The Dawes Act and Contraction of Indian Land in the U.S.
Ying Simona Qian1
July 2003
Abstract
During the rapid geographical expansion of American agriculture between mid19th century and early 20th century, a curious phenomenon so far has not been
given much attention by economists. While the rest of the nation was deeply
engaged in a love affair with the opening of agricultural lands, on native
American reservations farming activities declined and increasing numbers of
reservation land allotments were leased and sold to white settlers. In 1887 the
Dawes Act privatised land on Indian reservations and granted Indian
households the right to sell or lease their individual allotment. Between then
and 1934, when the Act was finally repealed, about 60 percent of Indian land
passed out of Indian hands. This paper provides a detailed analysis of reasons
behind the disparity between agricultural productivities of the white and Indian
populations, and assesses the implication of land privatisation when other
institutions are not yet in place to facilitate correct evaluation of the land's
productivity and provide investment assistance/credit to a socially
disadvantaged group. The current draft is preliminary and focuses on getting
the history right. A revised version enhanced by reservation-specific historical
data and empirical investigation will be available by the time of the conference.
JEL classification: N0, N4, K0.
Keywords: Land privatization, Economy on Indian Reservations, American
Economic History.
1
Department of Economics, Harvard University. Email: [email protected]. I am grateful
to Professor Claudia Goldin of Harvard Department of Economics and Professor John R. Stilgoe
of Harvard Graduate School of Design for useful comments and encouragement. All errors are
mine.
1
中文内容提要：
十九世纪中叶到二十世纪初期，美国农业用地面积通过西进运动增加迅
猛，美国经济史学对此研究甚多。然而，就在美国上下沉浸在对土地的向
往之中的同时，印第安人却不断地在把他们手上的保留地土地卖掉或租
掉。1887 年 Dawes 法的颁布正式将印第安保留地的土地私有化，在一定条
件下允许土地买卖、租赁。从那时起到 1934 年这条法令被撤销的 37 年时
间里，60%的印第安土地转手到了白人手中。这篇论文初稿意图通过对这
一尚未被经济史充分研究的历史事件作细节分析，为探讨私有化的过程和
其必需的制度条件提供一个新的案例。 作者正在着笔文章的第二稿，充实
理论，并利用保留地更具体的历史数据作回归分析。第二稿在今年底预计
完成。
2
Introduction:
The rapid physical expansion of American agriculture between mid-19th century and
early 20th century fascinates me. Farmers relentlessly sought land, raced to become
owners of it, and toiled with incredible tenacity thereafter to plant and harvest, bringing
the wilderness to its fertility. Between 1860 and 1890, the total number of farms in the
United States rose from 2 million to near 6 million, and improved farm acreage
increased from 1.6 billion to 4.1 billion. About 30% of the new farms and 52% of the
improved land acres were added to the agricultural domain in the 19 western states and
territories that were largely or entirely settled only after 1860.2 The rush for land
subdued after 1900, due to exhaustion of available lands and the beginning of the shift
from agriculture to industry. But even after the closing of the frontier farmers still
acquired lands whenever they could. In 1887, the passage of the Dawes Act opened the
Indian reservations for white settlement. Between then and 1934, when the Act was
finally repealed, about 60 percent of Indian land passed out of Indian hands.3 White
farmers settled on the surplus lands ceded by Indian reservations to the federal
government, leased and purchased individual allotments from the Indians:
increasingly the terrain on Indian reservations became checker-boarded with both white
and Indian lands.
Many have written about the American frontier and the energetic American farmer, but
this paper accesses the energy by comparing it with the weary. While the rest of the
nation was deeply engaged in a love affair with the opening of agricultural lands, on
native American reservations farming activities declined and increasing numbers of
allotments were leased and sold to the white settlers. The reasons behind the
difference in farming activity between the white and the native is the subject of this
paper.
A brief description of the Dawes Act should be helpful here. Basically a privatization
policy, the Dawes Act of 1887 gave the President of the United States general authority
to have a reservation allotted at a time when he believed appropriate, and granted the
2Fite
(1966) p223.
(1971) p145.
3Washburn
3
American Indians individual property rights over their lands. Each head of the
household in an allotted reservation was to receive a 160-acre tract of land, with single
individuals over 18 in the same household receiving an additional 80 acres and children
under 18 receiving allotments of 40 acres. On reservations with lands suited only for
grazing, acreages were doubled. Indians who are not residing on a reservation were
eligible for allotments on land in the public domain. In order not to make the transition
too abrupt, allotted lands were placed in a trust for 25 years, with the government as
guardian, for the sole use and benefit of the Indian allottee. At the end of the trust
period, an allottee was to receive a patent-in-fee, which gave him or her unrestricted title
to the allotment (title in fee simple), the same ownership as any white man’s.4
This Act was endorsed almost universally by policy makers at the time of legislation as a
way to give entitlements to the native Americans, stimulate their work incentives, and
assimilate them into a mainstream society where individual ownership of property was
believed to be key to virtue and hard work . Yet by 1934 its adverse impact on the
native American agriculture had become clear. Farming declined on Native American
reservations; increasing numbers of Indian households sold or leased their allotments.5
The first section of this paper describes further the procedure and the impact of the
Dawes Act.
Economic theory tells us that in an ideal factor market, production factors should
through exchange move into the hands of the most productive, but in reality many
reasons could hinder an efficient outcome. I find it unconvincing to think that white
settlers were better farmers than the native Americans in that period of American
history. Agriculture at the level of technology then depended very much on the
farmers’ ability to adapt to the locality and weather, and this trial-and-error process
needed generations to accumulate knowledge. White farmers who recently moved into
a new terrain on the Central Plains or the western territory almost needed to learn
farming all over again, even if they were farmers before they arrived.6 The native
Americans had lived on the reservations longer, but not so much longer, and the Dawes
Act forced the reservations to cede surplus lands just around that time, changing the
reservations from a land-rich economy to a land-poor one. All of these needed changes
in agricultural activities, such as from ranching to farming, and in agricultural methods.
