The New Trail of Tears

by Naomi Schaefer Riley

  Underlying federal policy are the assumptions that Indians are simply incapable of managing their own affairs and that natural resource development somehow runs contrary to their traditions. Researchers have examined this latter assumption in recent years. In his book 1491: New Revelations of the Americas before Columbus, Charles Mann looks at the scholarly consensus and concludes that the land was hardly “pristine” before Europeans’ arrival. For example, he says of the Amazon rainforests, “The new picture doesn’t automatically legitimate burning down the forest. Instead it suggests that for a long time clever people who knew tricks that we have yet to learn used big chunks of Amazonia nondestructively. Faced with an ecological problem, the Indians fixed it. Rather than adapt to Nature, they fixed it.”21

  Another common assumption about Indians today is that they’re traditionally communists, sharing all property. But the truth is much more complicated, and historians have found significant evidence of individual and family-held property rights among Indian tribes.

  In the 1974 “Boldt” decision, which granted fishing rights to Indians in the Pacific Northwest, presiding judge George Boldt cited the history of Indian fishing in the area in his decision: “Generally, individual Indians had primary use rights in the territory where they resided and permissive use rights in the natal territory (if this was different) or in territories where they had consanguineal kin. Subject to such individual claims, most groups claimed autumn fishing use rights in the waters near to their winter villages. Spring and summer fishing areas were often more distantly located and often were shared with other groups from other villages.”22 Indians invested significant effort in ensuring an adequate supply of fish each year. The idea that prior to whites’ arrival, Indians were simply roving bands living off whatever wildlife they happened to come upon and then sharing it equally among themselves runs contrary to history – not to mention everything we know about human ingenuity and human nature.

  But it’s an idea that continues to dictate public policy.

  For today’s journalists and historians looking back at the Dawes Act, the problem is clear. As Bordewich wrote, “Like many of his contemporaries in the golden age of capitalism, Dawes perceived private property as an almost magical force, a severe but benevolent taskmaster with transformative power.”23

  The truth of the matter is that Dawes was right – private property is an almost magical force. As any survey of world history demonstrates, countries that have adopted private property rights and the rule of law to enforce them are better off by almost every measure. Over the past 200 years, with the spread of capitalism, global per capita income has increased more than tenfold and average life expectancy has more than doubled.

  As Leonard Carlson notes in his 1981 book Indians, Bureaucrats, and Land, “no student of property rights or, indeed, economic theory will be surprised that the complicated and heavily supervised property right that emerged from allotment led to inefficiencies, corruption and losses for both Indians and society.”24

  In addition to the corruption that dominated the initial process of assigning allotments, there was also the 25-year waiting period before Indians actually owned their plot of land outright. This provision, ostensibly intended to protect Indians from selling their land to rapacious whites before Indians were judged “competent” to know their own interests, had the effect of diminishing the land’s value. Imagine that you were broke and someone gave you an acre of land but told you that you had to wait 25 years to sell it. Unless you wanted to start planting vegetables tomorrow, what good would it do you? You couldn’t even use it as collateral to get a loan, because technically it wouldn’t be yours yet. These kinds of provisions have the effect of sucking the magical powers out of a system of private property.

  In other words, Indians have long suffered from what Nobel Prize–winning economist Hernando de Soto has called “dead capital.” They may possess a certain amount of land on paper, but they can’t put it to use by selling it, buying more to take advantage of economies of scale, or borrowing against it.

  “There are, of course, arguments that the allotment experiment was a failure because it transferred so much land to whites,” notes Anderson, “but there is no systematic evidence to test this proposition. Certainly vast amounts of land were transferred to whites, but by itself this is not prima facie evidence that Indians were left worse off. If land was taken without compensation, there is no doubt that Indians were disadvantaged. To determine the impact of voluntary sales, we would have to know the sale price relative to the value of the land to Indians had it been retained by them.”25

  In other words, if you had a piece of land and you sold it for fair market value, no one would look at the situation and suggest that you had suffered some kind of great loss or had been swindled. You might simply have decided that the money you could get was more valuable to you than the land. Particularly when it comes to farmland, this determination is often based on how large a plot of land you own. Agricultural productivity is based on economies of scale. A reasonable person, whether Indian or non-Indian, might decide that 160 acres isn’t enough to make farming worth it or might rather have the money from the sale of the land and do something else with it. Not everyone aspires to be a farmer. But the Dawes Act, as it was written, didn’t take sufficient account of these possibilities, and those who assess its success or failure today typically don’t either.

