The Great American Indian Land Heist

This article appeared on Forbes.com on October 14, 2019.
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Today, we celebrate Indigenous Peoples’ Day in the U.S. I use the word “celebrate” advisedly. The record of the U.S. government’s treatment of American Indians has been dismal. The scene has been set many times. Indeed, in 1831, the U.S. Supreme Court concluded that the relationship between the federal government and the Indian tribes was that of a “ward to his guardian.” With that, the die was cast. The Indians were deemed to be mere wards of the State—dependencies of the federal government.

Throughout the 19th century, Indian policymaking was characterized by simplistic diagnoses of Indian problems, easy solutions, and stereotypes of Indians as uncivilized savages. During the early decades of the century, Indian policy was influenced primarily by missionaries who believed that the teachings of the Bible and acceptance of the Sabbath were the best means for civilizing Indians and integrating them into society.

The lack of success of the missionary approach led to the domination of policymaking by 19th-century liberals. They believed that exposing Indians to private property rights and a laissez-faire economic system would enable them to better adjust to a civil society. The latter approach, as well as Indian stereotypes characteristic of the era, are well captured in the views of Merrill E. Gates, president of both Amherst College and the Lake Mohonk Conference of the Friends of the Indians. In his presidential address at the 1896 annual meeting of the Conference, he observed that there was a "need of awakening in the savage Indian broader desires and ampler wants…. Discontent with the tepee and the starving rations of the Indian camp in winter is needed to get the Indian out of the blanket and into trousers." Moreover, he argued, these trousers needed to have "a pocket in them... a pocket that aches to be filled with dollars.”

The Dawes Severalty Act of 1887 was a product of such thinking. Most influential people thought that hard work, thrift, and a system of private property rights would encourage and enable Indians to acquire wealth and become integrated into society. The Dawes Act authorized the President to allot land on Indian reservations to individual Indians. Heads of families were to receive 160 acres, while others were to receive smaller allotments. Indians were also to receive full citizenship with the land transfers. Titles were to be held in trust by the United States government for 25 years, and then the land could be freely transferred. "Surplus" land—land left over after the allotments had been made—was to be sold on the open market.

Since there were considerably more "Indian lands" than acreages that qualified for Indian allotments, almost half of the land controlled by Indians was declared "surplus" and removed from their control. This amounted to nothing more than a great American Indian land heist. Also, many Indians who qualified and received allotments sold their newly acquired lands. This further reduced lands under Indian ownership and control. In addition, and perhaps most importantly, Indians (as well as many white homesteaders) were not afforded common-law protections that accompany property and contracts. Property rights and contracts were often neither enforced nor protected. Indeed, many Indians lost their lands through tactics that ranged from deceit and duplicity to murder.

With the passage of the Dawes Act in 1887, the land area “controlled” by Indians was reduced by 50%. By the time the so-called Indian New Deal of 1934 arrived—reversing the policies set in motion by the Dawes Act—about 38% of the acreage that had been allocated to Indians under provisions of the Act was transferred to non-Indians through sales and other means. Moreover, much of the land that the Indians retained was semiarid or desert land in the Southwest. This, along with the fact that the average parcel awarded to an Indian was only 160 acres, resulted in a great deal of Indian ownership that was not economically viable.

The experience of the Dawes Act led Indians to distrust private ownership. This is most unfortunate since private ownership had little to do with the failure of the Dawes Act. Rather, the Act failed as the result of a poorly conceived federal policy and a frontier justice system that did not properly recognize and use the common law of property and contracts. Consequently, in a misguided effort to ensure that they are not exploited by private property institutions, many Indians have favored public ownership.

But, Indian views are neither monolithic nor static. The Siletz Indians in Oregon, whom I served as an adviser to in the 1980s, endorsed privatization. And, it’s clear why they did. If privatized, the value of the Siletz reservation lands would increase by nearly threefold.

Steve H. Hanke

Steve Hanke is a professor of applied economics at The Johns Hopkins University and senior fellow at the Cato Institute.