ARTICLE BY ARTHUR J.

RAY
REVISED BY NATHAN COSCHI,
LEANNA FONG AND SASHA
YUSUFALI
PUBLISHED 04/02/09
LAST EDITED 06/22/15

Hudson's Bay Company

The Hudson's Bay Company (HBC), chartered 2 May 1670, is the
oldest incorporated joint-stock merchandising company in the
English-speaking world.

TCE - HOME 49
People talking outside the Hudson's Bay Company Post in Aklavik, NWT, 1956.
Image: Government of Canada/Library and Archives Canada/1971 -271 NPC.

Government of Canada/Library and Archives Canada/1971 -271 NPC.

The Hudson's Bay Company (HBC), chartered 2 May 1670, is the oldest
incorporated joint-stock merchandising company in the English-speaking world.
Originally headquartered in London, England, its head offices are located in Toronto.
The group currently operates the following retailers: Hudson’s Bay, Home Outfitters,
Lord & Taylor, Saks Fifth Avenue and Off 5th, Saks’ discount chain.

History

Beginnings: 17th Century

In the 17th century, the fur trade emerged as a major commercial enterprise in North
America due to European demand for felt hats made from beaver fur. French traders
Médard Chouart des Groseilliers and Pierre-Esprit Radisson were the first to propose
a trading company to reach the interior of the continent via Hudson Bay and gain
easier access to the fur resources of the interior. After failing to obtain French
support on their terms, they went to England in 1665 and interested Prince Rupert,
cousin of Charles II. Rupert persuaded the king, several merchants and noblemen to
back the venture. The first ships, the Eaglet and the Nonsuch, were dispatched on 3
June 1668 and the royal charter was proclaimed on 2 May 1670. The "Governor and
Company of Adventurers" were granted wide powers, including exclusive trading
rights in the territory traversed by rivers flowing into Hudson Bay. This vast region
was named Rupert's Land.
 Hudson's Bay Company Ships

Prince of Wales and Eddystone bartering with the Inuit off the Upper Savage
Islands, Hudson Strait, NWT. Watercolour by Robert Hood (courtesy Library and
Archives Canada/C-40364).

Rupert, Prince

Portrait of Prince Rupert by Sir Peter Lely (courtesy Hudson's Bay Co).
Unlike most contemporary trading concerns, the HBC evolved as a joint-stock
company with a centralized bureaucracy. At the annual General Court (Annual
General Meeting in today's terms), shareholders elected a governor and committee
to organize fur auctions, order trade goods, hire men and arrange for shipping. The
London-based governor and committee set all the basic policies implemented in
Rupert's Land, basing their decisions on annual reports, post journals and account
books supplied by the officials on the bay. The General Court also appointed a
governor to act on their behalf in the bay area. In Rupert’s Land, each factory
(trading post) was commanded by a chief factor (trader) and his council of officers.

Aboriginal Peoples

After trapping during the fall and winter when beaver pelts were of the highest
quality, in the summer months, Aboriginal peoples travelled to these trading posts
to barter furs for manufactured goods such as metal tools, guns, textiles and
foodstuffs. The now-iconic point blanket was one such item bartered for furs.
Often, Aboriginal traders were middlemen, bringing furs from communities farther
inland. In order to standardize trade among posts, the HBC introduced the Made
Beaver as the currency of the fur trade. All furs and manufactured items were
valued according to this standard, which was the equivalent of one prime male
beaver skin.
 Made Beaver Coin

Hudson's Bay Company brass made beaver from the Eastmain district (photo by
James Zagon/courtesy Currency Museum, Bank of Canada).

Silver Trade Ornament

The Hudson's Bay Company introduced silver in 1790 in regions where competition
with the rival North West Company required it. This pendant carries the company
mark and the outline of a beaver (courtesy Henry Birks Collection, Montréal).
The fur trade had a great impact upon Canada’s Aboriginal peoples. As a result of
their involvement in the fur trade, many abandoned their traditional lifestyles and
economy, and became reliant on European manufactured goods and foodstuffs for
survival. Many also moved beyond their traditional territory in search of fur-bearing
animals and to obtain a better position in the trade. This movement of people and
competition for European goods led to conflict among Aboriginal peoples. The
arrival of Europeans also introduced diseases, such as smallpox, that devastated
Aboriginal populations.

