Northwest Company

The North West Company was a fur trading business headquartered in Montreal from 1779 to 1821. It competed with increasing success against the Hudson's Bay Company in what is present-day Western Canada and Northwestern Ontario. With great wealth at stake, tensions between the companies increased to the point where several minor armed skirmishes broke out, and the two companies were forced by the British government to merge.

Before the Company

After the French landed in Quebec in 1608, spread out and built a fur trade empire in the St. Lawrence basin. The French competed with the Dutch (from 1614) and English (1664) in New York and the English in Hudson Bay (1670). Unlike the French who travelled into the northern interior and traded with First Nations in their camps and villages, the English made bases at trading posts on Hudson Bay, inviting the indigenous people to trade. After 1731, pushed trade west beyond Lake Winnipeg. After the British conquest of New France in 1763 (and the defeat of France in Europe), the management of the fur trading posts was taken over by English speakers. These so-called "pedlars" began to merge because competition cost them money and because of the high costs of outfitting canoes to the far west.

Beginnings

There are historical references to a North West Company as early as 1770, including the Montreal-based traders Benjamin Frobisher, Isaac Todd, Alexander Henry the elder and others, but the standard histories trace the company to a 16-share organization formed in 1779, which included Todd, Simon McTavish and James McGill. Seeking to break the Hudson's Bay Company monopoly over the North American fur trade, in 1780, the organization was joined by Peter Pond and Alexander Ellice, with his brothers, Robert and James, (and, later, his sons, including Edward Ellice).

In the winter of 1783–84, the North West Company was officially created on a long-term basis, with its corporate offices on Vaudreuil Street in Montreal. It was led by businessmen Benjamin Frobisher, his brother, Joseph, and McTavish, along with investor-partners who included the Ellices, Robert Grant, Nicholas Montour, Patrick Small, William Holmes, and George McBeath.

Official founding

In 1787 the North West Company merged with a rival organization, Gregory, McLeod and Co., which brought several more able partners in, including John Gregory, Alexander Mackenzie, and his cousin Roderick Mackenzie. The 1787 company consisted of 20 shares, some held by the agents at Montreal (see below), and others by wintering partners, who spent the trading season in the fur country and oversaw the trade with the aboriginal peoples there.

The wintering partners and the Montreal agents met each July at the company's depot at Grand Portage on Lake Superior, later moved to Fort William. Also under the auspices of the company, Alexander Mackenzie conducted two important expeditions of exploration. In 1789, he descended the Grand River (now called the Mackenzie River) to the Arctic Ocean, and in 1793 he went overland from Peace River to the Pacific Ocean. Further explorations were performed by David Thompson, starting in 1797, and later by Simon Fraser. These men pushed into the wilderness territories of the Rocky Mountains and Interior Plateau and all the way to the Strait of Georgia on the Pacific Coast.

Frobisher–McTavish deal

The death of Benjamin Frobisher opened the door to a takeover of the North West Company by Simon McTavish, who made a deal with Frobisher's surviving brother Joseph. The firm of McTavish, Frobisher and Company, founded in November 1787, effectively controlled eleven of the company's twenty outstanding shares. At the time the company consisted of 23 partners, but "its staff of Agents, factors, clerks, guides, interpreters, more commonly known today as amounted to 2000 people." In addition to Alexander Mackenzie, this group included Americans Peter Pond and Alexander Henry the elder. Further reorganizations of the partnership occurred in 1795 and 1802, the shares being subdivided each time to provide for more and more wintering partners.

Vertical integration of the business was completed in 1792, when Simon McTavish and John Fraser formed a London house to supply trade goods and market the furs, McTavish, Fraser and Company. While the organization and capitalization of the North West Company came from Anglo-Quebecers, both Simon McTavish and Joseph Frobisher married French Canadians. Numerous French Canadians played key roles in the operations both in the building, management, and shareholding of the various trading posts scattered throughout the country, as well numbering among the involved in the actual trading with natives.

In the northwest, the Company expanded its operations as far north as Great Bear Lake, and westwards beyond the Rocky Mountains. For several years, they tried to sell furs directly to China, using American ships to avoid the British East India Company's monopoly, but little profit was made there. The company also expanded into the United States' Northwest Territory (today's Midwest of Michigan, Illinois, Indiana, Ohio and Wisconsin). In 1796, to better position themselves in the increasingly global market, where politics played a major role, the North West Company briefly established an agency in New York City.

Despite its efforts, the North West Company was at a distinct disadvantage in competing for furs with the Hudson's Bay Company, whose charter gave it a virtual monopoly in Rupert's Land, where the best furs were trapped. The company tried to persuade the British Parliament to change arrangements, at least so the North West Company could obtain transit rights to ship goods to the west needed for trading for furs. It is said that Simon McTavish made a personal petition to Prime Minister William Pitt, but all requests were refused.

A few years later, with no relief to the Hudson's Bay Company's stranglehold, McTavish and his group decided to gamble. They organized an overland expedition from Montreal to James Bay and a second expedition by sea. In September 1803, the overland party met at Charlton Island, in what is now Nunavut Territory, the , a ship that Fraser acquired. At Charlton Island, they laid claim to the region inhabited by the Inuit, in the name of the North West Company, and were able to capitalize on the rich furs of the area. Their expansion northwestward cut into the profits of the Hudson's Bay Company. In 1800, HBC profited £38,000 in trade compared to the North West Company's £144,000 in 1800. This bold move caught the Hudson's Bay Company off guard. In succeeding years it retaliated rather than reaching a compromise, which McTavish had hoped might be negotiated.

Late 18th/early 19th century

Simon McTavish brought several members of his family into the company, but nepotism took a back seat to ability. His brother-in-law, Charles Chaboillez, oversaw the Lower Red River trading post. McTavish also hired several cousins and his nephews William McGillivray and Duncan McGillivray to learn the business. William McGillivray was groomed by his uncle to succeed him as Director of the North West Company, and by 1796 he had effectively done so, acting as Montreal agents' representative at the annual meetings at Grand Portage, and later at Fort William.

Simon McTavish was an aggressive businessman who understood that powerful forces in the business world were always ready to pounce on any weakness. As such, his ambition and forceful positions caused disagreements between him and some of the shareholders, several of whom eventually left the North West Company during the 1790s. Some of these dissidents formed their own company, known unofficially as the XY Company

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