My first attempt at podcasting and making journalism out of my non-journalism class

A few words from me

“Is it ever a good idea,” I wondered, “to give a company the state’s job?”

This was the question that I was grappling with when I came across the Hudson’s Bay Company (HBC) in my “Corporations and Empires” class at the end of my undergraduate career. I was surprised to find out that a company still existed when, say, the British East India Company, only exists in textbooks.

Even though this story is about the HBC, it is also a story about business more generally. Nations have always given companies responsibilities we often think of as ‘political’.

The United Fruit Company in Latin America, Blackrock in the American occupation of Afghanistan at the turn of this century, and more recently, the Wagner Group in Ukraine are all prime examples of companies with great responsibilities to govern or wage war. And European empires centuries ago were more than eager to create charter companies to move the empire’s economic engine, effectively creating ‘company-states’ that functioned very much like a government.

But is this good for the company? Is it good for the state? The dissolution of the United Fruit Company, the disastrous consequences on human lives in Afghanistan, and Russian political chaos suggest, “No.”

So, what did the Hudson’s Bay Company do differently, and what could it teach us about mixing business and politics?

I was lucky enough to investigate this question by creating a podcast episode rather than writing a traditional academic paper (thank you, Professor Cross, for indulging my inner-journalist). Many hours of research and fumbling around in iMovie later, my first podcast episode was finished for my non-journalism class’s final.

Business as Usual

Produced by: Jesse Lin

21 minutes

Transcript

Americans are most certainly familiar with names by the likes of Macy’s, JCPenney, and Sears, names associated with a golden consumer era long gone. Their hollowed-out stores in skeletal malls reflect their age in an era of digital commerce and troubles post-COVID-19.

North America’s oldest company has not fared much better. Faced with steep losses quarter after quarter, the Hudson’s Bay Company, or HBC, was taken private in March 2020. Its location in downtown Winnipeg was valued at zero dollars just months after. 

But the HBC has survived recessions and pandemics before, and much more. In its 352-year history, it has experienced political handovers and seen empires rise and fall. Once at the heart of the luxury fur trade and now the owner of luxurious Saks Fifth Avenue, only the HBC still stands in the list of corporations from an age of empires past. All others: the British East India Company; the Virginia Company; and the Massachusetts Bay Company; now exist only in high school textbooks. All had extensive political and economic rights. All fell from political chaos, economic failure, or both. 

Yet the HBC was given the most political and economic prerogatives of all joint-stock companies. How did the company manage to avoid what other charter companies could not and continue to survive to this day? 

This story leads us to the cold frontier of Canada’s far north where a company of imperial origins gave up empire for profits. Three key periods in the HBC’s history illustrate how the company underemphasized its political prerogatives, an approach which proved critical to the corporation’s longevity. 

The experience of French and indigenous traders was crucial for the fledgling HBC to gain an early foothold in the monopolized fur industry. 

As the company matured, it remained reluctant to use its political rights even when economic warfare escalated into actual warfare with its main competitor. 

And when Canadian independence rolled around, the HBC willingly gave up its imperial heritage and political prerogatives. By doing so, it transitioned to be a key economic actor for the Canadian commonwealth that we see today. As such, the HBC may not have a notable colonial legacy, but it manages to remain alive outside of the history books. 

By the time King Charles II granted the HBC’s charter in 1670, charter companies had long used political rights normally associated with states in service of empire. For example, the British East India Company tried and punished private British citizens for trading in the East Indies. The charters of the Virginia and Massachusetts Bay companies marked boundaries for colonial settlement and resource extraction. All three companies could create their own laws, defend their territory through war, and elect their own leaders. 

The HBC’s connection to empire was even more direct. The petitioners pushing for the company’s charter consisted of King Charles’ friends, acquaintances, and cousin, Prince Rupert, first Director of the HBC. From the first pages of its charter, King Charles II lauded their efforts, “…for the discovery of a new passage into the South Sea, and for the finding of some trade for furs…” as the two were expected to bring, “a very great advantage to us and our kingdom.”

Charles could not ignore the economic bounty promised by the North American fur trade and the Northwest Passage, a mystical western sea route to the riches of Asia. Ever the hedonist, the king needed a way to finance his lavish personal lifestyle. And as the first monarch after England’s brief stint with republicanism during the English Commonwealth, Charles was eager to restore the Crown’s power at home and England’s economic power abroad. The Stuart Restoration, as Charles’ designs came to be called, would require enormous amounts of capital that England did not have. 