Struggle for Control of the Fur Trade: 18th Century

Until 1763, the HBC struggled with the French for control of the fur trade in southern
Rupert's Land. In the early years, a series of naval and land battles took place on
Hudson and James bays. In 1713, by the Treaty of Utrecht, France acknowledged
England's claim to Hudson Bay. For the next 60 years, the HBC erected posts only
at the mouths of major rivers flowing into the bay, with the single exception of
Henley House, a small outpost erected in 1743 on the Albany River, 200 km from
the coast. This reluctance to establish posts in the interior of Rupert’s Land allowed
competitors to outflank the HBC by travelling into the interior to trade with
Aboriginal peoples rather than waiting for them to come to the coast. Aboriginal
traders also used this intense rivalry to extract greater returns for their furs.

After the Treaty of Paris 1763, the company's French rivals were replaced by a much
more formidable opposition, the Montréal-based overland trade network taken over
by the British. By 1774, HBC trade had been undercut enough that the governor and
the committee embarked on an aggressive policy of inland expansion beginning with
the building of Cumberland House on the lower Saskatchewan River. Intensive
competition with the North West Company spilled beyond Rupert's Land into the
Mackenzie drainage basin and the Pacific slope, combining economic conflict with
occasional physical violence (see Seven Oaks Incident). In 1821, a merger of the
two parties was arranged, and the British Parliament confirmed and extended the
company's monopoly privileges to include the Northwest Territories.

New Organizational Structure: 19th Century

Bringing together the different business traditions of the North West Company and
HBC required changes in the administrative structure of the new company. British
North America was divided into trading departments, which were then subdivided
into districts. District managers met annually in departmental council meetings
presided over by the governor in North America, a post held by Sir George Simpson
(1826–60). These councils passed regulations governing local trade, determined the
deployment of men and posts, and established the logistical requirements of the
various districts. The officers had a vested interest in these concerns since they
shared in the profits of the trade according to the terms set out in deed polls in 1821,
1834 and 1871. Council members had an equal voice and vote theoretically, but
Simpson had considerable power, and the London governor and committee could
overrule council decisions. After the merger, the HBC closed many trading posts
that had become unprofitable. This had an adverse effect on Aboriginal groups who
had become reliant on the fur trade for survival.
 Trading Furs

Johnnie, his wife and child with George Anderson examining whit e fox pelts at the
Hudson's Bay Company store. (Photo credit: Arthur H. Tweedle / Library and
Archives Canada / e002344213)

Simpson, Sir George

An able administrator and indefatigable traveller, Simpson was imperious when it

suited his purposes (courtesy Notman Photographic Archives/McCord Museum).
After 1821, a group of independent free traders among the Métis population at the
Red River Colony opposed the company's monopoly rights, which had been renewed
by Parliament for another 20 years in 1838. The issue culminated in the famous
Sayer Trial of 1849, in which Pierre-Guillaume Sayer — a Métis man — was tried
and convicted of trading with Aboriginal groups in violation of the company's legal
privileges. Fearing a Métis riot, however, the court did not pass sentence. The
decision effectively opened the trade of southern Rupert's Land to many small-scale
competitors.

