercantilism, which, by the way, turned out to be not a great economic idea. As first David Hume and then Adam Smith would point out. But this is like 100 years later. Right. This is in the 1700s that they realized, like. oh, if you pile up gold in your country, you'll just have inflation and the gold will tend to flow back out. And what you actually care about is maximizing output and focusing on gold is going to lead you down the wrong path. But they don't know that yet in the 1600s.
12:11
Speaker 1
Thank you very much, Professor. This is what was going on in the American colonies at the time. And of course, making the American colonists eventually very mad. And this was the idea behind this fur trade. So with the king's backing... His cousin, Prince Rupert, started to pull together investors to start a company and launch the first expedition. The name of the syndicate was, you're going to love this, the Governor and Company of Adventurers of England trading into Hudson's Bay.
12:42
Speaker 2
Amazing that we get from that to national-led in 200 years, you know? Like, they used to be great.
12:49
Speaker 1
They used to be adventurers.
12:50
Speaker 2
This is the golden era of company names.
12:53
Speaker 1
So these investors financed a test run, right? An MVP, a minimum viable product. It took years to make this work. They had a ship called the Nonesuch, because of course they did. The Nonesuch that made it to Hudson's Bay, filled with trading goods. They spent a long, very cold winter on the bay. And then in the spring, it worked. First Nations peoples arrived to trade their beaver furs for muskets and hatchets and And in 1669, the ship sails back to England filled with enough furs for hundreds of hats. They are not welcomed by crowds or parades because it was all kept a secret. This is business intelligence. They're in stealth mode. They don't want anyone else. They don't want anyone else doing the grand scheme because like once you see it, it's pretty obvious. 1670, King Charles signs a charter that gives the Company of Adventurers royal approval for a monopoly. And the charter was a doozy. It's pretty complicated language, so I translated it into modern English. Why don't you give it to us, Jacob?
13:58
Speaker 2
To encourage the company to carry out its enterprise, the Crown grants it exclusive rights of commerce throughout Hudson Bay and the rivers, lakes, bays, and waterways connected to it. The grant includes surrounding lands not already possessed by English subjects or subjects of another Christian ruler.
14:18
Speaker 1
So two things of note there. Number one, they have control over lands not possessed by English subjects or subjects of another Christian ruler. So in other words.
14:29
Speaker 2
They don't care about the Indians, but they're not saying take land from France.
14:32
Speaker 1
Yeah, exactly right. The other thing is nobody at this point, especially King Charles, has any grasp of the geography of Canada. No one has an idea of how big. It's the second biggest country in the world behind Russia. What if you don't count the ice? Yeah. This land under the ice, this is so big. Because when you say all the rivers that drain into Hudson's Bay, you're talking 40% of Canada, millions of square miles. And nobody knows at this point how big this grant is. And this gives them a monopoly in all those areas. And it lets the company in perpetuity control the lands and minister justice. England will be able to levy duties on the trade. But the king himself gets a very strange kickback, Jacob.
15:25
Speaker 2
The company is required to render an annual payment of two elk and two black beavers whenever the monarch or the monarch's successors enter the territory. Symbolic.
15:39
Speaker 1
It's a symbolic thing. Is there a particular history here? It's a symbolic thing that says that these are the king's lands. And so by symbolizing that whenever the king arrives, goes back to the old days, you have to give him gifts. And these are the gifts. And the kings and queens of England occasionally would collect this when they traveled to Canada later on. Queen Elizabeth II received two living beavers, which she donated to the zoo. Wow.
16:08
Speaker 2
Well, let me mention here, so this is a chartered company. The king has just granted a charter to this company. And we talked about this recently on the show about the history of the company. This is the era, the 1600s are the great era of the chartered company where a king will give a private company a monopoly on trading to some part of the world. And so by this point, The English East India Company and the Dutch East India Company are already giant things in the world. Not only private companies, but they have armies. And they are this weird, interesting kind of imperialist corporate hybrid that are key to the world history in this period. And I guess that's what we're going to see here.
16:49
Speaker 1
Private investors are making money. But the kings and queens, as the case may be, whoever gave the charter... have power over these lands. So it's a good trade. It's a good trade.
17:01
Speaker 2
And the private investors are doing work that we associate with the state. Military conquest, that sort of thing.
17:08
Speaker 1
Yes. So few pages of parchment and the largest monopoly in the Western Hemisphere is created. Now they just had to, you know, actually make it work.
17:18
Speaker 2
Execution. Now it's a matter of execution.
