Hudson's Bay, USA
As foreign ownership looms, PETER C. NEWMAN looks back in this exclusive essay on 336 years in which the so-called Company of Adventurers sparked the birth of a nation -- yet 'missed just about every business opportunity that came its way'
PETER C. NEWMAN
From Saturday's Globe and Mail
Like totems sacrificed to the French Revolution -- the trophies melted down for coinage, the statues of angels torn out of cathedrals and tossed into the Seine -- Canada's corporate selloff accelerates unabated. Once safe-and-sound corporate idols such as Air Canada, Canadian National, Future Shop, Molson's, Tim Hortons, Shoppers Drug Mart, EnCana, Club Monaco and many others are now owned or controlled by U.S. investors. So it should be no surprise that next week this country's founding commercial enterprise, the Hudson's Bay Company, becomes a plaything of South Carolina financier Jerry Zucker.
It shouldn't be a shock, but it is, because for those of us who have studied the HBC seriously, it is difficult to separate company and country. This epic acquisition (for just over $1-billion) by an American takeover artist shatters a unique 336-year link between Canada and its founding transcontinental business empire.
An essential formative influence in Canada's evolution from colony to nation, the company exercised a profound impact on our economy, geography and psyches. Its presence made us Canadian. Even now that the once-glorious Company of Adventurers has become just one more department-store sacrifice to the 100-ton gorilla known as Wal-Mart Inc., its absence will be felt.
If the metaphor holds -- if historically Canada was indeed the HBC writ large -- its demise as a core Canadian institution does not bode well for our future in a global economy. Sell too many of our big-box companies and we cease to be players in the only league that counts.
Even in this context, assigning such significance to a department store that has been in the black only once in the past seven quarters may seem melodramatic. But warnings are not always obvious. The Bay's demise as a touchstone Canadian institution sends an uncomfortable message: If we continue to cast adrift all of our historic anchors and become mere squatters on our own land, it will too late.
The question will then become not whether this century belongs to Canada (as the previous one never did), but a more urgent query: Will Canada belong to the 21st century? That's a profound dilemma and the answer should worry us all.
We tend to play down our history, mainly because we have no Walt Disney to paint it with the textures and excitement it deserves. But the birth of Canada was no immaculate conception. It took guts galore to navigate the rivers in cockleshell birch-bark canoes, to tame the rocky land and plant the pioneer communities. As citizens of a loose federation of regions on the periphery of civilization, Canadians felt like marginal people with few core values to call their own.
The "Company of Adventurers of England Tradeing into Hudsons Bay" was there nearly 200 years before Confederation, to set an example. Its survival skills became Canada's dominant virtue.
Country and company helped one another to inhabit and then prosper in North America's frozen attic. Survival meant hanging on against all odds. Implanting in the national conscience that will to endure became the HBC's most pervasive legacy.
At the same time, the deference to authority fostered by the HBC's dominant presence on Canada's frontier became our state religion, and still is. This prevailing ethic of Canadians being eager to kowtow to anyone in command of any patch of wilderness was very different from the militancy of the itchy loners who populated America's extravagantly prosperous Wild West. The Yanks challenged authority and never deferred to anyone. About 69 Indian wars were fought on American soil that cavalry charges turned into killing fields. "Sniping redskins to watch 'em spin" was the slogan among the sharpshooters, who came perilously close to committing genocide.
That was not the Canadian way. We had no massive cavalry, no vigilantes, no Davy Crockett. No one would dare to claim aboriginal people were treated fairly on this side of the 49th parallel, but neither was slaughter government policy.
Humane considerations aside, the fur trade depended on its native labour pool to hunt and trap the animals. The natives exchanged furs, which were to them largely useless (they hunted strictly for food), for the rifles, copper kettles and signature Hudson's Bay blankets that lightened life in the wilderness.
The unofficial HBC motto was, "Never shoot your customers." Had it maintained such an enlightened attitude as a department store, it may not have had to sell out so ignominiously to the only substantial bidder.
