# RAC–HBC Agreement

RAC–HBC Agreement was a series of protocols signed by the Russian-American Company (RAC) and the Hudson's Bay Company (HBC) in 1839 and remained active until 1865.

## Background

Both monopolies had over previous decades secured regions for control of the Maritime fur trade; the RAC being based in Russian America and the HBC in the Columbia Department of the Oregon Country. As the outposts and trading stations of each company grew closer in proximity, a clash of interests occurred in 1834 at Redoubt Saint Dionysius on the site of modern Wrangell, Alaska.
Officials from the two companies felt it was necessary to settle their long standing issues. Ferdinand Wrangel, Governor of Russian America, volunteered to negotiate on behalf of the RAC and the HBC sent George Simpson, Governor of Rupert's Land. Previously Simpson had stated to the HBC committee that if a settlement with the Russians was concluded, "we ought to be able to put down all competition on the Coast..." By removing the Russian markets, the Governor felt American merchants would lose an important revenue source. The Imperial Government of Russia in late 1838 ordered the RAC to end its disputes with the British, before it could strain relations with the United Kingdom. Simpson and Wrangel negotiated a commercial treaty in early 1839 while in Hamburg.

## Original agreement

The Russians granted the HBC exclusive fur trapping rights in "a strip of land ten miles in width, to the north and south of the Stakhina River, that is, the portion of the seacoast from 54°40′ latitude to a line drawn between Cape Spencer on Cross Sound and Mt. Fairweather." This lease was to begin on 1 June 1840 and last for one decade. Redoubt Saint Dionysius, with its annual expenses ₽12,000, was handed over to the British. In return for the additional areas to trade for furs, the HBC had to provide the RAC 2,000 land otter pelts per year. The HBC also had to supply New Archangel with 14,000 poods of wheat, worth ₽52,5000, along with a multitude of provisions needed.
The sudden demand for agricultural produce necessitated the creation of the HBC subsidiary, the Puget Sound Agricultural Company (PSAC). Using British supplies from London proved to be far less expensive than shipping from Kronstadt for the RAC. Naval shipments from Great Britain destined for Russian America cost the RAC only ₽80 per ton of supplies, compared to ₽250 from Kronstadt and ₽630 overland through Siberia to Okhotsk. Proceeds from freight transportation often gave an annual profit of £4,000 for the HBC.

## 1849 agreement

The agreement was continuously renewed, although with several modifications made over the years which followed. A different version was agreed by both companies and came into force on 3 April 1849. This commercial agreement saw the termination of the PSAC, providing agricultural and pastoral products to New Archangel. Encroachment by American settlers on company property after the Oregon Treaty, combined with the California Gold Rush, left Fort Cowlitz and Fort Nisqually understaffed and greatly reduced operational abilities. Despite Fort Langley and Fort Victoria producing much of the wheat quota for Russian America after 1846, the British could not meet the Russians' need for food. The RAC board of directors found the HBC stance for an end to supplying the Russian posts to be "based on quite valid reasons."
Additionally, the Russian authorities claimed exclusive rights to the timber, fisheries, and ice within the portion of the Alaska Panhandle occupied by the HBC, to allow further agreements with other companies for exploitation of resources. After the Fraser Gold Rush, numerous small merchants began operating within the HBC concession, undercutting the British fur trading efforts. During the 1860s the Labouchere operated within the leased area. In 1862 the HBC governing board complained to their Russian counterparts that they did not "afford us any protection and the whole Territory is just as free to Petty Traders who pay no rent..." Despite this economic competition and declining profits, the HBC signed the renewed protocols.

## Termination

The final expiration of the agreement occurred on 1 June 1865. An official of the RAC, A. Rutkovski, was sent to London, reaching the British capital in January 1865, offering a proposition to the HBC. In return for an annual payment of £3,000, retaining company posts and rights to an ice harvesting monopoly, the RAC would lease all lands of Russian America south of Mount Saint Elias. All Russian fur traders would additionally operate only in the name of the HBC. The historian John Semple Galbraith appraised Rutkovski's considered offer as "Such a proposal would have been unhesitatingly accepted had it been made twenty years earlier. But the same uncertainties of the value of the fur trade which induced the Russians to make such an offer in 1865 prevented the Hudson's Bay Company from accepting."
Additionally, by this point the British had already formulated plans to create stations in the Yukon, where the interior trade could continue to be accessed. Shortly after the ratification of the Alaska Purchase by the United States of America, the HBC inquired if the lease was still in effect. Mikhail Tebenkov responded that the RAC was itself unaware of the treaty's terms, but stated that the company "can only suppose the cession itself will cause the refusal of our Government to sanction of our agreement with your honourable body for a continuation of the lease of the Stackine Territory."
Despite being requesting to end the agreement when the official transfer to the Americans occurred, the HBC felt it could unilaterally continue to operate in the Stikine lisière; an interpretation the Americans didn't acknowledge. The RAC–HBC Agreement later had a part in the Alaska boundary dispute.