17:20
Speaker 1
Grossier and Radisson are now employees of the new joint stock limited liability company, and their dozen or so very rich investors. And they lead the company's expeditions back into the wilderness. And it took years to establish this. Lots of failed expeditions, ships crushed by the ice, men starving in long winters. But eventually, they made it work. By 1664, the company was profitable enough to pay out a 50% dividend to the investors.
17:47
Speaker 2
50%?
17:47
Speaker 1
Five-oh?
17:47
Speaker 2
50%.
17:48
Speaker 1
Now, it had been Like a dozen years.
17:54
Speaker 2
That's if you annualize it.
17:56
Speaker 1
But they were happy to get any money back, sending ships out in the unknown.
17:59
Speaker 2
You still got your equity.
18:01
Speaker 1
Here's how the trade worked. The Hudson's Bay Company would load up their ships in June when it was warm enough to get through the ice. They would sail over Quebec into Hudson's Bay. Their holds were filled with manufactured goods. So we're talking muskets, knives, axes, brass kettles, pots and pans, clothing, mirrors. Tobacco. Sewing needles. Huge. Huge. And they would drop off these goods at forts. They called them factories because there was a company manager called the factor. You don't hear so much about factors anymore. They're kind of like jobbers.
18:35
Speaker 2
Kind of like jobbers, right?
18:36
Speaker 1
The factors ran the factories. That's where they lived. And there would be this core group of employees who would stay all winter. And then in the spring, the tribes, primarily the Cree, would arrive in canoes filled with beaver pelts. And they'd have a big party. They would trade for manufactured goods. And then the resupply ship would come and they'd take all the furs back.
18:56
Speaker 2
Robert, did you tell me you spent a summer on Hudson's Bay at something, something, something factory?
19:02
Speaker 1
Yes. I lived for a summer in Moose Factory.
19:05
Speaker 2
Incredible.
19:06
Speaker 1
Along the Moose River. It was technically in James Bay, which is a sort of offshoot of Hudson's Bay. And my dad was a temporary doctor there. So he was doing doctor things. And I was just a kid, like 10 years old. It was an amazing experience. You felt so remote. You could only get there on a seaplane or a boat. And, you know, it's a pretty flat island and you look out into the sort of flat Hudson's Bay and it really feels like you are in the middle of nowhere.
19:33
Speaker 2
Was it fun? Was it bleak?
19:36
Speaker 1
It was fun because I was a kid. I got to like tool around and we'd go to these Cree events. In fact, you're going to love this.
19:45
Speaker 2
Oh, you brought a prop.
19:47
Speaker 1
A Cree woman taught me how to carve soapstone. Look at this.
19:52
Speaker 2
Is this from what you carved as a child?
19:54
Speaker 1
As a 10-year-old, I know.
19:55
Speaker 2
It's kind of like a profile?
19:57
Speaker 1
Yeah, it's kind of like a little guy. It's a little guy carved out of soapstone.
20:02
Speaker 2
Incredible. I don't think I have anything from when I was 10 years old.
20:04
Speaker 1
I will note that That the thing I remember most is the mosquitoes. There were so many mosquitoes. You would come in and not only were you bitten, but like your hair was filled with living mosquitoes. Well, you could have spent a winter there. That wouldn't have been a problem. Yeah, it's hard to imagine what the place would be like in the winter. In the 1600s!
20:24
Speaker 2
Apparently, temperatures were recorded at 50 degrees below zero Fahrenheit.
20:33
Speaker 1
Early company employees described the mercury on the thermometers freezing. I didn't even know that was possible.
20:38
Speaker 2
I don't know what the freezing point is of mercury.
20:39
Speaker 1
12-foot snowdrifts hail the size of a musket ball.
20:44
Speaker 2
That I can believe. Smaller than a golf ball.
20:46
Speaker 1
Yeah. And there are Grosier and Radisson, Caesars of their new empire, setting up trading networks, still traveling out on the rivers. Radisson described his difficult life, although I think he secretly loved it.
21:01
Speaker 2
To have the belly empty, the weariness in the bones, and drowsiness of the body by the bad weather that ye are to suffer, having nothing to keep ye from such calamity. I think they call that type 2 fun now. The fun that's not fun while you're having it.
21:18
Speaker 1
But afterwards, perhaps. For the Cree tribe, who lived around the area of these factories... The arrival of the company was transformative, I will say. Until the company arrived, all the fur trade was down through Montreal and Quebec. And so the Cree were actually pretty far from the trading action. They would get European goods, but afterward passed through a ton of middlemen. So the goods were pretty expensive. Now they are first in line.
21:47
Speaker 2
Getting them straight from the factory!