But neither the Northwest Passage nor the North American fur trade were going to give up their treasures easily. Since Columbus, people have risked death to discover the Northwest Passage’s entry point. The infamous 1845 Franklin expedition, immortalized in the novel and TV series, “The Terror,” showcases the unknown dangers well. 

And the fur trade was already monopolized by the French and Iroquois. Any attempt at entering the fur trade or discovering the Northwest Passage would demand significant capital and time. So, eager to cut into French trade and revitalize England’s imperial glory, King Charles granted the HBC unparalleled prerogatives in its charter, further than any charter company to ever exist. 

Charles declared Prince Rupert and the noble petitioners, “…the true lords and proprietors…” of all Canadian land, “…which are not actually possessed by any of our subjects, or by the subjects of any other Christian prince or state.”4 million square kilometers of Canadian tundra and prairie became, quite literally, Rupert’s Land. The amount of territory would only grow as the HBC embarked on discovering new waterways whereby the mid-19^th century, the HBC controlled 40% of Canada’s total landmass. The 40 million square feet of real estate that the HBC owns today looks humble in comparison. 

So long as the profits of Rupert’s Land enlarged the English treasury and dwindled French coffers, the Crown was uninterested in how Prince Rupert and company used their political and economic rights over this territory. 

But the experiences of two Frenchmen and thousands of indigenous traders taught the young company just how to leverage its economic rights and downplay its political prerogatives to gain a foothold in the fur trade’s entrenched rhythms. 

The HBC’s noble English petitioners had plenty of capital to pump into the company. But none had experience in the fur trade. France’s monopoly in North America made sure of that.

Since 1608, French traders had painstakingly integrated themselves into millennias-old trade routes that stretched deep into the North American continent. In order to succeed in this trade, Frenchmen learned indigenous languages, customs, and developed working relationships with the semi-nomadic tribes that supplied the valuable furs. The ever-changing movements and conflicts of their indigenous suppliers meant the French were constantly adapting to new economic circumstances that made it difficult for other Europeans to enter this trade. 

By the 1660s, the Iroquois had established themselves as the sole middlemen in the Hudson River region in the brutal Beaver War, driving France’s preferred trading partners, the Huron, out west. Two brothers-in-law, Médard Chouart des Groseilliers and Pierre-Esprit Radisson, urged the governor of New France to expand trade beyond the river basin. Luckily for the English, their pleas fell on deaf ears.

Radisson and des Groseilliers would prove to be the most valuable assets to the company in its early years. In his early teens, Radisson was captured and adopted into the Mohawk tribe. His years among the Mohawk people gave him special knowledge of fur trapping, the fur trade, and relationships that the HBC could exploit. When the time came to prove the viability of the HBC’s venture, only des Groseilliers and Radisson were experienced enough among the majority-English crew to take the helm of the mission. The Englishmen were able to stave off scurvy in their first winter with bitter spruce beer that des Groseilliers had learned from the indigenous people. 

Once arrived in Hudson’s Bay, the English led by the two Frenchmen encountered the indigenous people who would determine the company’s fortunes. The Cree were a semi-nomadic people living along the rim of Hudson’s Bay. Their position in the far north distanced them from the bustling trade in the south, forcing the Cree go through various intermediaries to obtain European goods. However, with the arrival of the English in Hudson’s Bay, the Cree saw an opportunity to cut out the middleman. The pelts that the Cree brought were of even better quality than those from the south as harsh, long winters produced a luxurious beaver coat. The HBC’s trading schedule adapted to match the natural migratory patterns of the Cree who stayed inland during the winter and hunted beavers when coats were thickest. When the spring melt came, the pelts were brought to the coast of Hudson’s Bay where they could be shipped to Europe before the entrance to the bay would freeze over in winter.  

The economic rhythms of the bay that des Groseilliers, Radisson, and the Cree accustomed the HBC to proved to be a winning strategy. Until 1690, the company could consistently pay dividends of up to 50% by investing only what was necessary for trade. By building small outposts at the mouths of rivers, the company positioned itself to best receive furs from the Cree while minimizing running costs. 

Only war interrupted the company’s economic success, something the company was entirely uninterested in. All remaining revenues were reinvested into commercial activity, and as such it maintained no military, navy, or commanding officers. So, when war broke out between England and France in 1689, the HBC was unprepared to defend its outposts from the superior military of New France. It would not be until 1715, when peace returned to Europe, that the company would quietly reestablish itself from its sole remaining outpost of Ft. Albany at the bottom of the bay. 

