Fort Nisqually, WA, headquarters of Puget Sound Agricultural Company by artist Meeker, n.d.
In 1838, as part of its application to renew the fur trade monopoly, HBC asked Parliament for increased powers to promote settlement in the Oregon territory since it alone was securing British interests there. Sir George Simpson wrote: "We are strengthening that claim to it [the territory] ... by forming the nucleus of a colony through the establishment of farms and the settlement of some of our retired officers and servants as agriculturalists."
Parliament refused the request, fearing that it would be interpreted negatively by the Americans, with whom the British had signed treaties for "joint occupation" of the Oregon territory in 1818 and again in 1827. Instead the government simply extended the Company's license for another 21 years without any changes. In response HBC was determined to establish a subsidiary organization. The Puget Sound Agricultural Company was formed as a joint-stock enterprise in 1840 and although technically at arm's length from HBC, its control was vested in HBC: Governor Sir John Henry Pelly, Deputy Governor Andrew Colville and Sir George Simpson were all Directors of PSAC. Moreover, ownership of the new company's stock was restricted to members and officers of HBC. In actual fact fur trade officers and Committeemen (Directors) bought up the bulk of the stock: ordinary HBC shareholders did not. Finally, the new company agreed to purchase all its sheep, cattle and horses from HBC.
Detail showing Puget Sound, map by Jack McMaster, 2004
The new entity was headquartered at Fort Nisqually at the southern end of Puget Sound, (in modern day Tacoma), which became jointly owned by HBC and PSAC in 1839. Dr. William F. Tolmie was appointed Chief Trader at the post. Fort Nisqually had been founded by HBC in 1833 and was well-situated for its new role as both an agricultural centre and transshipment point. Due to its superior grazing lands its primary value was the raising of livestock. By 1845 it was home to over 5872 sheep, 2280 cattle and 228 horses.
A second centre was located south of Nisqually at Cowlitz Farm, on a tributary of the Columbia and the main portage route from the Columbia into Puget Sound. Cowlitz was the headquarters for the production of grain, peas and potatoes. From the outset the idea was that HBC would continue to concentrate on the fur trade and PSAC would handle the subsidiary agricultural business: it would supply foodstuffs to the HBC posts along the Pacific coast as well as to Alaska and Hawaii, and in the course of the land settlement that such operations would entail, it would strengthen Britain's claim to the region north of the Columbia.
Chief Trader William Tolmie, 1874
But by 1845 American settlers arriving into Puget Sound were encroaching onto the Company's lands. Despite specific clauses of the Oregon Treaty of 1846 which guaranteed both HBC's and PSAC's lands to them, the establishment of the border at the 49th parallel spelled the end to both companies' operations in Washington and Oregon. HBC's strategy was to formally notify squatters of their trespass but not to pursue any harsher means: in Chief Factor James Douglas' words "... to warn off all new comers, in a pleasant way, and keep always on the right side of the law." Meticulous records of the notifications were kept with a view to using these at a later date to claim damages from the United States. But Nisqually and Cowlitz increasingly functioned as "beleaguered garrisons"
Settlement by the British also had limited success. HBC policy was designed to promote settlement north of the Columbia, whereas the most attractive area, the Willamette valley, lay to the south. Moreover, PSAC reserved all the best lands to its commercial farming enterprise. And last, but not least, British settlers were constrained by policies that favoured the Company at the expense of the settler. Farmers were to receive 1,000 acres on leasehold, 20 cows, 1 bull, 500 sheep, 8 oxen, 6 horses and a few pigs, leases to run for 5 years. Each farmer would be provisioned for the first year until his harvest came in. At the end of the lease the land and buildings would revert to the Company, it would have the sole right and duty of marketing the produce, and half of the increase from the stock would belong to the company. Although this degree of 'regulation' was not at all unusual in an era of emigration largely organized by private enterprise, other destinations - particularly New Zealand - gave the PSAC/ HBC initiative stiff competition. And there was little publicity: ironically, both companies were afraid of attracting too many emigrants!
Map of the Puget Sound Agricultural Company, submitted by Dr. William Tolmie, 1855
In 1855 war broke out with the natives as a direct response to the increased number of settlers. The Americans viewed Tolmie's harmonious relations with the natives, especially prior to the arrival of settlers, as complicity. Running the business, particularly at a profit, became more and more difficult. Tax assessors of the new Washington territorial legislature set high levies on the PSAC lands, not only to generate revenue, but perhaps also to encourage the British to leave. Tolmie left for a new position on Vancouver Island in 1859; one can only imagine he was glad to go.
The U.S. and Great Britain agreed to negotiate a final settlement of the claims of both HBC and PSAC in 1863. The Joint Commission finally awarded PSAC $200,000 for its properties south of the 49th parallel in 1869. That the final amount was so high is due in no small way to Tolmie, his fellow servants and their meticulous accounts.