Sir George, in his high office as Governor of Rupert's Land, was succeeded by A. J. Dallas, a Scottish merchant, who had been in business in China, had retired, and afterwards acted as Chief Factor of the Hudson's Bay Company at Fort Victoria, in Vancouver Island, and had then married the daughter of Governor James Douglas. Dallas had shown great nerve and judgment in British Columbia, in a serious brush with the United States authorities in 1859. Three years after this event he was called to succeed the great Governor of Rupert's Land. On his appointment to this high position, he took up his residence at Fort Garry, and had, in conjunction with the local Governor, William McTavish, to face the rising tide of dissatisfaction which showed itself in the Corbett and Stewart rescues. Writers of the period state that Dallas lacked the dignity and tact of old Sir George. In his letters, however, Governor Dallas shows that he thoroughly appreciated the serious state of matters. He says: "I have had great difficulty in persuading the magistrates to continue to act. Mr. William McTavish, Governor of Assiniboia, has resigned his post." Governor Dallas says he "finds himself with all the responsibility and semblance of authority over a vast territory, but unsupported, if not ignored, by the Crown." He states that people do not object to the personnel of the Hudson's Bay Company government, but to the "system of government." He fears the formation of a provisional government, and a movement for annexation to the United States, which had been threatened. He is of opinion that the "territorial right should revert to the Crown." These are strong, honest words for an official of the Company whose rule had prevailed for some two centuries.
And now Governor Dallas appears co-operating in an ingenious and adroit financial scheme with Mr. E. W. Watkin, a member of the British House of Commons, by which the Hudson's Bay Company property changed hands. Edward Watkin was a financial agent, who had much to do with the Grand Trunk Railway of Canada, and had an intimate knowledge of Canadian affairs. He had succeeded in interesting the Colonial Secretary of State, the Duke of Newcastle, in a railway, road, and telegraphic scheme for connecting the British possessions in North America.
Difficulties having arisen in inducing staid old Governor Berens, the London head of the Company, to accept modern ideas, a plan was broached of buying out the whole Hudson's Bay Company possessions and rights. Difficulty after difficulty was met and surmounted, and though many a time the scheme seemed hopeless, yet in the end it succeeded, though not without much friction and heart-burning. Watkin describes graphically the first interview between three members of the Hudson's Bay Company, Berens, Eden Colville, and Lyall, of the first part, and Glynn, Newmarch, himself, and three other capitalists of the second part. The meeting took place in the Hudson's Bay Company House, Fenchurch Street, February 1st, 1862. "The room was the 'Court' room, dark and dirty, faded green cloth, old chairs almost black, and a fine picture of Prince Rupert. Governor Berens, an old man and obstinate, was somewhat insulting in his manner. We took it patiently." It was a day of fate for the old Company.
Many interviews afterwards took place between Watkin and the accountant and solicitors of the Company. The Company would hear of no dealings, except on the basis of a cash payment. The men of capital accordingly succeeded in interesting the "International Financial Association," a new corporation looking for some great scheme to lay before the public.
At length the whole shares, property, and rights of the Hudson's Bay Company were taken over, the final arrangements being made by Mr. Richard Potter on June 1st, 1863. Thus the Company begun in so small a way by Prince Rupert and his associates nearly two centuries before, sold out, and the purchase money of one and a half millions of pounds was paid over the counter to the old Company by the new Association.
A new company was now to be organized whose stock would be open for purchase, and the International Association would, on such organization being formed, hand over the Company's assets to the new stockholders. In a short time the Company was reconstituted, Sir Edmund Head being the new Governor, with, as prominent members of the Board of Directors, Richard Potter, Eden Colville, E. B. Watkin, and an American fur trader of experience, Sir Curtis Lampson.
Secretly as the negotiations for the formation of a new company had been conducted, the news of the affair reached Canada and Rupert's Land, and led to anxious inquiries being made and to a memorial from the Company's officers being presented to the Board of Directors asking for information. So thoroughly secret had the interviews between the London parties been carried on that the officials of the London office knew nothing of them, and stated in their reply to the memorialists that the rumours were incorrect. In July, when the transfer had been consummated and the news of it appeared in the public press, it created surprise and indignation among the chief factors and chief traders, who, under the deed poll or Company arrangement which had been adopted in 1821, though somewhat modified thirteen years later, had been regarded as having certain partnership rights in the Company.
Mr. Edward Watkin informs us, in his interesting "Reminiscences," that he had intended that the "wintering partners," as the officers in Rupert's Land were called, should have been individually communicated with, but that on account of his hasty departure to Canada the matter had been overlooked. It certainly was irritating to the officers of the fur trade to learn for the first time from the public press of an arrangement being perfected involving their whole private interests.