The North West Company was a fur trading business headquartered in Montreal from 1779 to 1821, competing with increasing success, with the Hudson's Bay Company in what was to become the Canadian West. Tensions between the companies increased to the point where several minor skirmishes broke out and the two companies were forced to merge.
Although there are historical references to a North West Company as early as 1770, the first recorded involvement was a 16-share organization formed in 1779 that, for the next four years, was little more than a loose association of a few Montreal merchants who discussed how they might break the stranglehold the Hudson's Bay Company held on the North American fur trade. In 1783, the North West Company was officially created, with its corporate offices on Vaudreuil Street in Montreal and led by businessmen Benjamin Frobisher, his brother Joseph, and Simon McTavish, along with investor-partners who included Robert Grant, Nicholas Montour, Patrick Small, William Holmes and George McBeath.
In 1787 the North West Company merged with Gregory, McLeod and Co. following which Roderick Mackenzie joined the expanded organization, as did his cousin Alexander Mackenzie who would oversee the exploration of the western territories by the part of the group dubbed the "wintering partners" who did the actual trading for fur with the native trappers. Grand Portage, Minnesota, on Lake Superior, became the key exchange point for the North West Company where its western members met the supply canoes that came out from Montreal. This exchange point was relocated in 1803 to Fort William, also on the shore of Lake Superior, north of the American border. The business expanded to the country around Lake Athabasca that saw major explorations westward led by Simon Fraser, as well as Alexander Mackenzie and David Thompson. These men pushed into the wilderness territories of the Rocky Mountains and all the way to the Gulf of Georgia on the Pacific Coast.
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. In addition to Alexander Mackenzie, this group included Americans Peter Pond and Alexander Henry. 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, and a great many 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 voyageurs involved in the actual trading with natives.
In the north-west, the Company expanded its operations as far north as Great Bear Lake, and westwards beyond the Rocky Mountains. Efforts were made for several years 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 American Northwest Territory, where in 1795 Jacques Vieau established a trading post in Milwaukee, Wisconsin, with outposts at Kewaunee, Manitowoc, and Sheboygan. In 1796, in order 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. However, the North West Company was at a distinct disadvantage in trying to compete for furs with the Hudson's Bay Company, whose charter gave it a virtual monopoly in the northwest of Canada, where the best furs came from. Attempts were made to have the British Parliament change things, in particular to at least obtain transit rights for the company to ship the goods needed for trading for furs to the west. These efforts included a personal petition by Simon McTavish to Prime Minister William Pitt but all requests were refused.
A few years later, with still no resolution 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 the company's ship at Charlton Island in what is now Nunavut. There, they lay claim to the territory in the name of the North West Company. This bold move caught the Hudson's Bay Company off guard, and retaliation came in the ensuing years rather than the reasonable compromise McTavish had hoped might be negotiated.
There was intense competition between the rivals, and when Simon McTavish died on July 6, 1804, the new head of the company, William McGillivray, immediately set out to put an end to the five years of rivalry, which had escalated to a point where the master of the North West Company post at Great Bear Lake had been shot by an XY Company employee during a quarrel. McGillivray was successful in putting together an agreement with the XY Company in November of that year, wherein the old North West Company partners held 75 per cent of the shares, and the former XY Company partners the remaining 25 per cent. Alexander Mackenzie was excluded from the new joint partnership.
Under William McGillivray, more success came during the first decade of the 19th century as the North West Company expanded its operating territory. Competition with the Hudson's Bay Company was intense, however, and profit margins were squeezed. The North West Company branch in New York City had allowed the Canadians to get around the British East India Company's monopoly and ship furs to the Chinese market. Cargo ships owned by the North West Company conveniently sailed under the American flag, and doing so meant continued collaboration with John Jacob Astor. However, Astor was as aggressive as Simon McTavish had been, and an intense rivalry soon developed between him and William McGillivray over the Oriental market and westerly expansion to unclaimed territory in what is now the Columbia River basin in what is now the states of Washington and Oregon. Astoria's Pacific Fur Company beat the North West Company in an effort to found a post near the mouth of the Columbia, Fort Astoria. A collapse in the sea otter population and the imminent possibility of British seizure of Astoria during the War of 1812 led to its sale to the North West Company in 1813, resulting in an awkward situation when the HMS Racoon and its Captain Black arrived and went through a ceremony of possession, even though the fort was already ostensibly a British possession. Due to treaty complications of the Treaty of Ghent requiring the return of seized assets, putative ownership of the site was returned to the United States in 1817, although the fort, renamed Fort George by the North West Company, continued to operate until the Hudson's Bay Company's takeover and the replacement of Fort Astoria by Fort Vancouver.
The Canadian fur trade began to change in 1806, after Napoleon Bonaparte ordered the blockade of the Baltic Sea as part of the ongoing struggle between France and Britain for world dominance. Britain was dependent for almost all of its timber on the Baltic countries and on New Hampshire and Massachusetts. By then, however, tensions had also begun to escalate again between Britain and America, and in 1809 the American Government passed the Non-Intercourse Act, which effectively brought about an almost complete cessation of trade between the two countries. Britain then found itself totally dependent on her Canadian colony for its timber needs, especially the great white pine used for ships' masts. Almost overnight, timber and wood products replaced fur as Canada's number one export. Fur remained profitable, however, as it had a high value-to-bulk ratio, and in an economy short of ready money was routinely used by Canadian merchants to remit value to their London creditors.
By 1810 another crisis hit the fur industry, brought on by the over-harvesting of animals, the beaver in particular. The destruction of the North West Company post at Sault Sainte Marie by the Americans during the War of 1812 was a serious blow during an already difficult time. All these events only intensified competition, and when Thomas Douglas convinced his fellow shareholders in the Hudson's Bay Company to grant him the Selkirk Concession it marked another in a series of events that would lead to the demise of the North West Company. The Pemmican Proclamation, the ensuing Battle of Seven Oaks in 1816, and its violence, resulted in Lord Selkirk arresting William McGillivray and several North West Company proprietors, seizing their outpost property in Fort William and charging them with responsibility for the deaths of twenty-one people at Seven Oaks. Although this matter was resolved by the authorities in Montreal, over the next few years some of the wealthiest and most capable partners began to leave the company, fearful of its future viability. The form of nepotism within the company too had changed, from the strict values of Simon McTavish to something that now was harming the business in both its costs and morale of others.
By 1820, the company was issuing coinage, each coin representing the value of one beaver pelt. However, the continued existence of the North West Company was in great doubt, and shareholders had no choice but to agree to a merger with their hated rival after Henry Bathurst, the Secretary of State for War and the Colonies, ordered the companies to cease hostilities. In July 1821, under more pressure from the British government, which passed new regulations governing the fur trade in British North America, a merger agreement was signed with the Hudson's Bay Company, whereby the North West Company name disappeared after more than forty years in existence. At the time of the merger, the amalgamated company consisted of 97 trading posts that had belonged to the North West Company and 76 that belonged to the Hudson's Bay Company. George Simpson (1787-1860), the Hudson's Bay Company Governor-in-Chief of Rupert's Land who became the Canadian head of the northern division of the greatly enlarged business, made his headquarters in the Montreal suburb of Lachine.
Beyond the non-operating investors, these were some of the post proprietors, clerks, interpreters, explorers and others of the nearly 2,500 employed by the North West Company in 1799:
Lower English River:
Upper Fort des Prairies and Rocky Mountains:
Lower Fort des Prairies:
Lower Red River:
Michipicoten and the Bay:
Sault and Sloop "Otter":
In addition, the North West Company is also a case example in Oxford's John Roberts book The Modern Firm.