21:49
Speaker 1
Straight from the boat! So they were getting a great deal on products. And then, of course... The Cree would take those products, mark them up, and trade them to other tribes. And the Cree now had more guns, and so their power starts to rise in the region because they are close to the factories. One fascinating thing here is the Cree would wear their beaver pelts all winter because it was so cold, obviously, right? But by the end of the season, the fur on these coats was all matted down because they'd worn them day and night.
22:19
Speaker 2
Mm-hmm.
22:20
Speaker 1
But matted down fur ended up being the most valuable kind of fur that you could sell. It made the processing easier back in England or something. And so the Cree would essentially sell their used clothing every spring. And they would marvel how their ratty clothes that they might have just thrown away for a new one the next winter. Would get them knives and guns and sewing needles. Look, obviously, a.
22:45
Speaker 2
Lot of bad things happened when the Europeans came to North America. But in this narrow instance, this is an example of trade making everyone better off. Here is a thing that one group of people does not value and they're able to sell it to another group of people that values it more highly.
23:00
Speaker 1
The Cree would travel around to other tribes who didn't know this particular angle and scam so they could offer low prices for their used clothing and then sell them to the Hudson's Bay Company.
23:11
Speaker 2
It's like the people who go to the suburbs of Dallas to buy used clothes and then come and sell them at huge markups in Williamsburg.
23:19
Speaker 1
Yeah, exactly right. And I will say, we're used to these stories of brutality from colonists arriving on native land. And that is coming in this story, including sickness that will devastate the native population. But I have to say, at the very beginning, for the most part, the Hudson's Bay Company conducted a non-destructive business relationship with the Cree because they were not colonists. They didn't want to take over large parts of land. They were not missionaries. They negotiated with the Cree. They didn't just set prices. And economists later studying this whole situation found that the Cree actually had a lot of market power. They could effectively negotiate the price of the beaver furs. They could ask for different goods to come on the ships and They could demand a certain quality of goods.
24:06
Speaker 2
You could imagine in the same way that the English wanted to keep this scheme a secret, the Cree would have the same incentive, right? They would want to be the exclusive indigenous tribe trading with the British.
24:21
Speaker 1
Yeah. And another thing going for the Cree and the company was that a lot of the men in the company weren't just visiting. Like, they lived there. They were marrying Cree women. They were having children with the Cree. So, you know, it was something where they were often dealing with their in-laws and relatives.
24:42
Speaker 2
Well, and even, I mean, family, you know, business is a whole thing. Even beyond that, if you're staying in the same place and you're trading with the same people season after season, year after year. We've talked about this before. This is a repeated game. And so even if you're just trying to maximize your economic outcome, it's in your interest to deal with people fairly if you're going to be trading with them again and again. It's not like you're just going to see them once and you want to get all the money you can out of them. You want to build a relationship so that you can trade with them in the long run.
25:14
Speaker 1
I just want to be clear, this is the early part of the trading system. Obviously, terrible things are going to happen, and we'll get to that. But for the moment, people were pretty happy with this trade. But you know who wasn't happy, Jacob?
25:28
Speaker 2
The French. The French.
25:30
Speaker 1
They wake up one morning and they're like, wait a minute here. We have American colonies to our south and now we have the British taking away our fur trade. They decide that they are going to strike back in a set of conflicts, great power conflicts that will go on in one form or another for 100 years.
25:48
Speaker 2
Are they going to have their own company?
25:50
Speaker 1
When our program continues. And we are back telling not just a business story, Jacob, but also a political story at this point. For the French, having English settlements, English business in the interior of North America might give the English the rights to call it English land. And this is what they wanted to avoid. They did not want this to happen. So the French start to try everything they can to disrupt the Hudson's Bay Company. They send armed men through the woods to attack the Hudson's Bay settlements, which is pretty easy because these are basically salesmen, bureaucrats in these places. They actually take control over Hudson's Bay for a while. They bribe our heroes, Grosier and Radisson, with 400 gold coins to defect. And they take the money. Oh, they take the money.
26:43
Speaker 2
Somehow I didn't think they were going to take the money.
26:46
Speaker 1
Then, at least Radisson defects back to England. The man just hated bosses. Yeah. He hated having a boss.
26:52
Speaker 2
He was a pirate.
26:53
Speaker 1
Everyone drove him nuts.
26:55
Speaker 2
Yeah. I wonder if he looked longingly at the days when it was just him and the canoe. I bet he did.
27:02
Speaker 1
Yeah. So all of these battles and intrigues between the English and the French go back and forth, back and forth for decades until the Seven Years' War between England and France. It is settled in 1763 AD. France loses and England gets all of the French possessions in North America. Is that the French and Indian War?
27:22
Speaker 2
Is that what we in the United States call the French and Indian War?
