chrisleithner.ca

Leithner Letter No. 65
26 May, 2005

The natural effort of every individual to better his own condition ... is so powerful a principle, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.

Adam Smith
The Wealth of Nations (1776)

[We are hampered] by a set of unprincipled agents of government on one side and by a speculating nobleman on the other – equally, it appears, bent on the same subject – to exclude Canada and Canadians from this too famous trade. ... The H.B. Company, you see, [we] intend to oppose seriously. I hope the ancient North West spirit will rouse with indignation.

William McGillivray
Letter to Duncan Cameron (1811)

It is, however, more than doubtful whether ... collectivism has raised our moral standards, or whether the change has not rather been in the opposite direction. Though we are in the habit of priding ourselves on our more sensitive social conscience, it is by no means clear that this is justified by the practice of our individual conduct. It may even be ... that the passion for collective action is a way in which we now without compunction collectively indulge in that selfishness which as individuals we had learnt a little to restrain.

Friedrich Hayek
The Road to Serfdom (1944)

In 2004, a nationwide contest organised by the Canadian Broadcasting Corporation voted Tommy Douglas the “greatest Canadian of all time.” More than 1.2 million votes were cast; and in feature programs broadcast on CBC Television, advocates made their cases for the Top Ten nominees. After a Final Showdown and one last chance to vote, the result was announced on 29 November.

The CBC’s biography of Douglas lauds “his staunch devotion to social causes.” Most notably, Canada’s ‘“father of Medicare’ stayed true to his socialist beliefs – often at the cost of his own political fortune.” Born at Falkirk, Scotland, in 1904, after nine years as a Member of Parliament (Regina, Saskatchewan, Co-operative Commonwealth Federation) in the House of Commons, early in 1944 Douglas was elected leader of the provincial CCF in Saskatchewan. Later that eventful year, “with interest in socialism peaking in post-war Canada [the CBC apparently thinks the war ended a year sooner than it really did], the party won a landslide victory ... and Douglas found himself an instant celebrity as the head of North America’s first-ever socialist government. Over the next 18 years he weathered Communist fear campaigns and a province-wide doctor’s strike. Elected to five terms, he introduced Saskatchewan residents to car insurance, labour reforms and his long-standing dream of universal Medicare.”

Douglas was not a bad man. Like most CCF’ers and social gospellers, he was a sincere Christian who espoused and implemented many destructive ideas. Returning to Ottawa in 1964 (as the leader of the CCF’s successor, the New Democratic Party), his final – and only sensible – major stand occurred in October 1970 when he voted against the application of the War Measures Act in Quebec. Unfortunately for Canadians’ liberties and living standards, “Tommy Douglas’s legacy as a social policy innovator lives on. Social welfare, universal Medicare, old age pensions and mothers’ allowances – Douglas helped keep these ideas, and many more, watching as more established political parties eventually came to accept these once-radical ideas as their own.”

This choice and its justification speaks volumes about contemporary Canadians. So too does the CBC’s list of Top Ten Canadians (the Top 100 is indescribably dreadful). It contains three other politicians (Pierre Trudeau, #3; Lester Pearson, #6; Sir John Macdonald, #8); a humanitarian (Terry Fox, #2); researchers and inventors (Sir Frederick Banting, #4; Alexander Graham Bell, #9); a sportsman (Wayne Gretsky, #10); a tedious windbag (Don Cherry, #7) and an insufferable scaremonger masquerading as a scientist (David Suzuki, #5). I applaud the presence on any such list of humanitarians, technological entrepreneurs and sporting heroes. But I decry the presence of politicians (especially overt socialists), windbags and ratbags. Most of all, I deplore the absence of self-made capitalists and businessmen: the Top 100 contains only one businessman, John Molson at position #92, of any description. Do Canadians think that prosperity is automatic, and that the increase – even the maintenance – of living standards is effortless?

If the list of Top Ten Canadians must contain four politicians (it obviously doesn’t), then I say replace the present crop with Sir Wilfrid Laurier, Ernest Lapointe, Thomas Crerar and Henri Bourassa. Much better, remove from the list all politicians (and windbags and ratbags) and fill the six resultant vacancies with Simon McTavish, William McGillivray, Sir Alexander Mackenzie and any three of the following: Charles Chaboillez, Simon Fraser, Nicolas Montour and Venant St Germain and Jean Etienne Wadin. Of these names, only Laurier’s appears anywhere in the Top 100 (at #43). The rest, it seems to Canadians, may just as well never have existed. The trouble is that if not for the last eight names on this alternate list then Canada, for all its subsequent faults and follies, would probably not exist today.

