The company was founded as a result of the exploration of the region by Pierre Radisson and the sieur des Groseilliers in 1668–69 under the auspices of London merchants. The expedition's success in opening up the fur trade with the Native Americans prompted Prince Rupert, Charles's cousin, and others to appeal to the king for a charter. A preliminary charter seems to have been granted that year, but it was not until 1670 that the much-discussed permanent charter was granted to these “Gentlemen Adventurers trading into Hudson's Bay.” It conferred on them not only a trading monopoly but practically sovereign rights in the region specified as that drained by rivers flowing into Hudson Bay. The extent of this vast region was not then known, nor was it fully known for about a century.
The company's monopoly was not respected by other English traders. The Great Company, as the Hudson's Bay Company was known, did a highly profitable business, but Hudson Bay was claimed also by the French, who sent expeditions against the posts that recently had been established near the mouths of the Moose, Albany, Severn, and Nelson rivers. Warfare went on, almost regardless of whether there was peace or war between the two nations in Europe, until after the Peace of Utrecht (1713–14). The French on the whole were more successful than the British in the conflict over control of the posts, but ultimately all of Hudson Bay was recognized as British territory. Rivalry, however, continued between the French traders from Montreal and Quebec and the Hudson's Bay men.
The Great Company was content to remain at its seaboard posts and made little effort either to send traders inland or to search out the Northwest Passage. The only notable early voyages made westward that are known today were those of Henry Kelsey, the disastrous attempt of James Knight in 1719 to find by sea the Northwest Passage and fabled gold mines, the expeditions of Anthony Hendry (1754), and the journey of Samuel Hearne across barren grounds to the mouth of the Coppermine River in 1771, which definitively proved that there was no short Northwest Passage out of Hudson Bay. The company was harshly criticized in the middle of the 18th century, chiefly because of its failure to discover the Northwest Passage.
Rivalry with the North West Company
With the transfer of Canada from France to England by the Treaty of Paris in 1763, new competition developed in the lands nominally held in monopoly. Scotsmen had assumed a large role in the Montreal fur trade, and their trade cut into the declining returns of the Hudson's Bay Company. Out of the combinations of these Montreal merchants grew the North West Company, which was to be the chief rival of the older company. The Hudson's Bay men were stirred out of their lethargy: Samuel Hearne founded Cumberland House on the Saskatchewan River in 1774, and thereafter the Hudson's Bay Company took a greater interest in the West.
Other difficulties beset the company. In 1782 a French naval expedition took Fort Prince of Wales, on the Churchill River, one of the most important company posts. It was returned and became Fort Churchill, but trade there and at York Factory, the other great eastern post, declined. Brisk rivalry with the Northwesters (as the traders of the North West Company were known) in the West did not turn to the advantage of the Hudson's Bay Company. Company policy apparently did not encourage exploration, and the great geographer, David Thompson, left it to join the Northwesters.
The whole policy and nature of the Hudson's Bay Company was altered when the earl of Selkirk gained control after 1808. His scheme to colonize Scottish and Irish farmers on company lands led to the Red River Settlement trouble, which brought disaster to the company. The ruinous and bloody rivalry was brought to an end by the amalgamation of the companies in 1821. The name of the older company was retained.
The amalgamation marked the beginning of a period of true monopoly. The new united company virtually had absolute rule over a vast territory that extended from the Atlantic to the Pacific, since all of Canada except the settled eastern provinces was leased to the company. Parts of the United States, especially the Columbia River country, were subject to joint Canadian and American occupancy, but virtually were under company rule, especially during the long tenure of John McLoughlin, who acted as administrator there. The governorship (1821–56) of Sir George Simpson marked the peak of the company's fortunes.
In 1857 the company was subjected to a parliamentary investigation. Although the company trade privileges were renewed, its position was not secure. In 1863 the stock of the company was bought up and reissued by the International Financial Society; the stock passed from a few to many holders. This internal reorganization had a vast effect on the company.
The company also was changed from without, particularly after confederation (1867). Opponents were able to challenge successfully its monopolistic operations. In 1869 the company territory was by governmental order transferred to Canada in return for £300,000. The nature of the company was thereafter entirely different.
It began to change from being solely a fur-trading organization and eventually became a gigantic corporation of almost innumerable interests. The sales of company lands brought in much money. For many years (1889–1914) Lord Strathcona was governor. It was after his death that the real expansion of the company into retail trade and varied manufacturing took place, in the administrations of Sir Robert Molesworth Kindersley (1915–25) and Charles Vincent Sale (1926–30). In World War I company ships were used as transports and the company rendered great service to the war effort. In 1930 the company was split up: the Canadian stores became a separate organization, and the London portion once more turned to the fur trade. Company headquarters were transferred from England to Canada in 1970, and most enterprises other than retail stores were sold off in 1983.