27:25
Speaker 1
The French and Indian War was the North American part of this global conflict. So France loses. England gets essentially control over what is Canada. Hudson's Bay Company, they just continue making money. Unmolested by the French government. But there are still French fur traders who live in Quebec, speak French. They're now British citizens, but they're culturally French. They're still around. They're still angry. And they are willing to destroy the Hudson's Bay Company, not through guns, but through business competition for the beaver. I should say here, because we've sort of skipped forward in time, that Radisson ended up retiring back in Europe and Grosier stayed in Canada. And at the time, they never really got the credit they probably deserved for the grand scheme. The company cut their pensions. Seems petty. And Radisson at some point tried to beg the company for a job as a London warehouse keeper. And the company said no. Hated the bosses to the very end.
28:33
Speaker 2
I bet he was a nightmare as an employee, though. In defense of the company, I wouldn't hire that guy.
28:38
Speaker 1
I mean, he had defected. Yeah, I bet. So the company at this point is bigger than any man or any investor for that matter. It is a bureaucracy and they had a profitable enterprise and they did not like change. They were not adventurous. They were not trying to find the.
28:54
Speaker 2
Despite the name?
28:54
Speaker 1
They were not trying to find the Northwest Passage. They were not trying to expand settlements into camp.
29:00
Speaker 2
They got a good thing going.
29:01
Speaker 1
They got a good thing. Same trade.
29:03
Speaker 2
Founders are gone. Same forts. They're gone from the founder culture to the management culture. The cowboys are gone. And you know what that makes you? And boring middle managers are there.
29:11
Speaker 1
That makes you a sitting duck for competition. 1779, a bunch of French Canadians, again, they're now British citizens, a bunch of French Canadians and a ragtag group of of Scotsmen and Americans.
29:22
Speaker 2
Oh, it's a ragtag group. The Hudson's Bay Company, better look out.
29:26
Speaker 1
Formed a business rival called the Northwest Company. Are they looking for the Northwest Passage? No, but I think they have dreams of heading out into the Northwest to trap Beaver. They did not need a charter. They did not have a monopoly. In fact, they were more of an association. Oh, a real startup kind of vibe. They don't need a piece of paper from the King's City Hall. No, because their plan was to hustle harder and to steal the fur trade back from those lazy MFers up in Hudson's Bay.
30:00
Speaker 2
Okay, let's go. All right.
30:02
Speaker 1
So their system of fur trading was the exact opposite of Hudson's Bay. Hudson's, remember... brought all their goods to a single port. They waited for indigenous hunters to bring them health.
30:12
Speaker 2
Centralized.
30:12
Speaker 1
Centralized. Run from London. Everyone's on a salary. There are almost like 500 men running the forts. They're not the hardiest of men. The Northwest Company for traders were called the Voyageurs because they were door-to-door salesmen with knives. They would get in their canoes and voyage up the rivers, across the Great Lakes. They would pull their trading goods over mountains in their canoes, portages, They were usually short so they could fit in the boats and, of course, incredibly strong and muscular so that they could row all day. And they would trade to the people. They wouldn't wait for the people to go up to Hudson's Bay. They would find them and make the trade early. Now, let me ask you a question.
30:57
Speaker 2
When you talked about the origin story of the Hudson's Bay Company, what you're describing now is sort of what the status quo was before. And we were talking about the Hudson's Bay Company as this efficiency gain, this productivity gain that, you know, you could just bring it all on the ship and then it's going to be cheaper. Why are these guys going back to that old model? Like, why do they have a shot?
31:18
Speaker 1
Because they feel that the profits made by the Hudson's Bay Company are their opportunity because they can.
31:25
Speaker 2
Be cheaper, more nimble. So the Hudson's Bay Company has gotten kind of fat and lazy, maybe too many middlemen, overpaid bureaucrats, that kind of thing.
31:33
Speaker 1
And the Voyageurs were anything but fat and lazy. In fact, one 70-year-old French-Canadian trader described his life. This is from Bowne's book, The Company.
31:42
Speaker 2
So this old Voyageur looking back on his life, he says, no portage was ever too long for me. 50 songs I could sing. I've saved the lives of 10 Voyageurs, have had 12 wives and six running dogs. I spent all my money in pleasure. Were I young again, I should spend my life the same way over. There is no life so happy as a voyageur life. I know he was a British subject, but that sounds so French to me.
32:09
Speaker 1
So French. It was said that they would eat 10 pounds of meat a day. And a lot of it was in the form of something called pemmican.
32:18
Speaker 2
A pemmican.
32:20
Speaker 1
Pemmican, this is a combination.
32:21
Speaker 2
A pemmican bar.
32:22
Speaker 1
Yeah, and this is a combination of dried buffalo meat, fat, and berries. Have you had this?