4For
the complete text of the Dawes Act, see appendix A, Otis (1973) p177-84.
Tables 1, 2.1-4.
6Fite (1966), p1.
5See
4
The land price of the day was also not so much the understood agricultural value of the
land. The agricultural value of the land was still under speculation. Endless
discussions by agriculturists were printed in newspapers on potential climate changes,
new crops and new technologies that might upset or boost production on recently
opened lands on the Central Plains and the western territory. This was also a time not
long after the government had given away good farm land for free or very cheap
homestead; the land market saw many land speculators and monopoly power in land
dealing, in which, for example, the railroad companies were particularly involved.7
In this time of speculation and uncertain outlook, the native Americans increasingly
leased and sold their allotments, and the white farmers on the contrary continued to buy,
persist, and harvest. Regardless of whether the two people’s potential productivity
was the same or not, the perceived productivity was certainly different for the two at the
time of transaction, and the realized productivity was also different in the long run.8
America in the end of last century and early this century was moving very fast, and in
this commotion, the native Americans moved downwards and the white farmers moved
upwards. Factors embedded in institutions provide part of the reasons why this was so,
and the second section of the paper studies the various institutional constraints that led
to a lower realized productivity for the native Americans.
Yet institutional constraints could not be the only answer; for institutional constraints
are constraints for one individual only. For a collective that made the institutions, what
it has made it can also change. In his On Liberty J. S. Mill wrote that the “character” of
the members of a society is its most important asset. Just like “personality” is what
people do differently from one another in face of adverse situations, “culture” is an
interpretative power that makes one group distinct from another--culture makes sense
of what has befallen on the group, forms understanding of the situation, and renews
expectations. This process of “making sense” out of the situation—this interpretative
and expectation-forming power—delivers people to different outcomes. In a world
where pareto-ranked multiple equilibria are widely spread, which equilibrium an
economy would land on depends not only by its initial position. Krugman in his
“History v.s. Expectation” proves that in the presence of external economy, common
7Fite
8See
(1966), p30.
appendix for farming activities on white and native farms.
5
expectations can bring the economy to a higher equilibrium.9 I argue that agriculture at
that time of history did have a big external economy—the more people worked on
agriculture, the more knowledge was accumulated, and more likely and fast
institutional renovations would take place to improve productivity.
The white farmers and the American Indians expected and believed very different
things, and in this case such expectations were largely socially conditioned. The white
farmers, though diverse in terms of national origins, belonged to an “imagined
community” through printed media.10 The advertisements of railroads companies,
land holding companies, state governments and various other agencies targeted the
white farmers and raised their optimism. This exciting commotion made people hold
fast to their hopes, for believing in what your neighbours believe joins the club and adds
to one’s sense of security. Uncertainties when collectively tackled with hope became
potentialities, and surely the state governments would not leave a crowd to starvation.11
This common expectation leads the white farmers to a higher pareto-ranked equilibrium,
with more investment in farms and more efforts to solve information and transaction
problems. The native Americans, on the other hand, were never involved in the
frontier romance with the land; in fact even if they were involved in the frontier
romance, their perceived role was certainly not a farmer. Not only were they excluded
from the “imagined community,” the community within the tribe was also under threat
by the manipulation by the government, both in time of violence and “benevolence”.
The lack of uplifting common expectations led to the lower equilibrium, and the last
section examines the building of common expectations in the community of white
farmers and the American Indians.
I.
The Dawes Act of 1887: Provisions and Consequences
In the introduction I already summarized the basic provisions of the Dawes Act, but
there are some other important facts regarding the provisions of this Act that need to be
described here. The Dawes Act was compulsory, i.e. a tribe could not choose to remain
unallotted and an individual could not refuse to accept his or her parcel of allotted land.
When the government decided that the land of a particular reservation should be
9Krugman
(1991), p653.
term comes from Anderson (1983).
See Fite (1966), p129 for details on the relief from the State to destitute farmers on the frontier.
10This
11
6
allotted, every Indian household on this reservation had to select their allotment, and if
they failed to make their selection within four years, the Indian agent of the reservation
would make a selection for them. On many reservations all allotments were issued at
one time, and on others the allotment of lands dragged on for years. At the time of
allotment, an allottee also became a citizen of the U.S.
Unallotted lands not used by the tribe were considered surplus land, open to purchase
by white settlers upon the tribe’s approval. Until 1900, the federal government
typically purchased the land from the tribe at a fixed price ($1.25 per acre) and then
opened it for sale in a manner similar to the Homestead Laws. After 1900 surplus land
was held by the federal government and sold for the tribe by the general land office
under general or special laws. The tribe governments were under much pressure from
the government to cede these lands, and they lost their say on this completely after 1903,
when the Indian agent of the office of Indian Affairs took control and the tribe’s
approval was no longer needed concerning the disposal of the surplus lands.12
Initially the Dawes Act provided that while in trust, an Indian could neither lease, sell,
nor will the land. In 1891, an amendment to the Dawes Act was passed, permitting
leasing of the allotments when an allottee “by reasons of age or other disability...could
not personally and with benefit to himself occupy his allotment or any part thereof.”13
The practice of leasing was widely spread. The Annual Report of the Commissioner of
Indian Affairs for 1900 recorded that “on some reservations leasing is the rule and not
the exception, while on others the practice is growing”14
Purchasing inherited allotment became legal after 1901 and by 1907 all allotted lands
were potentially available for purchase. The Burke Act was passed in 1906, allowing an
individual to be declared “competent” to handle his or her own affairs in advance of the
25 year trust period. A “competent” individual was issued a patent in fee that gave
him a title to his land in fee simple and removed other restrictions on his property. He
or she could sell the land and this land became liable for state and local property taxes.
