By 1841, Simpson and McLoughlin were in complete disagreement about how the district should be run. Simpson and McLoughlin disagreed over the matter of establishing posts on the coasts and keeping ships in port. Dr. John did not want ships because of the unpredictability of ships crews and their harassment and problems with Indians. At this time, McLoughlin was ordered to move everything to Vancouver Island and build a new fort there. This fort was called Adelaide, which eventually became the city of Victoria.
After his retirement in 1846, he took his wife, son David, daughter Eloisa and her three children to Oregon City. James Douglas took over for him at the fort. In 1850, the old Ft. Vancouver became a military fort. He served as mayor of Oregon City in 1851, winning 44 of 66 votes. He built houses, sawmills, and gristmills providing employment for needy immigrants. He built a canal around the falls at his own expense. He gave away 300 lots of private and public use, including land given to a Catholic school, Methodist, Baptist, Presbyterian, Catholic, and Congregational churches. The Oregon City high school is on land given by John McLoughlin to a Protestant seminary. He also gave land for a city jail. In 1847, he was given the Knighthood of St. Gregory, bestowed on him by Pope Gregory. He died of old age on September 3, 1857.
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