Special History:
The Environment and the Fur Trade Experience in
Voyageurs National Park, 1730-1870

Chapter One
The Rainy Lake Region in the Fur Trade (continued)

Historical Overview of the fur trade in the Rainy Lake Region

The Hudson's Bay Company and the American Fur Company, 1821-1842

The union of the Hudson's Bay Company and the North West Company in 1821 brought an end to the fierce competition and strife that had racked the fur trade in Canada for more than two decades. While the merger secured the Hudson's Bay Company monopoly from Hudson Bay to Lake Athabaska, the company still faced competition along the international boundary with the United States. Nowhere was the threat of competition more significant than in the Rainy Lake Region. Under the aggressive leadership of George Simpson, who joined the company in 1820 and quickly established himself as its guiding force, the Hudson's Bay Company recognized two sources of competition in the Rainy Lake Region: independent traders and the American Fur Company. [54]

The most important independent trader in the area was George Johnston. Based in Sault Saint Marie, Johnston established two posts in the Rainy Lake Region in 1821. One post was on Little Vermilion Lake (Crane Lake) in American territory and the other on Mille Lacs in British territory. Johnston put in charge of these posts one Joseph Cadotte and two men by the name of Paul and Bazil Beaulieu. The Hudson's Bay Company took stern measures to eliminate these competitors, first trading with the Indians for such bargain prices that they would not have any dealings with Johnston's men, and then purchasing all the wild rice around Rainy Lake in order to starve them out. Cadotte's force at Mille Lacs was attacked by Indians and driven back to American territory. Beaulieu's force, augmented by Cadotte's when they were already short of provisions, soon began to desert him. By 1823, Beaulieu himself and his handful of followers were starving. By the following year, Johnston's traders appear to have abandoned the Rainy Lake Region. [55]

The Hudson's Bay Company had a more formidable rival in the American Fur Company. Founded by New York financier John Jacob Astor in 1808, the American Fur Company initially entered the fur trade through a series of combinations similar to those under the North West Company. Notably, the Pacific Fur Company operated in the Far West, and the South West Company operated from the Great Lakes to the Mississippi Valley. Both concerns included a number of Canadian partners. During the War of 1812, Astor had to sell his interest in the Pacific Fur Company to his Canadian partners. Meanwhile, at the other end of the continent the reverse occurred, with Astor securing control of the South West Company. By 1821, Astor's American Fur Company was prepared to compete with the Hudson's Bay Company for the Upper Mississippi fur trade. [56]

The American Fur Company operated under a different system than either the Hudson's Bay Company or the North West Company. Astor acted as importing and selling agent for the American Fur Company, which in turn served as liaison to the traders in the field. Each trader was assigned a department, or "outfit." The trader normally assumed all risk of profit or loss, although sometimes the American Fur Company shared in profit or loss on a fifty-fifty basis. The American Fur Company tried to minimize competition among its own traders, but was never completely successful. [57]

Historian David Lavender argues that the chief difference between the American Fur Company and its northern rivals–its lack of monopoly control–was due primarily to geography. In Canada the few constricted routes of long-distance trade abetted monopoly, whereas in the United States the opposite was true. Three major routes to the interior were available: the Hudson and Mohawk valleys (aided by the Erie Canal after its completion in 1825), the Ohio River, and the Mississippi River. Steamboats aided use of the latter. By 1823, steamboats navigated the Mississippi River as far north as present-day Minneapolis. "Only where a single trade artery dominated a large region, as in the case of the Missouri River," Lavender observes, "did any department of the American Fur Company approach economic dominance." Geography was a deterrent to monopoly in the United States for another reason, too. In the warmer latitudes of the United States, white settlement encroached on the fur trade more readily than it did in Canada. Frontier settlement increased the opportunities for independent traders. [58]

The American Fur Company raises prices The Indians of this Region through Competition & various other Courses have been in the habit for these 15 years of Getting the whole of the ammunition and tobacco Gratis so that you may see what was their first sensation when they found that the goods had risen in price and that they would get nothing for nothing— all our people at first despaired of the sweep of the measures which I was determined to apply in the Fall-- but to Show them that there was no alternative I gave them leave who where [sic] afraid to retire and go Back to the South which settled some and gave a spur to their Exertions and Every thing since that time has gone on smoothly and correctly. —William Aitken to Ramsey Crooks, December 25, 1834, American Fur Company Papers.

The American Fur Company established posts at Grand Portage, Rainy Lake, Vermilion Lake (not to be confused with Little Vermilion or Crane Lake), and Warroad during the winter of 1822-23. These were all in the Fond du Lac Department, which extended west from Lake Superior along the international boundary. By this point in time, traders generally recognized the old voyageur route from Grand Portage via Basswood Lake as the international boundary. However, the route would not be officially surveyed until 1823 nor finally settled until the Webster-Ashburton Treaty of 1842. Although the U.S. Congress passed a law in 1816 prohibiting British trade with Indians on American soil, Hudson's Bay Company men practically ignored the law in the Rainy Lake Region throughout the 1820s. [59]

The American Fur Company's trader was William Morrison, a former clerk of the North West Company and in George Simpson's judgment, "one of the best and most experienced Salteaux traders in the country." [60] After he retired in 1826, the trade was handled by William Aitken, head trader of the Fond du Lac Department. The Hudson's Bay Company's trader in charge of the Rainy Lake District in 1822-23 was Dr. John McLoughlin, a capable administrator with prior experience in the region. "The choice of McLoughlin," writes historian John S. Galbraith, "was in accord with a basic principle of the Hudson's Bay Company's trading policy that the most energetic and effective officers were sent to areas where the opposition was most severe." [61] Further evidence of the importance that the company attached to the Rainy Lake District, Galbraith notes, is the fact that Simon M'Gillivray, another chief trader, was appointed as McLoughlin's assistant, putting two commissioned officers in one small district. In 1824, McLoughlin departed for Oregon and Chief Factor John Dugald Cameron took McLoughlin's place at Rainy Lake. Cameron remained at Rainy Lake until 1830. Although Cameron was friendly toward his rival, Morrison, he continued the Hudson's Bay Company policy of competitive trading in order to drive the American traders out of the area.

The competition was finally too costly for the American Fur Company. In 1833, Simpson entered an agreement with Aitken. In return for a payment of 300 pounds sterling per year, the American Fur Company agreed to abandon its frontier posts from Lake Superior to the Red River. The agreement of 1833 gave the Hudson's Bay Company monopoly control over the Rainy Lake Region for nearly a decade. When the American Fur Company failed in 1842, it brought renewed competition along the international boundary.

Table of Contents | Introduction | Rainy Lake Region | Fur Trade Experience | Material Culture | Natural Environment | Bibliography