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HBC Coat of Arms, 1756

It’s easy to think of Hudson’s Bay Company, its role in the fur trade and the history of Canada in isolation.  But that is a distorted view. In fact the roots of HBC are firmly planted in the development of modern commerce as it occurred in the 16th and 17th centuries.  At that time the economies of the European powers were in a state of transition, evolving from small family firms and private networks of commercial activity into large national and multinational enterprises established on the “modern” principle of capital recruited on the open market.

The word company itself hints at this.  Derived from the Latin cum, meaning “with”, and panis, meaning “bread”, it originally referred to those “with whom one broke bread”, i.e. one’s extended family. Early companies that extended beyond the family retained much of the family firm’s characteristics.  The Merchant Adventurers of England – formed in the late 15th century to sell English woollens in Europe – referred to one another as “brothers”, their wives as “sisters” and were expected to worship together and subscribe to a strict code of moral conduct and numerous other rules.  Members paid a fee to join or inherited a membership, providing both labour and capital and assuming all risk.

The next type of commercial unit to emerge was the limited partnership, an association of both individuals and capital, which distinguished the liability of those who directed the enterprise from that of those who put up money alone.  The limited partnership slowly replaced the family firm as the dominant form of business in Europe.  Among its advantages was that of discretion: “silent” partners could partake in the business yet keep their interests quiet.  This was extremely useful to aristocrats and bureaucrats for whom engaging in commercial activity still meant serious loss of status or influence.

The third type of commercial organization to develop was the joint stock company.  It was an association of capital alone.  The company’s stock formed a single mass in which the partners of stockholders had shares.  And for the most part shares were not only transferable but could be traded and exchanged on the open market.  Joint stock companies became particularly popular in Britain.  After the Restoration of the monarchy in 1660 the business climate in Britain improved markedly.  In 1688 there were 24 such enterprises; between 1692-1695 no fewer than 150 others were founded.

Seal of the Muscovy Company,
1555
© Public Domain

Foreign trade was the natural sector for joint stock companies to flourish.  The expenses and risks involved in developing overseas trade of any kind meant that it was essentially unavailable to private individuals.  As early as 1553 the Muscovy (Russia) Company was established on the joint stock company model for the exploration of a possible North East Passage to Asia.  After a successful voyage to the White Sea in 1555 it received a Royal Charter from Queen Elizabeth I granting a monopoly on trade with Russia. In 1646, English merchants were excluded from Russia, but trade reopened in 1660.  The Company lost its monopoly in 1698 but survived, albeit not as a joint stock company, until 1917.  Henry Hudson’s first two voyages of exploration in 1607 and 1608 were undertaken on behalf of the Muscovy Company.  His third, in 1609, when he discovered the Hudson River, was for the Dutch East India Company.

 

Dutch East India Company
(VOC) logo, est. 1602
© Public Domain

In fact there were several East India companies.  Founded by the Royal Charter of Queen Elizabeth I on December 31, 1600,  the East India Company (popularly known as John Company) comprised the most powerful commercial enterprise of its day. Based in London, its influence reached out to all continents: it presided over the creation of British India, founded Hong Kong, and Singapore, and employed Captain Kidd to combat piracy. The Dutch East India Company (the Vereenigde Oostindische Compagnie or literally "United East Indies Company") was founded March 20, 1602,  when the government of the Netherlands granted it a monopoly to trade with the East Indies, a term formerly used to describe lands around the eastern Indian Ocean, roughly occupying modern day India and Indonesia.  The East India trade was extremely lucrative, based as it was on luxury items such as spices, silks, coffee, tea, porcelain and precious metals.  The French, Portuguese and Danish also had companies involved in the East India trade.

Other companies were formed for specific ends: the Levant Company (1581) to develop English trade with the Ottoman Turks; the Virginia Company (1606) to establish a permanent colony in North America and develop trade; the African Company (1660) to exploit the slave trade.  The last of the great trading companies, the South Seas Company (1711) was founded to profit from the trade with South America, but collapsed in 1720 in an orgy of speculation and fraud.

Like other companies with Royal Charters, HBC received a trading monopoly in exchange for furthering national aims such as trade, exploration and colonization.  But such monopolies were only effective if they were enforced.  In HBC’s case, its late entry into the interior, as well as the sheer size of its domain, made competition inevitable.   That reality led HBC to a successful strategy of absorbing its rivals, primarily the North West Company.

Viewed in this larger context, Hudson’s Bay Company is clearly a child of its times.  The fact that it is the only trading company to have remained in continuous operation from this era is a testament to its adaptability in the face of over three centuries of change.