32:27
Speaker 2
There is a thing called a pemmican bar that I've had, but it was in a wrapper.
32:33
Speaker 1
You have not had the authentic buffalo one.
32:36
Speaker 2
I don't know if I would have lived to tell the tale if I'd had authentic pemmican.
32:40
Speaker 1
Well, there is a description of what it tasted like. I couldn't resist putting it in. It's from H.M. Robinson's book, The Great Fur Land. Jacob?
32:49
Speaker 2
Take the scrapings from the driest outside corner of a very stale piece of cold roast beef. Add it to lumps of rancid fat. Then garnish all with long human hairs and short hairs of dogs and oxen. And you have a fair imitation of common pemmican. I love it.
33:06
Speaker 1
You get the long hairs and the short hairs.
33:08
Speaker 2
It's good writing. That is good writing.
33:10
Speaker 1
Yeah, yeah, yeah. The Voyagers loved it. They loved it. Loved it.
33:16
Speaker 2
You know what makes food taste really good? Working all day.
33:20
Speaker 1
Rowing 12 hours a day.
33:22
Speaker 2
Paddling. You keep saying rowing. Have you seen a canoe? You don't row a canoe.
33:27
Speaker 1
I guess technically. I don't spend a lot of time in the water. You're more of a walker. So the Northwest Company would arrive early in the spring, just as the snow was melting, to the tribes that usually were setting out to Hudson's Bay. And they would take the very best pelts. They would offer them a great deal. They could get them for cheaper because, eh, I wanted to row all the way up to Hudson's Bay. Here's someone offering money. Yeah, paddle. Sorry, I keep saying row. Anyway, paddle all the way up to Hudson's Bay. Now, I should say here, at first, you know, in business history podcast tradition, you might want to cheer for the plucky upstart company with the beefy singing voyagers. But their business model, I want to say, created some terrible, terrible incentives for They did not have the same standards of behavior demanded of the Hudson's Bay Company employees. Its senior traders could become partners and get a share of the profits, which was an incentive for these traders to move fast, think short-term, and compete aggressively.
34:37
Speaker 2
Well, and also, I mean, I was talking before about how the Hudson's Bay Company was in this repeated game. They would trade with the same people every year in the same place, and that creates an incentive to treat your counterparty well. Just out of greed alone, you should treat them decently. Whereas if you were a voyeur traveling across the land, you were only going to see these people once and you have no economic incentive to treat them decently because you're not going to trade with them again. It's a one-time game. Yeah.
35:06
Speaker 1
Some they would come back to, but oftentimes they would come in and take all the beaver from an area. This is called beavering out the region. And the next season they would just go to a different area.
35:16
Speaker 2
So this is trapping.
35:17
Speaker 1
Yes.
35:17
Speaker 2
They are trapping their own beavers and trapping too many.
35:20
Speaker 1
They even pushed the introduction of steel leg traps so they can do it all more efficiently. And another problem with the Northwest Company, they would bring alcohol to trade to the native tribes. So they would offer drinks for free. They would get the natives drunk, then use the brandy. to get the furs for cheap. At one point, it was estimated that one third of the cargo in the canoes was alcohol. This is what they were doing. And because they were creating these long variable trade routes, European diseases like smallpox would make it to isolated tribes and just destroy whole communities. And the Voyagers, I have to say, this won't surprise you, were not beyond a little corporate sabotage. So, They would use violence and threats against people who traded with Hudson's Bay. They would destroy fishing nets, burn down rival forts. Business models. Business models matter.
36:17
Speaker 2
Incentives. Incentives matter. Yeah. They had bad economic incentives, and they behaved very badly.
36:23
Speaker 1
So because they behaved badly, that meant they needed new territory, new trading partners. And the men of the Northwest Company pushed onward deeper. They're just sort of burning through. And deeper into North America. Yeah. Now, on the other side, all of this is starting to hurt the profits of the Hudson's Bay Company. The stock price was plunging back in London. And as we noted in the banana show, when your competitor is playing dirty, sadly, you have an incentive to start playing dirty too. So the Hudson's Bay Company was going to have to actually leave Hudson's Bay.
37:01
Speaker 2
Oh, leave, like expand.
37:02
Speaker 1
Expand. Go into the country. Okay. Their first huge mistake was to start a settlement that would eventually become the Canadian city of Winnipeg. This is far from Hudson's Bay. And it's, in fact, smack dab in the middle of the Northwest Company's trading routes. It's 1812. Governor Miles McDonald arrives with settlers on land claimed by the Hudson's Bay Company. It's called Red River. And they proceed to build fences and shacks. And winter comes and they suffer. crops dying, starvation. You have to remember the Hudson's Bay Company did not have a lot of experience actually being in the wilderness. They were alongside the wilderness, but they did not know how to do this. And so in desperation, in 1814, Governor McDonald issues something that would be known as the Pemmican Proclamation.