Some Truly Great Canadians

It is typically Canadian that the typical Canadian knows nothing about this latter group of eight nominees. Perhaps this is because these contenders were, by contemporary standards, archetypically untypical Canadians. They were arguably the most wildly daring and astonishingly successful men who ever operated a business enterprise in the New World. They were the founders and most significant owners of, and the driving forces behind, the North West Company.

The North West Company was never a company in the modern sense of the term. Rather, it was a series of partnerships, renegotiated every several years, among groups of capitalists, merchants and explorers. Some of its partners (and most of its clerks and almost all voyageurs) were French Canadians, but most were Highland Scots. When Simon McTavish struck the first known partnership (early records are scanty) at Montreal in 1774, the trade in furs – particularly beaver pelts – was North America’s biggest industry. It was also the only line of business of any significance in what had a few years before become the British colony of Quebec. At that time, apart from narrow populated strips along the St Laurence and the Atlantic seaboard (and another ribbon from Georgian Bay to Lake Superior and the southern tip of Lake Winnipeg charted by French merchant explorers), to Europeans the continent was mostly unknown. By 1821, when William McGillivray (Simon McTavish’s nephew) merged the last partnership into the Hudson’s Bay Company, the fur trade had grown massively. Relative to industry and agriculture, however, it had become much less consequential. But in the interim the North West Company had explored and brought the fruits of commerce to that portion – more than one-third – of the continent from Montreal to the Pacific and Arctic Oceans.

The Nor’westers’ impulse to discover new territories was not a dispassionate desire to extend the frontiers of human knowledge: it was the consequence of its organisational structure and the economics of the fur trade. Its profitability rested upon the expansion past depleted or lower-quality areas towards richer (in terms of the number and quality of animals) districts. More than anybody, the NWC’s partners created what the historian Donald Creighton later dubbed the commercial empire of the St Laurence (see The Empire of the St Lawrence: A Study in Commerce and Politics, University of Toronto Press, 1937, 2002, ISBN: 0802084184). Within fifteen years of its formation, more than three-quarters of the continent’s fur trade passed though the NWC’s books. Montreal was its centre, and its spokes extended to the Pacific (at its height, the NWC’s sphere of influence extended from Alaska to Oregon), the Arctic, Labrador, London, the Caribbean, New York and China.

The Nor’westers thus integrated a vast undeveloped area into an embryonic world economy. They established trade and the rudiments of the rule of law throughout practically all of what would eventually become Western Canada. They also did much more. They demonstrated that, more than anything else, it is the bonds of capital and commerce that unite and enrich – culturally as well as materially – Canada’s two founding peoples. They also showed that the ties of trade and enlightened self-interest could beget peaceful and mutually advantageous relations among Aborigines and Europeans. The men of the NWC, in short, discovered half a continent, built a business and a culture and set an example the likes of which North America had never seen before – and, alas, has never seen since. For these reasons, the Nor’westers richly deserve to be recognised as “the greatest Canadians.”

Geography, Commerce and Modern Canada

A transcontinental economy was the immediate result (and Canada’s eventual creation in roughly its present geographic form was the unintended consequence) of the North West Company’s drive for profit. If you have roamed the vast territory the Nor’westers traversed, recall the terrain between Montreal and the Lake of the Woods. Remember as well the very different topography from Lake Winnipeg into central Saskatchewan and Northern Alberta; the formidable barrier of the Rockies; the labyrinth of the Columbia-Kootenay, the violent rapids (before engineers tamed them) of the Fraser and the vast delta of the Mackenzie (yes, they are named after the Nor’westers who discovered and explored them). In a great arc beyond Montreal, interlocking streams and lakes provided the habitat of fur-bearing animals. They also provided a suitable highway to transport the furs to markets where much would be paid for them. The geographic and economic nature of the fur trade thus prompted the Nor’westers to become traders and explorers.

It was a very arduous business. If you have ever rowed in a racing shell, remember your exhaustion after a short period on a sliding seat with a strike rate of forty to the minute. If you have ever carried two heavy valises a hundred metres, recall the aching sensations in your arms and chest. Bearing these things in mind, consider another basic fact of life for the partners and employees of the North West Company. Because the Hudson’s Bay Company, an English firm (albeit staffed on the ground mostly by Orkneymen and Shetland Islanders) with a royal charter and accompanying privileges, was granted a monopoly over all trade to and from Hudson’s Bay; the most direct route between Britain and the northwest was denied to any others who sought to trade furs with the Indians. Highlanders and Canadiens were therefore obliged to reach the northwest via a longer, dearer and more arduous route and means of transport. They paddled canoes and carried their trade goods and supplies from Lachine, on the western side of the Island of Montreal, to the remotest corners of North America. They were, bless them, no great respecters of authority.

