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Opposing the Americans

While the merger of the two great fur companies in 1821 secured a monopoly over the country from Hudson Bay to Lake Athabaska, the reorganized Hudson’s Bay Company still faced competition along the international frontier with the United States. Nowhere was this threat greater than in the Rainy Lake region. The company’s aggressive new leader, George Simpson, recognized two sources of competition there: the American Fur Company and the independent traders. Of the two, Simpson saw a more urgent need to oppose the latter, the “petty Traders of Lake Superior.” Competition from such people could not be tolerated, for if they were permitted to chip away at the company’s territory then others would follow.

The largest independent trader in the area was George Johnston. Based in Sault Ste. Marie, Johnston established two posts in the Rainy Lake region in 1821. One post was on Crane Lake in American territory and the other on Mille Lacs in British territory. Johnston put two brothers, Paul and Bazil Beaulieu, in charge of the first post and a former Nor’ Wester, Joseph ­Cadotte, in charge of the second.¹

By the time McLoughlin took over Rainy Lake House in September 1822, Cadotte had been driven out of British territory by an Indian attack that claimed the lives of two of his men. But the Beaulieu brothers still had their trading house at Crane Lake. McLoughlin’s first impulse was to send his chief trader, Simon McGillivray, to Crane Lake with a force of men to undercut their trade. En route, however, McGillivray learned that a US customs agent was in the vicinity, so he left his men inside British territory and returned to Rainy Lake House to confer with McLoughlin. Since 1816, the US government had banned British traders in American territory, but as yet there had been no enforcement of the law west of the Great Lakes. Now both men agreed that they should not risk the arrest of their men or the hefty $1,000 fine for trading without a US license. Instead, McGillivray established an outpost at nearby Basswood Lake in British territory, still with the object of capturing most of the trade and driving off the American competition.²

With McGillivray and his Hudson’s Bay men aggressively trading nearby, the Beaulieu brothers soon ran out of provisions at Crane Lake. All their hired men deserted them. Some of these deserters appeared at Rainy Lake House in December, “starving” and offering to work for food. McLoughlin refused to employ them, but on humanitarian grounds he gave them each two days’ rations and sent them on their way. The Beaulieu brothers stayed at Crane Lake through the winter, though by spring they were reduced to eating animal skins to keep alive.³

The Hudson’s Bay Company faced a far more formidable rival in the American Fur Company of New York financier John Jacob Astor. This company operated on a different business model than either the Hudson’s Bay Company or the North West Company. Astor acted as import-export 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 the company would sometimes share in profit or loss on a 50–50 basis. The American Fur Company tried to minimize competition between its own traders but was never completely successful.⁴

Although Astor liked to suggest that his fur company was a US equivalent to the Hudson’s Bay Company—“the only respectable one of any capital now existing in the country,” he once wrote to Senator Thomas Hart Benton of Missouri—in fact, the American Fur Company behaved more like the rapacious independent traders with whom it competed.⁵ Its decentralized capital structure ensured that its traders would emphasize immediate profits over long-term interests. At a time when the reorganized Hudson’s Bay Company began taking small steps toward conserving wildlife, reducing imports of liquor, and improving the welfare of its employees, the American Fur Company did nothing of the sort.⁶ The only thing that distinguished it from George Johnston’s outfit was its size. As the American Fur Company had far more capital behind it, McLoughlin could not expect to defeat this rival so much as hold it at bay.⁷

In the fall of 1822, the American Fur Company established new posts at Grand Portage, Rainy Lake, Vermilion Lake, and Lake of the Woods—a line of posts running more or less along the US border with British America. (The US-British Convention of 1818 defined the international border from Lake Superior to Lake of the Woods as not along the forty-ninth parallel but following the main voyageur route through the maze of lakes and streams now known as the Boundary Waters. This description of the boundary line was unambiguous to most traders and Indians in the region, although it would not be officially surveyed until 1823 and not finally settled until the Webster-Ashburton Treaty of 1842.) The whole area from the shore of Lake Superior across what is now the northern tier of Minnesota counties was included in the American Fur Company’s Fond du Lac Department and placed in the capable hands of William Morrison, another former Nor’ Wester. In George Simpson’s judgment, Morrison was “one of the best and most experienced Salteaux traders in the country.”⁸

Informed by Simpson of the American Fur Company’s plans, McLoughlin waited for Morrison to come up the Rainy River in the early fall of 1822. Morrison sent a pair of clerks instead. One was Pierre Cȏté, a mixed blood from Fond du Lac, and the other was Joseph Cadotte, the former Nor’ Wester who had worked for George Johnston at Mille Lacs the previous winter. When the outfit finally arrived without Morrison on October 5, McLoughlin counted fourteen men in seven small canoes, the lead canoe flying the American flag. As he soon learned, the fourteen included the white Indian, John Tanner, whom McLoughlin still knew by his Indian name, Shaw-shaw-wa ne-ba-se, the Swallow. They camped on the south side of the river almost exactly opposite Rainy Lake House. The next day the men set to work building a post, which rose within sight of the Hudson’s Bay establishment. Morrison visited the new post only once during the winter, and although McLoughlin recorded his arrival and departure from across the river, he made no mention in the journal of any courtesy call between them.⁹

Cȏté and Cadotte proved to be wily foes for McLoughlin. The chief factor asked the Americans to refrain from trading with Indians on British soil, but the Americans refused. After enduring several months of the Americans’ trespasses, he called Cȏté and Cadotte over to Rainy Lake House on a ruse and took them prisoner as soon as they set foot on the British side of the river. The tactic was reminiscent of the old struggle between the Hudson’s Bay Company and the North West Company. McLoughlin wished not to venture too far down that road, so after keeping them confined for ten hours he extracted a promise from Cȏté in writing that he would not allow his people to trade with the British Indians any more, and then he let the two go. Writing at length in the post journal that evening, McLoughlin cogitated over the day’s excitement and what it meant for the future. Had he done wrong in holding the men prisoner? “Taking them after asking them to come over,” he wrote, “it may be said I broke my word—but it must be recollected that they first broke theirs by coming to our side.” If he could not treat his unscrupulous American rivals as roughly as he might have liked, neither could he stand by passively when they trespassed. And yet, as he tried to force a change in the American company’s practices, he still worried that it might provoke retaliation or expose him to legal action by higher authorities.¹⁰

But McLoughlin’s tactic seemed to do the trick. The Americans ceased trespassing on British territory. And with the Hudson’s Bay Company’s greater capacity for supplying the Indians their wants, he soon had the lion’s share of the trade. In his year-end report on the district, McLoughlin stated with obvious satisfaction that the Americans departed in June with twelve packs of furs (nine of them underweight) compared to the Hudson’s Bay Company’s twenty-nine. When McLoughlin reported in person to the governor and council of the Northern Department at York Factory that summer, he boldly predicted that the Americans would not be back the next season.¹¹