"The shape of the indigenous Canadian imagination," concludes Abraham Rotstein, the University of Toronto economist who is the leading expert on the fur trade and Canada's identity, "took root in the experiences of the fur trade, both for the French period and after the Conquest.
"Voyageurs, rapids, the outlying frontier, courageous exploration of rivers, long portages, relations with distant Indian tribes, these and other features of the fur trade are echoed today in the Canadian self-image. The fur trade, more than virtually any other single experience, was the primary matrix out of which modern Canada emerged."
Beaver became the breathing equivalent of gold. What made the animals so valuable was not their fur but its fine, thick under-hair, which was turned into the felt used to make the beaver hats that became a high fashion item in England and on the Continent for several generations. Before the invention of the umbrella, beaver headgear provided an elegant way to keep dry, but more to the point, its wearers could be instantly placed within the social structure according to their choice of hats. (Incidentally, the lead fumes inhaled during the felt-making drove its practitioners into early senility; thus the saying "mad as a hatter.")
Another part of the beaver that sparked dreams of fortune in men's eyes were the pear-shaped glands located in the anal region: They contained an orange-brown alkaloid, Aspirin-like substance that cured headaches.
The Hudson's Bay Company strung a thin line of trading posts across the upper half of North America, which was all that kept out American annexationists pushing north. The inhabitants of these puppy bush settlements displayed individuality at their peril. The prevailing ethic remained deference to authority inside their ramparts and deference to nature beyond them. This attitude still determines what most Canadians do -- and, especially, don't do.
Arriving directly from the hard-bitten tradition of the Orkneys, the Shetlands and the Scottish Highlands, the early traders set out a primitive form of capitalism in the cold-frame latitudes of Hudson Bay. They stressed life's sombre virtues -- the notion that there was nothing more satisfying than a hard day's work well done and that the good man always earned more than his keep.
In dramatic contrast to the six-shooter individualism of the American West, the idea was to be careful, plainly dressed and quiet-spoken, close with one's money and tight with one's emotions. Flashes of pleasure and moments of splendour had to look accidental, never planned. Such a gloomy credo was carved into every Canadian psyche. Whatever our ancestry, as Canadians most of us still act Scottish in our reticence and rectitude. Blame the Bay.
"I adored the HBC," Sir William (Tony) Keswick, one of its last British governors, told me. "I'd have done anything for the company, within reason -- or without reason. It was a wonderfully romantic concern, and its people would have cut off their hands to help.
"We British are fanatically romantic about our history. The magnificent Prince Rupert [who restored Charles II to the British throne, and received the HBC Charter in return] was the company's first governor; our great Duke of Marlborough the third. [Nine generations after the original Marlborough, the family begat Winston Churchill who, when he retired from politics, accepted only one commercial directorship: as seigneur of the HBC.]
"The second -- the Duke of York -- gave it up only to become King of England. I've seen the minute book in which the Duke apologizes for not being at the next board meeting because he has just taken on the throne. I mean, that's absolutely honey to a Briton. You'd pay a dollar more for your $20 share if you could get that thrown in -- even if it has no practical merit."
Tony Keswick's enduring passion for the company was by no means unique. Some of its bachelor officers willed it their savings; one woman executive I met told me that she loved the company more than either of her husbands. Even the grumblers, fed up with their long, slow lives in some dreary posting, would vow that they were damn well going to retire early -- after only 38 years in the service.
The one emotion the HBC never inspired was neutrality. Native customers, feeling short-changed by its traders, insisted its initials should really stand for the Hungry Belly Company; their women accused the firm of masquerading as the Horny Boys' Club.
No one touched by the company's Darwinian will to survive remained unaffected. To be a Bay man was tantamount to belonging to a religious order.
Currently reduced to holding "scratch-and-save" sales, the Bay still behaves as though it once touched the hand of God. Throughout its history, it found comfort in the rumour that the members of the British Royal Family were major shareholders. The whispers became fact during a Canadian tour, when Prince Philip sidled up to then HBC governor Don McGiverin, and demanded: "How are we doing?"