The NWC’s large freight canoes (canots de maître) were up to 12m long, 1.5m wide and transported more than 3,500 kilos of supplies and trade goods. Crews of 10-12 manned them. From dawn to dusk – whilst the rivers, streams and lakes remained clear of ice – voyageurs paddled at the average rate of 40 strokes per minute. Normally, they stopped five minutes per hour and three or four times of day for a “pipe.” But sometimes, as when rival NWC crews met in the shallow waters of Lake Winnipeg, they raced all day and without interruption, their oars striking the water 60 times per minute. (The race to end all races involved Athabascan and Saskatchewan brigades and 40 hours of frenzied non-stop paddling before a bourgeois ordered them to stop.) That was not all. There were portages – short gaps between navigable stretches of water – that necessitated unpacking the canoes, carrying them and their contents to the next water and then reloading everything for the next leg forward. From Lachine, along the St Laurence, Ottawa and French rivers to Georgian Bay, there were 36 portages. (Between Lachine and the Height of Land a few kilometres from Fort William, which separates territories drained by the Great Lakes and Hudson’s Bay, there were more than 90.) The voyageurs then continued to the northwest through Lakes Huron and Superior, northwest again past the Lake of the Woods, still further to the northwest past Lake Winnipeg and through the winding streams of the Prairies, northwest to the Athabaska country (the upper Mackenzie River basin), and finally either west and then southwest across the Rockies to the Pacific or north to the Coppermine and the Great Slave Lake. An express canoe could often reach Fort William (today’s Thunder Bay, named in honour of William McGillivray) 18 days after leaving Lachine. The incentives of 18th century commerce put to shame today’s “publicly owned” Canada Post.

Immutable geography and the gravitational pull of commerce – the establishment, in other words, of east-west trading routes – set in train a series of developments that culminated in the British North America Act and the founding of modern Canada (see in particular Harold Innis, The Fur Trade in Canada: An Introduction to Canadian Economic History, University of Toronto Press, 1936, 1999, ISBN: 0802081967; see also his Staples, Markets, and Cultural Change: Selected Essays, McGill-Queen’s University Press, 1995, ISBN: 0773512993). Once the Americans crossed the Appalachians, they could proceed to the Rockies reasonably easily. But Canadians were not so fortunate. Sir Walter Scott said “I am a Scotsman; therefore I had to fight my way into the world.” French Canadians could readily understand the sentiment. The Scots and Canadiens of the NWC had to paddle and portage their way across a roadless land – nothing more than tracks existed until rails were laid in the 1880s, and in many parts sealed roads had to wait until well into the 20th century – all the way to the Pacific and Arctic.

One particularly enterprising Nor’wester, Sir Alexander Mackenzie, reached both oceans (the Arctic in 1789 and the Pacific in 1793) more than ten years before the Americans Merewether Lewis and William Clark dipped their toes into the Pacific. Commerce and profit, it is imperative to emphasise, drove Mackenzie and the Nor’westers. They recognised these discoveries’ geographical and navigational significance; but because they did not immediately yield furs and profitable trade routes, Mackenzie and his colleagues regarded his discoveries as failures. In sharp contrast, a statist quest – America’s pursuit of its “Manifest Destiny” – spurred Lewis and Clark. No matter how much they ignore and deny it, the fact remains: Canada’s roots are more entrepreneurial – and America’s are more mercantilist – than the inhabitants of either country realise.

Highland Scots, French Canadians, Métis and Indians

The story of the North West Company is also the story of culture as well as commerce. In particular, it is the story of a pragmatic, mostly tolerant – and profitable – liaison among dispossessed and underprivileged groups. In that respect it holds valuable lessons for our day. Highland Scots had been driven to Canada by the extinction of their way of life during the Clearances and after the Jacobite rebellion of 1745-46. In the wake of military defeat, France had abruptly abandoned its colonists in 1759-60. Without the Highlanders, many of whom shared a language with United Empire Loyalists and a religion with Canadiens, these two latter groups might never have united politically. In the early days (later it was the Irish), Highlanders provided the essential social cement.

They first learnt to do so in Montreal. In London, the language of the North West Company was English. In Montreal and points north and west, however, it was mostly French. William McGillivray was the NWC’s first clerk whose mother tongue was not French, and during his apprenticeship he kept records in that language. And because virtually all voyageurs spoke French, and those Indians who knew a European language also tended to speak French, so too on their long trips into the interior did most bourgeois (including Simon McTavish). The Marquis, as he was often called, successfully avoided marriage until his 43rd year; and when he did marry it was to the daughter of his old friend Charles Chaboillez. A Presbyterian minister performed the ceremony, but McTavish also maintained a pew for his wife in (and more than once set foot inside) a Roman Catholic church. In both respects, he followed the sensible practice adopted by many of his fur-trading colleagues. Finally, not just the commercial but also the social life in well-to-do Montreal circles of McTavish’s day was conducted in both languages.

