Indian Economic Life

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INDIAN ECONOMIC LIFE. In the two millennia before Columbus initiated continuous contact between Europe and the Americas, Indian economies were based on combinations of agriculture, fishing, hunting, and gathering. The horticultural practices of many gathering societies blurred the line between agriculture and gathering; Indians in many areas used fire and harvesting techniques to modify the productivity of the landscape for humans. As a result, berry patches, nut-bearing trees, basketry material, and forage for game animals were more prevalent than they would have been without human intervention. Indians of the Northeast woodlands practiced shifting agriculture as they rotated across the landscape, clearing the forest for fields of corn, beans, and squash around villages that moved every thirty to fifty years. Although they cultivated crops, they used the forest to restore soil productivity. In the desert Southwest, several large societies utilized irrigated agriculture; these societies went through cycles of growth and retreat as a result both of environmental and social changes.

Several areas developed sufficiently productive economies to support elite classes that controlled the economy and political system. In the Pacific Northwest, a title-holding class arose based on control and management of lucrative salmon runs. In the Mississippi Valley, an elite also developed, based in several large cities, of which Cahokia near present-day St. Louis is the most well known. At its height (in the thirteenth century), it had a population between 20,000 and 50,000.

These complicated local economies utilized long-distance trade for further enrichment; centers of trade were located throughout the continent—examples are on the Columbia River and the Dalles, at Cahokia on the Mississippi River, along the St. Lawrence River, and in the Southwest. The use of trade goods such as shell beads, stone tools, copper, flint products, and pottery has been confirmed in archaeological records; biodegradable goods were probably also traded, including hides, dried meat, canoes, cotton cloth, and baskets. Dried fish, oil, and human slaves were traded in the Pacific Northwest. Although markets and regional prices probably existed in the trading networks, actual exchange most likely invoked reciprocity rules that dominated in local economies.

Local economies were organized by many types of systems based on reciprocity and tied closely to the ecosystems in which the economies functioned. Leaders in most societies were expected to collect property and food that would be available for distribution to other members of the society, especially in times of need. Most well known of the reciprocity systems were the feasts used in the Pacific Northwest for distribution and governance, called "potlatches" by Europeans. The elite classes hosted feasts annually in order to celebrate family events (marriage, accession to titles) and simultaneously to generate recognition of property ownership and leadership authority. Fishing sites, small river drainages, and hunting grounds were held by "houses," groups of related kin who followed the directions of the men and women holding titles in the houses. Once the salmon harvesting and storing technology became linked to the house system two thousand years before contact, societies in the Pacific Northwest maintained their high population level and their way of life relatively unchanged until contact.

In the Northeast, Europeans after contact found that they had to enter into gift-giving relationships in order to conduct trade and make treaties with the indigenous people. The diplomatic and trade practices of the Iroquois Confederacy, for instance, linked gift exchange to peace making. Each town in the Confederacy had two sides ("moieties"), each of which shared food and other resources with the other. Women owned the agricultural land and organized horticultural production while men hunted.

Impact of Initial Contact with Europe

Because both the Old World and New World had developed different ways of managing their ecosystems, potential for productive trade and exchange of knowledge existed when European sailing vessels initiated contact. The New World had productive plants such as corn and potatoes, and valuable wildlife such as beaver and deer. The Old World had domesticated animals, metal tools, and wool cloth. Contact created huge changes in both worlds. Plants such as the potato participated in the agricultural revolution in northern Europe. The horse changed the Plains culture in North America.

Initial contact with Europeans led to the spread of diseases that decimated indigenous populations. The Atlantic Coast was depopulated all along its length. In the densely populated Southeast, for example, whole villages were abandoned. A consequence of this depopulation was that the first European settlers found land available for agriculture and found the tended countryside well stocked with berries and game.