  If the idea behind U.S. policy in the early 20th century was either to help Indians or to help white settlers, the easiest way of accomplishing this would’ve been to grant a simple title to the land to either group and let each do what they wanted. But, “had the land been given directly to Indians or whites, what role would there have been for the Office of Indian Affairs?” Anderson asks pointedly. Although the Dawes Act was ostensibly implemented with the idea of making Indians independent and regular citizens of the United States, Washington’s oversight of them increased significantly the longer the policy was in place. From 1900 to 1920, the number of employees grew from 101 to 262.26 (Today, there are about 9,000 employees at the Bureau of Indian Affairs and the Bureau of Indian Education.) This result, says Anderson, “is hardly surprising as bureaucrats are highly unlikely to sit back and watch their mission and jobs wither…. The BIA found its raison d’être with the passage of the Indian Reorganization Act in 1934.”27 Now the goal was no longer to make Indians independent of federal oversight but to permanently enshrine that federal oversight. In the name of protecting Indians from rapacious white people, the federal government has made itself indispensable to Indians’ daily economic lives.

  Meanwhile, Indian land has become all but useless to Indians themselves. The patchwork left by Dawes and then the Indian Reorganization Act has meant that reservations include land owned by individual Indians, land owned by individual non-Indians, land owned in trust by individual Indians, and land owned in trust by the tribe. Any major development, whether real estate or natural resources, involves such complex negotiations that it’s rarely worth the cost. Moreover, the federal government determined that land owned by individuals would be inherited equally by their children. It’s possible for an individual to stipulate otherwise in a will, but as Small and plenty of other Indians have confirmed to me, wills weren’t a part of traditional Indian culture, and few people ever wrote one.

  The result is that “[t]hroughout Indian Country, most allotments have been subdivided and redivided so many times that they are worthless to the nominal owners,” asserts Bordewich. He notes that in the early ’90s, the chairman of the Omaha tribe was receiving “a total of $2.40 annually for his share of a family allotment whose ownership is splintered among more than two hundred heirs. Much land that is Indian-owned on paper has in fact become so fragmented that to be made economically viable at all, it has had to be leased out by the Bureau of Indian Affairs to white farmers and ranchers.”28

  In summary, the Dawes Act wasn’t a good test of property rights, because Indians never had the
m.

  In the past few decades, tribes in both the United States and Canada (which adopted a “reserve” system similar to our reservations) have attempted end-runs around this policy – some tribes will back mortgages for individuals, essentially putting up the tribal coffers as collateral on the loan. The effects are as predictable as they are disastrous, with tribes like the Kamloops in British Columbia paying millions of dollars a year to Canadian banks on behalf of their delinquent members. Some tribes have made informal arrangements with banks – promising that if the banks are forced to foreclose, the tribe will help them find another buyer within the tribe so that they can recoup their losses.

  When I ask Susan Woodrow, the assistant vice president and Helena branch executive of the Minneapolis Federal Reserve Bank, whether any of these strategies has been successful at improving rates of home-ownership or credit on the reservations, she tells me, “The short answer is no.” Woodrow has spent much of the last 15 years helping tribes develop commercial law codes to encourage investment and private enterprise on the reservations. She describes some of the complex financial arrangements that tribe members have used to make mortgages possible, and they’re nothing less than dizzying. As an example, Conrad Stewart tells me, “I had my dad give me a homesite lease on his property. That way the mortgage is not attached to the land; it’s attached to the lease interest and based on the mortgage.”

  Homesite leases are typically entered into for a period of 25 years and then renewable for another 25. They’re common on Indian land because of the difficulties of getting a regular mortgage, and the Bureau of Indian Affairs monitors them heavily. A group called PLACE Advocacy, based in Bozeman, Montana, tries to help Indians navigate these obstacles. Its website features a flowchart of 10 steps (not including any steps taken by the lender) that must be completed for such a lease to be approved. Perhaps the most noteworthy part of this document, though, is the helpful cartoon on the side explaining that leases can be agreed upon only for “fair market value.” Fair market value “is the dollar value of a property based on a formal appraisal by the Office of Special Trustee (OST) in Billings.”29 A bureaucratic appraisal would obviously not be the definition of “fair market value” offered in most introductory economics textbooks. But on reservations, there can’t be anything called “fair market value” when it comes to land, because none of the land is privately owned. “The American dream is homeownership,” laments Stewart, “but that’s not really possible here.”

  But there’s more than homeownership at stake. American homes are one of the primary repositories of American wealth. And for those who want to start a business, they’re one of the primary sources of start-up capital. But because Indians don’t own their land – or, in most cases, their homes – they can’t get credit, making it extraordinarily difficult for them to set up a small business. Stewart sums up the situation: “We are the highest regulated race in the world.” Not only have individual American Indians been regulated into a kind of paralysis, larger economic projects on the reservation have all but stopped as a result of federal oversight.