The intense loneliness of the wintering partners, the men who remained in the trading posts during the trapping season, also manifested itself in pragmatism and tolerance. Most importantly and enduringly, there were many marriages “according to the custom of the country” with Indian women. These marriages and their progeny were so numerous that they created a “New Nation” – the Métis of Red River and the prairies.

Equally importantly, and unlike agriculture, the fur trade also encouraged co-operation between Europeans and Aborigines. Much has been written about the importation of liquor into the northwest; about its role as a means to grab the Indian trappers’ bounty; and about how it debauched a civilisation. Even more has been written (mostly by sanctimonious Canadians) about the different fates of native peoples on either side of the border. The Americans militarily conquered their frontier and the Indians who inhabited it; in particular, the 69 major attacks of the U.S. Cavalry, the vanguard of farmers and pastoralists, verged upon genocide. To the Americans, aborigines were literally in the way. In diametric contrast, the Canadian fur trade not just recognised – it required – Indians as long-term partners: only the aborigines had the local knowledge and manpower to harvest the furs the Europeans coveted.

Much less frequently noted is the economic reality that the relationship between Europeans and Indians was premised on both sides upon a shrewd assessment of self-interest. The Indians were able to exchange nearly worthless pelts (they killed the animals mostly for food) for much more valuable items such as implements, guns, blankets – and, yes, alcohol. Europeans, on the other hand, received beaver and other pelts at a small fraction of their purchasing power on the London market. Although rum, brandy and tobacco were essential trade goods, the traffic in guns, implements and blankets predominated at most posts. And very rarely is it noted that although the HBC and NWC fought one another like rival street gangs, they never shot their customers.

Further, native peoples quickly realised that they controlled another major requirement of the fur trade. The NWC (and later the HBC, when it finally roused itself) required tons of food along its routes. To preserve their monopoly over the buffalo, an essential foodstuff, Indians (and later Métis) took steps such as burning scrub from land surrounding the trading posts to keep the herds in their territories. Similarly, aborigines were well aware of their significant status as middleman, and so declined to transport the traders inland or help them to build canoes. The Canadian fur trade corroborated an insight of Britain’s pamphleteer of laissez-faire capitalism, Richard Cobden: “I see in the [principle of voluntary exchange and free trade] that which shall act on the moral world as the principle of gravitation in the universe, drawing men together, thrusting aside this antagonism of race, creed, and language, and uniting us in the bonds of eternal peace.”

In sharp contrast, Canadian governments have, deliberately or otherwise, repeatedly created severe ethnic and religious discord. It was the high-handed actions of the Dominion in far-off Ottawa that provoked Louis Riel and the Métis in 1870; and it was the broken promises of government that generated Riel’s second uprising in 1885 and the Manitoba language controversies of the 1890s (and 1980s). In 1916, it was the government of Ontario that dictated the terms under which French-speaking people in that province might receive schooling in their mother tongue; in 1917 and again in 1944, it was the Dominion Government that determined who would fight overseas; and during both wars, it interned Canadians of “enemy ancestry.” Since the late 1950s Canada’s élites have bastardised governments into instruments of economic warfare; and during the 1980s and 1990s they enshrined plunder into the Constitution. Canada ’s history tells us those individuals who speak different languages, practice different religions, etc., tend to live among one another relatively peacefully. But as soon as one group captures the organs of government and attempts to impose its views upon others, strife follows as night follows day.

The Management of Capital

The story of the North West Company is the story of long and lengthening trade routes and of onerous capital requirements. It is therefore the story of the necessity to increase the efficiency of operations more quickly than the amount of capital required to finance those operations. When the posts on Georgian Bay and Lake Huron were the most distant outposts of the fur trade, voyageurs could make a round trip within a single season. As soon as the spring ice cleared sufficiently at Lachine, they departed with trade goods, swapped them for furs and returned with the furs – just before the rivers and lakes froze in the autumn.

But the search for new and better sources of furs constantly drew them further north and west. As the routes lengthened, it became necessary to develop trans-shipment infrastructure on Lake Superior. Now two sets of canoemen were required: one (les allants and venants) ferried trade goods and furs between Lachine and Fort William; and the other, which lived for several years at a time in the interior (les hommes du nord), carried them between the Lakehead to points as distant as the Athabaska and Pacific (5,000 kilometres from Montreal). This arrangement also required wintering partners to organise trading in the interior, and more executive and administrative staff in Montreal to manage the business and arrange the larger and ever-longer credits. As a result, transport costs rose and stock turns fell; accordingly, risk and the cost of credit inexorably rose. Most but not all fur trading partnerships (which tended to amalgamate into larger partnerships such as the NWC) found enough capital to maintain warehouses and clerks in Montreal, and to pay, equip and feed their clerks and voyageurs. All this was in addition to the finance of trade goods and the expense of preparing the furs for sale and shipping them to England.