The company eventually extended its mandate across one-12th of the Earth's land surface, with outposts in San Francisco and Hawaii. Its most dynamic personage was Sir George Simpson, a bastard by birth and persuasion, who from 1821 to 1860 ran the HBC as his private domain. Darting across his empire in a fleet of express canoes, he cheered up local factors by announcing his arrival with the loud help of an accompanying bagpiper named Colin Fraser.
The most puzzled observers of these musical interludes were aboriginal people, who had never seen or heard such a weird instrument. According to what was most likely an apocryphal story, a puzzled Cree reportedly told his chief that "one white man was dressed like a woman, in a skirt of many colours. He had whiskers growing from his belt and fancy leggings. He carried a black swan which had many legs with ribbons tied to them. The swan's body he put under his arm upside down then put its head in his mouth and bit it. At the same time, he pinched its neck with his fingers and squeezed the body under his arm, until it made a terrible noise."
Rings true to me.
Simpson also pioneered the notion of having a mistress in every fort. Native women were often co-opted into casual sexual relationships, though many liaisons resulted in "country marriages" that lasted a lifetime. (One bit of stray evidence of just how solitary the HBC men felt were letters I found sent to the company's mail-order catalogue division. Enthralled by the layouts featuring women's underwear, one lonely soul wrote away to order "the lady on the right hand corner of page 59.")
In 1870, Simpson's vast empire was sold to the newly confederated Dominion of Canada for £300,000 plus title to seven million acres of prime prairie land holdings. The HBC then established its dominant influence over Canada's Arctic, organizing the trade in fox pelts, and eventually manning 200 northern posts.
In western Canada, the retail trade was channelled into a half-dozen downtown department stores that eventually became the nucleus of a national merchandising operation. Even with Wal-Mart cutting deeply into its Canadian sales, the company still owned 568 outlets, selling goods worth $5-billion a year.
There were other ventures along the way, including purchase of a Hollywood film studio and, during the First World War, ownership of a mighty fleet of 300 merchant ships vessels that ran the gauntlet with essential food supplies and ammunition to France and Tsarist Russia. A third of them were sunk by German torpedoes en route.
While researching all of this, I interviewed more than 1,000 Bay men and women, and took on some of their coloration. So anxious was I to do them justice that I began to feel like a Blues Brother on a mission from God. But it wasn't easy.
The tragic fact is that, despite the regal sponsorship that gave it a running start, the HBC missed just about every business opportunity that came its way. Whenever an intuitive leap was required to advance the company into fresh and lucrative jurisdictions, its decision-makers opted for safety and survival. Despite its historical significance, the company turned out to be the most stunningly unsuccessful monopoly in Canadian history.
Although it owned one of history's most valuable land holding -- one-third of the still-to-be-explored northern part of the continent -- it allowed others to profit from that magnificent hunk of real estate.
Here was a company that dominated the world's fur trade for three centuries, yet never made a fur coat. Here was a company that pioneered the nation's transportation arteries (much of the Trans-Canada Highway runs along its canoe routes) and exercised a transportation monopoly over western Canada, yet when it came time to build the CPR across its territory, the HBC demurred.
Here was a company that had the only functioning infrastructure on the Canadian plains and owned seven million acres of prime land along the new railway route, yet did little to capitalize on that invaluable asset. Here was a company that established a worldwide market for its "Best Procurable" scotch, high-quality gin and rye, but instead of continuing to distill its popular house brands turned the business over to Seagrams.
The most obvious dereliction of opportunity was the failure to capitalize on the company's potential oil and gas reserves. In the mid-1920s, it still held mineral rights on 4.5 million acres checkered across the Prairies. Rather than exploit that invaluable asset, described by Fortune magazine as "an oilman's dream," the HBC leased the entire package to Marland Oil of Ponca City, Okla. (and its successor, Continental), retaining only a 21-per-cent interest.
By the late 1960s, the joint venture ranked as Canada's third-largest oil and gas producer, with 1,606 wells in production; its earnings were twice as high as those of the HBC itself, and its equity was worth four times as much, with the company receiving less than a quarter of the royalties.