37:58
Speaker 2
Pemmican, like the disgusting snack.
38:00
Speaker 1
The disgusting snack. that they needed to survive. So McDonald's says in his proclamation that no one in this valley can export any pemmican. The settlers need every clumpy, hair-covered, fat nugget to survive.
38:17
Speaker 2
Export restrictions.
38:19
Speaker 1
This is not only a big overreach from the Hudson's Bay Company, but it's also terrible economics because pemmican wasn't just a resource that you would find laying on the ground. It was a manufactured product and it was manufactured by this group called the Metis. The Metis were descendants of Europeans and native tribes, but they had their own culture and identity.
38:41
Speaker 2
Like a mestizo, like a mix. Yeah.
38:42
Speaker 1
It's, it's based, it's based on the same, same language. Um, but they lived in this valley and they would manufacture pemmican. They would mix the bison fat and the berries and little hair on top and they would cook it and they would sell it to the Northwest company.
38:57
Speaker 2
Uh-huh.
38:58
Speaker 1
The Hudson Bay Company had gone more than 100 years without proclaiming how the tribes should live their lives, and now they were outlawing their livelihood.
39:07
Speaker 2
Uh-huh.
39:08
Speaker 1
And it turned out to be an absolute disaster. There was a confrontation with the Metis that left more than 20 people dead. Hudson's Bay seized the Northwest Company fort. Armed groups fought over supplies. And it basically erupted into this guerrilla war that stretched out over 4,000 miles. wherever there was Hudson's Bay people and the Northwest Company. They would have these skirmishes. So the Hudson's Bay Company seized a Northwest Company fort. Arms Group starts fighting over supplies because the Northwest Company is like, you're in our trading area. We need this pemmican to row, paddle, to paddle all day long. And it turns into this guerrilla corporate war fought across 4,000 miles. The pemmican war. The pemmican war. Waged by companies for seven years. For seven years, it's pretty much open season. And at this point, they're just fighting because they're fighting. They're fighting because the Hudson's Bay Company is trying to expand into the continent, and the Northwest Company has it. It's all revenge, and, you know, they take it all personally.
40:19
Speaker 2
But these are both private companies. They are corporations, and they're fighting, like, with guns?
40:26
Speaker 1
When they should be focused on profits? Yes. So I don't need to tell you, Jacob, this was terrible for the bottom line. The fur trade dwindled. The Hudson's Bay Company was forced to borrow 100,000 pounds from the Bank of England. The Northwest Company apparently had no real cash reserves because they were sort of an association. They had no way to borrow. So they started to not pay their employees in the interior. So it was hurting everyone. As this is happening, there is another terrible piece of luck. Around this time, a Northwest Company trader and mapmaker had finally found a good route over the Rocky Mountains, which was what everyone had been looking for for a long time. His name was David Thompson, and he found the source of the Columbia River, around where British Columbia is now, and followed it down to the ocean. So this would be down through Washington State, Oregon, today. He's thinking that this could be a new route, a new territory for the Northwest Company. He's almost to the ocean, at the mouth of the river, where he hopes to put a new fort for the Northwest Company and for Britain, and he sees a boat with an American flag. And then he sees the cabin. There is already a settlement at the mouth of the Columbia River, and it is named Fort Astoria.
41:47
Speaker 2
John Jacob Astor. His name was my name too.
41:50
Speaker 1
John Jacob Astor and his company had Already made it around one of the capes.
41:59
Speaker 2
South of the Pacific, South America.
42:01
Speaker 1
And made it around and started a fort. And John Jacob Astor in the fur business is like, oh, yeah, this is our land now. This is where I'm going to expand. And we didn't talk a lot about him, but he had built up a fur empire himself out of New York City. He was sort of a middleman for the whole business.
42:20
Speaker 2
And then went long New York real estate. Classic good move.
42:22
Speaker 1
Classic good move. into Hudson's Bay Company. So this freaks out the British government because when they see this, they're like, wait a minute, like what are the Americans doing? The Americans are going to move up the Pacific coast and take over all this land while we're fighting this long, weird Pemmican war. So British government had had enough of the chaos in 1821. They decide that Canada needs a united front. against the United States. And they forced the merger of the Northwest Company and the Hudson's Bay Company. Still hate each other, but they are now one company. One company of adventurers.
43:06
Speaker 2
This reminds me of the U.S. government forcing Sam Zimuri to merge his banana company with United Fruit. Same thing.