It therefore took at least 18 months – and sometimes as long as three years – for the NWC’s capital to earn a return (the HBC’s stock turn, on the other hand, was seldom more than one year). It took this long, in other words, to purchase manufactured goods on credit in England or rum in the West Indies, ship them across the Atlantic to Montreal, transport them on large canoes from Montreal to Fort William and on smaller craft from the Lakehead to the interior; to barter these goods with the Indians, who had trapped beaver and other furs; and then to transport furs in this three-stage process to London where the furs were sold and the credit repaid. The economics of the fur trade meant that the Nor’westers would have to pay much for credit (the American uprisings, war of 1812 and Napoleonic Wars did nothing to make it cheaper) and thus provided an incentive to rely as much as possible upon their own devices and capital.

In this respect the Nor’westers displayed characteristic grit and enterprise. They built the first rudimentary locks on the Great Lakes; they invested £12,000 “to make Yonge Street a better road” so that goods could be shipped in winter from York (now Toronto) to Georgian Bay; and they eventually built a fleet of schooners to ferry goods along Lake Superior. Many voyageurs and wintering partners could scarcely read and write, but they subsisted expertly from the country through which they travelled. Given a meagre supply of wild rice and dried buffalo meat (both produced in the interior), and pausing only when absolutely necessary to fish, over the years they required fewer and fewer supplies from Montreal. Hence they could travel longer distances before the water froze, their canoes could carry more trade goods and more furs could be bartered. Nor’westers, then, were excellent managers of working and fixed capital. Their accounts from 1780 to 1815 or so showed it: during these years they earned total net profits of approximately £1.2 million, and an investment of £800 in the founding partnership grew to £16,000 – an annualised compound return of 7.6%. (If that sounds paltry, remember that the British economy grew at a rate of 1% per annum during these years. Also note that, among other things, these profits seeded the Bank of Montreal. For roughly 200 years, it has been one of the continent’s most significant – and briefly its largest – financial institutions.)

The Management of Incentives

Major organisational handicaps burdened the NWC: its relatively short-term partnership agreements; the increasingly long trade routes; and the practice of dispersing capital at the end of each year’s business (joint stock companies and the concept of retained earnings were virtually unknown at this time in Canada). Compared to the Hudson’s Bay Company, which monopolised the shortest trade route to the northwest and bade the Indians to come to it, the NWC possessed major competitive disadvantages. It countered them by organising itself quite effectively. Most importantly, it shared rewards with its employees. It gave them something the HBC had long denied its staff: the incentive to exercise initiative, accept sensible risks and generate results. Only in the final years of the 18th century, when the HBC began to transform itself from a feudal royal monopoly to a mercantilist royal monopoly, could its inherent cost advantage become decisive.

Based in London, the HBC was a rigid hierarchy whose rules and regulations circumscribed its employees’ every action. Innovation was discouraged and sometimes punished (the HBC was renowned for the regimen of floggings it adopted from the Royal Navy). Initiative was rewarded only by the slight possibility that some day the employee might advance a rung in the bureaucratic ladder. Workers were chosen for their willingness to work cheaply, endure privation and boredom – and above all, follow orders without question. In sharp contrast, the NWC’s wintering partners were quasi-independent middle managers responsible for trading operations. They and the Montreal-based partners (who organised warehousing, shipping and finance) met for a few days annually – time was at a particular premium for those who travelled the longest distances – at Fort William in order to exchange information, set policy and divide profits. Clerks were chosen for their entrepreneurial style (“the ancient north west spirit”), were granted real responsibility, performance-based pay and a reasonable chance to become a partner.

The men drawn to the NWC were staunch individualists. Only in the opening years of the 19th century, as the HBC began to build a string of forts, trade in the interior and offer its employees better terms – i.e., mimic the Nor’westers – did cracks appear in the NWC’s organisational edifice. Increasingly effective competition from the HBC depressed the profit margins of both organisations. But the one did not know the extent of the other’s difficulties. More importantly, the NWC’s wintering and Montreal-based partners were insufficiently aware of the other’s difficulties (the very long distances, remember, severely limited the time they could converse face-to-face and greatly extended the time required to correspond). The wintering partners, who suspected that the NWC’s troubles stemmed from slackness and profligacy at headquarters, began to resent their privations and became more critical of the Montreal partners. But the winterers were unaware of the ever more onerous terms of financing with which the Montrealers had to cope. At its severest, the tensions erupted into divorce – most notably, Sir Alexander Mackenzie’s XY Company (named after the markings on its packs) that briefly competed fiercely with the NWC until it rejoined the fold.

