Below the fort, high bluffs extended uninterruptedly for six miles along the Mississippi River. At the point where they ended, another settlement grew up around a chapel built at the boat landing by Father Lucian Galtier in 1840. Its people, including Pierre Bottineau and other American Fur Company employees and the refugees from Fort Garry, were joined by the remaining Scots and Swiss from Fort Snelling when Major Joseph Plympton expelled them from the reservation in May 1840. The resultant town, platted in 1847 and named for the patron of Father Galtier's mission, St. Paul, was to become an important center of the fur trade and was to take on a new interest for those Selkirkers who remained at Red River.

While population at Fort Garry increased rapidly, from 2417 in 1831 to 4369 in 1840, economic opportunities did not increase at a similar rate. Accordingly, though the practice violated the no trading provision of the Selkirk charter which reserved all such activity in merchandise and furs to the Hudson's Bay Company, some settlers went into trade. The Company maintained a store at which products of England could be purchased and brought in goods for the new merchants on the understanding that they refrain from trading in furs. Despite this prohibiton, by 1844 some of the Fort Garry merchants were trading with the Indians for furs. In June 1845, the Governor and Council of Assiniboia imposed a 20 per cent duty on imports via Hudson's Bay which were viewed as aimed at the ``very vitals of the Company's trade and power.'' To reduce further the flow of goods from England, the Company's local officials asked that its London authorities refrain from forwarding any more trade goods to these men.