As the HBC learned, war isn’t good for business. But a blustering, aggressive rival unafraid to turn economic competition into all-out war would taunt the HBC’s political authority and tempt its right to defend its territory. 

Unlike the British East India Company, the HBC could not afford to fight protracted wars caused by petty squabbles and interests of individual traders. For one, the cost to employ a single trader in the far north was the second largest cost for the HBC after the actual trade goods. Profits from the fur trade were also dependent on keeping good relations and a favorable trading position with the indigenous population.

As such, labor records after 1810 show that the company was extremely strict with the rights and privileges of its employees. In one company contract, a certain John Macphail was employed by the HBC as a shepherd and cattleherd. Despite his occupation not having anything to do with the company’s trade, the contract stipulated, “…that all goods obtained by barter with the Indians or otherwise…shall be held by him for the Company only…and shall be duly delivered without any waste, spoil, or injury thereto.” Mr. Macphail was also explicitly forbidden from, “…any trade or employment whatsoever except for the benefit of the said Company and according to their orders…” in case the shepherd may have selfish ideas to trade mutton secretly for beaver pelts. 

However, despite the company’s best efforts, it was dragged into conflict, not by company traders, but by a colonial appendage. The Red River Settlement was founded by the Earl of Selkirk, a supremely wealthy, philanthropic Scotsman with dreams to improve the station of his fellow Scots. In a rare exercise of its political prerogative, the HBC begrudgingly entertained the earl’s grand ambitions. After all, he was the son-in-law of the prominent Wedderburn family who held significant company stock. The Red River Colony, five times the size of Scotland in the middle of modern-day Manitoba, was bought for a mere ten shillings. 

For the North West Company, colloquially called “Nor’Westers” and the HBC’s main rival, the colony was a flagrant attack on its operations. Established in 1779 in Montreal, the North West Company had always sought to operate outside of and differentiate itself from the HBC’s monopoly. The independent Nor’Westers went farther inland and westward than the HBC’s employees were ever allowed. The colony encompassed Lake Winnipeg, a central trade node whose waterways allowed traders to access most of northern North America by just a day’s paddle by canoe. According to a prominent partner of the Nor’Westers, the success of the Red River colony, “…would strike at the very existence of our trade.”

Indeed, it was the Red River Colony that made the first provocation. The governor of the colony, Miles Macdonell, invoking the rights within the HBC’s charter, ordered all people living in North West Company posts within the colony’s limits to vacate within six months. The Nor’Westers, making good on their long-held threats against the colony, attacked and razed the Red River Settlement to the ground. 

In fact, according to correspondence between the Earl of Selkirk and the Earl of Liverpool, the colony was razed, and its population massacred twice. In the same correspondence, the Earl of Selkirk laments that, “The appearance of even the most trifling military succour sent by the Governor of Canada, would have prevented the mediated attacks of the North West Company.”

Despite the HBC being, “Guardians of the Peace within their territories…” the company deferred to the Colonial Department, headed by Lord Bathurst. Even when the HBC directors attempted to pull together a paltry band of company employees to protect the Red River colony, the Canadian government warned against, “incurring the responsibility of persisting in it.” The Hudson’s Bay Company acquiesced to the instructions of the Colonial Department and refrained from taking substantive action, sending only messages communicating the “unwarrantable conduct” of the North West Company. But until the Colonial Department, “…be in possession of some more decisive evidence, as to the persons really guilty of the disturbances…his Lordship must defer giving an instruction…” leaving the company to sit on its hands. 

But the company was likely uninterested with the colony’s protection in the first place. The Earl of Selkirk even points out the divergent interests of “The commercial servants of the Hudson’s Bay Company,” and, “the agricultural settlers at Red River, a distinct class of persons having different interests, occupations, and pursuits.” Given the company’s long-standing preference to protect its economic bottom line, the HBC’s attempts at action can be interpreted as gestures to appease the Earl of Selkirk and the Wedderburn family. In appeasing the political concerns of the Earl, the company could keep its economic credit line secure while passing on its political responsibility to the other legitimate authority in the territory.

Indeed, commentators across the Atlantic began to question where the HBC’s commitment lay. Was it in its imperial obligations or economic prerogatives? As Canadian independence loomed on the horizon, the Company would be forced to reckon with its imperial roots and political prerogatives one last time. 