  If property rights on reservations were well defined, it would not only improve the housing stock and the general appearance of these communities but also significantly boost economic development. As Terry Anderson and Shawn Regan of the Property and Environmental Research Center wrote in 2013, “Crossing into reservations, especially in the West, reveals islands of poverty in a sea of wealth.”30 Crows and Northern Cheyennes sit on some of the largest oil, gas, and coal reserves in the country. Indian reservations, Anderson and Regan note, “contain almost 30% of the nation’s coal reserves west of the Mississippi, 50% of potential uranium reserves, and 20% of known oil and gas reserves” – resources worth nearly $1.5 trillion, or $290,000 per tribal member. Tragically, “86% of Indian lands with energy or mineral potential remain undeveloped because of Federal control of reservations that keeps Indians from fully capitalizing on their natural resources if they desire.”31

  In order to tap into those reserves, Indians (whether the land is tribally held or individually held) must follow a 49-step process. These steps involve the Bureau of Land Management, the Department of the Interior, the Department of Justice, and the Commerce Department, explains an exasperated Stewart. And it can take months, if not years, for each step to be approved. Just to dig a hole, he says, requires a $6,500 up-front payment for an application for a permit to drill (APD).

  Compare that, Stewart says, to the process just off the reservation, which requires about $125 and 15 minutes for the APD and then a mere five-step process for the permit to be approved. Stewart explains that although the tribe has had a coal mine since 1973, little progress has been made in getting resources out of the ground. The mine is the second largest in the nation, with 3 percent of the world’s coal reserves, but it extracts only 5 million tons a year. A few miles off the reservation at Powder River, the yearly extraction is close to 120 million tons a year.

  It’s true that not every reservation is enthusiastic about the idea of natural resource development. The Northern Cheyenne are conducting a referendum on the issue, and though Ivan Small believes most tribe members would be in favor of it, he suggests that the tribal government is overly influenced by people concerned about the environmental impact. Winfield Russell, of the Northern Cheyenne tribal council, says he worries that development of the land “will undermine or destroy Native culture.” Russell says he’s not taking a position on the issue, but he sees a strong connection between the untouched land and the tribe’s spiritual values. Unlike many other tribes, he says, “we’re still strong here as far as our ceremonial culture and spirit on the reservation. We still have our covenant here.”

  Northern Cheyenne lands are almost entirely held in tribal trust, which means that no economic development on the reservation can happen without a vote of tribe members (in addition to all those bureaucratic steps at the federal level). This is why, for instance, the tribal two-year school, Chief Dull Knife College, can’t expand its facility, even though enrollment has skyrocketed. “They will have to build up, not out,” says Russell. “The college borders on a cemetery, and there is other land we can’t go onto.” The absurdity of adding additional stories to a building – this isn’t New York City – on a reservation with hundreds of thousands of empty acres doesn’t seem to strike anyone.

  The Northern Cheyenne could sure use the money and jobs a coal mine like the Crows’ would bring. The unemployment rate for the 8,000 tribe members who live on the reservation is more than 80 percent. And when I ask Russell how those members are employed, he offers the following list: “Tribal Health Services, the Bureau of Indian Affairs, reservation schools, the roads department, the tribal court, tribal prosecution, our recovery center, and our tribal college.”

  That’s it. He mentions not a single private enterprise. Russell laments that the most talented people on the reservation tend to leave. “On the outside, they have more pay, better benefits – that is where a person will go. That’s what usually happens.”

  When I ask him what could be done to improve economic opportunity on the reservation, he tells me “more assistance from the federal government, helping the tribal government and financially assisting them and getting grants to the tribes.” He also suggests the need for reforms at the Bureau of Indian Affairs. But nothing Russell suggests would do anything to encourage private enterprise. It would merely continue the same kind of dependent relationship the tribe has with the federal government right now.

  To make matters worse, the federal government isn’t even legally bound to deliver subsidies to Indians. In Cherokee Nation v. Hitchcock (1902) and Lone Wolf v. Hitchcock (1903), the Supreme Court ruled that treaties signed with Indians could be modified or terminated without Indians’ consent. Indian leaders continue to cite the U.S. government’s treaty obligations when explaining the need for the government to provide funding for education or health care. But the Snyder Act of 1921 allows the federal
government to treat all tribes the same, regardless of the treaties those tribes signed. And as the Cato report notes, the Snyder Act “made Indian social programs subject to the same congressional spending adjustments as other programs.”32 Sadly, it seems that these spending adjustments are always going in one direction – up – and there’s a general assumption that these programs will simply be permanent. But there’s no guarantee.

  To know just how much the economy on the reservation depends on public funds, one need only learn the effects that the federal government shutdown in the fall of 2013 had on Indian reservations. Take the Crow tribe. Some 364 Crow members, more than a third of the tribe’s workforce, were furloughed. A bus service, the only way some Crows are able to travel across their 2.3-million-acre reservation, was shuttered. A home health care program for sick tribal members was suspended.33

  The Yurok tribe in Northern California relies almost solely on federal financing to operate. Its reservation has an 80 percent unemployment rate. As a result of the shutdown, the tribe furloughed 60 of its 310 employees, closed its child care center, and halted emergency financial assistance to low-income and older members. Financing for a program that ensures clean drinking water on the reservation ran low.34

  These tribes are so dependent on the federal government that without money from the Bureau of Indian Affairs, their economic activity comes to a complete halt and their members may not have access to clean drinking water.