Though the Dawes Act was passed in 1887, the process of allotment of Indian lands
started, in a small scale, even before 1887. A total of 586,805 acres were allotted in
12
Schmeckebier, The Office of Indian Affairs, p144.
(1973) p187.
14Reprinted in Carlson (1981) p37.
13Otis
7
Kansas, Nebraska, Michigan, Wisconsin and Western Washington before 1888.
Between 1888 and 1899, a total of 3,724,031 acres were allotted in Oklahoma, Oregon,
eastern Washington, Idaho, the eastern Dakotas and Minnesota. The Five Civilized
Tribes were exempt from the Dawes Act in 1887, but in 1897 the Congress passed the
Curtis Bill, which ended tribal governments in the Five Civilized Tribes and enforced
the allotment of land. Between 1900 and 1916, 14,739,323 acres were allotted in
Oklahoma, Minnesota, many of the same regions affected during the 1890s, and large
reservations of the plains states. The allotment activity died away between 1916 and
1934, during when 5,408,280 acres were allotted.15 Not much arable land was left for
allotment by then, and the allotted land already included the dry areas in southern
Idaho, eastern Montana, Arizona, and southern California that became arable due to
technological advancement in dry farming. The order of the allotment seemed to
reflect the relative “readiness” for farming in these reservations16, i.e. the percentage of
improved lands on reservation, the quality of arable lands, etc. In face of high
administrative costs in surveying the land and making individual allotments, it made
sense to grant private property earlier to those who were better farmers to take
advantage of it. Some also argue that the government was under the pressure of white
settlers to open surplus lands for homestead in reservations with better and improved
agricultural lands.
Allotments led to massive land losses to the reservations. Between 1887 and 1934
about 60 percent of Indian land passed out of Indian hands.17 When the Act was
passed in 1887, Indians still owned approximately 138,000,000 acres of land;18 by 1934
this area had shrunk to 52,000,000 acres. Among the approximately 86,000,000 acres of
land lost, at least 44% were disposed of as “ceded” surpluses after allotment to the
government at the remuneration rate of $1.25 per acre, and at least 25% passed out of the
Indian hands as surplus lands open to settlement by the whites. The grant of fee
patents at the end of the trust period and the removal of sales restrictions accounted for
27% of the total land loss, and sales of original and heirship allotments, permitted by
two consequent Acts, in 1902 (for inherited allotments) and 1907 (for original allotments),
accounted for about 4% of the total loss. (Table 1) While sale of individual allotments
was difficult due to legal prohibition, land leases were much more wide spread,
15Carlson
(1981) p74 for figures.
(1981) p47.
17Washburn (1971) p145.
18Estimate of Land Division, Office of Indian Affairs, quoted in p6, Part X of the Report on Land Planning
Committee to the National Resources Board (1935).
16Carlson
8
diverting huge acreages to white use. By 1934, a total of 11,396,053 acres of grazing
land and 2,499,422 acres of farm land were being leased,19 largely to land-seeking white
settlers. The entrance of white farmers to the reservation area was initially considered
valuable learning opportunities for the Indians. This hope materialized only in rare
circumstances, while the infiltration of white farmers created checkerboard-like
divisions on reservation land, making grazing and rotation in farming more difficult for
the Indians.
Indeed far from becoming efficient farmers, allotted Indians did not farm in any greater
numbers by 1930, and those Indians who were farmers were farther behind white
farmers than they had been in 1900.20 The average acres per Indian farm in ten states in
1900 was 1.21 times that per white farm. In 1930, the average Indian farm was only
half size of the average white farm. The value of land and building per farm for the
Indian farm in 1900 is 36% of the value per white farm, in 1930, the number dropped to
31%. (see Table 2.2 and 2.3)21 Lewis Meriam and staff in their 1928 commissioned
study “the Problem of Indian Administration” reported wide-spread and sometimes
extreme poverty on Indian reservations, a decrease in farming and ranching, prevalent
leasing and selling of the land, and increasing numbers of “idle” Indians eking out a
living on government aid, annuities from the tribe, money acquired from leasing and
selling of the land, and unskilled wage labor. The Preston-Engle report also suggested
that irrigation was a failure on Indian lands, and irrigated lands were largely farmed by
the whites. In Carlson’s study that compares Indian farms with white farms in this
period, he finds that Indians had smaller farms and used lower levels of all non-labor
inputs. (see Table 2.4)22 The value per acre of Indian operated farms relative to the
farms operated by the whites dropped, suggesting the stock of land after the sales were
inferior than before and also the lack of improvements on Indian operated lands.
The consequences of the Dawes Act became clear by the 30’s. In 1933, Commissioner of
Indian Affairs John Collier wrote, “It is only recently that we have come fully to realize
the magnitude of the disaster which the allotment law of 1887 has wrought upon the
Indians.”23 In 1934 the Dawes Act was repealed. The Wheeler-Howard Act (1934),
19Quoted
in p7, Part X of the Report on Land Planning Committee to the National Resources Board (1935).
(1981), p159.
21 Calculated based on Carlson (1981), p152 tables.
22Carlson (1981), p143. It was unlikely that the Indian farms had adopted high labor intensity methods,
because if that were the case it should have been documented, but such documentation was not found.
23Annual Report of the Commissioner of Indian Affairs (1933), quoted in Carlson (1981), p18.
