Indian Trading Houses

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INDIAN TRADING HOUSES were government owned and operated stores that existed from 1795 to 1822 as part of the federal government's effort to regulate trade with Native Americans. During this period, twenty-eight trading posts were established, but only seven or eight were extant at any given time. The first stores were established at Coleraine, Georgia, and Tellico, Tennessee. The most important ones were located at Green Bay and Prairie du Chien, Wisconsin; Detroit and Mackinac, Michigan; Chicago, Illinois; Fort Wayne, Indiana; Chickasaw Bluffs, Mississippi; and Natchitoches, Louisiana.

The idea of winning the goodwill of the Indians by supplying them with goods from official stores originated in the colonial period. Massachusetts and South Carolina maintained such stores at different times; in 1753, Benjamin Franklin recommended that Pennsylvania establish a similar system. In 1775, the Continental Congress appointed a committee to devise a trading house system, also called a factory system. In 1793, President George Washington recommended the establishment of a series of trading posts at which Indians could secure goods at cost, and Congress established the first such posts with the Trading Houses Act in 1796. Congress intended the trading house system to strengthen military policy, promote peace on the frontier, protect the Indians against exploitation by private traders, and offset the British and Spanish influence over the Indians.

The trading houses sent in their orders for goods to the superintendent of Indian trade, whose office was in Philadelphia until 1808, when it was moved to Washington, D.C. The superintendent bought the goods on the open market or by bids and shipped them to the trading posts. The principal distributing points were Detroit, Saint Louis, and New Orleans. The post overseers, also known as factors, sold the goods to the Indians and received furs, skins, bear oil, beeswax, and other products in exchange. These products were shipped to the superintendent, who sold them at auction or in foreign markets.

Many difficulties arose under this system: freight rates were excessively high; delays were constant; the superintendent was limited to the domestic market in making his purchases and, as a result, frequently secured goods of inferior quality; skins and furs were often improperly treated, resulting in considerable losses; and the factors were forced to disobey instructions and sell on credit, thus losing money from uncollected accounts. The system did little to reduce foreign influence over Native Americans and was even less effective at preventing Indian exploitation by private traders.

The trading house system was never accepted as a permanent policy. Congress seldom assured its existence for longer than a two-year period. The superintendent and factors were thus unable to plan for the future. Private traders, Indian agents, and frontier merchants opposed the system; opponents circulated false stories and eventually secured its abolition. Sen. Thomas H. Benton of Missouri, inspired by the fur companies and his state's traders, led the fight that closed the system in 1822.


Prucha, Francis P. The Great Father: The United States Government and the American Indians. Lincoln: University of Nebraska Press, 1984; 1986; 1995.

Wallace, Anthony F. C. Jefferson and the Indians: The Tragic Fate of the First Americans. Cambridge, Mass.: Belknap Press of Harvard University Press, 1999.

Edgar B.Wesley/j. h.

See alsoFur Trade and Trapping ; Indians and Alcohol ; Indian Policy, U.S. 1775–1830 ; Indian Trade and Traders .

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Indian Trading Houses

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Indian Trading Houses