Evading Monopoly and Unthinking Government

The story of the North West Company is, above all, the story of continuous and gallant struggle against entrenched, arrogant and privileged monopolies – public and private. The “private” monopoly was the Hudson’s Bay Company and the Selkirk settlement at Red River. The public monopolies were the Crown and the U.S. government.

In 1670, Charles II granted to the “Governor and Company of Adventurers of England Trading into Hudson’s Bay” ownership of the land (and animals and people) and a monopoly over the trade to and from all lands drained by Hudson’s Bay. In exchange, they agreed to explore this territory and, if possible, find the fabled Northwest Passage. For the next 125 years, the HBC vigorously defended its monopoly – but did little trading and virtually no exploring. It sent a few of its “servants” (the HBC was a rigidly stratified, almost medieval, organisation) inland from Fort Churchill with instructions to persuade Aboriginal trappers to carry their furs to the Bay. But in all that time it did little more. In sharp contrast, England’s rivals showed much more enterprise and flair. The traders-explorers of New France built a string of forts and thriving trade routes from the King’s Posts on the Saguenay to the Great Lakes and the Saskatchewan. The Brits’ “strategic plan” bade the Indians to come to them; the French, on the other hand, came to the Indians. The Treaty of Paris (1763) ended the Seven Year’s War – and also French exploration and trade in the northwest. But after a brief hiatus, Highland Scots and Canadiens saw the opportunity, stepped into the vacuum and soon expanded what the French were obliged to abandon.

After the formation of the North West Company, its traders occasionally encountered Bay men and leaflets threatening severe punishment against anyone who violated the HBC’s monopoly. The Nor’westers ignored the bullying, confident that they had inherited not only the trade formerly undertaken by the agents of New France but also the right to the rewards of their strenuous efforts. They did so despite growing provocations (the Nor’westers, it must be said, were hardly pacifists and gave at least as good as they got). By the beginning of the 19th century, their enmity was at the brink of open warfare.

The Montrealers had previously faced an equally severe threat from other arrogant monopolies. The extension (in the Quebec Act of 1774) of Quebec’s boundaries to the Ohio River had helped to deepen the divide between Britain and her rebellious thirteen colonies. Before the troops of the Continental Congress marched upon Montreal in 1775 (they occupied the town over the winter but attracted next to no converts to their cause), local authorities dumped its supply of powder and guns into the St Laurence. And in 1776, and although the colony was free of rebels, the authorities took another draconian step: they prohibited private shipping on the Great Lakes. That ban lasted until 1784.

Both measures imposed great hardships upon the Nor’westers. There was little danger, its partners pleaded, that rebels might capture supplies transported across the Great Lakes. But no matter: for the better part of a decade they were obliged to take longer and more costly and arduous routes to and from the northwest. Further, in the mid-1770s the trade goods most valued by the Indians lay at the bottom of the St Laurence. As far as British and Canadian governments are concerned, in other words, no good deed goes unpunished: the Crown’s local representatives “rewarded” the inhabitants of a loyal colony by menacing and shrivelling their major source of income. Scots traders and merchants soon realised that they had much more in common with their French Canadian counterparts than with the British military and civil authorities. Quebec’s affairs, reflected one merchant, were “overwhelmed by every kind of confusion, particularly in commercial matters, justice being administered by a compound of English and French laws and tinctured with the absurdities of both.” More than two centuries later, plus ça change, plus c’est la même chose.

But British indifference and American hostility had not run their course. The Treaty of Versailles (1783) and the Treaty of London (Jay’s Treaty, 1794), which ended the war between Britain and the U.S. and established the terms of their commercial relations, included adjustments – to put it mildly – to the boundary between British and American territory. Indians who had remained loyal to the Crown were betrayed and left to their own devices; and Canadian fur traders were increasingly excluded from American territory. It soon became clear that only American fur traders could operate south of the line (Americans operating from Montreal had previously competed with the NWC). One, John Jacob Astor, would profit fantastically from that country’s quick embrace of a Hamiltonian (i.e., mercantilist) orientation towards the fur trade. These changes imposed high costs and severe constraints upon the Nor’westers. Several of their major inland centres (including the biggest, Grand Portage) were on the American side of the line. Accordingly, these operations relocated to British territory – most notably, Fort William.

And then came the delusions of Thomas Douglas. No ancestor of Tommy’s, this Douglas was Baron Daer and Shortcleuch and the Fifth Earl of Selkirk. Two events influenced this Scottish aristocrat’s formative years. The first was a raid by the American privateer, John Paul Jones, upon his family’s home. Though there was no bloodshed or brutality, the young Selkirk found it a frightening experience – and in later years believed it left him with a dislike of Americans that he never wholly overcame. The second was his interest in the Highlands and his shocked reaction to the Clearances. As a boy he was in no position to help; but as he grew to maturity he began to develop schemes of emigration that might both restore hope to dispossessed people and strengthen Britain overseas.