20Carlson
9
also called the Indian Reorganization Act, required that no tribal held land should be
allotted in the future, and the secretary of the interior should return unsold surplus
lands to a tribe that had been opened for homesteads but not yet entered by the white
settlers. It also authorized an annual appropriation of 2 million to purchase lands for
Indians and a revolving credit fund of 10 million to make loans to incorporated tribes.
II Productivity: Potential, Perceived and Realized
The lands of the native Americans after the passage of the Dawes Act entered into the
market for exchange, and as a factor of production it should be employed by those who
could use it the most productively. There is no reason to believe that the potential
productivity should be different between the white settlers and the Indians, as in the
introduction I argued both had to learn a new way of farming from what they were used
to before.
In a simple model I let π be the true potential average productivity of the individual
allotments, πi = riπ be the perceived realizable average productivity by the Indians, and
πw = rwπ be the perceived realizable average productivity by the white settlers. Here
0<ri<=1 and 0<rw<=1. ri and rw are, firstly, functions of various institutional variables
most important of which will soon be described. Let us call the vector of these
institutional variables V. ri and rw, I argue, are also functions, respectively, of Ni and
Nw, indices of the strength of their communities. Ni and Nw are public goods within
the community, such as shared knowledge, risk and capital pooling and the
coordination in versatile usage of the land for ranching and herding. This brings into
the model an external economy, which I will argue was big in agriculture in this
historical period. The community indices are public goods in the sense that they need
costly contribution from each member of the community yet they cannot exclude
members who do not contribute from using the same resources. And later in the paper
I will argue that the community indices were detemined by the number of agricultural
workers, the level of homogeneity of private interest and leadership within the
community and the connectedness between the community and the larger market.
πw = r (Vw, Nw) π
πi = r (Vi, Ni) π
10
The land market was not perfectly competitive. Speculation was widely documented,
and the land price did not equalize marginal productivity of land.24 It was nevertheless
true, assuming individual rationality, that if πi < πw, land should be transfered from the
Indians to the white settlers.
III Institutional Variables
Many institutional factors accounted for a smaller perceived and realized productivity
for the Indians, and I will explore them in order.
1) Communal work and lack of Incentive
It appeared to the policy makers that the most important factor for low productivity was
lack of incentive in a communal living setting. They believed that the native Americans
followed a sort of communism concerning land before the allotment, hence was underdeveloped for lack of private entitlements and correct incentive. Therefore, the Dawes
Act through privatization set both the incentives and the morals right for higher
productivity.
I argue that this view was inaccurate. The pre-allotment land tenure system in most
Indian reservations was far from an inefficient communism; Indian economic activities
were in fact pursued with direct individual rewards in view. Agriculture was done at
household level; on reservations, possession of the land depended on its actual
occupancy, and only when abandoned, the land reverted to common ownership.
Boundaries were respected, and use rights were sustained in many reservations.25 The
Pueblos, probably the oldest and most agricultural economy among those of the Indians,
were individualistic in farming and pooled their efforts only in building and
maintaining the irrigation system.26 The Yakimas had a system of unofficial
assignments of plots to individual families, and based on this they had made remarkable
progress in farming
27
A very telling example is that the Flathead Reservation
compensated thirty tribe members whose improved land were affected by the route of a
railroad, even though The railroad’s right of passing through the reservation was
24speculation
25Carlson
(1981), p87.
(1971), p11.
27Otis (1971), p11.
26Otis
11
approved by the tribe.28 The rational behind this use right land tenure was, according
to the Indians themselves, to guarantee home for all. In 1881, hoping to prevent
allotment on their lands, the Five Civilized Tribes explained their land tenure system in
a petition to the Congress. They wrote, “Improvements can be and frequently are sold,
but the land itself is not a chattel. Its occupancy and possession are indispensable to
holding it, and its abandonment for two years makes it revert to the public domain. In
this way every one of our citizens is assured of a home. The change to individual title
would throw the whole domain in a few years into the hands of a few persons.”29
This “use rights” land tenure seemed to work well, and some American Indians had
been good farmers long before the allotment took place. There are areas in the southwestern United States where for at least 4000 years the Indians had subsisted entirely by
agriculture30 The Cherokees were also subsistent farmers before they were removed to
the wilderness in the west of the Mississippi River.31 In the 1820’s and 1830’s the
federal government moved the Five Civilized Tribes--Cherokee, Choctaw, Chickasaw,
Seminole and Creek—to region west of Arkansas and the eastern part of the present
state of Oklahoma. This territory, mostly rolling, partly wooded, and interlaced with
numerous rock creek and river bottoms, was thought to be a place where white men
would never want to live. They soon developed a successful agricultural economy.
Land was owned on a tribal or communal basis, but there was nothing to prevent an
energetic Indian farmer from expanding his operations into a large scale enterprise
under use right, and when the farm became too large to handle by a single family, they
had help from white farm workers and black slaves.32
In 1900, the census did a survey of “Agriculture on Indian Reservations”, which
concluded with an optimistic tone that the Indians were making progress in farming;
they were willing to work, “once convinced...that his efforts in tilling the soil will repay
him.”33 The Indian agents on reservations were considered influential in helping the
Indians learn to farm, while the Indians were praised for their willingness and diligence.
In some reservations the Indians had some cultural prejudice against farming, but the
authors seemed optimistic that this prejudice would dissipate soon. But it was worth
28Cited
in Carlson (1981), p89.
Record, 46th Cong., 3rd Sess., Vol. XI, Part 1, P.781.
30Fey and McNicle (1959), p29.
31For detailed study of pre-allotment Indian agricultural practice, see Carlon (1981).
32Fite (1966), p201.
331900 census “Agriculture on Indian Reservations,” Vol. V: Agriculture, p717-40.