43:15
Speaker 1
It's foreign policy.
43:15
Speaker 2
Stop fighting. Don't start wars. Just have a merger.
43:21
Speaker 1
It's the company versus manifest destiny after the break. And we're back from the break and into the story. The new company was known as the Hudson's Bay Company. They got to keep the name. And they got a new charter in 1821. This time Britain is not playing around. They give the company even more territory over which they have control, including the Pacific Northwest. They're hopeful there. And it's not just the waterways now. It's all the way to the Arctic. It's well into Oregon territory, which has become Oregon, Washington, Idaho.
43:56
Speaker 2
It's still a private company controlling half of North America or whatever.
44:01
Speaker 1
But it's now a weapon of foreign policy because they know that if you control the land and you have forts and trading, you may be able to call it your land. But Britain is bracing for the day when the United States is going to try... to claim this land. Now, the investors in the company, who own the company, they do what always happens after a merger. They want to shake things up. They send in this young executive named George Simpson. He actually arrived slightly before the merger, but this was all part of the plan. Simpson is not a fur trader. He doesn't eat pemmican. He doesn't sing while he paddles.
44:43
Speaker 2
Very good.
44:44
Speaker 1
Doesn't have a knife. He's a London man about town. He's a young up-and-comer, big customer of the coffee shops, which we've talked about. He'd been in the sugar business, and they're like, oh, yeah, he just knows how to manage big organizations. So he gets to go to Canada and clean up the mess. He is a classic reorg guy. So the first thing Simpson does is fire people. He notes that the company is filled with worn-out men. Of course, it was the company that wore them out, but sure. filled with worn-out men. There's 96 forts, some right next to each other. So he closes a bunch of forts, moves the payroll in half, costs synergies.
45:25
Speaker 2
Fort synergy?
45:27
Speaker 1
We would call it in business school. The next thing Simpson does is go on a listening tour. So he goes out to the forts. He gets an executive canoe. I don't know what that means. Somebody to paddle for him? Oh, of course, of course. He's not doing the paddling. And he hits the rivers of Canada. And you're going to think I'm making this up, but this is absolutely true. He loved, when he was out on the rivers, to get up very early. He would take an ice bath. Now, of course, that's the only kind of bath there is.
45:59
Speaker 2
A.k.a.
45:59
Speaker 1
A bath. A bath. In the rivers of Canada, it's always an ice bath. And he would journal a lot. Like, this is the modern striver corporate guy. And he doesn't give the outposts any warning that he's coming. He wants to show up and see who's working and who isn't and how it's going on. He reminded me of Jack Welch from GE a little bit.
46:24
Speaker 2
Yes, the neutron bomb had not been invented yet. Perhaps they called him a hatchet man.
46:28
Speaker 1
The hatchet man. Bravo. He was full of himself. He was a big jerk to his workers, but he was also like A jerk to his friends? When they went back to look at his journal, he described everyone he worked with at Hudson's Bay in really unflattering terms. Here's how he described one of his employees. This is from his journal.
46:50
Speaker 2
He called this guy he worked with a frothy, trifling, conceited man who would starve in any other country and is perfectly useless here. This is perfect at something.
47:06
Speaker 1
And this will come as no surprise, but George Simpson also starts cutting all the costs he can. So he changes the menus at the fort.
47:15
Speaker 2
More fish. Stop eating so much pemmican.
47:17
Speaker 1
Less meat. Yeah, yeah, yeah. He says people need to stop using sauces and pickles. He goes on a rant about how much mustard his employees are using.
47:25
Speaker 2
It sounds like anti-French at some level.
47:29
Speaker 1
All the moutarde? Cut it. So he's a control freak. And from a profit perspective, this is exactly what the company needed. He has complete market power. He got the yearly dividend, which is paid back to investors, over 10% a year. And no one questioned him after that. They were like, you got this.
47:50
Speaker 2
It's always kind of a bummer when the guy who's like a jerk is good at business. I'm always happy when it's the other way, but it does happen.
47:59
Speaker 1
Well, it's not going to last forever. were long because no matter how efficiently the company is running at this point, the facts on the ground are moving against all of fur trading. They were the masters of the wilderness, but the wilderness is disappearing and the beaver along with it. The first wave of settlers started really after the American bank panic of 1837. Well, that was a big one. That was a big one. A lot of people lost their farms and they're like, we're going west.
48:27
Speaker 2
This is the.
48:29
Speaker 1
Oregon Trail that we talk about. In 1858, gold was discovered in British Columbia. The miners pour into the region. And George Simpson... He tries everything he can to make life difficult for farmers and miners coming west.
48:45
Speaker 2
He doesn't want them messing up his beaver business. Yeah, yeah.
