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The fall of New France in 1760, followed by the enactment of the Treaty of Paris in 1763, ceased trade with the houses of Montreal and Québec. In consequence to those developments, French and Scottish fur traders, referred to as Canadian traders, established independent firms in Montreal and expanded their business west of the Great Lakes. The Canadian traders became so influential in the Canadian inland fur trade that the HBC "upland" territory and the rivers which led to the forts "was cut off from its usual channel." By 1773, the HBC decided to take action by moving westward as a countermeasure to the growing numbers of Canadian traders. In 1774, the HBC appointed Samuel Hearne and financed a project which established Fort Cumberland along the Saskatchewan River, five hundred yards of a Montreal trading post near Sturgeon Lake. The HBC continued to move inland and followed the "Canadians to their different establishments," building rival posts and organizing plans to supplant their opponents with the use of "pedlars, thieves and interlopers." The Canadian traders were furious against the movement to expel them from the western territories, and realized that losing a single canoe with valuable supplies onboard could financially terminate small operations. So, Montreal traders started forming mergers and establishing larger partnerships, and by 1779, nine fur companies "joined their stock together and made one common interest of the whole," thus establishing The North West Company (NWC). The Company was reorganized on a more secure footing in 1783, under the leadership of Benjamin and Joseph Frobisher, and Simon McTavish. .
Competition in the Western fur trade intensified after the first smallpox epidemic which ravaged the Canadian Plains in 1781-82, sharply reducing the Cree and Assiniboine population in the Red River area and eliminating most of the HBC and the NWC fur providers.