During the seventeenth century, the remaining Indians and European settlers developed a lucrative trading system. Two of the main staples of the trade were furs in the north and deerskins in the south. The fur trade began late in the sixteenth century and lasted into the twentieth century. It was rooted in the demand for felt hats in Europe and was influenced by the competition for furs between the English and French (both with Indian intermediaries); by the establishment of large trading companies (among which the Hudson's Bay Company came to dominate); and by difficulties on the Indian side in defending the closed-access property systems that they were able to establish early in the trading system.

Throughout the postcontact period, Indians had difficulty excluding other Indians and non-Indian hunters from their lands; this inability to exclude others created "open access" to fish, beaver, deer, buffalo, berries, and other natural products useful to humans. An Indian community unable to exclude others from its common lands was unable to enforce conservation practices and the resources became depleted.

The problem of uncontrolled access to hunting grounds influenced the deerskin trade in the Southeast. In the eighteenth century, deerskins and furs were the fourth largest export from the British colonies, after tobacco, bread and flour, and rice. Trading in deerskins was profitable for middlemen and a significant source of tax revenue for colonial governments. With this large demand for the resource, controlling the hunting grounds was important, but proved to be difficult for Indians. The importance of hunting in generating income also increased the relative status of men compared to women, who tended crops.

Other changes also occurred as a result of contact with Europeans. Although Indians had domesticated many plants, they had not domesticated many animals. Animals introduced from Europe changed the options in hunting, gathering, and agriculture. The horse introduced dramatic changes on the Great Plains, inducing a move toward greater reliance on buffalo and less on agriculture. Sheep changed the use of the countryside among the Navajo, and cattle raising spread to California and the Southeast. Tobacco also became a cash crop in the region, allowing Indians to participate in the expanding system of commercial agriculture. By the nineteenth century, some southeastern Indians had even become slave owners.

Consequences of the Industrial Revolution

Although some believe trade itself degraded the Indians' power, in the colonial era both Indians and Europeans benefited from their exchanges. Indians participated significantly in both the fur and deerskin trades. After the industrial revolution began in England in the mid-eighteenth century, exchange between the continents did lead to faltering Indian economies. The resulting economic expansion in Europe and the Americas led to removal of native peoples from their lands. The open-access problems that had led to decimation of fish, beaver, and deer in much of the continent became a greater problem as the new capitalist economy expanded westward. Indians suffered because the sources of their livelihood were depleted and because the new governments of the United States and Canada did not recognize land ownership by the indigenous peoples.

After the War of 1812, the American economy began to grow rapidly and the non-Indian population began to flow westward. Fueled by the British demand for cotton, southern settlements spread first to the Mississippi, and then to Texas. Although the Cherokees had participated in the growth of the agricultural economy, and were strong competitors in the market, they were severely outnumbered and could not resist removal to Indian Territory.

Removal occurred in both the South and the North: by 1850 the United States east of the Mississippi River had very few resident Indians. The Iroquois of New York State mainly remained, and later joined the economy as laborers. Mohawks working in high-rise steel construction were well known. Other Indians on Cape Cod, Long Island, and in the rural areas of the South became wage laborers after having been displaced from their lands. This process of moving Indians to the margins of white society also occurred in California and the Great Basin.

Although many tribes had reservations in Nebraska and Kansas, in 1854 those states were opened for white settlement, and the Indians had to move to Indian Territory. In California, the explosion of white population following the discovery of gold in 1849 swept away a great many Indian communities and much of the Mexican hacienda system that had provided Native people with employment. Even as Indians in the Plains found that a reservation, once made, could be unmade, Indians in the Pacific Northwest were signing treaties that defined new reservations. Relying on salmon fishing and hunting, many of these tribes reserved their right to harvest fish and game outside of the reservations. These rights became compromised when open-access rules of harvest were also applied to those resources late in the nineteenth and early in the twentieth centuries. Salmon harvesting became industrialized as many salmon canneries were established on the Columbia River and in Puget Sound. On the reservations established from 1850 to 1890, Indians developed agriculture, as they were restricted from harvesting game outside of the reservations. For Indians in the Plains, open access to buffalo had led to the near-extinction of the species, and they had little choice but to find new sources of food.