48:48
Speaker 1
And he has control. And, you know, once there's enough real people there, they're going to take control of the land because they live there at all times. So he said to his forts, you can't help out starving settlers with supplies. He even came up with a plan to eradicate the beaver in this big section around the Snake River so there wouldn't be an incentive for anyone to move there. He was a terrible man. But you cannot hold back Manifest Destiny. An editorial around the time in the Toronto Globe expressed what became a popular frustration with the company.
49:23
Speaker 2
The editorial wrote, it's unpardonable that civilization should be excluded from half a continent on at best, but a doubtful right of ownership for the benefit of 232 shareholders.
49:35
Speaker 1
Is it?
49:39
Speaker 2
I don't know what to make of the fact that my response is, were there really only 232 shareholders?
49:44
Speaker 1
Apparently at the time. I mean, only the very rich are going to own part of this company. It's not like there's full trading of penny stocks. It's not the Bank of England. Yeah. In the end, it was geopolitics that eventually ended the Hudson's Bay Company's total control of the region. In 1867, Russia sells Alaska to the United States.
50:05
Speaker 2
Seaward's Folly!
50:07
Speaker 1
Britain had already started to worry that Americans would want everything on the Pacific West Coast. And now the Americans have Alaska. They're pushing up into Oregon and Washington.
50:16
Speaker 2
That's why they called it British Columbia. They're like, surely if we name it British Columbia.
50:20
Speaker 1
No one will be able to set foot here. So the same year as Russia sold Alaska to the United States, Britain and some colonial leaders in Canada created the Nation of Canada. Technically, I think it's a confederation to make a dominion.
50:37
Speaker 2
Dominion. I always heard people. Is there a dominion day? Is that right?
50:40
Speaker 1
There is a dominion day or there was. Hudson's Bay Company would give up their charter and their vast land holdings to the new nation a few years later.
50:50
Speaker 2
I mean, in a way, it sounds like their land holdings would become Canada.
50:54
Speaker 1
They did become Canada.
50:55
Speaker 2
Yeah.
50:56
Speaker 1
They did get, the company was like, well, you have to compensate us. I mean, we're controlling this whole region. So they got 300,000 pounds. They got to keep their forts and some good farmland. You know, a substantial amount of real estate in the new West. The empire of Hudson's Bay Company was over, but the business was not. It was the late 1800s. Settlers are pouring into the West. And the Hudson's Bay Company has everything a settler could want. They had good farming land, which they sold to settlers. They had the goods to help them build and survive. So they start to provide products to not only settlers, but to gold miners. They're making a ton of money. And these forts scattered across the West become cities. The land under the forts eventually become huge department stores.
51:51
Speaker 2
This is the era of the department store. We talked about that in the Wanamaker show, 1860s, 70s. The department store is sort of being invented at this moment. This store that sells all kinds of things.
52:01
Speaker 1
And Hudson's Bay has like a 200-year start. So they were first with this. And they had the logistics routes. They had everything. When I was growing up in Canada, we'd go to The Bay. They had shortened the name to The Bay to make it cooler for back-to-school shopping. Now, this would last through my childhood up until last year. The Hudson's Bay Company had faced the wilderness. They had fought off the French. They defeated the Nor'westers. They built this nation. You know what they were no match for? The internet, the decline of malls, a lot of private equity hijinks. And they finally closed last year. And I watched all these videos. It was really sad. People came into the stores to buy up their signs and old mannequins and whatever, whatever they had left over. The last canoe, the last paddle. Everyone just wanted to take home a little bit of the history of Canada.
53:05
Speaker 2
Listeners, is there another Canada show that we should do?
53:08
Speaker 1
Tim Hortons.
53:09
Speaker 2
Tim Hortons. Oil Sands? Mounties?
53:14
Speaker 1
Mounties. Now you're just listing off anything you can think of that's Canadian.
53:20
Speaker 2
Email us at businesshistoryatpushkin.fm. You can find us on Instagram and on TikTok at businesshistorypod. I'm on Instagram. I'm on ex-FKA Twitter. So are you.
53:35
Speaker 1
At Radiosmith.
53:38
Speaker 2
Today's show was produced by Gabriel Hunter-Cheng. Our engineer is Sarah Bruguier. Our showrunner and editor is Jake Harper. My name is Jacob Goldstein.
53:50
Speaker 1
And I'm Robert Smith, Canadian and American too. Sorry.
53:55
Speaker 2
Thanks for listening.
The Hosts
Robert Smith
Robert Smith, co-host of the Business History podcast, is a Professor of Journalism at Columbia University and contributing host of NPR's Planet Money where he tells stories about how the…
