RAC-HBC Agreement

The RAC-HBC Agreement was a series of protocols signed by the Russian-American Company (RAC) and the Hudson's Bay Company (HBC) in 1839. Over previous decades both monopolies 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.

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 trap furs in the British had to send 2,000 land otter fur pelts. 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.

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