29Congressional
12
pointing out that before 1900, only 30% of the acres eventually allotted was completed.
Most reservations were still unallotted or newly allotted.
Meriam’s 1928 Report, however, had an urgently pessimistic tone. She documented the
“backward cultural traits” of the Indians, that they lived from hand to mouth and
accumulated too little, they liked to work together even when the production could have
been done more efficiently by fewer people. “This care-free, camp life existence has its
distinctly attractive features must of course be admitted,” wrote Meriam, “...The fact is,
however, that the economic basis upon which this type of existence was predicated has
largely gone and that the Indians must either be adjusted to a new economic basis or go
through the slow, painful process of vanishing.”34 One then asks whether this care-free
camp life existence was a mere remnant of the “nomadic Indian” existence, or was it
something new?
(2) Size
The changes brought by the Dawes Act, therefore, lay not so much in “correcting”
incentives by property rights. The relative prices, however, were very much changed
by the Act. Land became leasable and sellable by individual Indians within years of
the Act’s passage. Within reservations, expansion of land was no longer free to
individual Indian households as the reservations ceded surplus lands. Loss of surplus
lands has not been considered by researchers to be important changes to the reservation
economy. The reasoning was that since these surplus lands were not used before,
taking these “irrelevant alternatives” away would not affect welfare. Yet losing
surplus lands turned the reservations from a land rich economy to a land poor economy.
It was no longer possible to abandon one’s patch of land by simply moving to another
site to start anew, which the Indians often had done.35
The allotments on Indian reservations were often too small for production, and unlike a
white farmer with citizenship, who could legally obtain 160 acres free land of the public
domain under the Homestead Law, another 160 acres under the Preemption Law, and
yet another 160 acres under the Tree-Claim Law,36 the Indian’s allotment normally
could not go beyond 160 acres. That a large portion of the Indian country were more
34Meriam
(1928), p491.
Kelly (1928).
36Fite (1966), p17.
35See
13
suitable for grazing purposes and 160 or even 320 acres was insufficient for living on
stock raising and herding, especially on lands faraway from water, was brought up
again and again in congressional debates.37
Meyer reported that what was left of the
Santee Reservation was incapable of supporting the number of people living on it, given
the climatic conditions of the region. To make things worse, with sales and leases to
the white settlers the landscape was quickly checker-boarded, creating difficulties to
establish cattle industry because the cattle could not run over large expanses of
territory.38
(3) Funds
Lack of access to loanable funds, and consequently shortage of investment capital on the
farm was another difficulty confronting American Indians. According to the Dawes
provision, a mortgage claim could not be made to trust-status allotted lands, and
without the land as collateral, white lenders were unwilling to lend to American Indians
at reasonable rates. Loanable funds for American Indians largely depended on
government programs, which were sporadic. The tribes did have a source of income,
from sale of the tribal surplus land, that they could have made use of, but no systematic
plan was followed to channel this money to investment in agricultural production.
This amount of money was typically distributed by the government to individual
members of the tribe on a per capita basis or kept in tribal accounts at the federal
government for use at a later date.39 Meyer reported that among the Santees, the
money from the sale of former reservation lands and unused appropriations came at a
good time, but not used wisely, and “the expectation of more such windfalls did
irreparable damage to such habits of prudence, thrift, and industry that the Santees had
acquired since 1866.” He quoted the report by the Episcopal missionary in 1896, “Most
if not all of what they expect is disposed of by credit at scores before it is received, and
much is spent in rioting and drunkenness when it is obtained.”40 According to the
Report on Land Planning Committee to the National Resources Board in 1935, the
Indian farms, compared to the ones farmed by white farmers, had a lower debt ratio.41
37Congressional
Record, 46th Cong., 3rd Sess., Vol. XI, Part 1, p781.
(1967), p191.
39Carlson (1981), p73.
40Meyer (1967), p195.
41Part X of the Report on Land Planning Committee to the National Resources Board (1935), p58.
38Meyer
14
Indeed for the white farmers, loanable funds were more abundant. Capital was readily
available as eastern investors poured millions of dollars into western territories, securing
their loans with farm real estate mortgages. The manager of one loan company wrote,
“during many months of 1886 and 1887 we were unable to get enough mortgages for
people of the East who wished to invest in that kind of security.”42 The East also
channeled investment through inter-personal borrowing. Oliver Dalrymple, who
started large-scale farming (Bonanza farming) of wheat in the Red River Valley, started
penniless but borrowed from his brother William in Pennsylvania $2,000 to buy 1280
acres of “the best wheat land situated on the lines of a railroad”43 It is beyond the
scope of this paper to discuss what roles the investors from the East, the railroad
companies, land companies and speculators all played in bringing the wilderness under
cultivation, but that the white settlers had more channels for funding was clear.
(4) Inheritance
The 25 year trust status and other restrictions placed on the Indian ownership of land
not only hindered the use of land as collateral to obtain credit for investment in new
production techniques, but also created complications regarding heirship. The white
farmers upon the death bequeathed the farm and its improvements to only one heir,
who usually would continue to work on the land and compensate the other heirs in cash,
often raised by a loan secured by a mortgage. In the case of Indian lands, this method
was not possible because a mortgage could not be made. The land either was
partitioned among the heirs, or, where such partitioning was not possible, which was
often the case as the heirs were many and the land small, it had to be sold and the
proceeds divided among the heirs.44
(5) Education
Low levels of literacy and education of the American Indians were another hindrance to
realization of the potential productivity of the land. In 1900 56.2% of the native
Americans were illiterate, while the number for the white population is 6.2%.45 Being
illiterate meant farming knowledge had to be learned by listening rather than reading.
42quoted
in Fite (1966), p119.
(1966), p79.