If this series of spectacular missed opportunities doesn't qualify the Company of Misadventurers as a typical Canadian story, I don't know what does. But there is a lesson here: Survival is a lousy ethic because it kills risk, and thus the future. It was this reticent creed that paralyzed the HBC's corporate planners: They took occasional flyers, but never bet the firm.
One peculiarity of the Bay's management structure is that it was run by the ultimate absentee landlords, located in London. It took an unbelievable 264 years for the first HBC governor -- Sir Patrick Ashley Cooper -- to bother crossing the Atlantic in 1934, for a first-hand look at Hudson Bay, which had enriched his 31 predecessors who never made the journey.
His visit was not a success. Comfortably lodged aboard his tour vessel, he insisted on broadcasting a greeting from the King of England, from the ship's enclosed bridge. Since each settlement had only one radio receiver, inside the manager's house, none of the gathered native trappers heard the broadcast -- which was just as well, since very few of them understood English. When Ottawa objected to a businessman representing himself as carrying an official royal message, the ship's captain pulled the plug on Cooper's amplifier, so his greeting was never heard by anyone.
In significant contrast, the HBC's last Canadian president and chief executive officer is George Heller, the only head of the company who can actually skin a beaver. He was making his living by doing just that when he joined the company in 1952 as a lowly clerk-in-training at $200 a month (minus $50 for room and board).
Of the decade I spent writing my history of the HBC, I recall most vividly my final visit to Moose Factory, near the bottom of James Bay.
First scouted in 1671 by the audacious Pierre Radisson, the place was populated by ghosts. I spent most of my time in the company cemetery, walking among the tombstones and crosses, twisted into crazy angles by the permafrost.
It was beginning to snow a little and, as I stood in front of a tilted markers, I sensed the spiritual presence of the fur traders who had lived and died there. I felt them silently staring at me, their faces like those haunting slashes of pigment with which van Gogh portrayed the Borinage miners: flat eyes, prominent cheekbones, looks that betrayed not a glimmer of duplicity but a profound sense of accusation. They were dead men from a dead culture, their deeds and misdeeds long ago consigned to the dustbins where Canadians store their history.
Yet I could sense their curiosity: Why had their lives prompted so little attention, why had their names been ignored even in that crowded corner of obscurity reserved for Canada's unsung heroes? They had, after all, done everything that was expected of them and more. But the phantoms quickly vanished, and I walked back through a gathering snowstorm to the local Hudson's Bay store.
That night, I joined a burr of Bay men, trading yarns. They were drinking to remember the good old days, then drinking some more to forget them. These were the men who would gladly have sold the Bay blankets off their beds to maintain the Company's reputation. They missed the fur trade because it had been less a business than a way of life, an escape from the restrictive codes of civilization. Now, it was finished, and so were they.
Somebody mentioned George Simpson McTavish, a factor for the company who had spent 40 years at its most isolated posts. To break his seclusion, he had domesticated a mouse and discussed in great earnestness each day's events with the friendly rodent. He always travelled with a loaded pistol, not for defence, but to shoot himself in case he stumbled into a leg-hold trap and couldn't get back to his post. That's lonely.
Nothing happened to McTavish, except that his mouse died, but I couldn't get him out of my mind, trekking across some screaming stretch of wilderness, wondering when he might have to put the gun in his mouth.
Canada's backcountry where the HBC held sway was originally populated by many such "ordinary" men and women. They spent their lives in those obscure corners that poet Al Purdy located as being "north of summer."
Thinking and writing about these "ordinary men" as I did that long-ago day at Moose Factory, my memory twigged to a line in Shakespeare's Henry V, following the battle of Agincourt, when the King requests a list of the English dead.
"Edward the Duke of York, the Earl of Suffolk, Sir Richard Ketly, and Davy Gain, Esquire . . . None else of name," reports the King's herald.
"None else of name" -- the most devastating of epitaphs -- yet it fit most of the hard cases who lived and died in the service of the company. As the subsidiary of a Yankee coupon clipper's portfolio, the HBC will now vanish into the mists of forgotten history.
And nobody waved goodbye.
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