A royal commission was formed to investigate the living conditions of Alberta's "half-breeds" (as the Métis were known), who were then squatting on road allowances with no ready sources of cash income, or trapping in remote areas without access to education or health services.

Farm colonies, in which the Métis themselves would provide most of the physical labour, would be a suitably inexpensive relief scheme for the cash-strapped Alberta government to implement.

With commercially viable fish stocks, an abundance of timber, and connection to Bonnyville and Lac La Biche ensured by all-year wagon trail, only the agricultural suitability of the settlement was in doubt.

Covered mostly in grey clay "not of a highly productive nature", Wolf Lake was estimated to have a modest carrying capacity of "not more than seventy or eighty families".

A 1941 report of the Alberta Bureau of Public Welfare recorded a resident population of 58 inhabitants, with a lumbering operation active and a school under construction.