In the wake of the HBC’s eventual merger with the North West Company, many British watchers wondered whether the Company brought any value to its motherland. Pamphlets harped on the company’s lone existence as, “the only survivor of the numerous exclusive bodies which at one time depressed every branch of British commerce,”surmising whether the HBC would finally go under. After all, “It is evident that the Hudson’s Bay Company’s monopoly is not productive of the slightest advantage to the Budget of the mother country.”

To no fault of its own, the HBC’s economic circumstances had changed since 1670. The fur trade had become increasingly unprofitable for the company. The new fortunes of the day could be made in railroads, oil, gas, and especially in the case of the HBC, land. 

The question of land was not only about economics but the very fabric of government. Republic, empire, and commonwealth were vying for the HBC’s land, presenting the company with three possible routes to go down. 

It could have doubled down on its royal prerogatives. For Great Britain, “The staple question…is whether it is possible that a Company acting independently of the Canadian government to without direct responsibility toward the British Crown, can be entrusted with the settlement of questions in which both Canada and the British public are vitally concerned? To colonize or utilize the vast territory…”

The British ultimately deemed that the HBC could not be an actor for empire. It was no secret that the company’s economic interests were incompatible with the empire’s colonial interests. A pamphlet published on the eve of Canadian independence remarked that, “Their sole aim is avowedly to draw the greatest possible revenue from the country, to attain which the considerations of humanity and religion are overlooked…”

If not an actor for empire, the HBC could have entered the chapter of American expansion. 

Minnesota senator Alexander Ramsey wanted the US to buy Rupert’s Land for $6 million to construct a Pacific railway, a deal that would greatly enrich HBC shareholders. Had the Earl of Selkirk been alive, he would have certainly preferred this arrangement against, “The peculiar situation of the Canadas” he found himself in as, “Such proceedings would not have taken place under the United States.” Rupert’s Land could have been another Louisiana Territory or Alaska, purchased for cheap and opened to American interests. 

But American authorities were more concerned with respecting previous border agreements with Canada. They sent, “…detachments of American troops…stationed throughout the plains to ward off all persons intruding from the British side,”like those settlers at Red River. 

Only the option of commonwealth remained. In an ultimate act of political acquiescence, the HBC allowed its monopoly, rights, and prerogatives over Rupert’s Land and the Northwest Territories to be revoked in the 1868 Rupert’s Land Act. The HBC’s territory was finally integrated into the newly-formed nation of Canada in the 1870 Deed of Surrender. “The Parliament of Canada shall…have full power and authority to legislate for the future welfare and good government of the said Territory.” In giving up its control of territory, it could solely devote itself to the pursuit of profit and be unburdened from the responsibilities of empire. For Canada, the Deed of Surrender cemented Canadian authority to the Pacific Ocean. The three significant Company outposts out west became the provincial capitals of Winnipeg, Edmonton, and Victoria.

Stripped of its land and worthless fur monopoly, the question remained whether the company could survive the new economic climate. 

As new settlers pushed west into former company territory, the company turned away from trade and adapted its old outposts to accommodate a new type of clientele. It stocked a wider variety of goods demanded by these new settlers who transacted through cash instead of barter. The company solidified its new status as a retail company in 1912 with six department stores in provinces created out of former HBC territory. 

In April 2022, the Southern Chiefs Organization, representing over 81,000 indigenous peoples of the Anishinaabe and Dakota tribes, announced it would take over the HBC’s worthless Winnipeg department store. The main floor will be transformed into a public space that honors indigenous land and waters under the building’s atrium. A museum and art gallery dedicated to telling indigenous stories will sit alongside two restaurants. 

For Grand Chief Jerry Daniels, “This project represents SCO’s bold vision of what the future can hold,” said Grand Chief Jerry Daniels. “It can be a new world of hope and possibility, filled with place and space for our people to come together, to grow, create, and lead. 

The HBC unveiled its own plan just two months later to renovate its Beverly Hills Saks Fifth Avenue store in the 9600 Wilshire Project. 

 “Drawing on HBC’s rich 350-year history of entrepreneurship and reinvention” said HBC CEO Richard Baker, “the 9600 Wilshire project is an exciting and important step on our journey to build a future-facing holding company of luxury online and brick and mortar retail, high-end real estate and an intellectual property incubator that launches new businesses such as our growing, global flexible office offering.”

Just what and how much the HBC will have to give up in order to push forward remains to be seen. But if the past is any indication, focusing on the bottom line and reinvention are winning strategies that have worked before. They may just work for the legacy company once more.