Relinquishing Colonial Responsibilities

Although the company's primary concern remained the fur trade, it became
increasingly involved in providing government for settlers in the Red River Valley
and on Vancouver Island. Between 1812 and 1834, the governors of Assiniboia were
agents of the Selkirk estate, although they were overshadowed by the HBC. In 1834,
the company resumed jurisdiction and, until transfer to Canada, provided the Selkirk
colony's government. In 1849, Britain granted to the HBC the colony of Vancouver
Island, which was to be developed as an agricultural settlement. In 1851, Chief
Factor James Douglas was appointed governor. In 1858, during the Fraser Gold Rush,
the mainland colony of British Columbia, including most of present-day BC, was
created out of New Caledonia. Douglas was required by the British government to
resign his HBC commission before becoming governor of BC. In this way, the
company began to relinquish its colonial responsibilities.
By the 1850s, a growing expansionist movement in Canada saw the annexation and
settlement of the Northwest as essential to Canada’s development and prosperity.
Expansionists portrayed the HBC as an impediment to Canada’s growth and claimed
that, to protect its fur trade interests, the HBC had promoted the widely held belief
that the Northwest was a barren wasteland, unsuited to agricultural settlement. This
belief, however, was challenged by reports of the Palliser and Hind expeditions,
which encouraged westward European settlement. In 1863, the International
Financial Society bought controlling interest in the HBC, signalling a shift in the
company's outlook: most of the new shareholders were less interested in the fur trade
than in real-estate speculation and economic development in the West. Negotiations
conducted with the Colonial Office and, after 1867, with the Canadian government,
eventually resulted in the sale of Rupert's Land to Canada in 1870. As part of the
agreement, the company received £300,000 and one-twentieth of the fertile areas to
be opened for settlement. In addition, it retained title to the lands on which it had
built trading establishments. The terms of the agreement strongly influenced
company development after 1870. By retaining large landholdings on the prairies
and the parcels adjacent to its posts, many of which were located in developing urban
centres in the West and North, the HBC was able to become one of the most
important developers in western Canada. From the 1874 establishment of the Land
Commissioner's Office onward, the company was active as a major real-estate
developer, acquiring control of Markborough Properties in 1973 before eventually
spinning it off as a stand-alone company in 1990.
Natural-Resource Development

Involvement in natural-resource development stemmed naturally out of the HBC's

fur-trade and real-estate activities. In 1926, it co-founded Hudson's Bay Oil and Gas
(HBOG); in 1973, it acquired 35 per cent of Siebens Oil and Gas. In 1979, it disposed
of the latter and in 1980 bought controlling interest in Roxy Petroleum. In 1982, the
HBOG investment was sold to Dome Petroleum.

Retail Expansion

As economic development in the Prairie West accelerated after 1870, the company
did an increasing amount of business with settlers. Initially, most of this activity was
carried on at its trading posts. Since it differed in many respects from the trade with
Aboriginal groups, separate sales shop accounts were kept. From this modest
beginning, the HBC's retail and wholesale divisions eventually emerged, with outlets
entirely separate from the fur trade. In 1910, the company was restructured into three
departments: lands sales, fur trade and retail. In 1913, the HBC invested in the
construction of new retail stores, recognizing that this department had a greater
future potential than land sales and the fur trade. The first of the company’s “original
six” department stores was opened in Calgary that year. The last was opened in
Winnipeg in 1926. In 1959, the fur trade department was renamed the northern stores
department, while the land sales department was moved to a subsidiary company in
1961.
 Hudson's Bay Co Building

Hudson's Bay Company, Georgia and Seymour Street, Vancouver, c. 1922 (courtesy
Vancouver Public Library/11258).

Previously operating entirely in western Canada, in 1960, HBC began expanding

into central Canada with the acquisition of the Montréal-based Henry Morgan &
Company department store chain. In 1970, the 300th year of HBC's existence, Queen
Elizabeth granted a new charter to the company revoking most of the provisions of
the original charter and formally transferring the company from the United Kingdom
to Canada, where a new headquarters was established in Winnipeg, Manitoba.

The 1970s were a period of expansion with the acquisition of Shop-Rite and A. J.
Freiman Ltd (1972), as well as majority interests in companies like Markborough
Properties (1973), which would support their retail growth. In 1974, HBC opened
its first Toronto store at Yonge and Bloor, and also moved corporate offices to
Toronto.
HBC itself was the subject of a takeover battle in the late 1970s when Canadian
billionaire Kenneth Thomson and George Weston Limited fought for control, with
Thomson eventually coming out ahead and acquiring a 75 per cent stake in a $400
million transaction. The company, moving its headquarters to Toronto in 1987, was
active in acquisitions, purchasing the bankrupt Woodward’s department store chain
in 1993 and K-Mart Canada's stores in 1998, bringing them into the Zellers fold.

