Montreal, May 15, 2005 • No 154




Chris Leithner grew up in Canada. He is director of Leithner & Co. Pty. Ltd., a private investment company based in Brisbane, Australia.




[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


by Chris Leithner

          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."

          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?

Simon McTavish

          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, 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.

          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). 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."

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.

"The men of the North West Company, 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."

          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 threats 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 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 ηa change, plus c'est la mκme chose.

          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 Scots 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 was quite frightened – and in later years believed the incident 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.

          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 (present-day Winnipeg and environs) 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 Highland Clearances must have seemed benign. As one Nor'wester put it, Lord Selkirk's colonists were "victims sacrificed to the sinister views of a noble imposter."

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 various 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.

          Above all, 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 a prime example) can be 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 (see "The Socialist Wind from the South" and William Watson, Globalization and the Meaning of Canadian Life, University of Toronto Press, 1998). 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 – falsely, I believe – as "quintessentially Canadian" attitudes.

          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 entrenched 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.


Note: An extended version of this article, which covers the economics and finance of the fur trade, is available on The Leithner Letter.