The third main period of Indian economic history began with the division of reservations into individual landholdings, or allotments. This process accelerated following the passage of the Dawes General Allotment Act in 1887. Initially, the Indians' allotments were not to be sold, but by 1917 they were being sold in great numbers. On many reservations, lands not allotted were opened for non-Indian homesteading. On other reservations, the Bureau of Reclamation built irrigation projects, and on most of these reservations the best-irrigated land, often predominately Indian in ownership, quickly was purchased by non-Indians. Indians survived by working for wages or carrying out diminished subsistence activities, and through government support.

Early in the twentieth century, Indian ownership and control of resources fell to their historical low. Although the Indian Reorganization Act of 1934 ended land cessions, other policies accompanying the act allowed access to minerals and timber on Indian lands. After World War I, the few tribes that had built successful economies, based on timber and other resources, became the main targets for "termination" of their already diminished reservations. Some avoided termination, but many did not.

Revival in Late Twentieth Century

Fighting against termination began to create a resurgence of Indian political activity, which in turn lead to resurgence in economic activity. The 1960s brought both the end of the termination policy and the emergence of Indian activism, a process that was also encouraged by the civil rights movement. Throughout the 1970s, tribes began enterprises, and federal programs supported expanding reservation economies both with direct aid and indirectly through large housing programs. Under President Ronald Reagan in the 1980s, the supply of capital and resources from Washington to Indian Country shrank, but, simultaneously, some tribes were able to establish community-owned bingo and, later, casino gambling. This "gaming" economy became important for tribes located near large urban markets; such tribes became able to climb out of poverty. Other tribes, far from these markets, were not able to benefit from casino gambling. Many tribal enterprises—from farms to ranches to light industry and assembly plants—existed in other sectors at the end of the century. Private Indian enterprise was extensive; in 1997, the Census Bureau found almost 200,000 firms located throughout the country, with most in services (including entertainment and gaming), construction, and retail trade.

Although great change occurred in Indian economic life during the last five hundred years, Indian economies remained somewhat distinct from those of other minority groups in the United States. The 1997 Economic Censuses, for instance, were not able to collect data fully on Indians because the form of their enterprises did not conform to those of other people. No categories for "tribal corporations" or "subsistence hunters" were included, for example, and as a result, the census data was not complete. The persistence of these activities connected them to the precontact traditions of reciprocity in exchange and dependence on the continent's ecosystems.


Barrington, Linda, ed. The Other Side of the Frontier: Economic Explorations into Native American History. Boulder, Colo.: Westview Press, 1999.

Boyd, Robert, ed. Indians, Fire, and the Land in the Pacific Northwest. Corvallis: Oregon State University Press, 1999.

Carlson, Leonard A. Indians, Bureaucrats, and Land: The Dawes Act and the Decline of Indian Farming. Westport, Conn.: Greenwood Press, 1981.

Littlefield, Alice, and Martha C. Knack, eds. Native Americans and Wage Labor: Ethnohistorical Perspectives. Norman: University of Oklahoma Press, 1996.

McDonnell, Janet A. The Dispossession of the American Indian, 1887–1934. Bloomington: Indiana University Press, 1991.

Moore, John H., ed. The Political Economy of North American Indians. Norman: University of Oklahoma Press, 1993.

Ray, Arthur J. I Have Lived Here since the World Began: An Illustrated History of Canada's Native People. Toronto: Lester and Key Porter, 1996.

Tanner, Helen Hornbeck, ed. The Settling of North America: The Atlas of the Great Migrations into North America from the Ice Age to the Present. New York: Macmillan, 1995.

U. S. Census Bureau. American Indians and Alaska Natives: 1997 Economic Census, Survey of Minority-Owned Business Enterprise, EC97CS-6. Washington: U. S. Government Printing Office, 2001.

Ronald L.Trosper

See alsoAgriculture, American Indian ; Buffalo ; Dawes General Allotment Act ; Fur Trade and Trapping ; Indian Removal ; Indian Reorganization Act ; Indian Reservations ; Indian Territory .