44Part X of the Report on Land Planning Committee to the National Resources Board (1935), p17.
45The Indian Population of the United States and Alaska, 1930, p143. Quoted in Carlson, Appendix A,
p200.
43Fite
15
Illiteracy excluded the native Americans from the forum of sharing knowledge and
learning created by the increasing numbers of farmers’ newspapers, journals and “howto” books at that time.
Ignorance led to sub-optimal decisions. The Meriam report in 1928 reports that often
Indians who selected the allotment for themselves made selections based on the utility
of the land as a means of continuing their primitive mode of existence. Nearness to the
customary domestic water supply, availability of firewood, and the presence of some
native wild food were common motives in choosing one allotment over another. Few
were sufficiently far-sighted to select land on the basis of its productivity when used as
the white men used it. Meriam report also criticized the federal government’s
educational program for its lack of vocational training. The educational policy of the
federal government focused primarily on teaching a wide range of white culture and
values and preparing the American Indians for citizenship. The only attempt made by
the government in providing technical assistance was to make appropriations for white
“additional farmers” on the reservations to serve as models for the Indians, and hope
that when the white settlers moved into the opened reservation, the Indians would learn
more advanced farming techniques just by living closer to the white farmers. Yet this
turned out to be ineffective. In 1890 the Rosebud agent reported that “unless Indians
are so located that the farmer can be amongst them all the time but little can or will be
accomplished, as during his absence, which may be for two or three weeks, an Indian
breaking an implement becomes discouraged and awaits his return.”46
These above factors were among the important ones that created a wedge between the
perceived realizable productivity, the driving force behind the land transfer from the
Indians to the white farmers. The actual transfer was through land sale and land lease,
and involved a number of players including the federal Indian agent on the reservation,
real estate companies and land speculators. White farmers who bought or leased
individual Indian allotments often had come to the reservation hoping to get from the
government the ceded surplus Indian land. Opening of the Indian reservations was
indeed the centre of interest by land speculators and farmers. In 1890, when the Sioux
reservation was opened, hundreds of boomers gathered at Pierre and Chamberlain
waiting for the official word of the opening. According to Fite, “when the
announcement came at 3:30pm on February 11, a cannon was fired at Pierre, the
46The
Rosebud agent, Report of Commissioner (1890), p59.
16
legislators rose in their seats and cheered, and hundreds of people drove their teams
across the river on the ice and rushed to locate land.”47 However, many farmers
arrived at the reservations and discovered that there was no good land left in the public
domain, and subsequently opted to purchase from land dealers. How land speculation,
the homestead law and the government involvement affected the price of land still
needs further research to decide. The decision of leaving or staying on the land also
depends how much one could earn without the land, and it would be fruitful to look at
the occupations of landless Indians in early this century. Most Indians between 19001930 stayed in rural areas. In 1910, 4.5% of the Indian population of the United States
lived in urban areas, and by 1930, this had only increased to 9.9%, in contrast to the
percentage of blacks in urban areas, which rose from 27.4% to 43.7%.48
The
percentage of people gainfully employed was also much lower in the Indian population
during the earlier years in this century. In 1910, 40% of male Indians were not gainfully
employed, in contrast with the national male average of 20%. Perceivably employment
prospects for whites would be better than the Indians because the Indians were subject
to discrimination. On the other hand, some landless Indians had lived on the income of
their relatives. This security net embedded in kinship may not be there for the white
farmers, who were likely to be first-generation immigrants and whose culture valued
financial independence.
IV External Economy
External economy was especially important in farming in this period of time in America,
where the expansion of agricultural frontier just concluded not long ago. The whites
were new arrivals on their farms and needed to learn and experiment with new methods
of farming and new crops. The Indians had been where they were longer, but also
needed to make the transition from a land-rich economy to a land-poor economy. In
this situation, pooling knowledge was crucial, and high illiteracy rate among the native
Americans made it even more important, for many could not learn about new
information in other ways than through the literate members in the community.
Pooling resources and sharing risks were also important, when the individual farms
were too small, or when one family alone could not invest in farming equipments. And
finally, the institutional constraints, such as the heirship system, could be changed to a
more fitting arrangement, though not necessarily resembling that of the whites, if there
47Fite
(1966), p110.
(1981), p155.
48Carlson
17
were enough people in the community to change the convention. One could also
imagine the checker-boarding of the reservations better controlled if more cooperation
between the native American households were present. The fact that the checkerboarding of the reservation had been reported again and again to have made large scale
grazing and farming impossible also suggested the unit of perceived cooperation was
defined along the racial lines. The checker-board would not be a checker-board in the
language of the Indian Agents if the Indians and the whites were cooperating with each
other regardless of race. Further research is needed to determine the level of
interaction, but the existence of external economy along the line of race and therefore
inclusion of Ni in ri and Nw in rw, measurement of community strength, seem
legitimate.
Community strength N contributes to the realizable productivity and an optimistic
perception of potential in following channels. First, the scale of production, or the
number of people doing farming in the community, contributes to the productivity.
More practitioners meant more potential exchange of information, ideas, experimental
results, joint investment and risk pooling. Second, the strength of leadership
contributes to productivity, for an under-supply of public goods can be raised to the
optimal level if there is a benevolent planner.
Third, the heterogeneity in the
community is important. We explore the public good issue using a simple model.
Consider a community with J members and one public good. Assume that the quantity
of this good has no effects on the prices of other traded, private goods, i.e. partial
equilibrium analysis is valid. Normalize the utility function of each member j with the
numeraire being all other traded commodities, and denote this utility function Nj(x),
where x is the quantity of the public good in the community. Notice that I use N to
indicate utility here, because this utility corresponds to the N variables in the earlier
realizable productivity functions. Assume Nj(.) is twice differentiable, with Nj’(x) > 0
and Nj’’(x) < 0 for all x >= 0. The cost of supplying q units of the public good is c(q),
also twice differentiable, with c’(q) > 0 and c’’(q) < 0 for all q >= 0.