After a few preliminary (and by his later standards, quite successful) attempts in Prince Edward Island and Upper Canada, Lord Selkirk gradually fixed upon Red River (present-day Winnipeg and its environs) as a suitable site for a major agricultural settlement. By 1808, the loss of markets in Europe as a result of the Napoleonic Wars had seriously reduced the price of HBC shares. In July Selkirk began to buy as many as he could find. He did so individually and also jointly with Sir Alexander Mackenzie. This NWC partner’s objective – though Selkirk did not know it at the time – was to merge the HBC and NWC on terms favourable to the NWC. Selkirk never accumulated anything close to a controlling interest in the company, but he gained a voice. And his influence upon the HBC was stronger than the NWC’s. Accordingly, early in 1811 Selkirk proposed that a large tract of land at Red River to be used as an agricultural settlement, be granted to him.

This threatened the Nor’westers. It was therefore a temptation that the HBC could not resist. At first, the NWC’s partners did not take Selkirk’s proposed settlement seriously. But they soon recognised that if it succeeded – or was even attempted – then it could gravely weaken their commerce with the northwest. Land that is cultivated can support neither fur-bearing animals nor buffalo or the Indians who hunt them. Similarly, agricultural land has no place for the hunting and trapping Métis. Largely aligned with the NWC, by now they had lived at Red River for three generations. Like good Lockean liberals, they had mixed their brains and labour to wrest wealth from the land, which they regarded as theirs. Moreover, Red River sat astride – and potentially controlled access to and from – the NWC’s routes into the rest of the northwest.

Accordingly, the Nor’westers attempted to block the grant. But they were too late: in June 1811 Lord Selkirk and the HBC’s board of directors put their seals to an agreement. In return for his promise to found an agricultural settlement and some other considerations, Selkirk was granted 75 million acres (an area five times the size of Scotland). For 10 shillings, the settlement severely unsettled the Nor’westers. From their point of view, the Red River colony was utterly misconceived. Economic autarchy among people living at the edge of the known world and who were completely unfamiliar with techniques required to wrest produce from the local soil and were ill equipped to withstand the region’s severe winters and spring floods – it was just plain foolhardy. It was also cruel to send women and children to a place where, at that time, only one European woman had ever set foot.

Selkirk’s scheme was, indeed, a tragedy of such proportions that the suffering of participants became its dominant legacy. The settlers reached Hudson’s Bay too late in the season to undertake the overland journey to Red River. But food and accommodation were scarce, and the Bay is among the world’s coldest places. By spring most settlers were either dead or incapacitated. After they reached Red River their suffering continued: wolves and blizzards killed their precious cattle; hordes of locusts stripped bare the meagre crops; and what the insects did not destroy, drought and then flood did. By comparison, the Clearances must have seemed benign. As one Nor’wester put it, Selkirk’s colonists were “victims sacrificed to the sinister views of a noble imposter.”

On more than one occasion, the NWC’s crews escorted groups of destitute Highland settlers from Red River to more suitable districts in Upper Canada. By 1815, all but thirteen families had abandoned the district. (One more group, organised by one of Selkirk’s subordinates, was promised “free land on which to grow bananas and other tropical fruits” in 1821. Entering Hudson’s Strait, they were trapped by ice. The youngsters danced on the icebergs to the light of the aurora borealis; and their parents began to wonder if the northwest really was a suitable place to raise tropical produce.) But no matter: populated or not, the colony was the focus of the mounting struggle between the NWC and the HBC. The fur, to make an awful pun, truly flew. Their brawl gravely weakened the HBC, reduced the NWC to the verge of ruin, precipitated their merger on the HBC’s terms, destroyed Lord Selkirk’s fortune and contributed to his premature death (within a few days of Sir Alexander’s).

The Ancient North West Spirit and Contemporary Canada’s Malaise

Canadian historiography written in English about the events after the Plains of Abraham is generally so dull that few sane people can bear to read it. The standard school fare used to be overwhelmingly political and legal history: the advent of responsible government (spiced, perhaps, with the uprisings of William Lyon Mackenzie and Louis Papineau); the road to Confederation and the rise and fall of the National Policy (rendered a bit more palatable by the roguish charm of Sir John Macdonald and the Gallic toughness of Sir Georges Cartier); the development of Dominion status and the patriation of the British North America Act. Today’s standard school history is equally dreary. It is also destructive: it is little more than the glorification of the welfare-warfare state and a litany of complaints against Europeans, men and capitalists (and preferably all three). In recent French-language historiography, the events of 1759-60 are given their due, as are the outrages committed by Ottawa since 1867; but otherwise, it seems, nothing much occurred before 1960. In either language, Canadian history bores Canadians to tears because received texts are boring, irrelevant and idiotic; and they are tedious and senseless because they excise from consideration the most fascinating – and important – aspects of Canadians’ history.

