The Hudson's Bay Company was an English corporation formed in 1670, when Charles II, king of England, granted a charter to Prince Rupert, his Bohemian-born cousin, and 17 other noblemen and gentlemen, thus giving them a monopoly over trade in the region watered by streams flowing into Hudson Bay. In the vast territory, which came to be known as Rupert's Land, their company also had the power to establish laws and impose penalties for the infraction of the laws, to erect forts, to maintain ships of war, and to make peace or war with the natives. The original capital of the company was about $220,000, a large amount of capital for the period.

For almost a century this monopoly went unquestioned, although it had developed slowly. By 1749 the company had only four or five coastal forts and no more than 120 employees. The annual trade, although immensely profitable, consisted only of the barter of three or four shiploads of coarse British goods for an approximately equal weight of furs and skins. In that year, an unsuccessful attempt was made in Parliament to revoke the charter on the grounds that the powers it provided had not been used. After this period the development of the company speeded up. Conflicts with the French over the fur trade, which had begun with the birth of Hudson's Bay Company and had broken out into an open war settled in favor of the company in 1713, were finally resolved by the British conquest of Canada in 1763. The acquisition of Canada made the territories of the company accessible from the south as well as from the sea; trade increased immensely, and during the French wars from 1778 to 1783 the company was strong enough to bear a loss of approximately one million dollars.

A monopoly so profitable could not long be maintained. Private trappers and even rival companies soon entered the field, penetrating from the Great Lakes far up the Saskatchewan River toward the Rocky Mountains. In 1783 a group of these speculators formed the North West Fur Company of Montreal and entered into fierce competition with the Hudson's Bay Company. During the following years the supply of fur-bearing animals was threatened by the slaughter of animals during the breeding season. Eventually, in 1821, the two great companies merged, with a combined territory extended by a license to the Arctic Ocean on the north and the Pacific Ocean on the west. In 1838 the Hudson's Bay Company again acquired the sole rights of the trade in this area for a period of 21 years. At the expiration of the new license in 1859, however, the trade monopoly was abolished and trade in the region was opened to any entrepreneur. The claims of the company to vested interest and property rights, however, remained unsettled until 1870, when Rupert's Land was acquired by the Dominion of Canada in return for an indemnity of approximately $600,000 and a land grant of 7 million acres. The company retained its forts and trading posts, but gave up all monopolistic privileges.