In 1997, the Thomson family sold the last of its remaining shares, but in the
intervening years they had transformed HBC to a leaner, more focused operation by
selling off the company's interests in the oil and gas business, financial services and
a distillery, among others, for approximately $550 million.

Operations

The Hudson's Bay Company's operations include Hudson’s Bay, Lord & Taylor,
Saks and Home Outfitters. As of 2013, HBC operates 320 stores and its merchandise
passes through one of 11 distribution centres located across the country.

The 90 Bay stores are the traditional and best-known face of HBC. They offer a full
range of goods and services typically associated with department stores and feature
proprietary brands. This part of the company's operations also operates Home
Outfitter stores, which target the increasingly popular kitchen, bed and bath segment.

HBC's chain of Zellers stores operated in the mass merchandise category and aimed
to provide convenient access to everyday items at an affordable price. Beginning in
1994, Zellers faced fierce competition from its American rival Wal-Mart. Zellers
could not compete with the US retailing giant’s deep discounts. In 2011, Zellers
announced a plan for closure and liquidation that would facilitate Target
Corporation’s entry into Canada. Zellers closed most of their locations by 2012.

While the company built its brand around the department store setting and selling
over the counter, the 2000s brought a change in the retail landscape. Traditional ways
of selling goods were challenged by online retailers. The company first offered an
online shopping experience in 2000, which was a direct response to this evolving
retail landscape.

The 2000s continued to be a period of great change for HBC. In 2005, the company
began its partnership with the Canadian Olympic Committee (COC) and was named
the Official Department Store and General Merchandise Store Operator in Canada.
HBC, taking over from Roots Canada, outfitted the Canadian Olympic team with
iconic toques and mittens. The most popular iteration of these products was
produced for the 2010 Olympic Games in Vancouver, which the chairperson of the
London 2012 Olympic Games, Sebastian Coe, called the “must-have item” of the
games. This partnership was renewed in 2011 and will continue to 2020.

Declining sales and competition from US retailers encouraged rumours regarding

takeovers. Speculation ended when American financier Jerry Zucker acquired HBC
for over $1 billion (CAD) in 2006. In 2008, the New York–based private equity firm
and parent company of Lord & Taylor, NRDC Equity Partners, bought HBC from
Zucker’s widow. Under the direction of the company’s first woman CEO, Bonnie
Brooks, HBC’s new parent company initiated a rebranding project that sought to
make it competitive with other mid-market and high-end department stores.
Initiatives included offering shoppers more external brands, product selection as
well as contemporary branding. In 2011, HBC secured franchise rights for the trendy
UK-based fashion retailer Topshop and Topman to the delight of Canadian sartorial
devotees, and in 2013 acquired American luxury retailer Saks Fifth Avenue.
Branding and Logos

Beginning in 1965, the store embraced the short form of its name, “The Bay,” and
its logo featured a prominent “B.” In 2013, HBC’s logo underwent a significant
overhaul. The new logo and return to the fuller mantle of “Hudson’s Bay” is an effort
to acknowledge the company’s rich heritage and role in Canadian history.

Community Work

As Canada's oldest company, the HBC is part of the country's business and social
fabric and, as such, is involved in the community in a number of ways.

In 2004, the company created the HBC Foundation to represent its charitable efforts,
which have included the Zellers charity gift box program, cystic fibrosis and the
Canadian Cancer Society.

The HBC History Foundation is active in sharing the company's long and rich history
with the Canadian public and provides financial support to the HBC Archives
collection, the HBC Artifact collection and Canada's National History Society. In
addition, it provides support to history projects across Canada.

Suggested Reading
 E. E. Rich, The History of the Hudson's Bay Company 1670-1870 (3 vols,
1960) and The Fur Trade and the Northwest to 1857(1967); Douglas
Mackay, The Honourable Company(1966); Peter C. Newman, The Company
of Adventurers(1985), Caesars of the Wilderness (1987).