Assume the members of the community maximize a quasilinear maximand. A pareto
efficient outcome needs to slove
J
max ∑ N j (q) − c(q)
q≥0
j=1
18
with FOC for the optimal quantity q*
J
∑ N ' (q ) ≤ c' (q
j =1
0
0
j
) with equality if qo>0
When qo>0, the sum of marginal benefits from the public goods is equalized to the
marginal cost, and the outcome is efficient.
To assume the maximand is quasilinear is not exactly correct, as the production function
and the realization function (r) may not have the required forms for the members to
maximize a quasilinear function of N and the cost. Yet for purpose of illustration I
think it serves sufficiently.
The textbook method49 to decide individual contribution is to imagine a market where
the public good is traded with price p and each member decides how much the good he
wants to buy. This is the demand side. For the supply side imagine a supplier of the
public good who maximizes profits by deciding how much public good to produce at
the market price.
For member j in the community, he solves the following maximization problem where
p* is the competitive price for the public good,
Max N j ( x j + ∑ xt ) − p * x j
xi ≥0
t≠j
with FOC for the optimal amount xj*:
N j ' ( x j * + ∑ x t *) ≤ p *
t≠j
with equality if xj*>0
The supplier solves
Max (p *q − c(q))
q≥ 0
with FOC for optimal q*:
p* ≤ c' (q*) with equality if q*>0
49Following
(1)
Mas-Colell, Whinston and Green (1995), Microeconomic Theory, p362.
19
The market clearing condition is: q*=x*. Combine the two FOC’s, and assume that
I>1 and q*>0, then
J
∑ N ' ( q*) > c' ( q*)
j =1
j
The sum of marginal benefits is greater than the marginal cost, indicating under-supply.
When q*=0, the public good is completely absent.
When there is heterogeneity in the benefit function, i.e., Nj’s are different, then equation
(1) holds equality only for the member with the highest benefit from the public good,
therefore, he is the sole provider of the public good.
Private provision of the public good was important for the white settlers, and in the
following section I will discuss how the private interests of railroad companies drove
promotion and advertisement, bringing printed media into action of constructing a
community of frontier farmers and prospects. This private interest of promoting
sharing of information and scale economy was absent in the Indian reservations.
III
Romance, Identity and their Promoters
When an economy is growing, there is uncertainty and hardship. How uncertainty and
hardship are viewed reflects not only one’s personality but also a group’s identity. We
are braver when the people around us are braver. Institutions can pool risks and lessen
hardship, but it is the shared attitude toward these things among people that is the
common denominator beneath the institutions. The study of history stirs the heart by
studying what is underneath; the study of economics cannot by focusing on the groundlevel operations. And the fact is, we do have a heart, and even in this age of
deconstructionism we have romances and I think we better believe in them even if the
vogue, at least within the economics profession and I suspect in many others, is to say
no.
The public romance, however, was very often produced with private interests. The
classical example of private provision of public goods is the historical light-houses in
England, helping all fishermen without exclusion but normally funded by a private
party who benefits from it the most.
Many other examples abound, including the
20
preservation of the Boston Common, led by the social and economic elites to bulwark
their real estate value in Back Bay yet benefiting the city as a whole.50 In the case of
agricultural settlement, railroad companies, out of their interest to sell company land,
granted or acquired from the government, and develop their business, were the most
active agents. The Union Pacific, Northern Pacific, Burlington, Santa Fe, and other lines
all organized promotional campaigns and distributed millions of multi-language
pamphlets and maps, usually through the land department or a company immigration
bureau. In the single year of 1882 the Northern Pacific distributed 632,590 copies of
promotion material, written in English, Swedish, Dutch, Danish and Norwegian.
Newspaper advertisement was another main channel to recruit settlers, and they were
placed by the railroad companies in newspapers in the East and Northern Europe. The
advertisements were accompanied with uplifting words describing the romantic frontier
and beautiful images of farms growing out of the woods (see illustrations). Journalists
were invited to go on excursions sponsored by railroads; and often they were so
impressed with the land and the abundant food and drink provided gratis on the
journey that they volunteered to write about what they saw with great enthusiasm.51
The railroads also developed practical programs to locate farmers directly on railroadowned land and also provided transportation to the settlers, not forgetting to providing
large blocks of land that would lure an entire community to move altogether.52
The county governments were also actively recruiting people. With private land
companies and the railroads, they together created a moral and romantic image of the
frontier farmer. A pamphlet distributed by the Waseca County in Minnesota
addressed itself to “laboring men who earn a livinghood by honest toil, to landless men
who aspire to the dignity and independence which comes from a free home on God’s
green earth; to all men who wish for homes in a beautiful, fertile, productive country.”53
Land not only meant dignity, it also meant profit. The newspapers circulated
successful stories. On September 20, 1879, the Commercial and Financial Chronicle
devoted about half of an article on wheat growing in the United States to large-scale
operations in Dakota. Referring to a new system of raising wheat, the writer said, “It is
no longer left to the small farmer, taking up 160 acres of land, building a log cabin and
struggling to secure himself a home. Organized capital is being employed in the
50see
Domosh (1996), p127.
(1966), p29.
52Fite (1966), p32.
53Fite (1966), p27.
51Fite
21
work.”54 This was exactly the Bonanza farming in the Red River Valley, developed by
the fellow who borrowed 2,000 dollars from his brother who lived in the East to start the
business. Reports of quick and large profits excited the imagination of thousands of
restless settlers and stimulated the rapid westward movement of the 1880s; and learning
about these highly mechanized operations of large-scale farmers encouraged the smaller
farmers to mechanize and promoted thinking along lines of growth and long term
investments.
