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. Formerly headquartered in London, England, and via an intermediary residence in Winnipeg, Manitoba, its head offices are located in Toronto, Ontario.
The Hudson's Bay Company (HBC), chartered 2 May 1670, is the oldest incorporated joint-stock merchandising company in the English-speaking world. Formerly headquartered in London, England, and via an intermediary residence in Winnipeg, Manitoba, its head offices are located in Toronto, Ontario. Among general retailers in Canada, HBC continues to lead its next-closest competitor, Sears, in terms of annual sales. In 2003, HBC posted revenues of $7.4 billion and reported close to 70 000 employees. The group retails under the following names: The Bay, Zellers, Fields, and Home Outfitters.
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. 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 and some 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.
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. They appointed a governor to act on their behalf in the bay area. Each post was commanded by a chief factor (trader) and his council of officers. The London 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.
Naval and Land Battles
Until 1763 the HBC struggled with the French for control of the fur trade of 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. 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 North-West Territories.
Bringing together different business traditions 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, 1826-1860. 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 theoretically had an equal voice and vote, but Simpson had considerable power, and the London governor and committee could overrule council decisions.
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 was tried and convicted of trading with the Indians 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 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.
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.
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 .
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), and in 1973 acquired 35% 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.
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 Indian trade, 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. Expansion was augmented by the 1978 acquisition of controlling interests in the Simpsons and Zellers retail chains.
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% stake in a $400 million transaction. 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.
The company, moving its headquarters to Toronto in 1987, also was active in acquisitions, purchasing the bankrupt Woodwards department store chain in 1993 and K-Mart Canada's stores in 1997 and bringing them into the Zellers fold.
The Hudson's Bay Company's operations include The Bay (an estimated 34.7% of its 2003 $7.4 billion revenues), Zellers (59.7%), financial services (4.5%), and other operations. Reported figures for The Bay also include the Home Outfitters chain of stores. In total, HBC reported a total of almost 70 000 employees working in 562 stores for the 2003 fiscal year, a figure that includes 106 Fields stores the company operates in western Canada. Its merchandise passes through one of 11 distribution centres located across the country. The company also reported $4.1 billion in total assets.
The 99 Bay stores are the traditional and best-known face of HBC. They aim to 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 45 Home Outfitter stores, which target the increasingly popular bed and bath segment.
HBC's chain of Zellers stores operate in the mass merchandise category and aim to provide convenient access to everyday items. It also offers exclusive brands and about one-fifth of its 312 stores are former K-Mart Canada stores.
The Financial Services segment serves primarily as the credit arm of HBC counting some 3.1 million Bay and Zellers credit card holders as its clients. During the 2003 fiscal year, clients carried an average balance of $466 dollars on their account.
In 2003, HBC had an estimated 35% market share among all mass merchandisers/department stores in Canada, ranking fourth among all retailers in what is a highly fragmented industry. The retail sector's traditional ways of selling over the counter are being eroded more and more by the on-line offerings of retailers, accounting for some $15 billion in sales in 2003 alone. To this end, companies like HBC have begun to offer on-line purchasing as well. Online sales are projected to stabilize at a share of 10% of all department store sales for the sector.
Over the years, the company has been the subject of takeover rumours, which have largely gone unsubstantiated. As the Canadian market continues to evolve and faces more competition from large, mostly US-based retailers, these rumours will persist but, for the time being, will likely be balanced by HBC's more than 330-year strong tradition of being at service to the Canadian public.
The company's "HBC Foundation" was created in 2004 to represent all of these charitable efforts, which focus on three areas: healthy families, wellness, and education. Results include the raising of over $25 million to date for cystic fibrosis patients, contributing more than $16 million to the Canadian Cancer Society, and the annual Zellers charity gift box program, to name but a few.
The HBC "History Foundation" is active in the sharing of 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.
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).