Why, despite what Americans wanted and British politicians expected, did the scattered and scanty populations of the prairies and British Columbia join the St Laurence? Did Canada sleepwalk into nationhood? Canadian governments and their court historians have worked tirelessly to obscure and erase the answer: individuals – extraordinary, to be sure, but certainly not politicians – create nations. They need not intend to do so: nations (Canada is an example) can be the unintended consequences of other human actions. The legal trimmings and philosophical justifications come later. Accordingly, the contention that politicians and constitutions create nations is a myth that, alas, has not been challenged since the French Encyclopaedists of the late-18th century propounded it. The northwest joined the St Laurence because its economic and historical ties and emotional sympathies lay there. The Nor’westers built these links. Their feats – and their frustrations – are Canada’s foundations. Ostensibly a forgotten Montreal trading company, the story of the North West Company is, in a nutshell, the story of Canada.

Commerce and capitalism, in short, underlie and underpin Canada. Yet today’s Canadians – certainly the plurality that regards Tommy Douglas as The Greatest Canadian Ever – indignantly reject this truth. But as Martin Masse demonstrates, the current Canadian identity, based upon interventionism, welfarism and protectionism, is a damaging fairy tale (The Socialist Wind from the South and also William Watson, Globalisation and the Meaning of Canadian Life, University of Toronto Press, 1998, ISBN: 0802042201). Masse concludes “Canadians do not distinguish themselves from the Americans by trying to become more socialist, since the Americans were there before. The real Canadian tradition is one of rugged individualism being slowly frittered away under the overwhelming influence of American collectivism. ... The Canadian identity that should be cherished and the Canadian tradition that should be upheld are based on individualism, small government and the free market. That’s what we were until the 1950s.”

The history of the North West Company corroborates and elaborates this conclusion. It also teaches three lessons. First, the handful of businesses that Canadians regard as “icons” are privileged and protected embarrassments. For most of their history, the Canadian National Railway, CPR and above all the Hudson’s Bay Company were creatures of the state. As such, they were necessarily artificial, inefficient and generally incapable of standing on their own feet. They have bequeathed to Canadians the damaging legacy that business (and “culture”) usually will and probably should depend upon the government. Equally baleful has been their underlying attitude: the importance of deference, protection and regulation, and of organisational (collective) survival at the cost of individual entrepreneurship and excellence. These have become lauded as “quintessentially Canadian” attitudes.

The HBC is probably the worst (and certainly the oldest) offender. Its royal charter bestowed it with numerous monopoly privileges and massive competitive advantages. Yet an intrepid group of self-made Montrealers, burdened by all manner of disadvantages, almost overtook it. Only under the most exceptional leaders, such as Sir George Simpson and Lord Strathcona, did the HBC resemble a business. As it was progressively shorn of its privileges, it was less and less able to cope. For decades it has resembled nothing so much as a pitiful animal that should be humanely put to sleep.

The second enduring lesson is that, like the partners of the NWC, today’s Canadians face not just “private” but also “public” monopolies. But unlike the Nor’westers, few Canadians realise this and most (recall the CBC’s list of Top Ten Canadians) would hotly dispute it. Ironically, the most powerful, entrenched, predatory and arrogant monopolies – i.e., the ones that harm Canadians most – are the “health,” “education” and other “public service” rackets first advocated by J.S. Woodsworth (who, curiously given Canadians’ worship of the welfare state, languishes at #100 on the Top 100) and created by a range of politicians including Tommy Douglas, John Diefenbaker, Lester Pearson and Pierre Trudeau.

The third lesson is that today’s Canadians also suffer at the hands of Lord Selkirk’s ideological descendants. More than most countries, Canada is plagued with well-meaning nobility who propose and impose utopian schemes that always require taxpayers’ money, usually fail (to their proponents, social programs never fail but are always “underfunded”) and often bring disaster. “The urge to save humanity,” said H.L. Mencken, “is almost always a false front for the urge to rule.” And so it will remain until Canadians realise that they are tyrannised by “unprincipled agents of government” on one side and a “speculating nobility” of welfare-warfare statists on the other. Each seeks to separate Canadians from the rewards of honest labour and brave risk-taking. Like William McGillivray, I hope that once again “the ancient North West spirit will rouse with indignation.” Surveying the list of most revered Canadians, I am not holding my breath. But dreams are eternal: “perseverance,” after all, was the Nor’westers’ motto and the ultimate source of their astounding success.

Chris Leithner


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