Surely advertisements were not the only channel through which farmers learned about
the faraway lands and the possibility of settling there, and sometimes skepticism
towards such beautiful pictures were confirmed by letters from friends or family who
joined land-seeking movement. It is beyond the scope of this paper to ask how
information flowed among settlers and prospects. I suspect letters from that period
would be very interesting to look at, especially women’s letters, and probably many
people have found it interesting and already have done so.
But nevertheless the spirit was high. Unfavorable agricultural conditions on the Central
Plains retarded agricultural growth in early 1880’s, and home filing dropped sharply
during these years, evidence of sufficient information for prospects, yet pessimism and
discouragement were easily washed away by the increased rainfall and improved crops,
suggesting people’s fundamental optimism. The Kansas City Journal reported in
March, 1884 that “for more than four weeks almost every train from the east has been
loaded with large parties of excursionists ... seeking homes in various portions of
Kansas.”55
The printed media by circulating the good message of weather forecasts
and technological advances was wind on the tide.
The general optimism found in white settlers was absent in the Indian communities.
The image of the frontier farmer was not Indian—if they were in the story at all, they
were seen on horsebacks.56 The expansion of white farming to the Indians meant
threat. On top of the uncertainty of adjusting their agricultural production methods
and farming a relatively unfamiliar land, there was also political uncertainty. In the
1860’s the volume of Indian legislation increased, and some of it intruded the power of
the United States in internal tribal affairs. An act of 1862 provided that a chief or
54Fite
(1966), p83.
(1966), p117
56It will be interesting to look at how the Indians read the white literature of the Indians.
55Fite
22
headman might be removed from office as a punitive measure. Legislation of this
nature increased sharply after 1871, and the effects of legislation in time penetrated
every sphere of tribal, family, and individual interests. While the tribe government
was stripped of authority, the land-seeking white settlers had been an active force in
shaping the process of the allotment. White pressure had been exerted to speed up the
allotment process to hasten the opening of the reservation for settlement.57 Wittlesey of
the Board of Indian Commissioners reported that, “Another hindrance is the influence
brought to bear by surrounding white settlers who are waiting to get possession of the
lands that may be reserved after allotments are completed. If there are valuable tracts of
land, the whites try to prevent those from being allotted, and to prevent the Indians
from selecting them by bribery and by other means.”58 Near the end of 1889 the
Commissioner of Indian Affairs reported to the Secretary of the Interior that the Indians
of the Sioux reservation urged the Department to have their land surveyed and allotted
before the land would be opened to white settlers who would force them to leave their
lands. The Commissioner agreed that their apprehensions were reasonable in light of
past experiences.59 After the allotment process, the courts for the Southern Cheyenne
and Arapahoes were reluctant to enforce decisions involving Indian claims against
whites.60 The memory of the wounded knee in 1891 was a perpetual haunt.61
Commissioner Morgan reported in 1890, “The settled policy of the government is to
break up reservations, destroy tribal relations, settle Indians upon their own homesteads,
incorporate them into the national life, and deal with them not as nations or tribes or
bands, but as individual citizens.”62 This objective was protested against. Nineteen
tribes met at the International council of Indian territory meeting in 1887 and voted
unanimously against allotment. In their declaration they wrote,
Like other people the Indian needs at least a germ of political identity, some
governmental organization of his own, however crude, to which his pride in
manhood may cling and claim allegiance, in order to make true progress in the
affairs of life. This peculiarity in the Indian character is elsewhere called
57Carlson
(1981), p43.
(1971), p145.
59Federal Relations with the Great Sioux Indians of South Dakota, 1887-1933, p87.
60See Berthrong (1972), also his “Legacies of the Dawes Act: Bureaucrats and Land Thieves at the
Cheyenne-Arapacho Agencies of Oklahoma” in Arizona and the West (Winter 1979) p335-54.
61See Brown(1970).
62Fey and McNickle (1959), p67.
58Otis
23
“patriotism,” the wise and patient fashioning and guidance of which alone will
successfully solve the question of civilization. Exclude him from this and he has
little else to live for.”63
While the white population was inspired by a vocabulary that invoked frontier, dignity
and progress, the Indians were considered to be living in a time already past. Their
alienation from the mainstream society could be exacerbated by illiteracy, and their
estimation of what agriculture could achieve might be less informed than the white
settlers by the recent technological advances in farming. From the reports of Indian
agents, it seemed the Indian agent and some white “model farmers” paid by the federal
government to live on the reservations to show their examples, the Indians had no other
way of learning farming than reading, if they were able to read, what was in the printed
media market. More research needs to be done regarding reservation publications of
that time. Another fruitful research area is to study the leadership of the tribal elite in
that period of time, as well as inter-tribal relationship. This requires large amount of
archival work, as I have not found satisfactory secondary literature.
Conclusion
This paper studied the Dawes Act, observed the decline of farming and land loss in
Indian reservations, and the institutional factors that might have caused it. It asked
how the white settlers, though coming from different origins, were involved in a
community created by private interests but delivering public goods--the public goods of
shared information and optimism. In comparison the Indians did not exploit the
positive externalities involved in farming and did not revitalize the culture’s
interpretation power. Instead they fell pessimistic in face of various uncertainties and
made individual decisions. The land was checker-boarded. The size of the Indian
farms shrank and the value of their farms fell even more behind that of the white farms.
The percentage of native Americans gainfully employed was also reduced. This failure
of generating their own romance with land shaped the land holding of the native
Americans to this day.
63Report
of the Commissioner of Indian Affairs(1887).
24
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26